Coronavirus Update

Wetherspoon (JD) Plc - Latest Preliminary Results

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(For the 52 weeks ended 26 July 2020)







Before exceptional items (pre-IFRS 16)



  Like-for-like sales



  Revenue £1,262.0m (2019: £1,818.8m)



  (Loss)/profit before tax -£34.1m (2019: £102.5m)



  Operating profit £7.2m (2019: £131.9m)



  Earnings per share (including shares held in trust) -27.6p (2019: 75.5p)



  Free cash flow per share -54.2p (2019: 92.0p)



  Full year dividend 0.0p (2019: 12.0p)






Before exceptional items (post-IFRS 16)



IFRS 16 did not apply in the previous financial year, so no comparison is included.



  Loss before tax -£44.7m



  Operating profit £17.0m



  Earnings per share (including shares held in trust) -35.5p









After exceptional items (pre-IFRS 16)



  (Loss)/profit before tax -£94.8m (2019: £95.4m)



  Operating (loss)/profit -£6.0m (2019: 131.9m)



  Earnings per share (including shares held in trust) -82.6p (2019: 69.0p)






After exceptional items* (post-IFRS 16)



  Loss before tax -£105.4m



  Operating profit £3.8m



  Earnings per share (including shares held in trust) -89.9p




*Exceptional items as disclosed in account note 4.

Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:

"Warren Buffett, chairman of Berkshire Hathaway, commented in 1989 (below) on the dangers of what he calls the 'institutional imperative' and how it compels companies to stay on the same course, even if it's the wrong course - and how it compels companies to imitate competitors. The institutional imperative applies just as much to governments as it does to boards of directors. Professor Johan Giesecke, the Warren Buffett of epidemiology, is obviously perplexed in an April TV interview (appendix 1 below) as to how 100 countries all reacted, almost overnight, in the same way to the Covid-19 problem, based on the deeply flawed analysis of Imperial College.

"As Warren Buffett explains:

"My most surprising discovery: the overwhelming importance in business of an unseen force that we might call "the institutional imperative." In business school, I was given no hint of the imperative's existence and I did not intuitively understand it when I entered the business world. I thought then that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn't so. Instead, rationality frequently wilts when the institutional imperative comes into play."

"For example: (1) As if governed by Newton's First Law of Motion, an institution will resist any change in its current direction; (2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds; (3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and (4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated."

"Institutional dynamics, not venality or stupidity, set businesses on these courses, which are too often misguided. After making some expensive mistakes because I ignored the power of the imperative, I have tried to organize and manage Berkshire in ways that minimize its influence. Furthermore, Charlie and I have attempted to concentrate our investments in companies that appear alert to the problem."

"Since 100 governments adopted a lockdown strategy, it was very difficult for any government to adopt a different course. However, pubs eventually reopened in England on 4 July and in the rest of the UK shortly thereafter.

"The lockdown was far longer than was necessary to achieve its stated objective of 'flattening the curve' so as to assist the health service. Before pubs reopened, a detailed and comprehensive operating plan for the hospitality industry was nevertheless agreed on among the government, parliamentary committees, UK Hospitality, civil servants and other interested parties.

"The regulations and guidelines reflected in the plan drastically reduced pub capacity, but were carefully thought out and had the backing of the industry, legislators, licensing officials, local authorities and the public.

"For the two months following reopening, it appeared that the hospitality industry, in difficult circumstances, was adapting to the new régime and was getting 'back on its feet', albeit in survival mode.

"It appears that the government and its advisers were clearly uncomfortable as the country emerged from lockdown. They have introduced, without consultation, under emergency powers, an ever-changing raft of ill-thought-out regulations - these are extraordinarily difficult for the public and publicans to understand and to implement. None of the new regulations appears to have any obvious basis in science.

"For example, a requirement for table service was introduced - which is expensive to implement and undermines the essential nature of pubs for many people - pubs have now become like restaurants. Customers can approach the till in a shop, but not in a pub - which is, in no sense, 'scientific'.

"In addition, face-coverings, for which the health benefits are debatable, need not be worn while seated, yet must be worn to go to visit the bathroom - another capricious regulation.

"The most damaging regulation relates to the 10pm curfew, which has few supporters outside of the narrow cloisters of Downing Street and SAGE meetings. This has meant that many thousands of hospitality industry employees, striving to maintain hygiene and social-distancing standards, go off duty at 10pm, leaving people to socialise in homes and at private events which are, in reality, impossible to regulate.

"In marked contrast to the consistency of the comparatively successful Swedish approach, which emphasises social distancing, hygiene and trust in the people, the erratic UK government is jumping from pillar to post and is both tightening and tinkering with regulations, so we are now in quasi-lockdown which is producing visibly worse outcomes than those in Sweden, in respect of both health and the economy.

"Risk cannot be eliminated completely in pubs, but sensible social-distancing and hygiene policies, combined with continued assistance and co-operation from the authorities, should minimise it.

"Like-for-like sales in the first 11 weeks have been 15.0% below those of last year, with strong sales in the first few weeks, followed by a marked slowdown since the introduction of a curfew and other regulations, some of which are referred to above.

"The recent curfew and introduction of table service only have been particularly damaging for trade, depressing sales for customers who find it too much 'faff', at the same time as substantially increasing costs.

"As a result of recent changes in regulations, the outlook for pubs over the remainder of the current financial year is even more unpredictable than hitherto."

"The company has successfully adapted its business, over the last 41 years, to cope with widely different political and economic circumstances. We now employ over 40,000 people, 10,000 of whom are shareholders in the company, and are a major contributor to national income, paying approximately one pound in every thousand of treasury receipts in 2019 and in preceding years.

"However, the company and the entire hospitality industry need a more sensible and consistent regulatory framework in which to operate - the current environment of lockdowns, curfews and constantly changing regulations and announcements threatens not only pub companies, but the entire economy. The most important lesson, as Professor Mark Woolhouse of Edinburgh University has said, is that "lockdown just defers the problem; it doesn't solve it"."