TIDMJDW
RNS Number : 0837Z
Wetherspoon (JD) PLC
10 March 2017
10 March 2017
J D WETHERSPOON PLC
PRELIMINARY RESULTS
(For the 26 weeks ended 22 January 2017)
FINANCIAL HIGHLIGHTS
Before exceptional items
Revenue GBP801.4m (2016: GBP790.3m) +1.4%
Like-for-like sales +3.3%
Profit before tax GBP51.4m (2016: GBP36.0m) +42.8%
Operating profit GBP65.1m (2016: GBP49.4m) +31.7%
Earnings per share (including shares held in +51.6%
trust) 33.8p (2016: 22.3p)
Free cash flow per share 44.2p (2016: -5.6%
46.8p)
Full year dividend 4.0p (2016: 4.0p) Maintained
After exceptional items*
Profit before tax GBP39.9m (2016: GBP36.6m) +9.0%
Operating profit GBP65.1m (2016: GBP49.4m) +31.7%
Earnings per share (including shares +5.0%
held in trust) 27.2p (2016: 25.9p)
*Exceptional items as disclosed in account note 7 to the Interim
Report 2017.
Commenting on the results, Tim Martin, the Chairman of J D
Wetherspoon plc, said:
"The biggest danger to the pub industry is the continuing tax
disparity between supermarkets and pubs, in respect of VAT and
business rates.
"As previously indicated, we understand the need for the
government to raise taxes. However, there should be a sensible
rebalancing of the taxes paid by pubs and supermarkets, if the pub
industry is to survive in the long term.
"Last Wednesday's budget was presented by the Chancellor as
providing tax relief of approximately GBP1,000 per pub, for pubs
with a rateable value of less than GBP100,000.
"In fact, that sum is dwarfed by tax and regulatory increases.
For example, costs to Wetherspoon will increase by approximately
the following amounts in the next year:
- business rates: GBP7m
- electricity taxes: GBP4m
- excise duty: GBP7m
- Apprenticeship Levy: GBP2m
"In addition, the proposed sugar tax will cost approximately
GBP4m from April 2018 and there will be further electricity tax
increases of around GBP5m by 2020.
"Companies like Wetherspoon, on examination of the fine print of
the budget, are not, in fact, eligible for the GBP1,000 per annum
decrease in business rates, in any event.
"The company has previously emphasised the far-higher taxes per
meal or per pint that pubs pay compared to supermarkets. For
example, supermarkets pay less than 2p per pint for business rates,
whereas pubs pay around 18p per pint.
"The increase in business rates per pint for pubs from next
month will be around 2p, further exacerbating the tax gap.
"Pubs also pay VAT of 20% in respect of food sales, but
supermarkets pay almost nothing, enabling supermarkets to subsidise
the price of alcoholic drinks. An article written for the trade
press on this subject can be found below.
"Wednesday's budget will weigh far more heavily on pubs than
supermarkets, especially since wage costs per pint or meal are
approximately 10 times higher in pubs.
"The Chancellor was less-than-frank in his budget speech*, since
he did not spell out the duty increases, giving the impression to
many that there would be no increase.
"In effect, this was a budget for dinner parties, no doubt the
preference of the Chancellor and
his predecessor - dinner parties will suffer far less from the
taxes outlined above, whereas many people prefer to go to pubs,
given the choice.
"In the six weeks to 5 March 2017, like-for-like sales increased
by 2.7% and total sales decreased by 0.2%.
"As previously announced, the company intends to increase the
level of capital investment in existing pubs from GBP34m in 2015/6
to around GBP60m in the current year.
"As outlined above, the company also anticipates significantly
higher costs in the second half of the financial year. In view of
these additional costs and our expectation that like-for-like sales
will be lower in the next six months, the company remains cautious
about the second half of the year. Nevertheless, as a result of
modestly better-than-expected year-to-date sales, we currently
anticipate a slightly improved trading outcome for the current
financial year, compared with our expectations at the last
update."
* The Chancellor said, "I can also confirm that I will make no
changes to previously planned upratings of duties on alcohol and
tobacco."
Enquiries:
John Hutson Chief Executive Officer 01923 477777
Ben Whitley Finance Director 01923 477777
Eddie Gershon Company spokesman 07956 392234
Photographs are available at: 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. 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 2016 has been
published on the Company's website on 9 September 2016.
5. The current financial year comprises 53 trading weeks to 30 July 2017.
6. The next trading update will be issued on 3 May 2017.
CHAIRMAN'S STATEMENT AND OPERATING REVIEW
In the 26 weeks ended 22 January 2017, like-for-like sales
increased by 3.3%, with total sales increasing by 1.4% to GBP801.4m
(2016: GBP790.3m).
Like-for-like bar sales increased by 2.4% (2016: 2.9%), food by
5.1% (2016: 2.9%) and fruit/slot machines decreased by 2.1% (2016:
decreased by 2.9%). Like-for-like room sales at our hotels
increased by 14.8% (2016: 7.5%). Bar sales were 61.4% of the total,
food was 34.8%, fruit machines were 2.6% and room sales were
1.0%.
Operating profit increased by 31.7% to GBP65.1m (2016:
GBP49.4m). The operating margin was 8.1% (2016: 6.3%). Profit
before tax and exceptional items increased by 42.8% to GBP51.4m
(2016: GBP36.0m). The improved performance in the period was due
mainly to lower utility and interest costs, relatively benign costs
in other areas and the sale of some lower-margin pubs. In addition,
the company saw little impact, in the period under review, from the
'living wage' legislation, having increased pay rates before the
government announced its plans in this area.
Earnings per share, including shares held in trust by the
employee share scheme, and before exceptional items, were 33.8p
(2016: 22.3p).
As illustrated in the table in the tax section below, the
company paid taxes of GBP331.6m in the period under review,
approximately 33% higher than five years ago (2012: GBP250.1m).
Net interest was covered 4.6 times by profit before interest,
tax and exceptional items (2016: 3.1 times). Total capital
investment was GBP96.0m in the period (2016: GBP75.6m). GBP49.6m
was spent on freehold reversions of properties where Wetherspoon
was the tenant (2016: GBP15.5m), GBP28.4m on existing pubs (2016:
GBP17.4m) and GBP18.0m on new pub openings and extensions (2016:
GBP42.7m).
Exceptional items totalled GBP7.3m (2016: GBP4.3m). Twenty-three
pubs were sold or closed in the period. There was a GBP6.6m (2016:
GBP0.1m) loss on disposal and an impairment charge of GBP5.2m
(2016: GBP0.1m) for closed pubs and pubs which are on the
market.
During the period, the company received GBP0.4m in compensation
in respect of a transfer of interest-rate swaps between two
financial institutions; this has been treated as an exceptional
item.
In addition, there were GBP4.1m (2016: GBP3.6m) of exceptional
tax credits, as a result of a reduction in the UK average
corporation tax rate, which has the effect of creating an
exceptional tax credit for future years. The total cash effect of
these exceptional items resulted in cash inflow of GBP8.9m (2016:
GBPNil).
Free cash flow, after capital investment of GBP28.4m in existing
pubs (2016: GBP17.4m) and payments of tax and interest, was
GBP49.2m (2016: GBP55.7m). Free cash flow per share decreased by
5.6% to 44.2p (2016: 46.8p). The decrease was due mainly to the
increased expenditure on existing pubs and the timing of payments
to suppliers.
Dividends
The board declared an interim dividend of 4.0p per share for the
current interim financial period ending 22 January 2017 (2016: 4.0p
per share). The interim dividend will be paid on 25 May 2017 to
those shareholders on the register at 28 April 2017.
Corporation tax
We expect the overall corporation tax charge for the financial
year, including current and deferred taxation, to be approximately
26.8% before exceptional items (24 July 2016: 29.4%).
As in previous years, the company's tax rate is higher than the
standard UK tax rate owing mainly to depreciation which is not
eligible for tax relief.
Financing
As at 22 January 2017, the company's net debt, including bank
borrowings and finance leases, but excluding derivatives, was
GBP696.0m, an increase of GBP45.2m, compared with that of the
previous year end (24 July 2016: GBP650.8m). The net-debt-to-EBITDA
ratio was 3.46 times at the period end (24 July 2016: 3.47).
Unutilised facilities were GBP144.3m at the period end (24 July
2016: GBP189.6 m).
