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)

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