Pubs group Mitchells & Butlers poised to restore dividend

MITCHELLS & Butlers, the pubs group which was plunged into a boardroom power struggle earlier this year, is expected to reinstate its dividend.

Billionaire currency dealer Joe Lewis led the boardroom coup at the company which has traded strongly over last summer to give it the firepower for a payout to shareholders.

Together with a raft of pub sales to restore its balance sheet, the company is now poised to make the first payment since the dividend was scrapped in 2008.

Shares in M&B, whose 90 Scottish pubs include Deacon Brodies in Edinburgh and Glasgow's Horseshoe Bar, closed up 8.7p at 356p on Friday, near the year high.

Many City analysts say the stock soared on expectations of a renewed dividend. But analysts warn it could fall if the company freezes the dividend again at the annual results on Tuesday.

The City consensus is that M&B, whose chains include All Bar One and O'Neill's, will post a robust rise in pre-tax profit to 166 million against 134m last time. Earnings per share are expected to have jumped to 29.4p from 23.6p.

M&B's first-half profits leapt 55 per cent to 73m, and the group raised additional money in the summer by selling 300 of its low-margin drinks-led outlets to private equity group TDR Capital. The group will provide further evidence this week of its move to a more food-oriented offering.

Adam Fowle, group chief executive, said at the interim results that if M&B was still trading well at the end of November "the board would consider the dividend decision in a good light".

In a recent trading update M&B, where Bermuda-based Lewis is the main shareholder with 22 per cent, reported a 3.6 per cent rise in like-for-like in the nine weeks to 18 September. This was three times the pace during the nine weeks to 17 July.

Paul Hickman, leisure analyst at KBC Peel Hunt, said: "I think M&B are in a position reinstate the divi. They have already indicated they have got the balance sheet to do it, it is more a question of their confidence in the outside trading environment."

Lewis and other rebel shareholders won enough votes at January's heated AGM to install four non-executive directors. Former Debenhams boss John Lovering replaced the ousted Simon Laffin as chairman.