REG - Wetherspoon (JD) PLC - Preliminary results
04/10/2024 07:00
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RNS Number : 9063G Wetherspoon (JD) PLC 04 October 2024
4 October 2024
J D WETHERSPOON PLC
PRELIMINARY RESULTS
(For the 52 weeks ended 28 July 2024)
FINANCIAL HIGHLIGHTS Var %
Before separately disclosed items
Ÿ Like-for-like sales +7.6%
Ÿ Revenue £2,035.5m (2023: £1,925.0m) +5.7%
Ÿ Profit before tax £73.9m (2023: £42.6m) +73.5%
Ÿ Operating profit £139.5m (2023: £107.1m) +30.2%
Ÿ Diluted earnings per share 46.8p (2023: 26.4p) +77.3%
Ÿ Free cash inflow per share 26.4p (2023: 211.4p) -87.5%
Ÿ Full year dividend 12.0p (2023: 0.0p) +100%
After separately disclosed items(1)
Ÿ Profit before tax £60.6m (2023: £90.5m) -33.0%
Ÿ Operating profit £142.6m (2023: £106.0m) +34.5%
Ÿ Diluted earnings per share 39.0p (2023: 46.5p) -16.1%
(1)Separately disclosed items as disclosed in note 4.
Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc,
said:
"Sales continue to improve. In the last nine weeks, to 29 September 2024,
like-for-like sales increased by 4.9%.
"The company continues to be concerned about the possibility of further
lockdowns and about the efficacy of the government enquiry into the pandemic,
which will not be concluded for several years.
"In contrast, the World Health Organisation (WHO) reported on its findings in
2022.
"Professor Francois Balloux, director of the UCL Genetics Institute, writing
in The Guardian, and Professor Robert Dingwall, of Trent University, writing
in the Telegraph, provide useful synopses of the WHO report:
(see pages 54-56 of Wetherspoon News
https://www.jdwetherspoon.com/wp-content/uploads/2024/04/Wetherspoon-News-autumn-2022.pdf
(https://www.jdwetherspoon.com/wp-content/uploads/2024/04/Wetherspoon-News-autumn-2022.pdf)
)
"The conclusion of Professor Balloux, broadly echoed by Professor Dingwall,
based on an analysis by the World Health Organisation of the pandemic, is that
Sweden (which did not lock down), had a Covid-19 fatality rate "of about half
the UK's" and that "the worst performer, by some margin, is Peru, despite
enforcing the harshest, longest lockdown.
"Professor Balloux concludes that "the strength of mitigation measures does
not seem to be a particularly strong indicator of excess deaths.
"The company currently anticipates a reasonable outcome for the current
financial year, subject to our future sales performance."
Enquiries:
John
Hutson
Chief Executive Officer 01923 477777
Ben
Whitley
Finance Director 01923 477777
Eddie Gershon
Company spokesman 07956 392234
Photographs are available at: www.newscast.co.uk
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout
the UK. The Company aims to provide customers with good-quality food and
drink, served by well-trained and friendly staff, at reasonable prices. The
pubs are individually designed and the Company aims to maintain them in
excellent condition.
2. Visit our website jdwetherspoon.com
3. The financial information set out in the
announcement does not constitute the company's statutory accounts for the
periods ended 28 July 2024 or 30 July 2023. The financial information for the
period ended 30 July 2023 is derived from the statutory accounts for that year
which have been delivered to the Registrar of Companies. The auditors have
reported on those accounts: their report was unqualified, and did not contain
a statement under section 498(2) or (3) of the Companies Act 2006. Statutory
accounts for 2024 will be delivered to the registrar of companies in due
course. 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 2024 has
been published on the Company's website on 04 October 2024.
5. The current financial year comprises 52 trading
weeks to 27 July 2025.
6. The next trading update will be issued on 6
November 2024.
CHAIRMAN'S STATEMENT
Financial performance
The company was founded in 1979 - and this is the 41st year since
incorporation in 1983.
The table below outlines some key aspects of our performance during that
period.
Summary accounts for the years 1984-2024
Profit/(loss) Earnings per
Total number Total sales before tax and separately disclosed items share before Free cash flow
Financial year of pubs £000 £000 separately disclosed items Free cash flow per share
(sites) pence(3) £000 pence(2,3)
1984 1 818 (7) -
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(4) 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(6) 872 1,262,048 (44,687) (35.5) (58,852) (54.2)
2021(3) 861 772,555 (154,676) (119.2) (83,284) (67.8)
2022(3) 852 1,740,477 (30,448) (19.6) 21,922 17.3
2023(3) 826 1,925,044 42,559 26.4 271,095 211.4
2024 800 2,035,500 73,875 46.8 33,037 26.4
Notes
Adjustments to statutory numbers
1. Where appropriate, the earnings/losses 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. EPS and free cash flow per share are calculated using dilutive shares in
issue.
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 post-IFRS 16 numbers following
the transition from IAS17 to IFRS 16.
Continued Recovery
The recovery from the pandemic continued in FY24, the year under review.
In the first full post-lockdown financial year (FY22), like-for-like (LFL)
sales declined by 4.7% compared to the pre-pandemic FY19. LFL sales, on the
same basis, increased to 7.4% in FY23 and to 16.0% in FY24.
Total sales in FY24, which were £2,036 million, have increased by £217
million compared to FY19, although the number of pubs decreased from 879 at
the FY19 year-end to 800 at FY24.
Profits, before tax and separately disclosed items, like sales, have also
continued to make progress, improving from a loss of £30 million in FY22, to
a profit before tax of £43 million in FY23 and to £74 million in FY24.
Increased Freehold Ownership
Since 2010, the company has invested £458 million in acquiring the freehold
"reversions" of pubs where it was previously the tenant.
72% of pubs are now freehold, an increase from 41% in 2010.
Continued Expansion
As previously stated, our best estimate is that the company has potential for
about 1,000 pubs in the UK. Examples of recent pub openings include The
Captain Flinders near Euston Station, The Lion and the Unicorn in Waterloo
Station, the Star Light, Heathrow Airport, and The Grand Assembly in Marlow,
all in the London region.
In addition to new openings, there is potential to expand existing successful
pubs, by adding gardens or, for example, by expanding existing customer areas
into adjacent buildings.
Recent examples of the expansion of existing pubs include: The Prince of
Wales, Cardiff; The Sir John Moore, Glasgow; The Six Chimneys, Wakefield;
Wetherspoons, Victoria Station, London; The Red Lion, Skegness; The Talk of
the Town, Paignton; The Albany Palace, Trowbridge and The Mile Castle,
Newcastle.
As previously indicated, the company is also increasing investment in new
staff rooms, changing rooms, glass racks above bars (to cater for increased
usage of brewers' "branded glasses") and air conditioning.
Trading summary
Total sales in FY24 were £2,036 million, an increase of 5.7%, compared to
FY23.
LFL sales, compared to FY23, increased by 7.6%. LFL bar sales increased by
8.9%, food sales by 5.6%, slot/fruit machine sales by 10.8% and hotel-room
sales by 2.7%.
LFL sales were stronger than total sales due to a small number of pub
disposals and lease terminations.
Operating profit, before separately disclosed items, was £139.5 million
(2023: £107.1 million). The operating margin, before separately disclosed
items, was 6.9% (2023: 5.6%).
Profit, before tax and separately disclosed items, was £73.9 million (2023:
£42.6 million).
In the period, the company sold eighteen pubs and terminated the lease of an
additional nine pubs. This gave rise to a cash inflow of £8.9 million.
There was an exceptional loss on disposal of approximately £13.4 million,
recognised in the income statement, relating to these pubs.
The company opened two pubs in the year; the Star Light at Heathrow Airport
and The Captain Flinders, close to Euston Station in London.
Franchises
Wetherspoon opened its first franchised pub in Hull University's student union
in January 2022. The second opened at Newcastle University in September 2023,
and the third at Haven Primrose Valley Holiday Park, Filey, North Yorkshire in
March 2024. Further franchise proposals are under consideration.
Earnings
Earnings per share, before separately disclosed items, were 48.6p (2023:
27.0p).
Total capital investment was £116.5 million (2023: £78.5 million). £11.9
million was invested in new pubs and pub extensions (2023: £20.4 million),
£82.6 million in existing pubs and IT (2023: £47.0 million) and £21.9
million in freehold reversions of properties where Wetherspoon was the tenant
(2023: £11.2 million).
Separately disclosed items
Overall, there was a pre-tax 'separately disclosed loss' of £13.3 million
(2023: £48.0 million gain).
Operating profit, after separately disclosed items, was £142.6 million (2023:
£106.0 million).
Profit before tax, after separately disclosed items, was £60.6 million (2023:
£90.5 million).
Details of the separately disclosed items are given in note 4 of the accounts.
The tax effect on separately disclosed items is a credit of £3.5 million
(2023: debit of £22.2 million).
Following £19.9 million of impairment charges and £7.6 million of impairment
reversals in the year, the net book value of the company's assets in the
balance sheet is £1.37 billion, which is approximately seven times the
company's EBITDA (pre IFRS-16 and pre separately disclosed items), in the last
12 months, of £192.8 million.
