Interim Results
Wetherspoon (JD) PLC
02 March 2006
J D WETHERSPOON PLC
PRESS RELEASE
J D Wetherspoon plc announces interim results for the six months to 22 January
2006.
Highlights
Turnover up 1% to £406.3m
Operating profit up 15% to £39.7m*
Profit before tax up 21% to £27.4m*
Earnings per share up 31% to 10.6p*
Earnings per share (after exceptional items in the prior year) up 121% to 10.6p
Free cash flow per share 17.6p (prior year 17.4p)
Interim dividend per share up 10% to 1.6p
*Before exceptional items in the prior year.
Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc,
said:
'The half year to 22 January 2006 was a period of good progress for the Company.
Earnings per share increased by 31% (excluding exceptional items in the prior
year) to 10.6p (2005: 8.1p).
It is clear from our experience and from the evidence of other areas, such as
Ireland, California and New York, that the initial effect of a smoking ban can
result in sales and margin declines. However, we believe that sales and margins
can recover over time, once customers adjust to the non-smoking environment.
In the light of our strong earnings and cash flow, combined with our continued
concentration on making many small improvements to the business, I remain
confident of the Company's longer-term future prospects.'
Enquiries:
John Hutson Chief Executive Officer 01923 477777
Jim Clarke Finance Director 01923 477777
Eddie Gershon Company spokesman 07956 392234
Photographs are available at: www.newscast.co.uk 3 March 2006
Chairman's Statement
The half year to 22 January 2006 was a period of good progress for the Company.
Sales increased by 1% to £406.3 million (2005: £403.3 million). Operating
profit increased by 15% (excluding exceptional items in the prior year) to £39.7
million (2005: £34.6 million) and profit before tax by 21% (excluding
exceptional items in the prior year) to £27.4 million (2005: £22.6 million).
Earnings per share increased by 31% (excluding exceptional items in the prior
year) to 10.6p (2005: 8.1p), a faster rate than profit due to our share buyback
programme.
Like-for-like sales decreased by 0.3% in the period and sales at new pubs were
in line with expectations. The operating margin before interest and tax
increased to 9.8% (2005: 8.6%), due to lower head office costs and improved pub
profits. Net interest was covered 3.2 times (2005: 2.9 times) by operating
profit. Total capital investment was £15.9 million and net gearing at the
period end was 149% (2005: 120%).
Free cash flow (after capital investment of £6.7 million in existing pubs, £1.8
million in respect of share purchases under the Company's Share Incentive Plan
and payments of tax and interest) declined to £30 million (2005: £32.9 million).
This was due to higher operating profits offset by a reduction in the benefit
from trade creditors, following the slow down in our opening programme, and an
increase in the bank interest outflow, due to timing differences relating to our
new banking facilities. This resulted in free cash flow per share of 17.6p
(2005: 17.4p) before investment in new pubs, proceeds from pub disposals and
dividend payments. In the period under review, all our new pub capital
expenditure was financed from free cash flow. In addition we purchased 7.8
million of our own shares for cancellation at a cost of £24.0 million.
Dividend
The Board has declared an interim dividend of 1.60p per ordinary share (2005:
1.46p), a 10% increase on last year, payable on 26 May 2006 to shareholders on
the register at 28 April 2006.
Property
The first half saw the opening of 5 new pubs with a full year target of
approximately 13. We also completed the disposal of 6 pubs, which had previously
been identified for sale, to end the half year with 654 pubs.
Financing
As at 22 January 2006, the Company's total net borrowings were £339.9 million
(24 July 2005: £334.1 million). Total facilities at 22 January 2006 were £472
million, with a new 5 year loan facility finalised on competitive terms.
