RNS Number : 4987A
Wetherspoon (JD) PLC
22 January 2020
22 January 2020
J D WETHERSPOON PLC
Q2 Quarterly Business Update
J D Wetherspoon plc ('J D Wetherspoon' or 'the Company')
announces its Q2 business update. The Company's interim results for
the six months ending 26 January 2020 are expected to be announced
on 20 March 2020.
For the first 12 weeks of the second quarter (to 19 January
2020), like-for-like sales increased by 4.7% and total sales by
4.2%. In the year to date (25 weeks to 19 January 2020),
like-for-like sales increased by 5.0% and total sales by 4.9%.
Property and buybacks
Since the start of the financial year, the Company has opened 1
new pub and sold 5 and intends to open a further 10 to 15. It is
expected that around GBP80m will be spent this year on new pubs and
The Company has spent GBP57m in the year to date buying the
freehold reversions of 18 pubs of which it was previously the
tenant. Full-year reversion expenditure is expected to be around
GBP85m (2019: GBP77m).
A total of GBP320m has been spent on reversions since 2014.
In addition, the company has spent GBP516m on buying and
cancelling 53% of its own shares since the buyback program started
The number of shares in issue has been reduced from 221,512,519
The Company remains in a sound financial position. Net debt (pre
IFRS16) at the end of this financial year is currently expected to
be between GBP780m and GBP820m, slightly higher than previously
anticipated, due to higher than anticipated capital
Expenditure on reversions and buybacks, referred to above,
approximately equals company debt - if the company had not bought
shares or reversions it would be more or less debt-free, having
financed dividends, the repayment of 2003 borrowings of
approximately GBP300m and the opening of a net 239 pubs, from free
Commenting on corporate governance issues, the chairman of
Wetherspoon, Tim Martin, said:
"In an important high court case involving Wetherspoon, the
judge said that he would assume written statements by witnesses
were true, unless contradicted by barristers in
"This sensible principle of justice is also implicit in the
'comply or explain' provisions of corporate governance guidelines
"Comply or explain must mean that the code envisaged flexibility
and did not advocate a 'one-type-suits-all' approach.
"If shareholders say nothing in response to company
explanations, which have been made in order to comply with the
code, it is reasonable to assume their assent.
"However, in reality, detailed explanations are ignored by many
fund managers and their corporate governance advisers - comply or
explain has been corrupted to mean 'comply or be humiliated in
public and voted off the board' - a risk which most NEDs are
understandably reluctant to take.
"A likely reason for ignoring explanations, in defiance of the
code, is that it's simpler and cheaper to apply arbitrary standards
such as the 'nine-year rule'- rather than engaging with companies
and considering their explanations.
"Corporate governance adviser PIRC, for example, advertises for
temporary staff for the company results' "season", and it appears
to demand a blanket nine-year rule, almost irrespective of
"In effect, PIRC purports to impose its own version of the code
on companies, with no qualifications, or remit, for that
"In a further illustration of how the code operates in practise,
Wetherspoon's largest shareholder, Columbia Threadneedle (CT),
withdrew support for two of our long-serving NEDs for
non-compliance with the 'nine-year rule', with no advance warning
or discussion, shortly before our 2018 AGM.
"CT unilaterally took this action, in spite of detailed
explanations in the preceding years in our annual reports.
"CT and fellow shareholder Blackrock's OWN boards however, very
sensibly, do not observe the nine-year rule - both laud
'independent' NEDs with longer tenure than nine years.
"In other words, one rule for CT and Blackrock - and another for
"These issues were reviewed in some detail in our November 2019
trading statement (appendix 1). It would be beneficial if all
shareholders could read this appendix. It is not boilerplate and
the future of companies like Wetherspoon, and many others, is
seriously undermined by the operation of the current code.
"As in previous years, there has been no objection or critique
whatsoever, in writing or in person, from any shareholder,
individual or organisation, of the points raised in our November
"It is an unfortunate reflection on complacency in the City and
among unaccountable 'rule-makers' that institutions like Columbia
Threadneedle, Blackrock - and corporate governance adviser PIRC -
have not felt the need to issue a proper or detailed response to
the serious issues raised by Wetherspoon.
"The main consequence of the current governance system is
short-termist and inexperienced boards, which have minimal
representation from executives and the workforce - the people who
are best placed to understand and run the business.
"These factors are obviously damaging for customers, employees
and the economy - as well as for shareholders.
"The UK, of course, needs a sensible system of corporate
governance. However, the current system is remote,
counterproductive and inflexible, which are also the
characteristics of many major shareholding institutions and their
Commenting on Brexit, Tim Martin, said:
"It is disappointing to note that pro-remain organisations like
the CBI and the Food and Drink Federation are, even at this late
stage, doubling down on 'project fear' stories.
