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RNS
Wetherspoon (JD) PLC  -  JDW   

Half-year Report

Released 07:00 16-Mar-2018

RNS Number : 9155H
Wetherspoon (JD) PLC
16 March 2018
 

16 March 2018

 

J D WETHERSPOON PLC

PRELIMINARY RESULTS

(For the 26 weeks ended 28 January 2018)

 

FINANCIAL HIGHLIGHTS

 

 

 

Before exceptional items

 

Ÿ  Revenue £830.4m (2017: £801.4m)                          

+3.6%*

Ÿ  Like-for-like sales                                                       

+6.1%

Ÿ  Profit before tax £62.0m (2017: £51.4m)

Ÿ  Operating profit £74.0m  (2017: £65.1m)

Ÿ  Earnings per share (including shares held in trust) 45.7p (2017: 33.8p)

+20.6%

+13.6%

+35.2%

Ÿ  Free cash flow per share 34.8p (2017: 44.2p)

-21.3%

Ÿ  Interim dividend 4.0p (2017: 4.0p)

Maintained

 

After exceptional items**

 

 

Ÿ  Profit before tax £54.3m (2017: £39.9m)

Ÿ  Operating profit £74.0m (2017: £65.1m)

+36.1%

+13.6%

Ÿ  Earnings per share (including shares held in trust) 39.2p (2017: 27.2p)

         

 

* In our pre-close statement of 24 January 2018, we stated that total sales growth was 4.3%. For the purposes of the pre-close statement, we compared weeks 1 to 25 of this financial year with weeks 2 to 26 of the last financial year - the same 25 'calendar weeks'. In the current half-year statement, we compare weeks 1 to 26 of this financial year with weeks 1 to 26 of the previous financial year. The reason for the difference in reference periods is that the year ended 30 July 2017 was a 53-week period.

**Exceptional items as disclosed in account note 7 to the Interim Report 2018.

 

 

Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:

 

"There has been a huge debate, since the referendum, about the economic effects of Brexit.

In particular, trade organisations like the CBI and the BRC, supported by the FT, the Sunday Times, the Guardian, the chairmen of Whitbread and Sainsbury's and others, have misled the public by saying that food prices will automatically rise if we leave the EU without a deal.

 

"This is a fallacy - the EU is a protectionist organisation which imposes high taxes on food, clothing, wine and thousands of other items from non-EU countries - which comprise around 93% of the world's population. Like Monty Python's Dennis Moore, as illustrated by Sam Akaki in appendix 1 below, the EU "….steals from the poor and gives to the rich…".

 

"In fact, MPs have the power to eliminate these import taxes in March 2019, thereby reducing prices for the public, just as their predecessors achieved the same objective by repealing the Corn Laws almost two centuries ago.

 

"Two articles I have written on this subject for Wetherspoon News (appendix 1) and

The Independent newspaper (appendix 2) are included below. The issues have also been examined by Matt Ridley in The Times (appendix 3).

 

"Another frequently repeated Brexit concern is that the much bigger EU economy will be better able to withstand a Mexican standoff than the UK.

 

"This is also a fallacy. For example, Wetherspoon is one of the biggest customers, or possibly the biggest customer, of the excellent Swedish cider-maker Kopparberg. If trade barriers were imposed, so as to make Kopparberg uneconomic, then Wetherspoon could switch to UK suppliers or those from elsewhere in the world.

 

"In this case, the principal losers in a trade war would be the inhabitants of a small town in Sweden, where Kopparberg is produced, rather than the UK economy. Unfortunately for the Swedes, the EU negotiators, unlike those of the UK, are not subject to judgement at the ballot box, so Kopparberg's influence on the outcome may be minimal.

 

"The same principle applies to thousands of EU imports including Prosecco, Champagne and many wines and spirits - in almost all cases there are suitable, and often excellent, alternatives to EU products available elsewhere.

 

"In fact, the biggest danger for EU producers, whose wine industry, for example, has lost huge market share to the New World, in spite of import taxes, is that UK consumers take umbrage at what they see as the overbearing behaviour of EU negotiators, and decide to favour products which originate elsewhere.

 

"Provided that the UK parliament votes to eliminate tariffs, EU producers will, in any event, be faced with a far more competitive UK market - since New Zealand wine producers, for example, will be able to compete on an equal, import tax-free basis, for the first time. So, the antagonistic approach of EU negotiators, which risks alienating UK consumers, is extremely unhelpful to businesses within their own bloc.

 

"Most economists who criticise Brexit use hypothetical arguments, but, in the real world, the UK can eliminate import taxes, improving living standards and simplifying the Byzantine tax system - both of these factors will improve the outlook for consumers and businesses in the UK.

 

"In the six weeks to 11 March 2018, like-for-like sales increased by 3.8% and total sales increased by 2.6%.

 

"The company anticipates higher costs in the second half of the financial year, in areas including pay, taxes and utilities. In view of these additional costs, and our expectation that growth in 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 slightly better-than-expected year-to-date sales, we currently anticipate an unchanged trading outcome for the current financial year."

 

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 2017 has been published on the Company's website on 15 September 2017.

5.         The current financial year comprises 52 trading weeks to 29 July 2018.

6.         The next trading update will be issued on 9 May 2018.

 

 

CHAIRMAN'S STATEMENT AND OPERATING REVIEW

 

In the 26 weeks ended 28 January 2018, like-for-like sales increased by 6.1%

with total sales increasing by 3.6% to £830.4m (2017: £801.4m).

 

Like-for-like bar sales increased by 5.7% (2017: 2.4%), food by 6.9% (2017: 5.1%) and fruit machines by 4.6% (2017: decreased by 2.1%). Like-for-like room sales at our hotels increased by 3.1% (2017: 14.8%). Bar sales were 61.0% of total sales, food 35.3%, fruit machines 2.5% and room sales 1.1%.

 

Operating profit increased by 13.6% to £74.0m (2017: £65.1m). The operating margin was 8.9% (2017: 8.1%). Profit before tax and exceptional items increased by 20.6% to £62.0m (2017: £51.4m). The improved performance in the period was due mainly to strong sales and the sale of some lower-margin pubs.

 

Earnings per share, including shares held in trust by the employee share scheme, and before exceptional items, increased by 35.2% to 45.7p (2017: 33.8p). Earnings-per-share growth was higher than profit growth, mainly as a result of share buybacks.

 

As illustrated in the table in the tax section below, the company paid taxes of £356.1m in the period under review, approximately 30.2% higher than five years ago (2013: £273.5m).

 

Net interest was covered 5.5 times by profit before interest, tax and exceptional items (2017: 4.6 times). Total capital investment was £61.4m in the period (2017: £102.8m). £7.5m was spent on freehold reversions of properties where Wetherspoon was the tenant (2017: £55.8m), £35.1m on existing pubs (2017: £28.6m) and £18.8m on new pub openings and extensions (2017: £18.4m).

 

Exceptional items totalled £6.8m (2017: £7.3m). Twelve pubs were sold or closed in the period. There was a £5.9m (2017: £6.6m) loss on disposal and an impairment charge of £1.1m (2017: £5.2m) for closed pubs and pubs which are on the market. The cash effect of the exceptional charges was an inflow of £0.8m from the proceeds of pub disposals.

 

Free cash flow, after capital investment of £35.0m in existing pubs (2017: £28.4m) and payments of tax and interest, was £36.8m (2017: £49.2m). Free cash flow per share decreased by 21.3% to 34.8p (2017: 44.2p). The decrease was due mainly to increased expenditure on existing pubs, increased corporation tax payments and a

reduction in payables.

 

Dividends

The board declared an interim dividend of 4.0p per share for the current interim financial period ending 28 January 2018 (2017: 4.0p per share). The interim dividend will be paid on 31 May 2018 to those shareholders on the register at 4 May 2018.

 

Corporation tax

We expect the overall corporation tax charge for the financial year, including current and deferred taxation, to be approximately 23.4% before exceptional items (30 July 2017: 25.1%). This reduction is due primarily to decreases in the amounts of non-qualifying depreciation and expenditure not allowable for tax purposes.

 

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.

 

Share buybacks

During the half year, 3,497,500 shares were repurchased by the company for cancellation, representing approximately 3.21% of the issued share capital, at a cost of £36m, including stamp duty, representing an average cost per share of 1,025p.

 

At the year end, the company had a liability for share purchases of £15.5m which was settled during the half year, ended 28 January 2018.

 

Financing

As at 28 January 2018, the company's net debt, including bank borrowings and finance leases, but excluding derivatives, was £756.4m, an increase of £60.1m, compared with that of the previous year end (30 July 2017: £696.3m).

