TIDMJDW
RNS Number : 9017O
Wetherspoon (JD) PLC
06 October 2023
6 October 2023
J D WETHERSPOON PLC
PRELIMINARY RESULTS
(For the 52 weeks ended 30 July 2023)
FINANCIAL HIGHLIGHTS Var %
Before separately disclosed
* Like-for-like sales +12.7%
* Revenue GBP1,925.0m (2022: GBP1,740.5m) +10.6%
-ve to +ve
* Profit/(loss) before tax GBP42.6m (2022: -GBP30.4m)
* Operating profit GBP107.1m (2022: GBP25.7m) +316.7%
-ve to +ve
* Diluted earnings/(losses) per share 26.4p (2022:
-19.6p)
* Free cash inflow per share 211.4p (2022: 17.3p) +1,122%
-
* Full year dividend 0.0p (2022: 0.0p)
After separately disclosed (1)
* Profit before tax GBP90.5m (2022: GBP26.3m) +244.1%
* Operating profit GBP106.0m (2022: GBP55.1m) +92.4%
* Diluted earnings per share 46.5p (2022: 15.0p (2) ) +210%
(1) Separately disclosed items as disclosed in note 4.
(2) Restated, see note 8.
Commenting on the results, Tim Martin, the Chairman of J D
Wetherspoon plc, said:
"Wetherspoon continues to perform well. In the first nine weeks
of the current financial year, to 1 October 2023, like-for-like
sales increased by 9.9%, compared with the nine weeks to 2 October
2022.
"As we said last year, perhaps the biggest threat to the
hospitality industry is the possibility of further lockdowns and
restrictions.
"Those interested in the UK Government's response to the
pandemic may like to read the reports by Professor Francois
Balloux, director of the UCL Genetics Institute, in The Guardian,
and by Professor Robert Dingwall, of Trent University, in the
Telegraph
"See pages 54-56 of Wetherspoon News
https://www.jdwetherspoon.com//media/files/pdf-documents/wetherspoon-news/wetherspoon-news-autumn-2022.pdf
)
"The conclusion of Professor Balloux, broadly echoed by
Professor Dingwall, based on an analysis by the World Health
Organisation of the pandemic, is that Sweden (which did not lock
down), had a Covid-19 fatality rate "of about half the UK's" and
that "the worst performer, by some margin, is Peru, despite
enforcing the harshest, longest lockdown."
"Professor Balloux concludes that "the strength of mitigation
measures does not seem to be a particularly strong indicator of
excess deaths."
"Indeed, as some commentators have noted, lockdowns were not
contemplated in the UK's laboriously compiled prepandemic plans. It
appears that these plans were jettisoned, early on in the pandemic,
in favour of copying China's lockdown approach - an example,
perhaps, of Warren Buffett's so-called "institutional imperative" -
"everyone else has locked down, so we will, too".
"The company currently anticipates a reasonable outcome for the
financial year, subject to our future sales performance.
Enquiries:
John Hutson Chief Executive Officer 01923 477777
Ben Whitley Finance Director 01923 477777
Eddie Gershon Company spokesman 07956 392234
Photographs are available at: www.newscast.co.uk
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout the UK. The
Company aims to provide customers with good-quality food and drink,
served by well-trained and friendly staff, at reasonable prices.
The pubs are individually designed and the Company aims to maintain
them in excellent condition.
2. Visit our website jdwetherspoon.com
3. The financial information set out in the announcement does
not constitute the company's statutory accounts for the periods
ended 30 July 2023 or 31 July 2022. The financial information for
the period ended 31 July 2022 is derived from the statutory
accounts for that year which have been delivered to the Registrar
of Companies. The auditors have reported on those accounts: their
report was unquali ed, and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006. Statutory accounts
for 2023 will be delivered to the registrar of companies in due
course. This announcement has been prepared solely to provide
additional information to the shareholders of J D Wetherspoon, in
order to meet the requirements of the UK Listing Authority's
Disclosure and Transparency Rules. It should not be relied on by
any other party, for other purposes. Forward-looking statements
have been made by the directors in good faith using information
available up until the date that they approved this statement.
Forward-looking statements should be regarded with caution because
of inherent uncertainties in economic trends and business
risks.
4. The annual report and financial statements 2023 has been
published on the Company's website on 06 October 2023.
5. The current financial year comprises 52 trading weeks to 28 July 2024.
6. The next trading update will be issued on 8 November 2023.
CHAIRMAN'S STATEMENT
Financial performance
The company was founded in 1979 - and this is the 40th year
since incorporation in 1983.
The table below outlines some key aspects of our performance
during that period.
Summary accounts for the years 1984-2023
Profit/(loss) Earnings per
Total number Total sales before tax and share before Free cash flow
Financial year of pubs GBP000 exceptional separately Free cash flow per share
(Sites) items disclosed items GBP000 pence(2,3)
GBP000 pence(!)
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1984 1 818 (7) 0
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1985 2 1,890 185 0.2
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1986 2 2,197 219 0.2
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1987 5 3,357 382 0.3
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1988 6 3,709 248 0.3
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1989 9 5,584 789 0.6 915 0.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1990 19 7,047 603 0.4 732 0.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1991 31 13,192 1,098 0.8 1,236 0.6
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1992 45 21,380 2,020 1.9 3,563 2.1
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1993 67 30,800 4,171 3.3 5,079 3.9
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1994 87 46,600 6,477 3.6 5,837 3.6
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1995 110 68,536 9,713 4.9 13,495 7.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1996 146 100,480 15,200 7.8 20,968 11.2
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1997 194 139,444 17,566 8.7 28,027 14.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1998 252 188,515 20,165 9.9 28,448 14.5
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
1999 327 269,699 26,214 12.9 40,088 20.3
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2000 428 369,628 36,052 11.8 49,296 24.2
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2001 522 483,968 44,317 14.2 61,197 29.1
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2002 608 601,295 53,568 16.6 71,370 33.5
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2003 635 730,913 56,139 17.0 83,097 38.8
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2004 643 787,126 54,074 17.7 73,477 36.7
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2005(4) 655 809,861 47,177 16.9 68,774 37.1
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2006 657 847,516 58,388 24.1 69,712 42.1
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2007 671 888,473 62,024 28.1 52,379 35.6
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2008 694 907,500 58,228 27.6 71,411 50.6
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2009 731 955,119 66,155 32.6 99,494 71.7
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2010 775 996,327 71,015 36.0 71,344 52.9
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2011 823 1,072,014 66,781 34.1 78,818 57.7
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2012 860 1,197,129 72,363 39.8 91,542 70.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2013 886 1,280,929 76,943 44.8 65,349 51.8
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2014 927 1,409,333 79,362 47.0 92,850 74.1
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2015 951 1,513,923 77,798 47.0 109,778 89.8
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2016 926 1,595,197 80,610 48.3 90,485 76.7
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2017 895 1,660,750 102,830 69.2 107,936 97.0
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2018 883 1,693,818 107,249 79.2 93,357 88.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2019 879 1,818,793 102,459 75.5 96,998 92.0
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2020(6) 872 1,262,048 (44,687) (35.5) (58,852) (54.2)
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2021(3) 861 772,555 (154,676) (119.2) (83,284) (67.8)
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2022(3) 852 1,740,477 (30,448) (19.6) 21,922 17.3
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
2023(3) 826 1,925,044 42,559 26.4 271,095 211.4
----------------- -------------- ------------- --------------- --------------- ---------------- ----------------
Notes
Adjustments to statutory numbers
1. Where appropriate, the earnings/losses per share (EPS), as
disclosed in the statutory accounts, have been recalculated to take
account of share splits, the issue of new shares and capitalisation
issues.
2. Free cash flow per share excludes dividends paid which were
included in the free cash flow calculations in the annual report
and accounts for the years 1995-2000.
3. EPS and free cash flow per share are calculated using
dilutive shares in issue.
4. Before 2005, the accounts were prepared under UKGAAP. All
accounts from 2005 to date have been prepared under IFRS.
5. Apart from the items in notes 1-4, all numbers are as
reported in each year's published accounts.
6. From financial year 2020 data is based on post-IFRS 16
numbers following the transition from IAS17 to IFRS 16.
7. Free cash flow is defined in the APM section within
accounting policies in the annual report. The free cash flow
calculation can be found on the cash flow statement.
Comparison to Pre-Pandemic Period (FY19)
The sales recovery, following the pandemic, continued in
FY23.
Like-for-like sales for the financial year increased by 7.4%
(FY22: -4.7%), compared to FY19. Bar sales increased by 2.1%, food
sales by 13.7%, slot/fruit machine sales by 43.0% and hotel sales
by 15.4%.
Like-for-like sales, compared to FY19, have continued to improve
in the first 9 weeks of the current financial year (FY24) and are
17.3% ahead of the equivalent 9-week period.
The comparisons in the remainder of this statement are with the
previous financial year, which ended on 31 July 2022.
Cash flow
Free cash flow, including pre-tax proceeds of approximately
GBP169 million from the sale of the majority of the company's
interest rate swaps, was GBP271.1 million (2022: GBP21.9
million).
Excluding the proceeds from the swaps, free cash flow was
approximately GBP102 million.
Free cash flow was calculated after capital payments of GBP47.0
million for existing pubs (2022: GBP45.9 million), GBP12.3 million
for share purchases for employees (2022: GBP12.8 million) and
payments of tax and interest.
Balance sheet
Wetherspoon's balance sheet is significantly stronger than it
was in the period before the pandemic.
Debt levels, excluding IFRS-16 lease debt, have decreased by
GBP163 million since January 2020, just before the first lockdown,
to GBP641.9 million.
This reduction has been achieved after investments in freehold
reversions (pubs where Wetherspoon was previously the tenant) of
GBP81.7 million and GBP108.5 million in new pubs.
During the pandemic, the company raised a total of GBP229
million of new equity.
On an IFRS-16 basis, which includes notional debt from leases,
debt decreased from GBP1.45 billion to GBP1.06 billion between
January 2020 and the end of FY23.
Trading summary
Total sales for FY23 were GBP1,925 million, an increase of
10.6%, compared to the 53 weeks ended 31 July 2022.