Non-Smoking
We now operate 49 non-smoking pubs; 37 were existing pubs which reopened as
non-smoking pubs between March and October 2005. 12 are new pubs which opened
for the first time in the last year. Like-for-like sales in the converted pubs
have continued the sales trend disclosed previously, declining by 7.6% in the
quarter ended 22 January 2006. As stated previously, the increase in the
percentage of food sales, combined with the decline in bar and fruit machine
sales in non-smoking pubs, has resulted in a considerable drop in their
operating margin. This amounted to a reduction of 4% in the last quarter.
We announced in March 2005 plans to convert approximately 10% of our pubs to
non-smoking, followed by the rest of the estate in May 2006. Given the
government's decision to bring forward a complete national smoking ban by 18
months to the middle of 2007, and the initial financial performance described
above, we have decided to await the complete ban imposed by the government in
2007. In the meantime, new pub openings will continue to be non-smoking and we
will complete the small number of conversions already in the pipeline. In
addition, the ban on smoking in Scotland, due to take place on the 26th of this
month, will result in a further 36 pubs becoming non-smoking.
It is clear from our experience and from the evidence of other areas, such as
Ireland, California and New York, that the initial effect of a smoking ban can
result in sales and margin declines. However, we believe that sales and margins
can recover over time, once customers adjust to the non-smoking environment.
New Licensing Legislation
The Company has successfully adjusted to the major challenge of a new licensing
system and longer opening hours. The new licensing legislation has resulted in
longer opening hours for our pubs, which now open from 9am for food and coffee
as well as alcoholic drinks, and close around midnight, or slightly later in
some pubs at the weekends. There was considerable anxiety that this extension of
hours would result in an increase in binge drinking. However, the majority of
police forces and local authorities have reported an improvement in the
underlying situation, as people drink more slowly with a flexible terminal hour,
and pubs and clubs close at different times. Sales figures from our own and
other licensed trade companies have not indicated, on average, an increase in
consumption, in keeping with the pattern experienced by the licensing
authorities.
Current trading and prospects
Like-for-like sales in February 2006 increased by 1.9%, in comparison with a
decline of the same amount in February 2005. Profits and cash flows continue to
be enhanced by the cost reductions outlined in our results announcement of 4
March 2005. The imminent Scottish smoking ban, combined with the potential
impact of the football World Cup in June and July 2006, leads us, as previously
indicated, to take a cautious view of the possible outcome for the second half
of the current financial year.
The level of capital investment in existing pubs, excluding new pubs, has been
about 2% of sales in recent years, below the historical average. We intend to
increase this level of investment to approximately 4% as we increase expenditure
on refurbishments, gardens, kitchen equipment and IT systems. Our aim is to
ensure we are in the best position to deal with the challenges facing the pub
industry over the next few years.
The main issue for the future relates to the smoking bans in Britain and
Northern Ireland. However, in the light of our strong earnings and cash flow,
combined with our continued concentration on making many small improvements to
the business, I remain confident of the Company's longer-term future prospects.
Tim Martin
Chairman
3 March 2006
Income statement for the 26 weeks ended 22 January 2006
Notes Unaudited Unaudited Unaudited Unaudited Unaudited
26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended
22 January 23 January 23 January 24 July 24 July
2006 2005 2005 2005 2005
£000 £000 £000 £000 £000
Before After Before After
exceptional exceptional exceptional exceptional
items items items items
Revenue 406,326 403,341 403,341 809,861 809,861
Operating costs 2 (366,634) (368,695) (368,695) (738,355) (738,355)
Operating profit before 39,692 34,646 34,646 71,506 71,506
exceptional items
Exceptional items 3 - - (8,047) - (7,380)
Operating profit 39,692 34,646 26,599 71,506 64,126
Net interest payable (12,339) (12,021) (12,021) (24,329) (24,329)
Profit on ordinary activities 27,353 22,625 14,578 47,177 39,797
before taxation
Tax on profit on ordinary 4 (9,281) (7,263) (5,566) (14,926) (14,155)
activities
Attributable to equity 18,072 15,362 9,012 32,251 25,642
shareholders
Earnings per ordinary share 5 10.6p 8.1p 4.8p 17.4p 13.8p
Diluted earnings per ordinary 5 10.6p 8.1p 4.8p 17.4p 13.8p
share
All activities relate to continuing operations.