Free cash flow
There was a free cash inflow of £33.0 million in the period, including £14.8
million from the sale of interest rate swaps (2023: £271.1 million inflow,
including £169.4 million from the sale of interest rate swaps).
Free cash flow was lower than profits due to:
- the amount that the company owed to suppliers and other third parties, such
as HMRC, reducing from £329 million at the end of FY23 to £298 million at
the end of the period under review.
- higher-than-usual levels of reinvestment in existing pubs, which increased
from £47 million in FY23 to £83 million in FY24. This reinvestment, relating
to the projects mentioned above, was around £17 million more than the P&L
depreciation charge for the period.
- £5 million of loan issue costs in the period relating to the refinancing of
the company's loans.
Balance sheet
Debt, excluding IFRS-16 lease debt, was £660.0 million at the period end (30
July 2023: £641.9 million).
On an IFRS-16 basis, which includes notional debt from leases, debt increased
from £1.06 billion to £1.07 billion at the end of FY24.
Debt levels, excluding IFRS-16 lease debt, have decreased from £804.5 million
to £660.0 million since January 2020, just before the first lockdown. On an
IFRS-16 basis, debt decreased from £1.45 billion to £1.07 billion during
this period.
Dividends and return of capital
As a result of the improved trading and financial position of the company, the
board is recommending the payment of a final dividend, equivalent to the 2019
annual dividend, of 12 pence (2023: nil) per share.
During the period, 5,127,959 shares (4.1% of the share capital) were purchased
by the company for cancellation, at a cost of £39.5 million, including stamp
duty and fees, representing an average cost per share of 770p.
Financing
The company has total available finance facilities of £938.0 million.
On 6 June 2024, the company signed a new four-year £840.0 million banking
agreement on attractive terms.
On 22 August 2023, the company disposed of all interest rate swaps in place,
receiving £14.8 million to do so.
At the same time, the company took out a new interest-rate swap of £200.0
million from 23 August 2023 to 6 February 2025 at a rate of 5.67%.
On 25 September 2023, the company took out a further interest-rate swap of
£400.0 million from 6 February 2025 to 6 February 2028 at a rate of 4.23%.
The total cost of the company's debt, in the period under review, including
the banks' margin was 7.05% (30 July 2023: 6.09%).
Taxation
The total tax charge for the period was £15.4 million in respect of profits
before separately disclosed items (2023: £8.7 million).
The total tax charge comprises two parts. The first part is the actual current
tax (the 'cash' tax) which this year is £2.9 million (2023: nil).
The second part is deferred tax (the 'accounting' tax), which is tax payable
in future periods, that must be recognised in the current period for
accounting purposes. The accounting tax charge for the period is £12.5
million (2023: £8.7 million).
You cannot be serious
Pubs are highly regulated businesses, controlled by licensing laws, which
originate in parliament.
In recent weeks, according to press reports, two potential changes to
licensing regulations have been aired by government ministers and academic
researchers, both aimed at lowering alcohol consumption.
The first is that pub and hospitality licensing hours might be reduced. Since
1988, pubs have been able to open all day, having previously been required to
close for around two or three hours each afternoon.
In addition, in 2005, the then government further liberalised licensing laws,
which resulted in many pubs opening an hour or two more in the evening - in
Wetherspoon's case, usually until midnight on weekdays and until 1am on
Fridays and Saturdays.
Counterintuitively, since these liberalisations, the share of alcohol
consumption of the "on-trade" - pubs, clubs, restaurants etc - has plummeted.
In the early 1980s, the on-trade accounted for about 90% of beer sales, for
example.
This dropped to about 50% before the pandemic and is now about 40%, probably
due to the increase in price disparity with supermarkets, which stems from the
tax disadvantage referred to in the section entitled "VAT equality" below.
The effect of reducing pub opening times would certainly further reduce
on-trade consumption, but that reduction is likely to be replaced by
"off-trade" consumption at home and in other "unregulated" environments.
Among the advantages of the on-trade, linked to regulation, are that
consumption is supervised by trained licensees, police and local authorities,
in many cases including CCTV coverage of premises, and so on.
This does not mean that pubs are invariably oases of tranquillity but, in
general, pub behaviour is good and pubs are valued by communities.
The second, slightly daft, proposal is reported as emanating from Cambridge
University - that pubs should sell beer in quantities of two-thirds of a pint
(sometimes called schooners), rather than the traditional pint.
Common sense indicates that reducing glass sizes is unlikely, due to human
nature, to reduce alcohol consumption in pubs, and would also have no effect
whatsoever on drinks bought in supermarkets, unless container sizes in
supermarkets were also, unrealistically, reduced.
For example, our Aussie cousins, notorious guzzlers, already use schooners
without any noticeable reduction in consumption.
Both these proposals seem likely, if implemented, to encourage off-trade
consumption at the expense of the on-trade, thereby exchanging the relatively
highly priced and supervised pub environment for the inexpensive and
unsupervised alternative of home, park and party consumption.
The word 'pub' may have a misleading connotation for some ministers and
researchers. For example, Wetherspoon's highest selling draught product by
far, is Pepsi. Coffee and tea volumes, which are not in the draught category,
are approximately double those of Pepsi. The reality is that products sold in
pubs have radically changed in recent decades.
In summary, neither of these proposals would seem to pass the common-sense
test, as John McEnroe would no doubt aver.
Scottish Business Rates
In appendix 1 below, we explain how business rates for Scottish pubs,
theoretically based on property values, have, by a strange process of legal
reasoning, become a de facto sales tax, based on the sales performance of the
occupier.
VAT equality
Wetherspoon, along with many in the hospitality industry, has been a strong
advocate of tax equality between the off-trade, which consists mainly of
supermarkets, and the on-trade, consisting mainly of pubs, clubs and
restaurants.
Pubs, clubs and restaurants pay 20% VAT in respect of food sales but
supermarkets pay nothing. Supermarkets also pay far less business rates per
pint or meal than pubs.
It does not make economic sense for the tax system to favour mainly
out-of-town supermarkets over mainly high-street pubs.
This imbalance is a major factor in town centre and high street dereliction.
Our more detailed arguments on this point, from our FY23 annual report, can be
found in appendix 2 below.
How pubs contribute to the economy
Wetherspoon and other pub and restaurant companies have always generated far
more in taxes than are earned in profit.
In the financial year ended 28 July 2024, the company generated taxes of
£780.2 million.
The table below shows the £6.2 billion of tax revenue generated by the
company, its staff and customers in the last ten years.
Each pub, on average, generated £7.1 million in tax during that period. The
tax generated by the company, during this period, equates to approximately 26
times the company's profits after tax.
Republic of Ireland pubs contributed €14.0 million of Irish tax
contributions during the year, of which €7.9 million related to VAT, €3.5
million alcohol duty and €2.3 million employment taxes.
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 TOTAL
2015 to 2024
£m £m £m £m £m £m £m £m £m £m £m
VAT 394.7 372.3 287.7 93.8 244.3 357.9 332.8 323.4 311.7 294.4 3,013.0
Alcohol duty 163.7 166.1 158.6 70.6 124.2 174.4 175.9 167.2 164.4 161.4 1,526.5
PAYE and NIC 134.7 124.0 141.9 101.5 106.6 121.4 109.2 96.2 95.1 84.8 1,115.4
Business rates 41.3 49.9 50.3 1.5 39.5 57.3 55.6 53.0 50.2 48.7 447.3
Corporation tax 9.9 12.2 1.5 - 21.5 19.9 26.1 20.7 19.9 15.3 147.0
Corporation tax credit (historic capital allowances) - - - - - - - - - -2.0 -2.0
Fruit/slot machine duty 16.7 15.7 12.8 4.3 9.0 11.6 10.5 10.5 11 11.2 113.3
Climate change levies 10.2 11.1 9.7 7.9 10 9.6 9.2 9.7 8.7 6.4 92.5
Stamp duty 1.1 0.9 2.7 1.8 4.9 3.7 1.2 5.1 2.6 1.8 25.8
Sugar tax 2.6 3.1 2.7 1.3 2.0 2.9 0.8 - - - 15.4
Fuel duty 2.0 1.9 1.9 1.1 1.7 2.2 2.1 2.1 2.1 2.9 20.0
Apprenticeship levy 2.5 2.5 2.2 1.9 1.2 1.3 1.7 0.6 - - 13.9
Carbon tax - - - - - 1.9 3.0 3.4 3.6 3.7 15.6
Premise licence and TV licences 0.5 0.5 0.5 0.5 1.1 0.8 0.7 0.8 0.8 1.6 7.8
Landfill tax - - - - - - 1.7 2.5 2.2 2.2 8.6
Insurance premium tax 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 - 1.7
Furlough tax - - -4.4 -213 -124.1 - - - - - -341.5
Eat Out to Help Out - - - -23.2 - - - - - - -23.2
Local government grants - - -1.4 -11.1 - - - - - - -12.5
TOTAL TAX 780.2 760.4 666.9 39.1 442.1 765.1 730.7 695.3 672.4 632.4 6,184.6
TAX PER PUB (£m) 0.98 0.92 0.78 0.05 0.51 0.87 0.83 0.78 0.71 0.67 7.10
TAX AS % OF NET SALES 38.3% 39.5% 38.3% 5.1% 35.0% 42.1% 43.1% 41.9% 42.1% 41.8% 36.7.%
PROFIT/(LOSS) AFTER TAX 58.5 33.8 -24.9 -146.5 -38.5 79.6 83.6 76.9 56.9 57.5 236.9
Note - this table is prepared on a cash basis, is UK only and post IFRS-16
from FY20 onward.