Like-for-like sales, compared to FY22, increased by 12.7%.
Like-for-like bar sales increased by 9.0%, food sales by 17.7%,
slot/fruit machine sales by 26.4% and hotel rooms by 11.8%.
The operating profit, before separately disclosed items, was
GBP107.1 million (2022: GBP25.7 million). The operating margin,
before separately disclosed items, was 5.6% (2022: 1.5%).
The profit before tax and separately disclosed items was GBP42.6
million (2022: GBP30.4 million loss), including property gains of
GBP2.2 million (2022: GBP2.1 million).
In the year, the company sold 13 pubs, terminated the leases of
14 pubs, and closed 4 pubs. This gave rise to a cash inflow of
GBP7.0 million after associated fees. There was a loss on disposal
of GBP9.4 million, recognised in the income statement, relating to
these pubs.
Earnings per share before separately disclosed items, were 27.0p
(2022: losses per share of 19.6p).
Total capital investment was GBP78.5 million (2022: GBP122.7
million). GBP20.4 million was invested in new pubs and pub
extensions (2022: GBP51.1 million), GBP47.0 million in existing
pubs and IT (2022: GBP45.9 million) and GBP11.2 million in freehold
reversions of properties where Wetherspoon was the tenant (2022:
GBP25.8 million).
Separately disclosed items
Overall, there was a pre-tax 'separately disclosed gain' of
GBP48.0 million (2022: GBP56.7 million).
There was a GBP97.7 million gain related to the fair value
movement of interest rate swaps; a GBP9.4 million charge relating
to the disposal of pubs; and a GBP38.3 million property impairment
charge, in respect of pubs which were deemed unlikely to generate
sufficient cash flows, in the future, to support their carrying
value.
Although there have been a number of impairments over the years
in respect of individual properties, the book value of the
company's assets is GBP1.38 billion, which is approximately eight
times the company's EBITDA of GBP170 million. There are many pubs
in the estate where expected future cash flows would result in a
valuation which is considerably in excess of book value. However,
accounting rules do not take account of these potential
valuations.
This historical cost accounting approach can also create
anomalies in pub valuations.
For example, one pub in South London has made an estimated
return on equity, since opening over 20 years ago, after all costs
including interest and tax, of GBP4.4 million; yet its valuation
has been impaired due to low profitability in the aftermath of the
pandemic.
Dividends and return of capital
The board has not recommended the payment of a final dividend
(2022: GBP0). There have been no share buybacks in the financial
year to date (2022: GBP0).
Financing
As at 30 July 2023, the company's total net debt, excluding
derivatives and lease liabilities, was GBP641.9 million (2022:
GBP891.7 million), a decrease of GBP249.8 million.
In November 2022, the company repaid government "CLBILS" loans
of GBP100 million, which had been due to mature in August 2023. The
company has total available finance facilities of GBP983
million.
The company has interest rate swaps in place in respect of
GBP200 million, from August 2023 to February 2025. The swap rate
currently being paid, excluding the banks' margin, is 5.67%. The
total cost of the company's debt, in the year under review,
including the banks' margin was 6.25%.
Property
The company opened three pubs during the year and sold, closed
or terminated the leases of 31 pubs. The company had a trading
estate of 826 pubs at the financial year end.
In the last 12 years, the company has increased the ratio of
freehold pubs it owns from 43% to 70%, as a result of investment in
freehold reversions and opening freehold pubs.
As indicated above, at 30 July 2023, the net book value of the
property, plant and equipment of the company was GBP1.38
billion.
The properties have not been revalued since 1999.
Taxation
The total tax charge is GBP8.7 million in respect of profits
before separately disclosed items (2022: GBP5.6 million
credit).
The total tax charge comprises two parts. The first part is the
actual current tax (the 'cash' tax) which this year is nil (2022:
nil) because of losses carried forward from prior years.
The second part is deferred tax (the 'accounting' tax), which is
tax payable in future periods, that must be recognised in the
current period for accounting purposes. The accounting tax charge
in the year is GBP8.7 million (2022: GBP5.6 million credit).
The company is seeking a refund of historic excise duty from
HMRC, totalling GBP524k , in relation to goods sent to the Republic
of Ireland, when Wetherspoon pubs first opened in that country. The
company has been charged excise duty on the same goods twice, as
they were purchased in the UK, and excise duty was paid in full.
Irish excise duty was then paid in addition.
Business rates transmogrified to a sales tax
Business rates are supposed to be based on the value of the
building, rather than the level of trade of the tenant. This should
mean that the rateable value per square foot is approximately the
same for comparable pubs in similar locations. However, as a result
of the valuation approach adopted by the government "Assessor" in
Scotland, Wetherspoon often pays far higher rates per square foot
than its competitors.
This is highlighted (in the tables below) by assessments for the
Omni Centre, a modern leisure complex in central Edinburgh, where
Wetherspoon has been assessed at more than double the rate per
square foot of the average of its competitors, and for The Centre
in Livingston (West Lothian), a modern shopping centre, where a
similar anomaly applies.
As a result of applying valuation practice from another era,
which assumed that pubs charged approximately the same prices, the
raison d'être of the rating system - that rates are based on
property values, not the tenant's trade - has been undermined.
Similar issues are evident in Galashiels, Arbroath, Anniesland -
and, indeed, at most Wetherspoon pubs in Scotland. In effect, the
application of the rating system in Scotland discriminates against
businesses like Wetherspoon, which have lower prices, and
encourages businesses to charge higher prices. As a result,
consumers are likely to pay higher prices, which cannot be the
intent of rating legislation.
Omni Centre, Edinburgh
Occupier Name Rateable value (RV) Customer area (ft(2)) Rates per square foot
-------------------- ---------------------- ----------------------
Playfair (JDW) GBP218,750 2,756 GBP79.37
-------------------- ---------------------- ----------------------
Unit 9 (vacant) GBP48,900 1,053 GBP46.44
-------------------- ---------------------- ----------------------
Unit 7 (vacant) GBP81,800 2,283 GBP35.83
-------------------- ---------------------- ----------------------
Frankie & Benny's GBP119,500 2,731 GBP43.76
-------------------- ---------------------- ----------------------
Nando's GBP122,750 2,804 GBP43.78
-------------------- ---------------------- ----------------------
Slug & Lettuce GBP108,750 3,197 GBP34.02
-------------------- ---------------------- ----------------------
The Filling Station GBP147,750 3,375 GBP43.78
-------------------- ---------------------- ----------------------
Tony Macaroni GBP125,000 3,427 GBP36.48
-------------------- ---------------------- ----------------------
Unit 6 (vacant) GBP141,750 3,956 GBP35.83
-------------------- ---------------------- ----------------------
Cosmo GBP200,000 7,395 GBP27.05
-------------------- ---------------------- ----------------------
Average (exc JDW) GBP121,800 3,358 GBP38.55
-------------------- ---------------------- ----------------------
The Centre, Livingston
Occupier Name Rateable Value (RV) Customer Area (ft(2)) Rates per square foot
-------------------- ---------------------- ----------------------
The Newyearfield (JDW) GBP165,750 4,090 GBP40.53
-------------------- ---------------------- ----------------------
Paraffin Lamp GBP52,200 2,077 GBP25.13
-------------------- ---------------------- ----------------------
Wagamana GBP67,600 2,096 GBP32.25
-------------------- ---------------------- ----------------------
Nando's GBP80,700 2,196 GBP36.75
-------------------- ---------------------- ----------------------
Chiquito GBP68,500 2,221 GBP30.84
-------------------- ---------------------- ----------------------
ASK Italian GBP69,600 2,254 GBP30.88
-------------------- ---------------------- ----------------------
Pizza Express GBP68,100 2,325 GBP29.29
-------------------- ---------------------- ----------------------
Prezzo GBP70,600 2,413 GBP29.26
-------------------- ---------------------- ----------------------
Harvester GBP98,600 3,171 GBP31.09
-------------------- ---------------------- ----------------------
Pizza Hut GBP111,000 3,796 GBP29.24
-------------------- ---------------------- ----------------------
Hot Flame GBP136,500 4,661 GBP29.29
-------------------- ---------------------- ----------------------
Average (exc JDW) GBP82,340 2,721 GBP30.40
-------------------- ---------------------- ----------------------
In summary, as a result of the approach taken in Scotland,
business rates for pubs are de facto a sales tax, rather than a
property tax, as the above examples clearly demonstrate.
VAT equality
As we have previously stated, the government would generate more
revenue and jobs if it were to create tax equality among
supermarkets, pubs and restaurants.
Supermarkets pay virtually no VAT in respect of food sales,
whereas pubs pay 20%. This has enabled supermarkets to subsidise
the price of alcoholic drinks, widening the price gap, to the
detriment of pubs and restaurants. Pubs also pay around 20 pence a
pint in business rates, whereas supermarkets pay only about 2
pence, creating further inequality.
Pubs have lost 50% of their beer sales to supermarkets in the
last 35 or so years. It makes no sense for supermarkets to be
treated more leniently than pubs, since pubs generate far more jobs
per pint or meal than do supermarkets, as well as far higher levels
of tax. Pubs also make an important contribution to the social life
of many communities and have better visibility and control of those
who consume alcoholic drinks.
.
Tax equality is particularly important for residents of less
affluent areas, since the tax differential is more important there
- people can less afford to pay the difference in prices between
the on and off trade.
As a result, in these less affluent areas, there are often fewer
pubs, coffee shops and restaurants, with less employment and
increased high-street dereliction. Tax equality would also be in
line with the principle of fairness - the same taxes should apply
to businesses which sell the same products.
How pubs contribute to the economy
Wetherspoon and other pub and restaurant companies have always
generated far more in taxes than are earned in profits.
In the financial year ended 30 July 2023, the company generated
taxes of GBP760.2 million.
The table below shows the GBP6.0 billion of tax revenue
generated by the company, its staff and customers in the last 10
years. Each pub, on average, generated GBP6.8 million in tax during
that period. The tax generated by the company, during this 10-year
period, equates to approximately 25 times the company's profits
after tax.
