Corporate governance

 

Wetherspoon has been a strong critic of the composition of the boards of UK-quoted companies.

 

Directors of UK PLCs have, on average, relatively little experience of the companies they govern, due to the "nine-year rule", which limits their tenure, combined with the fact that most directors are part-time, and have never worked for the company in question, on a full-time basis.

 

In addition, those responsible for overseeing governance, among institutional shareholders, are often responsible for several hundred companies each, making genuine board engagement impossible, and thereby necessitating a "tick-box" approach, which is the antithesis of good governance.

 

The combination of arbitrary rules, the preponderance of part-time directors and overloaded institutional governance departments means that bureaucracy and virtue-signalling, rather than innovation and efficacy, dominate most UK PLC boardrooms.

 

In appendix 3, further details are provided on this issue from our last annual report.

 

Further progress

 

The company has always tried to improve as many areas of the business as possible, on a continuing basis.

 

In the period Wetherspoon awarded £21.2 million in respect of bonuses and free shares to employees, of which 99.0% was paid to staff below board level and 89.6% was paid to staff working in our pubs.

 

Tenure continued to improve. The average length of service of a pub manager is now 14.6 years, and of a kitchen manager is 10.7 years.

 

Wetherspoon has been recognised by the Top Employers Institute as a Top Employer United Kingdom 2024. It is the 19th time that Wetherspoon has been certified by the Top Employers' Institute.

 

The company has an extensive training programme for its employees, including 'kitchen of excellence' training, as well as cellar, dispense and coffee academy training.

 

Wetherspoon has recently been included in the Financial Times 'FT - Statista Leaders 2024' report, which highlights Europe's leading companies in diversity and inclusion.

 

The company's UK nominated charity is Young Lives vs Cancer (previously CLIC Sargent). It supports children and young people with cancer. Since our partnership began in 2002, Wetherspoon has raised over £23 million for the charity, thanks to the generosity of our customers and employees.

 

In January 2024, the company was awarded the highest rating by the Sustainable Restaurant Association - the world's largest accreditation scheme for pubs and restaurants, see Link to SRA article.

 

Wetherspoon came first in the 'Out to Lunch' league table, compiled by the Soil Association, when last awarded, in 2019 and 2021. Restaurants and pubs are judged and scored on a range of criteria: family friendliness, healthy options, food quality, value, sustainability and ingredients' provenance.

 

Wetherspoon is seeking to extend the appeal of its menu. For example, 36% of the dishes on the menu that is available in the majority of pubs are vegetarian, 10% are vegan and 21% are under 500 calories.

 

Cod and haddock are sourced from fisheries which have been certified to the MSC's (Marine Stewardship Council) standards for well-managed and sustainable fisheries.

 

We are introducing a new chip scuttle to our kitchens, which helps to keep chips hot, while also reducing the risk of fire, and reducing energy consumption by around 10%.

 

We have introduced a food oil monitoring device to improve oil quality checks, which should reduce oil consumption and improve food quality.

 

Guinness have a 'Quality Accreditation Programme'. Independent assessors review 17 aspects of quality. All Wetherspoon pubs have received accreditation.

 

Since 2008, Wetherspoon has invited brewers from overseas to feature their ales in its real-ale festivals. To date, these brewers have contributed 234 ales, from 147 breweries in 29 countries. In addition, the company works with over 250 UK brewers, mostly small or "micro" brewers.

 

Since 1999, Wetherspoon has worked with independent real-ale quality assessor Cask Marque to gauge the quality of ale being served in its pubs. Cask Marque carries out an 11-point audit covering stock rotation, beer line cleanliness, equipment maintenance, glasswashing cleanliness and hygiene. A star rating is awarded from 1 to 5, with a target or 4 to 5 stars for all pubs. Cask Marque state that 66% of pubs achieve 4 or 5 stars. 99% of Wetherspoon pubs have achieved 4 or 5 stars.

 

Sustainability, recycling and the environment

 

Wherever possible, Wetherspoon separates waste into eight streams: glass; tins/cans; cooking oil; paper/cardboard; plastic; lightbulbs; food waste and general waste.

 

9,911 tonnes of recyclable waste were processed last year at our national recycling centre. In addition, food waste is sent for 'anaerobic digestion' and used cooking oil is converted to biodiesel for agricultural use.

 

Smart meters are installed in the majority of pubs to facilitate energy consumption reporting.

 

According to ISTA, a leading company providing energy services, Wetherspoon has reduced greenhouse gas emissions by 60% over the last 10 years, after adjusting for sales growth. During that time, the company has also contributed £107m in climate change levies and carbon taxes.

 

The company has 'Cleaner Power Certification' from its electricity supplier, Total Gas & Power Ltd, that states that "the electricity supplied by Total Gas & Power Ltd for the supply period of 01/10/22 to 30/09/24 will be 100% generated from renewable schemes as accredited by OFGEM".

 

Bonuses and free shares

 

As indicated above, Wetherspoon has, for many years (see table below), operated a bonus and share scheme for all employees. Before the pandemic, these awards increased, as earnings increased for shareholders.