Corporate Governance
Wetherspoon has been a strong critic of the composition of the boards of
UK-quoted companies.
Directors of UK PLCs have, on average, relatively little experience of the
companies they govern, due to the "nine-year rule", which limits their tenure,
combined with the fact that most directors are part-time, and have never
worked for the company in question, on a full-time basis.
In addition, those responsible for overseeing governance, among institutional
shareholders, are often responsible for several hundred companies each, making
genuine board engagement impossible, and thereby necessitating a "tick-box"
approach, which is the antithesis of good governance.
The combination of arbitrary rules, the preponderance of part-time directors
and overloaded institutional governance departments means that bureaucracy and
virtue-signalling, rather than innovation and efficacy, dominate most UK PLC
boardrooms.
In appendix 3 below, further details are provided on this issue from our FY23
annual report.
Further progress
In the period Wetherspoon awarded £49.0 million of bonuses and free shares to
employees, of which 96.5% was paid to staff below board level and 86.3% was
paid to staff working in our pubs. Approximately 24,500 of our 42,300
employees are shareholders in the company.
The average length of service of a pub manager increased to 14.9 years, and of
a kitchen manager is 10.9 years. There are 26 employees who have worked for
the company for more than 30 years, 662 for more than 20 years, 4,056 for more
than 10 years and 11,444 for more than five years.
Wetherspoon has been recognised by the Top Employers Institute as a Top
Employer United Kingdom 2024. It is the 19th time that Wetherspoon has been
certified by the Top Employers' Institute.
251 pubs feature in the 2025 Good Beer Guide, an increase of 15 compared to
last year.
In November 2023, Wetherspoon was voted the Best Airport Retailer for Food
& Beverages at the British Travel Awards.
In August 2024, our national distribution centre in Daventry, operated by DHL,
had its 20th anniversary. 27 of the original colleagues from 2004 are still
working there. In addition, we opened a secondary warehouse in Rugby which, as
well as acting as a business continuity solution, will allow for further
company volume growth.
The company has an extensive training programme for its employees, including
'kitchen of excellence' training, as well as cellar, dispense and coffee
academy training.
Wetherspoon has recently been included in the Financial Times 'FT - Statista
Leaders 2024' report, which highlights Europe's leading companies in diversity
and inclusion.
The company's UK nominated charity is Young Lives vs. Cancer (previously CLIC
Sargent). It supports children and young people with cancer. Since our
partnership began in 2002, Wetherspoon has raised over £23.5 million for the
charity, thanks to the generosity and efforts of our customers and employees.
677 of the company's washrooms have been awarded the highest platinum or
diamond statuses by the National Loo of the Year awards. The awards are aimed
at highlighting and improving standards of away-from home washrooms across the
UK. The washrooms are judged against numerous criteria, including décor and
maintenance, cleanliness, accessibility, hand-washing and drying equipment and
overall management.
In January 2024, the company was awarded the highest rating by the Sustainable
Restaurant
Association - the world's largest accreditation scheme for pubs and
restaurants, see link to SRA article
(https://www.investors.jdwetherspoon.com/wp-content/uploads/sites/3/2024/10/pages-for-interim-report.pdf)
.
Wetherspoon came first in the 'Out to Lunch' league table, compiled by the
Soil Association, when last awarded, in 2019 and 2021. Restaurants and pubs
are judged and scored on a range of criteria: family friendliness, healthy
options, food quality, value, sustainability and ingredients' provenance.
Wetherspoon is seeking to extend the appeal of its menu. For example, 39% of
the dishes on the menu that is available in the majority of pubs are
vegetarian, 11% are vegan and 24% are under 500 calories.
Cod and haddock are sourced from fisheries which have been certified to the
MSC's (Marine Stewardship Council) standards for well-managed and sustainable
fisheries.
Guinness have a 'Quality Accreditation Programme'. Independent assessors
review 17 aspects of quality. 100% of pubs passed their Guinness
accreditation.
Since 2008, Wetherspoon has invited brewers from overseas to feature their
ales in its real-ale festivals. To date, these brewers have contributed 234
ales, from 147 breweries in 29 countries. In addition, the company works with
over 250 UK brewers, mostly small or "micro" brewers.
Since 1999, Wetherspoon has worked with independent real-ale quality assessor
Cask Marque to gauge the quality of ale being served in its pubs. Cask Marque
carries out an 11-point audit covering stock rotation, beer line cleanliness,
equipment maintenance, glass washing cleanliness and hygiene. A star rating is
awarded from 1 to 5, with a target of 4 to 5 stars for all pubs. Cask Marque
state that 66% of UK pubs achieve 4 or 5 stars. 98% of Wetherspoon pubs have
achieved 4 or 5 stars.
Sustainability, recycling and the environment
Wherever possible, Wetherspoon separates waste into eight streams: glass;
tins/cans; cooking oil; paper/cardboard; plastic; lightbulbs; food waste and
general waste.
In partnership with Veolia, our waste service provider, 99.8% of general waste
was diverted from landfill in FY24.
9,324 tonnes of recyclable waste were processed last year at our national
recycling centre. In addition, food waste is sent for 'anaerobic digestion'
and used cooking oil is converted to biodiesel for agricultural use.
Smart meters are installed in the majority of pubs (and are being installed
into the rest of pubs) to facilitate energy consumption reporting.
According to ISTA, a leading company providing energy services, Wetherspoon
has reduced greenhouse gas emissions by 66% over the last 10 years, after
adjusting for sales growth. During that time, the company has also contributed
£108.1m in climate change levies and carbon taxes.
Length of service
The table below provides details of the improved retention levels of pub and
kitchen managers, key areas for any pub company, in the last decade.
Financial year Average pub manager length of service Average kitchen manager length of service
(Years) (Years)
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 13.9 10.4
2023 14.3 10.6
2024 14.9 10.9
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 Profit/(loss) after tax(1) 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 (39) -
2021 23 (146) -
2022 30 (25) -
2023 36 34 106%
2024 49 59 83%
Total(2) 466 860 54.2%
(1)(IFRS-16 was implemented in the year ending 26 July 2020 (FY20). From this
period all profit numbers in the above table are on a Post-IFRS-16 basis.
Prior to this date all profit numbers are on a Pre-IFRS-16 basis.
(2) Excludes 2020, 2021 and 2022.
Food hygiene ratings
Wetherspoon has always emphasised the importance of hygiene standards.
We now have 735 pubs rated on the Food Standards Agency's website (see table
below). The average score is 4.99, with 99.6% 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 56 pubs have passed.
Financial Year Total pubs scored Average rating Pubs with highest rating %
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 775 4.98 98.6
2023 753 4.99 99.2
2024 735 4.99 99.6
Property litigation
Some years ago, Wetherspoon took successful legal action for fraud against its
own property advisors Van de Berg, who were found, by the court, to have
diverted freehold properties to third parties, leaving Wetherspoon with an
inferior leasehold interest.
Following the Van de Berg case, Wetherspoon instigated further legal actions
against a number of individuals and companies who had freehold properties
introduced to them by Van de Berg. Liability was denied by all. The cases were
contested and settled out of court. Details can be found in appendix 4 below.
Press corrections
In the febrile atmosphere of the first UK lockdown, a number of harmful
inaccuracies were published in the press. A large number of corrections and
apologies were received, as a result of legal representations by Wetherspoon.
In order to try to set the record straight, a special edition of Wetherspoon
News was published, which includes details of the apologies and corrections.
It can be found on the company's website:
(https://www.jdwetherspoon.com/wp-content/uploads/2024/08/Does-Truth-Matter_.pdf
(https://www.jdwetherspoon.com/wp-content/uploads/2024/08/Does-Truth-Matter_.pdf)
).
Pubwatch
As Wetherspoon has previously highlighted, Pubwatch is a forum which has
improved wider town and city environments, by bringing together pubs, local
authorities and the police, in a concerted way, to encourage good behaviour
and to reduce antisocial activity.
Wetherspoon pubs are members of 532 schemes country wide, with 4 new schemes
and 10 less schemes due to disposals.
The company also helps to fund National Pubwatch, founded in 1997 by licensees
Bill Stone and Raoul De Vaux, along with police superintendent Malcolm
Eidmans. This is the umbrella organisation which helps to set up, co-ordinate
and support local schemes.
