Pre-tax profit up 7.3% at Wetherspoons
JD Wetherspoon (JDW), the managed pub retailer, has this morning unveiled record sales of £996.3m and a 7.3% increase in profit before tax and exceptional items of £71m, up from £66.2m.
Unveiling its preliminary results for the 52 weeks to 25 July 2010, the company's chairman and founder Tim Martin criticised the government's role in the downturn of the UK pub industry - blaming over regulation and increased taxation for the sector's demise.
The company said that like-for-like sales for the period were largely flat - with a marginal increase of 0.1%. However, in the six weeks to 5 September it revealed like-for-like sales had grown by 1.5% and total sales had improved by 7.6% and the group said it remained confident of a "resilient performance".
Like-for-like bar sales decreased by 0.8% during the year, a slowdown from the decline of 2.5% the year before. JDW said that like-for-like food sales were marginally up at +0.1% and that it had seen a 12.1% hike in the same key performance indicator for machine sales.
The operating margin, before exceptional items, interest and tax, decreased to 10.0%, down from 10.2% the year before, with increases in labour and repair costs being partially offset by reduced energy costs and lower depreciation. JDW said that the operating margin after exceptional items increased to 9.0%, up from 7.9%.
Total capital investment for the period was £81.8m, with JDW £57.7m on new pub openings and £24.1m on its existing estate, which included the introduction of a new till system.
Net interest was covered 3.4x by operating profit before exceptional items and 3.1x by operating profit after exceptional items.
Exceptional items before tax totalled £10.6m and JDW said these related to the impairment of trading pub assets.
The company opened 47 pubs during the year, 15 of which were freehold, and closed three others, resulting in a total estate of 775 pubs at the financial year-end. As was the case last year, most new openings were of existing pubs, with rents and development costs "being lower than historic trends", added JDW.
It revealed that it had total net bank borrowings (excluding finance leases and derivatives) of £379.5m, a reduction of £8.7m from the £388.2m in 2009. Net debt including finance leases (but excluding derivatives) was £388.4m - down from £390m.
Year end net-debt-to-EBITDA was 2.7x - down from 2.73x.
As previously outlined in the interim accounts, the board declared and paid a total dividend of 12p for the financial year ending 25 July 2010.The board also declared a special dividend of 7p and both dividends were paid on 1 April 2010.
Martin's comment
In a statement, Martin said: "Our sales, profit and cashflow continue to be resilient and the performance of our recently opened pubs is encouraging. As previously indicated, we continue to believe that there are substantial opportunities for us to acquire new sites at reasonable prices.
"We are also seeking to invest in our existing estate with a planned programme of refurbishment expenditure as well as seeking to finish the rollout of our new till system. In addition we are planning to increase targeted investment in pub staffing and support."
