Preliminary Results - Correction

RNS Number : 3429F
Wetherspoon (JD) PLC
18 March 2022
 

18 March 2022

 

J D WETHERSPOON PLC

PRELIMINARY RESULTS

(For the 26 weeks ended 23 January 2022)

 

CORRECTION

 

 

This is an amendment to the Preliminary Results announcement published at 07:00 on 18 March 2022 (RNS Number: 2096F) .

 

The free cash outflow under the Free Cash Flow section of the Chairman's Statement has been corrected to £34.5m from £16.6m.

 

All other details remain unchanged. The full, amended announcement is shown below:

 

 

FINANCIAL HIGHLIGHTS - All Comparisons against FY20

 

· Revenue £807.4m  (2020: £933.0m)    -13.5%

· Like-for-like sales     -11.8%

 

 

 

Before exceptional items (pre-IFRS 16):

 

· Loss before tax -£21.3m  (2020: profit £57.9m)

· Operating profit £0.5m  (2020: profit £76.6m)

· Earnings per share -16.0p  (2020: 44.3p)

 

 

Before exceptional items (post-IFRS 16):

 

· Loss before tax -£26.1m  (2020: profit £51.6m)

· Operating profit £1.6m  (2020: profit £80.8m)

· Earnings per share -19.7p  (2020: 39.3p)

 

 

After exceptional items (pre-IFRS 16):

 

· Loss before tax -£8.2m  (2020: profit £42.0m)

· Operating profit £0.8m  (2020: profit £76.6m)

· Earnings per share -7.8p  (2020: 30.5p)

 

 

After exceptional items (post-IFRS 16):

 

· Loss before tax -£13.0m  (2020: profit £35.7m)

· Operating profit £1.9m  (2020: profit £80.8m)

· Earnings per share -9.0p  (2020: 25.5p)

 

 

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

 

" Following a traumatic two years for many businesses and people, the ending of Covid restrictions has brought a return to more normal trading patterns in recent weeks. As indicated above, trade for the last three weeks was 2.6% below the equivalent period in 2019, reflecting an improving trend.

 

"Contrary to some reports, the company has a full complement of staff and is fully stocked, with some minor exceptions.

 

"Inflationary pressures in the economy have been widely publicised. Nearly 70% of the company's properties are freehold, with interest rates fixed for the next decade. Most of the company's leasehold pubs have rent reviews which are fixed at levels below the current level of inflation. There is pressure on input costs from food, drink and energy suppliers, mitigated to an extent, by a number of long-term contracts. Overall, the company expects the increase in input prices to be slightly less than the level of inflation.

 

"The government is reported to have spent over £400 billion on Covid measures, around nine times the annual defence budget. The expenditure has been financed by the creation of "new money" by the Bank of England, which has led to significant inflation and higher taxes.

 

"Draconian restrictions, which amount to a lockdown-by-stealth, are, of course, kryptonite for hospitality, travel, leisure and many other businesses. The company is confident of a strong future if restrictions are avoided. The readiness of the leaders of all the UK's main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK's 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy."

 

 

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 and Ireland. 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 2021 has been published on the Company's website on 7 October 2021.

5.  The current financial year comprises 53 trading weeks to 31 July 2022.

6.  The next trading update will be issued on 4 May 2022

CHAIRMAN'S STATEMENT

Financial performance

 

The company was founded in 1979 - and this is the 39th year since incorporation in 1983.

The table below outlines some key aspects of our performance during that period.

 

Summary accounts for the years 1984-2022

 

 

 

 

 

 

 

 

 

 

Financial year

Total number of Pubs (Sites)

Total sales

(Loss)/profit

(Loss)/Profit

Earnings

Earnings

Free cash flow

Free cash flow

 

 

 

 

before tax and exceptional items (Pre-IFRS16)

before tax and exceptional items (Post-IFRS16)

per share before exceptional items (Pre-IFRS16)

per share before exceptional items (Post-IFRS16)

 

per share

 

 

 

£000

£000

£000

pence

pence

£000

pence

 

1984

1

818

(7)

-

0

-

 

 

 

1985

2

1,890

185

-

0.2

-

 

 

 

1986

2

2,197

219

-

0.2

-

 

 

 

1987

5

3,357

382

-

0.3

-

 

 

 

1988

6

3,709

248

-

0.3

-

 

 

 

1989

9

5,584

789

-

0.6

-

915

0.4

 

1990

19

7,047

603

-

0.4

-

732

0.4

 

1991

31

13,192

1,098

-

0.8

-

1,236

0.6

 

1992

45

21,380

2,020

-

1.9

-

3,563

2.1

 

1993

67

30,800

4,171

-

3.3

-

5,079

3.9

 

1994

87

46,600

6,477

-

3.6

-

5,837

3.6

 

1995

110

68,536

9,713

-

4.9

-

13,495

7.4

 

1996

146

100,480

15,200

-

7.8

-

20,968

11.2

 

1997

194

139,444

17,566

-

8.7

-

28,027

14.4

 

1998

252

188,515

20,165

-

9.9

-

28,448

14.5

 

1999

327

269,699

26,214

-

12.9

-

40,088

20.3

 

2000

428

369,628

36,052

-

11.8

-

49,296

24.2

 

2001

522

483,968

44,317

-

14.2

-

61,197

29.1

 

2002

608

601,295

53,568

-

16.6

-

71,370

33.5

 

2003

635

730,913

56,139

-

17.0

-

83,097

38.8

 

2004

643

787,126

54,074

-

17.7

-

73,477

36.7

 

2005

655

809,861

47,177

-

16.9

-

68,774

37.1

 

2006

657

847,516

58,388

-

24.1

-

69,712

42.1

 

2007

671

888,473

62,024

-

28.1

-

52,379

35.6

 

2008

694

907,500

58,228

-

27.6

-

71,411

50.6

 

2009

731

955,119

66,155

-

32.6

-

99,494

71.7

 

2010

775

996,327

71,015

-

36.0

-

71,344

52.9

 

2011

823

1,072,014

66,781

-

34.1

-

78,818

57.7

 

2012

860

1,197,129

72,363

-

39.8

-

91,542

70.4

 

2013

886

1,280,929

76,943

-

44.8

-

65,349

51.8

 

2014

927

1,409,333

79,362

-

47.0

-

92,850

74.1

 

2015

951

1,513,923

77,798

-

47.0

-

109,778

89.8

 

2016

926

1,595,197

80,610

-

48.3

-

90,485

76.7

 

2017

895

1,660,750

102,830

-

69.2

-

107,936

97.0

 

2018

883

1,693,818

107,249

-

79.2

-

93,357

88.4

 

2019

879

1,818,793

102,459

-

75.5

-

96,998

92.0

 

2020

872

1,262,048

(34,095)

(44,687)

(27.6)

(35.5)

(58,852)

(54.2)

 

2021

861

772,555

(154,676)

(167,166)

(110.3)

(119.2)

(83,284)

(67.8)

 

 2022

 859

807,395

(21,255)

(26,064)

(16.0)

(19.7)

(34,509)

(27.2)

 

Notes

Adjustments to statutory numbers

1. Where appropriate, the earnings per share (EPS), as disclosed in the statutory accounts, have been recalculated to take account of share splits, the issue of new shares and capitalisation issues.

2. Free cash flow per share excludes dividends paid which were included in the free cash flow calculations in the annual report and accounts for the years 1995-2000.

3. The weighted average number of shares, EPS and free cash flow per share include those shares held in trust for employee share schemes.

4. Before 2005, the accounts were prepared under UKGAAP. All accounts from 2005 to date have been prepared under IFRS.

5. Apart from the items in notes 1-4, all numbers are as reported in each year's published accounts.

6. From financial year 2020 data is based on both pre-IFRS16 numbers and post-IFRS16 numbers following the transition from IAS17 to IFRS16.

7. Free cash flow is defined in note 8 and in the Company's accounting policies. The calculation of free cash flow can be found on the cash flow statement.

8. 2022 results are for the 6 month period ended 23 January 2022.

Background

 

As previously reported, in the first half of the financial year, which ended on 23 January 2022, sales were adversely affected by Covid-19 restrictions, and labour costs were high, due mainly to Covid-related absences.

 

Like-for-like sales were -11.8%, compared to the six-month period ended 26 January 2020, before the pandemic, and were -12.4% for the first four weeks of the second half of the financial year, ending 20 February 2022, compared to the same period in FY20.

 

Since sales were affected by Covid from about February/March 2020, culminating in a pub closure on 20 March 2020, sales from 21 February 2022 are compared with sales from a similar period in 2019.

 

In the most recent three-week period, to 13 March 2022, sales improved, being 2.6% lower than the equivalent period in 2019.

 

Cash sales per week during this three-week period have been approximately 10% above the depressed levels of December 2021, our busiest month of the year, indicating an improving trend.

 

Detailed comparisons with 'normal' trading periods, before Covid, maybe of limited value. We have, even so, compared sales, profits and margins, below, with the first half of FY20, before the pandemic.

 

Total sales were £807.4m, a decrease of 13.5%, compared to the 26 weeks ended 26 January 2020.

 

Like-for-like sales, as indicated above, decreased by 11.8%. Like-for-like bar sales decreased by 12.7%, food sales by 11.1% and slot/fruit machine sales by 9.8%. Hotel room sales increased by 6.6%.

 

The unaudited pre-IFRS16 operating profit, before exceptional items, was £0.5m (2020: £76.6m). The operating margin, before exceptional items, was 0.1% (2020: 8.2%).

 

The unaudited pre-IFRS16 loss before tax and exceptional items was £21.3m (2020: £57.9m profit). This included property losses of £1.8m (2020: £0.2m).

 

Property losses arose from the disposal of four pubs and the closure of two pubs. The disposals resulted in a cash inflow of £2.1m.

 

Losses per share, including shares held in trust by the employee share scheme, before exceptional items, were 16.0p (2020: earnings per share of 43.3p).

 

Total capital investment was £64.7m (2020: £128.5m). £26.6m was invested in new pubs and pub extensions (2020: £23.7m), £18.9m in existing pubs and IT (2020: £34.1m) and £19.2m in freehold

reversions of properties where Wetherspoon was the tenant (2020: £70.7m).

 

The company increased investment levels, which are still substantially below the pre-pandemic period, on the basis that the adverse effects of Covid-19 were likely to diminish in the near future.

 

Exceptional items

 

There was a pre-tax exceptional gain of £13.0m (2020: £15.9m loss). £12.7m of the gain related to interest rate swaps. The company has interest rate swaps in place for approximately the next 10 years at an average rate of 1.24%, excluding the banks' margin.

 

Free Cash Flow

 

There was a free cash outflow of £34.5m (2020: £49.0m inflow), after capital payments of £19.5m for existing pubs (2020: £34.5m), £7.1m for share purchases for employees (2020: £9.3m) and payments of tax and interest. Free cash outflow per share was 27.2p (2020: 46.7p inflow).

 

The effect of IFRS16 on a hypothetical leasehold pub

 

As previously indicated, in order to illustrate the differences between old and new accounting, the example below shows how a leasehold pub would be affected. The following assumptions have been made:

 

n a 25-year lease, at a rent of £100k per annum, rising by 7.5% at each five-year rent review

n capital development costs of £1m funded by equity, without debt

n £30k of capital reinvestment per annum from year 6 to year 25

n pub EBITDA profits of £160k per annum

n head office costs and tax excluded from calculations

 

 

 

 

 

 

 

 

 

 

 

 

£000

£000

£000

£000

£000

£000

£000

 

Pub EBITDAR

260

260

268

276

284

294

6,904

 

Accounting Profit

pre IFRS16
(before head office costs & corporation tax)

100

100

100

100

100

100

2,500

 

Accounting Profit

post IFRS16
(before head office costs & corporation tax)

60

65

81

101

125

154

2,500

 

Cash earnings

160

160

130

130

130

130

3,400

 

                       

 

As the table illustrates, "cash earnings" are the same in both examples, however accounting earnings vary greatly.

 

Pre-IFRS16 treatment results in stable accounting profit of £100k, reflecting stable cash earnings, whereas post-IFRS16 treatment gives rise to erratic accounting profits, which vary from £60k to £154k, over the term of the lease.

 

As a result, it will be difficult for investors to understand the performance of the business, using IFRS16 accounting standards, at any given point in the lease, from an examination of the profit and loss account.

 

In appendix 1, below, we have provided profit and loss, balance sheet and cash flow statements, using pre-IRFS16 accounting methodology, for those who find the new accounting too complex or unhelpful.

 

Dividends and return of capital

 

The board has not recommended the payment of an interim dividend (2020: £0). There have been no share buybacks in the financial year to date (2020: £6.5m).

 

Financing

 

As at 23 January 2022, the company's total net debt, excluding derivatives, was £920.4m (2020: £804.5m), an increase of £115.9m. The half year-end net-debt-to-EBITDA ratio was 25.63 times (2020: 3.54 times).

 

Although debt has increased by £116m since H1 2020, trade creditors have reduced by £72m and £109m has been invested in new pubs and freehold reversions.

 

The company has an agreement with its lenders, who have been extremely supportive throughout the pandemic, that waives its debt covenants until October 2022 and replaces them with a minimum liquidity requirement of £75m. At the half-year-end liquidity was £159.1m.

 

There has been no change in the total finance facilities of £1,083.0m during the period.

 

As referred to above, the company has fixed its SONIA (SONIA is a replacement for LIBOR) interest rates in respect of £770m until November 2031. The weighted average cost of the swaps, excluding the banks' margin, is currently 1.61%. The total cost of the company's debt, including the banks' margin was 4.28%. The cost of the swaps is illustrated in the table below:

 

Swap Value

Start Date

End Date

Weighted Average %

£770m

30-Jul-21

30-Jul-23

1.61%

£770m

31-Jul-23

30-Jul-26

1.10%

£770m

31-Jul-26

30-Jun-28

1.33%

£770m

01-Jul-28

29-Mar-29

1.32%

£770m

31-Mar-29

30-Nov-31

1.02%

 

 

 

Property

 

The company opened four pubs during the first six months and sold or closed six, resulting in a trading estate of 859 pubs at the half year end.

 

The half-year depreciation charge, excluding depreciation of "right-of-use" assets (a new charge to the profit and loss account, post-IFRS16) was £37.2m (2021: £38.7m).

 

As at 24 July 2011, the company's freehold/ leasehold split was 43.4%/56.6%. As at 23 January 2022, as a result of investment in freehold reversions (relating to pubs where the company was previously a tenant) and freehold pub openings, the split was 67.8%/32.2%. As at 23 January 2022, the net book value of the property, plant and equipment of the company was £1.4 billion, including £1.1 billion of freehold and long-leasehold property. The properties have not been revalued since 1999.

 

Taxation

 

The current corporation tax credit for the year is £1.5m (2020: £13.6m charge). The 'accounting' tax credit, which appears in the income statement, is £1.0m (2021: £9.5m charge).