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 TOTAL
------------------
2014
to 2023
------------------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
VAT 372.3 287.7 93.8 244.3 357.9 332.8 323.4 311.7 294.4 275.1 2,893.4
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Alcohol
duty 166.1 158.6 70.6 124.2 174.4 175.9 167.2 164.4 161.4 157 1,519.8
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
PAYE and
NIC 124.0 141.9 101.5 106.6 121.4 109.2 96.2 95.1 84.8 78.4 1,059.1
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Business
rates 49.9 50.3 1.5 39.5 57.3 55.6 53 50.2 48.7 44.9 450.9
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Corporation
tax 12.2 1.5 - 21.5 19.9 26.1 20.7 19.9 15.3 18.4 155.5
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Corporation
tax credit
(historic
capital
allowances) - - - - - - - - -2 - -2.0
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Fruit/slot
machine
duty 15.7 12.8 4.3 9 11.6 10.5 10.5 11 11.2 11.3 107.9
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Climate
change levies 11.1 9.7 7.9 10 9.6 9.2 9.7 8.7 6.4 6.3 88.6
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Stamp duty 0.9 2.7 1.8 4.9 3.7 1.2 5.1 2.6 1.8 2.1 26.8
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Sugar tax 3.1 2.7 1.3 2 2.9 0.8 - - - - 12.8
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Fuel duty 1.9 1.9 1.1 1.7 2.2 2.1 2.1 2.1 2.9 2.1 20.1
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Apprenticeship
levy 2.5 2.2 1.9 1.2 1.3 1.7 0.6 - - - 11.4
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Carbon tax - - - - 1.9 3 3.4 3.6 3.7 2.7 18.3
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Premise
licence
and TV licences 0.5 0.5 0.5 1.1 0.8 0.7 0.8 0.8 1.6 0.7 8.0
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Landfill
tax - - - - - 1.7 2.5 2.2 2.2 1.5 10.1
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Furlough
tax - -4.4 -213 -124.1 - - - - - - -341.5
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Eat Out
to Help
Out - -23.2 - - - - - - - -23.2
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Local government
grants - -1.4 -11.1 - - - - - - - -12.5
------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
TOTAL TAX 760.2 666.7 38.9 441.9 764.9 730.5 695.2 672.3 632.4 600.5 6,003.5
------------------ ------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
TAX PER
PUB (GBPm) 0.92 0.78 0.05 0.51 0.87 0.83 0.78 0.71 0.67 0.66 6.78
------------------
TAX AS
% OF NET
SALES 39.5% 38.3% 5.0% 35.0% 42.1% 43.1% 41.9% 42.1% 41.8% 42.6% 39.0.%
------------------ ------ ------ ------- ------- ------ ------ ------ ------ ------ ------
PROFIT/(LOSS)
AFTER TAX 33.8 -24.9 -146.5 -38.5 79.6 83.6 76.9 56.9 57.5 58.9 237.3
------------------ ------ ------ ------- ------- ------ ------ ------ ------ ------ ------ ---------
Note - this table is prepared on a cash basis. IFRS-16 from FY20
onwards.
Corporate governance
Wetherspoon has been a strong critic of the composition of the
boards of UK-quoted companies.
As a result of the 'nine-year rule', limiting the tenure of NEDs
and the presumption in favour of 'independent', part-time chairmen,
boards are often composed of short-term directors, with very little
representation from those who understand the company best - people
who work for it full time, or have worked for it full time.
Wetherspoon's review of the boards of major banks and pub
companies, which teetered on the edge of failure in the 2008-10
recession, highlighted the short "tenure", on average, of
directors.
In contrast, Wetherspoon noted the relative success, during this
fraught financial period, of pub companies Fuller's and Young's,
the boards of which were dominated by experienced executives, or
former executives.
As a result, Wetherspoon has increased the level of experience
on the Wetherspoon board by appointing four "worker directors".
All four worker directors started on the 'shop floor' and
eventually became successful pub managers. Three have been promoted
to regional management roles. They have worked for the company for
an average of 24 years.
Board composition cannot guarantee future success, but it makes
sensible decisions, based on experience at the coalface of the
business, more likely.
The UK Corporate Governance Code 2018 (the 'Code') is a vast
improvement on previous codes, emphasising the importance of
employees, customers and other stakeholders in commercial success.
It also emphasises the importance of its comply-or-explain ethos,
and the consequent need for shareholders to engage with companies
in order to understand their explanations.
A major impediment to the effective implementation of comply or
explain seems to be the undermanning of the corporate governance
departments of major shareholders.
For example, Wetherspoon has met a compliance officer from one
major institution who is responsible for around 400 companies - an
impossible task.
As a result, it appears that compliance officers and governance
advisors, in practice, often rely on a "tick-box" approach, which
is, itself, in breach of the Code.
A further issue is that many major investors, in their own
companies, for sensible reasons, do not observe the nine-year rule,
and other rules, themselves. An approach of "do what I say, not
what I do" is clearly unsustainable.
Further progress
As always, the company has tried to improve as many areas of the
business as possible, on a week-to-week basis, rather than aiming
for 'big ideas' or grand strategies.
Frequent calls on pubs by senior executives, the encouragement
of criticism from pub staff and customers and the involvement of
pub and area managers, among others, in weekly decisions, are the
keys to success. Wetherspoon paid GBP36.0 million in respect of
bonuses and free shares to employees in the period ended 31 July
2023, of which 98.6% was paid to staff below board level and 83.4%
was paid to staff working in our pubs.
Wetherspoon has been the biggest corporate sponsor of 'Young
Lives vs Cancer' (previously CLIC Sargent), having raised a total
of GBP22.2 million since 2002. During the pandemic, our
contributions had been reduced, but, since the reopening of our
pubs' there have been great efforts seen and our contributions have
bounced back significantly.
Bonuses and free shares
As indicated above, Wetherspoon has, for many years (see table
below), operated a bonus and share scheme for all employees. Before
the pandemic, these awards increased, as earnings increased for
shareholders.
Financial year Bonus and free shares Profit/(loss) after tax(1) Bonus and free shares as % of profits
GBPm GBPm
---------------- ---------------------- --------------------------- --------------------------------------
2007 19 47 41%
2008 16 36 45%
2009 21 45 45%
2010 23 51 44%
2011 23 52 43%
2012 24 57 42%
2013 29 65 44%
2014 29 59 50%
2015 31 57 53%
2016 33 57 58%
2017 44 77 57%
2018 43 84 51%
2019 46 80 58%
2020 33 (39) -
2021 23 (146) -
2022 30 (25) -
2023 36 34 106%
Total 503 591 53%(2)
---------------- ---------------------- --------------------------- --------------------------------------
1 IFRS 16 was implemented in the year ending 26 July 2020
(FY20). From this period all profit numbers in the above table are
on a post-IFRS 16 basis. Before this date all profit numbers are on
a pre-IFRS 16 basis.
(2 Excludes 2020, 2021 and 2022.)
Length of Service
The attraction and retention of talented pub and kitchen
managers are important for any hospitality business. As the table
below demonstrates, the retention of managers has improved, even
during the pandemic.
Average pub Average kitchen
Financial manager length manager length
year of service of service
(Years) (Years)
----------- ---------------- ----------------
2013 9.1 6.0
2014 10.0 6.1
2015 10.1 6.1
2016 11.0 7.1
2017 11.1 8.0
2018 12.0 8.1
2019 12.2 8.1
2020 12.9 9.1
2021 13.6 9.6
2022 13.9 10.4
2023 14.3 10.6
Food Hygiene Ratings
Wetherspoon has always emphasised the importance of hygiene
standards.
We now have 753 pubs rated on the Food Standards Agency's
website (see table below). The average score is 4.99, with 99.2% of
the pubs achieving a top rating of five stars. We believe this to
be the highest average rating for any substantial pub company.
In the separate Scottish scheme, which records either a 'pass'
or a 'fail', all of our 60 pubs have passed.
Pubs with
Financial Total Pubs Average highest Rating
Year Scored Rating %
----------- ----------- -------- ----------------
2013 771 4.85 87.0
2014 824 4.91 92.0
2015 858 4.93 94.1
2016 836 4.89 91.7
2017 818 4.89 91.8
2018 807 4.97 97.3
2019 799 4.97 97.4
2020 781 4.96 97.0
2021 787 4.97 98.4
2022 775 4.98 98.6
2023 753 4.99 99.2
Property litigation
In 2013, Wetherspoon agreed an out-of-court settlement of
approximately GBP1.25 million with developer Anthony Lyons,
formerly of property leisure agent Davis Coffer Lyons, relating to
claims that Mr Lyons had been an accessory to frauds committed by
Wetherspoon's former retained agent Van de Berg and its directors
Christian Braun, George Aldridge and Richard Harvey in respect of
properties in Leytonstone (which currently trades as the Walnut
Tree), Newbury (which was leased to Café Rouge) and Portsmouth
(which currently trades as The Isambard Kingdom Brunel).
Of these three properties, only Portsmouth was pleaded by
Wetherspoon in its case 2008/9 case against Van de Berg. Mr Lyons
denied the claim and the litigation was contested.
In the Van de Berg litigation, Mr Justice Peter Smith ruled that
Van de Berg, but not Mr Lyons (who was not a party to the case),
fraudulently diverted the freehold of Portsmouth from Wetherspoon
to Moorstown Properties Limited, a company owned by Simon Conway,
which leased the property to Wetherspoon.
As part of a series of cases, Wetherspoon also agreed
out-of-court settlements with:
1) Paul Ferrari of London estate agent Ferrari Dewe & Co, in
respect of properties referred to as the 'Ferrari Five' by Mr
Justice Peter Smith in the Van de Berg case, and
2) Property investor Jason Harris, formerly of First London and
now of First Urban Group who paid GBP400,000 to to Wetherspoon to
settle a claim in which it was alleged that Harris was an accessory
to frauds committed by Van de Berg. Harris contested the claim and
did not admit liability.
Messrs Ferrari and Harris both contested the claims and did not
admit liability.
Press corrections
The press and media, over the decades, have generally been fair
and accurate in reporting on Wetherspoon. However, in the febrile
atmosphere of the first lockdown, something went awry and a number
of harmful inaccuracies were published.