Statement of recognised income and expense
Notes Unaudited Unaudited Unaudited
26 weeks ended 26 weeks ended 52 weeks ended
22 January 23 January 24 July
2006 2005 2005
£000 £000 £000
Cash flow hedges: losses taken to equity (1,068) - -
Tax on items taken directly to equity 320 - -
Net expense recognised directly in equity (748) - -
Profit for the period 18,072 9,012 25,642
Total recognised income for the period 10 17,324 9,012 25,642
Cash flow statement for the 26 weeks ended 22 January 2006
Notes Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended 22 ended 22 ended 23 ended 23 ended ended
January January January January 24 July 24 July
2006 2006 2005 2005 2005 2005
£000 £000 £000 £000 £000 £000
Cash flows from operating
activities
Cash generated from operations 6 60,826 60,826 62,002 62,002 123,460 123,460
Interest received 125 125 3,571 16 3,598 43
Interest paid (15,625) (15,625) (12,590) (12,590) (24,108) (24,108)
Refinancing costs paid (1,367) - -
Corporation tax paid (6,850) (6,850) (6,363) (6,363) (12,632) (12,632)
Purchase of own shares for Share (1,765) (1,765) (1,989) (1,989) (3,816) (3,816)
Incentive Plan
Net cash inflow from operating 35,344 36,711 44,631 41,076 86,502 82,947
activities
Cash flows from investing
activities
Purchase of tangible fixed assets (6,695) (6,695) (8,180) (8,180) (14,173) (14,173)
for existing pubs
Proceeds of sale of tangible fixed 2,448 6,546 8,547
assets
Investment in new pubs and pub (9,242) (18,616) (24,495)
extensions
Net cash out flow from investing (13,489) (6,695) (20,250) (8,180) (30,121) (14,173)
activities
Cash flows from financing activities
Equity dividends paid 7 (4,749) (4,839) (7,520)
Issue of ordinary shares 1,082 86 271
Purchase of own shares (24,042) (9,416) (45,718)
Advances/(repayments) under bank 6,786 (2,500) (25,000)
loans
Advances under US senior notes - - 29,999
Net cash outflow from financing (20,923) (16,669) (47,968)
activities
Net increase in cash and cash 8 932 7,712 8,413
equivalents
Opening cash and cash equivalents 18,073 9,660 9,660
Closing cash and cash equivalents 19,005 17,372 18,073
Free cash flow 5 30,016 32,896 68,774
Free cash flow per ordinary share 5 17.6p 17.4p 37.1p
Balance sheet as at 22 January 2006
Notes Unaudited 22 Unaudited 23 Unaudited
January January 2005 24 July
2006 £000 2005
£000 £000
Assets
Non-current assets
Intangible assets 2,929 4,008 3,042
Property, plant and equipment 747,535 764,811 756,761
Other non-current assets 9,352 5,060 5,397
759,816 773,879 765,200
Current Assets
Inventories 13,639 12,684 12,777
Assets available for sale - 4,554 1,691
Trade and other receivables 16,158 11,562 12,195
Cash and cash equivalents 9 19,005 17,372 18,073
48,802 46,172 44,736
Liabilities
Current Liabilities
Trade and other payables (77,961) (81,531) (80,578)
Borrowings 9 - (25,000) (25,000)
Current income tax liabilities (9,079) (6,742) (7,556)
Accruals and other liabilities (32,145) (26,453) (32,580)
(119,185) (139,726) (145,714)
Non-current Liabilities
Borrowings 9 (359,004) (319,718) (327,218)
Derivative financial instruments (11,464) - -
Deferred tax liabilities (84,120) (82,210) (83,211)
Provisions and other liabilities (6,718) (6,350) (7,048)
(461,306) (408,278) (417,477)
Net Assets 228,127 272,047 246,745
Shareholders Equity
Ordinary shares 3,312 3,748 3,458
Share premium account 129,679 128,425 128,607
Capital redemption reserve 1,030 581 874
Retained earnings 94,106 139,293 113,806
Total shareholders' equity 10 228,127 272,047 246,745
Notes
1 Interim statement
The interim statement does not constitute full accounts as defined by S.240 of
the Companies Act 1985. The figures for the year ended 24 July 2005 have been
derived from the UK GAAP statutory accounts, which have been filed with the
Registrar of Companies and on which the auditors gave an unqualified report.