 

The accounting tax credit comprises two parts: the actual current tax credit (the 'cash' tax) and the deferred tax credit (the 'accounting' tax). The tax losses arising in the financial year will be carried forward for use against profits in future years, meaning that the cash tax benefit will be received in future years. Therefore, a 'deferred tax' benefit is created which will reverse in future years when the cash tax benefit of the losses is realised.

 

The company is seeking a refund of historic excise duty from HMRC, totalling £495k, in relation to goods sent to the Republic of Ireland, when Wetherspoon pubs first opened in that country. The company has been charged excise duty on the same goods twice, as they were purchased in the UK, and excise duty was paid in full. Irish excise duty was then paid in addition.

 

Owing to a paperwork error, in the early days of our business in the Republic, which the company has sought to rectify, it has, to date, been unable to reclaim this duty, even though it is transparently clear that the duty has been paid.

 

Scotland Business Rates

 

Business rates are supposed to be based on the value of the building, rather than the level of trade of the tenant. This should mean that the rateable value per square foot is approximately the same for comparable pubs in similar locations. However, as a result of the valuation approach adopted by the government "Assessor" in Scotland, Wetherspoon often pays far higher rates per square foot than its competitors.

 

This is highlighted (in the tables below) by assessments for the Omni Centre, a modern leisure complex in central Edinburgh, where Wetherspoon has been assessed at more than double the rate per square foot of the average of its competitors, and for The Centre in Livingston (West Lothian), a modern shopping centre, where a similar anomaly applies.

 

As a result of applying valuation practice from another era, which assumed that pubs charged approximately the same prices, the raison d'être of the rating system - that rates are based on property values, not the tenants trade- has been undermined.

 

 

Omni Centre, Edinburgh

Occupier Name

Rateable Value (RV)

Customer Area (ft²)

Rates per square foot

Playfair (JDW)

£218,750

2,756

£79.37

Unit 9 (vacant)

£48,900

1,053

£46.44

Unit 7 (vacant)

£81,800

2,283

£35.83

Frankie & Benny's

£119,500

2,731

£43.76

Nando's

£122,750

2,804

£43.78

Slug & Lettuce

£108,750

3,197

£34.02

The Filling Station

£147,750

3,375

£43.78

Tony Macaroni

£125,000

3,427

£36.48

Unit 6 (vacant)

£141,750

3,956

£35.83

Cosmo

£200,000

7,395

£27.05

Average (exc JDW)

£121,800

3,358

£38.55

 

 

The Centre, Livingston

Pub Name

Rateable Value (RV)

Customer Area (ft²)

Rates per square foot

The Newyearfield (JDW)

£165,750

4,090

£40.53

Paraffin Lamp

£52,200

2,077

£25.13

Wagamama

£67,600

2,096

£32.25

Nando's

£80,700

2,196

£36.75

Chiquito

£68,500

2,221

£30.84

Ask Italian

£69,600

2,254

£30.88

Pizza Express

£68,100

2,325

£29.29

Prezzo

£70,600

2,413

£29.26

Harvester

£98,600

3,171

£31.09

Pizza Hut

£111,000

3,796

£29.24

Hot Flame

£136,500

4,661

£29.29

Average (exc JDW)

£82,340

2,721

£30.40

 

Similar issues are evident in Galashiels, Arbroath, Wick, Anniesland - and indeed most Wetherspoon pubs in Scotland. In effect, the application of the rating system in Scotland discriminates against businesses like Wetherspoon, which have lower prices, and encourages businesses to charge higher prices. As a result, consumers are likely to pay higher prices, which cannot be the intent of rating legislation.

 

VAT equality

 

As we have previously stated, the government would generate more revenue and jobs if it were to create tax equality among supermarkets, pubs and restaurants. Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20%. This has enabled supermarkets to subsidise the price of alcoholic drinks, widening the price gap, to the detriment of pubs and restaurants. Pubs also pay around 20 pence a pint in business rates, whereas supermarkets pay only about 2 pence, creating further inequality.

 

Pubs have lost 50% of their beer sales to supermarkets in the last 35 or so years. It makes no sense for supermarkets to be treated more leniently than pubs, since pubs generate far more jobs per pint or meal than do supermarkets, as well as far higher levels of tax. Pubs also make an important contribution to the social life of many communities and have better visibility and control of those who consume alcoholic drinks.

Tax equality is particularly important for residents of less affluent areas, since the tax differential is more important there - people can less afford to pay the difference in prices between the on and off trade.

 

 

How pubs contribute to the economy

 

Wetherspoon and other pub and restaurant companies have always generated far more in taxes than are earned in profits. Wetherspoon generated total taxes in FY19, before the pandemic, of £763.6m. This equated to one pound in every thousand of UK government revenue

 

In the six months ended 23 January 2022, the company generated taxes of £294.1m.

 

The table below shows the tax revenue generated by the company, its staff and customers in the last 10 years. Each pub, on average, generated £6.1m in tax during that period:

 

 

2022 (HY)

2021 (FY)

2020 (FY)

2019 (FY)

2018 (FY)

2017 (FY)

2016 (FY)

2015 (FY)

2014 (FY)

2013 (FY)

TOTAL
2013 to 2022

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

VAT

118.1

93.8

244.3

357.9

332.8

323.4

311.7

294.4

275.1

253.0

2,604.5

Alcohol duty

74.0

70.6

124.2

174.4

175.9

167.2

164.4

161.4

157.0

144.4

1,413.5

PAYE and NIC

65.1

101.5

106.6

121.4

109.2

96.2

95.1

84.8

78.4

70.2

928.5

Business rates

23.3

1.5

39.5

57.3

55.6

53.0

50.2

48.7

44.9

46.4

420.4

Corporation tax

1.5

-

21.5

19.9

26.1

20.7

19.9

15.3

18.4

18.4

161.7

Corporation tax credit (historic capital allowances)

-

-

-

-

-

-

-

-2.0

-

-

-2.0

Fruit/slot Machine duty

5.7

4.3

9.0

11.6

10.5

10.5

11.0

11.2

11.3

7.2

92.3

Climate change levies

6.2

7.9

10.0

9.6

9.2

9.7

8.7

6.4

6.3

4.3

78.3

Stamp duty

1.6

1.8

4.9

3.7

1.2

5.1

2.6

1.8

2.1

1.0

25.8

Sugar tax

1.3

1.3

2.0

2.9

0.8

-

-

-

-

-

8.3

Fuel duty

0.8

1.1

1.7

2.2

2.1

2.1

2.1

2.9

2.1

2.0

19.1

Carbon tax

-

-

-

1.9

3.0

3.4

3.6

3.7

2.7

2.6

20.9

Premise licence and TV licences

0.4

0.5

1.1

0.8

0.7

0.8

0.8

1.6

0.7

0.7

8.1

Landfill tax

-

-

-

-

1.7

2.5

2.2

2.2

1.5

1.3

11.4

Furlough Tax
Rebate

-3.8

-213.0

-124.1

-

-

-

-

-

-

-

-340.9

Eat out to help out

-

-23.2

-

-

-

-

-

-

-

-

-23.2

Local Government Grants

-0.1

-11.1

-

-

-

-

-

-

-

-

-11.2

TOTAL TAX

294.1

37.0

440.7

763.6

728.8

694.6

672.3

632.4

600.5

551.5

5.4bn

TAX PER PUB (£000)

342

43

533

871

825

768

705

673

662

632

6.1m

TAX AS % OF NET SALES

36.4%

4.8%

34.9%

42.0%

43.0%

41.8%

42.1%

41.8%

42.6%

43.1%

37.3%

Note - this table is prepared on a cash basis. 2022 is for the 6 month period ending 23 January 2022.

 

   

Corporate Governance

 

Wetherspoon has been a strong critic of the composition of the boards of UK-quoted companies.

 

As a result of the "nine-year rule", limiting the tenure of NEDs and the presumption in favour of "independent", part-time chairmen, boards are often composed of short-term directors, with very little representation from those who understand the company best - people who work for it full-time, or have worked for it full-time.

 

Wetherspoon's review of the boards of major banks and pub companies, which teetered on the edge of failure in the 2008-2010 recession, highlighted the short "tenure", on average, of directors.

 

In contrast, Wetherspoon noted the relative success, during this fraught financial period, of pub companies Fuller's and Young's, the boards of which were dominated by experienced executives, or former executives.

 

As a result, Wetherspoon has increased the level of executive experience on the Wetherspoon board by appointing four "worker directors".

 

All four worker directors started on the "shop floor" and eventually became successful pub managers. Three have been promoted to area management roles. They have worked for the company for an average of 24 years.

 

Board composition cannot guarantee future success, but it makes sensible decisions, based on experience at the coalface of the business, more likely.

 

The UK Corporate Governance Code 2018 (the "Code") is a vast improvement on previous codes, emphasising the importance of employees, customers and other stakeholders in commercial success. It also emphasises the importance of its 'comply or explain' ethos, and the consequent need for shareholders to engage with companies in order to understand their explanations.

 

A major impediment to the effective implementation of comply or explain seems to be the undermanning of the corporate governance departments of major shareholders.

 

For example, Wetherspoon has recently met a compliance officer from one major institution who is responsible for around 400 companies - an impossible task, since the written regulatory output of each company is vast, coupled with the practical impossibility of meeting with so many companies in any meaningful way.

 

As a result, it appears that compliance officers and governance advisors, in practice, often rely on a "tick-box" approach, which is, itself, in breach of the Code.

 

A further issue is that many major investors, in their own companies, for sensible reasons, do not observe the nine-year rule, and other rules, themselves. An approach of "do what I say, not what I do" is clearly unsustainable.

 

Further progress

 

As always, the company has tried to improve as many areas of the business as possible, on a week-to-week basis, rather than aiming for 'big ideas' or grand strategies.

 

Frequent calls on pubs by senior executives, the encouragement of criticism from pub staff and customers and the involvement of pub and area managers, among others, in weekly decisions, are the keys to success.

 

Wetherspoon paid £11.1m in respect of bonuses and free shares to employees in the period ending 23 January 2022, of which 98.7% was paid to staff below board level and 91.0% was paid to staff working in our pubs.

 

Wetherspoon has been the biggest corporate sponsor of 'Young Lives vs Cancer' (previously CLIC Sargent), having raised a total of £19.7m since 2002. During the pandemic, our contributions had been reduced, but since the reopening of our pubs there have been great efforts seen and our contributions have bounced back significantly.

 

Bonuses and Free Shares

 

As indicated above, Wetherspoon has, for many years (see table below), operated a bonus and share scheme for all employees. Before the pandemic, these awards increased, as earnings increased for shareholders.

 

Financial year

Bonus and free shares

(Loss)/Profit after tax1

Bonus and free shares as % of profits

 

£m

£m

 

2007

19

47

41%

2008

16

36

45%

2009

21

45

45%

2010

23

51

44%

2011

23

52

43%

2012

24

57

42%

2013

29

65

44%

2014

29

59

50%

2015

31

57

53%

2016

33

57

58%

2017

44

77

57%

2018

43

84

51%

2019

46

80

58%

2020

33

(30)

-

2021

23

(136)

-

2022 H1

11

(20)

-

Total

448

581

48.5%2

   

1 (Loss)/Profit is Pre-IFRS16 and before exceptional items

2 Excludes 2020, 2021 and 2022

 

Length of Service

 

The attraction and retention of talented pub and kitchen managers is important for any hospitality business. As the table below demonstrates, the retention of managers has improved, even during the pandemic.

 

Financial year

Average pub manager length of service

Average kitchen manager length of service

 

(Years)

(Years)

2013

9.1

6.0

2014

10.0

6.1

2015

10.1

6.1

2016

11.0

7.1

2017

11.1

8.0

2018

12.0

8.1

2019

12.2

8.1

2020

12.9

9.1

2021

13.6

9.6

2022 H1

13.8

10.3

 

Food Hygiene Ratings

 

Wetherspoon has always emphasised the importance of hygiene standards.

 

We now have 778 pubs rated on the Food Standards Agency's website (see table below). The average score is 4.98, with 98.6% of the pubs achieving a top rating of five stars. We believe this to be the highest average rating for any substantial pub company.

 

In the separate Scottish scheme, which records either a 'pass' or a 'fail', all of our 65 pubs have passed

 

 

Financial Year

Total Pubs Scored

Average Rating

Pubs with highest Rating %

2013

771

4.85

87.0

2014

824

4.91

92.0

2015

858

4.93

94.1

2016

836

4.89

91.7

2017

818

4.89

91.8

2018

807

4.97

97.3

2019

799

4.97

97.4

2020

781

4.96

97.0

2021

787

4.97

98.4

2022 H1

778

4.98

98.6

 

Property litigation

 

As previously reported, Wetherspoon agreed on an out-of-court settlement with developer Anthony Lyons, formerly of property leisure agent Davis Coffer Lyons, in 2013 and received approximately £1.25m from Mr Lyons.

 

The payment relates to litigation in which Wetherspoon claimed that Mr Lyons had been an accessory to frauds committed by Wetherspoon's former retained agent Van de Berg and its directors Christian Braun, George Aldridge and Richard Harvey. Mr Lyons denied the claim - and the litigation was contested.

 

The claim related to properties in Portsmouth, Leytonstone and Newbury. The Portsmouth property was involved in the 2008/9 Van de Berg case itself.

 

In that case, Mr Justice Peter Smith found that Van de Berg, but not Mr Lyons (who was not a party to the case), fraudulently diverted the freehold from Wetherspoon to Moorstown Properties Limited, a company owned by Simon Conway. Moorstown leased the premises to Wetherspoon. Wetherspoon is still a leaseholder of this property - a pub called The Isambard Kingdom Brunel.

 

The properties in Leytonstone and Newbury (the other properties in the case against Mr Lyons) were not pleaded in the 2008/9 Van de Berg case.

 

Leytonstone was leased to Wetherspoon and trades today as The Walnut Tree public house. Newbury was leased to Pelican plc and became Café Rouge.

 

As we have also reported, the company agreed to settle its final claim in this series of cases and accepted £400,000 from property investor Jason Harris, formerly of First London and now of First Urban Group. Wetherspoon alleged that Harris was an accessory to frauds committed by Van de Berg.

Harris contested the claim and has not admitted liability.

 

Before the conclusion of the above cases, Wetherspoon also agreed on a settlement with Paul Ferrari of London estate agent Ferrari Dewe & Co, in respect of properties referred to as the 'Ferrari Five' by Mr Justice Peter Smith.

 

Press corrections

 

Wetherspoon has been the subject of a number of inaccurate media stories on a variety of different subjects. After complaining to the organisations concerned, the company obtained corrections and/or apologies from a number of publications, including:

 

Daily Express    The Daily Telegraph

Daily Mail    The Guardian

Daily Mirror      The Independent

Daily Star      The Times

Sky News      Forbes

 

The company has published a special edition of Wetherspoon News which includes details of the apologies and corrections which can be found on the Company's website

 

( https://www.jdwetherspoon.com/~/media/files/pdf-documents/wetherspoon-news/does-truth-matter_.pdf )

 

Current trading and outlook

 

Following a traumatic two years for many businesses and people, the ending of Covid restrictions has brought a return to more normal trading patterns in recent weeks. As indicated above, trade for the last three weeks was 2.6% below the equivalent period in 2019, reflecting an improving trend.