In order to try to set the record straight, a special edition of
Wetherspoon News was published, which includes details of the
resulting apologies and corrections. It can be found on the
company's website
https://www.jdwetherspoon.com//media/files/pdf-documents/wetherspoon-news/does-truth-matter_.pdf
.
Board changes
Su Cacioppo retired from the Wetherspoon board on the 7th
October 2022, after 31 years with the company. Su started as a pub
manager in 1991, then became an area manager, before eventually
becoming the board director responsible for the personnel, legal
and marketing departments in 2008.
Sir Richard Beckett KC also retired from the board at last
year's AGM, after 13 years as a non-executive director of the
company, latterly as head of the nominations committee.
I would like to thank sincerely Su and Richard for their
dedicated, creative and conscientious work over many years.
Pubwatch
Pubwatch is a forum which has improved wider town and city
environments, by bringing together pubs, local authorities and the
police, in a concerted way, to encourage good behaviour and to
reduce antisocial activity.
Wetherspoon pubs are members of 538 schemes country wide.
The company also helps to fund National Pubwatch, founded in
1997 by just two licensees and a police office. This is the
umbrella organisation which helps to set up, co-ordinate and
support local schemes.
It is our experience that in some towns and cities, where the
authorities have struggled to control antisocial behaviour, the
setting up of a Pubwatch has been instrumental in improving safety
and security - of not only licensed premises, but also the town and
city in general, as well as assisting the police in bringing down
crime.
Conversely, we have found, in several towns, including some
towns on the outskirts of London, that the absence of an effective
Pubwatch scheme results in higher incidents of crime, disorder and
antisocial behaviour.
In our view, Pubwatch is integral to making towns and cities a
safe environment for everyone.
Current trading and outlook
Wetherspoon continues to perform well. In the first 9 weeks of
the current financial year, to 1 October 2023, like-for-like sales
increased by 9.9%, compared to the 9 weeks to 2 October 2022.
As we said last year, perhaps the biggest threat to the
hospitality industry is the possibility of further lockdowns and
restrictions.
Those interested in the UK Government's response to the pandemic
may like to read the reports by Professor Francois Balloux,
director of the UCL Genetics Institute, in The Guardian, and by
Professor Robert Dingwall, of Trent University, in the
Telegraph
(see pages 54-56 of Wetherspoon News
https://www.jdwetherspoon.com//media/files/pdf-documents/wetherspoon-news/wetherspoon-news-autumn-2022.pdf
)
The conclusion of Professor Balloux, broadly echoed by Professor
Dingwall, based on an analysis by the World Health Organisation of
the pandemic, is that Sweden (which did not lock down), had a
Covid-19 fatality rate "of about half the UK's" and that "the worst
performer, by some margin, is Peru, despite enforcing the harshest,
longest lockdown."
Professor Balloux concludes that "the strength of mitigation
measures does not seem to be a particularly strong indicator of
excess deaths."
Indeed, as some commentators have noted, lockdowns were not
contemplated in the UK's laboriously compiled prepandemic plans. It
appears that these plans were jettisoned, early on in the pandemic,
in favour of copying China's lockdown approach - an example,
perhaps, of Warren Buffett's so-called "institutional imperative" -
"everyone else has locked down, so we will, too".
The company currently anticipates a reasonable outcome for the
financial year, subject to our future sales performance.
INCOME STATEMENT for the 52 weeks ended 30 July 2023
J D Wetherspoon plc, company
number: 1709784
Notes 52 weeks 52 52 weeks 53 weeks 53 weeks 53 weeks
weeks
ended ended ended ended ended ended
30 July 30 30 July 31 July 31 July 31 July
July
2023 2023 2023 2022 2022 2022
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items items items items
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------ ---------------------------- ----------- --------------------- ------------ ----------- ------------
Revenue 1 1,925,044 - 1,925,044 1,740,477 - 1,740,477
Other operating
(costs)/income - (1,022) (1,022) - 29,384 29,384
Operating costs (1,817,982) - (1,817,982) (1,714,757) - (1,714,757)
------------ ----------- ------------
Operating
profit/(loss) 107,062 (1,022) 106,040 25,720 29,384 55,104
Property
gains/(losses) 3 2,231 (47,712) (45,481) 2,142 (24,526) (22,384)
Finance income 6 1,351 97,724 99,075 531 52,859 53,390
Finance costs 6 (68,085) (1,038) (69,123) (58,841) (1,000) (59,841)
------------ ----------- ------------
Profit/(loss)
before
tax 42,559 47,952 90,511 (30,448) 56,717 26,269
Income tax
(charge)/credit 7 (8,734) (22,190) (30,924) 5,560 (12,562) (7,002)
------------ ----------- ------------
Profit/(loss)
for
the period 33,825 25,762 59,587 (24,888) 44,155 19,267
----------------- ------ ---------------------------- ----------- --------------------- ------------ ----------- ------------
Profit/(loss)
per
ordinary share
(p)
- Basic 8 27.0 20.5 47.5 (19.6) 34.8 15.2
- Diluted(1) 8 26.4 20.1 46.5 (19.6) 34.6 15.0
----------------- ------ ---------------------------- ----------- --------------------- ------------ ----------- ------------
(1) Restated, see note 8.
STATEMENT OF COMPREHENSIVE INCOME for the 52 weeks ended 30 July
2023
52 weeks 53 weeks
ended ended
30 July 31 July
Notes 2023 2022
GBP000 GBP000
---------------------------------------------------- ------ --------- ---------
Items which will be reclassified subsequently
to profit or loss:
Interest-rate swaps: gain taken to other
comprehensive income 37,529 48,452
Interest-rate swaps: loss reclassification
to the income statement (13,310) (4,332)
Tax on items taken directly to other comprehensive
income 7 (6,055) (11,051)
Currency translation differences 1,633 (1,474)
---------------------------------------------------- ------ --------- ---------
Net gain recognised directly in other
comprehensive income 19,797 31,595
Profit for the period 59,587 19,267
---------------------------------------------------- ------ --------- ---------
Total comprehensive profit for the period 79,384 50,862
---------------------------------------------------- ------ --------- ---------
CASH FLOW STATEMENT for the 52 weeks ended 30 July 2023
J D Wetherspoon plc, company
number: 1709784
Notes free free
cash cash
flow(1) flow
52 weeks 52 weeks 53 weeks 53 weeks
ended ended ended ended
30 July 30 July 31 July 31 July
2023 2023 2022 2022
GBP000 GBP000 GBP000 GBP000
-------------------------------- ------ ---------- --------- ---------- ---------
Cash flows from operating
activities
Cash generated from operations 9 270,686 270,686 178,510 178,510
Interest received 6 1,011 1,011 97 97
Interest paid 6 (50,545) (50,545) (41,044) (41,044)
Cash proceeds on termination
of interest-rate swaps 169,413 169,413 - -
Corporation tax paid (12,200) (12,200) (715) (715)
Lease interest (15,954) (15,954) (17,501) (17,501)
---------- ---------
Net cash flow from operating
activities 362,411 362,411 119,347 119,347
-------------------------------- ------ ---------- --------- ---------- ---------
Cash flows from investing
activities
Reinvestment in pubs (41,646) (41,646) (42,777) (42,777)
Reinvestment in business
and IT projects (5,315) (5,315) (3,113) (3,113)
Investment in new pubs
and pub extensions (20,361) - (51,083) -
Freehold reversions and investment
properties (11,202) - (25,773) -
Proceeds of sale of property,
plant and equipment 11,349 - 10,547 -
---------- ---------
Net cash flow from investing
activities (67,175) (46,961) (112,199) (45,890)
-------------------------------- ------ ---------- --------- ---------- ---------
Cash flows from financing
activities
Purchase of own shares for
share-based payments (12,332) (12,332) (12,808) (12,808)
Loan issue cost - - (192) (192)
Advances/(repayments)
under bank loans (200,033) - 50,000 -
Other loan receivables 889 - (3,542) -
Lease principal payments (32,023) (32,023) (38,535) (38,535)
Asset-financing principal
payments (4,911) - (7,132) -
-------------------------------- ------ ---------- --------- ---------- ---------
Net cash flow from financing
activities (248,410) (44,355) (12,209) (51,535)
-------------------------------- ------ ---------- --------- ---------- ---------
Net change in cash and
cash equivalents 46,826 (5,061)
-------------------------------- ------ ---------- --------- ---------- ---------
Opening cash and cash
equivalents 40,347 45,408
Closing cash and cash
equivalents 87,173 40,347
-------------------------------- ------ ---------
Free cash flow(1) 271,095 21,922
-------------------------------- ------ ---------- --------- ---------- ---------
1 Free cash flow is a measure not required by accounting
standards; a definition is provided in the accounting policies
BALANCE SHEET as at 30 July 2023
J D Wetherspoon plc, company number: Notes 30 July 31 July
1709784
2023 2022
GBP000 GBP000
-------------------------------------- ------ ------------ ------------
Assets
Non-current assets
Property, plant and equipment 13 1,377,816 1,426,862
Intangible assets 12 6,505 5,409
Investment property 14 18,740 23,364
Right-of-use assets 387,353 419,416
Other loan receivable 1,986 2,739
Derivative financial instruments 11,944 61,367
Lease assets 8,450 9,264
-------------------------------------- ------ ------------
Total non-current assets 1,812,794 1,948,421
-------------------------------------- ------ ------------ ------------
Current assets
Lease assets 1,361 2,001
Assets held for sale 400 800
Inventories 34,558 26,402
Receivables 27,267 29,400
Current income tax receivables 8,351 2,000
Cash and cash equivalents 87,173 40,347
Total current assets 159,110 100,950
Total assets 1,971,904 2,049,371
-------------------------------------- ------ ------------ ------------
Current liabilities
Borrowings (4,200) (5,137)
Derivative financial instruments (78) -
Trade and other payables (329,098) (282,481)
Provisions (2,395) (2,661)
Lease liabilities (51,486) (48,471)
Total current liabilities (387,257) (338,750)
-------------------------------------- ------ ------------ ------------
Non-current liabilities
Borrowings (727,643) (930,404)
Derivative financial instruments - (2,031)
Deferred tax liabilities (65,752) (34,718)
Lease liabilities (391,794) (421,583)
Total non-current liabilities (1,185,189) (1,388,736)
-------------------------------------- ------ ------------ ------------
Total liabilities (1,572,446) (1,727,486)
