Mitchells & Butlers suspends dividend payments to shareholders
Managed pub operator Mitchells & Butlers (M&B) has announced is to freeze dividend payments to its shareholders until December 2010 at the earliest.
The group, which revealed its annual results today, said it would not pay a dividend until it had reduced its medium term debt facility, currently at between £550m and £600m, to below £300m.
It said it anticipated reaching this position in two years time. The group's overall net debt is just over £2.7bn.
M&B also said it was cutting back on "expansionary capital expenditure" by £73m to £120m, and focusing resources on maintaining its existing estate.
And in the light of the current property and financial environment, the group said it was postponing plans to sell off non-core assets, such as its bowling alley interests, and scotching any move to become a real estate investment trust (REIT) "for the foreseeable future".
M&B broke the news about its dividend as it revealed turnover for the year to September 27, 2008 up 0.7 per cent at £1,908m.
EBITDA was up 1.1 per cent at £477m, while operating profits were flat at £344m.
However pre-tax profits, down more than 13 per cent at £179m, were hit partly by the losses M&B incurred earlier in the year following the failed property joint venture with then-shareholder Robert Tchenguiz.
The group said trading in the nine weeks to November 22, 2008 had seen overall like-for-like sales up one per cent, with food sales up 3.5 per cent and drinks up 0.5 per cent.
While sales had been driven by the group's "value and volume strategy", overall growth has been restrained by weak machine sales, M&B said.
The group said its estate had recently been valued at £4.7bn, a fall of seven per cent on last year's valuation exercise.
Looking forward, M&B said it was "aggressively driving accelerated market share gains and ensuring that this is profitable activity by focusing on the optimal balance of volume, price and mix to maximise the cash contribution to profit.
"As a result of this policy and the proactive menu management we expect to significantly mitigate the impact of the input cost increases."
The group said it believed food and energy input costs would rise by £30m in the coming year, "heavily concentrated in the first half", with a further £20m in costs coming from the minimum wage and other regulatory demands.
More to follow...