In November 2016, the Company issued a summary of its current
views in respect of debt. The summary is as follows:
"The Company understands that debt always involves risk: the
greater the debt, the greater the risk. As a rapidly expanding
company, Wetherspoon has historically had higher debt levels than
the conservatively financed 'family brewers', the debts of which
have often been around 2 times EBITDA, but the levels have usually
been lower than the large pub 'PLCs', where they sometimes rose to
5 to 8 times EBITDA, in recent years, often with unfortunate
consequences.
"As well as expanding rapidly by opening new pubs, Wetherspoon
has bought back approximately half of its shares in this
millennium, at a cost of GBP400m and has spent approximately
GBP140m on freehold reversions: freeholds of properties where
Wetherspoon was the tenant. This level of expenditure and debt may
be justifiable in an era of (a) low interest rates, (b) reasonable
historic prices for shares and property and (c) an experienced
board which is sceptical of dangerous fashions in the financial
world. Even so, the Company's debt levels during this period, which
have benefited shareholders, have clearly involved significant
risk.
"As at 24 July 2016, the Company's net debt/EBITDA was 3.47
times. Over the past 15 financial year ends, this ratio has
been:
Financial Net Debt
Year End /
EBITDA
---------- --------
2002 2.85
2003 2.61
2004 2.78
2005 2.81
2006 2.80
2007 3.21
2008 3.24
2009 2.74
2010 2.70
2011 2.98
2012 2.96
2013 2.88
2014 3.21
2015 3.37
2016 3.47
"Weighing the level of debt and risk is a difficult job. Our aim
is to be conservatively financed as the business matures, although
a precise timetable depends on many factors. For the foreseeable
future, it is intended that the Company's net debt/EBITDA will be
around 3.5 times. The ratio may rise for a temporary period, for
example, if there were a sudden deterioration in trading, in which
instance the Company would seek to reduce the level in a timely
manner. Insofar as it is possible to generalise, the board believes
that debt levels of between 0 and 2 times EBITDA are a sensible
long-term benchmark."
Property
During the period, we opened two new pubs and closed 22 pubs,
bringing the number of pubs open at the period end to 906.
Following a review of our estate, we have placed around 100 pubs on
the market in the last two years or so. Eighty-three of these pubs
have now been sold, are under contract or have been closed.
UK taxes and regulation
Pubs and restaurants pay far higher levels of UK tax than do
supermarkets. The main disparity relates to VAT (value added tax),
since supermarkets pay no VAT in respect of their food sales,
whereas pubs pay 20%, enabling supermarkets to subsidise their
alcoholic drinks prices. Pubs also pay approximately 18p per pint
in respect of business rates, while supermarkets pay less than 2p
per pint.
In addition, the government has, in recent years, introduced
both a 'late-night levy' and additional fruit/slot machine taxes,
further reducing the competitive position of pubs in relation to
supermarkets.
The tax disparity with supermarkets is unfair. Pubs create
significantly more jobs and more taxes per pint or per meal than do
supermarkets and it does not make social or economic sense for the
UK tax régime to favour supermarkets. We acknowledge the need for
companies to pay a reasonable level of taxes, but hope that
legislators will make prompt progress in creating a level playing
field for all businesses which sell similar products.
The taxes paid by Wetherspoon in the period under review were as
follows:
First half 2017 2016
(estimate - UK GBPm GBPm
only)
VAT 156.5 153.1
Alcohol duty 79.3 83.3
PAYE and NIC 45.1 46.9
Business rates 25.3 24.7
Corporation tax 8.3 10.6
Machine duty 5.0 5.6
Climate change
levy 4.8 3.1
Stamp duty 3.0 1.1
Carbon tax 1.7 1.8
Landfill tax 1.2 1.3
Fuel duty 1.0 1.1
Premise licence
and TV licences 0.4 0.4
--------------------- ----- -----
TOTAL TAX 331.6 333.0
--------------------- ----- -----
Tax per pub (GBP000) 362.8 350.0
--------------------- ----- -----
Tax as % of sales 41.4% 42.1%
--------------------- ----- -----
Pre-exceptional
profit after tax 37.7 26.5
--------------------- ----- -----
Profit after tax
as % of sales 4.7% 3.4%
--------------------- ----- -----
Further progress
As previously highlighted, the company's philosophy is to try
continuously to upgrade as many areas of the business as possible.
An example is IT, where we have introduced a new 'mobile ordering
app' -soon available in all pubs. We are continuing to work with
our suppliers and customers to improve the range and quality of
real ales and craft beers, and a new menu was introduced in almost
all of our pubs on 8 March 2017, offering both new and upgraded
dishes. 262 Wetherspoon pubs were recommended in CAMRA's 2017 Good
Beer Guide - more than any other company.
In November 2015, the government's Food Standards Agency (FSA)
issued a report which named Wetherspoon equal top of the largest 20
food chains for hygiene standards over the preceding five years.
92% of our pubs have obtained the maximum five rating, under the
FSA scheme. This exceptional record reflects extremely hard work by
our central catering, audit and operations team, as well as by the
teams in our pubs.
We have now been recognised as a 'Top Employer UK' by the Top
Employers Institute for 14 consecutive years. 99% of our pubs have
achieved approval from Cask Marque, an independent brewery-run
scheme which encourages high standards in ale quality.
We also allocated GBP18.8m in bonuses and free shares to
employees, 97% of which was paid to those below board level and 79%
of which was paid to those working in our pubs.
Current trading and outlook
The biggest danger to the pub industry is the continuing tax
disparity between supermarkets and pubs, in respect of VAT and
business rates.
As previously indicated, we understand the need for the
government to raise taxes. However, there should be a sensible
rebalancing of the taxes paid by pubs and supermarkets, if the pub
industry is to survive in the long term.
Last Wednesday's budget was presented by the Chancellor as
providing tax relief of approximately GBP1,000 per pub, for pubs
with a rateable value of less than GBP100,000.
In fact, that sum is dwarfed by tax and regulatory increases.
For example, costs to Wetherspoon will increase by approximately
the following amounts in the next year:
- business rates: GBP7m
- electricity taxes: GBP4m
- excise duty: GBP7m
- Apprenticeship Levy: GBP2m
In addition, the proposed sugar tax will cost approximately
GBP4m from April 2018 and there will be further electricity tax
increases of around GBP5m by 2020.
Companies like Wetherspoon, on examination of the fine print of
the budget, are not, in fact, eligible for the GBP1,000 per annum
decrease in business rates, in any event.
The company has previously emphasised the far-higher taxes per
meal or per pint that pubs pay compared to supermarkets. For
example, supermarkets pay less than 2p per pint for business rates,
whereas pubs pay around 18p per pint.
The increase in business rates per pint for pubs from next month
will be around 2p, further exacerbating the tax gap.
Pubs also pay VAT of 20% in respect of food sales, but
supermarkets pay almost nothing, enabling supermarkets to subsidise
the price of alcoholic drinks. An article written for the trade
press on this subject can be found below.
Wednesday's budget will weigh far more heavily on pubs than
supermarkets, especially since wage costs per pint or meal are
approximately 10 times higher in pubs.
The Chancellor was less-than-frank in his budget speech*, since
he did not spell out the duty increases, giving the impression to
many that there would be no increase.
In effect, this was a budget for dinner parties, no doubt the
preference of the Chancellor and his predecessor - dinner parties
will suffer far less from the taxes outlined above, whereas many
people prefer to go to pubs, given the choice.
In the six weeks to 5 March 2017, like-for-like sales increased
by 2.7% and total sales decreased by 0.2%.
As previously announced, the company intends to increase the
level of capital investment in existing pubs from GBP34m in 2015/6
to around GBP60m in the current year.
As outlined above, the company also anticipates significantly
higher costs in the second half of the financial year. In view of
these additional costs and our expectation that like-for-like sales
will be lower in the next six months, the company remains cautious
about the second half of the year. Nevertheless, as a result of
modestly better-than-expected year-to-date sales, we currently
anticipate a slightly improved trading outcome for the current
financial year, compared with our expectations at the last
update.
Tim Martin
Chairman
9 March 2017
* The Chancellor said, "I can also confirm that I will make no
changes to previously planned upratings of duties on alcohol and
tobacco."
The Publican's Morning Advertiser
Wetherspoons founder hits out on VAT: 'It's the maths,
stupid'
By Tim Martin, 07-Jan-2016
Despite leaving the VAT Club, Tim Martin speaks out in typically
forthright fashion on the tax burden of the pub trade.