-------------------------------------- ------ ------------
Net assets 399,458 321,885
-------------------------------------- ------ ------------ ------------
Shareholders' equity
Share capital 2,575 2,575
Share premium account 143,170 143,294
Capital redemption reserve 2,337 2,337
Other reserves 234,579 234,579
Hedging reserve 31,781 13,617
Currency translation reserve 2,148 (144)
Retained earnings (17,132) (74,373)
-------------------------------------- ------ ------------ ------------
Total shareholders' equity 399,458 321,885
-------------------------------------- ------ ------------ ------------
STATEMENT OF CHANGES IN EQUITY
Notes Share Share Capital Other Currency Total
premium
capital account redemption reserves Hedging translation Retained
reserve reserve reserve earnings
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ------ -------- --------- ----------- --------- --------- ------------ --------- ---------
As at 25 July
2021 2,575 143,294 2,337 234,579 (19,452) 1,851 (87,207) 277,977
Total
comprehensive
income - - - - 33,069 (1,995) 19,788 50,862
Loss for the
period - - - - - - 19,267 19,267
Interest-rate
swaps:
cash flow hedges - - - - 48,452 - - 48,452
Interest-rate
swaps:
amount
reclassified
to the income
statement - - - - (4,332) - - (4,332)
Tax on items
taken
directly to
comprehensive
income 7 - - - - (11,051) - - (11,051)
Currency
translation
differences - - - - - (1,995) 521 (1,474)
------------------ ------ -------- --------- ----------- --------- --------- ------------ --------- ---------
Share-based
payment
charges - - - - - - 5,874 5,874
Tax on
share-based
payment - - - - - - (20) (20)
Purchase of own
shares
for share-based
payments - - - - - - (12,808) (12,808)
------------------ ------ -------- --------- ----------- --------- --------- ------------ --------- ---------
At 31 July 2022 2,575 143,294 2,337 234,579 13,617 (144) (74,373) 321,885
Total
comprehensive
income - - - - 18,164 2,292 58,928 79,384
Profit for the
period - - - - - 59,587 59,587
Interest-rate
swaps:
cash flow hedges - - - - 37,529 - - 37,529
Interest-rate
swaps:
amount
reclassified
to the income
statement - - - - (13,310) - - (13,310)
Tax on items
taken
directly to
comprehensive
income 7 - - - - (6,055) - - (6,055)
Currency
translation
differences - - - - - 2,292 (659) 1,633
------------------ ------ -------- --------- ----------- --------- --------- ------------ --------- ---------
Share capital
expenses - (124) - - - - - (124)
Share-based
payment
charges - - - - - - 10,545 10,545
Tax on
share-based
payment - - - - - - 100 100
Purchase of own
shares
for share-based
payments - - - - - - (12,332) (12,332)
At 30 July 2023 2,575 143,170 2,337 234,579 31,781 2,148 (17,132) 399,458
------------------ ------ -------- --------- ----------- --------- --------- ------------ --------- ---------
The share premium account represents those proceeds received in
excess of the nominal value of new shares issued. GBP124,000 has
been recognised during the year (2022: nil) in relation to the
issue of shares in previous periods.
The capital redemption reserve represents the nominal amount of
share capital repurchased and cancelled in previous periods.
Other reserves contain net proceeds received for share
placements which took place in previous periods. The other reserve
as used as this is determined to be distributable for the purposes
of the Companies Act 2006.
See note 22 for details on the hedging reserve within the
accounts.
The currency translation reserve contains the accumulated
currency gains and losses on the long-term financing and balance
sheet translation of the overseas branch. The currency translation
difference reported in retained earnings is the retranslation of
the opening reserves in the overseas branch at the current period
end's currency exchange rate.
As at 30 July 2023, the company had distributable reserves of
GBP251.4 million (2022: GBP173.7 million).
NOTES TO THE FINANCIAL STATEMENTS
1. Revenue
52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
--------------------- ---------- ----------
Bar 1,093,368 1,024,677
Food 742,067 639,683
Slot/fruit machines 62,579 51,639
Hotel 24,939 22,848
Other 2,091 1,630
--------------------- ----------
1,925,044 1,740,477
--------------------- ---------- ----------
2. Operating profit/(loss) - analysis of costs by nature
This is stated after charging/(crediting): 52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
----------------------------------------------- --------- ---------
Variable concession rental payments 16,980 8,799
Short-term leases 504 10
Cancelled principal payments - (4,726)
Repairs and maintenance 94,011 101,520
Net rent receivable (2,506) (2,001)
Share-based payments (note 5) 10,546 5,874
Depreciation of property, plant and equipment
(note 13) 70,173 71,227
Amortisation of intangible assets (note 12) 1,827 3,240
Depreciation of investment properties (note
14) 185 87
Amortisation of right-of-use assets 37,556 42,291
----------------------------------------------- --------- ---------
Analysis of continuing operations 52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
---------------------------------------------------- ------------ ------------
Revenue 1,925,044 1,740,477
Cost of sales(1) (1,765,970) (1,640,202)
---------------------------------------------------- ------------ ------------
Gross profit 159,074 100,275
Administration costs (53,034) (45,171)
---------------------------------------------------- ------------
Operating profit/(loss) after separately disclosed
items 106,040 55,104
---------------------------------------------------- ------------ ------------
(1) Included in cost of sales is GBP654.3 million (2022:
GBP599.8 million) relating to cost of inventory recognised as
expense.
Auditor's remuneration 52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
----------------------------------------------------- --------- ---------
Fees payable for the audit of the financial
statements
- Audit fees 560 415
- Additional audit work (for previous year audit) 50 85
Fees payable for other services
- Audit related services (interim audit procedures) 82 55
---------
Total auditor's fee 692 555
----------------------------------------------------- --------- ---------
3. Property losses and gains
52 weeks 52 weeks 52 weeks 53 weeks 53 weeks 53 weeks
ended ended ended ended ended ended
30 July 30 July 30 July 31 July 31 July 31 July
2023 2023 2023 2022 2022 2022
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note items items (note items
4) 4)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Disposals
Fixed assets - 8,136 8,136 3,492 (16) 3,476
Leases - (1,404) (1,404) (7,368) - (7,368)
Additional costs
of disposal 42 2,693 2,735 1,857 112 1,969
------------------------------- ----------- ----------- ----------- -----------
42 9,425 9,467 (2,019) 96 (1,923)
Impairments
Property, plant and
equipment (note 13) - 35,966 35,966 - 22,871 22,871
Reversal of property,
plant and equipment
(note 13) - (5,430) (5,430) - (3,420) (3,420)
Investment properties
(note 14) - 4,448 4,448 - 1,015 1,015
Intangible assets
Impairment reversal - (74) (74) - - -
Right-of-use assets - 3,377 3,377 - 3,964 3,964
------------------------------- ----------- ----------- -----------
- 38,287 38,287 - 24,430 24,430
Other
Other property gains (1,409) - (1,409) (123) - (123)
Leases (864) - (864) - - -
------------------------------- ----------- ----------- ----------- -----------
(2,273) - (2,273) (123) - (123)
Total property losses/(gains) (2,231) 47,712 45,481 (2,142) 24,526 22,384
------------------------------- ----------- ----------- ----------- -----------
4. Separately disclosed items
52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
--------------------------------------------- --------- ---------
Operating items
Rank settlement - (27,771)
Local government support grants (54) (1,443)
Duty drawback - (170)
Operating income (54) (29,384)
---------------------------------------------- --------- ---------
Other 1,076 -
Operating costs 1,076 -
--------------------------------------------- --------- ---------
Total operating (profit)/loss 1,022 (29,384)
---------------------------------------------- --------- ---------
Property losses
Loss on disposal of pubs 9,425 96
---------------------------------------------- --------- ---------
9,425 96
--------------------------------------------- --------- ---------
Other property losses
Impairment of assets under construction - 2,215
Impairment of intangible assets (74) -
Impairment of property, plant and equipment 35,966 19,904
Reversal of property, plant and equipment
impairment (5,430) (2,668)
Impairment of investment properties 4,448 1,015
Impairment of right of use assets 3,377 3,964
38,287 24,430
Total property losses 47,712 24,526
---------------------------------------------- --------- ---------
Other items
Finance costs 1,038 1,000
Finance income (97,724) (52,859)
(96,686) (51,859)
Taxation
Other tax Items - (2,102)
Tax effect on separately disclosed items 22,190 14,664
----------------------------------------------
22,190 12,562
Total separately disclosed items (25,762) (44,155)
---------------------------------------------- --------- ---------
Rank settlement
In the previous year, the company recognised GBP27,771,000 from
HMRC in relation to a long-standing claim, regarding the historic
VAT treatment of slot/fruit machines.
Local government support grants
The company has recognised GBP54,000 (2022: GBP1,443,000) of
local government support grants in the UK and the Republic of
Ireland, associated with the COVID-19 pandemic.
Duty drawback
In the previous year, a credit of GBP170,000 was recognised for
duty drawback was received for perished stock during the period in
relation to the COVID-19 lockdown in the UK.
Other operating costs
As outlined in note 29 of the accounts, the company is in an
ongoing contractual dispute with a large supplier. Costs of
GBP1,076,000 have been recognised in relation to this dispute.
4. Separately disclosed items (continued)
Property losses
In the table on the previous page, those costs classified under
the 'separately disclosed property losses' relate to the loss on
disposal of sites sold during the year.
Other property losses
Property impairment relates to pubs which are deemed unlikely to
generate sufficient cash flows in the future to support their
carrying value. In the year, a total impairment charge of
GBP35,966,345 (2022: GBP19,904,000) was incurred in respect of the
of property, plant and equipment and GBP3,377,000 (2022:
GBP3,964,000) was incurred in respect of right of use assets, as
required under IAS 36. There were impairment reversals of
GBP5,430,153 recognised in the year (2022: GBP2,668,000).
