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RNS Number : 3706E
Wetherspoon (JD) PLC
07 July 2021
07 July 2021
J D WETHERSPOON PLC
UPDATE ANNOUNCEMENT
J D Wetherspoon plc (the "company") today publishes an update
announcement. The preliminary results are due to be released on 1
October 2021.
Current trading
As at 4 July 2021, 850 Wetherspoon pubs were open, out of a
total of 860. Most of the closed pubs are at airports.
Between 12 April and 16 May, when only outdoor trading was
permitted, about 500 pubs were opened, and like-for-like* bar and
food sales were -49.0%.
Like-for-like sales from 17 May to 4 July, when pubs were fully
open, were -14.6%.
For the period from 17 May to 10 June, before the UEFA Euro 2020
football tournament started, like-for-like sales were -8.1%. From
10 June to 4 July, during the tournament, like-for-like sales were
-20.8%.
Apart from a limited number of exceptions for individual
matches, Wetherspoon pubs have not televised UEFA Euro 2020
football matches.
(* like-for-like sales are in comparison with the pre-pandemic
financial year of 2019)
Trading has been helped by the addition of outside seating.
Landlords, landowners, and local and licensing authorities have
been extremely flexible in accommodating extra outside space -
which has helped Wetherspoon and the licensed trade generally.
Property
In the last 6 months, the company has opened two new pubs, in
Headingley, a suburb of Leeds, and in Northallerton, North
Yorkshire.
The company has a pipeline of 75 projects. 18 are new pubs and
57 are extensions and upgrades to existing pubs.
The first tranche of new pubs and extensions will be located in
towns and cities including Birmingham, Newport Pagnell, Heswall,
Sheffield, Felixstowe, Dublin, Haverfordwest, Carmarthen and
Glasgow.
Once the 75 projects are completed, Wetherspoon plans to invest
approximately GBP750 million on a similar range of projects, in the
following 10 years, which may result in the creation of about
20,000 jobs.
Financial position
The company remains in a sound financial position. Net debt was
GBP865 million on 4 July 2021 and is expected to be around GBP833
million at the end of this financial year.
The company has received covenant waivers, up to and including
the quarter to July 2021. The normal EBITDA-related covenants have
been replaced with a minimum liquidity threshold of GBP75 million.
Liquidity was GBP224 million on 4 July 2021 and is expected to be
around GBP253 million at the end of the financial year.
The company proposes to enter discussions with its lenders
regarding waivers for the next financial year in due course.
VAT
It is an important principle of taxation that taxes should be
fair and equitable.
One area of undoubted unfairness, which creates economic
distortions, relates to VAT. Supermarkets pay zero VAT on food, but
pubs and restaurants pay 20%, in normal circumstances.
The chancellor reduced VAT on food for the hospitality industry
to 5% last year, still above the rate paid by supermarkets, which
was nonetheless welcome. However, it is now proposed that VAT
returns to 20%, in stages, in the next year.
The interim rise to VAT of 12.5%, in September 2021, will result
in Wetherspoon having to increase food prices by around 40 pence
per meal. The VAT rise will make the entire hospitality industry
less competitive vis a vis powerful supermarkets.
The top three quoted supermarkets (Tesco, J Sainsbury and Wm
Morrison) made pre-tax and pre-exceptional profits of GBP2.361
billion in 2019. The top three pub companies (Mitchells and
Butlers, Greene King and Wetherspoon) made GBP647 million in the
same year.
For many years, UK governments have therefore behaved like Monty
Python's Dennis Moore - who robbed the poor (in this case pubs and
restaurants) to help the rich (supermarkets).
Treating the same product - food - the same way for tax purposes
makes economic sense.
Apparent tax benefits to the Treasury, from higher taxes on food
for the hospitality industry, are a chimera, since tax distortions
cause lower growth.
The main impact of tax inequality is on high streets and town
and city centres, which heavily depend on a diversity of prosperous
hospitality businesses for economic, social and employment
success.
Some of the major licensed trade companies have not, in the
past, campaigned for tax equality, possibly due to their historic
association with brewers - supermarkets are most brewers' biggest
customers.
However, it appears that the chancellor, the Treasury and many
MP's are at least aware of the issue. Hence, the short-term
reduction in VAT to 5% during the pandemic, exactly reflecting the
long-term outcome sought by Wetherspoon, Fullers, Youngs, St
Austell and other family brewers.
Misrepresentations
Wetherspoon has almost never requested corrections or apologies
from newspapers or broadcasters, with which it has had a close
association, in the four decades of its existence, to the start of
the pandemic.
However, since March 2020 many misrepresentations and
inaccuracies have appeared in the media.
The company has successfully sought corrections and apologies
from the organisations concerned.
Corrections and/or apologies were received in 2020 from, among
others, The Times, The Daily Mail, Sky News, The Daily Star, the
Independent and the Guardian.
Recently, additional corrections and/or apologies have been
received from The Daily Telegraph, the Metro, Yahoo Finance and the
London Economic, following a slew of erroneous stories which said
that the company was suffering a staff shortage and had lobbied the
government to relax immigration rules from the EU.
(Please see link to a summary of press apologies and
corrections, extracted from the latest edition of
Wetherspoon News: Press apologies and corrections )
Outlook
The chairman of Wetherspoon, Tim Martin, said:
"The company continues to expect to make a loss for the year
ending 25 July 2021.
"In a trading update of 19 January 2021 (please see link:
Further Covid-19 Update, Equity Placing ), the company's principal
'scenario' estimated sales in the financial year starting 26 July
2021 to be in line with financial year 2019, which remains our
current best estimate, on the basis that restrictions are ended, as
the government currently intends."
Enquiries:
John Hutson Chief Executive Officer 07970 477377
Ben Whitley Finance Director 07970 477428
Eddie Gershon Company Spokesman 07956 392234
Please send any questions by email to
investorqueries@jdwetherspoon.co.uk
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout the UK. The
company aims to provide customers with good-quality food and drink,
served by well-trained and friendly staff, at reasonable prices.
The pubs are individually designed, and the company aims to
maintain them in excellent condition.
2. Visit our website: www.jdwetherspoon.com
3. This announcement has been prepared solely to provide
additional information to the shareholders of J D Wetherspoon, to
meet the requirements of the FCA's Disclosure and Transparency
Rules. It should not be relied on by any other party, for any other
purposes. Forward-looking statements have been made by the
directors in good faith, using information available up until the
date on which they approved this statement. Forward-looking
statements should be regarded with caution, because of the inherent
uncertainties in economic trends and business risks.
4. This announcement contains inside information on J D Wetherspoon plc.
5. The current financial year comprises 52 trading weeks to 25 July 2021.
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END
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