J D WETHERSPOON PLC
PRELIMINARY RESULTS
(For the 26 weeks ended 26 January 2020)
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FINANCIAL HIGHLIGHTS |
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Before exceptional items (pre-IFRS 16) |
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Revenue £933.0m (2019: £889.6m) |
+4.9% |
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Like-for-like sales |
+5.0% |
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Profit before tax £57.9m (2019: £50.3m) Operating profit £76.6m (2019: £63.5m) Earnings per share (including shares held in trust) 43.3p (2019: 37.4p) |
+15.2% +20.6% +15.8% |
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Free cash flow per share 46.7p (2019: 67.9p) |
-31.2% |
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Interim dividend cancelled (2019: 4.0p) |
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Before exceptional items (post-IFRS 16) IFRS 16 did not apply in the previous financial year, so no comparison is included. |
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Profit before tax £51.6m. PBT is lower because IFRS 16 assumes that the 'right to occupy' leasehold property for the term of the lease is an 'asset', which is approximately equivalent in value to future rental payments due – in this case estimated at £579m. It also assumed a liability in respect of future rental payments ('lease liabilities') of £584m. The depreciation charge has increased by £24m as a result of the amortisation of the new 'asset' over the remaining term of the leases. A notional interest charge (which will never be paid and is an accounting fiction) has also been assumed in respect of the liability of £584m of future rental payments. The IFRS 16 definition of PBT has not declined at the same amount as the increased depreciation and interest because the rent that was actually paid in the period (with some adjustments) has not been charged to the income statement. In other words, IFRS 16 has, broadly speaking, substituted actual rental payments for a complex system of notional payments or charges.
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Operating profit £80.8m. The Operating profit is £4.2m higher under IFRS 16 because the rental charge of about £28m (which represents the actual rent paid) has been substituted for a depreciation charge of £24m. |
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Earnings per share (including shares held in trust) 38.5p |
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After exceptional items (pre-IFRS 16)
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Profit before tax £42.0m (2019: £48.6m) Operating profit £76.6m (2019: £63.5m) |
-13.7% +20.6% |
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Earnings per share (including shares held in trust) 29.8p (2019: 36.0p) |
-17.2% |
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After exceptional items (post-IFRS 16) |
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Profit before tax £35.7m |
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Operating profit £80.8m |
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Earnings per share (including shares held in trust) 25.0p |
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Exceptional items, which totalled £15.9m resulted in a cash inflow of £2m.
Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:
“As recently reported, in the six weeks to 8 March 2020, like-for-like sales increased by 3.2% and total sales by 2.9%. In the following week, to 15 March, sales declined by 4.5%. In the early part of the current week, following the Prime Minister's advice to avoid pubs, sales have declined at a significantly higher rate.
“It is obviously very difficult to predict, in these circumstances, how events will unfold in future weeks and months, but we now anticipate profits being below market expectations, so long as the current health scare continues. As a result of this uncertainty, it is impossible to provide realistic guidance on our performance in the remainder of the financial year.
“The company has decided to delay most capital projects and to reduce expenditure, where possible, including the cancellation of the interim dividend. As a result of these actions, combined with the Government's proposals on business rates relief and credit guarantee facilities, the company believes it has sufficient liquidity to maintain operations at a substantially lower level of sales.
“As many companies and commentators have noted, the current health crisis places the hospitality industry, in particular, under great pressure. Wetherspoon, like our peers, will be working closely with all parties, including employees, banks, landlords and suppliers, in order to emerge from the situation in the best shape.”