Interim Results
Wetherspoon (JD) PLC
9 March 2001
J D WETHERSPOON PLC
J D Wetherspoon plc announces interim results
for the six months to 28 January 2001.
Highlights
Turnover up 30% to £226.7m
Profit before tax up 31% to £20.5m
Earnings per share up 23% to 9.2p
Interim dividend per share up 10% to 1.0p
42 pubs opened, total now 470
Commenting on the results, Tim Martin, the Chairman of J D
Wetherspoon plc, said:
'I am pleased to report further good progress during the half
year with sales up 30% and profit before tax up 31% to £20.5
million. We opened 42 pubs during the period bringing the total
number to 470. The new pubs included our first two in Northern
Ireland, in Ballymena and Belfast, which have traded extremely
well. Other new openings are in a variety of towns and cities
across England, Scotland and Wales and the initial levels of
sales have been very encouraging. As a result of our good
performance in the six month period, our continuing sales growth,
and the dedicated efforts of our staff, I remain confident of our
future prospects'.
Enquiries:
Tim Martin Chairman 01923 477777
John Hutson Managing Director 01923 477777
Jim Clarke Finance Director 01923 477777
Eddie Gershon Press Office 0956 392234
Photographs are available at www.newscast.co.uk.
Chairman's statement
I am pleased to report further good progress during the half
year. Sales increased by 30% to £226.7 million. Operating
profit excluding sale & leaseback rentals increased by 24% to
£30.9 million and profit before tax by 31% to £20.5 million.
Earnings per share rose by 23% to 9.2p.
Capital investment was £73.9 million and net gearing at the
period end was 68% (2000: 77%). Interest was covered 4.1 times
(2000: 3.8 times) by operating profits. Operating margins before
depreciation, sale & leaseback rentals, interest and tax were
19.8% compared to 19.7% last year.
Free cashflow, after capital investment of £9.3 million in
existing pubs and payments of tax, interest and dividends,
increased by 26% to £28.0 million resulting in cashflow per share
of 13.3p before investment in new pubs.
Economic profit, calculated by adding depreciation to profit
before tax and subtracting capital expenditure on existing pubs,
increased by 36% to £25.0 million.
Dividends
The Board has declared an interim dividend of 1.0p per ordinary
share, a 10% increase on last year. A scrip alternative will
again be offered to shareholders.
Further Progress
We opened 42 pubs during the period bringing the total number to
470. The new pubs included our first two in Northern Ireland, in
Ballymena and Belfast, which have traded extremely well. Other
new openings are in a variety of towns and cities across England,
Scotland and Wales and the initial levels of sales have been very
encouraging.
Our existing pubs performed well with like-for-like sales
increasing by 6.5% and like-for-like profit rising by 8.4%, on
top of high growth in the comparable period last year.
During the period we continued to make progress on a number of
fronts. We increased our investment in all areas of training,
winning just after the period end the National Innkeeping Supreme
Award for the Best Overall Training Programme for Managed Estates
and The Best Course Designed to Develop Food and Catering Skills.
We issued share options to 2993 people and paid out bonuses
totalling £4.9 million to people working in our pubs.
We have also continued to try to improve the quality of
traditional ales, an area often neglected by our main
competitors, with 404 pubs awarded Cask Marque accreditation, a
higher estate percentage, we believe, than any other pub company.
Head office staff and mystery visitors continue to visit each pub
to monitor standards six times per month, with bonuses paid
according to the level of standards on these visits. In
addition, each pub has a quarterly food inspection from Egon
Ronay and his associates, and each pub receives a quarterly
environmental, health and safety check from our own consultants.
We believe this helps us to achieve the highest average pub
standards in the industry.
The group of 10 Lloyds pubs acquired at the end of the last
financial year continue to show encouraging growth, with average
gross weekly sales having now reached £18,300 compared to around
£10,600 in the initial period of ownership.