 

Contrary to some reports, the company has a full complement of staff and is fully stocked, with some minor exceptions.

 

Inflationary pressures in the economy have been widely publicised. Nearly 70% of the company's properties are freehold, with interest rates fixed for the next decade. Most of the company's leasehold pubs have rent reviews which are fixed at levels below the current level of inflation. There is pressure on input costs from food, drink and energy suppliers, mitigated to an extent, by a number of long-term contracts. Overall, the company expects the increase in input prices to be slightly less than the level of inflation.

 

The government is reported to have spent over £400 billion on Covid measures, around nine times the annual defence budget. The expenditure has been financed by the creation of "new money" by the Bank of England, which has led to significant inflation and higher taxes.

 

Draconian restrictions, which amount to a lockdown-by-stealth, are, of course, kryptonite for hospitality, travel, leisure and many other businesses. The company is confident of a strong future if restrictions are avoided. The readiness of the leaders of all the UK's main political parties to resort to lockdowns, and extreme restrictions, which were not contemplated in the UK's 2019 plans for pandemics, is the main threat to the future of the hospitality industry, but also to the economy.

 

 

Appendix 1 - Unaudited   primary financial statements (pre-IFRS16 accounting)

 

As outlined on page 2, the following unaudited financial statements are included to aid understanding.

 

Pre-IFRS16 income statement (before exceptional items):

 

 

26 weeks ended 23 January 2022

26 weeks ended 24 January 2021

26 weeks ended 26 January 2020

 

£000

£000

£000

Revenue

807,395

431,072

933,021

Operating costs

(806,903)

(451,816)

(856,461)

Operating profit/(loss)

492

(20,744)

76,560

Property losses

(1,796)

(1,320)

(172)

Finance income

6

167

41

Finance costs

(19,957)

(24,275)

(18,508)

Loss before tax

(21,255)

(46,172)

57,921

Income tax credit

1,007

2,510

(12,487)

Loss for the period

(20,248)

(43,662)

45,434

 

Pre-IFRS16 income statement reconciliation (before exceptional items):

 

 

26 weeks ended 23 January 2022

26 weeks ended 24 January 2021

26 weeks ended 26 January 2020

 

£000

£000

£000

(Loss)/profit for the period before IFRS16

(20,248)

(43,662)

45,434

Operating costs

23,516

26,078

28,443

Amortisation and Depreciation

 

 

 

-  ROU Assets

(22,379)

(23,042)

(24,425)

-  Lease Premiums

-

86

192

Disposal of leases

3,449

1,088

347

Finance income

223

210

225

Finance costs

(9,617)

(11,015)

(11,078)

Income tax credit

-

3,887

1,189

Loss for the period

(25,057)

(46,370)

40,327

 

Pre-IFRS16 cash flow statement:

 

 

26 weeks ended 23 January 2022

26 weeks ended 24 January 2021

26 weeks ended 26 January 2020

 

£000

£000

£000

Net cash flows from operating activities

(7,959)

(59,823)

93,079

Net cash flow from investing activities

(58,852)

(19,012)

(135,778)

Net cash flow from financing activities

60,391

129,408

47,162

Net change in cash and cash equivalents

(6,420)

50,573

4,463

Opening cash and cash equivalents

45,408

174,451

42,950

Closing cash and cash equivalents

38,988

225,024

47,413

Free cash flow

(34,509)

(77,306)

48,966

Free cash flow per ordinary share (p)

(27.2)

(64.5)

46.7

 

 

Pre-IFRS16 balance sheet:

 

 

As at 23 January 2022

As at 25 July 2021

 

 

 

 

£000

£000

Non-current assets

 

 

Property, plant and equipment

1,437,057

1,420,515

Intangible assets

3,849

5,358

Investment property

12,653

10,533

Other non-current assets

10,658

7,434

Deferred tax assets

-

-

Total non-current assets

1,464,217

1,443,840

 

 

 

Current assets

 

 

Inventories

27,007

26,853

Receivables

34,814

34,477

Asset Held for Sale

2,123

-

Cash and cash equivalents

38,988

45,408

Total current assets

102,932

106,738

Total assets

1,567,149

1,550,578

 

 

 

Current liabilities

 

 

Borrowings

(6,740)

(7,610)

Trade and other payables

(259,737)

(287,758)

Current income tax liabilities

(372)

(1,454)

Provisions

(4,751)

(4,725)

Total current liabilities

(271,600)

(301,547)

 

 

 

Non-current liabilities

 

 

Borrowings

(956,605)

(883,272)

Derivative financial instruments

(3,565)

(37,643)

Deferred tax liabilities

(24,497)

(16,546)

Provisions

(1,488)

(1,488)

Other liabilities

(9,738)

(9,738)

Total non-current liabilities

(995,893)

(948,687)

Total liabilities

(1,267,493)

(1,250,244)

Net assets

299,656

300,344

 

 

 

Shareholders' equity

 

 

Share capital

2,575

2,575

Share premium account

143,294

143,294

Capital redemption reserve

2,337

2,337

Other reserve

234,579

234,579

Hedging reserve

(4,224)

(15,403)

Currency translation reserve

(501)

1,851

Retained earnings

(78,404)

(68,889)

Total shareholders' equity

299,656

300,344

 

 

INCOME STATEMENT for the 26 weeks ended 23 January 2022

 

J D Wetherspoon plc, company number: 1709784

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Unaudited

Unaudited

Audited

Audited

 

 

26 weeks

 

26 weeks

 

26 weeks

26 weeks

52 weeks

52 weeks

 

 

ended

 

ended

 

ended

ended

ended

ended

 

 

23 January

 

23 January

 

24 January

24 January

25 July

25 July

 

 

2022

 

2022

 

2021

2021

2021

2021

 

 

Before

 

After

 

Before

After

Before

After

 

 

exceptional

 

exceptional

 

exceptional

exceptional

exceptional

exceptional

 

 

items

 

items

 

items

items

items

items

 

 

£000

 

£000

 

£000

£000

£000

£000

Revenue

1

807,395

 

807,395

 

431,072

431,072

772,555

772,555

Other operating income - exceptional (note 4)

 

-

 

277

 

-

  8,937

  - 

  15,541

Operating costs

 

(805,767)

 

(805,767)

 

(448,694)

(448,694)

(872,913)

(872,913)

Operating costs - exceptional (note 4)

 

-

 

-

 

-

(16,473)

-

(24,482)

Operating profit/(loss)

2

1,628

 

1,905

 

(17,622)

(25,158)

(100,358)

(109,299)

Property gains/(losses)

3

1,653

 

1,653

 

(232)

(232)

(123)

(123)

Property losses - exceptional (note 4)

3

-

 

(23)

 

-

(2,190)

-

(5,839)

Finance income

6

229

 

229

 

377

377

595

595

Finance costs

6

(29,574)

 

(29,574)

 

(35,290)

(35,290)

(67,280)

(67,280)

Finance income/(costs) - exceptional (note 4)

6

-

 

12,774

 

-

(5,511)

-

(12,690)

Loss before tax

 

(26,064)

 

(13,036)

 

(52,767)

(68,004)

(167,166)

(194,636)

Income tax credit

7

1,007

 

1,007

 

6,397

6,397

20,695

20,695

Income tax credit/(expense) - exceptional (note 4)

7

-

 

560

 

-

2,816

-

(7,114)

Loss for the period

 

(25,057)

 

(11,469)

 

(46,370)

(58,791)

(146,471)

(181,055)

 

 

 

 

 

 

 

 

 

 

Loss per ordinary share (p)

 

 

 

 

 

 

 

 

 

 - Basic 1

8

(19.7)

 

(9.0)

 

(38.7)

(49.1)

(119.2)

(147.4)

 - Diluted 1

8

(19.7)

 

(9.0)

 

(38.7)

(49.1)

(119.2)

(147.4)

 

STATEMENT OF COMPREHENSIVE INCOME for the 26 weeks ended 23 January 2022

 

 

 

Notes

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

52 weeks

 

 

ended

ended

ended

 

 

23 January

24 January

25 July

 

 

2022

2021

2021

 

 

£000

£000

£000

Items which will be reclassified subsequently to profit or loss:

 

 

 

 

Interest-rate swaps: gain taken to other comprehensive income

22

22,314

16,717

44,551

Interest-rate swaps: (loss)/gain reclassification to the income statement

22

(2,011)

4,528

11,707

Tax on items taken directly to other comprehensive income

7

(9,124)

(4,037)

(5,084)

Currency translation differences

 

(1,885)

(1,933)

(3,510)

Net gain recognised directly in other comprehensive income

 

9,294

15,275

47,664

Loss for the period

 

(11,469)

(58,791)

(181,055)

Total comprehensive loss for the period

 

(2,175)

(43,516)

(133,391)

 

 

CASH FLOW STATEMENT for the 26 weeks ended 23 January 2022

 

J D Wetherspoon plc, company number: 1709784

 

 

 

 

 

 

 

 

 

Notes

Unaudited

 

Unaudited

Unaudited

Unaudited

Audited

Audited

 

 

 

 

free cash

 

free cash

 

free cash

 

 

 

 

flow

 

flow

 

flow

 

 

26 weeks

 

26 weeks

26 weeks

26 weeks

52 weeks

52 weeks

 

 

ended

 

ended

ended

ended

ended

ended

 

 

23 January

 

23 January

24 January

24 January

25 July

25 July

 

 

2022

 

2022

2021

2021

2021

2021

 

 

£000

 

£000

£000

£000

£000

£000

Cash flows from operating activities

 

 

 

 

 

 

 

 

Cash generated from/(used in) operations

9

33,215

 

33,215

(28,749)

(28,749)

25,208

25,208

Interest received

 

8

 

8

105

105

187

187

Interest paid

 

(6,662)

 

(6,662)

(29,185)

(29,185)

(48,428)

(48,428)

Corporation tax paid

 

(709)

 

(709)

12,201

12,201

7,673

7,673

Lease interest

 

(9,222)

 

(9,222)

(10,843)

(10,843)

(19,942)

(19,942)

Net cash flow from operating activities

 

16,630

 

16,630

(56,471)

(56,471)

(35,302)

(35,302)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Reinvestment in pubs

 

(18,925)

 

(18,925)

(9,602)

(9,602)

(19,692)

(19,692)

Reinvestment in business and IT projects

 

(543)

 

(543)

(872)

(872)

(2,620)

(2,620)

Investment in new pubs and pub extensions

 

(22,275)

 

-

(7,115)

-

(21,131)

-

Freehold reversions and investment properties

 

(19,248)

 

-

(1,423)

-

(16,858)

-

Proceeds of sale of property, plant and equipment

 

2,139

 

-

-

-

2,575

-

Net cash flow from investing activities

 

(58,852)

 

(19,468)

(19,012)

(10,474)

(57,726)

(22,312)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Purchase of own shares for share-based payments

 

(7,082)

 

(7,082)

(6,771)

(6,771)

(7,684)

(7,684)

Loan issue cost

10

-

 

-

(238)

(238)

(434)

(434)

Advances/(repayment) under bank loans

10

74,990

 

-

-

-

(195,000)

-

Advances under CLBILS

10

-

 

-

48,333

-

100,033

-

Other loan receivables

  10

(3,986)

 

-

-

-

-

-

Lease principal payments

23

(24,589)

 

(24,589)

(3,352)

(3,352)

(17,552)

(17,552)

Issue of share capital

28

-

 

-

91,523

-

91,523

-

Asset-financing principal payments

10

(3,531)

 

-

(3,439)

-

(6,901)

-

Net cash flow from financing activities

 

35,802

 

(31,671)

126,056

(10,361)

(36,015)

(25,670)

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

10

(6,420)

 

 

50,573

 

(129,043)

 

Opening cash and cash equivalents

18

45,408

 

 

174,451

 

174,451

 

Closing cash and cash equivalents

18

38,988

 

 

225,024

 

45,408

 

Free cash flow

8

 

 

(34,509)

 

(77,306)

 

(83,284)

Free cash flow per ordinary share

8

 

 

(27.2)p

 

(64.5)p

 

(67.8)p

 

 

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

 

 

 

BALANCE SHEET as at 23 January 2022

 

J D Wetherspoon plc, company number: 1709784

Notes

Unaudited

Unaudited

Audited

 

 

 

Restated

 

 

 

23 January

24 January

25 July

 

 

2022

2021

2021

 

 

£000

£000

£000

Assets

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

13

1,440,368

1,425,570

1,423,826

Intangible assets

12

3,849

8,956

5,358

Investment property

14

12,653

6,037

10,533

Right-of-use assets

23

448,184

527,614

468,538

Other loan receivable

16

3,224

-

-

Deferred tax assets

7

-

-

-

Lease assets

23

9,681

10,506

9,890

Total non-current assets

 

1,917,959

1,978,683

1,918,145

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

Lease assets

23

1,638

1,691

1,638

Assets held for sale

17

2,123

-

-

Inventories

15

27,007

22,369

26,853

Receivables

16

16,696

27,268

16,427

Current income tax receivables

 

2,269

-

1,187

Cash and cash equivalents

18

38,988

225,024

45,408

Total current assets

 

88,721

276,352

91,513

Total assets

 

2,006,680

2,255,035

2,009,658

 

 

 

 

 

Current liabilities

 

 

 

 

Borrowings

20

(6,740)

(7,610)

(7,610)

Trade and other payables

19

(244,757)

(184,742)

(259,791)

Provisions

21

(3,030)

(2,797)

(3,004)

Lease liabilities

23

(50,797)

(72,481)

(65,219)

Total current liabilities

 

(305,324)

(267,630)

(335,624)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

20

(956,605)

(1,029,343)

(883,272)

Derivative financial instruments

22

(3,565)

(65,477)

(37,643)

Deferred tax liabilities

7

(24,497)

(18,693)

(16,546)

Lease liabilities

23

(444,836)

(508,518)

(458,596)

Total non-current liabilities

 

(1,429,503)

(1,622,031)

(1,396,057)

Total liabilities

 

(1,734,827)

(1,889,661)

(1,731,681)

Net assets

 

271,853

365,374

277,977

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

Share capital

28

2,575

2,575

2,575

Share premium account

 

143,294

143,294

143,294

Capital redemption reserve

 

2,337

2,337

2,337

Other reserves

 

234,579

234,579

234,579

Hedging reserve

 

(4,224)

(49,369)

(15,403)

Currency translation reserve

 

(501)

5,089

1,851

Retained earnings

 

(106,207)

26,869

(91,256)

Total shareholders' equity

 

271,853

365,374

277,977

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

J D Wetherspoon plc, company number: 1709784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

Share

Share premium

Capital

Other

Hedging

Currency

Retained

Total

 

 

capital

account

redemption

Reserves

reserve

translation

earnings

 

 

 

 

 

reserve

 

 

reserve

 

 

 

 

£000

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

As at 26 July 2020 as previously reported

 

2,408

280,975

2,337

-

(66,577)

7,089

91,016

317,248

Effect of restatements

 

-

(137,681)

