Final Results
Wetherspoon (JD) PLC
07 September 2007
7 September 2007 PRESS RELEASE
J D WETHERSPOON PLC
PRELIMINARY RESULTS
(For the 52 weeks ended 29 July 2007)
RECORD PROFITS
IMPROVEMENT IN OPERATING MARGIN
TOTAL £77M OF SHARE BUYBACKS, PLUS SIGNIFICANT DIVIDEND INCREASE
Financial Highlights Reported Excluding 53 week
Results last year*
• Turnover £888.5m +5% +7%
• Operating profit £91.1m +9% +12%
• Profit before tax £62.0m +6% +9%
• Adjusted earnings per share 28.1p** +17% +20%
• Statutory earnings per share 31.8p*** +32% +36%
• Free cash flow per share 35.6p (2006: 42.1p)
• Dividend per share 12.0p (2006: 4.7p)
Business Highlights
• Like-for-like sales +5.6%
• Like-for-like profits +7.0%
• Record average level of weekly sales per pub £30,600****
*Growth on a 52 week basis excluding benefit of 53rd week last year.
** Excludes one-off deferred tax credit.
*** Includes one-off deferred tax credit.
**** Includes VAT.
Tim Martin, Chairman of J D Wetherspoon plc, comments:
'I am pleased to report another year of good progress for the company. Earnings
per share increased by 17% (+20%)* to 28.1 pence. Given the smoking bans and our
experience in Scotland, our outlook for like-for-like sales for the 2008
financial year remains cautious, as it involves more uncertainty than usual,
although we have no doubt that this legislation will be to the long-term benefit
of the licensed trade'.
John Hutson Chief Executive Officer 01923 477777
Jim Clarke Finance Director 01923 477777
Eddie Gershon Company Spokesman 07956 392234
Photographs are available at: www.newscast.co.uk
2007 CHAIRMAN'S STATEMENT AND OPERATING REVIEW
I am pleased to report another year of good progress for the company. Sales for
the year increased by £41.0 million to £888.5 million, a rise of 5% (+7.0%)*.
Operating margins were 10.3%, compared with 9.9% in the previous year. Operating
profit increased by 9% (+12%)* to £91.1 million and profit before tax by 6%
(+9%)* to £62.0 million. Earnings per share increased by 17% (+20%)* to 28.1p,
excluding the one-off benefit in the year, resulting from the change to
corporation tax rates. Statutory earnings per share, including the benefits of
the tax change, increased by 32% to 31.8p (2006: 24.1p).
Average sales per pub increased by 5.5% in the year under review, with
like-for-like sales increasing by 5.6%.
*Excluding 53rd week in the previous financial year.
Net interest was covered 3.1 times (2006: 3.3 times) by operating profit. Free
cash flow, after payments of tax, interest, share purchases under the company's
share plans and capital investment of £24.0 million in existing pubs, was £52.4
million (2006: £69.7 million), resulting in free cash flow per share of 35.6p
(2006: 42.1p). This reduction in free cash flow was mainly due to increases in
tax, interest and reinvestment in existing pubs, the latter resulting from the
provision of additional outside facilities, in connection with the nationwide
ban on smoking in public places.
We opened 18 pubs during the year, compared with 9 in the previous year. The
total number of pubs now operated by the company is 671. We intend to open about
30 pubs in the year ending July 2008 and anticipate having sufficient properties
in the course of acquisition and development to be able to continue this rate of
expansion in future years.
Dividends
The board proposes, subject to shareholders' consent, to pay a final dividend of
8.0p per share on 23 November 2007 to those shareholders on the register on 26
October 2007, bringing the total dividend for the year to 12.0p per share
(covered 2.3 times by earnings per share), compared with 4.7p the previous year.
Finance
The company had £88.4 million (2006: £136.6 million) of unutilised banking
facilities and cash balances as at the balance sheet date, with total facilities
of £522.2 million (2006: £492.2 million). The year's capital expenditure on new
pub developments was more than covered by free cash flow. In the current
financial year, any cash surplus which the company generates, after capital
expenditure and dividends, will be available for debt reduction, share buybacks
or a combination of both.
Return of capital
During the year, 13,184,049 shares (representing approximately 9% of the issued
share capital) were purchased by the company for cancellation, at a cost of
£77.0 million, representing an average cost per share of 584p.
Further progress
As indicated in previous years, our approach is to try to make lots of small
improvements in diverse areas of the business, creating momentum in the services
and facilities offered to customers, as well as sales and financial momentum for
the company.
In recent years, we have endeavoured to increase sales in areas such as coffee,
food (especially breakfasts), wine, real ales and specialist spirits.
Coffee sales continue to increase; we are now the number-one seller of Lavazza
in the world. In addition, we are the only major pub company to open all pubs
for breakfast at 9am daily, selling approximately 250,000 breakfasts each week.