"A dramatic headline on the BBC's main news website ("Brexit:
Price rises warning after chancellor vows EU rules divergence", 18
January) predicted dire consequences in the event of 'divergence'
from the EU.
"The article contained a jobs warning from the CBI, which
previously promoted the disastrous exchange rate mechanism and the
euro, and a food prices warning from the Food and Drink Federation
"The CBI's warnings about job losses and recession in the event
of a leave vote in 2016 have proved to be mythical - over a million
jobs have been created.
"The FDF's warnings about food price rises are absurd- the EU is
a highly protectionist organisation which imposes tariffs and
quotas on about 13,000 non-EU imports including many food and drink
products such as bananas, rice, oranges, coffee and wine.
"Elimination of tariffs will obviously reduce prices.
"It is high time these organisations took a wise-up pill and
supported the democratic decisions of the UK."
Tim Martin said:
"We continue to anticipate a trading outcome for this financial
year in line with our previous expectations."
Appendix 1 - Corporate Governance (and guaranteed eventual
destruction), Extract from JD Wetherspoon Q1 trading update, 13
Commenting on corporate governance issues, the Chairman of
Wetherspoon, Tim Martin, said:
"While acknowledging the need for a sensible system of corporate
governance (CG), I have, for many years, expressed the urgent need
for modification of the CG code, summarised in our 2019 annual
"There can be little doubt that the current system has directly
led to the failure or chronic underperformance of many businesses,
including banks, supermarkets, and pubs.
"It has also led to the creation of long and almost unreadable
annual reports, full of jargon, clichés and platitudes - which
confuse more than they enlighten.
"I believe by vesting so much power in non-executive directors
(NEDs), the system is also disenfranchising executives and the
workforce - the people who have real expertise and are the
cornerstone of business success.
"Another tectonic fault is that the institutions and advisers
which oversee the code, as described below, do not themselves
adhere to the rules they impose on others.
"The vast gap between the technocrats who make the rules and
commercial reality is illustrated by the 2016 CG code, which refers
to shareholders 64 times, employees three times and customers not
"In contrast, commercial reality, which should be reflected in
the code, is encapsulated in Sam Walton's Walmart mantra - "Who's
number one? THE CUSTOMER!"
"A core problem is that CG institutionalises short-termism,
inexperience and navel-gazing.
"'Independent' non-executive directors (NEDS), who work part
time, are limited by the code to nine years' service and stay, on
average, for just over four years.
"It is also common practise for there to be only two executive
directors, the most senior of whom, the CEO, averages only about
five years' - managements and workers are thus absurdly
"A cursory glance at the board compositions of major UK PLCs
underlines the issues.
"Tesco, for example, which has 450,000 employees and is the UK's
largest supermarket group, has only two executive directors, with
total service of about nine years and 11 NEDs with total service of
38 years. The overall average, including NEDs and executives, is
only 3.7 years.
"This sort of corporate structure is mirrored in banks,
retailers and pubs - where long-term performance, over recent
decades, has usually veered between poor and catastrophic.
"Adherence to a tick-box culture means, for example, that there
are no NEDS on the boards of major UK banks
(HSBC/RBS/Barclays/Lloyds) who have any personal experience of the
last banking crisis at their company - when it is clear that
inexperienced boards were a major factor in that crisis.
"In contrast, non-compliant companies like Wetherspoon (average
tenure 15 years), Fullers' (10 years), Dart Group (12 years) and
Berkshire Hathaway (19 years) have often fared far better, with
experienced boards, long-term shareholders and a long-term
"Compliance with CG guidelines increases the risk of failure -
companies like Northern Rock, HBOS, Carillion, Thomas Cook and
Mothercare were compliant with the code, but had shockingly low
levels of experience (around 4 years per director) and executive
"Stefano Bonini and others (Harvard Law School Forum, June 2017)
highlighted this problem and correctly said that "long-tenured
directors ... decrease the likelihood of corporate scandals ...
(and) ... accumulate information and knowledge."
"A Noddy-in-Toyland aspect of the current farce, as indicated
above, is that the 'comply or explain' principle, which underlies
the code, is not observed, in practise, by many 'enforcers' - ie
institutions or their corporate advisers.
"'Comply or explain' means that advisers and investors have an
obligation to weigh up explanations for non-observance of the
"However, in reality, many never do - including, it seems,
governance advisers such as PIRC.
"For example, Wetherspoon's largest institutional shareholder,
Columbia Threadneedle (CT), without any advance notice to the
Company, did not support the re-election of two of our long-serving
directors at last year's AGM - in spite of our repeated
explanations in annual reports.