During the period under review, as well as the training awards
mentioned above, the Company was recognised in a number of areas
including the following: Retailers Retailer Best Company 2000;
Publican magazine Pub Company of the Year 2000; Management Today
magazine Most Admired Drinks Company 2000; British Toilet Award
2000 and the Ease Award for disabled people.
People
Our continuing success depends entirely on the efforts of our
people and I would like to thank them once again for an excellent
effort in the last six months.
Prospects
Like-for-like sales in February 2001 increased by 3.1% following
an increase of 14% in February 2000. In January we introduced a
number of food and beverage offers in order to develop new
avenues for future growth. These have been extremely successful
in building sales volumes at some expense in respect of gross
margins and labour costs.
We have opened 7 new pubs since the period end and the Company
currently has licensing permission for a further 80 new pubs, 41
of which are in the course of construction. We have also agreed
terms in principle for the acquisition of a further 79 sites.
As a result of our good performance in the six month period, our
continuing sales growth, and the dedicated efforts of our staff,
I remain confident of our future prospects.
Tim Martin
Chairman
9 March 2001
Profit and loss account
for the six months ended 28 January 2001
Unaudited Unaudited Audited
half year half year full year
2001 2000 2000
£000 £000 £000
Turnover 226,694 174,666 369,628
======= ======= =======
Operating profit (2) 27,090 21,090 46,278
Net interest payable (6,622) (5,505) (10,226)
------- ------- -------
Profit on ordinary 20,468 15,585 36,052
activities before taxation
Tax on profit on ordinary (1,228) (779) (1,785)
activities (3)
------- ------- -------
Profit on ordinary 19,240 14,806 34,267
activities after taxation
Dividends (10) (2,108) (1,904) (5,599)
------- ------- -------
Retained profit for the 17,132 12,902 28,668
period
======= ======= =======
Earnings per ordinary share 9.2p 7.5p 16.8p
(4)
Fully diluted earnings per 9.0p 7.3p 16.4p
ordinary share (4)
Dividend per share (10) 1.00p 0.91p 2.67p
All activities relate to continuing operations.
There were no gains or losses recognised in any of the above
periods other than the profit for the period.
Cash flow statement
for the six months ended 28 January 2001
Un- Un- Un- Un- Audited Audited
audited audited audited audited Full Full
half half half half Year Year
year year year year
2001 2001 2000 2000 2000 2000
£000 £000 £000 £000 £000 £000
Net cash
inflow from
operating 47,069 47,069 37,701 37,701 76,165 76,165
activities
(5)
------ ------ ------
Returns on
investments
and
servicing
of finance
Interest
received 849 849 763 763 2,412 2,412
Interest
paid - (7,403) (7,403) (7,038) (7,038) (13,710) (13,710)
existing
pubs
Interest
paid and
capitalised (1,545) (1,668) (3,921)
into new
pubs
Purchase of
current
asset (241) - -
investments
------- ------- --------
Net cash
outflow (8,340) (7,943) (15,219)
from
returns on
investment
and
servicing
of finance
------- ------- -------
Taxation
Corporation
tax paid (205) (205) (399) (399) (1,100) (1,100)
------- ------- -------
Capital
expenditure
Purchase of
tangible
fixed
assets for (9,335) (9,335) (6,589) (6,589) (14,471) (14,471)
existing
pubs
Proceeds of
sale of
tangible - 4,395 4,277
fixed
assets
Investment
in new pubs
and pub (63,366) (70,890) (136,612)
extensions
-------- -------- ---------
Net cash
outflow (72,701) (73,084) (146,806)
from
capital
expenditure
-------- -------- ---------
Equity
dividends (2,990) (2,990) (2,190) (2,190) (3,785) (3,785)
paid
-------- -------- --------
Net cash
outflow (37,167) (45,915) (90,745)
before
financing
-------- -------- --------
Financing
Issue of
ordinary 1,148 1,567 46,566
shares
Advances
under bank 2,591 212,218 124,353
loans
Advances
under US - - 86,815
senior
notes
Repayments
of secured
bank loans - (187,882) (187,882)
-------- --------- --------
Net cash
inflow from 3,739 25,903 69,852
financing
-------- --------- --------
Decrease in
cash (6) (33,428) (20,012) (20,893)