Fetzer Coldwater Creek, our Californian house wine, is the biggest brand by
volume in the on-trade, in spite of the fact that it is sold only in Wetherspoon
pubs. In contrast to many pub companies, our concentration on real ales has
resulted in double-digit like-for-like volume increases.
In the course of the past 18 months, we have been concentrating on the sale of
Pimm's in our pubs, in the summer months, and now sell more of this product than
any other company worldwide.
Food now accounts for more than 30% of our sales, compared with 17% 10 years
ago; including those bar purchases made in association with table meals, diners
now account for approximately two-thirds of our sales.
We continue to concentrate on recycling and believe that we recycle more than
any other pub company. In the year under review, we recycled 3,100 tonnes of
cardboard, 1,600 tonnes of cooking oil, 230 tonnes of paper, 80 tonnes of
plastic and 30 tonnes of aluminium. In addition, we have commenced a pilot
scheme on glass-recycling which we hope to extend to all of our pubs in due
course.
Board changes
Jim Clarke, Finance Director, has informed the board of his intention to leave
the company. He will continue to work at J D Wetherspoon until the end of
October 2007; the board has initiated a thorough process to identify a suitable
successor.
Jim has made a significant contribution to the development of the business,
leaving J D Wetherspoon on a strong financial footing. I wish him well in his
future career.
People
The most important factor in successful pubs is good customer service.
Wetherspoon continues to provide a comprehensive employee training system which
has won many awards, over the years, from the relevant training bodies. In
addition, we provide monthly bonuses for all of our pub staff, whatever their
length of service in the company; in the year under review, we spent a total of
£19 million on monthly bonuses and share awards for employees. I would like to
thank our employees, partners and suppliers, once again, for their excellent
work in the past year.
Current trading and outlook
Legislation banning smoking in pubs in Wales and Northern Ireland was introduced
in the spring of 2007, followed by a ban in England at the beginning of July.
Like-for-like sales in July were +5.3%. In August, like-for-like sales were
+1.1%, with strong food sales offset by slowing bar sales. In Scotland, where a
ban has been in place since March 2006, sales and margins were under
considerable pressure for approximately the first 6 months, before staging an
encouraging recovery in the year under review. Given the smoking bans and our
experience in Scotland, our outlook for like-for-like sales for the 2008
financial year remains cautious, as it involves more uncertainty than usual,
although we have no doubt that this legislation will be to the long-term benefit
of the licensed trade. With regard to costs, we believe that the outlook for the
current financial year is approximately neutral, with a decline in utilities
charges being offset by higher payments for interest and wages.
We continue our efforts to improve the business. For example, we are introducing
a new menu in October and also planning Britain's largest-ever real-ale
festival, taking place on 1-18 November and featuring 50 ales from Britain's
regional and microbrewers.
As a result of our strong cash flow, our dedicated management team and our
efforts to improve every area of the business, we remain confident of our
prospects.
Tim Martin
Chairman
7 September 2007
Income Statement for the 52 weeks ended 29 July 2007
Notes 52 weeks ended 53 weeks
29 July 2007 ended
30 July 2006
Total Total
£000 £000
Revenue 888,473 847,516
Operating costs (797,360) (763,900)
Operating profit 91,113 83,616
Finance income 2 206 124
Finance costs 2 (29,295) (25,352)
Profit before tax 62,024 58,388
Tax expense 3 (15,190) (18,487)
Profit for the year 46,834 39,901
Earnings per share (pence) 4
Earnings per ordinary share 31.8 24.1
Adjusted earnings per ordinary share (excluding one off benefit to tax 28.1 24.1
charge)
Fully diluted earnings per share 31.6 24.0
Adjusted fully diluted earnings per share (excluding one off benefit to 27.9 24.0
tax charge)
Ordinary dividends declared and paid during the period: 7
Final dividend for 2005/06: 3.1p (2004/05: 2.82p) 4,537 4,749
Interim dividend for 2006/07: 4.0p (2006: 1.6p) 5,758 2,618
Ordinary dividends declared in respect of the period: 7
Interim dividend for 2006/07: 4.0p (2005/06: 1.6p) 5,758 2,618
Final dividend for 2006/07: 8.0p (2005/06: 3.1p) 11,396 4,537
All activities relate to continuing operations.
