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Wetherspoon (JD) PLC (JDW)

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Friday 13 March, 2015

Wetherspoon (JD) PLC

Half Yearly Report

RNS Number : 3401H
Wetherspoon (JD) PLC
12 March 2015
 

13 March 2015                         PRESS RELEASE

 

J D WETHERSPOON PLC

INTERIM RESULTS

 

(For the 26 weeks ended 25 January 2015)

 

FINANCIAL HIGHLIGHTS


 



 

Ÿ  Revenue £744.4m (2014: £683.2m)                          

+9.0%

Ÿ  Like-for-like sales                                                       

+4.5%

Ÿ  Operating profit £55.1m (2014: £55.7m)

-1.1%

Ÿ  Profit before tax & exceptional items £37.5m (2014: £37.8m)

Ÿ  Diluted earnings per share before exceptional items 22.6p (2014: 22.1p)

 -0.9%

 +2.3%

Ÿ  Interim dividend 4.0p (2014: 4.0p)

Maintained

 

After exceptional items

 


Ÿ  Profit before tax £37.5m (2014: £36.0m)

                      +4.1%

 

Ÿ  Diluted earnings per share 22.6p (2014: 20.7p)

                      +9.2%

 

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

 

"The first half of the financial year resulted in a reasonable sales performance and free cash flow, although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff.

 

As previously highlighted, the biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs. Thanks mainly to the work of Jacques Borel's VAT Club, there is a growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country.

 

In the six weeks to 8 March 2015, like-for-like sales increased by 1.6%, with total sales increasing by 5.6%.

 

The company has successfully established a strong coffee and breakfast trade in recent years, selling approximately 50m Lavazza coffees and teas per annum and about 24m breakfasts - more breakfasts (according to research by CGA Peach) than are sold by Caffè Nero or Pret a Manger. We are increasing our efforts in this area by introducing more competitive prices from Wednesday 18 March. Lavazza filter coffee, with free refills, will be available at 99p or under, between 8am and 2pm daily, at approximately 880 pubs. We are also introducing more competitive prices for breakfasts. Our aim is to triple coffee and breakfast sales over the next 18 months. On the same date, we are introducing several drinks offers, reflecting greater supermarket competition, including Magners Cider (568ml) and Punk IPA (330ml) at £1.99, at approximately the same number of pubs. Marketing and labour costs may be higher than anticipated in the second half, as a result of the coffee and breakfast campaigns.

 

The second half of the last financial year was strong, which will make it difficult to improve on that performance in the current year, although we expect a reasonable outcome for the full financial year, even so."

 

Enquiries:

 

John Hutson                            Chief Executive Officer           01923 477777

Ben Whitley                             Interim Finance Director         01923 477777

Eddie Gershon                        Company spokesman             07956 392234

 

Photographs are available at: www.newscast.co.uk            

 

 

 


Notes to editors

1.         JD Wetherspoon owns and operates pubs throughout the UK.  The Company aims to provide customers with good-quality food and drink, served by well-trained and friendly staff, at reasonable prices.  The pubs are individually designed and the Company aims to maintain them in excellent condition.

2.         Visit our website www.jdwetherspoon.co.uk

3.         This announcement has been prepared solely to provide additional information to the shareholders of JD 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 next trading statement will be issued on 6 May 2015.




CHAIRMAN'S STATEMENT AND
OPERATING REVIEW

 

In the 26 weeks ended 25 January 2015, like-for-like sales increased by 4.5%, with total sales increasing by 9.0% to £744.4m (2014: £683.2m). Like-for-like bar sales increased by 1.5% (2014: 3.4%), food by 10.1% (2014: 10.5%) and fruit/slot machines by 1.1% (2014: decreased by 9.5%).

 

Operating profit decreased by 1.1% to £55.1m (2014: £55.7m). The operating margin was 7.4% (2014: 8.2%). Profit before tax and exceptional items decreased by 0.9% to £37.5m (2014: £37.8m), owing mainly to a slightly lower gross margin, higher rates of pay for pub staff and higher utility costs. There were no exceptional items this year, so profit increased by 4.1%, compared with last year'spost-exceptional profit of £36.0m.

 

Diluted earnings per share, before exceptional items, increased by 2.3% to 22.6p (2014: 22.1p), helped by a slightly lower corporation tax rate and a slightly lower number of shares in issue. Diluted earnings per share after exceptional items increased by 9.2% to 22.6p (2014: 20.7p).

 

As illustrated in the table in the tax section below, the company paid taxes of £305.3m in the period under review, compared with £290.7m in the same period last year.

 

Net interest was covered 3.1 times by operating profit (2014: 3.1 times, before exceptional items). Total capital investment was £93.8m in the period (2014: £82.7m), with £72.4m spent on freehold reversions of properties where Wetherspoon was the tenant and new pub openings (2014: £58.0m). In addition,£21.4m was spent on existing pubs (2014: £24.7m).

 

There were no exceptional items (2014:a charge of £1.8m which related to interest due to HMRC, following the 'Rank' High Court decision of October 2013, in respect of gaming machines).