 

The net-debt-to-EBITDA ratio was 3.48 times at the period end (30 July 2017: 3.39). The company has total bank facilities available, excluding finance leases, of £860m (30 July 2017: £860m).

 

For the foreseeable future, it is intended that the company's net-debt-to-EBITDA ratio will be around 3.5 times. The ratio would rise for a temporary period, if there were, for example, 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.

 

As indicated previously, a higher level of debt may be justifiable when interest rates are low and other factors are favourable.

 

Property

During the period, we opened three new pubs and closed 12, bringing the number open at the period end to 886. Following a review of our estate, in recent years, we placed around 100 pubs on the market, 88 of which have now been sold, are under contract or have been closed.

 

UK taxes and regulation

Pubs and restaurants pay proportionally 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

2018

2017

(estimate - UK only)

£m

£m

VAT

162.5

156.5

Alcohol duty

85.4

79.3

PAYE and NIC

54.1

45.1

Business rates

27.5

25.3

Corporation tax

12.2

8.3

Machine duty

5.2

5.0

Climate change levy

4.5

4.8

Carbon tax

1.7

1.7

Landfill tax

1.3

1.2

Fuel duty

1.0

1.0

Premise licence and TV licences

0.4

0.4

Stamp duty

0.3

3.0

TOTAL TAX

356.1

331.6

Tax per pub (£000)

402.0

362.8

Tax as % of sales

42.9%

41.4%

Pre-exceptional profit after tax

48.2

37.7

Profit after tax as % of sales

5.8%

4.7%

 

 

Further progress

As previously highlighted, the company's philosophy is to try continuously to upgrade as many areas of the business as possible.

 

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. Currently , 92% of our pubs have obtained the maximum five rating, under the FSA scheme, with 98% of pubs receiving a rating of four or above. This record reflects extremely hard work by our central catering, audit and operations team, as well as by the teams in our pubs.

 

We have recently been recognised as a 'Top Employer UK' by the Top Employers Institute for 15 consecutive years.

 

The company has also recently been recognised for the quality of the facilities in its pubs, winning in six categories at the 'loo of the year' awards.

 

During the period under review, we allocated £21.2m in bonuses and free shares to employees, 97% of which was paid to those below board level and 84% to those working in our pubs.

 

Current trading and outlook

There has been a huge debate, since the referendum, about the economic effects of Brexit. In particular, trade organisations like the CBI and the BRC, supported by the FT, the Sunday Times, the Guardian, the chairmen of Whitbread and Sainsbury's and others, have misled the public by saying that food prices will automatically rise if we leave the EU without a deal.

 

This is a fallacy - the EU is a protectionist organisation which imposes high taxes on food, clothing, wine and thousands of other items from non-EU countries - which comprise around 93% of the world's population. Like Monty Python's Dennis Moore, as illustrated by Sam Akaki in appendix 1 below, the EU "….steals from the poor and gives to the rich…".

 

In fact, MPs have the power to eliminate these import taxes in March 2019, thereby reducing prices for the public, just as their predecessors achieved the same objective by repealing the Corn Laws almost two centuries ago.

 

 

Two articles I have written on this subject for Wetherspoon News (appendix 1) and The Independent newspaper (appendix 2) are included below. The issues have also been examined by Matt Ridley in The Times (appendix 3).

 

Another frequently repeated Brexit concern is that the much bigger EU economy will be better able to withstand a Mexican standoff than the UK.

 

This is also a fallacy. For example, Wetherspoon is one of the biggest customers, or possibly the biggest customer, of the excellent Swedish cider-maker Kopparberg. If trade barriers were imposed, so as to make Kopparberg uneconomic, then Wetherspoon could switch to UK suppliers or those from elsewhere in the world.

 

In this case, the principal losers in a trade war would be the inhabitants of a small town in Sweden, where Kopparberg is produced, rather than the UK economy. Unfortunately for the Swedes, the EU negotiators, unlike those of the UK, are not subject to judgement at the ballot box, so Kopparberg's influence on the outcome may be minimal.

 

The same principle applies to thousands of EU imports including Prosecco, Champagne and many wines and spirits - in almost all cases there are suitable, and often excellent, alternatives to EU products available elsewhere.

 

In fact, the biggest danger for EU producers, whose wine industry, for example, has lost huge market share to the New World, in spite of import taxes, is that UK consumers take umbrage at what they see as the overbearing behaviour of EU negotiators, and decide to favour products which originate elsewhere.

 

Provided that the UK parliament votes to eliminate tariffs, EU producers will, in any event, be faced with a far more competitive UK market - since New Zealand wine producers, for example, will be able to compete on an equal, import tax-free basis, for the first time. So, the antagonistic approach of EU negotiators, which risks alienating UK consumers, is extremely unhelpful to businesses within their own bloc.

 

Most economists who criticise Brexit use hypothetical arguments, but, in the real world, the UK can eliminate import taxes, improving living standards and simplifying the Byzantine tax system - both of these factors will improve the outlook for consumers and businesses in the UK.

 

In the six weeks to 11 March 2018, like-for-like sales increased by 3.8% and total sales increased by 2.6%.

 

The company anticipates higher costs in the second half of the financial year, in areas including pay, taxes and utilities. In view of these additional costs, and our expectation that growth in 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 slightly better-than-expected year-to-date sales, we currently anticipate an unchanged trading outcome for the current financial year.

 

 

 

Tim Martin

Chairman

15 March 2018

 

 

 

 

Appendix 1 - Tim's Viewpoint, Wetherspoon News, spring 2018

 

Ignore daft ideas - the public does know best

 

Wetherspoon News foils the CBI plan to fool the public about food prices

 

Few people are capable of expressing, with equanimity, opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.

- Albert Einstein

 

Wetherspoon News has had, at least, a temporary victory in the battle to correct the myth that food prices would inevitably rise in the absence of a 'deal' with the EU - a battle in which we took on much of the national press and big business.

 

The perpetrators of the myth - the CBI, the British Retail Consortium, the Financial Times, The Sunday Times, The Guardian, the chairmen of Sainsbury's and Whitbread and others - have had to accept that MPs do, indeed, have the power, in March next year, to lower food prices at a stroke, by voting to eliminate taxes, also called tariffs, on non-EU food imports, including coffee, rice, wine and thousands of other products.

 

Imports

This will mean, under World Trade Organisation rules, that there are no taxes, either, on food imports from the EU itself.

 

In addition, on leaving, MPs have the power, as government lawyers have repeatedly stated, to end the £200 million per week of net payments to the EU, and to divert those funds for domestic purposes - maybe the NHS, maybe tax breaks for the less well-off… MPs can choose.

 

Another benefit is that the UK can regain control of its historic fishing waters - 60% of fish in UK waters are now caught by EU boats, with devastating effects in many fishing communities.

 

Economists

So, why have the CBI, the City and most banks and economists insisted that we're all doomed without a deal?

 

The main reason is that highly educated people (and the heads of the above organisations, who all went to Oxford or Cambridge University) are often more susceptible to daft ideas than the 'man on the Clapham omnibus'.

 

Philby, Burgess and the Apostles of the 1930s, seduced by undemocratic creeds, all went to Cambridge University.

 

The truly clever people, who created democracy and the jury system, for example, understood these dangers.

 

But not all graduates are seduced - as the above quotation from Einstein implies, there are non- conformist exceptions.

 

Indeed, some of the most articulate advocates of democracy in the referendum were Oxbridge grads.

An unfortunate by-product of education, for the credulous, is the toxic belief that the elite knows best.

 

Twenty years ago, middle-aged Oxbridge males like Clarke, Mandelson, Blair, Heseltine and Howe, along with their peers at the CBI, Goldman Sachs, Arthur Andersen, Ernst and Young, most of the City and the Financial Times, urged us, with revolutionary zeal, to join the disastrous euro - in spite of the fact that its predecessor, the exchange rate mechanism, had brought the country to its knees only a few years before.

 

Luckily you, the public, remained unimpressed.

 

Elite

This 'we know best' attitude, incorporating a grudging view of democracy, is typical of the elite - and is illustrated by comments from City investment adviser, and Cambridge graduate, Mark Brumby.

 

In a February newsletter to clients, he said: "Democracy, which is great, but which gave us Boaty McBoatface and the Birdie Song … has now given us Brexit."

 

Brumby adds that The Times newspaper warns liberals that "they should not sneer at populism".