Statement of recognised income and expense for the 52 weeks ended 29 July 2007
52 weeks ended 53 weeks ended
29 July 2007 30 July 2006
£000 £000
Cash flow hedges: gain taken to equity 5,833 4,871
Tax on items taken directly to equity (1,777) (1,462)
4,939
Net gain recognised directly in equity 4,056 3,409
Profit for the year 46,834 39,901
Total recognised income for the year 50,890 43,310
Cash flow statement for the 52 weeks ended 29 July 2007
Notes 52 weeks ended 52 weeks ended 53 weeks ended 53 weeks ended
29 July 2007 29 July 2007 30 July 2006 30 July 2006
£000 £000 £000 £000
Cash flows from operating activities
Cash generated from operations 5 124,933 124,933 133,366 133,366
Interest received 189 189 290 290
Interest paid (27,610) (27,610) (23,441) (23,441)
Refinancing cost paid - - (1,412) (1,412)
Corporation tax paid (19,598) (19,598) (14,812) (14,812)
Purchase of own shares for share based (1,489) (1,489) (3,469) (3,469)
payments
Net cash inflow from operating activities 76,425 76,425 90,522 90,522
Cash flows from investing activities
Purchase of property, plant and equipment and (24,046) (24,046) (20,810) (20,810)
intangible assets for existing pubs
Proceeds of sale of property, plant and equipment 4,768 4,645
Investment in new pubs and pub extensions (51,951) (16,766)
Net cash out flow from investing activities (71,229) (32,931)
Cash flows from financing activities
Equity dividends paid 7 (10,295) (7,367)
Proceeds from issue of ordinary shares 5,927 6,974
Purchase of own shares (77,015) (78,683)
Advances under bank loans 76,135 304,504
Repayments under bank loans - (280,000)
Finance lease principal payments (1,988) -
Net cash outflow from financing activities (7,236) (54,572)
Net increase/(decrease) in cash and cash
equivalents 6 (2,040) 3,019
Opening cash and cash equivalents 21,092 18,073
Closing cash and cash equivalents 19,052 21,092
Free cash flow 4 52,379 69,712
Free cash flow per ordinary share 4 35.6p 42.1p
Balance sheet as at 29 July 2007
Notes 29 July 30 July
2007 2006
£000 £000
Assets
Non-current assets
Property, plant and equipment 782,269 743,826
Intangible assets 3,566 2,858
Other non-current assets 6,685 6,974
Deferred income tax asset 975 3,030
Total non-current assets 793,495 756,688
Current Assets
Inventories 19,029 13,688
Other receivables 11,761 10,027
Cash and cash equivalents 19,052 21,092
Total current assets 49,842 44,807
Assets held for sale 848 2,431
Total Assets 844,185 803,926
Liabilities
Current Liabilities
Trade and other payables (119,183) (118,130)
Financial liabilities (559) -
Current income tax liabilities (9,679) (10,809)
Total Current Liabilities (129,421) (128,939)
Non-current Liabilities
Financial liabilities (440,232) (368,717)
Derivative financial instruments (16,335) (15,156)
Deferred tax liabilities (79,400) (82,958)
Provisions and other liabilities (6,190) (6,581)
Total non-current liabilities (542,157) (473,412)
Net Assets 172,607 201,575
Shareholders Equity
Ordinary shares 2,849 3,076
Share premium account 141,422 135,532
Capital redemption reserve 1,569 1,305
Retained earnings 26,767 61,662
Total shareholders' equity 8 172,607 201,575
1 Authorisation of financial statements and statement of compliance with IFRSs
The preliminary announcement for the 52 week period ended 29 July 2007 has been
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union at 29 July 2007. Details of the accounting
policies adopted in this preliminary announcement are set out within the
investors section of the Company's website, www.jdwetherspoon.co.uk.
These preliminary statements do not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985. They have, however, been
extracted from the statutory accounts for the period ended 29 July 2007 on which
an unqualified report has been made by the company's auditors.
The 2006 statutory accounts have been filed with Registrar of Companies. The
2007 statutory accounts will be sent to shareholders in October 2007 and will be
filed with the Registrar of Companies following their adoption at the
forthcoming Annual General Meeting.
2 Finance income and costs
52 weeks ended 53 weeks ended
29 July 2007 30 July 2006
£000 £000
Finance costs
Interest payable on bank loans and overdrafts 22,685 22,407
Interest payable on US senior loan notes 6,027 2,769
Amortisation of bank loan issue costs 474 176
Interest payable on obligations under finance leases 109 -
Finance costs 29,295 25,352
Bank interest receivable (206) (124)
Total net finance cost 29,089 25,228
3 Taxation
(a) Tax on profit on ordinary activities
Tax charged in the income statement
52 weeks ended 53 weeks ended
29 July 2007 30 July 2006
£000 £000
Current income tax:
Current income tax charge 18,470 18,065
Total current income tax 18,470 18,065
Deferred tax:
Origination and reversal of timing differences 2,192 422
Adjustment in respect of a change in tax rate (5,472) -
Total deferred tax (3,280) 422
Tax charge in the income statement 15,190 18,487
A one off credit has been recognised in the accounts to reflect the changes in
deferred tax balances arising from a reduction in corporate tax rates in United
Kingdom which have been substantively enacted at the balance sheet date.
