JD Wetherspoon expects 'reasonable outcome'

9th Sep 2011 07:35

Full-year underlying profits from pubs group JD Wetherspoon were marginally ahead of expectations, while like-for-like sales growth has been maintained in the new financial year, albeit at a lower rate.Revenue in the 52 weeks to 24 July broke through the billion pounds barrier, rising 7.5% to £1,072.0m from £996.3m the year before. Like-for-like (LFL) sales grew 2.1% over the year. The market had been expecting full year sales of £1,069m.In the six weeks to 4 September 2011, like-for-like sales increased by 0.4% and total sales increased by 6.7%.On a pre-exceptional items basis, profit before tax slipped 5.9% to £66.8m from £71.0m last year, but was ahead of the market consensus forecast of £66.5m.The operating margin dipped half a point to 9.5% from 10.0% last year, while earnings per share eased 1.9% to 35.3p from 36.0p the year before.With exceptional items included, profit before tax rose 1.5% to a record level of £61.4m from £60.5m last year, while earnings per share shot up 17.2% to 35.4p from 30.2p; the operating margin remained at 9.0%.Exceptional items before tax totalled £5.4m, versus the previous year's exceptional charges of £10.6m. The exceptional items mostly relate to the impairment of trading pub assets of £4.4m (2010: £10.6m)."I am pleased to report a year of further progress for the company, with record sales and operating profit, although profit before tax was lower than last year as a result of higher interest charges," said company chairman Tim Martin before moving on to his traditional rant about the favouritism of government policies towards supermarkets over pubs."The biggest danger to the pub industry is the tax disparity between supermarkets and pubs, creating a serious and unsustainable competitive disadvantage. In addition, our pubs pay far higher VAT than those of our nearest neighbours, Ireland and France, as well as having the second highest rates of excise duty on beer and wine in Europe," Martin said, reheating well-worn themes of his. "The well documented increases in areas such as utilities and bar and food supplies, combined with ongoing pressure on consumers income continue to make this a tough trading environment. Nonetheless, given our resilient sales, profit and cash flow, together with the potential to open further new pubs, the board is aiming for a reasonable outcome in the current financial year," Martin added.In the full-year period, LFL bar sales increased by 1.7% after decreasing by 0.7% in the corresponding period a year earlier, while LFL food sales increased by 4.2%, having increased by 0.1% the year before. Machine sales decreased by 3.9%, having increased by 12.1% the year before. As at 24 July 2011, the company's total net bank borrowings (excluding finance leases and derivatives) were £429.8m, up from £379.5m a year earlier. Net debt including finance leases (but excluding derivatives) was £437.7m, an increase of £49.3m over the year. Net debt excluding derivatives increased, owing to 50 new pub openings costing £87.6m, reinvestment of £38.4m, share buybacks of £32.8m and the dividend payments of £5.2m. Year-end net-debt-to-EBITDA (earnings before interest, tax, depreciation and amortisation) was 2.98 times, up from 2.70 times 12 months earlier.A final dividend of 8.0p has been declared, leaving the total dividend for the year unchanged from last year at 12p, although last year the regular dividend was supplemented by a special dividend payment of 7p per share. --jh