 

Financial year	Bonus and free shares	Profit/(loss) after tax1	Bonus and free shares as % of profits
	£m	£m
2007	19	47	41%
2008	16	36	45%
2009	21	45	45%
2010	23	51	44%
2011	23	52	43%
2012	24	57	42%
2013	29	65	44%
2014	29	59	50%
2015	31	57	53%
2016	33	57	58%
2017	44	77	57%
2018	43	84	51%
2019	46	80	58%
2020	33	(39)	-
2021	23	(146)	-
2022	30	(25)	-
2023	36	34	106%
2024 H1	21	25	84%
Total	524	616	55%2

¹(IFRS-16 was implemented in the year ending 26 July 2020 (FY20). From this period all profit numbers in the above table are on a Post IFRS-16 basis. Prior to this date all profit numbers are on a Pre IFRS-16 basis.

² Excludes 2020, 2021 and 2022.

 

 

 

 

Length of service

 

The table below provides details of the improved retention levels of pub and kitchen managers, key areas for any pub company, in the last decade.

 

Financial year	Average pub manager length of service	Average kitchen manager length of service
	(Years)	(Years)
2014	10.0	6.1
2015	10.1	6.1
2016	11.0	7.1
2017	11.1	8.0
2018	12.0	8.1
2019	12.2	8.1
2020	12.9	9.1
2021	13.6	9.6
2022	13.9	10.4
2023	14.3	10.6
2024	14.6	10.7

 

Food hygiene ratings

 

Wetherspoon has always emphasised the importance of hygiene standards.

 

We now have 744 pubs rated on the Food Standards Agency's website (see table below). The average score is 4.99, with 99.1% of the pubs achieving a top rating of five stars. We believe this to be the highest average rating for any substantial pub company.

 

In the separate Scottish scheme, which records either a 'pass' or a 'fail', all of our 57 pubs have passed.

 

Financial Year	Total pubs scored	Average rating	Pubs with highest rating %
2014	824	4.91	92.0
2015	858	4.93	94.1
2016	836	4.89	91.7
2017	818	4.89	91.8
2018	807	4.97	97.3
2019	799	4.97	97.4
2020	781	4.96	97.0
2021	787	4.97	98.4
2022	775	4.98	98.6
2023	753	4.99	99.2
2024	744	4.99	98.7

 

Property litigation

 

Some years ago, Wetherspoon took successful legal action for fraud against its own property advisors Van de Berg, who were found, by the court, to have diverted freehold properties to third parties, leaving Wetherspoon with an inferior leasehold interest. Following the Van de Berg case, Wetherspoon instigated further legal actions against a number of individuals and companies who had freehold properties introduced to them by Van de Berg. Liability was denied by all. The cases were contested and settled out of court. Details can be found in appendix 4.

 

Press corrections

 

In the febrile atmosphere of the first UK lockdown, a number of harmful inaccuracies were published in the press. A large number of corrections and apologies were received, as a result of legal representations by Wetherspoon.

 

In order to try to set the record straight, a special edition of Wetherspoon News was published, which includes details of the apologies and corrections. It can be found on the company's website:

 

(https://www.jdwetherspoon.com/~/media/files/pdf-documents/wetherspoon-news/does-truth-matter_.pdf ).

 

 

 

 

Pubwatch

 

As Wetherspoon has previously highlighted, Pubwatch is a forum which has improved wider town and city environments, by bringing together pubs, local authorities and the police, in a concerted way, to encourage good behaviour and to reduce antisocial activity.

 

Wetherspoon pubs are members of 541 schemes country wide, with 5 new schemes and 2 less schemes due to disposals.

 

The company also helps to fund National Pubwatch, founded in 1997 by just two licensees and a police office. This is the umbrella organisation which helps to set up, co-ordinate and support local schemes.

 

It is our experience that in some towns and cities, where the authorities have struggled to control antisocial behaviour, the setting up of a Pubwatch has been instrumental in improving safety and security - of not only licensed premises, but also the town and city in general, as well as assisting the police in bringing down crime.

 

Conversely, we have found, in several towns, including some towns on the outskirts of London, that the absence of an effective Pubwatch scheme results in higher incidents of crime, disorder and antisocial behaviour.

 

In our view, Pubwatch is integral to making towns and cities a safe environment for everyone.

 

Current trading and outlook

 

As indicated above, sales continue to improve. In the last 7 weeks, to 17 March 2024, like-for-like sales increased by 5.8%.

 

The company continues to be concerned about the possibility of further lockdowns and about the efficacy of the government enquiry into the pandemic, which will not be concluded for several years.

 

In contrast, the World Health Organisation (WHO) reported on its findings in 2022.

 

Professor Francois Balloux, director of the UCL Genetics Institute, writing in The Guardian, and Professor Robert Dingwall, of Trent University, writing in the Telegraph, provide useful synopses of the WHO report:

 

(see pages 54-56 of Wetherspoon News

https://www.jdwetherspoon.com/~/media/files/pdf-documents/wetherspoon-news/wetherspoon-news-autumn-2022.pdf)

 

The conclusion of Professor Balloux, broadly echoed by Professor Dingwall, based on an analysis by the World Health Organisation of the pandemic, is that Sweden (which did not lock down), had a Covid-19 fatality rate "of about half the UK's" and that "the worst performer, by some margin, is Peru, despite enforcing the harshest, longest lockdown."

 

Professor Balloux concludes that "the strength of mitigation measures does not seem to be a particularly strong indicator of excess deaths."

 

The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.