How well do individual publicans, pubcos and the trade press
understand the tax and economic disparity between pubs and
supermarkets? And how well have the issues been articulated to the
public? In the end these sorts of arguments boil down to pounds and
pence, so we need to "do the math", as our American cousins say.
It's far from certain that the majority of people in our industry
really comprehend the true extent of our tax and regulatory
burden.
There are three main areas where the pub industry has its back
to the wall- that is to say areas where taxes and regulations are
stacked against the on-trade. The most topical relates to the
so-called living wage- which is really, of course, the new minimum
wage. A pint in an average pub costs around GBP3, excluding VAT.
Managed pubcos, including Wetherspoon, pay around 30% of their
sales as wages, so the cost of labour in a pub pint is roughly 90
pence.
VAT
The average cost of a pint in a supermarket is about a quid, ex
VAT, and it may be even less. Sainsbury's wages, as an example,
extracted from their published accounts, are about 10% of sales. So
the labour cost of a pint in a supermarket is roughly 10 pence. You
don't have to be Milton Friedman to work out that minimum wage
initiatives by governments hit the pub trade 9 or 10 times harder
than supermarkets, as a result.
Many people will think that minimum wages should be set at a
high level even so, and publicans prefer to pay their hardworking
staff well, if they can afford it- but economic necessity requires
other taxes to be fair if political parties wish pubs to survive
and thrive in these circumstances. Unfortunately, however, 2 of the
biggest taxes paid by pubs, business rates and VAT, also weigh far
more heavily on pubs than supermarkets.
Supermarkets
A couple of years ago, I tried to look up the amount of business
rates paid by supermarkets, but the information was not available
in their published accounts. Helpfully, Dalton Philips, then CEO of
Morrisons, told the Financial Times in July 2013 that his company
paid business rates of GBP240 million per annum. Morrisons sales in
that year were GBP18.116 billion, so their rates payable were 1.32%
of those sales. Therefore, we can calculate that a pint sold for a
quid, ex VAT, at Morrison's attracts an approximate business rates
charge of 1.32 pence.
Regrettably, as publicans know only too well, pubs pay a lot
more. On average, the "rateable value" of pubs is assessed at about
12% of "fair maintainable trade". The actual cash tax payable is
about half this level, that is to say about 6% of sales, ex VAT. So
a pint bought in a pub for GBP3, ex VAT, generates about 18 pence
in rates, more than 13 times the business rates charge per pint in
supermarkets. This disparity is unsustainable and makes no economic
sense.
Inequality
The third and greatest disparity relates to VAT. Supermarkets
pay almost no VAT in respect of food sales, whereas pubs pay 20%, a
massive tax inequality which helps supermarkets to subsidise their
alcoholic drinks prices, as many of us are aware.
Pubs have lost over 50% of their drinks sales to supermarkets in
the last 30 years and are continuing to lose trade at an alarming
rate, mainly as a result of these economic realities.
The question for politicians is a simple one- do you believe
that pubs play a valuable role in the economic and social life of
the nation? If yes, there needs to be what writer and entrepreneur
Luke Johnson calls a "sensible rebalancing" of the tax system. All
sensible publicans and pubcos know that the government needs taxes
to pay for schools and hospitals- and even to afford some aircraft
for our lonely aircraft carrier. However, it makes no sense to
discriminate against pubs and in favour of supermarkets.
Wetherspoon, as an example, pays around GBP650,000 of taxes of
one kind or another per pub per annum- let's preserve these golden
geese, not kill them.
The main question for the pub trade itself is how well do you ,
or does your company, understand these numbers and how well are
these punishing tax inequalities highlighted to customers and
staff? There is a common myth in our industry, especially at senior
levels, that the way to obtain tax reductions is to seek an
audience with politicians, preferably over a pint, and to charm
them into going easy on the pub trade, especially over excise duty
at budget time.
Democracy
But that approach hasn't always worked too well over the years.
We live in a democracy and voters love pubs and know that they
create jobs and government revenue- highlighting to the public the
way in which taxes are tilted in favour of supermarkets is just as
important as an audience with the Chancellor of the Exchequer. In
the end, in our system, the Chancellor does the bidding of the
public.
Perhaps the main new year's resolution for us all is to increase
our personal efforts in highlighting the maths of pub taxes for the
benefit of the public, as well as for politicians.
INCOME STATEMENT FOR THE 26 WEEKSED
J D Wetherspoon plc, company number:
1709784
Notes Unaudited Unaudited Unaudited Unaudited Audited Audited
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
22 January 22 January 24 January 24 January 24 July 24 July
2017 2017 2016 2016 2016 2016
Before After Before After Before After
exceptional exceptional exceptional exceptional exceptional exceptional
items items items items items items
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
Revenue 4 801,435 801,435 790,250 790,250 1,595,197 1,595,197
Operating costs (736,334) (736,334) (740,821) (740,821) (1,485,470) (1,485,470)
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
Operating profit 5 65,101 65,101 49,429 49,429 109,727 109,727
Property gains 6 586 586 3,845 3,845 5,335 5,335
Property (losses)/gains
- exceptional 7 (11,885) 634 (14,561)
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
Profit before
interest and tax 65,687 53,802 53,274 53,908 115,062 100,501
Finance income 38 38 76 76 116 116
Finance income
- exceptional 7 402 - -
Finance costs (14,310) (14,310) (17,342) (17,342) (34,568) (34,568)
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
Profit before
tax 51,415 39,932 36,008 36,642 80,610 66,049
Income tax expense 8 (13,760) (13,760) (9,487) (9,487) (23,689) (23,689)
Income tax expense
- exceptional(1) 8 4,138 3,641 8,846
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
Profit for the
period 37,655 30,310 26,521 30,796 56,921 51,206
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
Earnings per ordinary
share (p)
- Basic 9 34.6 27.8 22.9 26.6 49.5 44.5
- Diluted 9 33.8 27.2 22.3 25.9 48.3 43.4
------------------------ ----- ------------ ------------ ------------ ------------ ------------ ------------
STATEMENT OF COMPREHENSIVE INCOME FOR THE 26 WEEKSED 22 JANUARY
2017
Notes Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------ ----- ---------- ---------- --------
Items which will be reclassified
subsequently to profit or loss:
Interest-rate swaps: gain/(loss)
taken to other comprehensive
income 16 30,381 (8,520) (23,504)
Tax on items taken directly
to other comprehensive income (5,800) 734 3,432
Currency translation differences 883 1,726 4,265
------------------------------------ ----- ---------- ---------- --------
Net gain/(loss) recognised directly
in other comprehensive income 25,464 (6,060) (15,807)
Profit for the period 30,310 30,796 51,206
------------------------------------ -----
Total comprehensive income for
the period 55,774 24,736 35,399
------------------------------------ ----- ---------- ---------- --------
(1) At the last interim report, the deferred tax credit
resulting from the reduction in the corporation tax rate of
GBP3,786,000 was not shown as an exceptional item.
In the year accounts, as at 24 July 2016, this credit was
classified as an exceptional item. The interim comparative numbers
have been stated in line with
the year-end classification.