 

Brumby himself then says that "if you substitute 'look aghast' for 'sneer' and 'ignorance' for 'populism' … you might get a different answer". The indiscreet Brumby, influential in the City, says in public what around 70-80% of the elite say in privat

They mistrust the hoi polloi - and have started to call ideas or movements with which they disagree 'populism'. But, in reality, populism is Churchill in the 1930s, the Boston Tea Party, the Beatles, Rap, Punk,

Martin Luther King, Mahatma Gandhi, the suffragettes, the smashing of the Berlin Wall, the Internet and a million other interventions. Not all are great, but populism, distilled through a democratic system, is humanity's greatest achievement.

 

But the modern-day apostles, who evangelise the EU's unelected presidents, unaccountable court and parliament whose MPs can't even initiate legislation, don't hesitate to attribute the referendum result to racism or ignorance. They also have a more immediate motive for the orchestrated campaign to frighten the public about food price rises.

 

Deal

If the public can be convinced about the necessity of a deal with the EU, they can also be convinced to stay in the EU's 'customs union'.

 

In effect, this means staying in the EU by stealth, since the UK would then have to obey most EU laws - and would lose the benefits of independence, such as lower food prices and control of fishing rights.

 

The customs union means that EU countries, which comprise seven per cent of the world's population, charge no food taxes to one another, but charge punitive taxes to the rest of the world, thereby keeping prices at artificially high levels for UK and EU consumers.

 

The customs union also causes huge damage to African economies, as Sam Akaki emphasises on the opposite page.

 

And the food taxes on non-EU imports are sent to Brussels, too, rather than being used for the benefit of the UK public. Can you Adam and Eve it? Nice try Carolyn Fairbairn of the CBI, David Tyler of Sainsbury's, Richard Baker of Whitbread and others, but we've rumbled the latest edition of Project Fear. Listen up, big chiefs. The EU is leading most of Europe on a tragic path, away from democracy.Just ask the Greeks.

 

Einstein, a seriously clever guy who never went to university, said that real genius was knowing what you don't know.

 

So, when it comes to complex issues like the euro and democracy, take a cue from Einstein and understand that the collective intelligence of the public is infinitely greater than yours. It's painful for big egos to accept, but the public really does know best.

 

Tim Martin, Chairman

Appendix 2 - Tim Martin, The Independent, 21 December 2017

 

"Brexit will be great for our food industry and our pubs…

 

According to historian Martin Gilbert the truth exists, but it's hidden in a fog by lack of evidence and lack of perspective - other impediments include intellectual arrogance and misinformation, especially in politics. It's fascinating to see, at close quarters, the process by which myths are dismantled and the truth emerges in our democratic system.

 

The Confederation of British Industry (CBI) and the British Retail Consortium (BRC), abetted by the chairmen of Whitbread and Sainsbury's, have had considerable success in creating a fog which has misled the public, MPs and commentators about food prices. The Financial Times, Sunday Times and Guardian, for example, have all run stories stating that failure to agree a deal with the EU will result in substantial food price rises - a key part of their "cliff-edge" narrative of economic dislocation.

 

The false thesis is that reverting to World Trade Organisation rules, in the absence of an EU "deal", automatically results in tariffs, currently imposed on non-EU countries only, applying equally to imports from the EU itself. This is untrue, since WTO rules allow our Parliament to emulate New Zealand, Singapore and Hong Kong, among others, by eliminating food tariffs, provided the policy applies equally to all nations. Such rules would, as many Remainers admit, cause prices to fall in shops - and pubs.

 

In a Jeremy Vine show debate the Labour MP, Chuka Umunna, repeated the canard about food price rises. It was obvious that Chuka had swallowed the CBI line and really believed what he was saying, so I took to Twitter, for the first time ever, to try to correct his understandable misinterpretation. In an exchange of tweets, Chuka stuck religiously to his guns, but his followers got the point even so.

 

Their comments, hidden in a fog of abuse, abandoned the automatic-price-rise-post-Brexit position and instead said that UK farmers would suffer. That at least, unlike Chuka's position, is a valid argument. Indeed, it was a vexed and divisive debate in the 1830s and 40s, when almost precisely the same issues arose with regard to the Corn Laws. They were created to keep corn prices at a high level, by restricting imports, principally to protect landowners whose views predominated in Parliament at the time. However, their imposition eventually had devastating consequences for the poor, and was felt by many to have had catastrophic consequences in Ireland during the potato famine. When the Corn Laws were eventually abandoned, food prices fell.

 

The pub industry in the UK was also notorious for "trade protection" for most of the 20th century. Brewers were protected by a licensing system which favoured vested interests, but caused high prices and reduced competition in pubs and restaurants. Nostalgia aside, it is clear to most people that the abandonment of "barriers to entry" has led to a dramatic increase in the number of independent pubs, bars and restaurants, and to greater choice and higher standards than in the past.

 

There are thousands of examples of the benefits to the public of increased choice and competition. New Zealand farmers, to take one example, were protected by trade barriers in the recent past. There was huge anxiety about the elimination of tariffs there, but free trade has been a great success - farming productivity has surged, living standards have improved and food exports have boomed.

 

For those with long memories, tariffs and protection also did little to help the British car manufacturing industry - and are unlikely to help British farmers or manufacturers today, especially in the long run.

The CBI and big-business boardrooms, through religious attachment to the EU - which follows their equivalent zeal for the disastrous Exchange Rate Mechanism and the euro - have undoubtedly fooled some of the people some of the time. However, in a democracy the truth will emerge, and Chuka and members of the public who have been duped will quickly see through the cloud of misinformation. In due course, the debate will move on to the question of the validity of the EU's modern-day Corn Laws.

 

  

The emergence of the truth about food prices may, or may not, change political positions in the country about the EU, but the existence of the debate shows how democracy works, and why it's the best system. The main argument in favour of Brexit, ill-understood in the echo chamber of Remain, is that the EU's lack of democracy, its distant parliament, unelected presidents and unaccountable court prevent the very debates and direct dialogues with lawmakers, like Chuka, upon which freedom and prosperity depend."

 

 

 

Tim Martin

 

 

 

 

 

Appendix 3 - Matt Ridley, February 26 2018, The Times

 

"Corbyn's post-Brexit customs union would hurt the poor

 

The Labour leader's latest stance on Brexit ignores historic links between left-wing principles and free trade

 

If reports are accurate, there is at least one thing in Jeremy Corbyn's speech today with which I will agree: "The EU is not the root of all our problems and leaving it will not solve all our problems. Likewise the EU is not the source of all enlightenment and leaving it does not inevitably spell doom for our country. Brexit is what we make of it together." Yet this makes his overall conclusion, that we should stay in "a" customs union with the European Union, all the more baffling. That would be the worst of all worlds. It would be, in an inversion of the Labour Party's phrase, "for the few, not the many".

 

As Steven Pinker sets out in his new book Enlightenment Now, human beings are cursed by a pervasive negativity bias, "driven by a morbid interest in what can go wrong". Yet again and again, we defy the pessimists and improve the world. Brexit is fertile ground for this proclivity for pessimism because it has not yet happened. Our imaginations, and those of people with political axes to grind, run riot.

 

This is being exploited by the paid servants of big business and big government to try to keep us in a customs union system that benefits both. Ordinary people, in my experience, mostly see through this, as they did on referendum day. As a report from the organisations Labour Leave, Economists for Free Trade and Leave Means Leave calculated, the poor would benefit most from Brexit. If the Labour Party is really on the side of the poor rather than the elite, the EU customs union is a curious thing to defend. As David Paton, the professor of industrial economics at Nottingham University Business School, pointed out in a recent paper, The Left-wing Case for Free Trade, free trade always used to be a left-wing cause.

 

Free trade says to the poorest: we will enable you to get access to the cheapest and best products and services from wherever in the world they come. We will not, in the economist Joan Robinson's arresting image, put rocks in our own harbours to obstruct arriving cargo ships just because other people put rocks in theirs. The customs union, however, says: if Italy wants rocks in its harbours to protect its rice growers against Asian competition, then Britain must have them too, even though it grows no rice.

 

Take trainers. Britain makes very few such shoes. It imports lots. The average external EU customs union tariff on them is 17 per cent. Four fifths of this money goes straight to the European Commission. Poor people do not necessarily buy more trainers than rich people but trainers are a higher percentage of their spending. Their inflated trainer prices mean they spend less on other things, which hurts other producers, many of them British, affecting jobs and pay. The tariffs are there for pure protectionism: to aid the shoe industry elsewhere in Europe.

 

The purpose of all production is consumption, said Adam Smith. Or, as the American wit PJ O'Rourke put it, "imports are Christmas morning; exports are January's Mastercard bill". Yet the conversation about the customs union has been conducted almost entirely on behalf of producers, and exporters in particular. Remember, according to the Office for National Statistics in 2016, trade with the EU accounts for only 12 per cent of gross domestic product. It is not unreasonable to put the interests of the other 88 per cent first.