 

 

 

 

 

 

 

APPENDIX 1 Extract from Wetherspoon FY23 Annual report, Chairman's Statement

 

Business rates transmogrified to a sales tax

 

Business rates are supposed to be based on the value of the building, rather than the level of trade of the tenant. This should mean that the rateable value per square foot is approximately the same for comparable pubs in similar locations. However, as a result of the valuation approach adopted by the government "Assessor" in Scotland, Wetherspoon often pays far higher rates per square foot than its competitors.

 

This is highlighted (in the tables below) by assessments for the Omni Centre, a modern leisure complex in central Edinburgh, where Wetherspoon has been assessed at more than double the rate per square foot of the average of its competitors, and for The Centre in Livingston (West Lothian), a modern shopping centre, where a similar anomaly applies.

 

As a result of applying valuation practice from another era, which assumed that pubs charged approximately the same prices, the raison d'être of the rating system - that rates are based on property values, not the tenant's trade - has been undermined.

 

Similar issues are evident in Galashiels, Arbroath, Anniesland - and, indeed, at most Wetherspoon pubs in Scotland. In effect, the application of the rating system in Scotland discriminates against businesses like Wetherspoon, which have lower prices, and encourages businesses to charge higher prices. As a result, consumers are likely to pay higher prices, which cannot be the intent of rating legislation.

 

Omni Centre, Edinburgh					The Centre, Livingston
Occupier Name	Rateable Value (RV)	Customer Area (ft²)	Rates per square foot		Occupier Name	Rateable Value (RV)	Customer Area (ft²)	Rates per square foot
Playfair (JDW)	£218,750	2,756	£79.37		The Newyearfield (JDW)	£165,750	4,090	£40.53
Unit 9 (vacant)	£48,900	1,053	£46.44		Paraffin Lamp	£52,200	2,077	£25.13
Unit 7 (vacant)	£81,800	2,283	£35.83		Wagamama	£67,600	2,096	£32.25
Frankie & Benny's	£119,500	2,731	£43.76		Nando's	£80,700	2,196	£36.75
Nando's	£122,750	2,804	£43.78		Chiquito	£68,500	2,221	£30.84
Slug & Lettuce	£108,750	3,197	£34.02		Ask Italian	£69,600	2,254	£30.88
The Filling Station	£147,750	3,375	£43.78		Pizza Express	£68,100	2,325	£29.29
Tony Macaroni	£125,000	3,427	£36.48		Prezzo	£70,600	2,413	£29.26
Unit 6 (vacant)	£141,750	3,956	£35.83		Harvester	£98,600	3,171	£31.09
Cosmo	£200,000	7,395	£27.05		Pizza Hut	£111,000	3,796	£29.24
Average (exc JDW)	£121,800	3,358	£38.55		Hot Flame	£136,500	4,661	£29.29
					Average (exc JDW)	£82,340	2,721	£30.40

 

In summary, as a result of the approach taken in Scotland, business rates for pubs are de facto a sales tax, rather than a property tax, as the above examples clearly demonstrate.

 

 

 

 

 

APPENDIX 2 Extract from Wetherspoon FY23 Annual report, Chairman's Statement:

 

VAT equality

 

As we have previously stated, the government would generate more revenue and jobs 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%. This has enabled supermarkets to subsidise the price of alcoholic drinks, widening the price gap, to the detriment of pubs and restaurants. Pubs also pay around 20 pence a pint in business rates, whereas supermarkets pay only about 2 pence, creating further inequality.

 

Pubs have lost 50% of their beer sales to supermarkets in the last 35 or so years. It makes no sense for supermarkets to be treated more leniently than pubs, since pubs generate far more jobs per pint or meal than do supermarkets, as well as far higher levels of tax. Pubs also make an important contribution to the social life of many communities and have better visibility and control of those who consume alcoholic drinks.

.

Tax equality is particularly important for residents of less affluent areas, since the tax differential is more important there - people can less afford to pay the difference in prices between the on and off trade.

 

As a result, in these less affluent areas, there are often fewer pubs, coffee shops and restaurants, with less employment and increased high-street dereliction. Tax equality would also be in line with the principle of fairness - the same taxes should apply to businesses which sell the same products.

 

 

 

 

 

 

 

APPENDIX 3 Extract from Wetherspoon FY23 Annual report, Chairman's Statement

 

Corporate Governance

 

As a result of the 'nine-year rule', limiting the tenure of NEDs and the presumption in favour of 'independent', part-time chairmen, boards are often composed of short-term directors, with very little representation from those who understand the company best - people who work for it full time, or have worked for it full time.

 

Wetherspoon's review of the boards of major banks and pub companies, which teetered on the edge of failure in the 2008-10 recession, highlighted the short "tenure", on average, of directors.

 

In contrast, Wetherspoon noted the relative success, during this fraught financial period, of pub companies Fuller's and Young's, the boards of which were dominated by experienced executives, or former executives.

 

As a result, Wetherspoon increased the level of experience on the Wetherspoon board by appointing four "worker directors".

 

All four worker directors started on the 'shop floor' and eventually became successful pub managers. Three have been promoted to regional management roles. They have worked for the company for an average of 24 years.

 

Board composition cannot guarantee future success, but it makes sensible decisions, based on experience at the coalface of the business, more likely.

