TIDMJDW

RNS Number : 8959G

Wetherspoon (JD) PLC

20 March 2020

20 March 2020

J D WETHERSPOON PLC

PRELIMINARY RESULTS

(For the 26 weeks ended 26 January 2020)

 
FINANCIAL HIGHLIGHTS 
 
  Before exceptional items (pre-IFRS 16) 
     Revenue GBP933.0m (2019: GBP889.6m)                                                        +4.9% 
     Like-for-like sales                                                                        +5.0% 
     Profit before tax GBP57.9m (2019: GBP50.3m)                                               +15.2% 
      Operating profit GBP76.6m (2019: GBP63.5m)                                               +20.6% 
      Earnings per share (including shares held in trust) 43.3p                                +15.8% 
      (2019: 37.4p) 
     Free cash flow per share 46.7p (2019: 67.9p)                                              -31.2% 
     Interim dividend cancelled (2019: 4.0p) 
 
  Before exceptional items (post-IFRS 16) 
  IFRS 16 did not apply in the previous financial year, 
  so no comparison is included. 
                            Profit before tax GBP51.6m. 
                             PBT is lower because IFRS 16 assumes that the 'right 
                             to occupy' leasehold property for the term of the lease 
                             is an 'asset', which is approximately equivalent in value 
                             to future rental payments due - in this case estimated 
                             at GBP579m. It also assumed a liability in respect of 
                             future rental payments ('lease liabilities') of GBP584m. 
                             The depreciation charge has increased by GBP24m as a 
                             result of the amortisation of the new 'asset' over the 
                             remaining term of the leases. A notional interest charge 
                             (which will never be paid and is an accounting fiction) 
                             has also been assumed in respect of the liability of GBP584m 
                             of future rental payments. 
                             The IFRS 16 definition of PBT has not declined at the 
                             same amount as the increased depreciation and interest 
                             because the rent that was actually paid in the period 
                             (with some adjustments) has not been charged to the income 
                             statement. In other words, IFRS 16 has, broadly speaking, 
                             substituted actual rental payments for a complex system 
                             of notional payments or charges. 
     Operating profit GBP80.8m. 
      The Operating profit is GBP4.2m higher under IFRS 16 
      because the rental charge of about GBP28m (which represents 
      the actual rent paid) has been substituted for a depreciation 
      charge of GBP24m. 
     Earnings per share (including shares held in trust) 38.5p 
 
 
  After exceptional items (pre-IFRS 16) 
     Profit before tax GBP42.0m (2019: GBP48.6m)                                               -13.7% 
      Operating profit GBP76.6m (2019: GBP63.5m)                                               +20.6% 
     Earnings per share (including shares held in trust) 29.8p                                 -17.2% 
      (2019: 36.0p) 
 
 
  After exceptional items (post-IFRS 16) 
     Profit before tax GBP35.7m 
     Operating profit GBP80.8m 
     Earnings per share (including shares held in trust) 25.0p 
 
 

Exceptional items, which totalled GBP15.9m resulted in a cash inflow of GBP2m.

Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:

"As recently reported, in the six weeks to 8 March 2020, like-for-like sales increased by 3.2% and total sales by 2.9%. In the following week, to 15 March, sales declined by 4.5%. In the early part of the current week, following the Prime Minister's advice to avoid pubs, sales have declined at a significantly higher rate.

"It is obviously very difficult to predict, in these circumstances, how events will unfold in future weeks and months, but we now anticipate profits being below market expectations, so long as the current health scare continues. As a result of this uncertainty, it is impossible to provide realistic guidance on our performance in the remainder of the financial year.

"The company has decided to delay most capital projects and to reduce expenditure, where possible, including the cancellation of the interim dividend. As a result of these actions, combined with the Government's proposals on business rates relief and credit guarantee facilities, the company believes it has sufficient liquidity to maintain operations at a substantially lower level of sales.

"As many companies and commentators have noted, the current health crisis places the hospitality industry, in particular, under great pressure. Wetherspoon, like our peers, will be working closely with all parties, including employees, banks, landlords and suppliers, in order to emerge from the situation in the best shape."

Enquiries:

   John Hutson                         Chief Executive Officer      01923 477777 
   Ben Whitley                          Finance Director                  01923 477777 
   Eddie Gershon                     Company spokesman        07956 392234 

Photographs are available at: newscast.co.uk

Notes to editors

1. J D Wetherspoon owns and operates pubs throughout the UK and Ireland. 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 jdwetherspoon.com 

3. This announcement has been prepared solely to provide additional information to the shareholders of J D Wetherspoon, in order to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied on by any other party, for other purposes. Forward-looking statements have been made by the directors in good faith using information available up until the date that they approved this statement. Forward-looking statements should be regarded with caution because of inherent uncertainties in economic trends and business risks.

4. The annual report and financial statements 2019 has been published on the Company's website on 13 September 2019.

   5.         The current financial year comprises 52 trading weeks to 26 July 2020. 
   6.         The next trading update will be issued on 13 May 2020. 

CHAIRMAN'S STATEMENT AND OPERATING REVIEW

In the 26 weeks ended 26 January 2020, like-for-like sales increased by 5.0%,

with total sales increasing by 4.9% to GBP933.0m (2019: GBP889.6m).

Like-for-like bar sales increased by 4.2% (2019: 5.9%), food by 5.6% (2019: 7.1%) and fruit/slot machines by 20.3% (2019: 5.7%). Like-for-like hotel room sales decreased by 1.3% (2019: increased by 0.3%). Bar sales were 60.0% of total sales, food 36.1%, fruit/slot machines 2.8% and rooms 1.1%.

Pre-IFRS 16 operating profit increased by 20.6% to GBP76.6m (2019: GBP63.5m). The operating margin was 8.2% (2019: 7.1%). Profit before tax and exceptional items increased by 15.2% to GBP57.9m (2019: GBP50.3m). Higher sales, higher gross profit and lower property costs contributed to the increase, offsetting higher wages, repairs and taxes.

Earnings per share, including shares held in trust by the employee share scheme, and before exceptional items, increased by 15.8% to 43.3p (2019: 37.4p).

As illustrated in the table in the tax section below, the company paid taxes of GBP402.8m in the period under review (2019: GBP375.6m), which is 31.9% higher than five years ago.

Net interest was covered 4.1 times by profit before interest, tax and exceptional items (2019: 4.0 times). Total capital investment was GBP128.5m in the period (2019: GBP95.5m). GBP70.7m was spent on freehold reversions of properties where Wetherspoon was the tenant (2019: GBP55.7m), GBP34.1m on 'reinvestment' in existing pubs (2019: GBP24.9m) and GBP23.7m on new pub openings and pub extensions (2019: GBP14.8m).

Exceptional items totalled GBP15.9m (2019: GBP1.6m) and resulted in a cash inflow of GBP2m. GBP6.4m has been charged in respect of the disposal of 6 pubs in the period and in respect of a number of future disposals and aborted transactions. Following a review, an exceptional charge of GBP9.5m has been made, reflecting a revised view of the future value of IT projects.

Free cash flow, after capital investment of GBP34.5m in existing pubs (2019: GBP26.1m), GBP9.3m for share purchases for employees (2019: GBP9.0m) and payments of tax and interest, was GBP49.0m (2019: GBP71.7m). Free cash flow per share decreased by 31.2% to 46.7p (2019: 67.9p). The decrease was due mainly to the timing of supplier payments, an earlier payment of corporation tax and increased reinvestment.

Dividends

In view of current uncertainty, the board has decided to cancel the interim dividend (2019: GBP4.2m).

Corporation tax

We expect the overall corporation tax charge for the financial year, including current and deferred taxation, to be approximately 21.6%, on a pre-IFRS 16 basis, before exceptional items (2019: 21.4%).

As in previous years, the company's tax rate is higher than the standard UK tax rate, owing mainly to depreciation which is not eligible for tax relief.

Comment on IFRS 16

I believe the IFRS 16 is confusing and misleading. Common sense suggests that rent should be regarded as a cost in the income statement. Instead, a complex formula disregards actual rent paid and substitutes a notional asset (the 'right to occupy'), which attracts a depreciation charge, and a notional interest charge based on the total rental liability for the lease term, even though the great majority of the rental liability does not crystallise, in almost all cases, for many years.

Part of the purpose may be to equate rent with debt. However, for companies like Wetherspoon at least, rent bears almost no resemblance to debt.

Debt is invariably for a fixed term and the full amount is repayable at the end of the term. Debt therefore carries a refinancing risk.

In contrast, Wetherspoon leases, for example, carry no refinancing risk - there is just a liability to pay the rent when it falls due.

Of course leases carry a great risk- as so many restaurant companies and retailers have unfortunately demonstrated. However, it does not make sense to treat future liabilities in this way - why not treat future business rates or VAT liabilities in this way, if it's appropriate for rent?

The most important criticism of IFRS 16 is that the complexity it creates means that it will only be understood by experts - in general, good for the experts, but bad for business efficiency, shareholders and the public.

Share buybacks

During the half year, 419,741 shares (0.40% of the share capital) were repurchased by the company for cancellation, at a cost of GBP6.5m, an average cost per share of 1,523p (2019: GBPNil).

Financing

As at 26 January 2020, the company's net debt, including bank borrowings and finance leases, but excluding derivatives, was GBP804.5m, an increase of GBP67.5m, compared with that of the previous year end (2019: GBP737.0m).

The net-debt-to-EBITDA ratio was 3.54 times at the period end (28 July 2019: 3.36 times).

On 20 August 2019, the company entered into a new seven-year private placement agreement, which extends its total facilities, excluding finance leases, from GBP895m to GBP993m.