 

Free cash flow, after capital investment of £21.4m on existing pubs and payments of tax and interest, increased to £44.9m (2014: £42.6m). Free cash flow per share was 36.5p (2014: 33.8p).

 

Dividends

 

The board declared an interim dividend of 4.0p per share for the current interim financial period ending 25 January 2015 (2014: 4.0p per share). The interim dividend will be paid on 28 May 2015 to those shareholders on the register at 1 May 2015. The dividend was covered 5.9 times by profit (2014: 5.2 times). 

 

Corporation tax

 

We expect the overall corporation tax charge for the financial year, including current and deferred taxation, to be approximately 25.7% before exceptional items (July 2014: 25.8%). The decrease is due to a reduction in the corporation tax rate, partially offset by an increase in deferred tax liability.

 

As in previous years, the company's tax rate is higher than the standard UK tax rate, owing mainly to depreciation which is not eligible for tax relief.

 

Financing

 

As at 25 January 2015, the company's net borrowings (including finance leases) were £597.2m, an increase of £40.6m,compared with those of the previous year end (27 July 2014: £556.6m). Our net-debt-to-EBITDA ratio was 3.38 times at the period's end.

 

Following the period's end, the company concluded an amendment and restatement of its existing banking facility. An increased non-amortising facility of £820 million was arranged, on slightly better terms, expiring in February 2020. The facility is syndicated to a total of 11 lenders. The second half cash flows will reflect approximately £3.4m of associated fees.

 

Property

 

During the period, we opened 12 new pubs and closed three pubs, bringing the number of pubs open at the period's end to 936. Of these new openings, 11 were freehold purchases. We expect to open approximately 30 pubs in this financial year. This is at the lower end of expectations, owing mainly to a slower-than-anticipated rate of regulatory approvals.

 

Taxes and regulation

 

As many companies have highlighted, pubs and restaurants pay far higher levels of tax than do supermarkets. The main disparity relates to VAT (value added tax), since supermarkets pay no VAT in respect of their food sales, whereas pubs pay 20%, enabling supermarkets to subsidise their alcoholic drinks prices. Pubs also pay approximately 15p per pint in respect of business rates, while supermarkets pay only about 1.5-2p per pint. 

 

In addition, the government has recently introduced both a 'late-night levy' and additional fruit/slot machine taxes, further reducing the competitive position of pubs in relation to supermarkets.

It is widely acknowledged that the tax disparity with supermarkets is unfair and that pubs create more jobs and more taxes per pint or per meal than do supermarkets and that it does not make social or economic sense for the tax régime to favour supermarkets. We acknowledge the need to pay a reasonable level of taxes, but hope that legislators will make progress in creating a level playing field for all businesses which sell similar products.

 

The taxes paid by Wetherspoon in the period under review were as follows:

 


2015

First half

£m

(estimate)

2014

First half

£m

(rebased)

VAT

144.8

133.6

Alcohol duty

75.2

74.7

PAYE and NIC

40.7

38.0

Business rates

24.0

22.5

Corporation tax

7.8

8.8

Corporation tax credit
(historic capital allowances)

(2.0)

-

Machine duty

5.7

5.5

Climate change levy

3.0

3.0

Fuel duty

1.9

1.1

Carbon tax

1.8

1.3

Stamp duty

1.2

1.2

Landfill tax

0.8

0.7

Premise licence and
TV licences

0.4

0.3

TOTAL TAX

£305.3m

£290.7m

PROFIT AFTER TAX
(Pre-exceptional)

£27.8m

£27.9m

 

Further progress

 

As previously highlighted, the company continues to try to upgrade as many areas of the business as possible. Current initiatives include investment in various IT and accounting systems, improved management of repairs and maintenance and improved training for pub and kitchen managers. We also allocated £15.3m (2014: £14.0m) in bonuses and free shares to employees, 98% of which was paid to those below board level and 83% of which was paid to those working in our pubs.

 

As we have reported, the company has received a record number of recommendations in CAMRA's Good Beer Guide 2015- more, we believe, than any other pub company. In this connection, 925 of our pubs have also achieved approval from Casque Marque, a brewery-run scheme which encourages high standards in ale quality. In addition, the number of pubs receiving the maximum hygiene rating, in respect of the local-authority-run scheme Scores on the Doors, continues to increase, with 784 pubs (out of 838 which have been officially rated)scoring 5 out of 5 - a higher percentage of maximum scores than any other substantial pub company.

 

Current trading and outlook

 

The first half of the financial year resulted in a reasonable sales performance and free cash flow, although our profit was under pressure from areas which included increased competition from supermarkets and increased pay and bonuses for pub staff.

 

As previously highlighted, the biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs. Thanks mainly to the work of Jacques Borel's VAT Club, there is a growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country.

 

In the six weeks to 8 March 2015, like-for-like sales increased by 1.6%, with total sales increasing by 5.6%.