It is our experience that in some towns and cities, where the authorities have
struggled to control antisocial behaviour, the setting up of a Pubwatch has
been instrumental in improving safety and security - of not only licensed
premises, but also the town and city in general, as well as assisting the
police in bringing down crime.
Conversely, we have found, in several towns, including some towns on the
outskirts of London, that the absence of an effective Pubwatch scheme results
in higher incidents of crime, disorder and antisocial behaviour.
In our view, Pubwatch is integral to making towns and cities a safe
environment for everyone.
Current trading and outlook
As indicated above, sales continue to improve. In the last nine weeks, to 29
September 2024, like-for-like sales increased by 4.9%.
The company continues to be concerned about the possibility of further
lockdowns and about the efficacy of the government enquiry into the pandemic,
which will not be concluded for several years.
In contrast, the World Health Organisation (WHO) reported on its findings in
2022.
Professor Francois Balloux, director of the UCL Genetics Institute, writing in
The Guardian, and Professor Robert Dingwall, of Trent University, writing in
the Telegraph, provide useful synopses of the WHO report:
(see pages 54-56 of Wetherspoon News
https://www.jdwetherspoon.com/wp-content/uploads/2024/04/Wetherspoon-News-autumn-2022.pdf
(https://www.jdwetherspoon.com/wp-content/uploads/2024/04/Wetherspoon-News-autumn-2022.pdf)
)
The conclusion of Professor Balloux, broadly echoed by Professor Dingwall,
based on an analysis by the World Health Organisation of the pandemic, is that
Sweden (which did not lock down), had a Covid-19 fatality rate "of about half
the UK's" and that "the worst performer, by some margin, is Peru, despite
enforcing the harshest, longest lockdown."
Professor Balloux concludes that "the strength of mitigation measures does not
seem to be a particularly strong indicator of excess deaths."
The company currently anticipates a reasonable outcome for the current
financial year, subject to our future sales performance.
APPENDIX 1 Extract from Wetherspoon FY23 Annual report, Chairman's Statement
Business rates transmogrified to a sales tax
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 tenant's
trade - has been undermined.
Similar issues are evident in Galashiels, Arbroath, Anniesland - and, indeed,
at 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.
Omni Centre, Edinburgh The Centre, Livingston
Occupier Name Rateable Value (RV) Customer Area (ft²) Rates per square foot Occupier Name Rateable Value (RV) Customer Area (ft²) Rates per square foot
Playfair (JDW) £218,750 2,756 £79.37 The Newyearfield (JDW) £165,750 4,090 £40.53
Unit 9 (vacant) £48,900 1,053 £46.44 Paraffin Lamp £52,200 2,077 £25.13
Unit 7 (vacant) £81,800 2,283 £35.83 Wagamama £67,600 2,096 £32.25
Frankie & Benny's £119,500 2,731 £43.76 Nando's £80,700 2,196 £36.75
Nando's £122,750 2,804 £43.78 Chiquito £68,500 2,221 £30.84
Slug & Lettuce £108,750 3,197 £34.02 Ask Italian £69,600 2,254 £30.88
The Filling Station £147,750 3,375 £43.78 Pizza Express £68,100 2,325 £29.29
Tony Macaroni £125,000 3,427 £36.48 Prezzo £70,600 2,413 £29.26
Unit 6 (vacant) £141,750 3,956 £35.83 Harvester £98,600 3,171 £31.09
Cosmo £200,000 7,395 £27.05 Pizza Hut £111,000 3,796 £29.24
Average (exc JDW) £121,800 3,358 £38.55 Hot Flame £136,500 4,661 £29.29
Average (exc JDW) £82,340 2,721 £30.40
In summary, as a result of the approach taken in Scotland, business rates for
pubs are de facto a sales tax, rather than a property tax, as the above
examples clearly demonstrate.
APPENDIX 2 Extract from Wetherspoon FY23 Annual report, Chairman's Statement
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.
As a result, in these less affluent areas, there are often fewer pubs, coffee
shops and restaurants, with less employment and increased high-street
dereliction. Tax equality would also be in line with the principle of fairness
- the same taxes should apply to businesses which sell the same products.
APPENDIX 3 Extract from Wetherspoon FY23 Annual report, Chairman's Statement
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 2008-10 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 increased the level of 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 regional 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 met a compliance officer from one major
institution who is responsible for around 400 companies - an impossible task.
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.
APPENDIX 4 Extract from Wetherspoon FY23 Annual report, Chairman's Statement
Property Litigation
In 2013, Wetherspoon agreed an out-of-court settlement of approximately £1.25
million with developer Anthony Lyons, formerly of property leisure agent Davis
Coffer Lyons, relating to claims 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 in respect of properties
in Leytonstone (which currently trades as the Walnut Tree), Newbury (which was
leased to Café Rouge) and Portsmouth (which currently trades as The Isambard
Kingdom Brunel).
Of these three properties, only Portsmouth was pleaded by Wetherspoon in its
2008/9 case against Van de Berg. Mr Lyons denied the claim and the litigation
was contested.
In the Van de Berg litigation, Mr Justice Peter Smith ruled that Van de Berg,
but not Mr Lyons (who was not a party to the case), fraudulently diverted the
freehold of Portsmouth from Wetherspoon to Moorstown Properties Limited, a
company owned by Simon Conway, which leased the property to Wetherspoon.
As part of a series of cases, Wetherspoon also agreed out-of-court settlements
with:
1) Paul Ferrari of London estate agent Ferrari Dewe & Co, in respect of
properties referred to as the 'Ferrari Five' by Mr Justice Peter Smith in the
Van de Berg case, and
2) Property investor Jason Harris, formerly of First London and now of First
Urban Group who paid £400,000 to Wetherspoon to settle a claim in which
it was alleged that Harris was an accessory to frauds committed by Van de
Berg. Harris contested the claim and did not admit liability.
Messrs Ferrari and Harris both contested the claims and did not admit
liability.
INCOME STATEMENT for the 52 weeks ended 28 July 2024
(1) Separately disclosed items is a measure not required by accounting
standards. Post separately disclosed items is a GAAP measure.
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
Notes ended ended ended ended ended ended
28 July 28 July 28 July 30 July 30 July 30 July
2024 2024 2024 2023 2023 2023
before separately after before separately after
separately disclosed separately separately disclosed separately
disclosed Items(1) disclosed disclosed items(1) disclosed
items(1) items(1) items(1) items(1)
£000 £000 £000 £000 £000 £000
Revenue 1 2,035,500 - 2,035,500 1,925,044 - 1,925,044
Other operating income/(costs) 4 - 4,153 4,153 - (1,022) (1,022)
Operating costs (1,896,009) (1,059) (1,897,068) (1,817,982) - (1,817,982)
Operating profit 139,491 3,094 142,585 107,062 (1,022) 106,040
Property gains/(losses) 3 11 (32,480) (32,469) 2,231 (47,712) (45,481)
Finance income 6 2,032 16,131 18,163 1,351 97,724 99,075
Finance costs 6 (67,659) - (67,659) (68,085) (1,038) (69,123)
Profit/(loss) before tax 73,875 (13,255) 60,620 42,559 47,952 90,511
Income tax (charge)/credit 7 (15,361) 3,526 (11,835) (8,734) (22,190) (30,924)
Profit/(loss) for the period 58,514 (9,729) 48,785 33,825 25,762 59,587
Profit/(loss) per ordinary share (p)
- Basic 8 48.6 (8.1) 40.5 27.0 20.5 47.5
- Diluted 8 46.8 (7.8) 39.0 26.4 20.1 46.5
STATEMENT OF COMPREHENSIVE INCOME for the 52 weeks ended 28 July 2024
Notes 52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
£000 £000
Items which will be reclassified subsequently to profit or loss:
Interest-rate swaps: gain taken to other comprehensive income 38 37,529
Interest-rate swaps: loss reclassification to the income statement (18,025) (13,310)
Tax on items taken directly to other comprehensive income 7 - (6,055)
Currency translation differences (1,294) 1,633
Net (loss)/gain recognised directly in other comprehensive income (19,281) 19,797
Profit for the period 48,785 59,587
Total comprehensive profit for the period 29,504 79,384
CASH FLOW STATEMENT for the 52 weeks ended 28 July 2024
Free cash Free cash
flow(1) flow(1)
52 weeks 52 weeks 52 weeks 52 weeks
Note ended ended ended ended
28 July 28 July 30 July 30 July
2024 2024 2023 2023
£000 £000 £000 £000
Cash flows from operating activities
Cash generated from operations 9 232,907 232,907 270,686 270,686
Interest received 6 1,765 1,765 1,011 1,011
Interest paid 6 (52,482) (52,482) (50,545) (50,545)
Cash proceeds on termination of interest-rate swaps 14,783 14,783 169,413 169,413
Corporation tax paid (9,940) (9,940) (12,200) (12,200)
Lease interest (14,471) (14,471) (15,954) (15,954)
Net cash flow from operating activities 172,562 172,562 362,411 362,411
Cash flows from investing activities
Reinvestment in pubs (76,389) (76,389) (41,646) (41,646)
Reinvestment in business and IT projects (6,243) (6,243) (5,315) (5,315)
Investment in new pubs and pub extensions (11,933) - (20,361) -
Freehold reversions and investment properties (21,944) - (11,202) -
Proceeds of sale of property, plant and equipment 17,872 - 11,349 -
Net cash flow from investing activities (98,637) (82,632) (67,175) (46,961)
Cash flows from financing activities
Purchase of own shares for cancellation (39,505) - - -
Purchase of own shares for share-based payments (12,738) (12,738) (12,332) (12,332)
Loan issue cost (4,948) (4,948) - -
Repayments under bank loans (4,000) - (200,033) -
Other loan receivables 778 - 889 -
Lease principal payments (39,207) (39,207) (32,023) (32,023)
Asset-financing principal payments (4,245) - (4,911) -
Net cash flow from financing activities (103,865) (56,893) (248,410) (44,355)
Net change in cash and cash equivalents (29,940) 46,826
Opening cash and cash equivalents 87,173 40,347
Closing cash and cash equivalents 57,233 87,173
Free cash flow(1) 33,037 271,095
(1) Free cash flow is a measure not required by accounting standards.