-

141,002

-

-

(3,321)

-

At 26 July 2020 restated

 

2,408

143,294

2,337

141,002

(66,577)

7,089

87,695

317,248

Total comprehensive income

 

-

-

-

-

17,208

(2,000)

(58,724)

(43,516)

Loss for the period

 

-

-

-

-

-

-

(58,791)

(58,791)

Interest-rate swaps: cash flow hedges

22

-

-

-

-

16,717

-

-

16,717

Interest-rate swaps: amount reclassified to the income statement

22

-

-

-

-

4,528

-

-

4,528

Tax on items taken directly to comprehensive income

7

-

-

-

-

(4,037)

-

-

(4,037)

Currency translation differences

 

-

-

-

-

-

(2,000)

67

(1,933)

 

 

 

 

 

 

 

 

 

 

Issued share capital (net of expenses)

 

167

-

-

93,577

-

-

(2,222)

91,522

Share-based payment charges

 

-

-

-

-

-

-

6,420

6,420

Tax on share-based payment

 

-

-

-

-

-

-

471

471

Purchase of own shares for share-based payments

 

-

-

-

-

-

-

(6,771)

(6,771)

At 24 January 2021

 

2,575

143,294

2,337

234,579

(49,369)

5,089

26,869

365,374

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

-

-

-

-

33,966

(3,238)

(120,604)

(89,876)

Loss for the period

 

-

-

-

-

-

-

(122,264)

(122,264)

Interest-rate swaps: cash flow hedges

22

-

-

-

-

27,834

-

-

27,834

Interest-rate swaps: amount reclassified to the income statement

22

-

-

-

-

7,179

-

-

7,179

Tax on items taken directly to comprehensive income

7

-

-

-

-

(1,047)

-

-

(1,047)

Currency translation differences

 

-

-

-

-

-

(3,238)

1,660

(1,578)

 

 

 

 

 

 

 

 

 

 

Share-based payment charges

 

-

-

-

-

-

-

3,847

3,847

Tax on share-based payment

 

-

-

-

-

-

-

(455)

(455)

Purchase of own shares for share-based payments

 

-

-

-

-

-

-

(913)

(913)

 

 

 

 

 

 

 

 

 

 

At 25 July 2021

 

2,575

143,294

2,337

234,579

(15,403)

1,851

(91,256)

277,977

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

-

-

-

-

11,179

(2,352)

(11,003)

(2,176)

Loss for the period

 

-

-

-

-

-

-

(11,469)

(11,469)

Interest-rate swaps: cash flow hedges

22

-

-

-

-

22,314

-

-

22,314

Interest-rate swaps: amount reclassified to the income statement

22

-

-

-

-

(2,011)

-

-

(2,011)

Tax on items taken directly to comprehensive income

7

-

-

-

-

(9,124)

-

-

(9,124)

Currency translation differences

 

-

-

-

-

-

(2,352)

466

(1,885)

 

 

 

 

 

 

 

 

 

 

Share-based payment charges

 

-

-

-

-

-

-

3,152

3,152

Tax on share-based payment

 

-

-

-

-

-

-

(18)

(18)

Purchase of own shares for share-based payments

 

-

-

-

-

-

-

(7,082)

(7,082)

At 23 January 2022

 

2,575

143,294

2,337

234,579

(4,224)

(501)

(106,207)

271,853

The currency translation reserve contains the accumulated currency gains and losses on the long-term financing and balance sheet translation of the overseas branch. The currency translation difference reported in retained earnings is the retranslation of the opening reserves in the overseas branch at the current period end's currency exchange rate.

 

As at 23 January 2022, the company had distributable reserves of £124.7m.

 

   

NOTES TO THE FINANCIAL STATEMENTS

 

1.  Revenue

 

 

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Bar

480,453

236,701

440,119

Food

292,891

154,304

283,192

Eat out to help out scheme (note 24)

-

23,248

23,248

Slot/fruit machines

23,144

12,046

17,059

Hotel

10,424

4,570

8,592

Other

483

203

345

 

807,395

431,072

772,555

 

 

2.  Operating profit/(loss) - analysis of costs by nature

 

This is stated after charging/(crediting):

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Variable concession rental payments

2,196

2,607

2,801

Short term leases

375

102

784

Cancelled principal payments (note 23)

(2,250)

(7,322)

(10,933)

Repairs and maintenance

45,557

25,609

64,020

Net rent receivable

(926)

(1,076)

(1,873)

Share-based payments (note 5)

3,152

6,420

10,267

Depreciation of property, plant and equipment (note 13)

35,690

37,014

73,193

Amortisation of intangible assets (note 12)

1,491

1,694

3,151

Depreciation of investment properties (note 14)

50

12

44

Amortisation of right of use assets (note 23)

22,672

23,042

44,532

 

Analysis of continuing operations

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Revenue

807,395

431,072

772,555

Cost of sales

(784,197)

(439,375)

(844,574)

Gross profit/(loss)

23,198

(8,303)

(72,019)

Administration costs

(21,293)

(16,855)

(37,280)

Operating profit/(loss) after exceptional items

1,905

(25,158)

(109,299)

 

Included in cost of sales is £274.5m (2021: £145.9m) relating to cost of inventory recognised as expense.

 

 

3.  Property (gains)/losses

 

 

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

 

 

 

 

Non-exceptional property (gains)/losses

 

 

 

Disposal of fixed assets

1,485

1,268

1,548

Additional costs of disposal

435

52

775

Disposal of leases

(3,449)

(1,088)

(2,200)

Other property gains

(124)

-

-

 

(1,653)

232

123

 

 

 

 

Exceptional property (gains)/losses

 

 

 

Disposal of fixed assets

-

-

1,592

Additional costs of disposal

23

57

115

Impairment of property, plant and equipment

-

-

1,999

Impairment of right of use assets

-

2,133

2,133

 

23

2,190

5,839

 

 

 

 

Total property (gains)/losses

(1,630)

2,422

5,962

 

Non-exceptional property losses, excluding disposal of lease assets, were £1,796,000 in the period (2021: £1,320,000).

 

 

4.  Exceptional Items

 

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

52 weeks

 

 

ended

ended

ended

 

 

23 January

24 January

25 July

 

 

2022

2021

2021

 

 

£000

£000

£000

Exceptional operating items

 

 

 

 

Local government support grants

 

(107)

(5,238)

(11,123)

Duty drawback

 

(170)

(3,699)

(4,418)

Exceptional operating income

 

(277)

(8,937)

(15,541)

 

 

 

 

 

Equipment

 

-

2,516

3,753

Stock losses

 

-

2,200

4,158

Staff costs

 

-

11,562

15,692

Other

 

-

195

879

Exceptional operating costs

 

-

16,473

24,482

Total exceptional operating costs

 

(277)

7,536

8,941

 

 

 

 

 

Exceptional property losses

 

 

 

 

Disposal programme

 

 

 

 

Loss on disposal of pubs

 

23

57

1,707

Impairment of property plant and equipment

 

-

-

-

 

 

23

57

1,707

Other property losses

 

 

 

 

Impairment of property, plant and equipment

 

-

-

1,999

Impairment of right-of-use asset

 

-

2,133

2,133

 

 

-

2,133

4,132

 

 

 

 

 

Total exceptional property losses

 

23

2,190

5,839

 

 

 

 

 

Other exceptional items

 

 

 

 

Exceptional finance costs

 

(12,774)

5,511

12,690

 

 

 

 

 

Exceptional tax

 

 

 

 

Exceptional tax items

 

189

(2,816)

10,385

Tax effect on exceptional items

 

(749)

-

(3,271)

 

 

(560)

(2,816)

7,114

 

 

 

 

 

Total exceptional items

 

(13,588)

12,421

34,584

 

 

Duty drawback

A credit of £170,000 (July 2021: £4,418,000) for duty drawback was received for perished stock during the closure periods which arose in the last financial year.

 

Local government support grants

The company has recognised £107,000 income of local government support grants in the UK and the Republic of Ireland relating to the Covid-19 pandemic. These are recognised on receipt.

 

Exceptional finance costs

The company has recognised an exceptional net income of £12,774,000, £13,774,000 of which relates to a reclassification due to hedge accounting. See note 22 for further detail. The remaining £1,000,000 charge relates to covenant-waiver fees incurred during the period.

 

Taxation

The exceptional tax credit of £560,000 comprises a previous year adjustment to current tax of £2,000 and a deferred tax credit of £562,000. The deferred tax relates to a fair value movement on interest rate swaps (£373,000) and the impact of the change in UK tax rate on the deferred tax balances (£189,000).

 

 

5.  Employee benefits expenses

 

 

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Wages and salaries

302,569

256,022

520,339

Employee support grants

(3,145)

(97,539)

(208,986)

Social security costs

18,990

11,130

23,380

Other pension costs

4,579

4,058

7,877

Share-based payments

3,152

6,420

10,267

Redundancy and restructuring costs (note 4)

-

6,179

6,179

 

326,145

186,270

359,056

 

 Employee support grants disclosed above are amounts claimed by the company under the coronavirus job retention schemes in the UK and the Republic of Ireland.

 

Employee numbers

Unaudited

Unaudited

Audited

 

2022

2021

2021

 

Number

Number

Number

Full-time equivalents

 

 

 

Managerial/administration

4,916

4,613

4,586

Hourly paid staff

19,695

19,659

18,736

 

24,611

24,272

23,322

 

 

 

 

 

2022

2021

2021

 

Number

Number

Number

Total employees

 

 

 

Managerial/administration

5,030

4,722

4,703

Hourly paid staff

36,957

34,694

34,322

 

41,987

39,416

39,025

 

The totals above relate to the monthly average number of employees during the year, not the total of employees at the end of the year.

 

Share-based payments

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

Shares awarded during the year (shares)

839,248

852,261

852,261

Average price of shares awarded (pence)

1,069

957

957

Market value of shares vested during the year (£000)

3,906

4,150

9,169

Total liability of the share-based payments scheme (£000)

12,239

15,047

14,608

 

 The shares awarded as part of the above schemes are based on the cash value of the bonuses at the date of the awards. These awards vest over three years, with their cost spread over their three-year life. The share-based payment charge above represents the annual cost of bonuses awarded over the past three years. All awards are settled in equity.

 The company operates two share-based compensation plans. In both schemes, the fair values of the shares granted are determined by reference to the share price at the date of the award. The shares vest at a £Nil exercise price - and there are
no market-based conditions to the shares which affect their ability to vest.

 

6.  Finance Income and costs

 

 

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Finance costs

 

 

 

Interest payable on bank loans and overdrafts

9,892

11,725

21,903

Amortisation of bank loan issue costs (note 10)

1,002

860

1,746

Interest payable on swaps

5,918

9,115

18,228

Interest payable on asset-financing

256

352

664

Interest payable on private placement

2,889

2,223

4,907

Finance costs, excluding lease interest

19,957

24,275

47,448

 

 

 

 

Interest payable on leases

9,617

11,015

19,832

Total finance costs

29,574

35,290

67,280

 

 

 

 

Bank interest receivable

(6)

(167)

(188)

Lease interest receivable

(223)

(210)

(407)

Total finance income

(229)

(377)

(595)

 

 

 

 

Net finance costs before exceptional items

29,345

34,913

66,685

 

 

 

 

Exceptional finance costs (note 4)

(12,774)

5,511

12,690

 

 

 

 

Net finance costs after exceptional items

16,571

40,424

79,375

 

 

7.  Income tax expense

 

(a)  Tax on loss on ordinary activities

 

The standard rate of corporation tax in the UK is 19.0%. The company's profits for the accounting period are taxed
at a rate of 19.0% (2021: 19.0%).

 

Unaudited

 

Unaudited

 

Unaudited

Unaudited

Audited

Audited

 

26 weeks

 

26 weeks

 

26 weeks

26 weeks

52 weeks

52 weeks

 

ended

 

ended

 

ended

ended

ended

ended

 

23 January 2022

 

23 January 2022

 

24 January 2021

24 January 2021

25 July 2021

25 July 2021

 

Before

 

After

 

Before

After

Before

After

 

exceptional

 

exceptional

 

exceptional

exceptional

exceptional

exceptional

 

items

 

items

 

items

items

items

items

 

£000

 

£000

 

£000

£000

£000

£000

Taken through income statement

 

 

 

 

 

 

 

 

Current income tax:

 

 

 

 

 

 

 

 

Current income tax charge

(378)

 

(378)

 

-

-

(380)

(380)

Previous period adjustment

-

 

2

 

-

2,641

-

1,836

Total current income tax

(378)

 

(376)

 

-

2,641

(380)

1,456

 

 

 

 

 

 

 

 

 

Deferred tax:

 

 

 

 

 

 

 

 

Origination and reversal of temporary differences

(629)

 

(1,380)

 

(6,297)

(9,192)

(19,158)

(21,704)

Prior year deferred tax (credit)/charge

-

 

-

 

(100)

(2,662)

(1,157)

(3,718)

Impact of change in UK tax rate

-

 

189

 

-

-

-

10,385

Total deferred tax

(629)

 

(1,191)

 

(6,397)

(11,854)

(20,315)

(15,037)

 

 

 

 

 

 

 

 

 

Tax charge/(credit)

(1,007)

 

(1,567)

 

(6,397)

(9,213)

(20,695)

(13,581)

 

 

 

Unaudited

 

Unaudited

 

Unaudited

Unaudited

Audited

Audited

 

26 weeks

 

26 weeks

 

26 weeks

26 weeks

52 weeks

52 weeks

 

ended

 

ended

 

ended

ended

ended

ended

 

23 January 2022

 

23 January 2022

 

24 January 2021

24 January 2021

25 July 2021

25 July 2021

 

Before

 

After

 

Before

After

Before

After

 

exceptional

 

exceptional

 

exceptional

exceptional

exceptional

exceptional

 

items

 

items

 

items

items

items

items

 

£000

 

£000

 

£000

£000

£000

£000

Taken through equity

 

 

 

 

 

 

 

 

Current tax

(2)

 

(2)

 

4

4

6

6

Deferred tax

20

 

20

 

(8)

(8)

(22)

(22)

Tax (credit)/charge

18

 

18

 

(4)

(4)

(16)

(16)

 

 

Unaudited

 

Unaudited

 

Unaudited

Unaudited

Audited

Audited

 

26 weeks

 

26 weeks

 

26 weeks

26 weeks

52 weeks

52 weeks

 

ended

 

ended

 

ended

ended

ended

ended

 

23 January 2022

 

23 January 2022

 

24 January 2021

24 January 2021

25 July 2021

25 July 2021

 

Before

 

After

 

Before

After

Before

After

 

exceptional

 

exceptional

 

exceptional

exceptional

exceptional

exceptional

 

items

 

items

 

items

items

items

items

 

£000

 

£000

 

£000

£000

£000

£000

Taken through comprehensive income

 

 

 

 

 

 

 

 

Deferred tax charge on swaps

7,079

 

7,079

 

4,037

4,037

6,241

6,241

Impact of change in UK tax rate

2,045

 

2,045

 

-

-

(1,157)

(1,157)

Tax charge/(credit)

9,124

 

9,124

 

4,037

4,037

5,084

5,084

 

 

  7. Income tax expense (continued)

 

(b)  Reconciliation of the total tax charge

 

 

The taxation charge for the 26 weeks ended 23 January 2022 is based on the pre-exceptional loss before tax of £26.1m and the estimated effective tax rate before exceptional items for the 26 weeks ended 23 January 2022 of 3.9% (2021: 12.4%).