 

The poor are consumers too. So are businesses, including ones that export. They import raw materials and other goods and the cheaper those are, the more competitive our exporters will be. Outside a customs union, we would not have to cut all tariffs. If we wanted to protect certain British industries then we could, although I hope we would do so sparingly and temporarily.

 

This argument for free trade is not just a theoretical one. It was demonstrated unambiguously when we flourished after repealing the Corn Laws, which also privileged producers at the expense of consumers, in the mid-19th century. It was demonstrated by the two most free-trading economies in the world, Singapore and Hong Kong, as they roared past us in the prosperity league table from very poor to very rich in recent decades, and more recently by New Zealand and Australia, fast-growing since their turns towards freer trade.

 

The customs union diverts our trade towards Europe at the expense of poorer countries. Instead of buying ground coffee from African factories with low costs, we buy it from Germany: there is no tariff on coffee beans imported from Africa but a tariff on processed coffee. The customs union is not a free trade area. It would be possible to be in a free trade area with the EU while outside a customs union, like Iceland, Norway and Liechtenstein.

 

That we voted to leave the customs union should not be in doubt. The Vote Leave organisation made clear that "Britain lacks the power to strike free trade deals with its trading partners outside Europe. Being in the EU means that Brussels has full control of our trade policy . . . if we vote Leave, we can negotiate for ourselves." The government made clear that "a common external trade policy is an inherent and inseparable part of a customs union" and that apart from emulating Turkey's subservient relationship with the EU, "all the alternatives involve leaving the customs union". In 1846, two years before the publication of The Communist Manifesto, Richard Cobden, the campaigning manufacturer and politician whose rational optimism has proved a better guide to subsequent history than the conflict-obsessed dialectic of Karl Marx, made a speech in Manchester. "I believe that the physical gain will be the smallest gain to humanity from the success of this principle [free trade]," he said. "I look farther; I see in the free trade principle that which shall act on the moral world as the principle of gravitation in the universe - drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace.

 

"I have looked even farther . . . I believe that the desire and the motive for large and mighty empires; for gigantic armies and great navies - for those materials which are used for the destruction of life and the desolation of the rewards of labour - will die away; I believe that such things will cease to be necessary, or to be used, when man becomes one family, and freely exchanges the fruits of his labour with his brother man."

 

Give it a try, Jeremy."

 

 

 

 

INCOME STATEMENT FOR THE 26 WEEKS ENDED 28 January 2018

 

J D Wetherspoon plc, company number: 1709784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Audited

 

 

26 weeks ended

26 weeks ended

26 weeks

ended

26 weeks

ended

53 weeks

ended

53 weeks

ended

 

 

28 January

2018

28 January

2018

22 January

 2017

22 January

 2017

30 July

 2017

30 July

 2017

 

 

Before exceptional

 items

After

 exceptional

items

Before exceptional items

After

 exceptional

items

Before exceptional items

After

 exceptional

items

 

 

£000

£000

£000

£000

£000

£000

Revenue

4

830,392

830,392

801,435

801,435

1,660,750

1,660,750

Operating costs

 

(756,405)

(756,405)

(736,334)

(736,334)

(1,532,242)

(1,532,242)

Operating profit

5

73,987

73,987

65,101

65,101

128,508

128,508

Property gains

6

1,653

1,653

586

586

2,807

2,807

Property losses - exceptional

7

 

(7,656)

 

(11,885)

 

(26,868)

Profit before interest and tax

 

75,640

67,984

65,687

53,802

131,315

104,447

Finance income

 

27

27

38

38

72

72

Finance income - exceptional

7

 

-

 

402

 

402

Finance costs

 

(13,666)

(13,666)

(14,310)

(14,310)

(28,557)

(28,557)

Profit before tax

 

62,001

54,345

51,415

39,932

102,830

76,364

Income tax expense

8

(13,785)

(13,785)

(13,760)

(13,760)

(25,846)

(25,846)

Income tax expense - exceptional

8

 

881

 

4,138

 

5,541

Profit for the period

 

48,216

41,441

37,655

30,310

76,984

56,059

 

 

 

 

 

 

 

 

Earnings per ordinary share (p)

 

 

 

 

 

 

 - Basic1

9

46.7

40.1

34.6

27.8

70.8

51.5

 - Diluted2

9

45.7

39.2

33.8

27.2

69.2

50.4

 

 

STATEMENT OF COMPREHENSIVE INCOME FOR THE 26 WEEKS ENDED 28 January 2018

 

 

Notes

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Items which will be reclassified subsequently to profit or loss:

 

 

 

 

Interest-rate swaps: gain taken to other comprehensive income

16

12,101

30,381

24,581

Tax on items taken directly to other comprehensive income

16

(2,056)

(5,800)

(4,814)

Currency translation differences

 

(762)

883

2,104

Net gain recognised directly in other comprehensive income

 

9,283

25,464

21,871

Profit for the period

 

41,441

30,310

56,059

Total comprehensive income for the period

 

50,724

55,774

77,930

 

[1] Calculated excluding shares held in trust.

2 Calculated using issued share capital which includes shares held in trust.

CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 28 January 2018

 

 

J D Wetherspoon plc, company number: 1709784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

Unaudited

Unaudited

Unaudited

Unaudited

Audited

Audited

 

 

cash flow

free cash

cash flow

free cash

cash flow

free cash

 

 

 

flow1

 

flow1

 

flow1

 

 

26 weeks

26 weeks

26 weeks

26 weeks

53 weeks

53 weeks

 

 

ended

ended

ended

ended

ended

ended

 

 

28 January

28 January

22 January

22 January

30 July

30 July

 

 

2018

2018

2017

2017

2017

2017

 

 

£000

£000

£000

£000

£000

£000

Cash flows from operating activities

 

 

 

 

 

 

 

Cash generated from operations

10

104,066

104,066

105,052

105,052

224,403

224,403

Interest received

 

15

15

26

26

57

57

Net exceptional finance income

 

-

 

402

 

402

 

Interest paid

 

(12,236)

(12,236)

(13,150)

(13,150)

(26,834)

(26,834)

Corporation tax paid

 

(12,163)

(12,163)

(8,250)

(8,250)

(20,683)

(20,683)

Net cash inflow from operating activities

 

79,682

79,682

84,080

83,678

177,345

176,943

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of property, plant and equipment

(32,513)

(32,513)

(18,775)

(18,775)

(45,056)

(45,056)

Purchase of intangible assets

 

(2,468)

(2,468)

(9,633)

(9,633)

(13,502)

(13,502)

Investment in new pubs and pub extensions

(27,620)

 

(18,012)

 

(40,285)

 

Freehold reversions

 

(11,288)

 

(49,582)

 

(88,603)

 

Proceeds of sale of property, plant and equipment

2,726

 

8,798

 

19,620

 

Net cash outflow from investing activities

 

(71,163)

(34,981)

(87,204)

(28,408)

(167,826)

(58,558)

Cash flows from financing activities

 

 

 

 

 

 

 

Equity dividends paid

17

(8,437)

 

(8,933)

 

(13,352)

 

Purchase of own shares for cancellation

 

(51,647)

 

(25,359)

 

(28,445)

 

Purchase of own shares for share-based payments

(7,938)

(7,938)

(6,046)

(6,046)

(10,449)

(10,449)

Loan advances

15

72,595

 

59,944

 

47,236

 

Net cash inflow/(outflow) from financing activities

4,573

(7,938)

19,606

(6,046)

(5,010)

(10,449)

Net change in cash and cash equivalents

15

13,092

 

16,482

 

4,509

 

Opening cash and cash equivalents

 

50,644

 

46,135

 

46,135

 

Closing cash and cash equivalents

 

63,736

 

62,617

 

50,644

 

Free cash flow

 

 

36,763

 

49,224

 

107,936

Free cash flow per ordinary share

9

 

34.8p

 

44.2p

 

97.0p

 

   

1 Free cash flow is a measure not required by accounting standards; a definition is provided in our accounting policies.

 

 

 

BALANCE SHEET AS AT 28 January 2018

 

J D Wetherspoon plc, company number: 1709784

 

 

 

 

 

Notes

Unaudited

Unaudited

Audited

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

11

1,300,358

1,229,252

1,282,633

Intangible assets

12

28,219

30,809

29,691

Investment property

13

7,522

7,577

7,550

Other non-current assets

14

8,102

8,693

8,272

Derivative financial instruments

15

16,204

17,645

11,380

Deferred tax assets

 

4,556

5,626

6,612

Total non-current assets

 

1,364,961

1,299,602

1,346,138

 

 

 

 

 

Assets held for sale

 