 

The company has successfully established a strong coffee and breakfast trade in recent years, selling approximately 50m Lavazza coffees and teas per annum and about 24m breakfasts -- more breakfasts (according to research by CGA Peach) than are sold by Caffè Nero or Pret a Manger. We are increasing our efforts in this area by introducing more competitive prices from Wednesday 18 March. Lavazza filter coffee, with free refills, will be available at 99p or under, between 8am and 2pm daily,at approximately 880 pubs. We are also introducing more competitive prices for breakfasts. Our aim is to triple coffee and breakfast sales over the next 18 months. On the same date, we are introducing severaldrinks offers, reflecting greater supermarket competition, including Magners Cider (568ml) and Punk IPA (330ml) at £1.99,at approximately the same number of pubs. Marketing and labour costs may be higher than anticipated in the second half, as a result of the coffee and breakfast campaigns.

 

The second half of the last financial year was strong, which will make it difficult to improve on that performance in the current year, although we expect a reasonable outcome for the full financial year, even so.

 

 

 

 

Tim Martin

Chairman

12 March 2015


 


INCOME STATEMENT for the 26 weeks ended 25 January 2015

 


Notes

Unaudited

26 weeks ended

25 January

2015

Unaudited

26 weeks ended

 26 January

2014

Audited

52 weeks

ended

 27 July

2014



£000

£000

£000

Revenue

4

744,367

683,229

1,409,333

Operating costs


(689,278)

(627,513)

(1,293,758)






Operating profit

6

55,089

55,716

115,575






Finance income


26

47

67

Finance costs


(17,663)

(17,980)

(36,280)

Non-operating exceptional items

5

-

(1,814)

(997)






Profit before tax


37,452

35,969

78,365

Income tax expense

7

(9,629)

(9,927)

(37,243)






Profit for the period


27,823

26,042

41,122






Basic earnings per share (pence)

8

23.5

21.4

33.9

Diluted basic earnings per share (pence)

8

22.6

20.7

32.8

 

 

STATEMENT OF OTHER COMPREHENSIVE INCOME for the 26 weeks ended 25 January 2015

 


Notes

Unaudited

26 weeks ended

25 January 2015

Unaudited

26 weeks ended

26 January 2014

Audited

52 weeks ended

27 July

2014



£000

£000

£000

Items which will be reclassified subsequently to profit or loss:





Interest-rate swaps: (loss)/gain taken to other comprehensive income

14

(26,630)

 

10,357

13,879

Tax on items taken directly to other comprehensive income


5,326

(2,071)

(2,776)

Currency translation differences


(852)

-

7






Net (loss)/gain recognised directly in other comprehensive income


(22,156)

8,286

11,110

Profit for the period


27,823

26,042

41,122






Total comprehensive income for the period


5,667

34,328

52,232


 



CASH FLOW STATEMENT for the 26 weeks ended 25 January 2015

 

 



 

 

 

 

 

 

 

Notes

Unaudited

cash flow

 

26 weeks ended

25 January 2015

£000

 

 

 

Unaudited

free cash flow

26 weeks ended

 25 January 2015

£000


Unaudited

cash flow

 

26 weeks ended

 26 January 2014

£000

 

 

 

Unaudited

free cash flow

26 weeks ended

 26 January 2014

£000


Audited

cash flow

 

52 weeks ended

27 July

2014

£000


Audited

free cash flow

52 weeks ended

27 July

2014

£000














Cash flows from operating activities













Cash generated from operations

9

92,256


92,256


102,625


102,625


212,505


212,505

Interest received


26


26


56


56


78


78

Interest paid


(16,444)


(16,444)


(16,937)


(16,937)


(33,996)


(33,996)

Corporation tax paid


(5,769)


(5,769)


(8,821)


(8,821)


(18,070)


(18,070)

Gaming machine settlement


-




-




(16,696)



Net cash inflow from operating activities


70,069


70,069


76,923


76,923


143,821


160,517

Cash flows from investing activities













Purchase of property, plant and equipment


(18,484)


(18,484)


(21,824)


(21,824)


(46,300)


(46,300)

Purchase of intangible assets


(2,885)


(2,885)


(2,823)


(2,823)


(9,926)


(9,926)

Proceeds of sale of property, plant and equipment


3




-




505



Investment in new pubs and pub extensions


(59,399)




(50,865)




(97,694)



Freehold reversions


(12,763)




(7,135)




(14,823)



Investment properties


-




-




(8,754)



Purchase of lease premiums


(257)




(10)




(10)



Net cash outflow from investing activities


(93,785)


(21,369)


(82,657)


(24,647)


(177,002)


(56,226)

Cash flows from financing activities













Equity dividends paid

16

(9,761)




(9,987)




(14,949)



Purchase of own shares for cancellation


(2,413)




(2,893)




(24,550)



Purchase of own shares for share-based payments


(3,444)


(3,444)


(5,599)


(5,599)


(7,338)


(7,338)

Advances under bank loans

14

37,484




28,246




92,151



Loan issue costs

14

(379)


(379)


(4,080)