This comprises a pre-exceptional current tax rate of 1.4% (2021: 0.2%) and a pre-exceptional deferred tax charge of 2.5%
(2021: 12.2% charge).

 The UK standard weighted average tax rate for the period is 19.0% (2021: 19.0%). The current tax rate is lower than the UK standard weighted average tax rate, owing to tax losses in the period.

 

 

Unaudited

 

Unaudited

Unaudited

Unaudited

Audited

Audited

 

26 weeks

 

26 weeks

26 weeks

26 weeks

52 weeks

52 weeks

 

ended

 

ended

ended

ended

ended

ended

 

23 January 2022

 

23 January 2022

24 January 2021

24 January 2021

25 July 2021

25 July 2021

 

Before

 

After

Before

After

Before

After

 

exceptional

 

exceptional

exceptional

exceptional

exceptional

exceptional

 

items

 

items

items

items

items

items

 

£000

 

£000

£000

£000

£000

£000

(Loss) before income tax

(26,064)

 

(13,036)

(52,767)

(68,004)

(167,166)

(194,636)

 

 

 

 

 

 

 

 

Loss multiplied by the UK standard rate of

(4,952)

 

(2,477)

(10,027)

(12,921)

(31,762)

(36,981)

corporation tax of 19.0% (2021: 19.0%)

 

 

 

 

 

 

 

Abortive acquisition costs and disposals

373

 

373

-

-

-

-

Expenditure not allowable

108

 

98

69

69

1,791

4,680

Fair value movement on SWAP disregarded for tax

-

 

(3,217)

-

-

-

-

Other allowable deductions

(9)

 

(9)

(34)

(34)

(18)

(18)

Non-qualifying depreciation

3,294

 

3,294

2,287

2,287

7,029

7,029

Capital gains - effect or reliefs

464

 

464

168

168

728

728

Share options and SIPs

(297)

 

(297)

181

181

955

955

Deferred tax on balance-sheet-only items

(103)

 

(103)

-

-

-

-

Effect of different tax rates and unrecognisd losses in oversea companies

115

 

115

1,059

1,059

1,740

1,524

Rate change adjustment

-

 

190

-

-

-

10,385

Previous year adjustment - current tax

-

 

2

-

2,640

-

1,836

Previous year adjustment - deferred tax

-

 

-

(100)

(2,662)

(1,158)

(3,719)

Total tax expense reported in the income statement

(1,007)

 

(1,567)

(6,397)

(9,213)

(20,695)

(13,581)

 

  7.   Income tax expense (continued)

 

(c)  Deferred tax

 

The deferred tax in the balance sheet is as follows:

 The main rate of corporation tax is currently 19% but this will increase to 25% from 1 April 2023. The rate increase has been substantively enacted and therefore the deferred tax balances have been recognised at the rate they are expected to reverse.

 

Deferred tax liabilities

 

 

 

 

 

Accelerated tax

Other

Total

 

 

 

 

depreciation

temporary

 

 

 

 

 

 

differences

 

 

 

 

 

£000

£000

£000

At 25 July 2021

 

 

 

50,593

5,536

56,129

Movement during year posted to the income statement

 

 

 

2,944

108

3,052

Impact of tax rate change posted to the income statement

 

 

932

34

966

At 23 January 2022 (unaudited)

 

 

 

54,469

5,678

60,147

 

 

Deferred tax assets

 

 

 

 

Share

Tax losses

Interest-rate

Total

 

 

 

 

based

and interest

swaps

 

 

 

 

 

payments

capacity carried

 

 

 

 

 

 

 

forward

 

 

 

 

 

 

£000

£000

£000

£000

At 25 July 2021

 

 

 

807

29,365

9,412

39,584

Movement during year posted to the income statement

 

 

 

(98)

3,927

604

4,433

Movement during year posted to comprehensive income

 

 

-

-

(7,079)

(7,079)

Movement during year posted to equity

 

 

 

(20)

-

-

(20)

Impact of change in tax rate posted to income statement

 

-

777

-

777

Impact of change in tax rate posted to comprehensive income

 

-

-

(2,045)

(2,045)

At 23 January 2022 (unaudited)

 

 

 

689

34,069

892

35,650

 

 

The company has recognised deferred tax assets of £35.7m (2021: £39.6m), which are expected to offset against future profits.  This includes a deferred tax asset of £34.1m (2021: £29.4m) in respect of UK tax losses and current-year interest restrictions capable of reactivation in future periods. This is on the basis that it is probable that profits will arise in the foreseeable future, enabling the assets to be utilised.

 

Deferred tax assets and liabilities have been offset as follows

 

 

 

 

2022

2021

 

 

 

 

£000

£000

Deferred tax liabilities

 

 

 

60,147

56,129

Offset against deferred tax assets

 

 

 

(35,650)

(30,172)

Offset against deferred tax assets (restated)

 

 

-

(9,412)

Deferred tax liabilities

 

 

 

24,497

16,546

 

 

 

 

 

 

Deferred tax assets

 

 

 

35,650

39,584

Offset against deferred tax liabilities

 

 

 

(35,650)

(30,172)

Offset against deferred tax liabilities (restated)

 

 

-

(9,412)

Deferred tax asset

 

 

 

-

-

 

As at 23 January 2022, the company had a potential deferred tax asset of £8.8m (2021: £9.1m) relating to capital losses and tax losses in the Republic of Ireland. A deferred tax asset has not been recognised, as there is insufficient certainty of recovery.

 

On 3 March 2021, the chancellor confirmed that the UK rate of corporation tax will increase to 25% from 1 April 2023. Deferred tax has been calculated at the rate of taxation for the peiod that the deferred tax items are expected reverse.

 

In accordance with IAS 12, the deferred tax asset and liability must be offset where there is a right of offset, this has been applied in the period and the prior year balance.

 

 

8.  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 128,750,155 (2021: 120,565,127), 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.

  During a period where a company makes a loss, accounting standards require that 'dilutive' shares (for the company, those held in trust in respect of employee share schemes) not be included in the earning per share calculation, because they will reduce the reported loss per share; consequently, all per-share measures in the current period are based on the number of  shares in issue less shares held in trust of 126,946,018 (2021: 119,827,162).

  From financial year 2021, the weighted average number of shares held in trust for employee share schemes has been adjusted to exclude those shares which are expected to vest, yet remain in trust.

 

Weighted average number of shares

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

Shares in issue

128,750,155

120,565,127

124,668,915

Shares held in trust

(1,804,137)

(737,965)

(1,841,667)

Shares in issue less shares held in trust

126,946,018

119,827,162

122,827,248

(b)  Earnings per share

 

26 weeks ended 23 January 2022 unaudited

Loss

Basic EPS

Diluted EPS

 

£000

pence

pence

Earnings (loss after tax)

(11,469)

(9.0)

(9.0)

Exclude effect of exceptional items after tax

(13,588)

(10.7)

(10.7)

Earnings before exceptional items

(25,057)

(19.7)

(19.7)

Exclude effect of property gains/(losses)

(1,653)

(1.3)

(1.3)

Underlying earnings before exceptional items

(26,710)

(21.0)

(21.0)

 

 

 

 

 

 

 

 

26 weeks ended 23 January 2022 unaudited - pre-IFRS16

Loss

Basic EPS

Diluted EPS

 

£000

pence

pence

Earnings (loss after tax)

(6,660)

(5.2)

(5.2)

Exclude effect of exceptional items after tax

(13,588)

(10.7)

(10.7)

Earnings before exceptional items

(20,248)

(15.9)

(15.9)

Exclude effect of property gains/(losses)

1,796

1.4

1.4

Underlying earnings before exceptional items

(18,452)

(14.5)

(14.5)

 

 

26 weeks ended 24 January 2021 unaudited

Loss

Basic EPS

Diluted EPS

 

£000

pence

pence

Earnings (profit after tax)

(58,791)

(49.1)

(49.1)

Exclude effect of exceptional items after tax

12,421

10.4

10.4

Earnings before exceptional items

(46,370)

(38.7)

(38.7)

Exclude effect of property gains/(losses)

232

0.2

0.2

Underlying earnings before exceptional items

(46,138)

(38.5)

(38.5)

 

 

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

 (c)  Free 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 current pubs, after funding interest, corporation tax, lease principal payments, loan issues costs, 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, 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 scheme.

 

 

Free cash

Basic free

Diluted free

 

flow

cash flow

cash flow

 

 

per share

per share

 

£000

pence

pence

26 weeks ended 23 January 2022

(34,509)

(27.2)

(27.2)

26 weeks ended 24 January 2021

(77,306)

(64.5)

(64.5)

52 weeks ended 25 July 2021

(83,284)

(67.8)

(67.8)

 

(d)  Owners' earnings per share

 Owners' earnings measures' those earnings attributable to shareholders from current activities adjusted for significant non-cash items and one-off items. Owners' earnings are calculated as pre-IFRS16 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's current tax charge. The weighted average number of shares in issue used in this metric is disclosed above (see note 8a).

26 weeks ended 23 January 2022 unaudited

Owners'

Basic

Diluted

 

 

 

 

Earnings

Owners' EPS

Owners' EPS

 

 

 

 

£000

pence

pence

Loss before tax and exceptional items (pre-IFRS 16 income statement)

(21,255)

(16.7)

(16.7)

Exclude depreciation and amortisation

 

37,231

29.3

29.3

Less reinvestment in current properties

 

(18,925)

(14.9)

(14.9)

Exclude property gains and losses

 

1,796

1.4

1.4

Less cash tax (note 7a)

 

 

378

0.3

0.3

Owners' earnings

 

 

(775)

(0.6)

(0.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26 weeks ended 24 January 2021 unaudited

Owners'

Basic

Diluted

 

 

 

 

Earnings

Owners' EPS

Owners' EPS

 

 

 

 

£000

pence

pence

Loss before tax and exceptional items (pre-IFRS 16 income statement)

(46,172)

(38.5)

(38.5)

Exclude depreciation and amortisation

 

38,719

32.3

32.3

Less cash reinvestment in current properties

(7,633)

(6.4)

(6.4)

Exclude property gains and losses

 

1,320

1.1

1.1

Less cash tax (note 7a)

 

 

-

-

-

Owners' earnings

 

 

(13,766)

(11.5)

(11.5)

 

52 weeks ended 25 July 2021 audited

Owners'

Basic

Diluted

 

 

 

 

Earnings

Owners' EPS

Owners' EPS

 

 

 

 

£000

pence

pence

Loss before tax and exceptional items (pre-IFRS 16 income statement)

(154,676)

(125.9)

(125.9)

Exclude depreciation and amortisation

 

76,388

62.2

62.2

Less cash reinvestment in current properties

(19,962)

(16.3)

(16.3)

Exclude property gains and losses

 

2,323

1.9

1.9

Less cash tax (note 7a)

 

 

380

0.3

0.3

Owners' earnings

 

 

(95,547)

(77.8)

(77.8)

 

 

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

 

Analysis of additions by type

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

52 weeks

 

 

ended

ended

ended

 

 

23 January

24 January

25 July

 

 

2022

2021

2021

Reinvestment in existing pubs

 

18,925

8,130

19,962

Investment in new pubs and pub extensions

 

26,645

7,663

24,051

Lease premiums

 

(127)

276

1,800

Freehold reversions and investment properties

 

19,248

1,359

16,858

 

 

64,691

17,428

62,671

 

 

 

 

 

Analysis of additions by category

 

Unaudited

Unaudited

Audited

 

 

26 weeks

26 weeks

52 weeks

 

 

ended

ended

ended

 

 

23 January

24 January

25 July

 

 

2022

2021

2021

Property, plant and equipment (note 13)

 

62,521

15,194

58,139

Intangible assets (note 12)

 

-

2,234

4

Investment properties (note 14)

 

2,170

-

4,528

 

 

64,691

17,428

62,671

These additions tables have been inserted to reconcile the total fixed asset additions during the period to the reinvestment in existing pubs metric used in the owners' earnings calculation.

 

 

9. Cash used in/generated from operations

 

 

Unaudited

 

Unaudited*

Unaudited

Audited

 

26 weeks

 

26 weeks

26 weeks

52 weeks

 

ended

 

ended

ended

ended

 

23 January

 

23 January

24 January

25 July

 

2022

 

2022

2021

2021

 

£000

 

£000

£000

£000

Loss for the period

(11,469)

 

(6,660)

(58,791)

(181,055)

Adjusted for:

 

 

 

 

 

Tax (note 7)

(1,567)

 

(1,567)

(9,213)

(13,581)

Share-based charges (note 2)

3,152

 

3,152

6,420

10,267

Loss on disposal of property, plant and equipment (note 3)

1,485

 

1,485

1,268

3,140

Disposal of capitalised leases (note 3)

(3,449)

 

-

(1,088)

(2,200)

Net impairment charge (note 3)

-

 

-

2,133

4,132

Interest receivable (note 6)

(6)

 

(6)

(167)

(188)

Interest payable (note 6)

18,955

 

18,955

23,415

45,702

Lease interest receivable (note 6)

(223)

 

-

(210)

(407)

Lease interest payable (note 6)

9,617

 

-

11,015

19,832

Exceptional Interest (note 6)

(12,774)

 

(12,774)

5,511

12,690

Amortisation of bank loan issue costs (note 6)

1,002

 

1,002

860

1,746

Depreciation of property, plant and equipment (note 13)

35,690

 

35,690

37,014

73,193

Amortisation of intangible assets (note 12)

1,491

 

1,491

1,694

3,151

Depreciation on investment properties (note 14)

50

 

50

12

44

Aborted properties costs

2,283

 

2,283

17

628

Cancelled prinipal payments (note 23)

(2,250)

 

-

(7,322)

(10,993)

Amortisation of right-of-use assets (note 23)

22,652

 

-

23,042

44,532

 

64,640

 

43,101

35,611

10,633

Change in inventories

(154)

 

(154)

726

(3,758)

Change in receivables

(269)

 

(337)

4,908

15,748

Change in payables

(31,002)

 

(28,021)

(69,994)

2,585

Cash flow from operating activities

33,215

 

14,589

(28,749)

25,208

 

 

*This column shows the cash generated from operations as it would have been reported, before the introduction of IFRS16.

