M&B focuses on strong recovery

Mitchells & Butlers (M&B) has released its trading statement covering the 14 weeks ended 2 January 2021, with CEO Phil Urban stating he is confident in the future of the business. 

Across the whole of the first quarter, total sales were 67.1% below the prior year. On a like-for-like basis (for sites when open, excluding periods of closure) trading has been 30.1% down on prior year across this period. Throughout, M&B has reduced discretionary capital expenditure and operating costs to a minimum.

“We are now in a third national lockdown," says Urban. "I am consistently impressed by the resilience and energy of our teams as we repeatedly open and close businesses that we have invested in to make Covid secure and urge the government to better understand the huge impact these restrictions are having on the hospitality sector. The Job Retention Scheme is temporarily protecting some employment but there is a real and pressing need for support for businesses themselves if we are to return to being the vibrant sector and important employers that we were.

"Mitchells & Butlers was a high performing business going into the pandemic and with the support of our main stakeholders I have every confidence that we can emerge in a strong competitive position once the current restrictions on us are lifted.”

Financial performance 

Since the announcement of (M&B's) preliminary results on 26 November 2020, progressively tighter restrictions were imposed through December, resulting in an ever smaller number of sites open and significantly reduced sales activity being possible through the important festive trading season. After the government announcement reallocating regions in England between tiers on 30 December 2020, M&B has had no sites open.

The group currently has cash balances on hand of £125m, with all facilities drawn. With no sites trading, ongoing monthly cash burn has returned to the level previously disclosed in relation to the last shutdown, at approximately £35m to £40m before payment of debt service (representing interest and amortisation) of £50m per quarter. The next quarter payment date for debt service is 15 March 2021.

Despite the recent positive news on vaccine approval and roll-out, M&B has said it is not possible to estimate with any confidence what restrictions on ability to trade lie ahead and for how long. As a result, the directors believe it is prudent to explore an equity capital raise, to give the group increased financial and operational flexibility. No decision has yet been made with regards to the timing, size, or terms of any such equity capital raise.