 

The UK Corporate Governance Code 2018 (the 'Code') is a vast improvement on previous codes, emphasising the importance of employees, customers and other stakeholders in commercial success. It also emphasises the importance of its comply-or-explain ethos, and the consequent need for shareholders to engage with companies in order to understand their explanations.

 

A major impediment to the effective implementation of comply or explain seems to be the undermanning of the corporate governance departments of major shareholders.

 

For example, Wetherspoon has met a compliance officer from one major institution who is responsible for around 400 companies - an impossible task.

 

As a result, it appears that compliance officers and governance advisors, in practice, often rely on a "tick-box" approach, which is, itself, in breach of the Code.

 

A further issue is that many major investors, in their own companies, for sensible reasons, do not observe the nine-year rule, and other rules, themselves. An approach of "do what I say, not what I do" is clearly unsustainable.

 

 

 

APPENDIX 4 Extract from Wetherspoon FY23 Annual report, Chairman's Statement:

 

Property Litigation

 

In 2013, Wetherspoon agreed an out-of-court settlement of approximately £1.25 million with developer Anthony Lyons, formerly of property leisure agent Davis Coffer Lyons, relating to claims that Mr Lyons had been an accessory to frauds committed by Wetherspoon's former retained agent Van de Berg and its directors Christian Braun, George Aldridge and Richard Harvey in respect of properties in Leytonstone (which currently trades as the Walnut Tree), Newbury (which was leased to Café Rouge) and Portsmouth (which currently trades as The Isambard Kingdom Brunel).

 

Of these three properties, only Portsmouth was pleaded by Wetherspoon in its case 2008/9 case against Van de Berg. Mr Lyons denied the claim and the litigation was contested.

 

In the Van de Berg litigation, Mr Justice Peter Smith ruled that Van de Berg, but not Mr Lyons (who was not a party to the case), fraudulently diverted the freehold of Portsmouth from Wetherspoon to Moorstown Properties Limited, a company owned by Simon Conway, which leased the property to Wetherspoon.

 

As part of a series of cases, Wetherspoon also agreed out-of-court settlements with:

 

1) Paul Ferrari of London estate agent Ferrari Dewe & Co, in respect of properties referred to as the 'Ferrari Five' by Mr Justice Peter Smith in the Van de Berg case, and

 

2) Property investor Jason Harris, formerly of First London and now of First Urban Group who paid £400,000 to Wetherspoon to settle a claim in which it

 was alleged that Harris was an accessory to frauds committed by Van de Berg. Harris contested the claim and did not admit liability.

 

Messrs Ferrari and Harris both contested the claims and did not admit liability.

 

 

 

 

INCOME STATEMENT for the 26 weeks ended 28 January 2024

 

J D Wetherspoon plc, company number: 1709784
	Notes	Unaudited		Unaudited				Unaudited			Unaudited	Unaudited		Unaudited
		26 weeks		26 weeks				26 weeks			26 weeks	26 weeks		26 weeks
		ended		ended				ended			ended	ended		ended
		28 January		28 January				28 January			29 January	29 January		29 January
		2024		2024				2024			2023	2023		2023
		before		separately				after			before	separately		after
		separately		disclosed				separately			separately	disclosed		separately
		disclosed		items				disclosed			disclosed	items		disclosed
		items						items			items			items
		£000		£000				£000			£000	£000		£000
Revenue	1	990,954		-				990,954			915,956	-		915,956
Other operating income	2	-		4,356				4,356			-	-		-
Operating costs		(923,272)		-				(923,272)			(878,536)	-		(878,536)
Operating profit		67,682		4,356				72,038			37,420	-		37,420
Property gains/(losses)	2	88		(15,179)				(15,091)			489	(11,665)		(11,176)
Finance income	2	1,195		1,567				2,762			247	65,091		65,338
Finance costs	2	(32,931)		(636)				(33,567)			(33,592)	(1,037)		(34,629)
Profit/(loss) before tax		36,034		(9,892)				26,142			4,564	52,389		56,953
Income tax charge	4	(11,147)		3,653				(7,494)			(3,271)	(16,767)		(20,038)
Profit/(loss) for the period		24,887		(6,239)				18,648			1,293	35,622		36,915
Profit/(loss) per ordinary share (p)
- Basic	5	20.3		5.1				15.2			1.0	28.4		29.4
- Diluted1	5	19.6		4.9				14.7			1.1	27.9		29.0
1Restated, see note 5.

 

 

 

STATEMENT OF COMPREHENSIVE INCOME for the 26 weeks ended 28 January 2024

 

			Unaudited	Unaudited	Audited
	Notes		26 weeks	26 weeks	52 weeks
			ended	ended	ended
			28 January	29 January	30 July
			2024	2023	2023
			£000	£000	£000
Items which will be reclassified subsequently to profit or loss:
Interest-rate swaps: gain taken to other comprehensive income	10		38	37,529	37,529
Interest-rate swaps: loss reclassification to the income statement	10		(5,601)	(1,913)	(13,310)
Tax on items taken directly to other comprehensive income			-	(8,904)	(6,055)
Currency translation differences			(1,388)	3,211	1,633
Net (loss)/gain recognised directly in other comprehensive income			(6,951)	29,923	19,797
Profit for the period			18,648	36,915	59,587
Total comprehensive profit for the period			11,697	66,838	79,384