 

 

10. Analysis of change in net debt

 

 

 

25 July

Cash

Other

23 January

 

 

2021

flows

changes

2022

 

 

 

 

 

 

 

 

£000

£000

£000

£000

Borrowings

 

 

 

 

 

Cash and cash equivalents

 

45,408

(6,420)

-

38,988

Other loan receivable - due before one year

 

-

762

-

762

Asset-financing obligations - due before one year

 

(7,610)

870

-

(6,740)

Current net borrowings

 

37,798

(4,788)

-

33,010

 

 

 

 

 

 

Bank loans - due after one year

 

(776,871)

(74,990)

(979)

(852,842)

Asset-financing obligations - due after one year

 

(8,633)

2,661

-

(5,972)

Other loan receivable - due after one year

 

-

3,224

-

3,224

Private placement - due after one year

 

(97,768)

-

(23)

(97,791)

Non-current net borrowings

 

(883,272)

(69,105)

(1,002)

(953,381)

 

 

 

 

 

 

Net debt

 

(845,474)

(73,893)

(1,002)

(920,371)

 

 

 

 

 

 

Derivatives

 

 

 

 

 

Interest-rate swaps liability - due after one year

 

(37,643)

-

34,078

(3,565)

Total derivatives

 

(37,643)

-

34,078

(3,565)

 

 

 

 

 

 

Net debt after derivatives

 

(883,117)

(73,893)

33,076

(923,936)

 

 

 

 

 

 

Leases

 

 

 

 

 

Lease assets - due before one year

 

1,638

(656)

656

1,638

Lease assets - due after one year

 

9,890

-

(209)

9,681

Lease obligations - due before one year

 

(65,219)

25,245

(10,823)

(50,797)

Lease obligations - due after one year

 

(458,596)

-

13,760

(444,836)

Net lease liabilities

 

(512,287)

24,589

3,384

(484,314)

 

 

 

 

 

 

Net debt after derivatives and lease liabilities

 

(1,395,404)

(49,304)

36,460

(1,408,250)

 

The cash movement on the bank loans of £74,990,000 is disclosed in the cash flow statement as an advance/(repayment) under bank loans.

 The cash movement on asset-financing of £3,531,000 is disclosed in the cash flow statement as asset-financing principal payments.

 Lease obligations represent long term payables and lease assets represent long term receivables, and are therefore both disclosed in the table above.

 

Non-cash movements

The non-cash movement in bank loans and the private placement relate to the amortisation of loan issue costs.
The amortisation charge for the year of £1,002,000 is disclosed in note 6. These are arrangement fees paid in respect of new borrowings and are charged to the income statement over the expected life of the loans.

 

The movement in interest-rate swaps relates to the change in the 'mark to market' valuations for the year for swaps subject to hedge accounting.

 The non-cash movement in lease liabilities is analysed in the table overleaf.

 

 

10.  Analysis of change in net debt (continued)

 

Unaudited

Non-cash movement in net lease liabilities

23 January

 

2022

 

£000

Recognition of new leases (note 23)

(4,317)

Remeasurements of existing leases liabilities (note 23)

(8,504)

Remeasurements of existing leases assets (note 23)

447

Disposal of lease (note 23)

13,508

Cancelled principal payments (note 23)

2,250

Exchange differences (note 23)

-

Non-cash movement in net lease liabilities

3,384

 

The table below calculates a ratio between net debt, being borrowing less cash and cash equivalents, and earnings before interest, tax, and depreciation (EBITDA). The numbers in this table are all before the effect of IFRS16.

 

 

 

 

Unaudited

Unaudited

Unaudited

 

 

 

26 weeks

26 weeks

52 weeks

 

 

 

ended

ended

ended

 

 

 

23 January

24 January

25 July

 

 

 

2022

2021

2021

 

 

 

£000

£000

£000

Loss before tax (income statement)

 

 

(21,255)

(46,172)

(154,676)

Interest

 

 

19,951

24,108

47,260

Depreciation

 

 

37,215

38,719

76,474

Earnings before interest, tax and depreciation (EBITDA)

 

35,911

16,655

(30,942)

 

 

 

 

 

 

Net debt / EBITDA

 

 

25.63

-60.36

-27.32

 

11. Dividends paid and proposed

 

Unaudited

Unaudited

Audited

 

26 weeks

26 weeks

52 weeks

 

ended

ended

ended

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Paid in the period

 

 

 

2020 final dividend

-

-

-

2021 interim dividend

-

-

-

2021 final dividend

-

-

-

 

-

-

-

 

 

 

 

Dividends in respect of the period

 

 

 

Interim dividend

-

-

-

Final dividend

-

-

-

 

-

-

-

 

 

 

 

Dividend per share (p)

-

-

-

Dividend cover

-

-

-

 

Dividend cover is calculated as profit after tax and exceptional items over dividend paid. Dividend cover has not been shown for previous year and current year, as the company reported a loss in both periods.

 

12. Intangible assets

 

 

 

 

 

 

Computer

Assets

Total

 

 

 

 

 

software and

under

 

 

 

 

 

 

development

construction

 

 

 

 

 

 

£000

£000

£000

Cost:

 

 

 

 

 

 

 

At 24 January 2021

 

 

 

34,266

2,189

36,455

Transfers

 

 

 

 

804

(804)

-

Disposals

 

 

 

 

(2,323)

(1,381)

(3,704)

At 25 July 2021

 

 

 

32,747

4

32,751

Disposals

 

 

 

 

(21)

(4)

(25)

At 23 January 2022

 

 

 

32,726

-

32,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortisation:

 

 

 

 

 

At 24 January 2021

 

 

 

(27,499)

-

(27,499)

Provided during the period

 

 

(1,457)

-

(1,457)

Exchange differences

 

 

 

(1)

-

(1)

Disposals

 

 

 

 

1,564

-

1,564

At 25 July 2021

 

 

 

(27,393)

-

(27,393)

Provided during the period

 

 

(1,491)

-

(1,491)

Disposals

 

 

 

 

7

-

7

At 23 January 2022

 

 

 

(28,877)

-

(28,877)

 

 

 

 

 

 

 

 

Net book amount at 23 January 2022

 

 

3,849

-

3,849

Net book amount at 25 July 2021

 

 

 

5,354

4

5,358

Net book amount at 24 January 2021

 

 

 

6,767

2,189

8,956

 The majority of intangible assets relates to computer software and software development. Examples include the development costs of the SAP accounting and property-maintenance systems and bespoke J D Wetherspoon apps.

 

13. Property, plant and equipment

 

Freehold and Long Leasehold Property

Short Leasehold Property

Equipment Fixtures and Fittings

Assets Under Construction

Total

 

£000

£000

£000

£000

£000

Cost

 

 

 

 

 

At 26 July 2020

1,363,106

295,009

684,732

86,624

2,429,471

Additions

4,356

-

3,434

7,404

15,194

Transfers

3,964

901

1,321

(6,186)

-

Exchange differences

(58)

(5)

(13)

(61)

(137)

Disposals

-

(1,878)

(1,262)

-

(3,140)

Reclassifications

676

(676)

-

-

-

Transfer from investment property

5,768

-

-

-

5,768

At 24 January 2021

1,377,812

293,351

688,212

87,781

2,447,156

Additions

10,427

132

7,817

24,569

42,945

Transfers

37,059

3,263

7,064

(47,386)

-

Exchange differences

(1,299)

(139)

(413)

(1,096)

(2,947)

Disposals

(2,623)

(2,507)

  (2,369)

-

(7,499)

Reclassifications

7,166

(7,166)

-

-

-

At 25 July 2021

1,428,542

286,934

700,311

63,868

2,479,655

Additions

22,982

2,039

12,993

24,507

62,521

Transfers to investment property

-

-

-

(2,170)

(2,170)

Transfers

11,193

1,167

1,333

(13,693)

-

Exchange differences

(930)

(47)

(163)

(380)

(1,520)

Transfer to held for sale

(2,854)

(3,279)

(2,123)

-

(8,256)

Disposals

(3,551)

(1,132)

(978)

(959)

(6,620)

Reclassifications

8,167

(8,167)

-

-

-

At 23 January 2022

1,463,549

277,515

711,373

71,173

2,523,610

 

 

Accumulated depreciation and Impairment

 

 

 

 

At 26 July 2020

(307,297)

(167,009)

(512,387)

-

(986,693)

Provided during the period

(9,585)

(5,688)

(21,741)

-

(37,014)

Transfers from investment property

(290)

-

-

-

(290)

Disposals

-

1,325

1,086

-

2,411

Reclassification

419

(419)

-

-

-

At 24 January 2021

(316,753)

(171,791)

(533,042)

-

(1,021,586)

Provided during the period

(10,696)

(4,811)

(20,672)

-

(36,179)

Exchange differences

282

23

249

-

554

Impairment loss

(1,631)

(368)

-

-

(1,999)

Disposals

874

1,080

1,427

-

3,381

Reclassification

(4,509)

4,509

-

-

-

At 25 July 2021

(332,433)

(171,358)

(552,038)

-

(1,055,829)

Provided during the period

(10,527)

(4,969)

(20,194)

-

(35,690)

Exchange differences

49

28

93

-

170

Transfer to held for sale

1,442

2,641

2,050

-

6,133

Disposals

776

618

580

-

1,974

Reclassification

(4,751)

4,751

-

-

-

At 23 January 2022

(345,444)

(168,289)

(569,509)

-

(1,083,242)

 

 

 

 

 

 

Net book amount at 23 January 2022

1,118,105

109,226

141,864

71,173

1,440,368

Net book amount at 25 July 2021

1,096,109

115,576

148,273

63,868

1,423,826

Net book amount at 24 January 2021

1,061,059

121,560

155,170

87,781

1,425,570

Net book amount at 26 July 2020

1,055,809

128,000

172,345

86,624

1,442,778

 

 

 

 

 

 

   

 

13.   Property, plant and equipment (continued)

  Impairment of property, plant and equipment

 In assessing whether a pub has been impaired, the book value of the pub is compared with its anticipated future cash flows and fair value. Assumptions are used about sales, costs and profit, using a pre-tax discount rate for future years of 8.7% (2021: 7%).

  If the value, based on the higher of future anticipated cash flows and fair value, is lower than the book value, the difference is written off as property impairment.

  As a result of this exercise, £Nil impairment losses (2021: £Nil) was charged to property losses in the income statement.

 

 

14. Investment property

  The company owns four (2021: two) freehold properties with existing tenants - and these assets have been classified

as investment properties. During the year, a property which was originally recognised as part of property, plant and equipment under the catergory 'Assets under Construction' has been transferred to investment property.

 

 

 

 

 

 

 

 

£000

Cost:

 

 

 

 

 

 

 

At 26 July 2020

 

 

 

 

 

11,842

Transfer to property, plant and equipment

 

 

 

 

(5,768)

At 24 January 2021

 

 

 

 

 

6,074

Additions

 

 

 

 

 

 

4,528

At 25 July 2021

 

 

 

 

 

10,602

Transfer from property plant and equipment

 

 

 

 

 

 

2,170

At 23 January 2022

 

 

 

 

 

12,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortisation:

 

 

 

 

 

At 26 July 2020

 

 

 

 

 

(315)

Provided during the period

 

 

 

 

 

(12)

Transfer to property, plant and equipment

 

 

 

 

290

At 24 January 2021

 

 

 

 

 

(37)

Provided during the period

 

 

 

 

 

(32)

At 25 July 2021

 

 

 

 

 

(69)

Provided during the period

 

 

 

 

 

(50)

At 23 January 2022

 

 

 

 

 

(119)

 

 

 

 

 

 

 

 

Net book amount at 23 January 2022

 

 

 

 

12,653

Net book amount at 25 July 2021

 

 

 

 

 

10,533

Net book amount at 24 January 2021

 

 

 

 

 

6,037

Net book amount at 26 July 2020

 

 

 

 

 

11,527

Rental income received in the period from investment properties was £333,000 (2021: £ 161,250 ).

Operating costs, excluding depreciation, incurred in relation to these properties amounted to £9 ,000 (2021: £ 2,000 ).

 In the opinion of the directors, the fair value of the investment properties is approximately equal to its book value.

 

15. Inventories

 

 Bar, food and non-consumables stock held at pubs and national distribution centre.

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

 

£000

£000

£000

Goods for resale at cost

 

 

 

 

 

27,007

22,369

26,853

  16. Receivables

 

This category relates to situations in which third parties owe the company money. Examples include rebates from suppliers and overpayments of certain taxes.

 Prepayments relate to payments which have been made in respect of liabilities after the period's end.

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

 

£000

£000

£000

Current (due within one year)

 

 

 

 

 

 

 

 

Other loan receivables

 

 

 

 

 

762

-

-

Other receivables

 

 

 

 

 

3,075

1,015

2,004

Accrued income

 

 

 

 

 

1,053

440

1,499

Prepayment

 

 

 

 

 

11,806

25,813

12,924

Total current receivables

 

 

 

 

 

16,696

27,268

16,427

 

 

 

 

 

 

 

 

 

Non-current (due after one year)

 

 

 

 

 

 

 

 

Other loan receivables

 

 

 

 

 

3,224

-

-

Total other non-current assets

 

 

 

 

 

3,224

-

-

 

Accrued income relates to discounts which are calculated based on certain products delivered at an agreed rate per item.

 Included in prepayments is £1,102,000 (2021: £16,500,000) in relation to government grants receivable under the coronavirus job retention scheme.

 

Credit risk

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

 

£000

£000

£000

Due from suppliers - not due

 

 

 

 

 

2,786

883

1,040

Due from suppliers - overdue

 

 

 

 

 

289

132

964

 

 

 

 

 

 

3,075

1,015

2,004

 

Credit risk is the risk that a counterparty does not settle its financial obligation with the company. At the period's end, the company has assessed the credit risk on amounts due from suppliers, based on historic experience, meaning that the expected lifetime credit loss was immaterial. Cash and cash equivalents are also subject to the impairment requirements of IFRS9 - the identified impairment loss was immaterial.

 

17. Assets held for sale

 

These relate to situations in which the company had exchanged contracts to sell a property, but the transaction is not yet complete. As at 23 January 2022, three sites were classified as held for sale (2021:Nil).

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

 

£000

£000

£000

Property, plant and equipment

 

 

 

 

 

2,123

-

-

 

 

18. Cash and cash equivalents

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

£000

£000

£000

Cash and cash equivalents

 

 

 

 

38,988

225,024

45,408

Cash at bank earns interest at floating rates, based on daily bank deposit rates.

 

19. Trade and other payables

 

This category relates to money owed by the company to third parties.

 Accruals refer to allowances made by the company for future anticipated payments to suppliers and other creditors.