(4,080)


(4,103)


(4,103)

Finance lease principal payments

14

(1,401)




(2,761)




(5,552)



Net cash inflow/(outflow) from financing activities


 

20,086


 

(3,823)


 

2,926


 

(9,679)


35,659


 

(11,441)

Net change in cash and cash equivalents

14

(3,630)




(2,808)




2,478



Opening cash and cash equivalents


32,315




29,837




29,837



Closing cash and cash equivalents


28,685




27,029




32,315






44,877




42,597




92,850














Free cash flow per ordinary share

8



36.5p




33.8p




74.1p


 

 




BALANCE SHEET as at 25 January 2015

 


Notes

Unaudited

25 January

2015

£000

Unaudited

26 January

2014

£000

Audited

27 July

2014

£000

 

Assets





Non-current assets





Property, plant and equipment

10

1,124,542

1,003,952

1,068,067

Intangible assets

11

27,303

21,368

26,838

Deferred tax assets


11,359

9,398

6,033

Other non-current assets

12

9,848

9,759

9,766

Investment property

13

8,682

5,757

8,713

Derivative financial instruments

14

-

1,905

1,723

Total non-current assets


1,181,734

1,052,139

1,121,140






Current assets





Inventories


24,082

21,115

22,312

Other receivables


29,072

30,583

23,901

Cash and cash equivalents

14

28,685

27,029

32,315

Total current assets


81,839

78,727

78,528






Assets held for sale


-

672

-






Total assets


1,263,573

1,131,538

1,199,668






Liabilities





Current liabilities





Trade and other payables


(249,499)

(221,559)

(243,160)

Borrowings

14

(2,713)

(4,107)

(2,636)

Provisions


(4,371)

(6,547)

(4,442)

Derivative financial instruments

14

-

-

(3,149)

Current income tax liabilities


(6,181)

(9,134)

(3,872)

Total current liabilities


(262,764)

(241,347)

(257,259)






Non-current liabilities





Borrowings

14

(623,139)

(522,508)

(586,230)

Derivative financial instruments

14

(56,796)

(35,593)

(28,740)

Deferred tax liabilities


(84,857)

(62,575)

(83,686)

Provisions


(3,055)

(3,576)

(3,055)

Other liabilities


(13,340)

(31,472)

(13,530)

Total non-current liabilities


(781,187)

(655,724)

(715,241)






Net assets


219,622

234,467

227,168






Shareholders' equity





Share capital

17

2,450

2,513

2,460

Share premium account


143,294

143,294

143,294

Capital redemption reserve


1,981

1,918

1,971

Hedging reserve


(45,437)

(26,950)

(24,133)

Currency translation differences


(845)

-

7

Retained earnings           


118,179

113,692

103,569






Total shareholders' equity


219,622

234,467

227,168



STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

 


Share capital

£000

Share premium

account

£000

Capital redemption

reserve

£000

Hedging reserve

£000

Currency translation differences

£000

Retained earnings

£000

Total

£000

At 28 July 2013

2,521

143,294

1,910

(35,236)

-

102,426

214,915









Total comprehensive income




8,286


26,042

34,328

Profit for the period






26,042

26,042

Interest-rate swaps: cash flow hedges




10,357



10,357

Tax on items taken directly to
comprehensive income




(2,071)



(2,071)

Repurchase of shares

(8)


8



(2,879)

(2,879)

Tax on repurchase of shares






(14)

(14)

Deferred tax on share-based payments






(222)

(222)

Share-based payment charges






3,925

3,925

Purchase of shares held in trust






(5,574)

(5,574)

Tax on purchase of shares held in trust






(25)

(25)

Dividends






(9,987)

(9,987)

At 26 January 2014

2,513

143,294

1,918

(26,950)

-

113,692

234,467









Total comprehensive income




2,817

7

15,080

17,904

Profit for the period






15,080

15,080

Interest-rate swaps: cash flow hedges




3,522



3,522

Tax on items taken directly to
comprehensive income




(705)



(705)

Currency translation differences





7


7

Repurchase of shares

(53)


53



(21,549)

(21,549)

Tax on repurchase of shares






(108)

(108)

Share-based payment charges






3,596

3,596

Deferred tax on share-based payments






(441)

(441)

Purchase of shares held in trust






(1,730)

(1,730)

Tax on purchase of shares held in trust






(9)

(9)

Dividends






(4,962)

(4,962)

At 27 July 2014

2,460

143,294

1,971

(24,133)

7

103,569

227,168









Total comprehensive income




(21,304)

(852)

27,823

5,667

Profit for the period






27,823

27,823

Interest-rate swaps: cash flow hedges




(26,630)



(26,630)

Tax on items taken directly to
comprehensive income




5,326



5,326

Currency translation differences





(852)


(852)

Repurchase of shares

(10)


10



(4,264)

(4,264)

Tax on repurchase of shares






(21)

(21)

Deferred tax on share-based payments






380

380

Share-based payment charges






3,897

3,897

Purchase of shares held in trust






(3,427)

(3,427)

Tax on purchase of shares held in trust






(17)

(17)

Dividends






(9,761)

(9,761)

At 25 January 2015

2,450

143,294

1,981

(45,437)

(845)

118,179

219,622




Notes

 

1.         General information

 

J D Wetherspoon plc is a public limited company, incorporated and domiciled in England and Wales. Its registered office address is: Wetherspoon House, Central Park, Reeds Crescent,

Watford, WD24 4QL

 

The company is listed on the London Stock Exchange.

