Pub punters pushed Mitchells & Butlers' (MAB) adjusted free cash flow back into positive territory during the first-half as the Harvester, All Bar One and Miller & Carter owner said a milder February brought in more revenue across the group. However, this was achieved via higher drinks prices - which could have less mileage in times of weak economic growth - while sales volumes were flat. Net free cash flow climbed to £23m from a negative £3m the prior year.
Management credited its rise in sales to investment in its estate - upgrading amenities and tailoring venues to guests' preferences. Mitchells’ £90m capital expenditure bill in the period was two-thirds refurbishment and one-third maintenance. The company said that only 250 of 1,700 properties had not been refurbished in the past seven years.
Mitchells cut £61m from net debt in the period but still has a debt-to-equity ratio of 89 per cent and an annual £48m pension deficit payment to think about. Asked about dividend and buyback possibilities, finance director Tim Jones said the end of those payments in 2023 would give the company “more options” to hand cash back to shareholders.
| MITCHELLS & BUTLERS (MAB) | ||||
| ORD PRICE: | 265p | MARKET VALUE: | £ 1.13bn | |
| TOUCH: | 264.5-265.5p | 12-MONTH HIGH: | 294p | LOW: 235p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 429p | NET DEBT: | 89% | |
| Half year to 13 April | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.13 | 75 | 13.0 | nil |
| 2019 | 1.19 | 69 | 14.3 | nil |
| % change | +5 | -8 | +10 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangibles of £12m, or 2.8p a share | ||||