In the year, a total impairment charge of GBP4,448,441 (2022:
GBP1,015,000) was incurred in respect of the impairment of our
investment properties.
There was no impairment charge relating to assets under
construction (2022: GBP2,215,000).
Separately disclosed finance costs
The separately disclosed finance costs of GBP1,038,000 relate to
covenant-waiver fees (2022: GBP1,000,000).
Separately disclosed finance income
The company has separately disclosed finance income of
GBP97,724,000 (2022: GBP52,859,000). GBP71,124,000 (2022:
GBP48,527,000) relates to the fair value on interest-rate swaps
recognised in the P&L, GBP13,290,000 (2022: GBP8,143,000)
relates to hedge ineffectiveness at termination, based on highly
probable cash flows and GBP13,310,000 (2022: GBP3,802,000) relates
to the amortisation of the hedge reserve to the P&L relating to
discontinued hedges. See note 22 in the accounts.
Taxation
The tax effect on separately disclosed items is a charge of
GBP22,190,000 (2022: GBP14,664,000) and relates primarily to;
derivative contracts (GBP16,345,000 charge) (2022:
GBP10,009,000).
5. Employee benefits expenses
52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
------------------------------------------------- --------- ---------
Wages and salaries 668,397 639,366
Employee support grants (768) (4,473)
Social security costs 41,262 41,637
Other pension costs 10,675 9,657
Share-based payments 10,545 5,874
730,111 692,061
------------------------------------------------- --------- ---------
Directors' emoluments 2023 2022
GBP000 GBP000
------------------------------------------------- --------- ---------
Aggregate emoluments 1,788 1,984
Aggregate amount receivable under long-term
incentive schemes 455 527
Company contributions to money purchase pension
scheme 173 195
2,416 2,706
------------------------------------------------- --------- ---------
Employee support grants disclosed above are amounts claimed by
the company under the coronavirus job retention schemes in the UK
and the Republic of Ireland.
For further details of directors' emoluments including the
highest paid director and details on the number of directors'
accruing a pension, please see the directors' remuneration report
on pages 67-75 of the annual report.
5. Employee benefits expenses (continued)
2023 2022
Number Number
----------------------- ------- -------
Full-time equivalents
Head office 362 332
Pub managerial 4,549 4,648
Pub hourly paid staff 19,539 19,791
-----------------------
24,450 24,771
----------------------- ------- -------
2023 2022
Number Number
----------------------- ------- -------
Total employees
Head office 379 342
Pub managerial 4,678 4,757
Pub hourly paid staff 37,151 37,028
-----------------------
42,208 42,127
----------------------- ------- -------
The totals above relate to the monthly average number of
employees during the year, not the total of employees at the end of
the year.
Share - based payments 52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
----------------------------------------------- ---------- ----------
Shares awarded during the year (shares) 3,627,591 2,048,275
Average price of shares awarded (pence) 534 909
Market value of shares vested during the year
(GBP000) 1,464 7,122
Share awards not yet vested (GBP000) 16,632 11,275
----------------------------------------------- ---------- ----------
For details of the share incentive plan and the deferred bonus
scheme, refer to the directors' remuneration report on pages 67-75
of the annual report.
The shares awarded as part of the above schemes are based on the
cash value of the bonuses at the date of the awards. These awards
vest over three years, with their cost spread over their three-year
life. The share-based payment charge above represents the annual
cost of bonuses awarded over the past three years. All awards are
settled in equity.
The company operates two share-based compensation plans. In both
schemes, the fair values of the shares granted are determined by
reference to the share price at the date of the award. The shares
vest at a GBPNil exercise price - and there are no market-based
conditions to the shares which affect their ability to vest.
6. Finance income and costs
52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
----------------------------------------------- --------- ---------
Finance costs
Interest payable on bank loans and overdrafts 43,469 22,869
Amortisation of bank loan issue costs (note
10) 1,246 1,983
Interest payable on swaps 1,894 9,220
Interest payable on asset-financing 205 448
Interest payable on private placement 4,977 6,238
Finance costs excluding lease interest 51,791 40,758
Interest payable on leases 16,294 18,083
Total finance costs 68,085 58,841
Bank interest receivable (1,011) (103)
Lease interest receivable (340) (428)
Total finance income (1,351) (531)
Net finance costs before separately disclosed
items 66,734 58,310
----------------------------------------------- --------- ---------
Separately disclosed finance costs (note 4) 1,038 1,000
Separately disclosed finance income (note
4) (97,724) (52,859)
(96,686) (51,859)
Net finance (income)/costs after separately
disclosed items (29,952) 6,451
----------------------------------------------- --------- ---------
7. Income tax expense
(a) Tax on profit/(loss) on ordinary activities
The standard rate of corporation tax in the UK is 25.0%, having
increased from 19% on 1 April 2023. The company's profits for the
accounting period are taxed at a rate of 21.0% (2022: 19.0%) being
the blended tax rate applicable in the period.
52 weeks 52 weeks 52 weeks 53 weeks 53 weeks 53 weeks
ended ended ended ended ended ended
30 July 30 July 30 July 31 July 31 July 31 July
2023 2023 2023 2022 2022 2022
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note items items (note items
4) 4)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Taken through income statement
Current income tax:
Current income tax charge - 5,552 5,552 22 - 22
Previous period adjustment - 293 293 - 2 2
-------------------------------- ----------- ----------- -----------
Total current income tax - 5,845 5,845 22 2 24
Deferred tax:
Origination and reversal
of temporary differences 13,602 16,345 29,947 (4,529) 14,662 10,133
Prior year deferred tax
credit (4,868) - (4,868) (1,053) - (1,053)
Impact of change in UK
tax rate - - - - (2,102) (2,102)
----------- ----------- -----------
Total deferred tax 8,734 16,345 25,079 (5,582) 12,560 6,978
Tax charge/(credit) 8,734 22,190 30,924 (5,560) 12,562 7,002
-------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
52 weeks 52 weeks 52 weeks 53 weeks 53 weeks 53 weeks
ended ended ended ended ended ended
30 July 30 July 30 July 31 July 31 July 31 July
2023 2023 2023 2022 2022 2022
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note items items (note items
4) 4)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Taken through equity
Current tax - - - (2) - (2)
Deferred tax (100) - (100) 22 - 22
-------------------------------- -----------
Tax (credit)/charge (100) - (100) 20 - 20
-------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
52 weeks 52 weeks 52 weeks 53 weeks 53 weeks 53 weeks
ended ended ended ended ended ended
30 July 30 July 30 July 31 July 31 July 31 July
2023 2023 2023 2022 2022 2022
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note items items (note items
4) 4)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Taken through comprehensive
income
Deferred tax charge on
swaps - 6,055 6,055 8,404 - 8,404
Impact of change in UK
tax rate - - - 2,647 - 2,647
-----------
Tax charge - 6,055 6,055 11,051 - 11,051
-------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
7. Income tax expense (continued)
(b) Reconciliation of the total tax charge
The taxation charge for the 52 weeks ended 30 July 2023 is based
on the pre-separately disclosed profit before tax of GBP42.6
million and the estimated effective tax rate before separately
disclosed items for the 52 weeks ended 30 July 2023 of 20.5% (July
2022: 18.3%). This comprises a pre- separately disclosed current
tax rate of 0% (July 2022: 0.1%) and a pre- separately disclosed
deferred tax charge of 20.5% (July 2022: 18.3% charge).
The UK standard weighted average tax rate for the period is 21%
(2022:19%). The current tax rate is lower than the UK standard
weighted average tax rate owing to tax losses brought forward and
previously disallowed interest being deductible in the period.
52 weeks 52 weeks 53 weeks 53 weeks
ended ended ended ended
30 July 30 July 31 July 31 July
2023 2023 2022 2022
Before After Before After
separately separately separately separately
disclosed disclosed disclosed disclosed
items items items items
GBP000 GBP000 GBP000 GBP000
--------------------------- ------------------------------ ----------------------------- ----------- -----------
Profit/(loss) before
income tax 42,559 90,511 (30,448) 26,269
Profit/(loss) multiplied
by the
UK standard rate of 8,937 19,008 (5,785) 4,991
corporation tax of 21.0%
(2022:
19.0%)
Abortive acquisition costs
and disposals 427 427 498 498
Expenditure not allowable 711 711 1,001 1,001
Fair value movement on
SWAP disregarded
for tax (2,599) 484 - 34
Other allowable deductions (13) (13) 168 (9)
Non-qualifying
depreciation and
loss on disposal 5,875 8,489 60 4,105
Capital gains - effect of
reliefs 1,175 1,175 396 380
Share options and SIPs 188 188 (669) (669)
Deferred tax on
balance-sheet-only
items (182) (182) (162) (162)
Effect of different tax
rates and
unrecognised losses in
overseas
companies 2,871 2,871 (14) (14)
Rate change adjustment (3,788) 2,341 - (2,102)
Previous year adjustment -
current
tax - 293 - 2
Previous year adjustment -
deferred
tax (4,868) (4,868) (1,053) (1,053)
--------------------------- ------------------------------ ----------------------------- ----------- -----------
Total tax expense/(income)
reported
in the income statement 8,734 30,924 (5,560) 7,002
--------------------------- ------------------------------ ----------------------------- ----------- -----------
7. Income tax expense (continued)
(c) Deferred tax
The deferred tax in the balance sheet is as follows:
The main rate of corporation tax increased to 25% on 1 April
2023. Deferred tax balances have been recognised at the rate they
are expected to reverse.