======== ========= ========
------ ------ ------
Free cash
flow (4) 27,985 22,248 45,511
====== ====== ======
Cash flow
per
ordinary 13.3p 11.2p 22.3p
share (4)
Summarised balance sheet
as at 28 January 2001
Unaudited Unaudited Audited
Half year Half year Full Year
2001 2000 2000
£000 £000 £000
Fixed assets
Tangible assets (8) 565,036 439,691 504,996
------- ------- -------
Current assets
Investments 241 167 100
Stocks 6,001 4,003 4,686
Debtors due within one year 7,927 9,788 7,378
Debtors due after more than one 5,588 5,588 5,588
year
Cash 8,257 42,566 41,685
------ ------ ------
28,014 62,112 59,437
Creditors due within one year (75,349) (65,157) (67,936)
-------- -------- --------
Net current liabilities (47,335) (3,045) (8,499)
-------- -------- --------
Total assets less current 517,701 436,646 496,497
liabilities
Creditors due after one year (216,197) (215,199) (213,979)
--------- --------- ---------
Total net assets 301,504 221,447 282,518
========= ========= =========
Capital and reserves
Called up share capital 4,214 3,990 4,198
Share premium account 114,919 67,984 113,081
Revaluation reserve 24,158 25,166 24,494
Profit and loss account 158,213 124,307 140,745
------- ------- -------
Equity shareholders' funds (9) 301,504 221,447 282,518
======= ======= =======
Notes
1 Basis of preparation
The interim report for the six months ended 28 January 2001 is
unaudited and does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985. It has been
prepared under the historical cost convention modified by the
revaluation of freehold and leasehold properties, and on a basis
consistent with the accounting policies for the year ended 30
July 2000. The results for the year ended 30 July 2000 and the
balance sheet at that date are an extract from the statutory
accounts for that year, which have been filed with the Registrar
of Companies and on which the Company's auditors gave an
unqualified report under Section 235 of the Companies Act 1985,
which did not contain a statement under Section 237(2) or (3) of
that Act. The results for the six months ended 30 January 2000
and the balance sheet at that date are an extract from the
unaudited interim report for that period.
2 Operating profit
Unaudited Unaudited Audited
half year half year Full year
2001 2000 2000
£000 £000 £000
Turnover 226,694 174,666 369,628
Cost of sales (188,515) (144,429) (304,344)
--------- --------- ---------
Gross profit 38,179 30,237 65,284
Administrative expenses (11,089) (9,147) (19,006)
--------- --------- ---------
Operating profit 27,090 21,090 46,278
========= ========= =========
Cost of sales includes distribution costs and all pub operating
costs.
3 Taxation
The charge to corporation tax on the trading profit of the
period, net of ACT offset, was £1.228 million, and does not bear
a normal relationship to profit before tax because of the
availability of tax allowances relating to capital expenditure in
the current and past periods.
4 Earnings and cash flow per share
The calculation of basic earnings per share is based on profit on
ordinary activities after taxation for the period of £19,240,000
(2000: £14,806,000) and on Ordinary shares 210,172,175 (2000:
198,545,089), being the weighted average number of Ordinary
shares in issue and ranking for dividend during the period.
Fully diluted earnings per share has been calculated in
accordance with FRS14 and is after allowing for the dilutive
effect of the conversion into ordinary shares of the weighted
average number of options outstanding during the period. The
number of shares used for the fully diluted calculation is
213,055,507 (2000: 203,063,102)
The calculation of 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 the trading area of
existing pubs, after funding interest on existing pubs, tax and
dividend payments and all other reinvestment in pubs open at the
start of the period ('free cash flow'). It is calculated before
taking into account inflows and outflows of financing from
outside sources, and is based on the same number of shares in
issue as for the calculation of basic earnings per share.