276

4,182

1,524

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

20,531

20,401

21,575

Receivables

 

24,827

29,517

21,029

Cash and cash equivalents

15

63,736

62,617

50,644

Total current assets

 

109,094

112,535

93,248

Total assets

 

1,474,331

1,416,319

1,440,910

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Borrowings

15

(113)

(80)

(17,461)

Derivative financial instruments

15

(3,728)

-

-

Trade and other payables

 

(278,283)

(278,329)

(313,525)

Current income tax liabilities

 

(13,096)

(12,327)

(12,159)

Provisions

 

(4,408)

(4,526)

(5,175)

Total current liabilities

 

(299,628)

(295,262)

(348,320)

Non-current liabilities

 

 

 

 

Borrowings

15

(819,991)

(758,536)

(729,487)

Derivative financial instruments

15

(39,271)

(50,741)

(50,276)

Deferred tax liabilities

 

(69,003)

(71,519)

(69,731)

Provisions

 

(1,890)

(2,850)

(1,890)

Other liabilities

 

(11,583)

(12,433)

(12,383)

Total non-current liabilities

 

(941,738)

(896,079)

(863,767)

Net assets

 

232,965

224,978

228,823

Shareholders' equity

 

 

 

 

Share capital

18

2,110

2,211

2,180

Share premium account

 

143,294

143,294

143,294

Capital redemption reserve

 

2,321

2,220

2,251

Hedging reserve

 

(22,239)

(27,470)

(32,284)

Currency translation reserve

 

4,133

3,561

4,899

Retained earnings

 

103,346

101,162

108,483

Total shareholders' equity

 

232,965

224,978

228,823

 

 

 

 

 

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

 

 

 

 

 

 

£000

£000

£000

£000

£000

£000

£000

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

(4,814)

1,338

25,632

22,156

 

 

Profit for the period

 

 

 

 

 

 

25,749

25,749

 

 

Interest-rate swaps: cash flow hedges

 

 

 

 

(5,800)

 

 

(5,800)

 

 

Tax on items taken directly to comprehensive income

 

 

986

 

 

986

 

 

Currency translation differences

 

 

 

 

 

1,338

(117)

1,221

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of own shares for cancellation

 

(31)

 

31

 

 

(15,442)

(15,442)

 

 

Share-based payment charges

 

 

 

 

 

 

5,745

5,745

 

 

Tax on share-based payment

 

 

 

 

 

 

208

208

 

 

Purchase of own shares for share-based payments

 

 

 

 

(4,403)

(4,403)

 

 

Dividends

 

 

 

 

 

 

(4,419)

(4,419)

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 July 2017

 

2,180

143,294

2,251

(32,284)

4,899

108,483

228,823

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

10,045

(766)

41,445

50,724

 

 

Profit for the period

 

 

 

 

 

 

41,441

41,441

 

 

Interest-rate swaps: cash flow hedges

 

 

 

 

12,101

 

 

12,101

 

 

Tax on items taken directly to comprehensive income

 

 

(2,056)

 

 

(2,056)

 

 

Currency translation differences

 

 

 

 

 

(766)

4

(762)

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of own shares for cancellation

 

(70)

 

70

 

 

(36,205)

(36,205)

 

 

Share-based payment charges

 

 

 

 

 

 

5,464

5,464

 

 

Tax on share-based payment

 

 

 

 

 

 

534

534

 

 

Purchase of own shares for share-based payments

 

 

 

 

(7,938)

(7,938)

 

 

Dividends

 

 

 

 

 

 

(8,437)

(8,437)

 

 

At 28 January 2018

 

2,110

143,294

2,321

(22,239)

4,133

103,346

232,965

 

 

During the half year, 3,497,500 shares were repurchased by the company for cancellation, representing approximately

3.21% of the issued share capital, at a cost of £36.2m, including stamp duty, representing an average cost per share of 1,025p.

At the year end, the company had a liability for share purchases of £15.5m which was settled during the half year,

ended 28 January 2018.

 

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 15 March 2018.

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 30 July 2017 were approved by the board of directors on 14 September 2017 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 53 weeks ended 30 July 2017, 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 2017,
pages 41 and 43.

 

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 53 weeks ended 30 July 2017 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 53 weeks ended 30 July 2017 is extracted from the statutory accounts of the Company for that year.

The interim results for the 26 weeks ended 28 January 2018 and the comparatives for 22 January 2017 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 30 July 2017 - 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
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 31 July 2017 and will have a minimal impact on the financial statements:

 

n Recognition of deferred tax assets for unrealised losses - amendments to IAS 12

n Disclosure initiative - amendments to IAS 7

n Annual improvements to IFRS 2014 - 2016 cycle

 

Standards and interpretations which are not yet effective and have not been early adopted by the Company:

 

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. 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.

 

The impact of this standard is expected to be material. The choice of transition method is expected to be significant.

 

The standard gives the option to either fully restate or recognise an asset equal to the value of the liability on the date of transition.

 

The Company is waiting for clarification on the tax treatment of this change, before selecting the transition method.

 

On 28 May 2014, the International Accounting Standards Board issued IFRS 15 - 'Revenue from Contracts with Customers' which is effective for periods starting on or after 1 January 2018. The impact of this accounting standard on the Company's accounts is considered immaterial. The Company does not have long-term contractual relationships with its customers.

 

On 24 July 2014, the International Accounting Standards Board issued IFRS 9 - 'Financial Instruments: Recognition and Measurement' which is effective for periods starting on or after 1 January 2018. IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

 

Debt instruments currently classified as 'held to maturity' and measured at amortised cost will meet the conditions for classification at amortised cost under IFRS 9.

 

The Company believes that its current hedge relationships will qualify as continuing hedges, on the adoption of IFRS 9.

 

4.   Revenue

 

Revenue disclosed in the income statement is analysed as follows:

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

 

 

 

 

 

Sales of food, beverages, hotel rooms and machine income

 

830,392

801,435

1,660,750

 

 

5.   Operating profit - analysis of costs by nature

 

This is stated after charging/(crediting):

 

 

 

 

 

Notes

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Concession rental payments

 

11,474

11,639

24,784

Minimum operating lease payments

 

22,430

23,727

44,828

Repairs and maintenance

 

32,182

29,232

66,219

Net rent receivable

 

(679)

(743)

(1,422)

Share-based payments

 

5,464

4,966

10,711

Depreciation of property, plant and equipment

11

34,270

32,741

66,483

Amortisation of intangible assets

12

3,992

3,332

6,931

Depreciation of investment properties

13

28

28

55

Amortisation of other non-current assets

14

170

206

400

 

 

6.   Property (gains)/losses

 

 

 

 

 

 

 

 

 

Notes

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

 

 

 

 

 

Non-exceptional property (gains)/losses

 

 

 

 

Loss/(gain) on disposal of fixed assets

 

(988)

62

(615)

Additional costs of disposal

 

15

-

25

Other property gains

 

(680)

(648)

(2,217)

 

 

(1,653)

(586)

(2,807)

 

 

 

 

 

Exceptional property losses

 

 

 

 

Loss on disposal of fixed assets - disposal programme

 

3,580

5,618

15,099

Additional costs of disposal

 

2,330

976

3,262

Impairment of property, plant and equipment

 

1,131

5,169

7,787

Onerous lease provision

 

615

122

720

 

7

7,656

11,885

26,868

 

 

 

 

 

Total property losses

 

6,003

11,299

24,061

 

 

7.   Exceptional items

 

 

 

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Exceptional property losses

 

 

 

 

Disposal programme

 

 

 

 

Loss on disposal of pubs

 

5,910

6,594

18,361

Impairment of property plant and equipment

 

1,131

3,899

5,943

Impairment of other non-current assets

 

-

1,270

141

Onerous lease reversal

 

-

(235)

(1,319)

Onerous lease provision

 

242

252

1,659

 

 

7,283

11,780

24,785

Other property losses

 

 

 

 

Impairment of property, plant and equipment

 

-

-

1,664

Impairment of intangible assets

 

-

-

39

Onerous lease reversal

 

(110)

(208)

(696)

Onerous lease provision

 

483

313

1,076

 

 

373

105

2,083

 

 

 

 

 

Total exceptional property losses

 

7,656

26,868

 

 

 

 

 

Other exceptional items

 

 

 

 

Net exceptional finance income

 

-

(402)

(402)

 

 

-

(402)

(402)

 

 

 

 

 

Total pre-tax exceptional items

 

7,656

11,483

26,466

 

 

 

 

 

Exceptional tax

 

 

 

 

Exceptional tax items

 

-

(4,413)

(4,155)

Tax effect on exceptional items

 

(881)

275

(1,386)

 

 

(881)

(4,138)

(5,541)

 

 

 

 

 

Total exceptional items

 

6,775

7,345

20,925

 

 

Disposal programme

The Company has offered several of its sites for sale. During the half year end, 11 pubs had been sold, two were classified as held for sale and two additional pubs 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 £1,131,000 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.