Change in accounting policies
In accordance with the directive of the Council of the European Union, JD
Wetherspoon plc ('the Company') has adopted International Financial Reporting
Standards ('IFRS') with effect from 25 July 2005, having previously applied UK
accounting standards. These interim statements are the first that the Company
has prepared under IFRS and they have been prepared in accordance with the IFRS
accounting policies that management expects to apply in the 2006 IFRS -
compliant full year financial statements. These accounting policies are
consistent with those adopted for the restatement of the 2005 financial
information. Both the restatement and a summary of significant accounting
policies are available on the Company's website, www.jdwetherspoon.co.uk/
investors, and are also available on request from the Company Secretary on 01923
477777.
The results of prior periods have been restated under the new accounting
policies so that proper comparison can be made with the results for the current
period. For the year ended 24 July 2005 profit after tax and exceptional items
has increased by £1,122,000 and net assets have reduced by £13,139,000. This
represents an increase in profits of 2.4% and a reduction in net assets of 5.0%.
The corresponding figures for the half year to 23 January 2005 are £281,000 and
£16,716,000. Note 11 provides further detail.
As permitted, this interim report has been prepared in accordance with UK
listing rules and not in accordance with IAS34 'Interim Financial Reporting' and
is therefore not fully compliant with IFRS.
The Company has taken the option to only apply IAS 32 'Financial Instruments:
Disclosure & Presentation' and IAS 39 'Financial Instruments: Recognition &
Measurement' prospectively, with effect from 25 July 2005. The comparative
periods have therefore not been restated for IAS 32 or 39. The effect of IAS 39
is to reduce equity by £10,397,000 as at 25 July 2005 by recognising gains and
losses on interest rate and currency swaps. IAS 39 has had no effect on amounts
recognised in the income statement or balance sheet. Neither IAS 32 nor IAS 39
have had any effect on basic or diluted earnings per share. Note 10 provides
further detail.
IFRS currently in issue are subject to ongoing review and endorsement by the
European Commission as well as possible amendment by the IASB, and therefore are
subject to possible change. Further standards or interpretations may also be
issued that could be applicable for the full year consolidated financial
statements. These potential changes could result in change to the basis of
accounting or presentation of certain financial information from that presented
in this document.
2 Operating costs
Unaudited Unaudited Unaudited
26 weeks ended 26 weeks ended 52 weeks ended
22 January 23 January 24 July
2006 2005 2005
£000 £000 £000
Cost of sales (350,142) (351,382) (705,942)
Administration costs
Head office costs (15,681) (16,908) (31,428)
Employee Share Incentive Plan charge (811) (405) (985)
(366,634) (368,695) (738,355)
3 Exceptional items
Unaudited Unaudited Unaudited
26 weeks ended 26 weeks ended 52 weeks ended
22 January 23 January 24 July
2006 2005 2005
£000 £000 £000
Distribution start up costs - 2,229 2,984
Restructuring costs - - 859
Impairment of fixed assets - - 1,068
Net loss on disposal and anticipated disposal of - 5,818 2,306
trading properties
Net loss on disposal and anticipated disposal of - - 163
non trading properties
- 8,047 7,380
4 Taxation
The taxation charge for the six months ended 22 January 2006 is calculated by
applying an estimate of the effective tax rate for the year ending 30 July 2006.
