M&B’s debts concern Joe Lewis camp

MITCHELLS & Butlers’ largest investor Joe Lewis yesterday voiced concerns over the embattled company’s finances, despite a return to profit in its full-year results.

A source close to Lewis’s investment vehicle Piedmont highlighted the sharp rise in M&B’s non-current liabilities on derivative financial instruments, which hit £235m for the full year to 24 September, up from £149m the previous year.

Piedmont also expressed concern over the pub group’s 0.7 per cent drop in operating margin to 16.3 per cent, the impact of the £37m pension deficit on the company’s net asset value, and the lack of update on when dividends will be resumed.

The firm, which owns 23 per cent of the All Bar One owner, walked away from a takeover bid for the pub chain on 13 October and is prevented from making a fresh approach within six months under Takeover Panel rules. Piedmont refused to be drawn on whether it will come back with a new bid next April if the firm improves.

But Piedmont said it supports executive chairman Bob Ivell’s ongoing search for a new CEO, and is not calling for an immediate hire. Piedmont has not put forward any candidates.

The firm’s pre-tax profits for the year to 24 September 2011 were £132m, compared to a £127m loss for the previous year. Like-for-like sales, measuring revenue from outlets open at least a year, rose 2.6 per cent compared to 2010.