 

 

 

 

 

 

 

Unaudited

Unaudited

 

 

 

 

 

 

23 January

24 January

 

2022

2021

 

£000

£000

£000

Trade payables

86,652

67,406

Other payables

20,151

16,835

Other tax and social security

59,035

48,502

Accruals

78,082

50,724

Deferred Income

 

 

 

 

 

837

1,275

 

244,757

184,742

259,791

 

20. Borrowings

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

 

£000

£000

£000

Current (due within one year)

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Lease liabilities

 

 

 

 

 

50,797

72,481

65,219

Asset-financing obligations

 

 

 

 

 

6,740

7,610

7,610

Total current borrowings

 

 

 

 

 

57,537

80,091

72,829

 

 

 

 

 

 

 

 

 

Non-current (due after one year)

 

 

 

 

 

 

 

 

Bank loans

 

 

 

 

 

 

 

 

Variable-rate facility

 

 

 

 

 

755,000

875,000

680,000

CLBILS

 

 

 

 

 

100,033

48,333

100,033

Unamortised bank loan issue costs

 

 

 

 

 

(2,191)

(3,829)

(3,162)

 

 

 

 

 

 

852,842

919,504

776,871

Private placement

 

 

 

 

 

 

 

 

Fixed-rate facility

 

 

 

 

 

98,000

98,000

98,000

Unamortised private placement issue costs

 

 

 

 

(209)

(255)

(232)

 

 

 

 

 

 

97,791

97,745

97,768

Other

 

 

 

 

 

 

 

 

Lease liabilities

 

 

 

 

 

444,836

508,518

458,596

Asset-financing

 

 

 

 

 

5,972

12,094

8,633

Total non-current borrowings

 

 

 

 

 

1,401,441

1,537,861

1,341,868

 

 

 

 

 

 

 

 

 

Total borrowings

 

 

 

 

 

1,458,978

1,617,952

1,414,697

 

 

21. Provisions

 

 

 

 

 

 

Legal claims

Total

 

 

 

 

 

£000

£000

At 25 July 2021

 

 

 

 

3,004

3,004

Charged to the income statement:

 

 

 

 

 

 

- Additional charges

 

 

 

 

1,084

1,084

- Unused amounts reversed

 

 

 

 

(876)

(876)

- Used during year

 

 

 

 

(182)

(182)

At 23 January 2022

 

 

 

 

3,030

3,030

 

 

 

 

 

 

 

 

 

 

 

 

23 January

25 July

 

 

 

 

 

2022

2021

 

 

 

 

 

£000

£000

Current

 

 

 

 

3,030

3,004

Non-current

 

 

 

 

-

-

Total provisions

 

 

 

 

3,030

3,004

Legal claims

The amounts represent a provision for ongoing legal claims brought against the company in the normal course of business by customers and employees. Owing to the nature of the business, the company expects to have a continuous provision for outstanding employee and public liability claims. All claim provisions are considered current and are therefore not discounted.

 

22. Financial instruments

 

The table below analyses the company's financial liabilities in relevant maturity groupings, based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

   

Maturity profile of financial liabilities

 

 

Within

 

 

 

 

More than

 

 

 

1 year

1-2 years

2-3 years

3-4 years

4-5 years

5 years

Total

 

 

£000

£000

£000

£000

£000

£000

£000

 

At 23 January 2022 (unaudited)

 

 

 

 

 

 

 

 

Bank loans

25,247

25,247

44,644

856,221

-

-

951,359

 

Bank loans - CLBILS

2,107

1,164

100,033

-

-

-

103,304

 

Private placement

3,655

3,655

3,655

3,655

3,655

98,000

116,275

 

Trade and other payables

184,885

-

-

-

-

-

184,885

 

Derivatives

8,933

6,165

3,143

3,203

3,361

8,295

33,100

 

Lease liabilities

50,797

49,096

48,348

45,423

44,242

409,524

647,430

 

Asset-financing obligations

6,788

4,324

2,323

-

-

-

13,435

 

 

Within

 

 

 

 

More than

 

 

1 year

1-2 years

2-3 years

3-4 years

4-5 years

5 years

Total

 

£000

£000

£000

£000

£000

£000

£000

At 25 July 2021

 

 

 

 

 

 

 

Bank loans

21,798

21,798

11,857

41,549

855,000

-

952,002

Bank loans - CLBILS

2,005

2,005

100,138

-

-

-

104,148

Private placement

3,655

3,655

3,655

3,655

3,655

99,828

118,103

Trade and other payables

214,464

-

-

-

-

-

214,464

Derivatives

12,054

11,969

5,342

5,293

5,207

5,231

45,096

Lease liabilities

65,219

49,587

49,508

47,872

45,290

427,520

684,996

Asset-financing obligations

7,610

5,145

4,323

-

-

-

17,078

                               

 

The company has agreed a one-year extension for £855m of its existing banking agreement. The original loan, agreed in February 2019, was for five years with two one-year extension options, the first of which has been exercised.  The second extension option was originally meant to be reviewed in January 2022 but this has been deferred until June 2022 at the request of the bank.

 

At the balance sheet date, the company had loan facilities of £1,083m (2021: £1,041m) as detailed below:

 

n Secured revolving-loan facility of £875m

o £20m matures February 2024

o £855m matures February 2025

o 14 participating lenders

n Sale of senior secured notes £98m

o Matures August 2026

o The purchase of loan notes split among 5 participants.

n CLBILS secured loan of £100m

o Matures August 2023

o Four participating lenders

n Overdraft facility of £10m

 

 

These facilities have been entered into to meet the short and long term liquidity needs of the business. The objective is to ensure that the company has sufficient financial resources to meet working capital requirements as well as funds for reinvestment and development. The company manages liquidity risk through its revolving-loan facility as well as other longer term facilities to avoid reliance on short term borrowings. The company's borrowings are dependent on the meeting of financial covenants, which if breached, could result in funding being withdrawn. The company has agreed covenant waivers with its lenders as outlined in the going concern section of the 2021 annual report within the accounting policies (page 51) and have ensured liquidity through share placings in the current and prior year.

 

 

22.   Financial instruments (continued)

 

The company has hedged its interest-rate liabilities to its banks by swapping the floating-rate debt into fixed-rate debt which

has fixed £770m of these borrowings at rates of between 0.61 and 3.84%. The effective weighted average interest rate of the swap agreements used during the year is 1.61% (2021: 2.42%), fixed for a weighted average period of 6.9 years (2021: 3.6 years). In addition, the company has entered into forward-starting interest-rate swaps as detailed in the table below.

 

Weighted average by swap period:

 

From

To

 

Total swap value £m

Weighted average interest %

30/07/2021

30/07/2023

 

770

 

 

 

1.61

31/07/2023

30/07/2026

 

770

 

 

 

1.10

31/07/2026

30/06/2028

 

770

 

 

 

1.33

01/07/2028

29/03/2029

 

770

 

 

 

1.32

31/03/2029

30/11/2031

 

770

 

 

 

1.02

 

At the balance sheet date, £755m (2021: £875m) was drawn down under the £875m secured-term revolving-loan facility. The amounts drawn under this agreement can be varied, depending on the requirements of the business.

 Capital risk management

The company's capital structure comprises shareholders' equity and loans. The objective of capital management  is to ensure that the company is able to continue as a going concern and provide shareholders with returns on  their investment, while managing risk.

 The company does not have a specific measure for managing capital structure; instead, the company plans its capital

requirements and manages its loans, dividends and share buybacks accordingly. In a normal trading year, the company measures loans using a ratio of net debt to EBITDA which was 3.36 times in 2019. With covenant waivers agreed, management's primary metric is liquidity.

 Financial risks associated with financial instruments, including credit risk and liquidy risk, are discussed in the 2021 annual report in the section 2, page 61.

 Fair value of financial assets and liabilities

IFRS13 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)

 Interest-rate risks of financial liabilities

An analysis of the interest-rate profile of financial liabilities, after taking account of all interest-rate swaps,

is set out in the following table. This table excludes lease liabilities.

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

£000

£000

£000

Analysis of interest-rate profile of financial liabilities

 

 

 

 

Floating rate due after one year

 

 

 

 

(2,191)

101,171

(3,162)

Fixed rate due after one year

 

 

 

 

855,033

818,333

780,033

 

 

 

 

 

852,842

919,504

776,871

Asset-financing obligations

 

 

 

 

 

 

 

Fixed rate due in one year

 

 

 

 

6,740

7,610

7,610

Fixed-rate due after one year

 

 

 

 

5,972

12,094

8,633

 

 

 

 

 

12,712

19,704

16,243

Private placement

 

 

 

 

 

 

 

Fixed rate due after one year

 

 

 

 

97,791

97,745

97,768

 

 

 

 

 

97,791

97,745

97,768

 

 

 

 

 

 

 

 

 

 

 

 

 

963,345

1,036,953

890,882

The floating-rate borrowings are interest-bearing borrowings at rates based on LIBOR, fixed for periods of up to one month.

The fixed-rate loan is the element of the company's borrowings which has been fixed with interest-rate swaps.

 

 

22.   Financial instruments (continued)

 

 

Fair values

In some cases, payments which are due to be made in the future by the company or due to be received by the company

have to be given a fair value. The table below highlights any differences between book value and fair value of financial instruments.

 

 

Unaudited

 

Unaudited

Unaudited

Unaudited

Audited

Audited

 

23 January

 

23 January

24 January

24 January

25 July

25 July

 

2022

 

2022

2021

2021

2021

2021

 

 

 

 

 

 

 

 

 

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

38,988

 

38,988

225,024

225,024

45,408

45,408

Receivables

3,075

 

3,075

1,015

1,015

2,004

2,004

Lease assets

11,319

 

11,432

12,197

12,185

11,528

11,643

 

53,382

 

53,495

238,236

238,224

58,940

59,055

 

 

 

 

 

 

 

 

Financial liabilities at amortised cost

 

 

 

 

 

 

 

Trade and other payables

(184,885)

 

(184,885)

(136,240)

(136,240)

(214,464)

(214,464)

Asset-financing obligations

(12,712)

 

(12,839)

(19,704)

(19,712)

(16,243)

(16,406)

Lease obligations

(495,633)

 

(500,589)

(580,999)

(593,892)

(523,815)

(529,053)

Private placement

(97,791)

 

(98,768)

(97,745)

(99,358)

(97,768)

(98,746)

Borrowings

(852,852)

 

(861,380)

(919,504)

(928,699)

(776,871)

(784,639)

 

(1,643,873)

 

(1,658,461)

(1,754,192)

(1,777,901)

(1,629,161)

(1,643,308)

 

 

 

 

 

 

 

 

Derivatives - cash flow hedges

 

 

 

 

 

 

 

Non-current derivative financial liability

(3,565)

 

(3,565)

(65,477)

(65,477)

(37,643)

(37,643)

 

(3,565 )

 

(3,565)

(65,477)

(65,477)

(37,643)

(37,643)

 

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 year end's prevailing interest rates.

 

Obligations under asset-financing

The minimum lease payments under asset-financing fall due as follows:

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

 

 

 

23 January

24 January

25 July

 

 

 

 

 

2022

2021

2021

 

 

 

 

 

£000

£000

£000

Within one year

 

 

 

 

6,740

7,610

7,610

In the second to fifth year, inclusive

 

 

 

 

13,244

9,468

 

 

 

 

 

13,225

20,854

17,078

Less future finance charges

 

 

 

 

(1,150)

(835)

Present value of lease obligations

 

 

 

 

12,712

19,704

16,243

 

 

 

 

 

 

 

 

Less amount due for settlement within one year

 

 

 

(6,740)

(7,610)

(7,610)

Amount due for settlement during the second to fifth year, inclusive

 

 

5,972

12,094

8,633

All asset-financing obligations are in respect of various equipment used in the business. No escalation clauses are included
in the agreements.

 

 

22.   Financial instruments (continued)

 

Interest-rate swaps

At 23 January 2022, 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 up to one month.

 

 

Loss/(Gain) on

Deferred

Total Hedging

 

 interest-rate

tax

Reserve

 

swaps

 

 

 

£000

£000

£000

As at 24 January 2021

65,477

(11,580)

53,897

Change in fair value posted to comprehensive income

(27,834)

-

(27,834)

Hedge ineffectiveness posted to income statement

(11,707)

-

(11,707)

Deferred tax posted to comprehensive income

-

1,047

1,047

As at 25 July 2021

25,936

(10,533)

15,403

Change in fair value posted to comprehensive income

(22,314)

  - 

(22,314)

Fair value reclassfied from reserve to income statement

2,011

  - 

2,011

Deferred tax posted to comprehensive income

  - 

9,124

9,124

As at 23 January 2022

5,633

(1,409)

4,224

 

Interest-rate hedges

The company's interest-rate swap agreements are in place as protection against future changes in borrowing costs.

Under these agreements, the company pays a fixed interest charge and receives variable interest income which matches

the variable interest payments made on the company's borrowings.

 

There is an economic relationship between the company's revolving-loan facility, the hedged item and the company's interest-rate swaps, the hedging instruments, where the company pays a floating interest charge on the loan and receives a floating

interest-rate credit on the interest-rate swap. The interest-rate swap agreement allows the company to receive a floating interest-rate credit and requires the company to pay an agreed fixed interest charge.

 

The company adopts hedge accounting, meaning that the effective portion of changes in the fair value of derivatives is recognised in comprehensive income, with any gain or loss relating to an ineffective portion accounted for in the income statement.

 

The company has established a hedging ratio of 1:1 between the interest-rate swaps and the company's floating-rate borrowings, meaning that floating interest rates paid should be identical to those amounts received for a given amount

of borrowings.

 

These hedges could be ineffective if the:

n period over which the borrowings were drawn were changed. This could result in the borrowings

being made at a different floating rate than the interest-rate swap.

n gross amount of borrowings were less than the value swapped.

n impact of LIBOR reform were to cause a mismatch between the interest rate of the swaps and

that of the company's debt.

 

The company tests hedge effectiveness prospectively using the hypothetical derivative method and compares the changes

in the fair value of the hedging instrument with those in the fair value of the hedged item attributable to the hedged risk. For interest rate swaps which were designated as part of a hedging relationship a gain of £22,314,000 (2021: £16,717,000) has been recognised in the hedging reserve in respect of the effective portion of the fair value movement. A change in fair value of £13,774,000 (2021: £4,528,000) has been recognised in the income statement as exceptional finance income (note 4). This recognises hedge ineffectiveness and the associated reclassification of hedges based on the forecast future borrowings for the life of the hedges.  It has been considered highly probable that floating-rate utilised core debt will be less than the total value of interest rate swaps in place, over the remaining life of the swaps, giving rise to over-hedging.  A number of designated hedge relationships have become fully ineffective and therefore have been discontinued and recognised in the income statement.  There are no amounts recognised in the hedge reserves for discontinued hedge relationships.

 

Interest-rate sensitivity

During the 26 weeks ended 23 January 2022, if the interest rates on UK-denominated borrowings had been 1% higher, with all other variables constant, pre-tax loss for the year would have been reduced by £5,000 and equity increased by £67,660,000. The movement in equity arises from a change in the 'mark to market' valuation of the interest-rate swaps into which the company has entered, calculated by a 1% shift of the market yield curve. The company considers that a 1% movement in interest rates represents a reasonable sensitivity to potential changes. However, this analysis is for illustrative purposes only.

 

 

23. Leases

 

About 32% of the company's pubs are leasehold. New leases are normally for 30 years, with a break clause after 15 years. Most leases have upwards-only rent reviews, based on open-market rental at the time of review, but most new pub leases

have an uplift in rent which is fixed at the start of the lease.

 

(a)  Right-of-use assets

 

The table below shows the movements in the company's right-of-use assets.

 

During the period, 15 leases were remeasured as a result of changes in the agreed payments under the lease contracts and

changes in the lease terms. In additions, three new lease contracts were agreed on.