CASH FLOW STATEMENT FOR THE 26 WEEKSED
J D Wetherspoon plc, company
number: 1709784
Notes Unaudited Unaudited Unaudited Unaudited Audited Audited
cash free cash free cash free
flow cash flow cash flow cash
flow(1) flow(1) flow(1)
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
22 January 22 January 24 January 24 January 24 July 24 July
2017 2017 2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ----- ---------- ---------- ---------- ---------- --------- --------
Cash flows from operating
activities
Cash generated from
operations 10 105,052 105,052 100,641 100,641 181,836 181,836
Interest received 26 26 76 76 136 136
Net exceptional finance
income 402 - -
Interest paid (13,150) (13,150) (15,808) (15,808) (31,182) (31,182)
Corporation tax paid (8,250) (8,250) (10,635) (10,635) (19,917) (19,917)
Net cash inflow from
operating activities 84,080 83,678 74,274 74,274 130,873 130,873
--------------------------------- ---------- ---------- ---------- ---------- --------- --------
Cash flows from investing
activities
Purchase of property,
plant and equipment (18,775) (18,775) (14,120) (14,120) (28,407) (28,407)
Purchase of intangible
assets (9,633) (9,633) (3,289) (3,289) (5,104) (5,104)
Investment in new pubs
and pub extensions (18,012) (42,696) (54,118)
Freehold reversions (49,582) (15,518) (36,083)
Purchase of lease
premiums - - (1,091)
Proceeds of sale of
property, plant and
equipment 8,798 3,005 22,520
Net cash outflow from
investing activities (87,204) (28,408) (72,618) (17,409) (102,283) (33,511)
--------------------------------- ---------- ---------- ---------- ---------- --------- --------
Cash flows from financing
activities
Equity dividends paid 17 (8,933) (9,543) (14,190)
Purchase of own shares
for cancellation (25,359) (14,186) (53,580)
Purchase of own shares
for share-based payments (6,046) (6,046) (1,165) (1,165) (6,877) (6,877)
Loan advances 15 39,530 21,764 48,591
Finance lease principal
payments 15 - (1,356) (2,051)
-------------------------- ----- ---------- ---------- ---------- ---------- --------- --------
Net cash (outflow) from
financing activities (808) (6,046) (4,486) (1,165) (28,107) (6,877)
--------------------------------- ---------- ---------- ---------- ---------- --------- --------
Net change in cash
and cash equivalents 15 (3,932) (2,830) 483
-------------------------- ----- ---------- ---------- ---------- ---------- --------- --------
Opening cash and cash
equivalents 32,658 32,175 32,175
Closing cash and cash
equivalents 28,726 29,345 32,658
-------------------------- ----- ---------- ----------
Free cash flow 49,224 55,700 90,485
-------------------------- ----- ---------- ---------- ---------- ---------- --------- --------
Free cash flow per
ordinary share 9 44.2p 46.8p 76.7p
(1) Free cash flow is a measure not required by accounting standards; a definition is provided in our accounting policies.
BALANCE SHEET AS AT 22 JANUARY
2017
J D Wetherspoon plc, company
number: 1709784
Notes Unaudited Unaudited Audited
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
--------------------------------- ----- ---------- ---------- ---------
Assets
Non-current assets
Property, plant and equipment 11 1,229,252 1,187,037 1,188,512
Intangible assets 12 30,809 29,929 27,051
Investment property 13 7,577 8,620 7,605
Other non-current assets 14 8,693 9,807 9,725
Derivative financial instruments 15 17,645 - -
Deferred tax assets 5,626 8,728 11,426
--------------------------------- ----- ---------- ---------- ---------
Total non-current assets 1,299,602 1,244,121 1,244,319
--------------------------------- ----- ---------- ---------- ---------
Assets held for sale 4,182 196 950
Current assets
Inventories 20,401 20,013 19,168
Receivables 29,517 31,045 27,616
Cash and cash equivalents 15 28,726 29,345 32,658
--------------------------------- ----- ---------- ---------- ---------
Total current assets 78,644 80,403 79,442
Total assets 1,382,428 1,324,720 1,324,711
--------------------------------- ----- ---------- ---------- ---------
Liabilities
Current liabilities
Borrowings 15 (80) (695) (112)
Derivative financial instruments 15 - (3,988) (79)
Trade and other payables (278,329) (279,796) (266,523)
Current income tax liabilities (12,327) (8,088) (8,247)
Provisions (4,526) (3,661) (4,463)
Total current liabilities (295,262) (296,228) (279,424)
--------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Borrowings 15 (724,645) (654,793) (683,306)
Derivative financial instruments 15 (50,741) (44,505) (63,398)
Deferred tax liabilities (71,519) (75,046) (74,441)
Provisions (2,850) (2,962) (3,387)
Other liabilities (12,433) (14,336) (13,307)
Total non-current liabilities (862,188) (791,642) (837,839)
--------------------------------- ----- ---------- ---------- ---------
Net assets 224,978 236,850 207,448
--------------------------------- ----- ---------- ---------- ---------
Shareholders' equity
Share capital 18 2,211 2,375 2,273
Share premium account 143,294 143,294 143,294
Capital redemption reserve 2,220 2,056 2,158
Hedging reserve (27,470) (39,765) (52,051)
Currency translation reserve 3,561 (375) 2,340
Retained earnings 101,162 129,265 109,434
--------------------------------- ----- ---------- ---------- ---------
Total shareholders' equity 224,978 236,850 207,448
--------------------------------- ----- ---------- ---------- ---------
The financial statements, on pages 7 to 23, approved by the
board of directors and authorised for issue on 9 March 2017,
are signed on its behalf by:
John Hutson Ben Whitley
Director Director
STATEMENT OF CHANGES IN EQUITY
J D Wetherspoon plc, company
number: 1709784
Share Share Capital Hedging Currency Retained Total
capital premium redemption reserve translation earnings
account reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------- ------- ---------- -------- ----------- -------- --------
At 26 July 2015 2,387 143,294 2,044 (31,979) (2,182) 109,329 222,893
Total comprehensive
income (7,786) 1,807 30,715 24,736
Profit for the period 30,796 30,796
Interest-rate swaps:
cash flow hedges (8,520) (8,520)
Tax on items taken directly
to comprehensive income 734 734
Currency translation
differences 1,807 (81) 1,726
------------------------ ------- ------- ---------- -------- ----------- -------- --------
Purchase of own shares
for cancellation (12) 12 (3,866) (3,866)
Share-based payment
charges 3,895 3,895
Tax on share-based
payment (100) (100)
Purchase of own shares for
share-based payments (1,165) (1,165)
Dividends (9,543) (9,543)
------------------------ ------- ------- ---------- -------- ----------- -------- --------
At 24 January 2016 2,375 143,294 2,056 (39,765) (375) 129,265 236,850
Total comprehensive
income (12,286) 2,715 20,234 10,663
Profit for the period 20,410 20,410
Interest-rate swaps:
cash flow hedges (14,984) (14,984)
Tax on items taken directly
to comprehensive income 2,698 2,698
Currency translation
differences 2,715 (176) 2,539
------------------------ ------- ------- ---------- -------- ----------- -------- --------
Purchase of own shares
for cancellation (102) 102 (35,527) (35,527)
Share-based payment
charges 5,661 5,661
Tax on share-based
payment 160 160
Purchase of own shares for
share-based payments (5,712) (5,712)
Dividends (4,647) (4,647)
------------------------ ------- ------- ---------- -------- ----------- -------- --------
At 24 July 2016 2,273 143,294 2,158 (52,051) 2,340 109,434 207,448
Total comprehensive
income 24,581 1,221 29,972 55,774
Profit for the period 30,310 30,310
Interest-rate swaps:
cash flow hedges 30,381 30,381
Tax on items taken directly
to comprehensive income (5,800) (5,800)
Currency translation
differences 1,221 (338) 883
------------------------ ------- ------- ---------- -------- ----------- -------- --------
Purchase of own shares
for cancellation (62) 62 (28,445) (28,445)
Share-based payment
charges 4,966 4,966
Tax on share-based
payment 214 214
Purchase of own shares for
share-based payments (6,046) (6,046)
Dividends (8,933) (8,933)
------------------------ ------- ------- ---------- -------- ----------- -------- --------
At 22 January 2017 2,211 143,294 2,220 (27,470) 3,561 101,162 224,978
------------------------ ------- ------- ---------- -------- ----------- -------- --------
During the half year, 3,106,300 shares were repurchased by the
company for cancellation, representing approximately 2.8% of the
issued share capital, at a cost of GBP28.4m, including stamp duty,
representing an average cost per share of 916p. At the half year
end, the company had a liability for share purchases of GBP3.1m
which was settled post half year end.
NOTES TO THE FINANCIAL STATEMENTS
1. General information
J D Wetherspoon plc is a public limited company, incorporated
and domiciled in England and Wales.
Its registered office address is: Wetherspoon House, Central
Park, Reeds Crescent, Watford,
WD24 4QL
The company is listed on the London Stock Exchange.
This condensed half-yearly financial information was approved
for issue by the board on 9 March 2017.
This interim report does not comprise statutory accounts within
the meaning of Sections 434 and 435 of the Companies Act 2006.
Statutory accounts for the year ended 24 July 2016 were approved by
the board of directors on 8 September 2016 and delivered to the
Registrar of Companies. The report of the auditors, on those
accounts, was unqualified, did not contain an emphasis-of-matter
paragraph or any statement under Sections 498 to 502 of the
Companies Act 2006.