 

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, £373,000 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, no exceptional charge 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 £845,000.

 

 

 

Impairments recognised in last half-year accounts were reclassified as disposal losses in the full-year accounts, if the pub was sold in the second half of the year.

8.     Income tax expense

 

The taxation charge for the 26 weeks ended 28 January 2018 is based on the pre-exceptional profit before tax of £62.0m and the estimated effective tax rate before exceptional items for the 26 weeks ended 28 January 2018 of 22.2% (July 2017: 25.1%). This comprises a pre-exceptional current tax rate of 22.0% (July 2017: 23.9%) and a pre-exceptional deferred tax charge of 0.2% (July 2017: 1.2%).

 

The UK standard weighted average tax rate for the period is 19% (2017: 19.67%). 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

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Income tax before exceptional items

 

 

 

 

Current income tax:

 

 

 

 

Current tax

 

13,645

12,491

24,837

Prior year adjustment

 

(6)

(93)

(246)

Total current income tax

 

13,639

12,398

24,591

 

 

 

 

 

Deferred tax:

 

 

 

 

Origination and reversal of temporary differences

 

(162)

1,601

1,103

Adjustment in respect of prior period

 

308

(239)

152

Total deferred tax

 

146

1,362

1,255

 

 

 

 

 

Total income tax expense before exceptional items

 

13,785

25,846

 

 

 

 

 

Exceptional income tax

 

 

 

 

Exceptional current income tax:

 

 

 

 

Current tax on exceptional items

 

(221)

59

161

Total exceptional current income tax

 

(221)

59

161

 

 

 

 

 

Exceptional deferred tax:

 

 

 

 

Deferred tax on exceptional items

 

(660)

216

(1,547)

Impact of change in the UK tax rate - exceptional

 

-

(4,413)

(4,155)

Total exceptional deferred tax

 

(660)

(4,197)

(5,702)

 

 

 

 

 

Total exceptional income tax credit on exceptional items

 

(881)

(5,541)

 

 

 

 

 

Tax charge in the income statement

 

12,904

9,622

20,305

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Taken through equity

 

 

 

 

Current tax on share-based payment

 

(320)

(127)

(159)

Deferred tax on share-based payment

 

(214)

(87)

(263)

Tax charge credit

 

(534)

(214)

(422)

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Taken through comprehensive income

 

 

 

 

Deferred tax charge on swaps

 

2,299

5,496

4,835

Impact of change in UK tax rate

 

(243)

304

(21)

Tax charge

 

2,056

5,800

4,814

 

 

 

9.      Earnings and free cash flow per share

 

(a) Weighted average number of shares
 

Earnings per share are based on the weighted average number of shares in issue of 105,605,135 (2017: 111,364,354),
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

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

Weighted average number of shares

 

2018

2017

2017

Shares in issue (used for diluted EPS)

 

105,605,135

111,364,354

111,293,971

Shares held in trust

 

(2,366,388)

(2,441,371)

(2,500,717)

Shares in issue less shares held in trust

 

103,238,747

108,922,983

108,793,254

 

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.

 

 

(b) Earning per share

 

26 weeks ended 22 January 2017 unaudited

 

Profit

Basic EPS

Diluted EPS

 

 

 

pence per

pence per

 

 

 

ordinary

ordinary

 

 

£000

share

share

Earnings (profit after tax)

 

41,441

40.1

39.2

Exclude effect of exceptional items after tax

 

6,775

6.6

6.5

Earnings before exceptional items

 

48,216

46.7

45.7

Exclude effect of property gains/(losses)

 

(1,653)

(1.6)

(1.6)

Underlying earnings before exceptional items

 

46,563

45.1

44.1

 

 

 

 

 

 

 

 

 

 

26 weeks ended 22 January 2017 unaudited

 

Profit

Basic EPS

Diluted EPS

 

 

 

pence per

pence per

 

 

 

ordinary

ordinary

 

 

£000

share

share

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

 

 

 

 

 

 

 

 

 

 

53 weeks ended 30 July 2017 audited

 

Profit

Basic EPS

Diluted EPS

 

 

 

pence per

pence per

 

 

 

ordinary

ordinary

 

 

£000

share

share

Earnings (profit after tax)

 

56,059

51.5

50.4

Exclude effect of exceptional items after tax

 

20,925

19.3

18.8

Earnings before exceptional items

 

76,984

70.8

69.2

Exclude effect of property gains/(losses)

 

(2,807)

(2.6)

(2.6)

Underlying earnings before exceptional items

 

74,177

68.2

66.6

 

 

9.      Earnings and free cash flow per share (continued)

 

(c) Owners' earnings per share
 

Owners' earnings measure the earning attributable to shareholders from current activities adjusted for significant non-cash items and one-off items. Owners' earnings are calculated as profit before tax, exceptional items, depreciation

and amortisation and property gains and losses less reinvestment in current properties and cash tax. Cash tax is defined as the current year current tax charge.

 

26 weeks ended 28 January 2018 unaudited

 

Owner's

Basic EPS

Diluted EPS

 

 

Earnings

pence per

pence per

 

 

 

ordinary

ordinary

 

 

£000

share

share

Profit before tax and exceptional items (income statement)

 

62,001

60.1

58.7

Exclude depreciation and amortisation (note 2)

 

38,460

37.3

36.4

Less reinvestment in current properties

 

(35,091)

(34.0)

(33.2)

Exclude property gains and losses (note 3)

 

(1,653)

(1.7)

(1.6)

Less cash tax (note 7)

 

(13,645)

(13.2)

(12.9)

Owners' earnings

 

50,072

48.5

47.4

 

 

 

 

 

26 weeks ended 22 January 2017 unaudited

 

Owner's

Basic EPS

Diluted EPS

 

 

Earnings

pence per

pence per

 

 

 

ordinary

Ordinary

 

 

£000

share

Share

Profit before tax and exceptional items (income statement)

 

51,415

47.2

46.2

Exclude depreciation and amortisation (note 2)

 

36,307

33.3

32.6

Less reinvestment in current properties

 

(28,588)

(26.2)

(25.7)

Exclude property gains and losses (note 3)

 

(586)

(0.5)

(0.5)

Less cash tax (note 7)

 

(12,491)

(11.5)

(11.2)

Owners' earnings

 

46,057

42.3

41.4

 

 

 

 

 

53 weeks ended 30 July 2017 audited

 

Owner's

Basic EPS

Diluted EPS

 

 

Earnings

pence per

pence per

 

 

 

ordinary

Ordinary

 

 

£000

share

Share

Profit before tax and exceptional items (income statement)

 

102,830

94.5

92.4

Exclude depreciation and amortisation (note 2)

 

73,869

67.9

66.4

Less reinvestment in current properties

 

(65,912)

(60.6)

(59.2)

Exclude property gains and losses (note 3)

 

(2,807)

(2.6)

(2.6)

Less cash tax (note 7)

 

(24,837)

(22.8)

(22.3)

Owners' earnings

 

83,143

76.4

74.7

 

The diluted owners' earnings per share increased by 14.5% (year end 2017: decreased by 6.9%).

 

Analysis of additions by type

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

Ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

Reinvestment in existing pubs

 

35,091

28,588

65,912

Investment in new pubs and pub extensions

 

18,803

18,371

46,894

Freehold reversions

 

7,520

55,831

95,326

 

 

61,414

102,790

208,132

 

 

 

9.             Earnings and free cash flow per share (continued)

 

 

Analysis of additions by category

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

Property, plant and equipment (note 11)

 

58,894

95,700

198,556

Intangible assets (note 12)

 

2,520

7,090

9,576

 

 

61,414

102,790

208,132

 

 

 

(d) Free cash flow per share

 

 

Free cash

Basic free

Diluted free

 

 

flow

cash flow

cash flow

 

 

 

pence per

pence per

 

 

 

ordinary

ordinary

 

 

£000

share

share

26 weeks ended 28 January 2018

 

36,763

35.6

34.8

26 weeks ended 22 January 2017

 

49,224

45.2

44.2

53 weeks ended 30 July 2017

 

107,936

99.2

97.0

 

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

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Profit for the period

 

41,441

30,310

56,059

Adjusted for:

 

 

 

 

Tax

8

12,904

9,622

20,305

Share-based charges

5

5,464

4,966

10,711

Loss on disposal of property, plant and equipment

6

2,592

5,680

14,484

Net onerous lease provision

6

615

122

720

Net impairment charge

7

1,131

5,169

7,787

Interest receivable

 

