J D WETHERSPOON PLC
PRE-CLOSE TRADING STATEMENT
J D Wetherspoon plc presents below its pre-close trading statement for the financial year to 29 July 2018. The preliminary results are due to be announced on 14 September 2018.
Current trading
For the 10 weeks to 8 July 2018 like-for-like sales increased by 5.2% and total sales by 5.6%. In the year to date (49 weeks to 8 July 2018) like-for-like sales increased by 5.2% and total sales by 4.2%.
Property
The Company has opened 6 new pubs since the start of the financial year and has completed the sale of 23 pubs. No further openings are expected in the current year.
About £9m of exceptional, non-cash losses are expected in this financial year, mainly a result of pub disposals which were below the value in our balance sheet.
The Company has also spent £15.6m on buying the freehold “reversions” of pubs of which we were previously tenants.
Financial position
The Company remains in a sound financial position. Net debt at the end of this financial year is expected to be about £740m.
The Company spent £51.6m in respect of share buybacks in the first quarter of the year.
As previously reported, the shareholding of Tim Martin has risen above 30%, as a result of share buybacks in the last 12 years. A rule 9 'whitewash', under the relevant regulations, will again be put forward at the General Meeting in November, which will allow the Company to continue to undertake buybacks
Outlook
The chairman of Wetherspoon, Tim Martin, said:
“We are frequently asked about the effect of Brexit on the Company and the economy. The main advantage of Brexit is that the EU is a protectionist system that imposes high tariffs on non-EU imports such as wine, rice, coffee, oranges, children's shoes and clothes, and over 12,000 other products.
“Leaving the EU allows the UK to adopt the approach of countries like Singapore, Hong Kong, Switzerland and Australia by dismantling these tariff walls, which improves general living standards.
“As the retiring Australian High Commissioner, Alexander Downer, has recently said:
“You will do well if you open your markets and you embrace free trade; there was never a country that embraced free trade that was poor as a result.”
“In this connection, Wetherspoon has started to review its product range and has exchanged French champagne for sparkling wine from the UK and Australia, and German wheat beer for UK and American alternatives. The new products are now available, at reduced prices, in our pubs.
“We plan further initiatives in this area in the coming months.
“Huge progress has been made in leaving the EU: the referendum has taken place; the manifestos of the main parties, respecting the result, were endorsed in the general election; Article 50 was triggered and the sensible decision was taken to allow legal EU migrants to stay post-Brexit.
“Unsurprisingly, the prime minister has run into difficulties by making the mistake of prioritising a “deal” with the unelected EU representatives, which they have little incentive to accommodate, rather than a sensible implementation of Brexit in areas under the control of parliament.
“99% of the benefits of leaving the EU, including the avoidance of vast financial contributions, the elimination of tariffs and the reacquisition of fishing rights, need no agreement from any third party. The prime minister can avoid most current problems by prioritising these areas.
“I enclose below (Appendix 1) an article I wrote for the Sun newspaper on this issue.
“We continue to anticipate a trading outcome for this financial year in line with our previous expectations.”
“As in the current year, we anticipate considerable cost increases next year, in areas including business rates, the sugar tax, utility taxes and wages. In addition, as a result of an increase in our “swaps”, our interest rates will rise by around £7m.
Trading statement ends.