 

 

 

 

 

 

CASH FLOW STATEMENT for the 26 weeks ended 28 January 2024

 

J D Wetherspoon plc, company number: 1709784
			Unaudited		Unaudited		Unaudited	Unaudited	Audited	Audited
					free cash			free cash		free cash
					flow1			flow1		Flow1
			26 weeks		26 weeks		26 weeks	26 weeks	53 weeks	53 weeks
			ended		ended		ended	ended	ended	ended
	Notes		28 January		28 January		29 January	29 January	30 July	30 July
			2024		2024		2023	2023	2023	2023
			£000		£000		£000	£000	£000	£000
Cash flows from operating activities
Cash generated from operations	6		78,719		78,719		84,187	84,187	270,686	270,686
Interest received			1,053		1,053		71	71	1,011	1,011
Interest paid			(26,770)		(26,770)		(21,245)	(21,245)	(50,545)	(50,545)
Cash proceeds on termination of interest-rate swaps			14,783		14,783		169,413	169,413	169,413	169,413
Corporation tax paid			(6,600)		(6,600)		(8,730)	(8,730)	(12,200)	(12,200)
Lease interest			(7,321)		(7,321)		(8,172)	(8,172)	(15,954)	(15,954)
Net cash flow from operating activities			53,864		53,864		215,524	215,524	362,411	362,411
Cash flows from investing activities
Reinvestment in pubs			(33,612)		(33,612)		(24,333)	(24,333)	(41,646)	(41,646)
Reinvestment in business and IT projects			(975)		(975)		(2,804)	(2,804)	(5,315)	(5,315)
Investment in new pubs and pub extensions			(10,510)		-		(10,669)	-	(20,361)	-
Freehold reversions and investment properties			(12,122)		-		(9,994)	-	(11,202)	-
Proceeds of sale of property, plant and equipment			10,688		-		3,327	-	11,349	-
Net cash flow from investing activities			(46,531)		(34,587)		(44,473)	(27,137)	(67,175)	(46,961)
Cash flows from financing activities
Purchase of own shares for cancellation			(34,081)		-		-	-	-	-
Purchase of own shares for share-based payments			(6,630)		(6,630)		(7,454)	(7,454)	(12,332)	(12,332)
Advances/(repayments) under bank loans			15,000		-		(140,033)	-	(200,033)	-
Other loan receivables			370		-		393	-	889	-
Lease principal payments			(18,729)		(18,729)		(14,904)	(14,904)	(32,023)	(32,023)
Asset-financing principal payments			(2,107)		-		(2,855)	-	(4,911)	-
Net cash flow from financing activities			(46,177)		(25,359)		(164,853)	(22,358)	(248,410)	(44,355)
Net change in cash and cash equivalents			(38,844)				6,198		46,826
Opening cash and cash equivalents			87,173				40,347		40,347
Closing cash and cash equivalents			48,329				46,545		87,173
Free cash flow1					(6,082)			166,029		271,095

 

¹ Free cash flow is a measure not required by accounting standards; a definition is provided in the accounting policies within the 2023 Annual Report.

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET as at 28 January 2024

 

J D Wetherspoon plc, company number: 1709784	Notes	Unaudited	Unaudited	Audited
		28 January	29 January	30 July
		2024	2023	2023
		£000	£000	£000
Assets
Non-current assets
Property, plant and equipment		1,374,806	1,417,559	1,377,816
Intangible assets		6,489	5,670	6,505
Investment property		18,652	23,276	18,740
Right-of-use assets	11	364,072	400,739	387,353
Other loan receivable		1,523	2,749	1,986
Derivative financial instruments	10	-	326	11,944
Lease assets	11	9,771	8,662	8,450
Total non-current assets		1,775,313	1,858,981	1,812,794
Current assets
Lease assets	11	1,617	2,001	1,361
Assets held for sale	8	1,750	1,533	400
Inventories		29,374	32,483	34,558
Receivables		27,543	14,650	27,267
Current income tax receivables		6,301	4,049	8,351
Cash and cash equivalents		48,329	46,545	87,173
Total current assets		114,914	101,261	159,110
Total assets		1,890,227	1,960,242	1,971,904
Current liabilities
Borrowings	9	(2,093)	(4,324)	(4,200)
Derivative financial instruments	10	-	(66)	(78)
Trade and other payables		(281,294)	(258,733)	(329,098)
Provisions		(2,817)	(2,877)	(2,395)
Lease liabilities	11	(48,413)	(47,409)	(51,486)
Total current liabilities		(334,617)	(313,409)	(387,257)
Non-current liabilities
Borrowings	9	(742,879)	(789,296)	(727,643)
Derivative financial instruments	10	(9,116)	(9,631)	-
Deferred tax liabilities		(64,359)	(56,984)	(65,752)
Lease liabilities	11	(369,938)	(406,529)	(391,794)
Total non-current liabilities		(1,186,292)	(1,262,440)	(1,185,189)
Total liabilities		(1,520,909)	(1,575,849)	(1,572,446)
Net assets		369,318	384,393	399,458
Shareholders' equity
Share capital		2,485	2,575	2,575
Share premium account		143,170	143,294	143,170
Capital redemption reserve		2,337	2,337	2,337
Other reserves		234,669	234,579	234,579
Hedging reserve		26,218	40,329	31,781
Currency translation reserve		578	4,529	2,148
Retained earnings		(40,139)	(43,250)	(17,132)
Total shareholders' equity		369,318	384,393	399,458