BALANCE SHEET as at 28 July 2024
J D Wetherspoon plc, company number: 1709784 Notes Restated(1)
28 July 30 July
2024 2023
£000 £000
Assets
Non-current assets
Property, plant and equipment 13 1,374,617 1,377,816
Intangible assets 12 5,933 6,505
Investment property 14 18,290 18,740
Right-of-use assets(1) 373,338 395,353
Other loan receivable 1,194 1,986
Derivative financial instruments - 11,944
Lease assets 8,860 8,450
Total non-current assets 1,782,232 1,820,794
Current assets
Lease assets 1,358 1,361
Assets held for sale 2,488 400
Inventories 28,404 34,558
Receivables 26,576 27,267
Current income tax receivables 6,079 8,351
Cash and cash equivalents 57,233 87,173
Total current assets 122,138 159,110
Total assets 1,904,370 1,979,904
Current liabilities
Borrowings - (4,200)
Derivative financial instruments (701) (78)
Trade and other payables (298,059) (329,098)
Provisions (3,047) (2,395)
Lease liabilities (49,582) (51,486)
Total current liabilities (351,389) (387,257)
Non-current liabilities
Borrowings (719,134) (727,643)
Derivative financial instruments (4,073) -
Deferred tax liabilities(1) 7 (59,487) (60,152)
Lease liabilities (368,660) (391,794)
Total non-current liabilities (1,151,354) (1,179,589)
Total liabilities (1,502,743) (1,566,846)
Net assets 401,627 413,058
Shareholders' equity
Share capital 2,472 2,575
Share premium account 143,170 143,170
Capital redemption reserve 2,440 2,337
Other reserves 195,074 234,579
Hedging reserve 13,794 31,781
Currency translation reserve 106 2,148
Retained earnings(1) 44,571 (3,532)
Total shareholders' equity 401,627 413,058
( )
(1)Restated 30 July 2023.
STATEMENT OF CHANGES IN EQUITY
Notes Share Share premium Capital Other Currency Restated(1)
capital account redemption Reserves Hedging translation Retained Total
reserve reserve reserve earnings
£000 £000 £000 £000 £000 £000 £000 £000
As at 31 July 2022 as previously reported 2,575 143,294 2,337 234,579 13,617 (144) (74,373) 321,885
Effect of restatements(1) - - - - - - 13,600 13,600
Restated(1) as at 31 July 2022 2,575 143,294 2,337 234,579 13,617 (144) (60,773) 335,485
Total comprehensive income - - - - 18,164 2,292 58,928 79,384
Profit for the period(1) - - - - - - 59,587 59,587
Interest-rate swaps: cash flow - - - - 37,529 - - 37,529
hedges
Interest-rate swaps: amount - - - - (13,310) - - (13,310)
reclassified to the income statement
Tax on items taken directly to comprehensive income 7 - - - - (6,055) - - (6,055)
Currency translation differences - - - - - 2,292 (659) 1,633
Share capital expenses - (124) - - - - - (124)
Share-based payment charges - - - - - - 10,545 10,545
Tax on share-based payment 7 - - - - - - 100 100
Purchase of own shares for share-based payments - - - - - - (12,332) (12,332)
As at 30 July 2023 as previously reported 2,575 143,170 2,337 234,579 31,781 2,148 (17,132) 399,458
Effect of restatements(1) 13,600 13,600
Restated(1) as at 30 July 2023 2,575 143,170 2,337 234,579 31,781 2,148 (3,532) 413,058
Total comprehensive income - - - - (17,987) (2,042) 49,533 29,504
Profit for the period - - - - - 48,785 48,785
Interest-rate swaps: cash flow hedges - - - - 38 - - 38
Interest-rate swaps: amount reclassified to the income statement - - - - (18,025) - - (18,025)
Currency translation differences - - - - - (2,042) 748 (1,294)
Purchase of own shares and cancellation (103) - 103 (39,505) - - - (39,505)
Share-based payment charges - - - - - - 11,021 11,021
Tax on share-based payment 7 - - - - - - 287 287
Purchase of own shares for share-based payments - - - - - - (12,738) (12,738)
As at 28 July 2024 2,472 143,170 2,440 195,074 13,794 106 44,571 401,627
(1)Restated 30 July 2023.
The share premium account represents those proceeds received in excess of the
nominal value of new shares issued.
The capital redemption reserve represents the nominal amount of share capital
repurchased and cancelled in previous periods.
Other reserves contain net proceeds received for share placements which took
place in previous periods. During the year, £39.5 million was deducted from
other reserves relating to share buybacks. Other reserves is used as this is
determined to be distributable for the purposes of the Companies Act 2006.
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 28 July 2024, the company had distributable reserves of £253.5 million
(Restated 2023: £265.0 million).
NOTES TO THE FINANCIAL STATEMENTS
1. Revenue
52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
£000 £000
Bar 1,167,450 1,093,368
Food 773,002 742,067
Slot/fruit machines 66,886 62,579
Hotel 25,337 24,939
Other 2,825 2,091
2,035,500 1,925,044
2. Operating profit/(loss) - analysis of costs by nature
This is stated after charging/(crediting): 52 weeks 52 weeks
Ended ended
28 July 30 July
2024 2023
£000 £000
Variable concession rental payments 16,905 16,980
Short-term leases 593 504
Repairs and maintenance 114,544 94,011
Net rent receivable (2,711) (2,506)
Share-based payments (note 5) 11,021 10,545
Depreciation of property, plant and equipment (note 13) 63,496 70,173
Amortisation of intangible assets (note 12) 1,937 1,827
Depreciation of investment properties (note 14) 176 185
Amortisation of right-of-use assets 36,773 37,556
( )
Analysis of continuing operations 52 weeks 52 weeks
Ended ended
28 July 30 July
2024 2023
£000 £000
Revenue 2,035,500 1,925,044
Cost of sales(1) (1,837,608) (1,765,970)
Gross profit 197,892 159,074
Administration costs (55,307) (53,034)
Operating profit after separately disclosed items 142,585 106,040
(1)Included in cost of sales is £664.7 million (2023: £654.3 million)
relating to the cost of inventory recognised as an expense.
Auditor's remuneration 52 weeks 52 weeks
Ended ended
28 July 30 July
2024 2023
£000 £000
Fees payable for the audit of the financial statements
- Audit fees 610 560
- Additional audit work (for previous year audit) 122 50
Fees payable for other services
- Audit related services (interim audit procedures) 72 82
Total auditor's fee 804 692
3. Property losses and gains
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
28 July 2024 28 July 2024 28 July 2024 30 July 2023 30 July 2023 30 July 2023
Before Separately After Before Separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note 4) items items (note 4) items
£000 £000 £000 £000 £000 £000
Disposals
Fixed assets 77 10,496 10,573 - 8,136 8,136
Leases - (1,519) (1,519) - (1,404) (1,404)
Additional costs of disposal - 4,405 4,405 42 2,693 2,735
77 13,382 13,459 42 9,425 9,467
Impairments
Property, plant and equipment (note 13) - 25,268 25,268 - 35,966 35,966
Reversal of property plant and equipment - (7,582) (7,582) - (5,430) (5,430)
Investment properties (note 14) - 347 347 - 4,448 4,448
Reversal of investment properties - (73) (73) - - -
Intangible assets - - - - (74) (74)
Right-of-use assets - 2,161 2,161 - 3,377 3,377
Reversal of right-of-use assets - (1,023) (1,023) - - -
- 19,098 19,098 - 38,287 38,287
Other
Other property gains (88) - (88) (1,409) - (1,409)
Leases - - - (864) - (864)
(88) - (88) (2,273) - (2,273)
Total property (gains)/losses (11) 32,480 32,469 (2,231) 47,712 45,481
4. Separately disclosed items
52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
£000 £000
Operating items
Local government support grants (14) (54)
Depreciation overcharge on impaired assets (4,139) -
Operating income (4,153) (54)
Other 1,059 1,076
Operating costs 1,059 1,076
Total operating (profit)/loss (3,094) 1,022
Property losses
Loss on disposal of pubs 13,382 9,425
13,382 9,425
Other property losses
Impairment of assets under construction 5,334 -
Impairment of intangible assets - (74)
Impairment of property, plant and equipment 19,934 35,966
Reversal of property, plant and equipment impairment (7,582) (5,430)
Impairment of investment properties 347 4,448
Reversal of investment properties impairment (73) -
Impairment of right-of-use assets 2,161 3,377
Reversal of right-of-use asset Impairments (1,023) -
19,098 38,287
Total property losses 32,480 47,712
Other items
Finance costs - 1,038
Finance income (16,131) (97,724)
(16,131) (96,686)
Taxation
Tax effect on separately disclosed items (3,526) 22,190
(3,526) 22,190
Total separately disclosed items 9,729 (25,762)
Other operating income
Included in other operating income is a reversal of overcharged depreciation
in relation to previously impaired fixed assets
and right-of-use assets, totalling £4,139,000. The overcharge of depreciation
occurred between the periods ended 26 July 2020
and 30 July 2023, and was not material in any one period to any line item. As
such, the overcharge has been reversed in
the current year.