 

This condensed half-yearly financial information was approved for issue by the board on 12 March 2015.

 

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 27 July 2014 were approved by the board of directors on 11 September 2014 and delivered to the Registrar of Companies. The report of the auditors, on those accounts, was unqualified, did not contain an emphasis-of-matter paragraph or any statement under Sections 498 to 502 of the Companies Act 2006.

 

There are no changes to the principal risks and uncertainties as set out in the financial statements for the 52 weeks ended 27 July 2014, which may affect the company's performance in the next six months. The most significant risks and uncertainties relate to the taxation on, and regulation of, the sale of alcohol, cost increases and UK disposable consumer incomes. For a detailed discussion of the risks and uncertainties facing the company, refer to the annual report for 2014, pages 43 and 44.

 

 

2.         Basis of preparation

 

This condensed half-yearly financial information of J D Wetherspoon plc (the 'Company'), which is abridged and unaudited, has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standards (IAS) 34, Interim Financial Reporting, as adopted by the European Union. This interim report should be read in conjunction with the annual financial statements for the 52 weeks ended 27 July 2014 which were prepared in accordance with IFRSs, as adopted by the European Union.

 

The directors have made enquiries into the adequacy of the Company's financial resources, through a review of the Company's budget and medium-term financial plan,including capital expenditure plans and cash flow forecasts; they have satisfied themselves that the Company will continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going-concern basis in preparing the Company's financial statements.

 

The financial information for the 52 weeks ended 27 July 2014 is extracted from the statutory accounts of the Company for that year.

 

The interim results for the 26 weeks ended 25 January 2015 and the comparatives for 26 January 2014 are unaudited, but have been reviewed by the independent auditors. A copy of the review report is included at the end of this report.

 

3.         Accounting policies

 

With the exception of tax, the accounting policies adopted in the preparation of the interim report are consistent with those applied in the preparation of the Company's annual report for the year ended 27 July 2014 - and the same methods of computation and presentation are used.

 

Income tax

Taxes on income in the interim periods are accrued using the tax rate which would be applicable to expected total annual earnings.

 

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 28 July 2014 and will have a minimal impact on the financial statements:

 

·      IFRS 10, 'Consolidated financial statements'

·      Amendments to IAS 32, 'Financial instruments: Presentation'

·      Amendments to IAS 36, 'Impairment to assets'

·      Amendments to IAS 39, 'Financial instruments: Recognition and measurement'

 

The following amendments are mandatory for the first time for the financial year beginning 28 July 2014, but arenot relevant for the Company:

 

·      IFRS 11, 'Joint arrangements'

·      IFRS 12, 'Disclosure of interestsin other entities'

·      IAS 27, 'Consolidated and separate financial statements'

·      IAS 28, 'Associates and joint ventures'

·      Amendments to IFRS 10, 11 and 12,on transition guidance

·      Amendments to IFRS 10, 12 and IAS 27,on consolidation for investment entities

·      Amendments to IAS 39, 'Employee benefits'

·      IFRIC 21, 'Levies'

 



 


4.         Revenue

 

Revenue disclosed in the income statement is analysed as follows:

Unaudited

26 weeks ended

25 January 2015

£000

Unaudited

26 weeks ended

26 January 2014

£000

Audited

52 weeks ended

27 July 2014

£000





Sales of food, beverages, hotel rooms and machine income

744,367

683,229

1,409,333

 

 

5.         Exceptional items


Unaudited

26 weeks ended

25 January 2015

£000

Unaudited

26 weeks ended

26 January 2014

£000

Audited

52 weeks ended

27 July

2014

£000

Other exceptional items








Interest payable on gaming machine VAT repayment

-

1,814

997

Non-operating exceptional items


1,814

997





Income tax expense - current tax

-

-

(4,375)

Income tax expense - deferred tax

-

-

21,119

Exceptional items reported in tax

-

-

16,744





 

Total exceptional items

 

-

 

1,814

 

17,741

 

 

6.    Operating profit

 

This is stated after charging/(crediting):

Unaudited

26 weeks ended

25 January 2015

£000

Unaudited

26 weeks ended

26 January 2014

£000

Audited

52 weeks ended

27 July 2014

£000

 

Concession rental payments

 

9,126

 

7,850

 

17,166

Minimum operating lease payments

26,359

26,332

52,538

Repairs and maintenance

25,307

26,061

56,603

Rent receivable

(374)

(295)

(517)

Investment property income

(178)

(138)

(328)

