J D Wetherspoon plc (LON:JDW) announced it’s preliminary results today for the 52 weeks ended 26 July 2015. Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:
“I am pleased to report a year of progress for the company, with record sales and free cash flow.
“As we have previously stated, we believe that pubs are taxed excessively and that the government would create more jobs and receive higher levels of overall revenue, 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% – and this disparity enables supermarkets to subsidise their alcoholic drinks sales to the detriment of pubs and restaurants. Wetherspoon is happy to pay its share of tax and, in this respect, is a major contributor to the economy. In the year under review, we paid total taxes of £632.4m, an increase of £32.2m, compared with the previous year, which equates to approximately 41.8% of our sales. This equates to an average payment per pub of £673,000 per annum or £12,900 per week.
“Jacques Borel, who has campaigned successfully for lower VAT for bars and restaurants in many other countries, has also been campaigning in this country. A large number of companies have supported his campaign, including Heineken, Pizza Hut, Fuller’s and St Austell, among others. It is disappointing to note that some of the biggest pub companies, including Enterprise Inns, Mitchells and Butlers, Greene King and Marston’s have failed to support Jacques’ campaign and have not campaigned themselves in any meaningful way for VAT equality between pubs and supermarkets. Pubs have lost 50% of their beer sales to supermarkets in the last 35 years (including many pubs owned by these companies), as VAT has climbed from 8% to 20 %. In this connection, in my opinion, the trade newspaper, the Publican Morning Advertiser, has entirely lost its legitimacy as a mouthpiece for individual licensees.
“The limitations of corporate governance systems should be recognised. Common sense, management skills and business savvy are more important to commercial success than board structures. All the major banks and many supermarket and pub companies have recently suffered colossal business and financial problems, in spite of, or perhaps because of, their adherence to governance guidelines.
“Wetherspoon increased the minimum hourly rate for staff by 5% in October 2014 and by a further 8% at the end of July 2015. Both decisions were taken without the knowledge that the government was about to announce a new minimum wage, now called a “the living wage”. In addition, as Wetherspoon shareholders are aware, we pay about 40% of our profits (£30.7m in the year under review) as a bonus or free shares, over 80% of which is paid to people who work in our pubs. By pushing up the cost of wages by a large factor, the government is inevitably putting financial pressure on pubs, many of which have already closed. This financial pressure will be felt most strongly in areas which are less affluent, since the price differential in those areas between pubs and supermarkets is far more important to customers.
“We continue to run the world’s biggest real-ale festival, twice per annum, and have added a cider festival in recent times, featuring a wide variety of suppliers from the UK, Europe and elsewhere in the world. Wetherspoon sells far more beers and ciders from craft and micro-brewers throughout the year than any other pub company.
“In the six weeks to 6 September 2015, like-for-like sales increased by 1.4%, with total sales increasing by 5.2%.
“As previously stated on 15 July 2015, a number of factors likely to influence our trading performance this financial year are difficult to quantify at this early stage. Positive aspects include an increase in pub numbers, a better economy and slightly lower interest rates; less favourable aspects include heightened competition from supermarkets and restaurant groups and increased staff, repairs, bar and food costs. We continue to anticipate a trading performance similar to, or slightly above, that achieved in the last financial year.”
|Before exceptional items|
|Ÿ Revenue £1,513.9m (2014: £1,409.3m)||7.40%|
|Ÿ Like-for-like sales||3.30%|
|Ÿ Profit before tax £77.8m (2014: £79.4m)||-2.00%|
|Ÿ Earnings per share (including shares held in trust) 47.0p (2014: 47.0p)||Maintained|
|Ÿ Free cash flow per share 89.8p (2014: 74.1p)||21.20%|
|Ÿ Full year dividend 12.0p (2014: 12.0p)||Maintained|
|After exceptional items*|
|Ÿ Profit before tax £58.7m (2014: £78.4m)||-25.10%|
|Ÿ Earnings per share (including shares held in trust) 36.7p (2014: 32.8p)||11.90%|