As previously stated, it is intended that the company's net-debt-to-EBITDA ratio will be around 3.5 times for the foreseeable future. The ratio might rise for a temporary period, if there were, for example, a sudden deterioration in trading, in which instance the company would seek to reduce the level in a timely manner. Insofar as it is possible to generalise, the board believes that debt levels of between 0 and 2 times EBITDA are a sensible long - term benchmark. A higher level of debt may be justifiable - at times when interest rates are low and other factors are favourable.

Property

During the period, we opened one new pub and disposed of six, bringing the number open at the period end to 874. The company is also redeveloping a number of successful pubs, usually adding extra interior customer space, a garden, staff rooms and, in some cases, hotel rooms. Recent examples include the Prior John in Bridlington, the Sirhowy in Blackwood and the Blue Bell in Scunthorpe.

Following a review of our estate, we placed around 130 pubs on the market in the last few years, most of which have now been sold.

10 years ago our freehold/leasehold split was 41.3/58.7%. As a result of investment in the course of the last few years in 'freehold reversions', the split was 63.6/36.4% at the period end.

UK taxes and regulation

Pubs and restaurants pay proportionally far higher levels of UK tax than do supermarkets. The main disparity relates to VAT (value added tax), since supermarkets pay no VAT in respect of their food sales, whereas pubs pay 20%, enabling supermarkets to subsidise their alcoholic drinks prices. Pubs also pay approximately 18p per pint in respect of business rates, while supermarkets pay less than 2p per pint.

In addition, the government has, in recent years, introduced both a 'late-night levy' and additional fruit/slot machine taxes, further reducing the competitive position of pubs in relation to supermarkets.

The tax disparity with supermarkets is unfair. Pubs create significantly more jobs and more taxes per pint or per meal than do supermarkets and it does not make social or economic sense for the UK tax régime to favour supermarkets. We acknowledge the need for companies to pay a reasonable level of tax, but hope that legislators will make prompt progress in creating a level playing field for all businesses which sell similar products.

The taxes paid by Wetherspoon in the period under review were as follows:

 
First half               2020   2019 
(estimate - UK only)     GBPm   GBPm 
VAT                      182.5  175.5 
Alcohol duty             89.4   86.1 
PAYE and NIC             62.2   59.0 
Business rates           29.0   28.7 
Corporation tax          21.5    8.5 
Fruit/slot machine 
 duty                     6.5    5.5 
Climate change levy       5.1    5.1 
Stamp duty                3.6    2.6 
Sugar tax                 1.4    1.5 
Fuel duty                 1.1    1.1 
Premises licences and 
 TV licences              0.4    0.4 
Carbon tax                 -     0.4 
TOTAL TAX                402.7  375.6 
Tax per pub (GBP000)     462.0  427.3 
Tax as % of sales        43.2%  42.2% 
Pre-exceptional profit 
 after tax               45.4   39.5 
Profit after tax as 
 % of sales              4.9%   4.4% 
 

Further progress

As previously highlighted, the company's philosophy is to try continuously to upgrade as many areas of the business as possible.

The Food Standards Agency, in association with local authorities, regularly inspects licensed and other food businesses in the UK and awards marks from zero to five, according to the standards it finds.

Currently, 97.1% of our pubs have obtained the maximum five rating (2019: 97.6%), under the FSA scheme, with 99.1% of pubs receiving a rating of four or above (2019: 99.5%). This record reflects extremely hard work by our central catering, audit and operations team, as well as by the excellent teams in our pubs.

We have again been recognised, for the 17th year in a row, as a 'Top Employer UK' by the Top Employers Institute, in association with the Guardian newspaper.

A pub company is only as good as its employees - and Wetherspoon recognises this through its bonus and training schemes. We paid GBP23m in respect of bonuses and free shares to employees in the period (2019: GBP21m), of which 98% was paid to staff below board level and 88% was paid to staff working in our pubs.

In addition, the company runs a government-approved apprenticeship scheme and participates in a professional management diploma and degree course, in conjunction with Leeds Beckett University.

Corporate governance

In our trading update of 22 January, I commented on corporate governance as follows:

"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 cross-examination.

"This sensible principle of justice is also implicit in the 'comply or explain' provisions of corporate governance guidelines (the 'code').

"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 explanations.

"In effect, PIRC purports to impose its own version of the code on companies, with no qualifications, or remit, for that approach.

"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 UK PLC.

"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 review.

"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 advisers."

Current trading and outlook

As recently reported, in the six weeks to 8 March 2020, like-for-like sales increased by 3.2% and total sales by 2.9%. In the following week, to 15 March, sales declined by 4.5%. In the early part of the current week, following the Prime Minister's advice to avoid pubs, sales have declined at a significantly higher rate.

It is obviously very difficult to predict, in these circumstances, how events will unfold in future weeks and months, but we now anticipate profits being below market expectations, so long as the current health scare continues. As a result of this uncertainty, it is impossible to provide realistic guidance on our performance in the remainder of the financial year.

The company has decided to delay most capital projects and to reduce expenditure, where possible, including the cancellation of the interim dividend. As a result of these actions, combined with the Government's proposals on business rates relief and credit guarantee facilities, the company believes it has sufficient liquidity to maintain operations at a substantially lower level of sales.

As many companies and commentators have noted, the current health crisis places the hospitality industry, in particular, under great pressure. Wetherspoon, like our peers, will be working closely with all parties, including employees, banks, landlords and suppliers, in order to emerge from the situation in the best shape.

Tim Martin

Chairman

19 March 2020

Appendix 1 - Corporate Governance (and guaranteed eventual destruction), Extract from JD Wetherspoon Q1 trading update, 13 November 2019

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 report.

"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 at all.

"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 underrepresented.

"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 view.

"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 representation.

"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 guidelines.

"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 process.

"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 guidelines.

"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 advisers.

"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 today.

"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 economy.

"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?"

PRE-IFRS 16 INCOME STATEMENT for the 26 weeks ended 26 January 2020

 
 J D Wetherspoon plc, company 
  number: 1709784 
 
                       Notes     Unaudited     Unaudited     Unaudited     Unaudited       Audited       Audited 
                                  26 weeks      26 weeks      26 weeks      26 weeks      52 weeks      52 weeks 
                                     ended         ended         ended         ended         ended         ended 
                                26 January    26 January    27 January    27 January       28 July       28 July 
                                      2020          2020          2019          2019          2019          2019 
                                    Before         After        Before         After        Before         After 
                               exceptional   exceptional   exceptional   exceptional   exceptional   exceptional 
                                     items         items         items         items         items         items 
                                    GBP000        GBP000        GBP000        GBP000        GBP000        GBP000 
--------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Revenue                 1         933,021       933,021       889,606       889,606     1,818,793     1,818,793 
 Operating costs                 (856,461)     (856,461)     (826,135)     (826,135)   (1,686,876)   (1,686,876) 
--------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Operating profit        2          76,560        76,560        63,471        63,471       131,917       131,917 
 Property 
  (losses)/gains         3           (172)         (172)         3,772         3,772         5,599         5,599 
 Property (losses) 
  - exceptional          3                      (15,948)                     (1,651)                     (7,040) 
--------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Profit before 
  interest 
  and tax                           76,388        60,440        67,243        65,592       137,516       130,476 
 Finance income          6              41            41            26            26            41            41 
 Finance costs           6        (18,508)      (18,508)      (16,993)      (16,993)      (35,098)      (35,098) 
--------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Profit before tax                  57,921        41,973        50,276        48,625       102,459        95,419 
 Income tax expense      7        (12,487)      (12,487)      (10,776)      (10,776)      (22,830)      (22,830) 
 Income tax expense 
  - exceptional          7                         1,801                          99                         188 
--------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Profit before IFRS 16              45,434        31,287        39,500        37,948        79,629        72,777 
----------------------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
 Earnings per ordinary 
  share (p) 
  - Basic[1]             8            44.3          30.5          38.3          36.8          77.2          70.6 
  - Diluted[2]           8            43.3          29.8          37.4          36.0          75.5          69.0 
--------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 

RECONCILIATION TO THE STATUTORY PROFIT for the 26 weeks ended 26 January 2020

 
                         Notes     Unaudited     Unaudited     Unaudited     Unaudited       Audited       Audited 
                                    26 weeks      26 weeks      26 weeks      26 weeks      52 weeks      52 weeks 
                                       ended         ended         ended         ended         ended         ended 
                                  26 January    26 January    27 January    27 January       28 July       28 July 
                                        2020          2020          2019          2019          2019          2019 
                                      Before         After        Before         After        Before         After 
                                 exceptional   exceptional   exceptional   exceptional   exceptional   exceptional 
                                       items         items         items         items         items         items 
                                      GBP000        GBP000        GBP000        GBP000        GBP000        GBP000 
----------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Profit before IFRS 16                45,434        31,287        39,500        37,948        79,629        72,777 
 Operating costs                      28,443        28,443             -             -             -             - 
 Amortisation of 
  right-of-use assets     25        (24,425)      (24,425)             -             -             -             - 
 Lease premium 
  amortisation                           192           192             -             -             -             - 
 Disposal of leases        3             347           347             -             -             -             - 
 Finance costs             6        (11,078)      (11,078)             -             -             -             - 
 Finance income            6             225           225             -             -             -             - 
 Income tax expense        7           1,189         1,189             -             -             -             - 
----------------------  ------  ------------  ------------  ------------  ------------  ------------  ------------ 
 Profit for the period                40,327        26,180        39,500        37,948        79,629        72,777 
------------------------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 

[1] Calculated excluding shares held in trust.

[2] Calculated using issued share capital which includes shares held in trust.