There are no changes to the principal risks and uncertainties as
set out in the financial statements for the 52 weeks ended 26 July
2016, which may affect the company's performance in the next six
months. The most significant risks and uncertainties relate to the
taxation on, and regulation of, the sale of alcohol, cost increases
and UK disposable consumer incomes. For a detailed discussion of
the risks and uncertainties facing the company, refer to the annual
report for 2016, pages 43 and 44.
2. Basis of preparation
This condensed half-yearly financial information of J D
Wetherspoon plc (the 'Company'), which is abridged and unaudited,
has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with
International Accounting Standards (IAS) 34, Interim Financial
Reporting, as adopted by the European Union. This interim report
should be read in conjunction with the annual financial statements
for the 52 weeks ended 24 July 2016 which were prepared in
accordance with IFRSs, as adopted by the European Union.
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; they have satisfied
themselves that the Company will continue in operational existence
for the foreseeable future. For this reason, they continue to adopt
the going-concern basis in preparing the Company's financial
statements.
The financial information for the 52 weeks ended 24 July 2016 is
extracted from the statutory accounts of the Company for that
year.
The interim results for the 26 weeks ended 22 January 2017 and
the comparatives for 24 January 2016 are unaudited, yet have been
reviewed by the independent auditors. A copy of the review report
is included at the end of this report.
3. Accounting policies
With the exception of tax, the accounting policies adopted in
the preparation of the interim report are consistent with those
applied in the preparation of the Company's annual report for the
year ended 24 July 2016 - and the same methods of computation and
presentation are used.
Income tax
Taxes on income in the interim periods are accrued using the tax
rate which would be applicable to expected total annual
earnings.
Changes in standards
On 13 January 2016, the International Accounting Standards Board
issued IFRS 16 - 'leases', which is effective for periods starting
on or after 1 January 2019, subject to EU endorsement. IFRS 16
requires lessees to recognise a lease liability reflecting future
lease payments and a right-of-use asset for lease contracts,
subject to exceptions for short-term leases and leases of low-value
assets.
Standards and interpretations which are not yet effective and
have not been early adopted by the Company:
-- Amendment to IFRS 9, 'Financial Instruments'
4. Revenue
Revenue disclosed in the income
statement is analysed as follows:
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------- ---------- ---------- ---------
Sales of food, beverages, hotel
rooms and machine income 801,435 790,250 1,595,197
==================================== ========== ========== ---------
5. Operating profit - analysis of costs by nature
This is stated after charging/(crediting):
Notes Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------- ----- ---------- ---------- --------
Concession rental payments 11,639 10,172 21,971
Minimum operating lease payments 23,727 25,811 51,260
Repairs and maintenance 29,232 26,109 54,924
Net rent receivable (743) (692) (1,496)
Depreciation of property, plant
and equipment 11 32,741 32,089 65,297
Amortisation of intangible assets 12 3,332 2,713 5,949
Depreciation of investment properties 13 28 31 62
Amortisation of other non-current
assets 14 206 209 904
Share-based payments 4,966 3,895 9,556
------------------------------------------- ----- ---------- ---------- --------
6. Property (gains)/losses
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------------- ---------- ---------- --------
Non-exceptional property (gains)/losses
Loss/(gain) on disposal of fixed
assets 62 (3,845) (4,866)
Additional costs of disposal - - 63
Other property gains (648) - (532)
(586) (3,845) (5,335)
Exceptional property (gains)/losses
Loss on disposal of fixed assets
- disposal programme 5,618 124 7,328
Additional costs of disposal 976 - 1,149
Impairment of property, plant
and equipment 5,169 89 4,809
Impairment of intangible assets - - 239
Impairment of other assets - - 491
Onerous lease (reversals)/provision 122 (847) 545
11,885 (634) 14,561
Total property losses/(gains) 11,299 (4,479) 9,226
----------------------------------------- ---------- ---------- --------
7. Exceptional items
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------ ---------- ---------- --------
Exceptional property losses
Disposal programme
Loss on disposal of pubs 6,594 124 8,477
Impairment of assets held for
sale 3,899 89 598
Impairment of property plant
and equipment - closed pubs - - 2,287
Impairment of other non-current
assets - closed pubs 1,270 - 491
Onerous lease reversal - sold
pubs (235) - (427)
Onerous lease provision - closed
pubs 252 - 944
------------------------------------------- ---------- ---------- --------
11,780 213 12,370
Other property losses
Onerous lease reversal (208) (1,122) (949)
Onerous lease provision 313 275 977
Impairment of property, plant
and equipment - - 1,924
Impairment of intangible assets - - 239
------------------------------------------- ---------- ---------- --------
105 (847) 2,191
Total exceptional property losses/(gains) 11,885 (634) 14,561
------------------------------------------- ---------- ---------- --------
Other exceptional items
Net exceptional finance income (402) - -
------------------------------------------- ---------- ---------- --------
(402) - -
Total pre-tax exceptional items 11,483 (634) 14,561
------------------------------------------- ---------- ---------- --------
Exceptional tax
Exceptional tax items (4,413) (3,786) (8,363)
Tax effect on exceptional items 275 145 (483)
-------------------------------------------
(4,138) (3,641) (8,846)
Total exceptional items 7,345 (4,275) 5,715
------------------------------------------- ---------- ---------- --------
Disposal programme
The Company has offered a number of its sites for sale. During
the half year end, 22 (year end 2016: 29) pubs had been sold, seven
(year end 2016: three) were classified as held for sale and an
additional pub (year end 2016: nine) had been closed as part of the
pub-disposal programme. In the table above, those costs classified
as loss on disposal are the loss on sold sites and associated costs
to sale.
The costs classified above as impairment of assets held for sale
of GBP3,899,000 (year end 2016: GBP598,000), relate to the
write-down of assets to their assessed recoverable amount for any
pubs which the Company has committed to selling.
It is the view of management that the Company is committed to
selling when a contract for sale has been exchanged. A further
impairment of GBP1,270,000 (year end 2016: GBP2,788,000) has been
recognised for pubs (year end 2016: nine) which have been closed
and made available for sale as part of the pub-disposal
programme.
Other property losses
The onerous lease provision relates to pubs for which future
trading profits, or income from subleases, are not expected to
cover the rent. The provision takes several factors into account,
including the expected future profitability of the pub and also the
amount estimated as payable on surrender of the lease, where this
is a likely outcome. In the period, GBP105,000 (year end 2016:
GBP28,000) was charged net in respect of onerous leases.
Property impairment relates to the situation in which, owing to
poor trading performance, pubs are unlikely to generate sufficient
cash in the future to justify their current book value. In the
period, an exceptional charge of GBPNil (year end 2016:
GBP1,924,000) was incurred in respect of the impairment of
property, plant and equipment, as required under IAS 36. All
exceptional items
listed above generated a net cash inflow of GBP8,520,000 (year
end 2016: GBP13,959,000).
Exceptional finance income
During the period the Company transferred two of its
interest-rate swaps to other banks. Transferring the swaps
has not changed in anyway the terms, conditions or future cash
flows of the swaps. The bank which originally issued the
swaps paid the Company GBP402,000 compensation for agreeing to
the transfer.
8. Income tax expense
The taxation charge for the period ended 22 January 2017 is
based on the pre-exceptional profit before tax of GBP51.4m and the
estimated effective tax rate before exceptional items for the year
ending 24 July 2017 of 26.8% (July 2016: 29.4%).
This comprises a pre-exceptional current tax rate of 24.1% (July
2016: 22.8%) and a pre-exceptional deferred tax rate of 2.7% (July
2016: 6.6%).