(27)

(38)

(72)

Interest payable

 

13,105

12,533

25,740

Depreciation of property, plant and equipment

11

34,270

32,741

66,483

Amortisation of intangible assets

12

3,992

3,332

6,931

Depreciation on investment properties

13

28

28

55

Amortisation of other non-current assets

14

170

206

400

Amortisation of bank loan issue costs

15

561

1,777

2,817

Aborted properties costs

 

262

631

1,157

Net exceptional finance income

7

-

(402)

(402)

 

 

116,508

106,677

213,175

Change in inventories

 

1,044

(1,233)

(2,407)

Change in receivables

 

(2,788)

(793)

4,980

Change in payables

 

(10,698)

401

8,655

Cash flow from operating activities

 

104,066

105,052

224,403

 

 

11.    Property, plant and equipment

 

 

 

 

 

Freehold and

Short-

Equipment,

Assets

Total

 

 

 

long-leasehold

leasehold

fixtures

under

 

 

 

 

property

property

and fittings

construction

 

 

 

 

£000

£000

£000

£000

£000

Cost:

 

 

 

 

 

 

 

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

Additions

 

 

60,640

3,911

30,966

7,339

102,856

Transfers

 

 

6,525

107

974

(7,606)

-

Exchange differences

 

 

434

82

161

376

1,053

Transfer to held for sale

 

 

6,570

1,511

1,811

-

9,892

Disposals

 

 

(18,439)

(17,364)

(15,453)

-

(51,256)

Reclassification

 

 

15,765

(15,765)

-

-

-

At 30 July 2017

 

 

1,066,936

361,609

561,801

67,834

2,058,180

Additions

 

 

10,932

1,238

25,961

20,763

58,894

Transfers

 

 

16,799

981

4,211

(21,991)

-

Exchange differences

 

 

(280)

(52)

(102)

(242)

(676)

Transfer to held for sale

 

 

(1,506)

(529)

(951)

-

(2,986)

Disposals

 

 

(6,798)

(4,742)

(4,401)

-

(15,941)

Reclassification

 

 

5,341

(5,341)

-

-

-

At 28 January 2018

 

 

1,091,424

353,164

586,519

66,364

2,097,471

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment:

 

 

 

 

At 24 July 2016

 

 

(181,040)

(207,144)

(374,377)

-

(762,561)

Provided during the period

 

 

(7,746)

(6,729)

(18,266)

-

(32,741)

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)

Provided during the period

 

 

(8,056)

(6,294)

(19,392)

-

(33,742)

Exchange differences

 

 

(23)

(15)

(104)

-

(142)

Impairment loss

 

 

1,023

(2,637)

(825)

-

(2,439)

Transfer to held for sale

 

 

(4,208)

(1,682)

(1,398)

-

(7,288)

Disposals

 

 

6,362

15,737

12,348

-

34,447

Reclassification

 

 

(10,537)

10,537

-

-

-

At 30 July 2017

 

 

(205,374)

(179,793)

(390,380)

-

(775,547)

Provided during the period

 

 

(8,185)

(6,237)

(19,848)

-

(34,270)

Exchange differences

 

 

-

(3)

(21)

-

(24)

Impairment loss

 

 

(826)

(149)

(156)

-

(1,131)

Transfer to held for sale

 

 

1,261

529

920

-

2,710

Disposals

 

 

2,586

4,520

4,043

-

11,149

Reclassification

 

 

(2,309)

2,309

-

-

-

At 28 January 2018

 

 

(212,847)

(178,824)

(405,442)

-

(797,113)

 

 

 

 

 

 

 

 

Net book amount at 28 January 2018

878,577

174,340

181,077

66,364

1,300,358

Net book amount at 30 July 2017

 

861,562

181,816

171,421

67,834

1,282,633

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

 

 

 

 

11.    Property, plant and equipment (continued)

 

During the period, two (2017: seven) pubs, with a carrying value of £276,000 (2017: £4,133,000), 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 £Nil (2017: £49,000) was transferred out of other non-current assets held for sale,

totalling £276,000 (2017: £4,182,000) related to the same pubs.

 

 

12.    Intangible assets

 

 

 

 

 

 

 

 

£000

Cost:

 

 

 

 

 

 

 

At 24 July 2016

 

 

 

 

 

 

56,591

Additions

 

 

 

 

 

 

7,090

Transfer to held for sale

 

 

 

 

 

 

(8)

Disposals

 

 

 

 

 

 

(6)

At 22 January 2017

 

 

 

Additions

 

 

 

 

 

 

2,486

Transfer to held for sale

 

 

 

 

 

 

8

Disposals

 

 

 

 

 

 

(487)

At 30 July 2017

 

 

 

Additions

 

 

 

 

 

 

2,520

Disposals

 

 

 

 

 

 

(2)

At 28 January 2018

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment:

 

 

 

 

 

At 24 July 2016

 

 

 

 

 

 

(29,540)

Provided during the period

 

 

 

 

 

 

(3,332)

Transfer to held for sale

 

 

 

 

 

 

8

Disposals

 

 

 

 

 

 

6

At 22 January 2017

 

 

 

Provided during the period

 

 

 

 

 

 

(3,599)

Exchange differences

 

 

 

 

 

 

1

Transfer to held for sale

 

 

 

 

 

 

(8)

Disposals

 

 

 

 

 

 

481

At 30 July 2017

 

 

 

Provided during the period

 

 

 

 

 

 

(3,992)

Disposals

 

 

 

 

 

 

2

At 28 January 2018

 

 

 

 

 

 

 

 

 

 

 

Net book amount at 28 January 2018

 

 

Net book amount at 30 July 2017

 

 

 

 

 

29,691

Net book amount at 22 January 2017

 

 

 

 

 

30,809

Net book amount at 24 July 2016

 

 

 

 

 

 

27,051

 

The intangible assets relates to computer software and development.

 

 

 

 

13.    Investment property

 

 

 

 

 

 

 

 

£000

 

Cost:

 

 

 

 

 

 

 

 

At 24 July 2016

 

 

 

 

 

 

7,751

 

At 22 January 2017

 

 

 

 

 

At 30 July 2017

 

 

 

 

 

 

7,751

 

At 28 January 2018

 

 

 

 

 

 

7,751

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment:

 

 

 

 

 

 

At 24 July 2016

 

 

 

 

 

 

(146)

 

Provided during the period

 

 

 

 

 

 

(28)

 

At 22 January 2017

 

 

 

 

 

 

(174)

 

Provided during the period

 

 

 

 

 

 

(27)

 

At 30 July 2017

 

 

 

 

 

Provided during the period

 

 

 

 

 

 

(28)

 

At 28 January 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book amount at 28 January 2018

 

 

 

 

 

Net book amount at 30 July 2017

 

 

 

 

 

 

7,550

 

Net book amount at 22 January 2017

 

 

 

 

 

 

7,577

 

Net book amount at 24 July 2016

 

 

 

 

 

 

7,605

 

 

Rental income received in the period from investment properties was £157,000 (2017: £177,000).

Operating costs, excluding depreciation, incurred in relation to these properties amounted to £10,000 (2017: £4,000).

 

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

 

 

 

 

 

 

 

£000

Cost:

 

 

 

 

 

 

 

At 24 July 2016

 

 

 

 

 

 

16,230

Transfer to held for sale

 

 

 

 

 

 

(76)

Disposals

 

 

 

 

 

 

(1,661)

At 22 January 2017

 

 

 

 

Transfer to held for sale

 

 

 

 

 

 

(181)

Disposals

 

 

 

 

 

 

(1,585)

At 30 July 2017

 

 

 

 

 

 

12,727

At 28 January 2018

 

 

 

 

 

 

12,727

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment:

 

 

 

 

 

 

 

At 24 July 2016

 

 

 

 

 

 

(6,505)

Provided during the period

 

 

 

 

 

 

(206)

Transfer to held for sale

 

 

 

 

 

 

27

Disposals

 

 

 

 

 

 

884

At 22 January 2017

 

 

 

 

Provided during the period

 

 

 

 

 

 

(194)

Impairment loss

 

 

 

 

 

 

(180)

Transfer to held for sale

 

 

 

 

 

 

235

Disposals

 

 

 

 

 

 

1,484

At 30 July 2017

 

 

 

 

Provided during the period

 

 

 

 

 

 

(170)

At 28 January 2018

 

 

 

 

 

 

 

 

 

 

 

 

Net book amount at 28 January 2018

 

 

 

 

Net book amount at 30 July 2017

 

 

 

 

 

 

8,272

Net book amount at 22 January 2017

 