PRE-IFRS 16 CASH FLOW STATEMENT for the 26 weeks ended 26 January 2020

 
 J D Wetherspoon plc, company 
  number: 1709784 
 
                                    Notes    Unaudited    Unaudited    Unaudited    Unaudited     Audited    Audited 
                                                  cash         free         cash         free        cash       free 
                                                  flow         cash         flow         cash        flow       cash 
                                                            Flow[1]                   Flow[1]                Flow[1] 
                                              26 weeks     26 weeks     26 weeks     26 weeks    52 weeks   52 weeks 
                                                 ended        ended        ended        ended       ended      ended 
                                            26 January   26 January   27 January   27 January     28 July    28 July 
                                                  2020         2020         2019         2019        2019       2019 
                                                GBP000       GBP000       GBP000       GBP000      GBP000     GBP000 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Cash flows from operating 
  activities 
 Cash generated from operations       9        131,546      131,546      133,232      133,232     227,176    227,176 
 Interest received                                  40           40           20           20          33         33 
 Interest paid                                (17,027)     (17,027)     (17,556)     (17,556)    (33,957)   (33,957) 
 Corporation tax paid                         (21,480)     (21,480)      (8,539)      (8,539)    (19,661)   (19,661) 
                                                                     -----------  -----------  ----------  --------- 
 Net cash flow from operating 
  activities                                    93,079       93,079      107,157      107,157     173,591    173,591 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 
 Cash flows from investing 
  activities 
 Purchase of property, plant 
  and equipment                               (32,764)     (32,764)     (22,672)     (22,672)    (47,398)   (47,398) 
 Purchase of intangible 
  assets                                       (1,768)      (1,768)      (3,413)      (3,413)     (6,923)    (6,923) 
 Investment in new pubs 
  and pub extensions                          (34,773)                  (15,214)                 (26,778) 
 Freehold reversions and investment 
  properties                                  (70,633)                  (51,902)                 (77,207) 
 Lease premiums paid                                 -                      (93)                    (451) 
 Proceeds of sale of property, 
  plant and equipment                            4,160                     5,818                    9,319 
                                                                     -----------  -----------  ----------  --------- 
 Net cash flow from investing 
  activities                                 (135,778)     (34,532)     (87,476)     (26,085)   (149,438)   (54,321) 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 
 Cash flows from financing 
  activities 
 Equity dividends paid               11        (8,371)                   (8,435)                 (12,652) 
 Purchase of own shares 
  for cancellation                   28        (6,455)                         -                  (5,399) 
 Purchase of own shares for 
  share-based payments                         (9,260)      (9,260)      (8,960)      (8,960)    (16,004)   (16,004) 
 Loan issue cost                     10          (321)        (321)        (462)        (462)     (6,268)    (6,268) 
 Advances under private 
  placement                          10         98,000                         -                        - 
 Repayment of bank loans             10       (25,000)                  (38,863)                 (13,865) 
 Advances under finance 
  lease                              10              -                    12,000                   12,000 
 Finance lease principal 
  payments                           10        (1,431)                     (698)                  (2,106) 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Net cash flow from financing 
  activities                                    47,162      (9,581)     (45,418)      (9,422)    (44,294)   (22,272) 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 
 Net change in cash and 
  cash equivalents                   10          4,463                  (25,737)                 (20,141) 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Opening cash and cash 
  equivalents                        19         42,950                    63,091                   63,091 
 Closing cash and cash 
  equivalents                        19         47,413                    37,354                   42,950 
---------------------------------  ------               ----------- 
 Free cash flow                       8                      48,966                    71,650                 96,998 
---------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Free cash flow per ordinary 
  share                               8                       46.7p                     67.9p                  92.0p 
 

[1] Free cash flow is a measure not required by accounting standards; a definition is provided in our accounting policies.

PRE-IFRS 16 BALANCE SHEET as at 26 January 2020

 
 J D Wetherspoon plc, company number: 
  1709784 
                                         Notes    Unaudited    Unaudited     Audited 
                                                 26 January   27 January     28 July 
                                                       2020         2019        2019 
                                                     GBP000       GBP000      GBP000 
--------------------------------------  ------  -----------  -----------  ---------- 
 Non-current assets 
 Property, plant and equipment            13      1,458,531    1,356,259   1,384,971 
 Intangible assets                        12         12,378       23,313      23,070 
 Investment property                      14         11,572        7,467       5,531 
 Other non-current assets                             7,696        7,849       7,888 
 Derivative financial instruments         23              -       11,420         321 
 Deferred tax assets                       7          9,706        4,088       8,342 
--------------------------------------  ------ 
 Total non-current assets                         1,499,883    1,410,396   1,430,123 
--------------------------------------  ------  -----------  -----------  ---------- 
 
 Current assets 
 Assets held for sale                     18            350        3,383       3,146 
 Inventories                              16         23,453       22,769      23,717 
 Receivables                                         27,544       24,335      21,903 
 Cash and cash equivalents                19         47,413       37,354      42,950 
 Total current assets                                98,760       87,841      91,716 
                                                             -----------  ---------- 
 Total assets                                     1,598,643    1,498,237   1,521,839 
--------------------------------------  ------  -----------  -----------  ---------- 
 
 Current liabilities 
 Borrowings                               21        (3,286)      (3,207)     (3,287) 
 Trade and other payables                         (314,831)    (320,501)   (308,326) 
 Current income tax liabilities                     (1,275)     (11,164)    (10,986) 
 Provisions                                         (3,116)      (5,499)     (4,072) 
 Total current liabilities                        (322,508)    (340,371)   (326,671) 
--------------------------------------  ------  -----------  -----------  ---------- 
 
 Non-current liabilities 
 Borrowings                               21      (848,654)    (758,112)   (776,683) 
 Derivative financial instruments         23       (57,096)     (35,465)    (49,393) 
 Deferred tax liabilities                  7       (38,212)     (38,506)    (39,416) 
 Provisions                                         (1,659)      (2,453)     (1,934) 
 Other liabilities                                 (10,607)     (11,235)    (10,930) 
 Total non-current liabilities                    (956,228)    (845,771)   (878,356) 
--------------------------------------  ------  -----------  -----------  ---------- 
 Net assets                                         319,907      312,095     316,812 
--------------------------------------  ------  -----------  -----------  ---------- 
 
 Shareholders' equity 
 Share capital                            28          2,094        2,110       2,102 
 Share premium account                              143,294      143,294     143,294 
 Capital redemption reserve                           2,337        2,321       2,329 
 Hedging reserve                                   (47,390)     (19,957)    (40,730) 
 Currency translation reserve                         1,603        3,697       5,370 
 Retained earnings                                  217,969      180,630     204,447 
--------------------------------------  ------  ----------- 
 Total shareholders' equity                         319,907      312,095     316,812 
--------------------------------------  ------  -----------  -----------  ---------- 
 

INCOME STATEMENT for the 26 weeks ended 26 January 2020

 
J D Wetherspoon plc, company number: 1709784 
 
                               Notes    Unaudited    Unaudited    Unaudited    Unaudited      Audited      Audited 
                                         26 weeks     26 weeks     26 weeks     26 weeks     52 weeks     52 weeks 
                                            ended        ended        ended        ended        ended        ended 
                                       26 January   26 January   27 January   27 January      28 July      28 July 
                                             2020         2020         2019         2019         2019         2019 
                                           Before        After       Before        After       Before        After 
                                      exceptional  exceptional  exceptional  exceptional  exceptional  exceptional 
                                            items        items        items        items        items        items 
                                           GBP000       GBP000       GBP000       GBP000       GBP000       GBP000 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
Revenue                          1        933,021      933,021      889,606      889,606    1,818,793    1,818,793 
Operating costs                         (852,251)    (852,251)    (826,135)    (826,135)  (1,686,876)  (1,686,876) 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
Operating profit                 2         80,770       80,770       63,471       63,471      131,917      131,917 
Property gains                   3            175          175        3,772        3,772        5,599        5,599 
Property losses - exceptional    3                    (15,948)                   (1,651)                   (7,040) 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
Profit before interest and 
 tax                                       80,945       64,997       67,243       65,592      137,516      130,476 
Finance income                   6            266          266           26           26           41           41 
Finance costs                    6       (29,586)     (29,586)     (16,993)     (16,993)     (35,098)     (35,098) 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
Profit before tax                          51,625       35,677       50,276       48,625      102,459       95,419 
Income tax expense               7       (11,298)     (11,298)     (10,776)     (10,776)     (22,830)     (22,830) 
Income tax expense - 
 exceptional                     7                       1,801                        99                       188 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
Profit for the period                      40,327       26,180       39,500       37,948       79,629       72,777 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
 
Earnings per ordinary share (p) 
 - Basic[1]                      8           39.3         25.5         38.3         36.8         77.2         70.6 
 - Diluted[2]                    8           38.5         25.0         37.4         36.0         75.5         69.0 
-----------------------------  -----  -----------  -----------  -----------  -----------  -----------  ----------- 
 

STATEMENT OF COMPREHENSIVE INCOME for the 26 weeks ended 26 January 2020

 
                                                                   Notes   Unaudited   Unaudited   Audited 
                                                                            26 weeks    26 weeks  52 weeks 
                                                                               ended       ended     ended 
                                                                          26 January  27 January   28 July 
                                                                                2020        2019      2019 
                                                                              GBP000      GBP000    GBP000 
-----------------------------------------------------------------  -----  ----------  ----------  -------- 
Items which will be reclassified subsequently to profit or loss: 
Interest-rate swaps: gain taken to other comprehensive income       23       (8,024)          64  (24,963) 
Tax on items taken directly to other comprehensive income            7         1,364        (11)     4,243 
Currency translation differences                                             (3,109)     (1,122)       181 
-----------------------------------------------------------------  -----  ----------  ----------  -------- 
Net gain recognised directly in other comprehensive income                   (9,769)     (1,069)  (20,539) 
Profit for the period                                                         26,180      37,948    72,777 
-----------------------------------------------------------------  -----  ----------  ----------  -------- 
Total comprehensive income for the period                                     16,411      36,879    52,238 
-----------------------------------------------------------------  -----  ----------  ----------  -------- 
 

[1] Calculated excluding shares held in trust.