The UK standard weighted average tax rate for the period is
19.67% (2016: 20.0%). The current tax rate is higher than the UK
standard weighted average tax rate, owing mainly to depreciation
which is not eligible for tax relief.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------- ---------- ---------- --------
Income tax before exceptional
items
Current income tax:
Current tax 12,491 8,559 19,382
Prior year adjustment (93) (33) (1,035)
Total current income tax 12,398 8,526 18,347
Deferred tax:
Origination and reversal of
temporary differences 1,601 961 4,205
Adjustment in respect of prior
period (239) - 1,137
------------------------------------ ----------
Total deferred tax 1,362 961 5,342
Total income tax expense before
exceptional items 13,760 9,487 23,689
------------------------------------ ---------- ---------- --------
Exceptional income tax
Exceptional current income tax:
Current tax on exceptional items 59 145 (75)
------------------------------------ ---------- ---------- --------
Total exceptional current income
tax 59 145 (75)
Exceptional deferred tax:
Deferred tax on exceptional
items 216 - (408)
Impact of change in the UK tax
rate - exceptional (4,413) (3,786) (8,363)
------------------------------------ ---------- ---------- --------
Total exceptional deferred tax (4,197) (3,786) (8,771)
Total exceptional income tax
expense on exceptional items (4,138) (3,641) (8,846)
------------------------------------ ---------- ---------- --------
Tax charge in the income statement 9,622 5,846 14,843
------------------------------------ ---------- ---------- --------
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------- ---------- ---------- --------
Taken through equity
Current tax on share-based payment (127) - (159)
Deferred tax on share-based
payment (87) 100 99
------------------------------------
Tax charge/(credit) (214) 100 (60)
------------------------------------ ---------- ---------- --------
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------- ---------- ---------- --------
Taken through comprehensive
income
Deferred tax charge on swaps 5,496 734 (4,701)
Impact of change in UK tax rate 304 - 1,269
Tax charge/(credit) 5,800 734 (3,432)
------------------------------------ ---------- ---------- --------
9. Earnings and free cash flow per share
Earnings per share are based on the weighted average number of
shares in issue of 111,364,354 (2016: 119,030,301), including those
held in trust in respect of employee share schemes. Earnings per
share, calculated on this basis, are usually referred to as
'diluted', since all of the shares in issue are included.
Accounting standards refer to 'basic earnings' per share - these
exclude those shares held in trust in respect of employee share
schemes.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
Weighted average number of shares 2017 2016 2016
---------------------------------- ----------- ----------- -----------
Shares in issue (used for diluted
EPS) 111,364,354 119,030,301 117,898,893
Shares held in trust (2,441,371) (3,417,799) (2,854,697)
Shares in issue less shares
held in trust 108,922,983 115,612,502 115,044,196
----------------------------------- ----------- ----------- -----------
The weighted average number of shares held in trust for employee
share schemes has been adjusted to exclude those shares which have
vested, but which remain in trust.
Profit Basic Diluted
EPS EPS
pence pence
per per
ordinary ordinary
26 weeks ended 22 January 2017 GBP000 share share
unaudited
------------------------------------------ ------- -------- --------
Earnings (profit after tax) 30,310 27.8 27.2
Exclude effect of exceptional
items after tax 7,345 6.8 6.6
Earnings before exceptional
items 37,655 34.6 33.8
Exclude effect of property gains/(losses) (586) (0.6) (0.5)
Underlying earnings before exceptional
items 37,069 34.0 33.3
------------------------------------------- ------- -------- --------
Profit Basic Diluted
EPS EPS
pence pence
per per
ordinary ordinary
26 weeks ended 24 January 2016 GBP000 share share
unaudited
------------------------------------------ ------- -------- --------
Earnings (profit after tax) 30,796 26.6 25.9
Exclude effect of exceptional
items after tax (4,275) (3.7) (3.6)
Earnings before exceptional
items 26,521 22.9 22.3
Exclude effect of property gains/(losses) (3,845) (3.3) (3.2)
Underlying earnings before exceptional
items 22,676 19.6 19.1
------------------------------------------- ------- -------- --------
Profit Basic Diluted
EPS EPS
pence pence
per per
ordinary ordinary
52 weeks ended 24 July 2016 GBP000 share share
audited
------------------------------------------ ------- -------- --------
Earnings (profit after tax) 51,206 44.5 43.4
Exclude effect of exceptional
items after tax 5,715 5.0 4.9
------------------------------------------- -------
Earnings before exceptional
items 56,921 49.5 48.3
Exclude effect of property gains/(losses) (5,335) (4.7) (4.5)
Underlying earnings before exceptional
items 51,586 44.8 43.8
------------------------------------------- ------- -------- --------
9. Earnings and free cash flow per share (continued)
Free Basic Diluted
cash free free
flow cash cash
flow flow
pence pence
per per
ordinary ordinary
GBP000 share share
------------------------------- ------ -------- --------
26 weeks ended 22 January 2017 49,224 45.2 44.2
26 weeks ended 24 January 2016 55,700 48.2 46.8
52 weeks ended 24 July 2016 90,485 78.7 76.7
-------------------------------- ------ -------- --------
The calculation of free cash flow per share is based on the net
cash generated by business activities and available for investment
in new pub developments and extensions to current pubs, after
funding interest, corporation tax, loan issue costs, all other
reinvestment in pubs open at the start of the period and the
purchase of own shares under the employee share-based schemes
('free cash flow'). It is calculated before taking account of
proceeds from property disposals, inflows and outflows of financing
from outside sources and dividend payments and is based on the
weighted average number of shares in issue, including those held in
trust in respect of the employee share schemes.
10. Cash generated from operations
Notes Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
-------------------------------------- ----- ---------- ---------- --------
Profit for the period 30,310 30,796 51,206
Adjusted for:
Tax 8 9,622 5,846 14,843
Share-based charges 5 4,966 3,895 9,556
Loss/(gain) on disposal of property,
plant and equipment 6 5,680 (3,821) 2,462
Net onerous lease provision 6 122 (847) 545
Net impairment charge 7 5,169 89 5,539
Interest receivable (38) (76) (116)
Interest payable 12,533 15,545 30,973
Depreciation of property, plant
and equipment 11 32,741 32,089 65,297
Amortisation of intangible assets 12 3,332 2,713 5,949
Depreciation on investment properties 13 28 31 62
Amortisation of other non-current
assets 14 206 209 904
Amortisation of bank loan issue
costs 15 1,777 1,797 3,595
Aborted properties costs 631 202 614
Net exceptional finance income (402) - -
-------------------------------------- ----- ---------- ---------- --------
106,677 88,468 191,429
Change in inventories (1,233) (562) 283
Change in receivables (793) (1,585) 954
Change in payables 401 14,320 (10,830)
Cash flow from operating activities 105,052 100,641 181,836
-------------------------------------- ----- ---------- ---------- --------
11. Property, plant and equipment
Freehold Short- Equipment, Assets Total
and
long-leasehold leasehold fixtures under
property property and fittings construction
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------------- --------- ------------ ------------ ---------
Cost:
At 26 July 2015 876,021 425,350 520,781 62,779 1,884,931
Additions 24,009 1,802 15,024 23,526 64,361
Transfers 24,766 1,498 5,043 (31,307) -
Exchange differences 443 142 223 1,065 1,873
Transfer to held
for sale - (2,575) (1,690) - (4,265)
Disposals - (1,097) (1,316) - (2,413)
Reclassification 4,208 (4,208) - - -
----------------------- -------------- --------- ------------ ------------ ---------
At 24 January
2016 929,447 420,912 538,065 56,063 1,944,487
----------------------- -------------- --------- ------------ ------------ ---------
Additions 29,887 7,811 17,006 6,807 61,511
Transfers 2,799 312 797 (3,908) -
Exchange differences 622 201 326 1,583 2,732
Transfer to held
for sale (3,869) (1,889) (2,149) - (3,642)
Disposals (32,488) (4,342) (12,920) - (54,015)
Reclassification 9,344 (9,344) - - -
At 24 July 2016 935,742 413,661 541,125 60,545 1,951,073
----------------------- -------------- --------- ------------ ------------ ---------
Additions 52,097 1,855 14,507 27,241 95,700
Transfers 14,403 3,163 2,860 (20,426) -
Exchange differences 435 80 156 365 1,036
Transfer to held
for sale (10,059) (5,004) (4,493) - (19,556)
Disposals (13,723) (8,082) (10,813) - (32,618)
Reclassification 16,546 (16,546) - - -
At 22 January
2017 995,441 389,127 543,342 67,725 1,995,635
----------------------- -------------- --------- ------------ ------------ ---------
Accumulated depreciation
and impairment:
At 26 July 2015 (174,449) (204,712) (352,014) - (731,175)
Provided during
the period (7,315) (7,073) (17,701) - (32,089)
Transfers - - - - -
Exchange differences (1) (1) (6) - (8)
Impairment loss - (71) (18) - (89)
Transfer to held
for sale - 2,495 1,574 - 4,069
Disposals - 749 1,093 - 1,842
Reclassification (3,191) 3,191 - - -
----------------------- -------------- --------- ------------ ------------ ---------
At 24 January
2016 (184,956) (205,422) (367,072) - (757,450)
----------------------- -------------- --------- ------------ ------------ ---------
Provided during
the period (7,427) (7,601) (18,180) - (33,208)
Transfers - - - - -
Exchange differences (17) (10) (91) - (118)
Impairment loss (869) (2,915) (936) - (4,720)
Transfer to held
for sale 3,228 1,846 1,883 - 6,957
Disposals 12,484 3,475 10,019 - 25,978
Reclassification (3,483) 3,483 - - -
-----------------------
At 24 July 2016 (181,040) (207,144) (374,377) - (762,561)
----------------------- -------------- --------- ------------ ------------ ---------
Provided during
the period (7,746) (6,729) (18,266) - (32,741)
Transfers - - - - -
Exchange differences (13) (8) (82) - (103)
Impairment loss (3,885) (836) (447) - (5,168)
Transfer to held
for sale 6,134 5,234 4,055 - 15,423
Disposals 6,259 4,400 8,108 - 18,767
Reclassification (9,644) 9,644 - - -
-----------------------
At 22 January
2017 (189,935) (195,439) (381,009) - (766,383)
----------------------- -------------- --------- ------------ ------------ ---------
Net book amount
at 22 January 2017 805,506 193,688 162,333 67,725 1,229,252
----------------------- -------------- --------- ------------ ------------ ---------
Net book amount
at 24 July 2016 754,702 206,517 166,748 60,545 1,188,512
---------------------- -------------- --------- ------------ ------------ ---------
Net book amount
at 24 January 2016 744,491 215,490 170,993 56,063 1,187,037
----------------------- -------------- --------- ------------ ------------ ---------
Net book amount
at 26 July 2015 701,572 220,638 168,767 62,779 1,153,756
---------------------- -------------- --------- ------------ ------------ ---------
11. Property, plant and equipment (continued)
During the period, seven (2016: three) pubs, with a carrying
value of GBP4,133,000 (2016: GBP196,000), were classified as held
for sale. These pubs are being disposed of as part of the Company's
pub-disposal programme. Other movements include property impairment
and foreign currency translation.