The UK standard rate of corporation tax is 30% (2005: 30%), and the latest
estimate of the current tax payable on profits before exceptional items for the
financial year ending 30 July 2006 is 31% (2005: 30%).
Unaudited Unaudited Unaudited Unaudited Unaudited
26 weeks 26 weeks 26 weeks 52 weeks 52 weeks
ended ended ended ended ended
22 January 23 January 23 January 24 July 24 July
2006 2005 2005 2005 2005
£000 £000 £000 £000 £000
Before After Before After
exceptional exceptional exceptional exceptional
items items items items
Current tax 8,373 6,705 6,036 14,270 14,270
Deferred tax 908 558 (470) 656 (115)
Tax on profit on ordinary 9,281 7,263 5,566 14,926 14,155
activities
5 Earnings and cash flow per share
The calculation of basic earnings per share is based on profits on ordinary
activities after taxation of £18,072,000 (January 2005: £9,012,000; July 2005:
£25,642,000) and on 170,220,787 (January 2005: 188,616,286; July 2005:
185,524,467) ordinary shares, being the weighted average number of ordinary
shares in issue and ranking for dividend during the period.
Earnings per share before exceptional items is calculated as follows:
Unaudited Unaudited Unaudited Earnings Earnings Earnings
Earnings Earnings Earnings per share per share per share
for 26 for 26 for 52 for 26 For 26 for 26
weeks weeks weeks weeks weeks weeks
ended 22 ended 23 ended 24 ended 22 ended 32 ended 24
January January July January January July
2006 2005 2005 2006 2005 2005
£000 £000 £000 pence pence pence
Earnings and basic earnings per 18,072 9,012 25,642 10.6 4.8 13.8
share
Exceptional costs, net of tax - 6,350 6,609 - 3.3 3.6
Earnings and earnings per share 18,072 15,362 32,251 10.6 8.1 17.4
before exceptional items
Diluted earnings per share have been calculated using the weighted average
number of shares in issue diluted for the effect of share options, where the
option price has a diluting effect. The number of shares used for the fully
diluted calculation is 170,537,340 (January 2005: 188,845,052; July 2005:
185,760,654).
The calculation of free cash flow per share is based on the net cash generated
by business activities and available for investment in new pub developments and
extensions to existing pubs, after funding interest, tax, all other reinvestment
in pubs open at the start of the period and the purchase of own shares under the
employee Share Incentive Plan ('free cash flow'). It is calculated before taking
account of proceeds from property disposals and inflows and outflows of
financing from outside sources, dividend payments and is based on the same
number of shares in issue as that for the calculation of basic earnings per
share.
6 Cash generated from operations
Unaudited Unaudited Unaudited
26 weeks 26 weeks 52 weeks
ended ended ended
22 January 23 January 24 July
2006 2005 2005
£000 £000 £000
Profit attributable to equity shareholders 18,072 9,012 25,642
Adjusted for:
Tax 9,281 5,566 14,155
Depreciation of tangible fixed assets 21,136 22,072 47,256
Distribution start up costs - 2,229 2,984
Restructuring costs - - 859
Impairment of fixed assets - - 1,068
Net loss on disposal and anticipated disposal of trading - 5,818 2,306
properties
Net loss on disposal and anticipated disposal of non-trading - - 163
properties
Share Incentive Plan 811 405 985
Interest income (28) (210) (232)
Interest expense 12,367 12,231 24,561
61,639 57,123 119,747
Change in inventories (862) (675) (768)
Change in receivables (1,536) 391 (247)
Change in payables 1,585 7,461 8,571
Net cash inflow from operating activities pre exceptional 60,826 64,300 127,303
Outflow related to exceptional items - (2,298) (3,843)
Net cash inflow from operating activities 60,826 62,002 123,460
7 Dividends paid
Unaudited Unaudited Unaudited
26 weeks ended 26 weeks ended 52 weeks ended
22 January 23 January 24 July
2006 2005 2005
£000 £000 £000
Declared and paid in the period
Final dividend for 2004/05 - 2.82p (2003/04 - 2.56p) 4,749 4,839 4,839
Interim dividend for 2004/05 - 1.46p (2003/04 - 1.33p) - - 2,681
4,749 4,839 7,520
On 26 May 2006 the Company will pay an interim dividend of 1.60 pence per share,
for the half year ended 22 January 2006 to shareholders on the register at the
close of business on 28 April 2006.