[2] Calculated using issued share capital which includes shares held in trust.

CASHFLOW STATEMENT for the 26 weeks ended 26 January 2020

 
 J D Wetherspoon plc, company 
  number: 1709784 
 
 
                                   Notes    Unaudited    Unaudited    Unaudited    Unaudited     Audited    Audited 
                                                 cash         free         cash         free        cash       free 
                                                 flow         cash         flow         cash        flow       cash 
                                                           flow[1]                   flow[1]                flow[1] 
                                             26 weeks     26 weeks     26 weeks     26 weeks    52 weeks   52 weeks 
                                                ended        ended        ended        ended       ended      ended 
                                           26 January   26 January   27 January   27 January     28 July    28 July 
                                                 2020         2020         2019         2019        2019       2019 
                                               GBP000       GBP000       GBP000       GBP000      GBP000     GBP000 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Cash flows from operating 
  activities 
 Cash generated from operations      9        160,036      160,036      133,232      133,232     227,176    227,176 
 Interest received                                 40           40           20           20          33         33 
 Interest paid                               (17,027)     (17,027)     (17,556)     (17,556)    (33,957)   (33,957) 
 Corporation tax paid                        (21,480)     (21,480)      (8,539)      (8,539)    (19,661)   (19,661) 
 Lease interest                               (9,134)      (9,134)            -            -           -          - 
                                                                    -----------  -----------  ----------  --------- 
 Net cash flow from operating 
  activities                                  112,435      112,435      107,157      107,157     173,591    173,591 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 
 Cash flows from investing 
  activities 
 Purchase of property, 
  plant and equipment                        (32,764)     (32,764)     (22,672)     (22,672)    (47,398)   (47,398) 
 Purchase of intangible 
  assets(2)                                   (1,768)      (1,768)      (3,413)      (3,413)     (6,923)    (6,923) 
 Investment in new pubs 
  and pub extensions                         (34,773)                  (15,214)                 (26,778) 
 Freehold reversions and investment 
  properties                                 (70,633)                  (51,902)                 (77,207) 
 Lease premiums paid                                -                      (93)                    (451) 
 Proceeds of sale of property, 
  plant and equipment                           4,160                     5,818                    9,319 
                                                                    -----------  -----------  ----------  --------- 
 Net cash flow from investing 
  activities                                (135,778)     (34,532)     (87,476)     (26,085)   (149,438)   (54,321) 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 
 Cash flows from financing 
  activities 
 Equity dividends paid              11        (8,371)                   (8,435)                 (12,652) 
 Purchase of own shares 
  for cancellation                  28        (6,455)                         -                  (5,399) 
 Purchase of own shares for 
  share-based payments                        (9,260)      (9,260)      (8,960)      (8,960)    (16,004)   (16,004) 
 Loan issue cost                    10          (321)        (321)        (462)        (462)     (6,268)    (6,268) 
 Advances under private 
  placement                         10         98,000                         -                        - 
 Repayment of bank loans            10       (25,000)                  (38,863)                 (13,865) 
 Advances under finance 
  lease                             10              -                    12,000                   12,000 
 Lease principal payments           25       (19,912)     (19,912)            -            -           -          - 
 Lease principal receipts           25            556          556            -            -           -          - 
 Finance lease principal 
  payments                          10        (1,431)                     (698)                  (2,106) 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Net cash flow from financing 
  activities                                   27,806     (28,937)     (45,418)      (9,422)    (44,294)   (22,272) 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 
 Net change in cash and 
  cash equivalents                  10          4,463                  (25,737)                 (20,141) 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Opening cash and cash 
  equivalents                       19         42,950                    63,091                   63,091 
 Closing cash and cash 
  equivalents                       19         47,413                    37,354                   42,950 
--------------------------------  ------               ----------- 
 Free cash flow                      8                      48,966                    71,650                 96,998 
--------------------------------  ------  -----------  -----------  -----------  -----------  ----------  --------- 
 Free cash flow per ordinary 
  share                              8                       46.7p                     67.9p                  92.0p 
 

[1] Free cash flow is a measure not required by accounting standards; a definition is provided in our accounting policies.

[2] Within reinvestment in business and IT projects, GBP733,000 were intangible assets (2019: GBP1,952,000), with the remaining balance being related equipment.

BALANCE SHEET as at 26 January 2020

 
 J D Wetherspoon plc, company number: 
  1709784 
                                         Notes     Unaudited    Unaudited     Audited 
                                                  26 January   27 January     28 July 
                                                        2020         2019        2019 
                                                      GBP000       GBP000      GBP000 
--------------------------------------  ------  ------------  -----------  ---------- 
 Non-current assets 
 Property, plant and equipment            13       1,458,531    1,356,259   1,384,971 
 Intangible assets                        12          12,378       23,313      23,070 
 Investment property                      14          11,572        7,467       5,531 
 Other non-current assets                 15               -        7,849       7,888 
 Right-of-use assets                      25         579,175            -           - 
 Derivative financial instruments         23               -       11,420         321 
 Deferred tax assets                       7           9,706        4,088       8,342 
 Lease assets                             25          11,319            -           - 
--------------------------------------  ------ 
 Total non-current assets                          2,082,681    1,410,396   1,430,123 
--------------------------------------  ------  ------------  -----------  ---------- 
 
 Current assets 
 Lease assets                             25           1,561            -           - 
 Assets held for sale                     18             350        3,383       3,146 
 Inventories                              16          23,453       22,769      23,717 
 Receivables                              17          22,391       24,335      21,903 
 Cash and cash equivalents                19          47,413       37,354      42,950 
 Total current assets                                 95,168       87,841      91,716 
                                                              -----------  ---------- 
 Total assets                                      2,177,849    1,498,237   1,521,839 
--------------------------------------  ------  ------------  -----------  ---------- 
 
 Current liabilities 
 Borrowings                               21         (3,286)      (3,207)     (3,287) 
 Trade and other payables                 20       (315,773)    (320,501)   (308,326) 
 Current income tax liabilities                         (86)     (11,164)    (10,986) 
 Provisions                               22         (3,116)      (5,499)     (4,072) 
 Lease liabilities                        25        (59,328)            -           - 
 Total current liabilities                         (381,589)    (340,371)   (326,671) 
--------------------------------------  ------  ------------  -----------  ---------- 
 
 Non-current liabilities 
 Borrowings                               21       (848,654)    (758,112)   (776,683) 
 Derivative financial instruments         23        (57,096)     (35,465)    (49,393) 
 Deferred tax liabilities                  7        (38,212)     (38,506)    (39,416) 
 Provisions                               22               -      (2,453)     (1,934) 
 Other liabilities                        24               -     (11,235)    (10,930) 
 Lease liabilities                        25       (537,498)            -           - 
 Total non-current liabilities                   (1,481,460)    (845,771)   (878,356) 
--------------------------------------  ------  ------------  -----------  ---------- 
 Net assets                                          314,800      312,095     316,812 
--------------------------------------  ------  ------------  -----------  ---------- 
 
 Shareholders' equity 
 Share capital                            28           2,094        2,110       2,102 
 Share premium account                               143,294      143,294     143,294 
 Capital redemption reserve                            2,337        2,321       2,329 
 Hedging reserve                                    (47,390)     (19,957)    (40,730) 
 Currency translation reserve                          1,603        3,697       5,370 
 Retained earnings                                   212,862      180,630     204,447 
--------------------------------------  ------  ------------ 
 Total shareholders' equity                          314,800      312,095     316,812 
--------------------------------------  ------  ------------  -----------  ---------- 
 

The financial statements, on pages 11 to 30, approved by the board of directors and authorised for issue on 19 March 2020, are signed on its behalf by:

John Hutson Ben Whitley

Director Director

STATEMENT OF CHANGES IN EQUITY

 
  J D Wetherspoon plc, 
  company 
  number: 1709784 
 
                             Notes     Share     Share      Capital    Hedging      Currency   Retained      Total 
                                     capital   premium   redemption    reserve   translation   earnings 
                                               account      reserve                  reserve 
                                      GBP000    GBP000       GBP000     GBP000        GBP000     GBP000     GBP000 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  At 29 July 2018                      2,110   143,294        2,321   (20,010)         4,767    154,080    286,562 
 
  Total comprehensive 
   income                                                                   53       (1,070)     37,896     36,879 
                                                                                                         --------- 
  Profit for the period                                                                          37,948     37,948 
  Interest-rate swaps: 
   cash 
   flow hedges                23                                            64                                  64 
  Tax on items taken 
   directly 
   to comprehensive income     7                                          (11)                                (11) 
  Currency translation 
   differences                                                                       (1,070)       (52)    (1,122) 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  Share-based payment 
   charges                                                                                        5,651      5,651 
  Tax on share-based 
   payment                     7                                                                    398        398 
  Purchase of own shares 
   for 
   share-based payments                                                                         (8,960)    (8,960) 
  Dividends                   11                                                                (8,435)    (8,435) 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  At 27 January 2019                   2,110   143,294        2,321   (19,957)         3,697    180,630    312,095 
 