Depreciation of property, plant and equipment

29,902

26,630

54,459

Amortisation of intangible assets

2,126

1,621

3,254

Amortisation of non-current assets

175

148

321

Depreciation of investment properties

31

-

41

Share-based payment charges

3,897

3,925

7,869

Net impairment charges

-

-

1,012

Net onerous lease provision

-

-

(228)

Loss on disposal of fixed assets

470

308

645

 



7.         Income tax expense

 

The taxation charge for the period ended 25 January 2015 is based on the pre-exceptional profit before tax of £37.5m and the estimated effective tax rate before exceptional items for the year ending 26 July 2015 of 25.7% (2014: 25.8%). This comprises a pre-exceptional current tax rate of 21.6% (July 2014: 21.4%) and a pre-exceptional deferred tax charge of 4.1% (July 2014: 4.4%).  

 

The UK standard weighted average tax rate for the period is 20.7% (2014: 22.3%). The current tax rate is higher than the UK standard weighted average tax rate, owing mainly to depreciation which is not eligible for tax relief and unrecognised overseas losses.

 


Unaudited

26 weeks ended

25 January

2015

£000


Unaudited

26 weeks ended

26 January

2014

£000


Audited

52 weeks ended

27 July

2014

£000







Current tax

8,184


8,642


17,004

Current tax on exceptional items

-


-


(4,375)

Prior year adjustment

(106)


-


-







Deferred tax






Origination and reversal of temporary differences

1,551


1,285


3,495

Deferred tax on exceptional items

-


-


21,119







Tax charge in the income statement

9,629


9,927


37,243

 



 

8.         Earnings and free cash flow per share

 

Earnings per share in the chairman's statement have been calculated using the weighted average number of shares in issue of 122,876,804 (2014: 125,897,616) which include 4,282,562 (2014: 4,388,934) shares held in trust, in respect of the employee Share Incentive Plan and the 2005 Deferred Bonus Scheme.

 

 


 Unaudited

26 weeks ended

Unaudited

 26 weeks ended

Audited

52 weeks ended

Weighted average number of shares

 25 January 2015

26 January 2014

27 July

2014

Shares in issue (used for diluted EPS)

122,876,804

125,897,616

125,312,581

Shares held in trust

 (4,282,562)

(4,388,934)

(4,174,284)

Shares in issue less shares held in trust (used for basic EPS)

118,594,242

121,508,682

121,138,297

 

The weighted average number of shares held in trust for employee share schemes has been adjusted to exclude those shares which have vested, but remain in trust.

 



Basic EPS pence per ordinary share

Diluted EPS pence per ordinary share

26 weeks ended 25 January 2015 (unaudited)

Profit


£000

Earnings (profit after tax)

27,823

23.5

22.6

Exclude effect of exceptional items after tax

-

-

-

Adjusted earnings before exceptional items

27,823

23.5

22.6







Basic EPS pence per ordinary share

Diluted EPS pence per ordinary share

26 weeks ended 26 January 2014 (unaudited)

 

Profit

£000

Earnings (profit after tax)

26,042

21.4

20.7

Exclude effect of exceptional items after tax

1.5

1.4

Adjusted earnings before exceptional items

22.9

22.1

 



Basic EPS pence per ordinary share

Diluted EPS pence per ordinary share

52 weeks ended 27 July 2014 (audited)

Profit


£000

Earnings (profit after tax)

41,122

33.9

32.8

Exclude effect of exceptional items after tax

17,741

14.7

14.2

Adjusted earnings before exceptional items

58,863

48.6

47.0

 

 

Free cash flow per share

26 weeks ended

25 January 2015

26 weeks ended

26 January 2014

52 weeks

ended

27 July

 2014





Free cash flow (£000)

44,877

42,597

92,850

Free cash flow per share (p)

36.5

33.8

74.1





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, tax, all other reinvestment in pubs open at the start of the period and the purchase of own shares under the employee share-based schemes ('free cash flow'). It is calculated before taking account of proceeds from property disposals, inflows and outflows of financing from outside sources and dividend payments and is based on the weighted average number of shares in issue, including those held in trust in respect of the employee share schemes.



 

9.         Cash generated from operations


Unaudited

26 weeks ended

25 January 2015

£000

Unaudited

26 weeks ended

26 January 2014

£000

Audited

52 weeks ended

27 July 2014

£000





Profit for the period

27,823

26,042

41,122





Tax

9,629

9,927

37,243

Exceptional items

-

1,814

997

Net finance costs

17,637

17,933

36,213

Depreciation, amortisation and impairment

32,234

28,399

59,087

Share-based payment charges

3,897

3,925

7,521

Loss on disposal of fixed assets

470

308

645






91,690

88,348

182,828

Change in inventories

(1,770)

(1,258)

(2,455)

Change in receivables

(5,171)

(6,643)

39

Change in payables

7,507

22,178

32,093





Net cash inflow from operating activities

92,256

102,625

212,505

 

 

10.        Property, plant and equipment


£000



Net book amount at 28 July 2013 (audited)

956,928

Additions

73,962

Disposals

(308)