 

Disposals and derecognised leases in the period represent the purchasing of 10 formerly leasehold properties, the disposal of four leases altogether.

 

 

 

 

 

 

 

 

 

£000

Cost

 

 

 

 

 

 

 

 

As at 25 July 2021

 

 

 

 

 

 

 

558,897

Additions

 

 

 

 

 

 

 

4,317

Remeasurement

 

 

 

 

 

 

 

8,758

Exchange differences

 

 

 

 

 

 

 

1

Disposals and derecognised leases

 

 

 

 

 

 

(14,356)

At 23 January 2022 (unaudited)

 

 

 

 

 

 

 

557,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and impairment:

 

 

 

 

 

 

As at 25 July 2021

 

 

 

 

 

 

 

(90,359)

Provided during the period

 

 

 

 

 

 

 

(22,672)

Disposals and derecognised leases

 

 

 

 

 

 

1,691

Remeasurment

 

 

 

 

 

 

 

1,907

At 23 January 2022 (unaudited)

 

 

 

 

 

 

 

(109,433)

 

 

 

 

 

 

 

 

 

Net book amount at 23 January 2022 (unaudited)

 

 

 

 

 

448,184

Net book amount at 25 July 2021

 

 

 

 

 

 

 

468,538

 

23.   Leases (continued)

 

(b)  Leas e maturity profile

 

The tables below analyse the company's lease liabilities and assets in relevant maturity groupings, based on the remaining period at the balance sheet date to the end of the lease. The amounts disclosed in the table are the contractual undiscounted cash flows. The impact of discounting reconciles these amounts to the values disclosed in the balance sheet.

 

Lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

Audited

 

 

 

 

 

 

2022

2021

 

 

 

 

 

 

£000

£000

Within one year

 

 

 

 

 

50,797

65,219

Between one and two years

 

 

 

 

 

49,096

49,587

Between two and three years

 

 

 

 

 

48,348

49,508

Between three and four years

 

 

 

 

 

45,423

47,872

Between four and five years

 

 

 

 

 

44,242

45,290

After five years

 

 

 

 

 

409,524

427,520

Lease commitments payable

 

 

 

 

 

647,430

684,996

 

 

 

 

 

 

 

 

Discounting lease liability

 

 

 

 

 

(151,797)

(161,181)

Lease liability

 

 

 

 

 

495,633

523,815

 

 

 

 

 

 

 

 

Lease assets

 

 

 

 

 

Unaudited

Audited

 

 

 

 

 

 

2022

2021

 

 

 

 

 

 

£000

£000

Within one year

 

 

 

 

 

1,638

1,638

Between one and two years

 

 

 

 

 

1,398

1,586

Between two and three years

 

 

 

 

 

1,150

1,130

Between three and four years

 

 

 

 

 

1,106

1,084

Between four and five years

 

 

 

 

 

1,112

1,070

After five years

 

 

 

 

 

7,066

7,255

 

 

 

 

 

 

13,470

13,763

 

 

 

 

 

 

 

 

Discounting lease asset

 

 

 

 

 

(2,151)

(2,235)

Lease asset

 

 

 

 

 

11,319

11,528

The comparative numbers disclosed above are those included in the 2021 annual report.

   

23.   Leases (continued)

  (c)  Lease liability

  The tables below show the movements in the period of the lease liability and the lease asset.

 

 

Lease liability

 

 

 

 

 

Unaudited

Audited

 

 

 

 

 

 

23 January

25 July

 

 

 

 

 

 

2022

2021

 

 

 

 

 

 

£000

£000

 

 

 

 

 

 

 

 

Lease liability as at commencement of period

 

 

 

523,815

573,146

Additions

 

 

 

 

 

4,317

12,162

Remeasurements of leases

 

 

 

 

 

8,504

(15,602)

Disposals

 

 

 

 

 

(13,508)

(15,790)

Cancelled principal payments (due to expedient)

 

 

 

(2,250)

(10,993)

Exchange differences

 

 

 

 

 

-

(233)

Lease liabilities before payments

 

 

 

 

520,878

542,690

 

 

 

 

 

 

 

 

Interest payable in period:

 

 

 

 

 

 

 

Interest expense within period (discounting element)

 

 

 

9,954

19,872

Cancelled interest expense (due to expedient)

 

 

 

(412)

(2,918)

 

 

 

 

 

 

9,542

16,954

Total cash outflow for leases in period:

 

 

 

 

 

Lease payment commitments for period

 

 

 

 

(24,463)

(53,602)

Cancelled payment commitments (due to expedient)

 

 

 

2,662

13,911

Deferred payment commitments

 

 

 

 

 

(12,986)

3,862

 

 

 

 

 

 

(34,787)

(35,829)

 

 

 

 

 

 

 

 

Net principal payments at 23 January 2022

 

 

 

 

(25,245)

(18,875)

 

 

 

 

 

 

 

 

At 23 January 2022

 

 

 

 

 

495,633

523,815

 

The company has applied the practical expedient during the financial period, which is an amendment to IFRS16 - an amendment which allows reductions in rent payments due on or before June 2022 to be credited to the income statement, rather than requiring the remeasurement of the lease and spreading of rent reduction received in this period over the term of the lease.

 

This practical expedient was extended in March 2021 for a further 12 months to June 2022. This 2021 amendment is effective for annual reporting periods beginning on or after 1 April 2021 and has been applied to all rent concessions which meet the conditions of the expedient.

 

The application of this amendment results in principal payments of £2,250,000 being credited to the income statement and a reduction in associated interest charges of £412,000, resulting in a total credit to the income statement of £2,662,000 which is disclosed in cash generated from operations, note 9. Future rental payments, up to the end of the lease, are capitalised, including any agreed increases.

 

Future rent payments could change as a result of open-market rent reviews or options being exercised to terminate a lease early. Any changes in the minimum unavoidable lease payments will be included as a remeasurement of the lease liability.

 

Leases with lease terms of under one year are not capitalised.

 

 

 

23.   Leases (continued)

 

Lease assets

 

 

 

 

 

Unaudited

Audited

 

 

 

 

 

 

2022

2021

 

 

 

 

 

 

£000

£000

 

 

 

 

 

 

 

 

Recognition of Asset liability

 

 

 

 

 

11,528

12,851

Remeasurements of leases

 

 

 

 

 

447

-

Lease assets before payments at 23 January 2022

 

 

 

11,975

12,851

 

 

 

 

 

 

 

 

Interest due in period

 

 

 

 

 

228

413

 

 

 

 

 

 

 

 

Total cash Inflow for leases in period

 

 

 

 

(884)

(1,736)

 

 

 

 

 

 

 

 

Net principal payments at 23 January 2022

 

 

 

 

(656)

(1,323)

 

 

 

 

 

 

 

 

At 23 January 2022

 

 

 

 

 

11,319

11,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rent cash flow Analysis

 

 

 

 

 

2022

 

 

 

 

 

 

 

£000

 

Cash outflows relating to capitalised leases

 

 

 

34,787

 

Expense relating to short term leases

 

 

 

 

375

 

Expense relating to variable element of concessions

 

 

 

2,196

 

Total rent cash outflows for period

 

 

 

 

 

37,358

 

 

 

 

 

 

 

 

 

Cash inflows relating to capitalised leases

 

 

 

 

(884)

 

Income relating to lessor sites

 

 

 

 

 

(757)

 

Total rent cash Inflows for period

 

 

 

 

 

(1,641)

 

 

The company has sublet several of its leases which have been capitalised above, with lease assets being the capitalised

future rent receivables from sublet sites. The company monitors the receipts of rental charges on sublet sites and where any amounts remain unpaid, take the appropriate steps. It is the company's view that there are no significant credit losses on

the sublease assets.

 

Where needed, deferral terms were agreed on with lessees in relation to the coronavirus pandemic. The assessment is that there is no material expected credit loss.

 

The interest payable and receivable shown in the tables above is the interest element of the payments made and received in the period. These amounts differ from the lease interest charged/credited to the income statement in the period - see note 6. The amounts charged/credited to the income statement in the period will also include amounts due, yet not paid, in the period. The incremental borrowing rate applied to lease liabilities and assets was 1.9-3.6%, depending on the lease's length.

 

 

24. Government support

 

 

 

 

 

 

 

23 January

24 January

25 July

 

2022

2021

2021

 

£000

£000

£000

Eat out to help out (note 1)

 

 

 

 

 

-

(23,248)

(23,248)

Local government grants (note 4)

 

 

 

 

 

(107)

(5,238)

(11,123)

Employee support grants (note 5)

 

 

 

 

 

(3,145)

(97,539)

(208,986)

 

(3,252)

(126,025)

(243,357)

 

The government support in the table above should be viewed in context of the contribution to the economy as on page 6.  In the five years before the pandemic the company paid 42.1% of its sales as taxes.

 

Local government grants

From the 9 September 2020, the UK Government made available several grants to support those businesses which had been adversely affected by the pandemic. Applications were made to the respective local authorities in line with the eligibility criteria for each scheme. The Irish Government introduced a similar grant called "COVID Restrictions Support Scheme", for which the company applied for centrally. Government grants were recognised at the point at which funds were receipted.  In the year, £0.1m was receipted: with the majority of this balance in relation to the Republic or Ireland. The grants were treated as exceptional income.

 

Employee support grants

The coronavirus job retention scheme, (CJRS) and equivalent Republic of Ireland schemes, were introduced at the beginning of the pandemic to support companies in retaining employees, in the form of grants to cover a proportion of the wages and salaries of furloughed staff. The claims have been made weekly since April 2020 for weekly paid employees and monthly for salaried employees. No CJRS claims have been made though since 16 August 2021. These are accounted for as a credit to wages and salaries within employee costs.

 

The company was also eligible for a business rates holiday, which represented a saving of £4.6m (July 2021: £56m) in the period.

 

The 5% VAT rate on food, non-alcoholic drinks and hotel room sales, introduced in July 2020, was passed on to customers in the form of lower selling prices. This temporary reduced rate ended on 30 September 2021, with a new reduced rate of 12.5% introduced thereafter, which will end on 31 March 2022.

 

The company has entered into an agreed repayment schedule with HMRC for outstanding liabilities.  At the end of the half-year period the outstanding amount was £2.7m (2021: £25.7m), which will be repaid in full by the end of January 2022.

 

25. Capital commitments

 

At 23 January 2022, the company had £12.8m (July 2021: £10.0m) of capital commitments, relating to the purchase of seven

(July 2021: eight) sites, for which no provision had been made in respect of property, plant and equipment.

 

The company had some other 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.

 

26. Contingent asset

 

IAS 37 requires disclosure when it is probable (more than 50% likelihood) that an inflow of benefits will occur.  A claim has been submitted to HMRC in relation to the historic VAT treatment of gaming machines. The company is stood behind the lead case of Rank Group PLC and 2016 G1 Limited v HMRC, and will then apply the relevant judgment. The decision of the First-Tier tribunal was released on 30 June 2021 and was found in favour of the taxpayers, and HMRC has subsequently confirmed that it will not appeal against the decision. The timing and amount of the receipt are to be determined, although management's best estimate is an approximate £27m cash inflow.

 

27. Related-party disclosures

 J D Wetherspoon is the owner of the share capital of the following companies:

 

Company name

 

Country of incorporation

Ownership

Status

J D Wetherspoon (Scot) Limited

 

Scotland

 

Wholly owned

Dormant

J D Wetherspoon Property Holdings Limited

 

England

 

Wholly owned

Dormant

Moon and Spoon Limited

 

England

 

Wholly owned

Dormant

Moon and Stars Limited

 

England

 

Wholly owned

Dormant

Moon on the Hill Limited

 

England

 

Wholly owned

Dormant

Moorsom & Co Limited

 

England

 

Wholly owned

Dormant

Sylvan Moon Limited

 

England

 

Wholly owned

Dormant

Checkline House (Head Lease) Limited

 

Wales

 

Wholly owned

Dormant

 

All of these companies are dormant and contain no assets or liabilities and are, therefore, immaterial. As a result, consolidated accounts have not been produced. The company has an overseas branch in the Republic of Ireland.

 

The registered office of all of the above companies is the same as that for J D Wetherspoon plc, as disclosed on the final page of these accounts.

 

28. Share capital

 

 

Number of

Share

 

shares

capital

 

000s

£000

Balance at 26 July 2020 (audited)

120,380

2,408

Issue of shares

8,370

167

Balance at 24 January 2021 (unaudited)

128,750

2,575

Balance at 25 July 2021 (audited)

128,750

2,575

Balance at 23 January 2022 (unaudited)

128,750

2,575

 

The total authorised number of 2p ordinary shares is 500,000,000 (2021: 500,000,000). All issued shares are fully paid.

 While the memorandum and articles of association allow for preferred, deferred or special rights to attach to ordinary shares, no shares carried such rights at the balance sheet date.

 

29. General Information

 

J D Wetherspoon plc is a public listed 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 17 March 2022.

 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 25 July 2021 were approved by the board of directors on 1 October 2021 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, contained an emphasis-of-matter paragraph, highlighting material uncertainty relating to going concern and did not contain any statement under sections 498-502 of the Companies Act 2006.

 There are no changes to the principal risks and uncertainties as set out in the financial statements for the 52 weeks ended

25 July 2021 which may affect the company's performance in the next 26 weeks. The most significant risks and uncertainties relate to widespread pub closures, 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 pages 60-61 of the annual report for 2021.

 

 

30. 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, in conformity with the requirements of the Companies Act 2006. This interim report should be read in conjunction with the annual financial statements for the 52 weeks ended
25 July 2021 which were prepared in accordance with the International Accounting Standards in conformity with the requirements of the Companies Act 2006.


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.

 

The Company has modelled a range of scenarios, with the base forecast being one in which, over the next 12 months, sales broadly recover to pre Covid levels. More cautious scenarios have been analysed, including ones with significantly reduced revenue.

 

The directors are satisfied that the Company has sufficient liquidity in each of the aforementioned scenarios. The length of the liquidity period, in relation to each outcome, depends on the actions which the Company chooses to take (eg the extent to which cash expenditure is reduced).

 

The Company has agreed with its lenders to replace existing financial covenant tests with a minimum liquidity covenant for the period up to and including July 2022. There is material uncertainty, which may cast significant doubt over the Company's ability to continue as a going concern, beyond this date, as to whether financial covenant tests will be satisfied or whether further waivers will be agreed by lenders. The Company will remain in regular dialogue with its lenders throughout the period.

 

In addition, the directors have noted the range of possible additional liquidity options available to the Company, should they be required.

 

As a result, the directors have satisfied themselves that the Company will continue in operational existence for the foreseeable future. For this reason, the Company continues to adopt the going-concern basis in preparing its financial statements.

The financial information for the 52 weeks ended 25 July 2021 is extracted from the statutory accounts of the Company
for that year.

 

The interim results for the 26 weeks ended 23 January 2022 and the comparatives for 24 January 2021 are unaudited,
yet have been reviewed by the independent auditor.

 

31. Accounting policies

 

 

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 25 July 2021, with the same methods of computation and presentation 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.

 

 

 

 

 

 

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