  Total comprehensive 
   income                                                             (20,773)         1,673     34,459     15,359 
                                                                                                         --------- 
  Profit for the period                                                                          34,829     34,829 
  Interest-rate swaps: 
   cash 
   flow hedges                23                                      (25,027)                            (25,027) 
  Tax on items taken 
   directly 
   to comprehensive income     7                                         4,254                               4,254 
  Currency translation 
   differences                                                                         1,673      (370)      1,303 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  Purchase of own shares 
   for 
   cancellation                          (8)                      8                             (5,399)    (5,399) 
  Share-based payment 
   charges                                                                                        5,907      5,907 
  Tax on share-based 
   payment                     7                                                                    111        111 
  Purchase of own shares 
   for 
   share-based payments                                                                         (7,044)    (7,044) 
  Dividends                   11                                                                (4,217)    (4,217) 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  At 28 July 2019                      2,102   143,294        2,329   (40,730)         5,370    204,447    316,812 
 
  Total comprehensive 
   income                                                              (6,660)       (3,767)     26,838     16,411 
  Profit for the period                                                                          26,180     26,180 
  Interest-rate swaps: 
   cash 
   flow hedges                23                                       (8,024)                             (8,024) 
  Tax on items taken 
   directly 
   to comprehensive income     7                                         1,364                               1,364 
  Currency translation 
   differences                                                                       (3,767)        658    (3,109) 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  Purchase of own shares 
   for 
   cancellation                          (8)                      8                             (6,455)    (6,455) 
  Share-based payment 
   charges                                                                                        5,543      5,543 
  Tax on share-based 
   payment                     7                                                                    120        120 
  Purchase of own shares 
   for 
   share-based payments                                                                         (9,260)    (9,260) 
  Dividends                   11                                                                (8,371)    (8,371) 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
  At 26 January 2020                   2,094   143,294        2,337   (47,390)         1,603    212,862    314,800 
 -------------------------  ------  --------  --------  -----------  ---------  ------------  ---------  --------- 
 

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 restatement of the opening reserves in the overseas branch at the current period end's currency exchange rate.

As at 26 January 2020, the company had distributable reserves of GBP167.1m.

NOTES TO THE FINANCIAL STATEMENTS

   1.     Revenue 
 
 Revenue disclosed in the income statement     Unaudited    Unaudited     Audited 
  is analysed as follows: 
                                                26 weeks     26 weeks    52 weeks 
                                                   ended        ended       ended 
                                              26 January   27 January     28 July 
                                                    2020         2019        2019 
                                                  GBP000       GBP000      GBP000 
-------------------------------------------  -----------  -----------  ---------- 
 Bar                                             559,426      538,082   1,094,001 
 Food                                            337,241      319,015     656,955 
 Slot/fruit machines                              26,080       21,981      46,404 
 Hotel                                             9,468        9,596      19,699 
 Other                                               806          932       1,734 
-------------------------------------------  -----------  -----------  ---------- 
                                                 933,021      889,606   1,818,793 
-------------------------------------------  -----------  -----------  ---------- 
 
   2.      Operating profit - analysis of costs by nature 
 
 This is stated after charging/(crediting):        Unaudited    Unaudited       Audited 
                                                    26 weeks     26 weeks      52 weeks 
                                                       ended        ended         ended 
                                                  26 January   27 January       28 July 
                                                        2020         2019          2019 
                                                      GBP000       GBP000        GBP000 
-----------------------------------------------  -----------  -----------  ------------ 
 Concession rental payments                                -       14,737        32,086 
 Minimum operating lease payments                          -       20,271        38,241 
 Variable concession rental payments                   4,293            -             - 
 Short leases                                            108            -             - 
 Repairs and maintenance                              46,112       35,937        76,879 
 Net rent receivable                                   (841)        (678)       (1,545) 
 Share-based payments (note 5)                         5,543        5,651        11,558 
 Depreciation of property, plant and equipment 
  (note 13)                                           37,718       36,825        73,779 
 Amortisation of intangible assets (note 
  12)                                                  1,925        3,847         7,634 
 Depreciation of investment properties 
  (note 14)                                               34           27            55 
 Amortisation of right-of-use assets (note            24,425            -             - 
  25) 
 Amortisation of other non-current assets 
  (note 15)                                                -          169           343 
-----------------------------------------------  -----------  -----------  ------------ 
 
 
 Analysis of continuing operations                 Unaudited    Unaudited       Audited 
                                                    26 weeks     26 weeks      52 weeks 
                                                       ended        ended         ended 
                                                  26 January   27 January       28 July 
                                                        2020         2019          2019 
                                                      GBP000       GBP000        GBP000 
-----------------------------------------------  -----------  -----------  ------------ 
 Revenue                                             933,021      889,606     1,818,793 
 Cost of sales                                     (828,189)    (802,911)   (1,639,378) 
-----------------------------------------------  -----------  -----------  ------------ 
 Gross profit                                        104,832       86,695       179,415 
 Administration costs                               (24,062)     (23,224)      (47,498) 
-----------------------------------------------  ----------- 
 Operating profit after exceptional items             80,770       63,471       131,917 
-----------------------------------------------  -----------  -----------  ------------ 
 

Included within cost of sales is GBP325.9m (2019: GBP315.3m) relating to cost of inventory recognised as expense.

   3.      Property gains and losses 
 
                                                 Unaudited    Unaudited    Audited 
                                                  26 weeks     26 weeks   52 weeks 
                                                     ended        ended      ended 
                                                26 January   27 January    28 July 
                                                      2020         2019       2019 
                                                    GBP000       GBP000     GBP000 
---------------------------------------------  -----------  -----------  --------- 
 
 Non-exceptional property (gains)/losses 
 Disposal of fixed assets                             (90)      (3,634)    (4,650) 
 Additional costs of disposal                          217          196        230 
 Disposal of leases                                  (347)            -          - 
 Other property gains                                   45        (334)    (1,179) 
                                                            -----------  --------- 
                                                     (175)      (3,772)    (5,599) 
 
 Exceptional property losses (note 4) 
 Disposal of fixed assets                            3,003           16      1,015 
 Additional costs of disposal                          619          306        568 
 Impairment of property, plant and equipment         2,786          806      3,550 
 Impairment of intangible assets                     9,540            -          - 
 Impairment of other non-current assets                  -            -        145 
 Onerous lease provision                                 -          523      1,762 
                                                            -----------  --------- 
                                                    15,948        1,651      7,040 
 
 Total property losses                              15,773      (2,121)      1,441 
---------------------------------------------  -----------  -----------  --------- 
 

The gain of GBP347,000 relates to the purchase of the freeholds of former leasehold sites. As a result, the right-of-use asset and lease liability are derecognised. Under IFRS 16, the purchasing of freehold results in a gain, as the income statement is charged in advance of the cash payments. Without this gain, a non-exceptional loss of GBP172,000 would have been reported.

   4.      Exceptional items 
 
                                        Unaudited    Unaudited    Audited 
                                         26 weeks     26 weeks   52 weeks 
                                            ended        ended      ended 
                                       26 January   27 January    28 July 
                                             2020         2019       2019 
                                           GBP000       GBP000     GBP000 
-----------------------------------   -----------  -----------  --------- 
 Exceptional property losses 
 Disposal programme 
 Loss on disposal of pubs                   3,622          322      1,583 
 Impairment of property plant and 
  equipment                                 1,496          806      1,298 
 Impairment of other non-current 
  assets                                        -            -         93 
 Onerous lease provision                        -          158      1,134 
------------------------------------  -----------  -----------  --------- 
                                            5,118        1,286      4,108 
 Other property losses 
 Impairment of property, plant and 
  equipment                                 1,290            -      2,252 
 Impairment of intangible assets            9,540            -          - 
 Impairment of other non-current 
  assets                                        -            -         52 
 Onerous lease provision                        -          365        628 
------------------------------------  -----------  -----------  --------- 
                                           10,830          365      2,932 
 
 Total exceptional property losses         15,948        1,651      7,040 
------------------------------------  -----------  -----------  --------- 
 
 Exceptional tax 
 Tax effect on exceptional items 
  (note 7)                                (1,801)         (99)      (188) 
------------------------------------ 
                                          (1,801)         (99)      (188) 
 
 Total exceptional items                   14,147        1,552      6,852 
------------------------------------  -----------  -----------  --------- 
 

Disposal programme

The company has offered several of its sites for sale. During the half year, a further six (2019: two) sites had been disposed of and one (2019: two) was classified as held for sale. In the table above, the costs classified as loss on disposal are the losses on sold sites and associated costs to sale.

Other property losses

The company has reviewed its approach to capitalising costs in the early stages of a pub's development. In future, some initial costs will be expensed to the income statement. The property impairment charge of GBP1,290,000 relates to similar costs held on the balance sheet at the start of the year.

During the period, the company reviewed its accounting for the development and implementation of information systems. As a result of this review, it is the company's assessment that it will not achieve the future economic benefit from some of these assets which it had previously anticipated. The impairment charge of GBP9,540,000 reduces the useful economic life of these assets to reflect the company's view of future economic benefits which will be achieved.

The exceptional items listed above have generated a net cash inflow of GBP2,041,000 (2019: outflow of GBP694,000).

   5.      Employee benefits expenses 
 
                           Unaudited    Unaudited    Audited 
                            26 weeks     26 weeks   52 weeks 
                               ended        ended      ended 
                          26 January   27 January    28 July 
                                2020         2019       2019 
                              GBP000       GBP000     GBP000 
-----------------------  -----------  -----------  --------- 
 Wages and salaries          299,199      275,829    568,758 
 Social Security costs        18,077       17,280     35,783 
 Other pension costs           4,324        3,001      6,912 
 Share-based payments          5,543        5,651     11,558 
----------------------- 
                             327,143      301,761    623,011 
-----------------------  -----------  -----------  --------- 
 

The totals below relate to the monthly average number of employees during the period, not the total number of employees

at the end of the year (including directors on a service contract).

