JD Wetherspoon sees profits jump
JD Wetherspoon has unveiled a 13.6% rise in profit before tax of £66.2m as the company opened 39 pubs and saw like-for-likes for the rest of the estate grow by 1.2% in the year to 26 July.
Chairman Tim Martin said: "'Our approach remains one of trying to make lots of small improvements in diverse areas of the business, creating momentum in the services and facilities offered to customers, as well as sales and profits for the company. Our combination of bar, food and coffee sales helps to ensure that pubs are busy throughout much of the week, maximising profits and employment opportunities, as well as generating volume growth for many of our suppliers."
The company said it had seen a 17% increase in the sale of cask ales during the year. It added: "Over 96% of our estate is Cask Marque accredited and we currently have 193 pubs recommended in the CAMRA Good Beer Guide 2010 (Good Beer Guide 2009: 173 pubs) - more than any substantial pub company, an uplift of 12%. We ran the biggest real-ale festival in the world, during April 2009, selling 3.3 million pints over 20 days - an increase in like-for-like volumes of over 17%, compared with the same festival in 2008.
"We are the only substantial pub company which opens all pubs for breakfast, selling over 715,000 breakfasts and coffees each week - more than most coffee shop chains. We continue to be the world's number-one seller of 'Tierra' - Lavazza's Rainforest-Alliance-certified sustainable coffee. "This combination of bar, food and coffee sales helps to ensure that pubs are busy throughout much of the week, maximising profits and employment opportunities, as well as generating volume growth for many of our suppliers."
Total sales, including new pubs, increasing by £47.6 million to £955.1 million, a rise of 5.2% (2008: 2.1%). The operating margin, before exceptional items, interest and tax, increased to 10.2% (2008: 10.0%), with increases in energy, excise duty and labour costs being offset by reduced energy consumption, lower staff turnover and better buying, in several areas. The operating margin after exceptional items decreased to 7.9% (2008: 9.6%). Exceptional items before tax totalled £21.1 million (2008: £4.1 million). These related mainly to the impairment of trading pub assets of £6.5 million (2008: nil), the disposal of properties which the company no longer intends to develop of £4.4 million (2008: £1.2 million), a one-off depreciation adjustment, following a review of its fixed-asset register, of £9.4 million (2008: nil) and major litigation costs, involving legal action against its former estate agents, Van de Berg, of £1.6 million (2008: £1.1 million).
Of the 39 pubs opened during the year, 13 of which were freehold. It disposed of one pub and closed one other, resulting in a total estate of 731 pubs. In contrast with previous years, most new openings were of existing pubs, with rents and development costs being lower than historic trends. The average development cost for a new pub (excluding the cost of freeholds) was £850,000, compared with £1.5 million a year ago. The full-year depreciation charge was £45.1 million (2008: £45.1 million), and the company expects next year to be a similar amount, assuming the same level of capital spend.