 

 

 

 

 

 

 

 

STATEMENT OF CHANGES IN EQUITY

 

			Share	Capital			Currency
		Share	premium	redemption	Other	Hedging	translation	Retained
	Notes	capital	account	reserve	Reserves	reserve	reserve	earnings	Total
		£000	£000	£000	£000	£000	£000	£000	£000
As at 29 January 2023		2,575	143,294	2,337	234,579	40,329	4,529	(43,250)	384,393
Total comprehensive income		-	-	-	-	(8,548)	(2,381)	23,476	12,547
Profit for the period		-	-	-	-	-	-	22,673	22,673
Interest-rate swaps: amount reclassified to the income statement	10	-	-	-	-	(11,397)	-	-	(11,397)
Tax on items taken directly to comprehensive income	10	-	-	-	-	2,849	-	-	2,849
Currency translation differences		-	-	-	-	-	(2,381)	803	(1,578)
Share capital expenses		-	(124)	-	-	-	-	-	(124)
Share-based payment charges		-	-	-	-	-	-	7,420	7,420
Tax on share-based payment	4	-	-	-	-	-	-	100	100
Purchase of own shares for share-based payments		-	-	-	-	-	-	(4,878)	(4,878)
As at 30 July 2023		2,575	143,170	2,337	234,579	31,781	2,148	(17,132)	399,458
Total comprehensive income		-	-	-	-	(5,563)	(1,570)	18,830	11,697
Profit for the period		-	-	-	-		-	18,648	18,648
Interest-rate swaps: cash flow hedges	10	-	-	-	-	38	-	-	38
Interest-rate swaps: amount reclassified to the income statement	10	-	-	-	-	(5,601)	-	-	(5,601)
Currency translation differences		-	-	-	-	-	(1,570)	182	(1,388)
Purchase of own shares and cancelled		(90)	-	-	90	-	-	(39,458)	(39,458)
Share-based payment charges		-	-	-	-	-	-	4,013	4,013
Tax on share-based payment	4	-	-	-	-	-	-	238	238
Purchase of own shares for share-based payments		-	-	-	-	-	-	(6,630)	(6,630)
As at 28 January 2024		2,485	143,170	2,337	234,669	26,218	578	(40,139)	369,318

 

The share premium account represents those proceeds received in excess of the nominal value of new shares issued. £124,000 was recognised in the 2023 in relation to the issue of shares in previous periods.

 

The capital redemption reserve represents the nominal amount of share capital repurchased and cancelled in previous periods.

 

Other reserves contain net proceeds received for share placements which took place in previous periods. The other reserve is determined to be distributable for the purposes of the Companies Act 2006.

 

During the year, 4,497,959 shares were repurchased by the company and cancelled, representing approximately 3.5% of the issued share capital, at a cost of £34.1 million, including stamp duty and fees, representing an average cost per share of 779p. As at 28 January 2024, the company had committed to, but not yet purchased 630,000 shares.

 

See note 10 for details on the hedging reserve.

 

The currency translation reserve contains the accumulated currency gains and losses on the long-term financing and balance sheet translation of the overseas branch. The currency translation difference reported in retained earnings is the retranslation of the opening reserves in the overseas branch at the current period end's currency exchange rate.

 

As at 28 January 2024, the company had distributable reserves of £221.3 million (2023: £251.4 million).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.      Revenue

 

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	53 weeks
	ended	ended	ended
	28 January	29 January	30 July
	2024	2023	2023
	£000	£000	£000
Bar	570,810	521,088	1,093,368
Food	374,714	351,741	742,067
Slot/fruit machines	32,232	30,269	62,579
Hotel	12,131	11,863	24,939
Other	1,067	995	2,091
	990,954	915,956	1,925,044

 

2.      Separately disclosed items

 

		Unaudited	Unaudited
		26 weeks	26 weeks
		ended	ended
		28 January	29 January
		2024	2023
		£000	£000
Operating items
Other		203	-
Government grants		14	-
Depreciation overcharge on impaired assets		4,139	-
Operating income		4,356	-
Total operating profit		4,356	-
Property losses
Loss on disposal of pubs		(5,913)	(3,052)
		(5,913)	(3,052)
Other property (gains)/losses
Impairment of assets under construction		(4,583)	-
Reversal of intangible assets impairment		-	74
Impairment of property, plant and equipment		(5,848)	(7,311)
Reversal of property, plant and equipment impairment		358	-
Impairment of right-of-use assets		-	(1,376)
Reversal of right-of-use assets impairment		807	-
		(9,266)	(8,613)
Total property losses		(15,179)	(11,665)
Other items
Finance costs		(636)	(1,037)
Finance income		1,567	65,091
		931	64,054
Taxation
Current income tax charge		-	(5,847)
Tax effect on separately disclosed items		3,653	(10,920)
		3,653	(16,767)
Total separately disclosed items		(6,239)	35,622

 

 

 

 

 

 

 

 

2. Separately disclosed items (continued)

 

Other operating income

Other income of £1,402,000 has been recognised in the period relating to a settlement agreement (2023: nil). This is offset by costs of £517,000 (2023: nil) due to an ongoing contractual dispute with a large supplier, as outlined in note 14 and costs of £682,000 (2023: nil) in relation to a historic employment tax issue.