Other
Accelerated temporary Interest-rate
Deferred tax liabilities tax depreciation differences swap Total
GBP000 GBP000 GBP000 GBP000
---------------------------------------------- ------------------ ------------- -------------- ---------
At 31 July 2022 50,788 5,518 14,834 71,140
Previous year movement posted to
the income statement (3,392) 157 (1,629) (4,863)
Movement during year posted to the
income statement 2,652 1,162 7,772 11,586
Movement during year posted to comprehensive
income - - 6,055 6,055
---------------------------------------------- ------------------ ------------- -------------- ---------
At 30 July 2023 50,048 6,837 27,032 83,918
---------------------------------------------- ------------------ ------------- -------------- ---------
Tax losses
& interest
capacity
Share-based carried Interest-rate
Deferred tax assets payments forward swap Total
GBP000 GBP000 GBP000
---------------------------------------------- ------------------ ------------- -------------- -----------
At 31 July 2022 646 35,776 - 36,422
Previous year movement posted to
the income statement - 5 - 5
Movement during year posted to the
income statement 298 (18,659) (18,361)
Movement during year posted to equity 100 - - 100
---------------------------------------------- ------------------ ------------- -------------- -----------
At 30 July 2023 1,044 17,122 - 18,166
---------------------------------------------- ------------------ ------------- -------------- -----------
The company has recognised deferred tax assets of GBP18.2
million (2022: GBP36.4 million), which are expected to be offset
against future profits. This includes a deferred tax asset of
GBP17.1 million (2022: GBP35.8 million), in respect of UK tax
losses. Included within other temporary differences is GBP6.8
million (2022: GBP5.5 million) of chargeable gains rolled over on
the acquisition of new assets.
Deferred tax assets and liabilities have been offset as
follows:
2023 2022
GBP000 GBP000
----------------------------------------- --------- ---------
Deferred tax liabilities 83,918 71,140
Offset against deferred tax assets (18,166) (36,422)
-------------------------------------------- --------- ---------
Deferred tax liabilities 65,752 34,718
-------------------------------------------- --------- ---------
Deferred tax assets 18,166 36,422
( 18,166
Offset against deferred tax liabilities ) (36,422)
-------------------------------------------- --------- ---------
Deferred tax asset - -
-------------------------------------------- --------- ---------
As at 30 July 2023, the company had a potential deferred tax
asset of GBP9.7 million (2022: GBP10.9 million) relating to capital
losses (gross tax losses GBP34.5 million (2022: GBP35.0 million))
and tax losses in the Republic of Ireland (gross tax losses GBP24.2
million (2022: GBP18.4 million)). Both types of losses do not
expire and will be available to use in future periods indefinitely.
A deferred tax asset has not been recognised, as there is
insufficient certainty of recovery.
8. Earnings and free cash flow per share
Weighted average number of shares
Basic earnings/(loss) per share is calculated by dividing the
profit/(loss) after tax for the period by the weighted average
number of ordinary shares in issue during the financial year of
128,750,155 (2022: 128,750,155) less the weighted average number of
shares held in trust during the financial year of 3,296,278 (2022:
1,924,810). Shares held in trust are shares purchased by the
company to satisfy employee share schemes that have not yet
vested.
Diluted earnings/(loss) per share is calculated by dividing the
profit/(loss) after tax for the period by the weighted average
number of ordinary shares in issue during the financial year
adjusted for both shares held in trust and the effects of
potentially dilutive shares. For the company, the dilutive shares
are those that relate to employee share schemes that have not been
purchased in advance and have not yet vested. In the event of
making a loss during the year, the diluted loss per share is capped
at the basic earnings per share as the impact of dilution cannot
result in a reduction in the loss per share.
Weighted average number of shares 52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
----------------------------------- ------------ ------------
Shares in issue 128,750,155 128,750,155
Shares held in trust (3,296,278) (1,924,810)
Shares in issue - Basic 125,453,877 126,825,345
----------------------------------- ------------ ------------
Dilutive shares(1) 2,810,231 1,866,335
Shares in issue - Diluted(1) 128,264,108 128,691,680
----------------------------------- ------------ ------------
Earnings / (loss) per share
Diluted
52 weeks ended 30 July 2023 Profit/(loss) Basic EPS EPS
GBP000 pence pence
------------------------------------------- -------------- ---------- --------
Earnings (profit after tax) 59,587 47.5 46.5
Exclude effect of separately disclosed
items after tax (25,762) (20.5) (20.1)
------------------------------------------- -------------- --------
Earnings before separately disclosed
items 33,825 27.0 26.4
Exclude effect of property gains/(losses) (2,231) (1.8) (1.7)
Underlying earnings before separately
disclosed items 31,594 25.2 24.7
------------------------------------------- -------------- ---------- --------
Diluted
53 weeks ended 31 July 2022 Profit/(loss) Basic EPS EPS
GBP000 pence Pence
------------------------------------------- -------------- ---------- --------
Earnings (profit after tax) (1) 19,267 15.2 15.0
Exclude effect of separately disclosed
items after tax(1) (44,155) (34.8) (34.6)
------------------------------------------- -------------- --------
Earnings before separately disclosed
items (24,888) (19.6) (19.6)
Exclude effect of property gains/(losses) (2,142) (1.7) (1.7)
Underlying earnings before separately
disclosed items (27,030) (21.3) (21.3)
------------------------------------------- -------------- ---------- --------
(1) Impact of dilutive shares was omitted in error from FY22
earnings (profit after tax) per share.
9. Cash used/in generated from operations
52 weeks 53 weeks
ended ended
30 July 31 July
2023 2022
GBP000 GBP000
--------------------------------------------------- --------- ---------
Profit for the period 59,587 19,267
Adjusted for:
Tax (note 7) 30,924 7,002
Share-based charges (note 5) 10,545 5,874
Loss on disposal of property, plant and equipment
(note 3) 10,871 3,476
Disposal of capitalised leases (note 3) (2,273) (7,368)
Net impairment charge (note 3) 38,287 24,430
Interest receivable (note 6) (1,011) (103)
Interest payable (note 6) 50,234 41,395
Lease interest receivable (note 6) (340) (428)
Lease interest payable (note 6) 22,796 18,083
Separately disclosed Interest (note 6) (96,686) (51,859)
Amortisation of bank loan issue costs (note 6) 1,246 1,983
Depreciation of property, plant and equipment
(note 13) 70,173 71,227
Amortisation of intangible assets (note 12) 1,827 3,240
Depreciation on investment properties (note 14) 185 87
Aborted properties costs 1,719 2,947
Cancelled principal payments - (4,726)
Foreign exchange movements 1,633 (1,474)
Amortisation of right-of-use assets 37,556 42,291
--------------------------------------------------- --------- ---------
237,273 175,344
Change in inventories (8,157) 452
Change in receivables 2,133 (12,171)
Change in payables 39,437 14,885
Cash flow from operating activities 270,686 178,510
--------------------------------------------------- --------- ---------
10. Analysis of change in net debt
31 July Cash Other 30 July
2022 flows changes 2023
GBP000 GBP000 GBP000 GBP000
-------------------------------- ------------ ---------- --------- ------------
Borrowings
Cash and cash equivalents 40,347 46,826 - 87,173
Other loan receivable - due
before one year 803 - - 803
Asset-financing obligations
- due before one year (5,137) 889 48 (4,200)
--------------------------------- ------------ ---------- --------- ------------
Current net borrowings 36,013 47,715 48 83,776
Bank loans - due after one
year (828,616) 200,033 (1,201) (629,784)
Asset-financing obligations
- due after one year (3,974) 4,019 (45) -
Other loan receivable - due
after one year 2,739 (753) - 1,986
Private placement - due after
one year (97,814) - (46) (97,860)
--------------------------------- ------------ ---------- --------- ------------
Non-current net borrowings (927,665) 203,299 (1,292) (725,658)
Net debt (891,652) 251,014 (1,244) (641,882)
--------------------------------- ------------ ---------- --------- ------------
Derivatives
Interest-rate swaps asset -
due after one year 61,367 (169,413) 119,990 11,944
Interest rate swaps liability
- due before one year - - (78) (78)
Interest-rate swaps liability
- due after one year (2,031) - 2,031 -
------------
Total derivatives 59,336 (169,413) 121,943 11,866
--------------------------------- ------------ ---------- --------- ------------
Net debt after derivatives (832,316) 81,601 120,699 (630,016)
--------------------------------- ------------ ---------- --------- ------------
Leases
Lease assets - due before one
year 2,001 (1,677) 1,037 1,361
Lease assets - due after one
year 9,264 - (813) 8,451
Lease obligations - due before
one year (48,471) 32,926 (35,941) (51,486)
Lease obligations - due after
one year (421,582) - 29,788 (391,794)
Net lease liabilities (458,788) 31,249 (5,929) (433,468)
--------------------------------- ------------ ---------- --------- ------------
Net debt after derivatives
and lease liabilities (1,291,104) 112,850 114,770 (1,063,484)
--------------------------------- ------------ ---------- --------- ------------
Lease obligations represent long-term payables, while lease
assets represent long-term receivables - both are, therefore,
disclosed in the table above.
The non-cash movement in bank loans and the private placement
relate to the amortisation of loan issue costs. The amortisation
charge for the year of GBP1,246,000 (2022: GBP1,983,000) is
disclosed in note 6. These are arrangement fees paid in respect of
new borrowings and are charged to the income statement over the
expected life of the loans.
The movement in interest-rate swaps relates to the change in the
'mark to market' valuations for the year for swaps subject to hedge
accounting.
Non-cash movement in net lease liabilities 30 July
2023
GBP000
--------------------------------------------------------- ---------
Recognition of new leases (note 23) (16,820)
Remeasurements of existing leases liabilities (note 23) 2,450
Remeasurements of existing leases assets (note 23) 223
Disposal of lease (note 23) 2,969
Lease transfers to property, plant and equipment 5,333
Cancelled principal payments (note 23) -
Exchange differences (note 23) (84)
Non-cash movement in net lease liabilities (5,929)
--------------------------------------------------------- ---------
11. Dividends paid and proposed
No final dividend has been proposed for approval at the annual
general meeting for the 52 weeks ended 30 July 2023 (2022: Nil).
The board will continue to review the dividend policy.