Depreciation, impairment and other movements

(26,630)

 

Net book amount at 26 January 2014 (unaudited)

 

1,003,952

Additions and transfer from held for sale

93,556

Disposals

(420)

Depreciation, impairment and other movements

(29,021)

 

Net book amount at 27 July 2014 (audited)

1,068,067

Additions

86,850

Disposals

(473)

Depreciation, impairment and other movements

(29,902)

 

Net book amount at 25 January 2015 (unaudited)

 

1,124,542



 

11.        Intangible assets


£000



Net book amount at 28 July 2013 (audited)

20,166

Additions

2,823

Amortisation, impairment and other movements

(1,621)

 

Net book amount at 26 January 2014 (unaudited)

 

21,368

Additions

7,103

Amortisation, impairment and other movements

(1,633)

 

Net book amount at 27 July 2014 (audited)

26,838

Additions

2,591

Amortisation, impairment and other movements

(2,126)

 

Net book amount at 25 January 2015 (unaudited)

 

27,303

 

The majority of intangible assets relates to computer software and development.

 

 

12.        Other non-current assets         


Unaudited

25 January

2015

Unaudited

26 January

2014

Audited

27 July

2014


£000

£000

£000





Leasehold premiums

9,848

9,759

9,766

 

 

13.        Investment property    


Unaudited

25 January

2015

Unaudited

26 January

2014

Audited

27 July

2014


£000

£000

£000





Investment property

8,682

5,757

8,713

 

 

14.        Analysis of changes in net debt


 

27 July 2014

£000

 

Cash flows

£000

Non-cash

movement

£000

25 January 2015

£000

Cash at bank

32,315

(3,630)

-

28,685

Bank debt

(584,167)

(37,105)

(1,190)

(622,462)


(551,852)

(40,735)

(1,190)

(593,777)

Finance lease creditor

(4,699)

1,401

(92)

(3,390)

Net borrowings

(556,551)

(39,334)

(1,282)

(597,167)

Derivative - interest-rate swaps

(30,166)

-

(26,630)

(56,796)

Net debt

(586,717)

(39,334)

(27,912)

(653,963)

There were no changes in the hedging arrangements during the current financial period. The £26.6m non-cash movement on the interest-rate swap arises from the movement in fair value of the swaps.

15.        Fair values

 

The table below highlights any differences between book value and fair value of financial instruments.

 

 

 

 

Unaudited

25 January

2015

Book value

£000

Unaudited

25 January

2015

Fair value

£000

Unaudited

26 January

2014

Book value

£000

Unaudited

26 January

2014

Fair value

£000

 

Financial assets





Cash and cash equivalents

28,685

28,685

27,029

27,029

Trade receivables

2,555

2,555

2,554

2,554

 

Financial liabilities at amortised cost





Trade and other payables

(204,873)

(204,873)

(182,492)

(182,492)

Finance lease obligations

(3,390)

(3,477)

(7,490)

(7,580)

Long-term borrowings

(622,462)

(646,130)

(519,125)

(522,457)






Financial liabilities at fair value

through profit or loss





Interest-rate swaps

(56,796)

(56,796)

(33,688)

(33,688)

 

The fair value of finance leases has been calculated by discounting the expected cash flows at the period end's prevailing interest rates.

 

The fair value of derivatives has been calculated by discounting all future cash flows by the market yield curve at the balance sheet date.

 

The fair value of borrowings has been calculated by discounting the expected future cash flows at the period end's prevailing interest rates.

 

Interest-rate swaps

At 25 January 2015, the Company had fixed-rate swaps designated as hedges of floating-rate borrowings. The floating-rate borrowings are interest-bearing borrowings at rates based on LIBOR, fixed for periods of one month. The interest-rate swaps of the floating-rate borrowings were assessed to be effective.

 

Changes in valuation of swaps

Change in

fair value

£000

Deferred

tax

£000

Total

£000





Fair value at 26 January 2014 (unaudited)

(33,688)

6,738

(26,950)

Gain taken directly to other comprehensive income

3,522

(705)

2,817





Fair value at 27 July 2014 (audited)

(30,166)

6,033

(24,133)

Loss taken directly to other comprehensive income

(26,630)

5,326

(21,304)





 

Fair value at 25 January 2015 (unaudited)

 

(56,796)

 

11,359

 

(45,437)



 

Fair value of financial assets and liabilities

Effective from 27 July 2009, the Company adopted the amendment to IFRS 7 for financial instruments which are measured in the balance sheet at fair value. This requires disclosure of fair value measurements by level, using the following fair value measurement hierarchy:

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

-        Inputs other than quoted prices included in level 1 which are observable for the asset or liability, either directly or indirectly (level 2)

-        Inputs for the asset or liability which are not based on observable market data (level 3)

 

The fair value of the interest-rate swaps of £56.8m is considered to be level 2. All other financial assets and liabilities are measured in the balance sheet at amortised cost.