In addition, a carrying value of GBP49,000 was transferred out
of other non-current assets held for sale, totalling GBP4,182,000,
related to the same pubs.
12. Intangible assets
GBP000
------------------------- --------
Cost:
At 26 July 2015 53,353
Additions 2,645
At 24 January
2016 55,998
------------------------------- --------
Additions 598
Disposals (5)
At 24 July 2016 56,591
------------------------------- --------
Additions 7,090
Transfer to held
for sale (8)
Disposals (6)
At 22 January
2017 63,667
------------------------------- --------
Accumulated amortisation
and impairment:
At 26 July 2015 (23,356)
Provided during
the period (2,713)
At 24 January
2016 (26,069)
------------------------------- --------
Provided during
the period (3,236)
Exchange differences (1)
Impairment loss
(reversal) (239)
Disposals 5
At 24 July 2016 (29,540)
------------------------------- --------
Provided during
the period (3,332)
Transfer to held
for sale 8
Disposals 6
At 22 January
2017 (32,858)
------------------------------- --------
Net book amount
at 22 January 2017 30,809
-------------------------- --------
Net book amount
at 24 July 2016 27,051
-------------------------- --------
Net book amount
at 24 January 2016 29,929
-------------------------- --------
Net book amount
at 26 July 2015 29,997
------------------------------- --------
The intangible assets relates to computer software and
development.
13. Investment property
GBP000
-------------------------- -------
Cost:
At 26 July 2015 8,754
Additions -
-------------------------- -------
At 24 January
2016 8,754
-------------------------------- -------
Additions -
Disposals (1,003)
-------------------------------- -------
At 24 July 2016 7,751
Additions -
At 22 January
2017 7,751
-------------------------------- -------
Accumulated depreciation:
At 26 July 2015 (103)
Provided during
the period (31)
-------------------------------- -------
At 24 January
2016 (134)
-------------------------------- -------
Provided during
the period (31)
Disposals 19
At 24 July 2016 (146)
-------------------------------- -------
Provided during
the period (28)
At 22 January
2017 (174)
-------------------------------- -------
Net book amount
at 22 January
2017 7,577
-------------------------------- -------
Net book amount
at 24 July 2016 7,605
-------------------------------- -------
Net book amount
at 24 January
2016 8,620
-------------------------------- -------
Net book amount
at 26 July 2015 8,651
-------------------------------- -------
Rental income received in the period from investment properties
was GBP177,000 (2016: GBP191,000).
Operating costs, excluding depreciation, incurred in relation to
these properties amounted to GBP4,000 (2015: GBP28,000).
In the opinion of the directors, the cost as stated above is
equivalent to the fair value of properties.
14. Other non-current assets
Lease
premiums
GBP000
------------------------- ---------
Cost:
At 26 July 2015 15,205
Disposals -
At 24 January 2016 15,205
------------------------------- ---------
Additions 1,090
Disposals (65)
------------------------------- ---------
At 24 July 2016 16,230
------------------------------- ---------
Transfer to held
for sale (76)
Disposals (1,661)
At 22 January 2017 14,493
------------------------------- ---------
Accumulated amortisation
and impairment:
At 26 July 2015 (5,177)
Provided during
the period (209)
Exchange differences (1)
Impairment loss
(reversal) (11)
At 24 January 2016 (5,398)
------------------------------- ---------
Provided during
the period (695)
Exchange differences 3
Impairment loss
(reversal) (480)
Disposals 65
At 24 July 2016 (6,505)
------------------------------- ---------
Provided during
the period (206)
Transfer to held
for sale 27
Disposals 884
At 22 January 2017 (5,800)
------------------------------- ---------
Net book amount
at 22 January 2017 8,693
------------------------------- ---------
Net book amount
at 24 July 2016 9,725
------------------------------- ---------
Net book amount
at 24 January 2016 9,807
------------------------------- ---------
Net book amount
at 26 July 2015 10,028
------------------------------- ---------
15. Analysis of change in net debt
24 July Cash Non-cash 22 January
2016 flows movement 2017
GBP000 GBP000 GBP000 GBP000
------------------------------ --------- -------- -------- ----------
Borrowings
Cash in hand 32,658 (3,932) - 28,726
Other loans (112) 58 (26) (80)
--------------------------------- --------- -------- -------- ----------
Current net borrowings 32,546 (3,874) (26) 28,646
Bank loans - due
after one year (683,104) (39,588) (1,777) (724,469)
Other loans (202) - 26 (176)
--------------------------------- --------- -------- -------- ----------
Non-current net
borrowings (683,306) (39,588) (1,751) (724,645)
Net debt (650,760) (43,462) (1,777) (695,999)
--------------------------------- --------- -------- -------- ----------
Derivatives
Interest-rate swaps asset
- due after one year - - 17,645 17,645
Interest-rate swaps liability
- due before one year (79) - 79 -
Interest-rate swap liability
- due after one year (63,398) - 12,657 (50,741)
Total derivatives (63,477) - 30,381 (33,096)
--------------------------------- --------- -------- -------- ----------
Net debt after
derivatives (714,237) (43,462) 28,604 (729,095)
--------------------------------- --------- -------- -------- ----------
During the financial period, the Company entered into three
tranches of forward-starting interest-rate swap agreements
totalling GBP850m. The weighted average interest rate of the first
tranche of swaps is 0.6585% from October 2016 to July 2026. The
weighted average interest rate of second tranche of swaps is
1.1961% from July 2021 to July 2026. The weighted average interest
rate of the third tranche of swaps is 1.1961% from July 2023 to
July 2026. Using interest rates swaps, the company has fixed
interest rates on GBP600m of debt until July 2026.
16. Fair values
The table below highlights any differences between the book
value and the fair value of financial instruments.