8 Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Unaudited
26 weeks ended 26 weeks ended 52 weeks ended
22 January 23 January 24 July
2006 2005 2005
£000 £000 £000
Increase in cash in the year 932 7,712 8,413
Cash outflow/(inflow) from movement in debt financing (6,786) 2,500 (4,999)
Movement in net debt during the period (5,854) 10,212 3,414
Opening net debt (334,145) (337,559) (337,559)
Closing net debt (339,999) (327,347) (334,145)
9 Analysis of net debt
Unaudited at Non-cash Unaudited
24 July Cash movement at 22 January
2005 flow 2006 2006
£000 £000 £000 £000
Cash at bank and in hand 18,073 932 - 19,005
Debt due within one year (25,000) - 25,000 -
Debt due after one year (327,218) (6,786) (25,000) (359,004)
Net debt (334,145) (5,854) - (339,999)
10 Movement in equity
Called Unaudited
up Share Capital at 22 January
share premium redemption Retained 2006
capital account reserve earnings Total
£000 £000 £000 £000 £000
At 25 July 2005 3,458 128,607 874 113,806 246,745
Effect of adoption of IAS 32 and IAS 39 - - - (10,397) (10,397)
Tax on items taken directly to equity 3,119 3,119
At 25 July 2005 (restated) 3,458 128,607 874 106,528 239,467
Allotments 10 1,072 - - 1,082
Re-purchase of shares (156) - 156 (24,042) (24,042)
Share Incentive Plan - - - (955) (955)
Profit for the period - - - 18,072 18,072
Cash flow hedges: losses taken to equity - - - (1,068) (1,068)
Tax on items taken directly to equity - - - 320 320
Dividends - - - (4,749) (4,749)
At end of period 3,312 129,679 1,030 94,106 228,127
11 Impact of IFRS on prior reporting period
26 Weeks ended 52 weeks ended
23 January 2005 24 July 2005
Profit before Net assets Profit before Net assets
tax and tax and
exceptional exceptional
items items
£000 £000 £000 £000
As reported under UK GAAP 22,344 288,763 46,055 259,884
Depreciation adjustment re residual values 450 450 901 901
Lease incentives (deferred income) (169) (4,834) 221 (4,755)
Income tax and deferred tax - (15,013) - (14,156)
Dividend declared * - 2,681 - 4,871
281 (16,716) 1,122 (13,139)
As reported under IFRS 22,625 272,047 47,177 246,745
*Dividends amounting to £122,000 in respect of the purchase of the company's own
shares have been deducted in arriving at the aggregate of dividends paid and
proposed as disclosed for the 26 weeks ended 22 January 2006 (see note 10).
Property, plant and equipment
Under IAS 16, residual values are based on prices current at the balance sheet
date, whereas under previous UK GAAP residual values were based on prices at the
date of acquisition or later revaluation.
Changes to residual values are accounted for prospectively but first-time
adopters should adjust residual values of their assets at the date of transition
to IFRS and then use the amended depreciation that this implies from the date of
transition. This adjustment leads to a reduction in depreciation of £450,000 and
£901,000 for the 26 weeks ended 23 January 2005 and for the year ended 24 July
2005 respectively.
Leases
Under UK GAAP, lease incentives on leases where the lessor retains substantially
all the risks and benefits of ownership of the asset, are recognised as a
reduction in rent paid over the period up to the first rent review.