 
                             Unaudited   Unaudited  Audited 
                            26 January  27 January  28 July 
                                  2020        2019     2019 
                                Number      Number   Number 
--------------------------  ----------  ----------  ------- 
Full-time equivalents 
Managerial/administration        4,594       4,419    4,442 
Hourly paid staff               21,647      20,825   21,035 
-------------------------- 
                                26,241      25,244   25,477 
--------------------------  ----------  ----------  ------- 
 
                            26 January  27 January  28 July 
                                  2020        2019     2019 
                                Number      Number   Number 
--------------------------  ----------  ----------  ------- 
Total employees 
Managerial/administration        4,687       4,518    4,541 
Hourly paid staff               38,517      36,863   37,358 
-------------------------- 
                                43,204      41,381   41,899 
--------------------------  ----------  ----------  ------- 
 

The shares awarded as part of the share 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 GBPNil exercise price - and there are

no market-based conditions to the shares which affect their ability to vest.

 
Share-based payments                           Unaudited   Unaudited    Audited 
                                                26 weeks    26 weeks   52 weeks 
                                                   ended       ended      ended 
                                              26 January  27 January    28 July 
                                                    2020        2019       2019 
--------------------------------------------  ----------  ----------  --------- 
Shares awarded during the year (shares)          568,821     802,069  1,390,290 
Average price of shares awarded (pence)            1,542       1,303      1,313 
Market value of shares vested during the 
 year (GBP000)                                     9,774      14,199     17,173 
Total liability of the share-based payments 
 scheme (GBP000)                                  14,999      14,570     16,259 
--------------------------------------------  ----------  ----------  --------- 
 
   6.      Finance income and costs 
 
                                                   Unaudited    Unaudited    Audited 
                                                    26 weeks     26 weeks   52 weeks 
                                                       ended        ended      ended 
                                                  26 January   27 January    28 July 
                                                        2020         2019       2019 
                                                      GBP000       GBP000     GBP000 
-----------------------------------------------  -----------  -----------  --------- 
 Finance costs 
 Interest payable on bank loans and overdrafts         9,738       10,504     21,089 
 Amortisation of bank loan issue costs 
  (note 10)                                              722           58        925 
 Interest payable on swaps                             6,561        6,287     12,705 
 Interest payable on obligations under 
  finance leases                                         207          144        379 
 Interest payable on private placement                 1,280            -          - 
 Finance costs excluding lease interest               18,508       16,993     35,098 
 
 Interest payable on leases                           11,078            -          - 
 Total finance costs                                  29,586       16,993     35,098 
 
 Bank interest receivable                               (41)         (26)       (41) 
 Lease interest receivable                             (225)            -          - 
 Total finance income                                  (266)         (26)       (41) 
 

The finance costs in the income statement were covered 2.8 times by earnings before interest, tax and exceptional items.

On a pre-IFRS 16 basis, the finance costs in the income statement were covered 4.1 times (2019: 4.0 times) by earnings before interest, tax and exceptional items.

   7.      Income tax expense 
   (a)   Tax on profit on ordinary activities 

At the balance sheet date, the standard rate of corporation tax in the UK was scheduled to change from 19.0% to 17.0%,

with effect from 1 April 2020. Accordingly, the company's profits for this accounting period are taxed at the weighted average rate of 18.33% (2019: 19.00%).

On 11 March 2020, the chancellor presented the UK budget announcement and confirmed that the rate of corporation tax would remain at 19% from 1 April 2020. This is expected to be substantively enacted by the year-end balance sheet date.

As a result of this post balance sheet announcement, the prevailing tax rate used to calculate the income and deferred tax liabilities for the year ended 26 July 2020 will be 19%, instead of 18.33% used in the half-year results. Furthermore, the deferred tax balances will be recalculated at the year end to 19%; it is anticipated that this will result in a rate-change adjustment of approximately GBP3.4m.

 
                                                Unaudited    Unaudited    Audited 
                                                 26 weeks     26 weeks   52 weeks 
                                                    ended        ended      ended 
                                               26 January   27 January    28 July 
                                                     2020         2019       2019 
                                                   GBP000       GBP000     GBP000 
--------------------------------------------  -----------  -----------  --------- 
 Income tax before exceptional items 
 Current income tax: 
 Current income tax charge                         13,556       11,802     23,406 
 Current income tax - impact of IFRS 16           (1,189)            -          - 
 Previous period adjustment                          (18)        (415)      (922) 
                                              ----------- 
 Total current income tax                          12,349       11,387     22,484 
 
 Deferred tax: 
 Temporary differences                            (1,051)        (452)      2,174 
 Previous period adjustment                             -        (159)    (1,828) 
--------------------------------------------  ----------- 
 Total deferred tax                               (1,051)        (611)        346 
 
 Total tax expense before exceptional items        11,298       10,776     22,830 
--------------------------------------------  -----------  -----------  --------- 
 
 Exceptional income tax 
 Current income tax: 
 Current income tax charge                        (1,509)         (99)      (273) 
                                              ----------- 
 Total current income tax                         (1,509)         (99)      (273) 
 
 Deferred tax: 
 Temporary differences                              (292)            -         85 
--------------------------------------------  -----------  ----------- 
 Total deferred tax                                 (292)            -         85 
 
 Total exceptional income tax                     (1,801)         (99)      (188) 
--------------------------------------------  -----------  -----------  --------- 
 
 Tax charge in the income statement                 9,497       10,677     22,642 
--------------------------------------------  -----------  -----------  --------- 
 
                                                Unaudited    Unaudited    Audited 
                                                 26 weeks     26 weeks   52 weeks 
                                                    ended        ended      ended 
                                               26 January   27 January    28 July 
                                                     2020         2019       2019 
 Taken through equity                              GBP000       GBP000     GBP000 
--------------------------------------------  -----------  -----------  --------- 
 Current tax on share-based payment                 (259)        (536)      (514) 
 Deferred tax on share-based payment                  139          138          5 
--------------------------------------------  ----------- 
 Tax credit                                         (120)        (398)      (509) 
--------------------------------------------  -----------  -----------  --------- 
 
                                                Unaudited    Unaudited    Audited 
                                                 26 weeks     26 weeks   52 weeks 
                                                    ended        ended      ended 
                                               26 January   27 January    28 July 
                                                     2020         2019       2019 
 Taken through comprehensive income                GBP000       GBP000     GBP000 
--------------------------------------------  -----------  -----------  --------- 
 Deferred tax on swaps                            (1,364)           11    (4,243) 
--------------------------------------------  -----------  -----------  --------- 
 

The impact on the tax charge of the introduction of IFRS 16 is shown in the table above. There was no impact on deferred tax,

as all amounts resulting for the adoption of IFRS charged to the income statement were fully allowable.

   7.      Income tax expense (continued) 
   (b)   Reconciliation of the total tax charge 

The taxation charge for the 26 weeks ended 26 January 2020 is based on the pre-exceptional profit before tax of GBP51.6m and the estimated effective tax rate before exceptional items for the 26 weeks ended 26 January 2020 of 21.9% (2019: 21.4%).

This comprises a pre-exceptional current tax rate of 23.9% (2019: 22.6%) and a pre-exceptional deferred tax credit of 2.0% (2019: 1.2%).

The UK standard weighted average tax rate for the period is 18.33% (2019: 19.00%). The current tax rate is higher than

the UK standard weighted average tax rate owing mainly to depreciation which is not eligible for tax relief.

 
                                               Unaudited    Unaudited    Audited 
                                                26 weeks     26 weeks   52 weeks 
                                                   ended        ended      ended 
                                              26 January   27 January    28 July 
                                                    2020         2019       2019 
                                                  GBP000       GBP000     GBP000 
-------------------------------------------  -----------  -----------  --------- 
 Profit before income tax                         51,625       50,276    102,459 
 
 Profit multiplied by the UK standard 
  rate of                                          9,463        9,552     19,467 
 corporation tax of 18.33% (2019: 19.00%) 
 Abortive acquisition costs and disposals             95           77         85 
 Other disallowables                               (357)          167        384 
 Other allowable deductions                         (33)         (24)      (111) 
 Capital gains - effects of reliefs                  150          695      (380) 
 Non-qualifying depreciation                       1,442          731      2,487 
 Deduction for shares and SIPs                        41           43      (449) 
 Remeasurement of other balance sheet 
  items                                             (23)         (47)       (71) 
 Unrecognised losses in overseas companies           539          155        557 
 Unrecognised losses capital losses                    -            -      3,611 
 Previous year adjustment - current tax             (19)        (414)      (922) 
 Previous year adjustment - deferred tax               -        (159)    (1,828) 
-------------------------------------------               -----------  --------- 
 Total tax expense before exceptional 
  items                                           11,298       10,776     22,830 
-------------------------------------------  -----------  -----------  --------- 
 
 
 
 Exceptional profit before income tax           (15,948)      (1,651)    (7,040) 
 
 Profit multiplied by the UK standard 
  rate of                                        (2,923)        (314)    (1,337) 
 corporation tax of 18.33% (2019: 19.00%) 
 Other disallowables                                 555           61        183 
 Capital gains - effects of reliefs                    -            -         85 
 Non-qualifying depreciation                         567          154        881 
-------------------------------------------  -----------  -----------  --------- 
 Total tax expense on exceptional items          (1,801)         (99)      (188) 
-------------------------------------------  -----------  -----------  --------- 
 
 Total tax expense reported in the income 
  statement                                        9,497       10,677     22,642 
-------------------------------------------  -----------  -----------  --------- 
 
   7.      Income tax expense (continued) 
   (c)   Deferred tax 

The deferred tax in the balance sheet is as follows:

 
 Deferred tax liabilities                   Accelerated           Other     Total 
                                                    tax 
                                           depreciation       temporary 
                                                            differences 
                                                 GBP000          GBP000    GBP000 
-------------------------------------     -------------  --------------  -------- 
 At 28 July 2019                                 36,799           4,255    41,054 
 Previous year movement posted                        -               -         - 
  to the income statement 
 Movement during year posted 
  to the income statement                       (1,778)             (3)   (1,781) 
 Impact of tax rate change posted to                  -               -         - 
  the income statement 
 At 26 January 2020                              35,021           4,252    39,273 
----------------------------------------  -------------  --------------  -------- 
 
 Deferred tax assets                              Share   Interest-rate     Total 
                                                  based           swaps 
                                               payments 
                                                 GBP000          GBP000    GBP000 
-------------------------------------     -------------  --------------  -------- 
 At 28 July 2019                                  1,638           8,342     9,980 
 Previous year movement posted                        -               -         - 
  to the income statement 
 Movement during year posted 
  to the income statement                         (438)               -     (438) 
 Movement during year posted to 
  comprehensive income                                -           1,364     1,364 
 Movement during year posted 
  to equity                                       (139)               -     (139) 
 At 26 January 2020                               1,061           9,706    10,767 
----------------------------------------  -------------  --------------  -------- 
 

Deferred tax assets and liabilities have been offset as follows:

 
                                              Unaudited   Unaudited   Audited 
                                               26 weeks    26 weeks  52 weeks 
                                                  ended       ended     ended 
                                             26 January  27 January   28 July 
                                                   2020        2019      2019 
                                                 GBP000      GBP000    GBP000 
----------------------------------------     ----------  ----------  -------- 
Deferred tax liabilities                         39,273      43,246    41,054 
Offset against deferred tax assets              (1,061)     (4,740)   (1,638) 
----------------------------------------- 
Deferred tax liabilities                         38,212      38,506    39,416 
-------------------------------------------  ----------  ----------  -------- 
 
Deferred tax assets                              10,767       8,828     9,980 
Offset against deferred tax liabilities         (1,061)     (4,740)   (1,638) 
----------------------------------------- 
Deferred tax asset                                9,706       4,088     8,342 
-------------------------------------------  ----------  ----------  -------- 
 

As at 26 January 2020, the company had a potential deferred tax asset of GBP3.9m relating to capital losses.

A deferred tax asset has not been recognised, as there is not sufficient certainty of recovery.

   8.      Earnings and free cash flow per share 
   (a)     Weighted average number of shares 

Earnings per share are based on the weighted average number of shares in issue of 104,810,288 (2019: 105,501,035), including those held in trust in respect of employee share schemes. Earnings per share, calculated on this basis, are usually referred to as 'diluted', since all of the shares in issue are included.

Accounting standards refer to 'basic earnings' per share - these exclude those shares held in trust in respect of

employee share schemes.

 
 Weighted average number of shares      Unaudited     Unaudited       Audited 
                                         26 weeks      26 weeks      52 weeks 
                                            ended         ended         ended 
                                       26 January    27 January       28 July 
                                             2020          2019          2019 
-----------------------------------  ------------  ------------  ------------ 
 Shares in issue (used for diluted 
  EPS)                                104,810,288   105,501,035   105,439,345 
 Shares held in trust                 (2,143,674)   (2,248,342)   (2,313,464) 
 Shares in issue less shares held 
  in trust (used for basic EPS)       102,666,614   103,252,693   103,125,881 
-----------------------------------  ------------  ------------  ------------ 
 

The weighted average number of shares held in trust for employee share schemes has been adjusted to exclude those shares which have vested, yet remain in trust.

   (b)    Earnings per share 
 
 26 weeks ended 26 January 2020                Profit   Basic EPS   Diluted 
  unaudited                                                             EPS 
                                               GBP000       pence     pence 
-------------------------------------------  --------  ----------  -------- 
 Earnings before IFRS 16                       31,287        30.5      29.8 
 Impact of IFRS 16                            (5,107)       (5.0)     (4.8) 
-------------------------------------------  --------  ----------  -------- 
 Earnings (profit after tax)                   26,180        25.5      25.0 
 Exclude effect of exceptional items 
  after tax                                    14,147        13.8      13.5 
-------------------------------------------  --------  ----------  -------- 
 Earnings before exceptional items             40,327        39.3      38.5 
 Impact of IFRS 16                              5,107         5.0       4.8 
-------------------------------------------  --------  ----------  -------- 
 Earnings before exceptional items 
  and IFRS 16                                  45,434        44.3      43.3 
 Exclude effect of property gains/(losses)        172         0.1       0.2 
                                             -------- 
 Underlying earnings before exceptional 
  items                                        45,606        44.4      43.5 
-------------------------------------------  --------  ----------  -------- 
 
 
26 weeks ended 27 January 2019 unaudited         Profit  Basic EPS  Diluted EPS 
                                                 GBP000      pence        pence 
----------------------------------------------  -------  ---------  ----------- 
Earnings (profit after tax)                      37,948       36.8         36.0 
Exclude effect of exceptional items after tax     1,552        1.5          1.4 
----------------------------------------------  ------- 
Earnings before exceptional items                39,500       38.3         37.4 
Exclude effect of property gains/(losses)       (3,772)      (3.7)        (3.5) 
Underlying earnings before exceptional items     35,728       34.6         33.9 
----------------------------------------------  -------  ---------  ----------- 
 
 
52 weeks ended 28 July 2019 audited              Profit  Basic EPS  Diluted EPS 
                                                 GBP000      pence        pence 
----------------------------------------------  -------  ---------  ----------- 
Earnings (profit after tax)                      72,777       70.6         69.0 
Exclude effect of exceptional items after tax     6,852        6.6          6.5 
----------------------------------------------  ------- 
Earnings before exceptional items                79,629       77.2         75.5 
Exclude effect of property gains/(losses)       (5,599)      (5.4)        (5.3) 
Underlying earnings before exceptional items     74,030       71.8         70.2 
----------------------------------------------  -------  ---------  ----------- 
 
   8.      Earnings and free cash flow per share 
   (c)     Free cash flow per share 

The calculation of free cash flow per share is based on the net cash generated by business activities and available for investment in new pub developments and extensions to current pubs, after funding interest, corporation tax, all other reinvestment in pubs open at the start of the period and the purchase of own shares under the employee Share Incentive Plan ('free cash flow'). It is calculated before taking account of proceeds from property disposals, inflows and outflows of financing from outside sources and dividend payments and is based on the weighted average number of shares in issue, including those held in trust in respect of the employee share schemes.

 
                                     Free   Basic free     Diluted 
                                     cash                     free 
                                     flow    cash flow   cash flow 
                                             per share   per share 
                                   GBP000        pence       pence 
--------------------------------  -------  -----------  ---------- 
 26 weeks ended 26 January 2020    48,966         47.7        46.7 
 26 weeks ended 27 January 2019    71,650         69.4        67.9 
 52 weeks ended 28 July 2019       96,998         94.1        92.0 
--------------------------------  -------  -----------  ---------- 
 
   (d)    Owners' earnings per share 

Owners' earnings measure the earnings attributable to shareholders from current activities, adjusted for significant non-cash items and one-off items. Owners' earnings are calculated as profit before tax, exceptional items, depreciation and

amortisation, lease interest and property gains and losses less reinvestment in current properties, payment of operating leases and cash tax. Cash tax is defined as the current year's current tax charge.

 
 26 weeks ended 26 January 2020            Owners'         Basic   Diluted 
  unaudited 
                                          Earnings   Owners' EPS   Owners' 
                                                                       EPS 
                                            GBP000         pence     pence 
---------------------------------------  ---------  ------------  -------- 
 Profit before tax and exceptional 
  items (income statement)                  51,625          50.3      49.3 
 Exclude depreciation and amortisation 
  (note 2)                                  64,102          62.4      61.2 
 Exclude lease interest (note 6)            10,853          10.6      10.4 
 Less cash reinvestment in current 
  properties                              (29,350)        (28.6)    (28.0) 
 Exclude property gains and losses 
  (note 3)                                   (175)         (0.2)     (0.2) 
 Less lease interest                       (9,134)         (8.9)     (8.7) 
 Less lease principal payment             (19,356)        (18.9)    (18.6) 
 Less cash tax (note 7)                   (12,367)        (12.0)    (11.8) 
 Owners' earnings                           56,198          54.7      53.6 
---------------------------------------  ---------  ------------  -------- 
 
 
 26 weeks ended 27 January 2019            Owners'         Basic   Diluted 
  unaudited 
                                          Earnings   Owners' EPS   Owners' 
                                                                       EPS 
                                            GBP000         pence     pence 
---------------------------------------  ---------  ------------  -------- 
 Profit before tax and exceptional 
  items (income statement)                  50,276          48.7      47.7 
 Exclude depreciation and amortisation 
  (note 2)                                  40,868          39.6      38.7 
 Less cash reinvestment in current 
  properties                              (24,919)        (24.1)    (23.6) 
 Exclude property gains and losses 
  (note 3)                                 (3,772)         (3.7)     (3.5) 
 Less cash tax (note 7)                   (11,802)        (11.4)    (11.3) 
 Owners' earnings                           50,651          49.1      48.0 
---------------------------------------  ---------  ------------  -------- 
 
 
 52 weeks ended 28 July 2019 audited       Owners'         Basic   Diluted 
                                          Earnings   Owners' EPS   Owners' 
                                                                       EPS 
                                            GBP000         pence     pence 
---------------------------------------  ---------  ------------  -------- 
 Profit before tax and exceptional 
  items (income statement)                 102,459          99.4      97.2 
 Exclude depreciation and amortisation 
  (note 2)                                  81,811          79.3      77.6 
 Less cash reinvestment in current 
  properties                              (55,239)        (53.6)    (52.4) 
 Exclude property gains and losses 
  (note 3)                                 (5,599)         (5.4)     (5.3) 
 Less cash tax (note 7)                   (23,406)        (22.7)    (22.2) 
 Owners' earnings                          100,026          97.0      94.9 
---------------------------------------  ---------  ------------  -------- 
 