 

Included within other operating income is a reversal of overcharged depreciation in relation to previously impaired fixed assets and right-of-use assets, totalling £4,139,000. The overcharge of depreciation occurred between the periods ended 26 July 2020 through to 30 July 2023, and was not material in any one period to any line item. As such, the overcharge has been reversed in the current year.

 

Local government support grants

The company has recognised £14,000 (2023: £nil) of local government support grants in the UK and the Republic of Ireland, associated with the COVID-19 pandemic.

 

Property losses

Costs classified under the 'loss on disposal of pubs' relate to sites sold or surrendered during the year.

 

Other property (gains)/losses

Property impairment relates to pubs which are deemed unlikely to generate sufficient cash flows in the future to support their carrying value. In the year, a total impairment charge of £9,266,000 (2023: £8,613,000) was incurred in respect of the impairment of assets as required under IAS 36. Included within this charge were impairment reversals of £1,165,000 recognised in the year (2023: £74,000).

 

Separately disclosed finance costs and income

The separately disclosed finance costs in the prior period of £1,037,000 relate to covenant-waiver fees. The separately disclosed finance costs in the current year of £636,000 (2023: income of £65,091,000) relate to interest-rate swaps.

 

A charge of £6,237,000 (2023: income of £49,887,000) relates to the fair value movement on interest-rate swaps. Income of £176,000 (2023: income of £1,913,000) relates to the amortisation of the hedge reserve to the P&L relating to discontinued hedges and, £5,425,000 (2023: income of £13,291,000) relates to hedge ineffectiveness reclassified from the reserve to the P&L in relation to terminated swaps.

 

Included within separately disclosed finance income during the 26 weeks ended 28 January 2024 is the reversal of overcharged interest relating to IFRS-16 leases, of £1,567,000.

 

Taxation

The tax effect on separately disclosed items is a credit of £3,653,000 (2023: income of £16,767,000).

 

 

 

3.      Employee benefits expenses

 

	Unaudited	Unaudited
	26 weeks	26 weeks
	ended	ended
	28 January	29 January
	2024	2023
	£000	£000
Wages and salaries	345,684	321,363
Employee support grants	(289)	(768)
Social security costs	21,506	20,174
Other pension costs	5,682	5,165
Share-based payments	4,013	4,053
	376,596	349,987

Employee support grants disclosed above are amounts claimed by the company under the coronavirus job retention schemes in the UK and the Republic of Ireland.

 

	Unaudited	Unaudited
	2024	2023
	Number	Number
Full-time equivalents
Head office	382	354
Pub managerial	4,490	4,563
Pub hourly paid staff	19,593	19,295
	24,465	24,212
	2024	2023
	Number	Number
Total employees
Head office	382	362
Pub managerial	4,744	5,069
Pub hourly paid staff	36,628	36,629
	41,754	42,060

 

The totals above relate to the monthly average number of employees during the period, not the total of employees at the end of the period.

 

Share-based payments	Unaudited	Unaudited
	26 weeks	26 weeks
	ended	ended
	28 January	29 January
	2024	2023
Shares awarded during the year (shares)	1,548,446	1,971,414
Average price of shares awarded (pence)	658	477
Market value of shares vested during the year (£000)	4,835	1,445
Share awards not yet vested (£000)	15,116	9,484

 

The shares awarded as part of the above schemes are based on the cash value of the bonuses at the date of the awards. These awards vest over three years, with their cost spread over their three-year life. The share-based payment charge above represents the annual cost of bonuses awarded over the past three years. All awards are settled in equity.

 

The company operates two share-based compensation plans. In both schemes, the fair values of the shares granted are determined by reference to the share price at the date of the award. The shares vest at a £Nil exercise price - and there are no market-based conditions to the shares which affect their ability to vest.

 

 

 

 

 

4.      Income tax expense

The taxation charge for the 26 weeks ended 28 January 2024 is based on the pre-separately disclosed items profit before tax of £36.0 million and the estimated effective tax rate before separately disclosed items for the 26 weeks ended 28 January 2024 of 33.0% (July 2023: 20.5%). This comprises a pre-separately disclosed current tax rate of 0.3% (July 2023: 0%) and a pre-separately disclosed deferred tax charge of 32.7% (July 2023: 20.5% charge).

 

The UK standard weighted average tax rate for the period is 25% (2023: 21%). The current tax rate is lower than the UK standard weighted average tax rate owing to tax losses in the period.

 

The exceptional current tax charge relates entirely to the tax on profit crystallised when terminating interest rate SWAP contracts in the previous period.  For tax purposes the profits are spread over the remaining life of the underlying hedged item which results in the high exceptional ETR in the current period. A deferred tax liability is recognised in respect of this item.

