M&B profits jump after food focus
Birmingham-based pubs and restaurant group Mitchells & Butlers has reported a 26.1 per cent jump in pre-tax profits to £169m as it aims to become a "food-led" business. But the company, which owns Harvester and All Bar One, said drinks sales were down 0.7 per cent and it will not pay out a dividend as it monitors its cash pile. It also said that the "outlook for consumer spending remains uncertain". The final results, covering the year period to 25 September 2010, showed revenue had grown 1.1 per cent to £1.98bn.
Adam Fowle, chief executive of Mitchells & Butlers, said: "We have delivered a very good set of results in challenging economic conditions with earnings per share up 26 per cent.
"Excellent progress has been made against our strategic goal to turn Mitchells & Butlers into a food-led business by concentrating our industry leading brands on the informal eating-out market.
"This strategy continues to prove effective with 7 per cent like-for-like food sales growth in the first eight weeks driven by customers trading up the menu. The company now has a strong balance sheet which, coupled with our brands and resilient trading platform, underpins our confidence in the future."
Operating profit was up 7.3 per cent to £322m with a net cash inflow of £303m in the year.
Total company food sales increased by 4.5 per cent but drink sales were down 0.7 per cent, which the compant said was "held back as a result of the disposal of drinks-led pubs during the year".
Following the disposal of "non-core assets", the company now has almost 1,600 sites.
Disposals raising £130m were completed during the financial year, the company said.
Excluding the major disposals of its lodges and Hollywood Bowls, the company sold or exchanged contracts on 49 individual pubs at an EBITDA multiple of more than 15 times.
After the year end, 333 drinks-led non-core pubs were disposed to Stonegate Pub Company Limited for a net consideration of £363m. Including this transaction, about £500m of major disposals have been achieved since the strategy review in March.
Capital expenditure was £138m in the year, including £28m on acquisitions and expansionary capital. The EBITDA return on expansionary capital spent over the last two years was more than 30 per cent, the company claimed.
The purchase of 22 Ha Ha Bar & Grill sites for £19.5m was completed after the year end and these will be converted mainly into All Bar One and Browns.
It says they are "well positioned within the attractive informal eating out market".
The business says food is now 47 per cent of its sales and it estimates two-thirds of total sales relate to a food occasion.
The company said about dividends: "As indicated in May, the board is committed to a resumption of dividend payments. The board will closely monitor the level of operating cash flow generation and capital investment opportunities for the business during 2011 before taking a decision on the timing and quantum of the resumption of dividend payments."
