JDW reports 3.3% increase in sales
Like-for-like bar sales increased by 1.2% (2014: 2.7%), food sales by 7.3% (2014: 12%), while slot/fruit machine sales decreased by 2.8% (2014: decreased by 3.1%).
The group said that operating margin, before exceptional items, decreased to 7.4% (2014: 8.3%), mainly as a result of a “lower gross margin and increases in staff costs, utilities and depreciation”.
In the six weeks to 6 September, like-for-like sales increased by 1.4%, with total sales increasing by 5.2%.
The company opened 30 pubs during the year, with six pubs sold or closed, resulting in a total estate of 951 pubs at the financial year end.
It said that the average development cost for a new pub (excluding the cost of freeholds) was £2.1m, compared with £1.6m a year ago; four of the pubs included hotel accommodation and the average size was around 20% bigger than the previous year, factors that contributed to increases in costs. The full-year depreciation charge was £66.7m (2014: £58.1m). It currently intends to open about 15 to 20 pubs in the year ending July 2016.
Total capital investment was £173.3m in the period (2014: £177.5m), with £106.3m invested in new pubs and extensions to existing pubs (2014: £97.7m). In addition, there was expenditure of £44.8m on existing pubs and IT infrastructure (2014: £56.2m) and £21.6m on freehold reversions, where Wetherspoon was already a tenant, and investment properties (2014: £23.6m).
The company said that free cash flow, after capital investment of £44.8m on existing pubs (2014: £56.2m), £6.8m in respect of share purchases for employees (2014: £7.3m) and payments of tax and interest, increased by £16.9m to £109.8m (2014: £92.9m).
Tim Martin, chairman, said: “I am pleased to report a year of progress for the company, with record sales and free cash flow.
“As previously stated on 15 July 2015, a number of factors likely to influence our trading performance this financial year are difficult to quantify at this early stage. Positive aspects include an increase in pub numbers, a better economy and slightly lower interest rates; less favourable aspects include heightened competition from supermarkets and restaurant groups and increased staff, repairs, bar and food costs. We continue to anticipate a trading performance similar to, or slightly above, that achieved in the last financial year.
“As we have previously stated, we believe that pubs are taxed excessively and that the government would create more jobs and receive higher levels of overall revenue, if it were to create tax equality among supermarkets, pubs and restaurants. Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20% - and this disparity enables supermarkets to subsidise their alcoholic drinks sales to the detriment of pubs and restaurants. Wetherspoon is happy to pay its share of tax and, in this respect, is a major contributor to the economy. In the year under review, we paid total taxes of £632.4m, an increase of £32.2m, compared with the previous year, which equates to approximately 41.8% of our sales. This equates to an average payment per pub of £673,000 per annum or £12,900 per week.”