Under IFRS, lease incentives on leases where the lessor retains substantially
all the risks and benefits of ownership of the asset, are recognised as a
reduction in rent paid over the lease term.
The effect of the change is an increase in deferred income of £4,834,000 and
£4,755,000 at 23 January 2005 and 24 July 2005 respectively.
Income Taxes
The Company's IAS 12 amendments affect those deferred tax assets or liabilities
which taken together comprise the net deferred tax liability at the balance
sheet date.
The impact of adopting IFRS is an increase in the deferred tax liability of
£15,013,000 and £14,156,000 at 23 January 2005 and 24 July 2005 respectively.
Adjustments made as a result of implementing IAS 12 are outlined below:
• The Standard requires a deferred tax provision for all capital gains that
have been subject to rollover relief claims. Under UK GAAP, deferred tax was
only provided on assets subject to such claims to the extent that the
liability was expected to crystallise. This resulted in an increase in
deferred tax liability of £10,994,000 and £10,994,000 as at 23 January 2005
and 24 July 2005 respectively.
• Further to the recognition of a deferred tax liability on capital gains,
the Company has recognised a deferred tax asset on its capital losses on the
basis that should a capital gain crystallise the capital losses will be
available to offset against the gain. This resulted in a deferred tax asset
of £915,000 and £1,560,000 as at 23 January 2005 and 24 July 2005
respectively.
• UK GAAP did not permit the creation of a deferred tax liability for
revaluation gains, this is however required under IAS 19. Although the
Company has not revalued its properties since the 1999/2000 financial year,
the revalued carrying amounts at the date of transition to IFRS will form
the deemed costs under IFRS. A transitional deferred tax liability is
therefore required of £6,827,000 and £6,766,000 at 23 January 2005 and 24
July 2005 respectively.
• A deferred tax asset of £1,493,000 has been recognised at 25 July 2004 in
respect of lease incentives relating to below market rent adjustments in
existence at the date of transition to IFRS. This has increased to
£2,044,000 at 24 July 2005 (23 January 2005: £1,893,000). The deferred tax
asset is disclosed separately under non-current assets in the balance sheet.
• These assets have been adjusted from the amounts as announced on 20
January 2006 following a more detailed review.
Events after the Balance Sheet date
Under UK GAAP, Company dividends declared after the balance sheet date have been
recognised as a liability.
Under IFRS final dividends declared after the balance sheet date are not
recognised until approved by the shareholders at the annual general meeting.
Interim dividends are only recognised when paid.
The effect of the change is an increase in equity of £2,681,000 at 23 January
2005 and £4,871,000 at 24 July 2005.
Independent review report to J D Wetherspoon plc
Introduction
We have been instructed by the company to review the financial information for
the twenty six weeks ended 22 January 2006 which comprises interim balance sheet
as at 22 January 2006 and the related interim statements of income, cash flows
and statement of recognised income and expense for the twenty six weeks then
ended and related notes. We have read the other information contained in the
interim report and considered whether it contains 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 directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.
As disclosed in note 1, the next annual financial statements of the company will
be prepared in accordance with accounting standards adopted for use in the
European Union. This interim report has been prepared in accordance with the
basis set out in Note 1.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements. As explained in note 1, there is,
however, a possibility that the directors may determine that some changes are
necessary when preparing the full annual financial statements for the first time
in accordance with accounting standards adopted for use in the European Union.
The IFRS standards and IFRIC interpretations that will be applicable and adopted
for use in the European Union at 30 July 2006 are not known with certainty at
the time of preparing this interim financial information.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. 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 disclosed accounting policies have been applied.
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 and therefore provides a lower level of assurance. Accordingly we do not
express an audit opinion on the financial information. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of the Listing Rules of the Financial Services Authority and for no other
purpose. We do not, in producing this report, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in
writing.
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 twenty six
weeks ended 22 January 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
London
3 March 2006
Notes:
(a) The maintenance and integrity of the J D Wetherspoon plc web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
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