Unaudited Unaudited Unaudited Unaudited Audited Audited
22 January 22 January 24 January 24 January 24 July 24 July
2017 2017 2016 2016 2016 2016
Book Fair Book Fair Book Fair
value value value value value value
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ---------- ---------- ---------- ---------- --------- ---------
Financial assets
at amortised cost
Cash and cash equivalents 28,726 28,726 29,345 29,345 32,658 32,658
Receivables 4,312 4,312 5,287 5,287 2,236 2,236
Financial liabilities
at amortised cost
Trade and other payables (224,316) (224,316) (227,136) (227,136) (216,875) (216,875)
Finance lease obligations - - (695) (695) - -
Borrowings (724,725) (721,025) (654,793) (656,111) 683,418 684,037
Financial assets
at fair value
Non-current interest-rate
swap assets:
cash flow hedges 17,645 17,645 - - - -
Financial liabilities
at fair value
Current interest-rate
swap liabilities:
cash flow hedges - - (3,988) (3,988) (79) (79)
Non-current interest-rate
swap liabilities:
cash flow hedges (50,741) (50,741) (44,505) (44,505) (63,398) (63,398)
-------------------------- ---------- ---------- ---------- ---------- --------- ---------
The fair value of finance leases has been calculated by
discounting the expected cash flows at the period end's prevailing
interest rates. The fair value of derivatives has been calculated
by discounting all future cash flows by the market yield curve at
the balance sheet date. The fair value of borrowings has been
calculated by discounting the expected future cash flows at the
period end's prevailing interest rates. The fair value of
receivables excludes prepayment and accrued income. The fair value
of trade and other payables excludes other taxes and Social
Security.
15. Fair values (continued)
Interest-rate swaps
At 22 January 2017, the Company had fixed-rate swaps designated
as hedges of floating-rate borrowings. The floating-rate borrowings
are interest-bearing borrowings at rates based on LIBOR, fixed for
periods of one month. The interest-rate swaps of the floating-rate
borrowings were assessed to be effective.
Change Deferred Total
in
fair tax
value
Changes in valuation GBP000 GBP000 GBP000
of swaps
----------------------------- -------- -------- --------
Fair value at 24 January
2016 (unaudited) 48,493 (8,728) 39,765
Loss taken directly to other
comprehensive income 14,984 (2,698) 12,286
------------------------------- -------- -------- --------
Fair value at 24
July 2016 (audited) 63,477 (11,426) 52,051
Tax rate change - 304 304
Gain taken directly to other
comprehensive income (30,381) 5,496 (24,885)
------------------------------- -------- -------- --------
Fair value at 22 January
2017 (unaudited) 33,096 (5,626) 27,470
------------------------------ -------- -------- --------
Fair value of financial assets and liabilities
Effective from 27 July 2009, the Company adopted the amendment
to IFRS 13 for financial instruments which are measured in the
balance sheet at fair value. This requires disclosure of fair value
measurements by level, using the following fair value measurement
hierarchy:
-- Quoted prices in active markets for identical assets or liabilities (level 1)
-- Inputs other than quoted prices included in level 1 which are
observable for the asset or liability, either directly or
indirectly (level 2)
-- Inputs for the asset or liability which are not based on observable market data (level 3)
The fair value of the interest-rate swaps of GBP33.1m is
considered to be level 2. All other financial assets and
liabilities are measured in the balance sheet at amortised
cost.
17. Dividends paid and proposed
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 24 January 24 July
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------- ---------- ---------- --------
Paid in the period
2015 final dividend - 9,543 9,543
2016 interim dividend 8,933 - 4,647
8,933 9,543 14,190
---------------------------- ---------- ---------- --------
Dividends in respect of the
period
Interim dividend 4,416 4,625 -
Final dividend - - 9,084
4,416 4,625 9,084
---------------------------- ---------- ---------- --------
Dividend per share 4p 4p 8p
Dividend cover 3.4 3.2 3.6
----------------------------- ---------- ---------- --------
Dividend cover is calculated as profit after tax and exceptional
items over dividend paid.
18. Share capital
Number Share
of
shares capital
000s GBP000
---------------------------------- ------- -------
Opening balance at 26 July 2015
(audited) 119,349 2,387
Repurchase of shares (624) (12)
Closing balance at 24 January
2016 (unaudited) 118,725 2,375
Repurchase of shares (5,070) (102)
Balance at 24 July 2016 (audited) 113,655 2,273
Repurchase of shares (3,106) (62)
Closing balance at 22 January
2017 (unaudited) 110,549 2,211
------------------------------------ ------- -------
All issued shares are fully paid.
During the half year, 3,106,300 shares were repurchased by the
Company for cancellation, representing approximately 2.8% of the
issued share capital, at a cost of GBP28.4m, including stamp duty,
representing an average cost per share of 916p.At the half year
end, the Company had liability for share purchases of GBP3.1m which
was settled post half year end.
19. Related-party disclosure
There were no material changes to related-party transactions
described in the last annual financial statements. There have been
no related-party transactions having a material effect on the
Company's financial position or performance in the first half of
the current financial year.
20. Capital commitments
The Company had GBP5.6m of capital commitments for which no
provision had been made, in respect of property, plant and
equipment, at 22 January 2017 (2016: GBP21.2m).
The Company has some sites in the property pipeline; however,
any legal commitment is contingent on planning and licensing.
Therefore, there are no commitments at the balance sheet date, in
respect of these sites.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that this condensed interim financial
information has been prepared in accordance with IAS 34, as adopted
by the European Union, and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events which have occurred during
the first 26 weeks and their impact on the condensed set of
financial statements, plus a description of the changes in
principal risks and uncertainties for the remaining 26 weeks of the
financial year.
-- material related-party transactions in the first 26 weeks and
any material changes in the related-party transactions described in
the last annual report.
The directors of J D Wetherspoon plc are listed in the J D
Wetherspoon annual report for 24 July 2016. A list of current
directors is maintained on the J D Wetherspoon plc website:
www.jdwetherspoon.com
By order of the board
John Hutson Ben Whitley
Director Director
9 March 2017 9 March 2017
INDEPENT REVIEW REPORT TO J D WETHERSPOON PLC
Report on the interim financial statements
Our conclusion
We have reviewed J D Wetherspoon plc's interim financial
statements (the "interim financial statements") in the interim
report 2017 of
J D Wetherspoon plc for the 26 week period ended 22 January
2017. Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority
What we have reviewed
The interim financial statements comprise:
-- the balance sheet as at 22 January 2017;
-- the income statement and statement of comprehensive income for the period then ended;
-- the cash flow statement for the period then ended;
-- the statement of changes in shareholders' equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report
2017 have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Company
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim report 2017, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
report 2017 in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim report 2017 based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim
report 2017 and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
9 March 2017
London
Notes:
(a) The maintenance and integrity of the J D Wetherspoon plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
PUBS OPENED SINCE 25 JULY 2016
Name Address Town Postcode Country
The Iron Duke Town Hall Buildings, Wellington TA21 8LS UK
Fore Street
The Caley Picture 31 Lothian Road Edinburgh EH1 2DJ UK
House
PUBS CLOSED SINCE 25 JULY 2016
Name Address Town Postcode Country
The Secklow 316 Midsummer Boulevard Milton Keynes MK9 2EA UK
Hundred
The Glass The N1 Centre, Islington N1 0PS UK
Works Parkfield Street
The Regent 19 Church Street Walton-on-Thames KT12 2QP UK
The Monks' 163 Friar Street Reading RG1 1HE UK
Retreat
The London 15-16 Strand Torquay TQ1 2AA UK
Inn
The William 53 The Broadway Northwood HA6 1NZ UK
Jolle Hills
The Kings 11-13 Station Road Cheadle SK8 5AF UK
Hall Hulme
The Sir Timothy 47---49 Chapel Worthing BN11 1EG UK
Shelley Road
The Old Courthouse Castlerock Road Coleraine BT51 3HP UK
The Leaping Golden Square, Berwick-upon-Tweed TD15 1BG UK
Salmon Bank Hill
The Almond 31-32 Almondvale Livingston EH54 6HP UK
Bank Road
The Spinning 17-21 Broughshane Ballymena BT43 6EB UK
Mill Street
The William Trinity House Lane Kingston HU1 2JD UK
Wilberforce Upon Hull
The Gatehouse 1 Bird Street Lichfield WS13 6PW UK
The Capitol 7-9 Seagate Dundee DD1 2EG UK
The Thomas 7 Grays Brewery Chelmsford CM2 6QR UK
Mildmay Yard
The Fleur-de-Lis 63-67 Broad Street Banbury OX16 5BL UK
The Merton 42 Merton Road Bootle L20 3BW UK
Inn
The Milson Unit 1D, School Didsbury M20 6RD UK
Rhodes Lane
The Cribbar 11-19 Gover Lane Newquay TR7 1ER UK
The Ice Barque Fredrick Ward Way Grimsby DN31 1XZ UK
The Linen Townhall Street Enniskillen BT74 7BD UK
Hall
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BCGDXSXGBGRC
(END) Dow Jones Newswires
March 10, 2017 02:00 ET (07:00 GMT)
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