4 Earnings and cash flow per share
Basic earnings per share has been calculated by dividing the profit attributable
to equity holders of £46,834,000 (2006: £39,901,000) by the weighted average
number of shares in issue during the year of 147,256,488 (2006: 165,694,582).
Diluted earnings per share has been calculated on a similar basis taking account
of 910,449 (2006: 545,980) dilutive potential shares under option, giving a
weighted average number of ordinary shares adjusted for the effect of dilution
of 148,166,937 (2006: 166,240,832).
An adjusted earnings per share has also been included to reflect the impact of
the deferred taxation credit arising from the corporation tax rate change.
Earnings Earnings Basic earnings per share Diluted earnings per share
per share 52 weeks ended 53 weeks ended 52 weeks ended 53 weeks ended 52 weeks ended 53 weeks ended
29 July 2007 30 July 2006 29 July 2007 30 July 2006 29 July 2006 30 July 2006
£000 £000 pence pence pence pence
Profit for the year 46,834 39,901 31.8 24.1 31.6 24.0
Adjusted profit for
the year (excluding
one off benefit to
tax charge) 41,362 39,901 28.1 24.1 27.9 24.0
Cash flow per share
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 existing pubs, after funding interest, tax, all other reinvestment
in pubs open at the start of the period and the purchase of own shares under the
employee Share Incentive Plan ('free cash flow'). It is calculated before taking
account of proceeds from property disposals and inflows and outflows of
financing from outside sources, dividend payments and is based on the same
number of shares in issue as that for the calculation of basic earnings per
share.
5 Cash generated from operations
52 weeks ended 53 weeks
29 July 2007 ended
£000 30 July 2006
£000
Profit attributable to shareholders 46,834 39,901
Adjusted for:
Tax 15,190 18,487
Amortisation of intangible assets 1,044 1,079
Depreciation of Property, Plant and Equipment 42,554 42,127
Lease premium amortisation 348 187
Share based payments 3,014 2,480
Interest income (206) (124)
Interest expense 28,821 25,176
Amortisation of bank loan issue costs 474 176
Impairment of fixed assets 876 -
Net profit on disposal and anticipated disposal of trading properties (1,281) -
137,668 129,489
Change in inventories (5,341) (911)
Change in receivables (1,717) 2,003
Change in payables (5,677) 2,785
Net cash inflow from operating activities 124,933 133,366
6 Analysis of changes in net debt
At 30 July Cash Non-cash At 29 July
2006 flows movement 2007
£000 £000 £000 £000
Cash at bank and in hand 21,092 (2,040) - 19,052
Debt due after one year (368,717) (76,135) 7,012 (437,840)
Derivative financial instrument - fair value hedge (8,005) - (7,012) (15,017)
(355,630) (78,175) - (433,805)
Derivative financial instrument - cash flow hedge (7,151) - 5,833 (1,318)
(362,781) (78,175) 5,833 (435,123)
7 Dividends paid and proposed
52 weeks ended 53 weeks ended
29 July 2007 30 July 2006
£000 £000
Declared and paid during the year:
Dividends on ordinary shares:
Final dividend for 2005/06: 3.1p (2004/05: 2.82p) 4,537 4,749
Interim for 2007: 4.0p (2006: 1.6p) 5,758 2,618
Dividends paid 10,295 7,367
Proposed for approval by shareholders at the AGM:
Final dividend for 2006/07: 8.0p (2005/06: 3.1p) 11,396 4,537
On 23 November 2007 the Company intends to recommend a final dividend of 8.0
pence per share, for the year ended 29 July 2007 to shareholders on the register
at close of business on 26 October 2007. These preliminary results do not
reflect this dividend payable.
8 Statement of changes in shareholders equity
Capital
Called up Share redemption Retained
share premium reserve capital account
£000 £000 £000 £000 £000
At 25 July 2005 3,458 128,607 874 105,391 238,330
Exercise of options 49 6,925 - 6,974
Re-purchase of shares (431) 431 (78,683) (78,683)
Share based payments 2,480 2,480
Purchase of shares held in trust (3,469) (3,469)
Profit for the year 39,901 39,901
Cash flow hedges: gain taken to equity 4,871 4,871
Tax on items taken directly to equity (1,462) (1,462)
Dividends (7,367) (7,367)
At 30 July 2006 3,076 135,532 1,305 61,662 201,575
Exercise of options 37 5,890 5,927
Re-purchase of shares (264) 264 (77,015) (77,015)
Share based payments 3,014 3,014
Purchase of shares held in trust (1,489) (1,489)
Profit for the year 46,834 46,834
Cash flow hedges: gain taken to equity 5,833 5,833
Tax on items taken directly to equity (1,777) (1,777)
Dividends (10,295) (10,295)
At 29 July 2007 2,849 141,422 1,569 26,767 172,607
This information is provided by RNS
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Friday, 31st May 2024
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