Business

National pub group seeks capital fundraise to ensure lockdown survival



Pub group Mitchells & Butlers has reported first quarter total sales down 67.1% on last year and is set to explore its options to raise equity capital to support its survival.

On a like-for-like basis – excluding Covid-mandated periods of closure – trading was 30.1% down on the previous year.

A stock exchange update covering the 14 weeks ended 2 January explained that the company has had no sites open since 30 December.

Discretionary capital expenditure and operating costs have been kept to a minimum, but with no sites trading, ongoing monthly cash burn has returned to levels previously disclosed during the last shutdown, approximately £35m to £40m before payment of debt services – representing interest and amortisation – of £50m per quarter.

Mitchells & Butlers stated it has cash balances of £125m, with all facilities drawn.

While recent news on vaccine approval and roll-out were welcomed, “the future facing the hospitality sector remains extremely uncertain” and it is “not possible to estimate with any confidence what restrictions on our ability to trade lie ahead of us and for how long”.

As a result, the directors are exploring 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 fundraising.

Chief executive Phil Urban commented: “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.”

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At the end of November, the company revealed that around 1,300 jobs were lost last year, as total revenue fell 34.1% to £1.47bn during the year to 26 September, while operating profit fell from £297m last year to just £8m in 2020.

The group operates more than 1,700 pubs and bars across the UK – 83 of which are located in Scotland – with brands including Harvester, Toby Carvery, All Bar One, Browns, Nicholson’s, O’Neill’s and Ember Inns.

“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,” added Urban.



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