 

 

 

 

 

8,693

Net book amount at 24 July 2016

 

 

 

 

 

 

9,725

 

 

 

 

15.    Analysis of change in net debt

 

 

 

 

 

 

 

30 July

Cash

Non-cash

28 January

 

 

 

 

2017

flows

movement

2018

 

 

 

 

£000

£000

£000

£000

Cash and cash equivalents

 

 

 

 

 

 

 

Cash in hand

 

 

 

50,644

13,092

-

63,736

Total cash and cash equivalents

 

-

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

 

 

 

Bank loans - due before one year

 

(17,347)

17,347

-

-

Other loans

 

 

 

(114)

61

(60)

(113)

Current net borrowings

 

 

 

(17,461)

17,408

(60)

(113)

 

 

 

 

 

 

 

 

Bank loans - due after one year

 

 

(729,397)

(90,003)

(561)

(819,961)

Other loans

 

 

 

(90)

-

60

(30)

Non-current net borrowings

 

 

 

(729,487)

(90,003)

(501)

(819,991)

 

 

 

 

 

 

 

 

Total borrowings

 

 

(561)

 

 

 

 

 

 

 

 

Net debt

 

 

(561)

 

 

 

 

 

 

 

 

Derivatives

 

 

 

 

 

 

 

Interest-rate swaps asset - due after one year

11,380

-

4,824

16,204

Interest-rate swaps liability - due before one year

-

-

(3,728)

(3,728)

Interest-rate swap liability - due after one year

(50,276)

-

11,005

(39,271)

Total derivatives

 

 

12,101

 

 

 

 

 

 

 

 

Net debt after derivatives

 

 

 

(735,200)

(59,503)

11,540

(783,163)

 

 

 

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

 

28 January

28 January

22 January

22 January

30 July

30 July

 

2018

2018

2017

2017

2017

2017

 

Book value

Fair value

Book value

Fair value

Book value

Fair value

 

£000

£000

£000

£000

£000

£000

Financial assets at amortised cost

 

 

 

 

 

 

Cash and cash equivalents

63,736

63,736

62,617

62,617

50,644

50,644

Receivables

6,514

6,514

4,312

4,312

2,122

2,122

 

70,250

70,250

66,929

66,929

52,766

52,766

 

 

 

 

 

 

 

Financial liabilities at amortised cost

 

 

 

 

 

 

Trade and other payables

(219,061)

(219,061)

(224,316)

(224,316)

(259,798)

(259,798)

Borrowings

(820,104)

(820,165)

(758,616)

(754,916)

(746,948)

(746,951)

 

(1,039,165)

(1,039,226)

(982,932)

(979,232)

(1,006,746)

(1,006,749)

 

 

 

 

 

 

 

Derivatives - cash flow hedges

 

 

 

 

 

 

Non-current interest-rate swap assets

16,204

16,204

17,645

17,645

11,380

11,380

Current interest-rate swap liabilities

(3,728)

(3,728)

-

-

-

-

Non-current interest-rate swap liabilities

(39,271)

(39,271)

(50,741)

(50,741)

(50,276)

(50,276)

 

(26,795)

(26,795)

(33,096)

(33,096)

(38,896)

(38,896)

 

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 half year end's prevailing interest rates.

 

16.    Fair values (continued)

 

Interest-rate swaps

 

At 28 January 2018, 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.

 

 

 

 

Change in

Deferred

Total

 

 

 

fair value

tax

 

Changes in valuation of swaps

 

 

£000

£000

£000

Fair value at 22 January 2017 (unaudited)

 

 

33,096

(5,626)

27,470

Gain taken directly to other comprehensive income

 

5,800

(986)

4,814

Fair value at 30 July 2017 (audited)

 

 

38,896

(6,612)

32,284

Loss taken directly to other comprehensive income

 

(12,101)

2,056

(10,045)

Fair value at 28 January 2018 (unaudited)

 

 

26,795

(4,556)

22,239

 

 

Fair value of financial assets and liabilities

 

IFRS 7 requires disclosure of fair value measurements by level, using the following fair value measurement hierarchy:

 

n Quoted prices in active markets for identical assets or liabilities (level 1)

n Inputs other than quoted prices included in level 1 which are observable for the asset or liability,

either directly or indirectly (level 2)

n 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 £26.8m is considered to be level 2. All other financial assets and liabilities are measured in the balance sheet at amortised cost, and their valuation is also considered to be level 2.

 

 

17.    Dividends paid and proposed

 

 

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

53 weeks

 

 

ended

ended

ended

 

 

28 January

22 January

30 July

 

 

2018

2017

2017

 

 

£000

£000

£000

Paid in the period

 

 

 

 

2016 final dividend

 

-

8,933

8,933

2017 interim dividend

 

-

-

4,419

2017 final dividend

 

8,437

-

-

 

 

8,437

13,352

 

 

 

 

 

Dividends in respect of the period

 

 

 

 

Interim dividend

 

4,215

4,416

-

Final dividend

 

-

-

8,488

 

 

4,215

8,488

 

 

 

 

 

Dividend per share

 

4p

4p

8p

Dividend cover

 

4.9

3.4

4.2

 

 

Dividend cover is calculated as profit after tax and exceptional items over dividend paid.

 

 

 

 

18.    Share capital

 

 

 

Number of

Share

 

 

 

shares

capital

 

 

 

000s

£000

Opening 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

Repurchase of shares

 

 

(1,550)

(31)

Balance at 30 July 2017 (audited)

 

 

108,999

2,180

Repurchase of shares

 

 

(3,498)

(70)

Closing balance at 28 January 2018 (unaudited)

 

 

105,501

2,110

 

All issued shares are fully paid.

 

 

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 £28.1m of capital commitments for which no provision had been made, in respect of property,

plant and equipment, at 28 January 2018 (2017: £5.6m).

 

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 30 July 2017.

A list of current directors is maintained on the J D Wetherspoon plc website: jdwetherspoon.com

 

By order of the board

 

 

 

 

John Hutson                                                                                            Ben Whitley

Director                                                                                                   Director

15 March 2018                                                                                        15 March 2018

 

 

 

 

INDEPENDENT REVIEW REPORT TO J D WETHERSPOON PLC

 

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report of J D Wetherspoon plc for the 26 weeks ended 28 January 2018 which comprises the Income statement, the Statement of comprehensive income, cash flow statement, Balance sheet, Statement of changes in equity and the related notes. We have read the other information contained in the half-yearly financial report which comprises the financial highlights, Chairman's statement and operating review and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Company, 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. Our review work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusion we have formed.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 2 the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

 

Our responsibility

Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

 

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.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks ended 28 January 2018 is 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 and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

 

Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

London

15 March 2018
 

PUBS OPENED SINCE 31 JULY 2017

 

 

 

 

 

Name

Address

Town

Postcode

Country

 

 

 

 

 

Royal Victoria Pavilion

Harbour Parade

Ramsgate

CT11 8LS

UK

 

 

 

 

 

The Crown Hotel

23 High Street

Biggleswade

SG18 0JE

UK

 

 

 

 

 

Captain Ridley's Shooting Party

183-185 Queensway

Bletchley

MK2 2ED

UK

 

PUB CLOSED SINCE 31 JULY 2017

 

Name

Address

Town

Postcode

Country

 

 

 

 

 

The Thomas Telford

65-69 Whitby Road

Ellesmere Port

CH65 8AB

UK

 

 

 

 

 

The John Laird

88 Claughton Road

Birkenhead

CH41 6ES

UK

 

 

 

 

 

The Ice Wharf

22-24 Strand Road

Derry

BT48 7AB

UK

 

 

 

 

 

The Diamond Tap

42 Cheap Street

Newbury

RG14 5BX

UK

 

 

 

 

 

The Railway

202 Upper Richmond Road

Putney

SW15 6TD

UK

 

 

 

 

 

The Crockerton

Greyfriars Road

Cardiff

CF10 3AD

UK

 

 

 

 

 

The Isaac Wilson

61 Wilson Street

Middlesbrough

TS1 1SF

UK

 

 

 

 

 

The Squire Knott

55-57 Yorkshire Street

Oldham

OL1 3SL

UK

 

 

 

 

 

The Robert Hamilton

12-14 Bank Street

Airdrie

ML6 6AF

UK

 

 

 

 

 

The Gaffers Row

48 Victoria Street

Crewe

CW1 2JE

UK

 

 

 

 

 

The Gatehouse

Chichester Gate, Terminus Road

Chichester

PO19 8EL

UK

 

 

 

 

 

The Granite City

Main Terminal Aberdeen Airport

Aberdeen

AB21 7DU

UK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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Half-year Report - RNS