 

	Unaudited		Unaudited	Unaudited	Unaudited	Audited	Audited
	26 weeks		26 weeks	26 weeks	26 weeks	52 weeks	52 weeks
	ended		ended	ended	ended	ended	Ended
	28 January 2024		28 January 2024	29 January 2023	29 January 2023	30 July 2023	30 July 2023
	before		after	before	after	before	after
	separately		separately	separately	separately	separately	separately
	disclosed		disclosed	disclosed	Disclosed	disclosed	disclosed
	items		items	items	Items	Items	Items
	£000		£000	£000	£000	£000	£000
Taken through income statement
Current income tax:
Current income tax charge	75		8,895	866	6,625	-	5,552
Previous period adjustment	-		(245)	-	88	-	293
Total current income tax	75		8,650	866	6,713	-	5,845
Deferred tax:
Origination and reversal of temporary differences	11,072		(1,156)	2,405	15,771	13,602	29,947
Prior year deferred tax credit	-		-	-	(36)	(4,868)	(4,868)
Impact of change in UK tax rate	-		-	-	(2,410)	-	-
Total deferred tax	11,072		(1,156)	2,405	13,325	8,734	25,079
Tax charge	11,147		7,494	3,271	20,038	8,734	30,924
Taken through equity
Current tax	(52)		(52)	-	-	-	-
Deferred tax	(186)		(186)	-	-	(100)	(100)
Tax credit	(238)		(238)	-	-	(100)	(100)
Taken through comprehensive income
Deferred tax charge on swaps	-		-	7,479	7,479	-	6,055
Impact of change in UK tax rate	-		-	1,425	1,425	-	-
Tax (credit)/charge	-		-	8,904	8,904	-	6,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.  Basic earnings/(loss) per share

 

Weighted average number of shares

 

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) after tax for the period by the weighted average number of ordinary shares in issue during the financial year of 127,671,463 (2023: 128,750,155) less the weighted average number of shares held in trust during the financial year of 4,618,943 (2023: 3,296,278). Shares held in trust are shares purchased by the company to satisfy employee share schemes that have not yet vested.

 

Diluted earnings/(loss) per share is calculated by dividing the profit/(loss) after tax for the period by the weighted average number of ordinary shares in issue during the financial year adjusted for both shares held in trust and the effects of potentially dilutive shares. For the company, the dilutive shares are those that relate to employee share schemes that have not been purchased in advance and have not yet vested. In the event of making a loss during the year, the diluted loss per share is capped at the basic earnings per share as the impact of dilution cannot result in a reduction in the loss per share.

 

 

	Unaudited	Unaudited	Audited
Weighted average number of shares	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	28 January	29 January	30 July
	2024	2023	2023
		Restated1
Shares in issue	127,671,463	128,750,155	128,750,155
Shares held in trust	(4,618,943)	(3,337,132)	(3,296,278)
Shares in issue - Basic	123,052,520	125,413,023	125,453,877
Dilutive shares1	3,466,567	2,046,258	2,810,231
Shares in issue - Diluted	126,519,087	127,459,281	128,264,108

¹ Impact of dilutive shares from FY 2023 has been restated.

 

 

Earnings / (loss) per share

 

26 weeks ended 28 January 2024 unaudited	Profit/(loss)	Basic EPS	Diluted EPS
	£000	pence	pence
Earnings (profit after tax)	18,648	15.2	14.7
Exclude effect of separately disclosed items after tax	6,239	5.1	4.9
Earnings before separately disclosed items	24,887	20.3	19.6
Exclude effect of property gains/(losses)	(88)	(0.1)	(0.1)
Underlying earnings before separately disclosed	24,799	20.2	19.5

 

 

 

26 weeks ended 29 January 2023 unaudited	Profit/(loss)	Basic EPS	Diluted EPS
	£000	pence	Pence1
Earnings (profit after tax)	36,915	29.4	29.0
Exclude effect of exceptional items after tax	(35,622)	(28.4)	(27.9)
Earnings before separately disclosed items	1,293	1.0	1.1
Exclude effect of property gains/(losses)	(489)	(0.4)	(0.4)
Underlying earnings before separately disclosed	804	0.6	0.7

¹ Impact of dilutive shares from FY 2023 has been restated.

 

 

 

 

 

 

 

 

6. Cash used in/generated from operations

 

	Unaudited		Unaudited	Audited
	26 weeks		26 weeks	53 weeks
	ended		ended	ended
	28 January		29 January	30 July
	2024		2023	2023
	£000		£000	£000
Profit for the period	18,648		36,915	59,587
Adjusted for:
Tax (note 4)	7,494		20,038	30,924
Share-based charges	4,013		3,125	10,545
Loss on disposal of property, plant and equipment	5,964		3,738	10,871
Gain on remeasurement of capitalised leases	(1,568)		(489)	(2,273)
Gain on disposal of capitalised leases	-		(686)	-
Net impairment charge (note 2)	9,266		8,613	38,287
Interest payable & receivable	25,718		24,411	49,223
Lease interest	5,782		7,966	22,456
Separately disclosed depreciation overcharge on impaired assets	(4,139)		-	-
Separately disclosed Interest (note 2)	636		(64,054)	(96,686)
Amortisation of bank loan and private placement issue costs	236		968	1,246
Depreciation and amortisation	53,814		54,847	109,741
Aborted properties costs	397		688	1,719
Foreign exchange movements	(1,388)		(3,214)	1,633
Lease premiums	(51)		-	-
	124,822		92,866	237,273
Change in inventories	5,184		(6,081)	(8,157)
Change in receivables	(312)		14,143	2,133
Change in payables	(50,975)		(16,741)	39,437
Cash flow from operating activities	78,719		84,187	270,686