Local government support grants
The company has recognised £14,000 (2023: £54,000) of local government
support grants in the UK and the Republic of Ireland, associated with the
COVID-19 pandemic.
Other operating costs
Other operating costs relate to a contractual dispute with a large supplier
which has now been resolved. Costs of £1,846,000 (2023: 1,076,000) have been
recognised in relation to this dispute. Further costs of £684,000 (2023: nil)
are in relation to an historic employment tax issue. Income of £1,471,000 has
been recognised in the period relating to a settlement agreement (2023: nil).
Property losses
In the table on the previous page, those costs classified under the
'separately disclosed property losses' relate to the loss on disposal of sites
sold during the year.
Other property losses
Property impairment relates to pubs which are deemed unlikely to generate
sufficient cash flows in the future to support their carrying value. In the
year, a total impairment charge of £19,934,000 (2023: £35,966,000) was
incurred in respect of property, plant and equipment and £2,161,000 (2023:
£3,377,000) in respect of right-of-use assets, as required under IAS 36.
There were impairment reversals of £8,678,000 recognised in the year (2023:
£5,430,000).
In the year, a total impairment charge of £347,000 (2023: £4,448,441) was
incurred in respect of the impairment of our investment properties.
There was £5,334,000 impairment charge relating to assets under construction
(2023: nil).
Separately disclosed finance costs
In the previous year, the company recognised covenant waiver fees of
£1,038,000.
Separately disclosed finance income
The separately disclosed finance income of £16,131,000 (2023: £97,724,000)
relates to interest-rate swaps. A charge of £1,894,000 (2023: income of
£71,124,000) relates to the fair value movement on interest-rate swaps.
Income of £18,025,000 (2023: £13,310,000) relates to the amortisation of the
hedge reserve to the P&L relating to discontinued hedges. As a result of
no hedge accounting being applied, there has been no hedge ineffectiveness
recognised in the P&L (2023: £13,290,000).
Taxation
The tax effect on separately disclosed items is a credit of £3,526,000 (2023:
£22,190,000 charge).
5. Employee benefits expenses
52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
£000 £000
Wages and salaries 717,558 668,397
Employee support grants (289) (768)
Social security costs 45,857 41,262
Other pension costs 11,983 10,675
Share-based payments 11,021 10,545
786,130 730,111
Restated(1)
Directors' emoluments 2024 2023
£000 £000
Aggregate emoluments 1,874 2,864
Aggregate amount receivable under share schemes 353 339
Company contributions to money purchase pension scheme 171 173
2,398 3,376
(1)Restated 30 July 2023.
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.
2024 2023
Number Number
Full-time equivalents
Head office 388 362
Pub managerial 4,542 4,549
Pub hourly paid staff 19,467 19,539
24,397 24,450
2024 2023
Number Number
Total employees
Head office 397 379
Pub managerial 4,743 4,678
Pub hourly paid staff 36,937 37,151
42,077 42,208
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.
Restated(1)
Share-based payments 52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
Shares awarded during the year (shares) 3,937,892 3,813,792
Average price of shares awarded (pence) 701 526
Market value of shares vested during the year (£000) 7,377 1,464
Share awards not yet vested (£000) 21,617 16,632
(1)Restated 30 July 2023.
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
52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
£000 £000
Finance costs
Interest payable on bank loans and overdrafts 48,262 43,469
Amortisation of bank loan issue costs (note 10) 439 1,246
Interest payable on swaps 866 1,894
Interest payable on asset-financing 70 205
Interest payable on private placement 3,284 4,977
Finance costs excluding lease interest 52,921 51,791
Interest payable on leases 14,738 16,294
Total finance costs 67,659 68,085
Bank interest receivable (1,765) (1,011)
Lease interest receivable (267) (340)
Total finance income (2,032) (1,351)
Net finance costs before separately disclosed items 65,627 66,734
Separately disclosed finance costs (note 4) - 1,038
Separately disclosed finance income (note 4) (16,131) (97,724)
(16,131) (96,686)
Net finance costs/(income) after separately disclosed items 49,496 (29,952)
7. Income tax expense
(a) Tax on profit/(loss) on ordinary activities
The standard rate of corporation tax in the UK is 25%. The company's profits
for the accounting period are taxed at a rate of 25% (2023: 21%).
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended ended
28 July 2024 28 July 2024 28 July 2024 30 July 2023 30 July 2023 30 July 2023
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note 4) items items (note 4) Items
£000 £000 £000 £000 £000 £000
Taken through income statement
Current income tax:
Current income tax charge 2,901 12,406 15,307 - 5,552 5,552
Previous period adjustment - (3,043) (3,043) - 293 293
Total current income tax 2,901 9,363 12,264 - 5,845 5,845
Deferred tax:
Origination and reversal of temporary differences 12,460 (13,164) (704) 13,602 16,345 29,947
Previous period deferred tax credit - 275 275 (4,868) - (4,868)
Total deferred tax 12,460 (12,889) (429) 8,734 16,345 25,079
Tax charge 15,361 (3,526) 11,835 8,734 22,190 30,924
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended Ended
28 July 2024 28 July 2024 28 July 2024 30 July 2023 30 July 2023 30 July 2023
Before separately After Before separately After
separately disclosed separately separately disclosed separately
disclosed items disclosed disclosed items disclosed
items (note 4) items items (note 4) items
£000 £000 £000 £000 £000 £000
Taken through equity
Current tax (52) - (52) - - -
Deferred tax (235) - (235) (100) - (100)
Tax credit (287) - (287) (100) - (100)
52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks
Ended ended ended ended ended ended
28 July 2024 28 July 2024 28 July 2024 30 July 2023 30 July 2023 30 July 2023
Before Separately After Before separately After
Separately disclosed separately separately disclosed separately
Disclosed items disclosed disclosed items disclosed
Items (note 4) items items (note 4) items
£000 £000 £000 £000 £000 £000
Taken through comprehensive income
Deferred tax charge on swaps - - - - 6,055 6,055
Tax charge - - - - 6,055 6,055
7. Income tax expense (continued)
(b) Reconciliation of the total tax charge
The taxation charge pre-separately disclosed items, for the 52 weeks ended 28
July 2024, is based on the profit before tax of £73.9m and the estimated
effective tax rate for the 52 weeks ended 28 July 2024 of 20.8% (July 2023:
20.5%). This comprises of a current tax rate of 3.9% (July 2023: 0%) and a
deferred tax charge of 16.9% (July 2023: 20.5% charge).
The UK standard weighted average tax rate for the period is 25% (2023: 21%).
The current tax rate is lower than the UK standard weighted average tax rate
owing to tax losses in the period.
52 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended
28 July 2024 28 July 2024 30 July 2023 30 July 2023
Before After Before After
separately separately separately separately
disclosed disclosed disclosed disclosed
items items items items
£000 £000 £000 £000
Profit before income tax 73,875 60,620 42,559 90,511
Profit multiplied by the UK standard rate of 18,469 15,155 8,937 19,008
corporation tax of 25% (2023: 21%)
Abortive acquisition costs and disposals 490 490 427 427
Expenditure not allowable 643 1,120 711 711
Fair value movement on SWAP disregarded for tax - (4,504) (2,599) 484
Other allowable deductions (18) (18) (13) (13)
Non-qualifying depreciation and loss on disposal (3,143) (1,986) 5,875 8,489
Capital gains - effect of deferred tax not recognised/(effect of relief) - 2,271 1,175 1,175
Share options and SIPs (1,382) (1,382) 188 188
Deferred tax on balance-sheet-only items (56) (56) (182) (182)
Effect of different tax rates and unrecognised losses in overseas companies 358 3,513 2,871 2,871
Rate change adjustment - - (3,788) 2,341
Previous year adjustment - current tax - (3,043) - 293
Previous year adjustment - deferred tax - 275 (4,868) (4,868)
Total tax expense reported in the income statement 15,361 11,835 8,734 30,924
7. Income tax expense (continued)
(c) Deferred tax
The main rate of corporation tax increased to 25% on 1 April 2023. Deferred
tax balances have been recognised at the rate they are expected to reverse.