5 Net cash inflow from operating activities
Unaudited Unaudited Audited
half year half year full year
2001 2000 2000
£000 £000 £000
Operating profit 27,091 21,090 46,278
Depreciation of tangible fixed 13,883 9,420 20,946
assets
Change in stocks (1,315) (158) (841)
Change in debtors (533) (2,100) 779
Change in creditors 7,943 9,449 9,003
------- ------- ------
47,069 37,701 76,165
======= ======= ======
6 Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
half year half year full year
2001 2000 2000
£000 £000 £000
Decrease in cash in the (33,428) (20,012) (20,893)
year
Cash inflow from increase (2,591) (24,336) (23,286)
in debt financing
-------- -------- --------
Movement in net debt (36,019) (44,348) (44,179)
during the period
Net debt at beginning of (169,483) (125,304) (125,304)
period
--------- --------- ---------
Net debt at end of period (205,502) (169,652) (169,483)
========= ========= =========
7 Analysis of net debt
Audited Unaudited
full year Cash half year
2000 flow 2001
£000 £000 £000
Cash at bank and in hand 41,685 (33,428) 8,257
Debt due within one year - (2,500) (2,500)
Debt due after one year (211,168) (91) (211,259)
--------- -------- ---------
Net debt (169,483) (36,019) (205,502)
========= ======== =========
8 Tangible fixed assets
Unaudited Unaudited Audited
half year half year full year
2001 2000 2000
£000 £000 £000
Opening net book value 504,996 370,148 370,148
Additions 73,923 78,963 155,794
Depreciation (13,883) (9,420) (20,946)
-------- ------- --------
Closing net book value 565,036 439,691 504,996
======== ======= ========
9 Capital, reserves and shareholders' funds
Called Share Re- Profit Un- Audited
Up Premium valuation and audited Full
Share Account reserve loss half Year
capital account year 2000
2001 share-
share- holders'
holders' funds
funds
£000 £000 £000 £000 £000 £000
At start of 4,198 113,081 24,494 140,745 282,518 205,996
period
Allotments 16 1,838 1,854 47,854
Transfer (336) 336 -
Profit for 19,240 19,240 34,267
the period
Dividends (2,108) (2,108) (5,599)
----- ------- ------ ------- ------- -------
At end of 4,214 114,919 24,158 158,213 301,504 282,518
period
===== ======= ====== ======= ======= =======
10 Dividend
On 17 May 2001 the company will pay an interim dividend of 1.00
pence per share, for the half year ending 28 January 2001 to
shareholders on the register at the close of business on 30 March
2001.
As in previous years, a scrip alternative will be offered. Many
shareholders already participate in the scrip dividend scheme and
wish to receive shares in lieu of cash, while others have
previously received cash dividends and may wish to continue doing
so. In either case shareholders need take no further action.
If any shareholder wishes to alter the form in which they receive
their dividends, they should advise the company's registrars,
Computershare Services plc, PO Box 82, The Pavilions, Bridgewater
Road, Bristol, BS99 7NH in writing no later than 26 April 2001.
Independent Review Report to J D Wetherspoon Plc
Introduction
We have been instructed by the company to review the financial
information set out on pages 4 to 9 and we have read the other
information contained in the interim report for any apparent
misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained
therein, is the responsibility of, and has been approved by the
directors. The Listing Rules of the London Stock Exchange require
that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in
preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in
Bulletin 1999/4 issued by the Auditing Practices Board. A review
consists principally of making enquiries of management and
applying analytical procedures to the financial information and
underlying financial data, and based thereon, assessing whether
the accounting policies and presentation have been consistently
applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope
than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material
modifications that should be made to the financial information as
presented for the six months ended 28 January 2001.
PricewaterhouseCoopers
Chartered Accountants
London
9 March 2001