12. Intangible assets
Computer Assets
software under
and
development construction Total
GBP000 GBP000 GBP000
----------------- ------------ ------------- -------
Cost:
At 25 July 2021 32,747 4 32,751
Additions 2,875 429 3,304
Disposals (20) - (20)
At 31 July 2022 35,602 433 36,035
------------------ ------------ ------------- -------
Additions 1,169 1,689 2,858
Disposals - (9) (9)
At 30 July 2023 36,771 2,113 38,884
------------------ ------------ ------------- -------
Accumulated depreciation:
At 25 July 2021 (27,393) - (27,393)
Provided during the period (3,240) - (3,240)
Disposals 7 - 7
--------------------------------
At 31 July 2022 (30,626) - (30,626)
----------------------------- --------- ------ ---------
Provided during the period (1,827) - (1,827)
Reversal of impairment
losses 74 - 74
At 30 July 2023 (32,379) - (32,379)
----------------------------- --------- ------ ---------
Net book amount at 30
July 2023 4,392 2,113 6,505
------------------------------ --------- ------ ---------
Net book amount at 31
July 2022 4,976 433 5,409
----------------------------- --------- ------ ---------
Net book amount at 25
July 2021 5,354 4 5,358
----------------------------- --------- ------ ---------
The majority of intangible assets relate to computer software
and software development. Examples include the development costs of
the Wetherspoon customer-facing app and other bespoke J D
Wetherspoon applications.
13. Property, plant and equipment
Freehold
and long Short Equipment Assets
leasehold leasehold fixtures under
property property and fittings construction Total
---------------------------- ----------- ----------- -------------- -------------- ----------
Cost
---------------------------- ----------- ----------- -------------- -------------- ----------
At 25 July 2021 1,428,542 286,934 700,311 63,868 2,479,655
Additions 37,019 8,407 33,146 33,700 112,272
Transfers to investment
property - - - (2,170) (2,170)
Transfers 15,948 1,185 2,572 (19,705) -
Exchange differences (1,257) (53) (201) (242) (1,753)
Transfer to held for
sale (1,739) - - - (1,739)
Disposals (13,614) (3,708) (4,713) - (22,035)
Reclassifications 12,435 (12,435) - - -
At 31 July 2022 1,477,334 280,330 731,115 75,451 2,564,230
---------------------------- ----------- ----------- -------------- -------------- ----------
Additions 19,315 5,983 32,148 10,323 67,769
Transfers 6,551 1,967 7,900 (16,418) -
Transfers from capitalised
leases (464) - - - (464)
Exchange differences 1,289 57 214 253 1,813
Transfer to held for
sale (527) - (419) - (946)
Disposals (16,448) (8,750) (7,574) (4,719) (37,491)
Reclassifications 7,003 (7,003) - - -
At 30 July 2023 1,494,053 272,584 763,384 64,890 2,594,911
---------------------------- ----------- ----------- -------------- -------------- ----------
Accumulated depreciation and impairment
At 25 July 2021 (332,433) (171,358) (552,038) 0 (1,055,829)
---------------------------- ---------- ---------- ---------- -------- ------------
Provided during the period (21,336) (9,704) (40,186) 0 (71,227)
Transfers from investment
property 0 0 0 0 0
Exchange differences 122 19 148 0 289
Impairment loss (18,617) 279 1,102 (2,215) (19,451)
Transfer to held for
sale 939 0 0 0 939
Disposals 3,752 2,288 1,871 0 7,911
Reclassification (6,960) 6,960 0 0 0
At 31 July 2022 (374,533) (171,516) (589,104) (2,215) (1,137,368)
---------------------------- ---------- ---------- ---------- -------- ------------
Provided during the period (21,958) (9,056) (39,159) 0 (70,173)
Transfers from investment
property 0 0 0 0 0
Exchange differences (35) (13) (184) 0 (232)
Impairment loss (30,478) (5,488) 0 0 (35,966)
Reversal of impairment
losses 700 3,440 1,290 0 5,430
Transfer to held for
sale 206 0 341 0 547
Disposals 5,514 7,534 6,005 1,614 20,667
Reclassifications (4,523) 4,523 0 0 0
At 30 July 2023 (425,107) (170,576) (620,811) (601) (1,217,095)
---------------------------- ---------- ---------- ---------- -------- ------------
Net book amount at 30
July 2023 1,068,946 102,008 142,573 64,289 1,377,816
---------------------------- ---------- ---------- ---------- -------- ------------
Net book amount at 31
July 2022 1,102,801 108,814 142,011 73,236 1,426,862
---------------------------- ---------- ---------- ---------- -------- ------------
Net book amount at 25
July 2021 1,096,109 115,576 148,273 63,868 1,423,826
---------------------------- ---------- ---------- ---------- -------- ------------
During the period, an amount of GBP41,646,000 (2022:
GBP42,777,000) was spent on the reinvestment of existing pubs.
GBP11,202,000 (2022: GBP25,773,000) was spent on freehold
reversions. GBP20,361,000 (2022: GBP58,789,000) was spent on
investment in new pubs and pub extensions. This led to a total
capital expenditure of GBP73,209,000 (2022: GBP127,339,000).
Reclassifications relate to assets transferred from short
leasehold property to freehold and long leasehold property upon a
freehold reversion.
14. Investment property
The company owns six (2022: six) freehold properties with
existing tenants - and these assets have been classified
as investment properties:
GBP000
------------------------------- -------
Cost:
At 25 July 2021 10,602
-------------------------------- -------
Transfer from property, plant
and equipment 2,170
Additions 11,763
At 31 July 2022 24,535
-------------------------------- -------
Transfer from property, plant -
and equipment
Additions 9
At 30 July 2023 24,544
-------------------------------- -------
Accumulated depreciation
and impairment:
At 25 July 2021 (69)
----------------------------- --------
Provided during the period (87)
Impairment loss (1,015)
At 31 July 2022 (1,171)
----------------------------- --------
Provided during the period (185)
Impairment loss (4,448)
At 30 July 2023 (5,804)
Net book amount at 30
July 2023 18,740
Net book amount at 31
July 2022 23,364
Net book amount at 25
July 2021 10,533
Rental income received in the period from investment properties
was GBP1,197,000 (2022: GBP790,000).
At the year end, the investment properties were independently
valued at GBP18,740,000 giving rise to an impairment charge of
GBP4,448,000 (2022: GBP1,015,000) was incurred to adjust their net
book value.
15. Events after the balance sheet date
On 22 August 2023, the company disposed of all interest rate
swaps in place, receiving GBP14.8 million to do so. At the same
time, the company took out a new interest-rate swap of GBP200
million from 23 August 2023 through to 6 February 2025 at a rate of
5.665%. On 25 September 2023, the company took out a further
interest-rate swap of GBP400 million from 6 February 2025 to 6
February 2028 at a rate of 4.225%.
On 21 September 2023, the company announced that 11 of its pubs
will be put on the market as part of a one-off disposal programme.
Management has concluded this to be a non-adjusting event on the
basis that events and conditions arose after the end of the
financial period.
16. Contingent liability
The company is in an on-going contractual dispute with a large
supplier. The outcome of the dispute is yet to be determined and
will be resolved by a legal process. Disclosing any further
information at this stage about the ongoing contractual dispute,
its financial effect (if any) and uncertainties relating to the
amount or timing of any outflow might be prejudicial to the
company's position.
17. Going Concern
The directors have made enquiries into the adequacy of the
Company's financial resources, through a review of the Company's
budget and medium-term financial plan, including capital
expenditure plans and cash flow forecasts. In line with accounting
standards, the going concern assessment period is the 12-months
from the date of approval of these accounts (approximately the end
of quarter 1 of FY25). Given the proximity to the going concern
review period, the Company has also considered the February 2025
expiry of its current revolving credit facility in its
assessment.
The Company has modelled a 'base case' forecast in which recent
momentum of sales, profit and cash flow growth is sustained. The
Company has anticipated within this forecast continued high levels
of inflation, particularly on wages, utility costs and repairs. The
base case scenario indicates that the Company will have sufficient
resources to continue to settle its debts as they fall due and
operate within its leverage covenants for the going concern
assessment period.
A more cautious but plausible scenario has been analysed, in
which sales for FY24 are in line with FY23 (ie no sales growth).
The Company has reviewed, and is satisfied with, the mitigating
actions that it could take if such an outcome were to occur. Such
actions could include reducing discretionary capital expenditure,
reducing costs or implementing price increases. Under this
scenario, the Company would still have sufficient resources to
settle liabilities as they fall due and sensible headroom on its
covenants through the duration of the going concern review
period.
The Company has also performed a 'reverse stress case' which
shows that the Company could withstand a 12% reduction in sales
from those assessed in the 'base case' throughout the going concern
period, as well as costs assumed to increase at a similar level to
the downside scenario, before the covenant levels would be exceeded
towards the end of the period. The directors consider this scenario
to be remote as, other than when the business was closed during the
pandemic, it has never seen sales decline at anywhere close to that
rate. Furthermore, the Company could take additional mitigating
actions, in such a scenario, to prevent any covenant breach.
The directors have determined that, over the period of the going
concern assessment, there is not expected to be a significant
impact resulting from climate change.
Following the cessation of a period of lender-agreed relaxed
covenants to 30 July 2023, the Company has reverted to its original
covenant targets and the Company is confident that these targets
will be met in the going concern assessment period.
As set out in Note 20 of the accounts, the secured Revolving
Credit Facility totalling GBP875 million of which GBP630 million
was drawn at 30 July 2023, matures in February 2024 (GBP20m) and
February 2025 (GBP855m).
As the directors believe that the positive trading and cash flow
trends which have been experienced in the period to 30 July 2023
will continue, coupled with increasing certainty over cost
inflation, the Company has chosen not to formally commence any
refinancing exercise as at the date of these accounts.
Given the Company's strong financial position and current
trading performance, the directors are confident that the Company
will be able to refinance its debt facilities when it is required
to do so. The Company has had frequent conversations to date with
its longstanding lending syndicate and advisors.
These discussions have highlighted multiple refinancing options
and very good levels of support. These factors, combined with the
alternative liquidity options available to the Company, provide the
Directors with appropriate assurance that the prospect of not being
able to refinance is remote and as such no material uncertainty
exists.
After due consideration of the matters set out above, the
directors have satisfied themselves that the Company will continue
in operational existence for the foreseeable future. For this
reason, the Company continues to adopt the going-concern basis in
preparing its financial statements.
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END
FR FFFEFILLEIIV
(END) Dow Jones Newswires
October 06, 2023 02:00 ET (06:00 GMT)
Wetherspoon ( J.d.) (LSE:JDW)
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