"As a result, three of our four NEDs felt compelled to offer
their resignations - inevitably destabilising the company in the
"Yet CT's owner is Ameriprise (a US company), two of whose
independent NEDs have themselves exceeded the nine-year rule.
"The Ameriprise chairman also breaches the nine-year rule - and
combines the roles of chairman and CEO, a further breach of UK
"In this context, the fact that CT is a US company is
irrelevant. It has decided that one rule applies to itself, but
that another should apply to Wetherspoon.
"In addition, US shareholder, Blackrock did not support
Wetherspoon's long serving NEDs last year, but they also have
directors who exceed the 9-year rule on their board.
"Not all institutions behave like CT and Blackrock. Two of our
largest shareholders strongly support Wetherspoon's approach as
illustrated in letters written to the company. Common sense does
exist, in small pockets, in the City.
"Indeed, in thousands of meetings with shareholders in the last
27 years, I and my colleagues have almost never been asked about
corporate governance - although the guidelines are clearly the
predominating factors in PLC board composition - and at AGMs.
"The tick-box malaise, to which only strong-willed contrarians -
and those with no financial interest in the perpetuation of the
current system - are immune, is particularly rife at CG
"For example, the CG adviser PIRC recommends its clients to vote
against my own re-election as chairman of Wetherspoon on the basis,
inter alia, that I have been chairman for more than nine years (a
milestone I hit in 1992).
"Amazingly, while advising Wetherspoon that it should have four
or five 'independent' NEDS, the hypocritical PIRC has, itself, just
one on its own board - someone whose only apparent employment
experience has been at a local authority.
"However, PIRC's own website misleadingly says that it adopted,
in 1988, "a private company structure with...executive directors
and a board of non-executives drawn from the founding pension funds
and public figures" - a structure that clearly no longer applies
"Furthermore, the founder of PIRC, Alan MacDougall who still
sits on his own board after 33 years (but seems to believe I
shouldn't be on mine), has no relevant PLC experience having,
according to his LinkedIn profile, a "BA Sociaology (sic) 2:2 -
Social policy and Soviet Studies" and work experience at the
National Union of Mineworkers and the Greater London Council.
"MacDougall has questionable personable judgement, referring to
himself on his Twitter account as a "governance expert" and an
"ex-Eurocommunist". In my opinion, many people equate communism
with fascism, since millions of Europeans perished or were
imprisoned under its yoke.
"It is perhaps a concern that PIRC has a low rating of 2.6 on
the employment website Glassdoor, and appears to rely on
inexperienced and temporary workers to analyse complex company
reports for corporate governance purposes.
"In summary, my view is the UK CG system is up the spout - and
is itself a threat to listed companies - and therefore to the UK
"By institutionalising inexperience, the code guarantees the
eventual destruction of the culture or 'DNA' of successful
companies - and culture has 'strategy' (with which the code is
obsessed) for breakfast, as respected management philosopher Peter
Drucker has said.
"Board structures should probably more closely resemble the
successful Fullers - a chairman with 41 years' experience at the
company, combined with directors with extensive executive
experience and long-term loyalty.
"In addition, genuine observance of 'comply or explain', rather
than current lip service, should be mandatory. One-size-fits-all
does not work in the real world.
"Board composition à la Fullers can't guarantee future corporate
success - but rigid compliance with current CG guidelines will
almost certainly guarantee eventual mediocrity or failure.
"City regulators and lawmakers should make haste. Even
Wetherspoon, a medium-sized company, has 42,000 employees, 13,000
of whom are shareholders, and it contributes about one pound in
every thousand of UK taxes (GBP764 million in 2019) - it's not in
anyone's interest to kill a golden goose.
"But, perhaps above all, no sensible business, looking to the
long term and genuinely apprised of the reality of the CG system,
would float on the London stock market today - who wants to
guarantee eventual destruction, after all?"
John Hutson Chief Executive Officer 01923 477777
Ben Whitley Finance Director 01923 477777
Eddie Gershon Company Spokesman 07956 392234
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 26 July 2020.
6. The next trading update is expected to be the Company's
interim results statement on 20 March 2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact firstname.lastname@example.org or visit www.rns.com.
(END) Dow Jones Newswires
January 22, 2020 02:00 ET (07:00 GMT)
Wetherspoon ( J.d.) (LSE:JDW)
Gráfica de Acción Histórica
De Jul 2020 a Ago 2020
Wetherspoon ( J.d.) (LSE:JDW)
Gráfica de Acción Histórica
De Ago 2019 a Ago 2020