The deferred tax in the balance sheet is as follows:
Deferred tax liabilities Accelerated tax depreciation Other temporary differences Interest-rate swap Total
£000 £000 £000 £000
As at 30 July 2023 50,048 6,838 27,032 83,918
Previous year movement posted to the income statement (52) (824) 4,149 3,273
Movement during year posted to the income statement 1,779 42 (20,619) (18,798)
At 28 July 2024 51,775 6,056 10,562 68,393
Deferred tax assets Share-based payments Tax losses and interest capacity carried forward Total
Other temporary differences
£000 £000 £000
As previously reported as at 30 July 2023 1,044 17,122 - 18,166
Effect of restatements(1) - - 5,600 5,600
Restated(1) as at 30 July 2023 1,044 17,122 5,600 23,766
Previous year movement posted to the income statement - 2,999 - 2,999
Movement during year posted to the income statement 914 (19,061) 53 (18,094)
Movement during year posted to equity 235 - - 235
At 28 July 2024 2,193 1,060 5,653 8,906
The company has recognised deferred tax assets of £8.9 million (2023
restated: £23.8 million), which are expected to be offset against future
profits. This includes a deferred tax asset of £1.1 million (2023: £17.1
million), in respect of UK tax losses. Included in other temporary differences
is £5.7 million (2023 restated: £5.6 million) relating to capital losses
capable of offset against rolled over gains.
Deferred tax assets and liabilities have been offset as follows:
2024 Restated(1)
2023
£000 £000
Deferred tax liabilities 68,393 83,918
Offset against deferred tax assets(1) (8,906) (23,766)
Deferred tax liabilities(1) 59,487 60,152
Deferred tax assets(1) 8,906 23,766
Offset against deferred tax liabilities(1) (8,906) (23,766)
Deferred tax asset(1) - -
(1)Restated 30 July 2023.
As at 28 July 2024, the company had a potential deferred tax asset of £5.4
million (2023: £4.1 million) relating to capital losses (gross tax losses
£21.6 million (2023: £16.4 million)) and tax losses in the Republic of
Ireland (gross tax losses £32.6 million (2023: £24.2 million)). Both types
of loss do not expire and will be available to use in future periods
indefinitely. A deferred tax asset has not been recognised, as there is
insufficient certainty of recovery.
For periods commencing on or after 1 January 2024, additional reporting
requirements will apply to ensure that the effective tax rate will be at least
15% in all countries, subject to various complex calculations. This is in line
with the minimum taxation rules announced by the G7 and progressed by the OECD
Inclusive Framework on Base Erosion and Profit Sharing. These rules have been
implemented in the UK via the Multinational Top Up Tax legislation during the
year and will first apply to the accounting period ending 27 July 2025.
Historically the company's effective tax rate has been above 15%. However, the
company does operate in Ireland where the corporation tax rate is below 15%.
The group has assessed the exposure to Multinational Top Up Taxes and any
impact will be immaterial.
The company applies the exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes,
as provided in the amendments to IAS 12 issued in May 2023.
8. Earnings and free cash flow per share
Weighted average number of shares
Basic earnings/(loss) per share is calculated by dividing the profit/(loss)
after tax for the period by the weighted average number of ordinary shares in
issue during the financial year of 125,291,770 (2023: 128,750,155) less the
weighted average number of shares held in trust during the financial year of
4,956,072 (2023: 3,296,278). Shares held in trust are shares purchased by the
company to satisfy employee share schemes which have not yet vested.
Diluted earnings/(loss) per share is calculated by dividing the profit/(loss)
after tax for the period by the weighted average number of ordinary shares in
issue during the financial year adjusted for both shares held in trust and the
effects of potentially dilutive shares. In the event of making a loss during
the year, the diluted loss per share is capped at the basic earnings per share
as the impact of dilution cannot result in a reduction in the loss per share.
Weighted average number of shares 52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
Shares in issue 125,291,770 128,750,155
Shares held in trust (4,956,072) (3,296,278)
Shares in issue - basic 120,335,698 125,453,877
Dilutive shares 4,693,614 2,810,231
Shares in issue - diluted 125,029,312 128,264,108
Earnings/(loss) per share
52 weeks ended 28 July 2024 Profit/(loss) Basic EPS Diluted EPS
£000 pence pence
Earnings (profit after tax) 48,785 40.5 39.0
Exclude effect of separately disclosed items after tax 9,729 8.1 7.8
Earnings before separately disclosed items 58,514 48.6 46.8
Exclude effect of property gains/(losses) (11) - -
Underlying earnings before separately disclosed items 58,503 48.6 46.8
52 weeks ended 30 July 2023 Profit/(loss) Basic EPS Diluted EPS
£000 pence Pence
Earnings (profit after tax) 59,587 47.5 46.5
Exclude effect of separately disclosed items after tax (25,762) (20.5) (20.1)
Earnings before separately disclosed items 33,825 27.0 26.4
Exclude effect of property gains/(losses) (2,231) (1.8) (1.7)
Underlying earnings before separately disclosed items 31,594 25.2 24.7
Free cash flow per share
Free cash flow Basic free cash flow per share Diluted free cash flow per share
£000 pence pence
52 weeks ended 28 July 2024 33,037 27.5 26.4
52 weeks ended 30 July 2023 271,095 216.1 211.4
9. Cash used in/generated from operations
52 weeks 52 weeks
ended ended
28 July 30 July
2024 2023
£000 £000
Profit for the period 48,785 59,587
Adjusted for: -
Tax (note 7) 11,835 30,924
Share-based charges (note 5) 11,021 10,545
Loss on disposal of property, plant and equipment (note 3) 14,978 10,871
Disposal of capitalised leases and lease premiums (note 3) (1,519) (2,273)
Net impairment charge (note 3) 19,098 38,287
Interest receivable (note 6) (1,765) (1,011)
Interest payable (note 6) 52,482 50,234
Lease interest receivable (note 6) (267) (340)
Lease interest payable (note 6) 14,738 22,796
Separately disclosed Interest (note 6) (16,131) (96,686)
Amortisation of bank loan issue costs (note 6) 439 1,246
Depreciation of property, plant and equipment (note 13) 63,496 70,173
Amortisation of intangible assets (note 12) 1,937 1,827
Depreciation on investment properties (note 14) 176 185
Aborted properties costs 336 1,719
Foreign exchange movements (1,294) 1,633
Amortisation of right-of-use assets 36,773 37,556
255,118 237,273
Change in inventories 6,154 (8,157)
Change in receivables 707 2,133
Change in payables (29,072) 39,437
Cash generated from operations 232,907 270,686
10. Analysis of change in net debt
30 July Cash Other 28 July
Analysis of changes in net debt for 52 weeks ended 28 July 2024 2023 flows changes 2024
£000 £000 £000 £000
Borrowings
Cash and cash equivalents 87,173 (29,940) - 57,233
Other loan receivable - due before one year 803 (87) - 716
Asset-financing obligations - due before one year (4,200) 4,245 (45) -
Current net borrowings 83,776 (25,782) (45) 57,949
Bank loans - due after one year (629,783) 8,948 (394) (621,229)
Asset-financing obligations - due after one year - - - -
Other loan receivable - due after one year 1,986 (691) (101) 1,194
Private placement - due after one year (97,860) - (45) (97,905)
Non-current net borrowings (725,657) 8,257 (540) (717,940)
Net debt (641,881) (17,525) (585) (659,991)
Derivatives
Interest-rate swaps asset - due after one year 11,944 (14,783) 2,839 -
Interest rate swaps liability - due before one year (78) - (623) (701)
Interest-rate swaps liability - due after one year - - (4,073) (4,073)
Total derivatives 11,866 (14,783) (1,857) (4,774)
Net debt after derivatives (630,015) (32,308) (2,442) (664,765)
Leases
Lease assets - due before one year 1,361 (976) 973 1,358
Lease assets - due after one year 8,449 - 411 8,860
Lease obligations - due before one year (51,486) 40,183 (38,279) (49,582)
Lease obligations - due after one year (391,794) - 23,134 (368,660)
Net lease liabilities (433,468) 39,207 (13,761) (408,024)
Net debt after derivatives and lease liabilities (1,063,483) 6,899 (16,203) (1,072,790)
Lease obligations represent long-term payables, while lease assets represent
long-term receivables - both are, therefore, disclosed in the table above.
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
£439,000 (2023: £1,246,000) is disclosed in note 6. These are arrangement
fees paid in respect of new borrowings and charged to the income statement
over the loans' expected life.
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.