 

 

16.        Dividends paid and proposed


Unaudited

26 weeks ended

25 January

2015

£000

Unaudited

26 weeks ended

26 January

2014

£000

Audited

52 weeks ended

27 July

2014

£000

 

Paid in the period

 

 

 

 

 

 

2013 final dividend

-

9,987

9,987

2014 interim dividend

-

-

4,962

2014 final dividend

9,761

-

-






9,761

9,987

14,949





Dividends in respect of the period




Interim dividend

4,744

4,970

-

Final dividend

-

-

9,761






4,744

4,970

9,761

 

Dividend per share

 

4p

 

4p

 

8p

 

 

17.        Share capital


Number of

shares

000s

Share capital

£000

 

Opening balance at 28 July 2013 (audited)

126,036

2,521

Repurchase of shares

(411)

(8)

 

Closing balance at 26 January 2014 (unaudited)

 

125,625

 

2,513

 

Closing balance at 27 July 2014 (audited)

122,968

2,460

Repurchase of shares

(92)

(10)

 

Closing balance at 25 January 2015 (unaudited)

 

122,876

 

2,450    




All issued shares are fully paid.



 

18.        Related-party disclosure

 

There were no material changes to related-party transactions described in the last annual financial statements. There have been no related-party transactions having a material effect on the Company's financial position or performance in the first half of the current financial year.

 

 

19.        Capital commitments

 

The Company had £1.2m capital commitments for which no provision had been made, in respect of property, plant and equipment, at 25 January 2015 (2014: £Nil).

 

The Company has some sites in the property pipeline; however, any legal commitment is contingent on planning and licensing. Therefore, there are no commitments at the balance sheet date, in respect of these sites.

 

 

20.        Events after the balance sheet date

 

Following the period's end, the Company concluded an amendment and extension of its existing banking facility. A new non-amortising £820m facility was arranged, expiring in February 2020. The facility is syndicated by a total of 11 lenders. Our £20m overdraft remains in place.



STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors confirm that this condensed interim financial information has been prepared in accordance with IAS 34, as adopted by the European Union, and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

·      an indication of important events which have occurred during the first 26 weeks and their impact on the condensed set of financial statements, plus a description of the changes in principal risks and uncertainties for the remaining 26 weeks of the financial year.

 

·      material related-party transactions in the first 26 weeks and any material changes in the related-party transactions described in the last annual report.

 

The directors of J D Wetherspoon plc are listed in the J D Wetherspoon annual report for 27 July 2014, with the exception of Kirk Davis, who resigned on 11 November 2014. A list of current directors is maintained on the J D Wetherspoon plc website: www.jdwetherspoon.co.uk

 

By order of the board

 

 

 

 

John Hutson

Director

12 March 2015

 




Independent review report to
J D Wetherspoon plc

Report on the Interim Report 2015 

Our conclusion
We have reviewed the condensed consolidated interim financial statements, defined below, in the Interim Report 2015 of J D Wetherspoon plc for the 26 weeks ended 25th January 2015. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

This conclusion is to be read in the context of what we say in the remainder of this report.

 

What we have reviewed
The condensed consolidated interim financial statements, which are prepared by J D Wetherspoon plc, comprise:

 

·      the balance sheet as at 25th January 2015;

·      the income statement and statement of comprehensive income for the period then ended;

·      the cash flow statement for the period then ended;

·      the statement of changes in equity for the period then ended; and

·      the explanatory notes to the condensed consolidated interim financial statements.

 

As disclosed in note 2, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

The condensed consolidated interim financial statements included in the Interim Report 2015 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

What a review of condensed consolidated financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the Interim Report 2015 and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

Responsibilities for the condensed consolidated interim financial statements and the review 

Our responsibilities and those of the directors The Interim Report 2015, including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report 2015 in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the Interim Report 2015 based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.


PricewaterhouseCoopers LLP
Chartered Accountants
12 March 2015
St.Albans

Notes:
(a)        The maintenance and integrity of the J D Wetherspoon plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
(b)        Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
 


PUBS OPENED SINCE 27 JULY 2014

 

Name

Address

Town

Postcode

The Saltoun Inn

Saltoun Square

Fraserburgh

AB43 9DA

The Chief Justice of the Common Pleas

2 Bank Street

Keswick

CA12 5JY

The Saxon Crown

100 Elizabeth Street

Corby

NN17 1FN

The Dairyman

16-18 High Street

Brentwood

CM14 4AB

The Picture House

117-117a Queen Street

Morley

LS27 8HE

The Pump House

Unit 1, Parkgate Development, Stratford Road

Shirley

B90 3AQ

The Old Unicorn

165 Town Street

Bramley

LS13 3NA

The Star

105 High Street

Hoddesdon

EN11 8TN

The Forty Foot

The Pavilion Centre, Marine Road

Dún Laoghaire


The John Fairweather

52-58 Main Street

Cambuslang

G72 7EP

The Sawyer's Arms

3-4 Commercial Street

Maesteg

CF34 9DF

The Twelve Tellers

14-15 Church Street

Preston

PR1 3BQ

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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