Non-cash movement in net lease liabilities 28 July
2024
£000
Recognition of new leases (8,617)
Recognition of new lease assets 1,900
Remeasurements of existing leases liabilities (22,458)
Remeasurements of existing leases assets (516)
Disposals and derecognised leases 2,081
Lease transfers to property, plant and equipment 14,179
Exchange differences (330)
Non-cash movement in net lease liabilities (13,761)
11. Dividends paid and proposed
The board proposes, subject to shareholders' consent, to pay a final dividend
of 12.0p (2023: nil) per share, on 28 November 2024, to those shareholders on
the register on 25 October 2024, giving a total dividend for the year of 12.0p
per share.
12. Intangible assets
Computer Assets Total
software and
under
£000
development
construction
£000
£000
Cost:
At 31 July 2022 35,602 433 36,035
Additions 1,169 1,689 2,858
Disposals - (9) (9)
At 30 July 2023 36,771 2,113 38,884
Additions 2,505 101 2,606
Transfers 2,114 (2,114) -
Exchange differences (4) - (4)
Disposals (2,516) - (2,516)
At 28 July 2024 38,870 100 38,970
Accumulated amortisation
At 31 July 2022 (30,626) - (30,626)
Provided during the period (1,827) - (1,827)
Reversal of impairment losses 74 74
At 30 July 2023 (32,379) - (32,379)
Provided during the period (1,937) - (1,937)
Exchange differences 4 - 4
Disposals 1,275 - 1,275
At 28 July 2024 (33,037) - (33,037)
Net book amount at 28 July 2024 5,833 100 5,933
Net book amount at 30 July 2023 4,392 2,113 6,505
Net book amount at 31 July 2022 4,976 433 5,409
The majority of intangible assets relates to computer software and software
development. Examples include the development costs of the Wetherspoon
customer-facing app and other bespoke company applications.
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 31 July 2022 1,477,334 280,330 731,115 75,451 2,564,230
Additions 19,315 5,983 32,148 10,323 67,769
Transfers from capitalised leases (464) - - - (464)
Transfers 6,551 1,967 7,900 (16,418) -
Exchange differences 1,289 57 214 253 1,813
Transfer to held for sale (527) - (419) - (946)
Disposals (16,448) (8,750) (7,574) (4,719) (37,491)
Reclassifications 7,003 (7,003) - - -
At 30 July 2023 1,494,053 272,584 763,384 64,890 2,594,911
Additions 36,085 4,347 52,105 22,367 114,904
Transfers from capitalised leases (1,753) - - - (1,753)
Transfers 21,880 1,225 6,414 (29,519) -
Exchange differences (917) (43) (168) (183) (1,311)
Transfer to held for sale (7,335) - - - (7,335)
Disposals (42,970) (10,892) (6,601) - (60,463)
Reclassifications 8,661 (8,661) - - -
At 28 July 2024 1,507,704 258,560 815,134 57,555 2,638,953
Accumulated depreciation and impairment
At 31 July 2022 (374,533) (171,516) (589,104) (2,215) (1,137,368)
Provided during the period (21,958) (9,056) (39,159) - (70,173)
Transfers from investment property - - - - -
Exchange differences (35) (13) (184) - (232)
Impairment loss (30,478) (5,488) - - (35,966)
Reversal of impairment losses 700 3,440 1,290 - 5,430
Transfer to held for sale 206 - 341 - 547
Disposals 5,514 7,534 6,005 1,614 20,667
Reclassifications (4,523) 4,523 - - -
At 30 July 2023 (425,107) (170,576) (620,811) (601) (1,217,095)
Provided during the period (19,844) (8,184) (35,468) - (63,496)
Transfers to capitalised leases 211 - - - 211
Exchange differences 35 12 91 - 138
Impairment loss (16,335) (1,237) (2,362) (5,334) (25,268)
Reversal of impairment losses 6,612 584 386 - 7,582
Transfer to held for sale 4,847 - - - 4,847
Disposals 13,379 7,202 4,171 3,993 28,745
Reclassifications (5,725) 5,725 - - -
At 28 July 2024 (441,927) (166,474) (653,993) (1,942) (1,264,336)
Net book amount at 28 July 2024 1,065,777 92,086 161,141 55,613 1,374,617
Net book amount at 30 July 2023 1,068,946 102,008 142,573 64,289 1,377,816
Net book amount at 31 July 2022 1,102,801 108,814 142,011 73,236 1,426,862
During the period, an amount of £76,389,000 (2023: £41,646,000) was spent on
the reinvestment of existing pubs. £21,944,000 (2023: £11,202,000) was spent
on freehold reversions. £11,933,000 (2023: £20,361,000) was spent on
investment in new pubs and pub extensions. This led to a total capital
expenditure of £110,266,000 (2023: £73,209,000).
Reclassifications relate to assets transferred from short leasehold property
to freehold and long leasehold property on a freehold reversion.
14. Investment property
The company owns six (2023: six) freehold properties with existing tenants -
and these assets have been classified
as investment properties:
Total
£000
Cost:
At 31 July 2022 24,535
Additions 9
At 30 July 2023 24,544
At 28 July 2024 24,544
Accumulated depreciation
At 31 July 2022 (1,171)
Provided during the period (185)
Impairment loss (4,448)
At 30 July 2023 (5,804)
Provided during the period (176)
Impairment loss (347)
Reversal of impairment loss 73
At 28 July 2024 (6,254)
Net book amount at 28 July 2024 18,290
Net book amount at 30 July 2023 18,740
Net book amount at 31 July 2022 23,364
Rental income received from investment properties in the period was
£1,205,000 (2023: £1,197,000).
At the year end, the investment properties were independently valued at
£18,290,000 giving rise to an impairment charge of £347,000 (2023:
£4,448,000) and an impairment reversal of £73,000, to adjust their net book
values
15. Events after the balance sheet date
There were no significant events after the balance sheet date.
16. Going Concern
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.
In line with accounting standards, the going concern assessment period is the
12-months from the date of approval of this report (approximately the end of
quarter 1 of FY26).
The Company has modelled a 'base case' forecast in which recent momentum of
sales, profit and cash flow growth is sustained. Within this forecast, the
Company has anticipated continued high levels of inflation, particularly on
wages, utility costs and repairs. The base case scenario indicates that the
Company will have sufficient resources to continue to settle its liabilities
as they fall due and operate within its leverage covenants for the going
concern assessment period.
A more cautious, yet plausible, scenario has been analysed, in which lower
sales growth is realised. The Company has reviewed, and is satisfied with, the
mitigating actions which it could take if such an outcome were to occur. Such
actions could include reducing discretionary expenditure and/or implementing
price increases. Under this scenario, the Company would still have sufficient
resources to settle liabilities as they fall due and sensible headroom within
its covenants through the duration of the going concern review period.
The Company has also performed a 'reverse stress case' which shows that it
could withstand a 13% reduction in like-for-like sales from those assessed in
the 'base case' throughout the going concern period, as well as costs assumed
to increase at a similar level to the downside scenario, before the covenant
levels would be exceeded towards the end of the period. The directors consider
this scenario to be remote as, other than when the business was closed during
the pandemic, it has never seen sales decline at anywhere close to that rate.
Furthermore, the Company could take additional mitigating actions, in such a
scenario, to prevent any covenant breach.
After due consideration of the matters set out above, 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.
17. Prior year restatements
During the year, it was identified and agreed that two previous year
restatements should be recognised for the period ended 31 July 2022. The
restatements are disclosed and described below:
Restatement of IFRS 16 right-of-use asset
Due to errors identified in the lease database, in the period ended 28 July
2024 the company migrated to a new lease accounting system to manage the
estate. As a result, the right-of-use asset and reserves balance as at 31 July
2022 has been restated by £8 million. The position as at 30 July 2023 has
also been restated.
Restatement of deferred tax asset
During the period, it was identified that there was certainty of recovery of
historical capital losses against rolled over gains relating to the year ended
31 July 2022 and therefore, a deferred tax asset should have been recognised
at this point totalling £5.6 million. As a result, the position as at 30 July
2023 has also been restated.
The disclosures impacted as a result of the above two misstatements have been
identified throughout the financial statements. The effect on specific
financial statement line items within the Statement of changes in equity and
Balance Sheet are as follows:
SOCIE Reported in 52 weeks ended Restated 52 weeks ended 31 July 2022
31 July 2022 £000
£000 Restatement
£000
Retained earnings (74,373) 13,600 (60,773)
Total shareholders equity 321,885 13,600 335,485
Balance Sheet
Right-of-use assets 419,416 8,000 427,416
Deferred tax liability 34,718 5,600 40,318
Retained earnings (74,373) 13,600 (60,773)
Reported in 52 Restated 52 weeks ended 30 July 2023
weeks ended £000
30 July 2023 Restatement
£000 £000
SOCIE
Retained earnings (17,132) 13,600 (3,532)
Total shareholders equity 399,458 13,600 413,058
Balance Sheet
Right-of-use assets 387,353 8,000 395,353
Deferred tax liability (65,752) 5,600 (60,152)
Retained earnings (17,132) 13,600 (3,532)
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