   8.       Earnings and free cash flow per share (continued) 
 
 Analysis of additions by type                 Unaudited    Unaudited    Audited 
                                                26 weeks     26 weeks   52 weeks 
                                                   ended        ended      ended 
                                              26 January   27 January    28 July 
                                                    2020         2019       2019 
-------------------------------------------  -----------  -----------  --------- 
 Reinvestment in existing pubs                    34,124       24,919     55,239 
 Investment in new pubs and pub extensions        23,679       14,934     35,172 
 Freehold reversions and investment 
  properties                                      70,732       55,653     77,207 
                                                 128,535       95,506    167,618 
-------------------------------------------  -----------  -----------  --------- 
 
 Analysis of additions by category             Unaudited    Unaudited    Audited 
                                                26 weeks     26 weeks   52 weeks 
                                                   ended        ended      ended 
                                              26 January   27 January    28 July 
                                                    2020         2019       2019 
-------------------------------------------  -----------  -----------  --------- 
 Property, plant and equipment (note 
  13)                                            121,687       93,032    161,242 
 Intangible assets (note 12)                         773        2,381      5,925 
 Investment properties (note 14)                   6,075            -          - 
 Other non-current assets (note 15)                    -           93        451 
                                                 128,535       95,506    167,618 
-------------------------------------------  -----------  -----------  --------- 
 
   (e)   Operating profit per share 
 
                                   Operating   Basic operating      Diluted 
                                                                  operating 
                                      profit        profit per       profit 
                                                         share    per share 
                                      GBP000             pence        pence 
--------------------------------  ----------  ----------------  ----------- 
 26 weeks ended 26 January 2020       76,560              74.6         73.0 
 26 weeks ended 27 January 2019       63,471              61.5         60.2 
 52 weeks ended 28 July 2019         131,917             127.9        125.1 
--------------------------------  ----------  ----------------  ----------- 
 

Operating profit in the table above excludes the impact of IFRS 16.

   9.      Cash generated from operations 
 
                                          Unaudited*    Unaudited    Unaudited    Audited 
                                            26 weeks     26 weeks     26 weeks   52 weeks 
                                               ended        ended        ended      ended 
                                          26 January   26 January   27 January    28 July 
                                                2020         2020         2019       2019 
                                              GBP000       GBP000       GBP000     GBP000 
---------------------------------------  -----------  -----------  -----------  --------- 
 Profit for the period                        31,287       26,180       37,948     72,777 
 Adjusted for: 
 Tax (note 7)                                 10,686        9,497       10,677     22,642 
 Share-based charges (note 2)                  5,543        5,543        5,651     11,558 
 Loss on disposal of property, plant 
  and equipment (note 3)                       2,913        2,913      (3,618)    (3,635) 
 Disposal of capitalised leases (note              -        (347)            -          - 
  3) 
 Net onerous lease provision (note 
  3)                                               -            -          523      1,762 
 Net impairment charge (note 3)               12,326       12,326          806      3,695 
 Interest receivable (note 6)                   (41)         (41)         (26)       (41) 
 Interest payable (note 6)                    17,786       17,786       16,935     34,173 
 Lease interest receivable (note                   -        (225)            -          - 
  6) 
 Lease interest payable (note 6)                   -       11,078            -          - 
 Amortisation of bank loan issue 
  costs (note 6)                                 722          722           58        925 
 Depreciation of property, plant 
  and equipment (note 13)                     37,718       37,718       36,825     73,779 
 Amortisation of intangible assets 
  (note 12)                                    1,925        1,925        3,847      7,634 
 Depreciation on investment properties 
  (note 14)                                       34           34           27         55 
 Amortisation of other non-current 
  assets (note 15)                               192            -          169        343 
 Aborted properties costs                         33           33          407        430 
 Amortisation of right-of-use assets               -       24,425            -          - 
  (note 25) 
---------------------------------------  -----------  -----------  -----------  --------- 
                                             121,124      149,567      110,229    226,097 
 Change in inventories                           264          264          531      (417) 
 Change in receivables                       (5,801)      (6,341)      (1,206)      1,228 
 Change in payables                           15,959       16,546       23,678        268 
 Cash flow from operating activities         131,546      160,036      133,232    227,176 
---------------------------------------  -----------  -----------  -----------  --------- 
 

*This column shows the cash generated from operations as it would have been reported, before the introduction for IFRS 16.

The amount of GBP131,546,000 shown is presented at the start of the pre-IFRS 16 cash flow presented within the

primary statements.

The difference of GBP28,490,000 between the cash flow from operating activities of GBP160,036,000 and the pre-IFRS 16 number

of GBP131,546,000 is formed from the net payments on leases accounted for under IFRS 16, as disclosed in note 25 of payments made of GBP29,232,000, less payments received of GBP742,000. These payments are deducted on the cash flow statement, resulting in a change in cash and cash equivalents and free cash flow being the same before and after the introduction of IFRS 16.

   10.    Analysis of change in net debt 
 
                                    28 July        IFRS       Cash   Non-cash   26 January 
                                       2019   migration      flows   movement         2020 
                                     GBP000      GBP000     GBP000     GBP000       GBP000 
------------------------------   ----------  ----------  ---------  ---------  ----------- 
 Borrowings 
 Cash in hand                        42,950           -      4,463          -       47,413 
Finance lease creditor - 
 due before one year                (3,287)           -      1,431    (1,430)      (3,286) 
 Current net borrowings              39,663           -      5,894    (1,430)       44,127 
 
 Bank loans - due after one 
  year                            (770,076)           -     25,000      (702)    (745,778) 
 Finance lease creditor - 
  due after one year                (6,607)           -          -      1,430      (5,177) 
Private placement - due 
 after one year                           -           -   (97,679)       (20)     (97,699) 
 Non-current net borrowings       (776,683)           -   (72,679)        708    (848,654) 
 
Net debt                          (737,020)           -   (66,785)      (722)    (804,527) 
 
 Derivatives 
Interest-rate swaps asset 
 - due after one year                   321           -          -      (321)            - 
Interest-rate swaps liability 
 - due after one year              (49,393)           -          -    (7,703)     (57,096) 
Total derivatives                  (49,072)           -          -    (8,024)     (57,096) 
 
Net debt after derivatives        (786,092)           -   (66,785)    (8,746)    (861,623) 
 
Operating leases 
Operating lease assets - 
 due before one year                      -       1,583      (556)        534        1,561 
Operating lease assets - 
 due after one year                       -      11,853          -      (534)       11,319 
Operating lease obligations 
 - due before one year                    -    (61,252)     19,912   (17,988)     (59,328) 
Operating lease obligations 
 - due after one year                     -   (570,052)          -     32,554    (537,498) 
Net lease liabilities                     -   (617,868)     19,356     14,566    (583,946) 
 
Net debt after derivatives 
 and lease liabilities            (786,092)   (617,868)   (47,429)      5,820  (1,445,569) 
 

The cash movement on the private placement is disclosed in the cash flow statement as an advance under private placement

of GBP98,000,000 and a cash payment of loan issue costs of GBP321,000.

Non-cash movements

The non-cash movement in bank loans and the private placement relate to the amortisation of loan issue costs.

The amortised charge for the year of GBP722,000 is disclosed in note 6. These are upfront payments made to obtain new borrowings. These costs are charged to the income statement over the expected life of the loan.

The movement in interest-rate swaps relates to the change in the 'mark to market' valuations for the year.

The migration movement of GBP617,868,000 is the recognition of the lease liability of GBP631,304,000 and the lease asset of GBP13,436,000 on adoption of IFRS 16. These amounts are disclosed in note 25. The non-cash movement in lease liabilities is analysed in the table below.

 
Non-cash movement in net lease liabilities          Unaudited 
                                                   26 January 
                                                         2020 
                                                       GBP000 
Recognition of new leases (note 25)                  (27,361) 
Remeasurements of existing leases (note 25)                77 
Disposals of lease (note 25)                           41,656 
Exchange differences (note 25)                            194 
Non-cash movement in net lease liabilities             14,566 
 
   10.        Net debt (continued) 

The table below calculated a ratio between net debt, being borrowings less cash and cash equivalents, and earnings before interest, tax and deprecation (EBITDA). The numbers in this table are all before the effect of IFRS 16.

 
                                                     Unaudited   Unaudited   Audited 
                                                      26 weeks    26 weeks  52 weeks 
                                                         ended       ended     ended 
                                                    26 January  27 January   28 July 
                                                          2020        2019      2019 
                                                        GBP000      GBP000    GBP000 
Profit before tax (income 
 statement)                                             57,921      50,276   102,459 
Interest (note 6)                                       18,467      16,967    35,057 
Depreciation and amortisation 
 (note 2)                                               39,869      40,868    81,811 
Earnings before interest, tax and depreciation 
 (EBITDA)                                              116,257     108,111   219,327 
 
 
Rolling EBITDA 
Last full year                                         219,327     214,496         - 
Last half year                                       (108,111)   (114,100)         - 
Rolling earnings before interest, tax 
 and depreciation (EBITDA)                             227,473     208,507   219,327 
 
Net debt/EBITDA                                           3.54        3.47      3.36 
 
   11.    Dividends paid and proposed 
 
                                      Unaudited   Unaudited   Audited 
                                       26 weeks    26 weeks  52 weeks 
                                          ended       ended     ended 
                                     26 January  27 January   28 July 
                                           2020        2019      2019 
                                         GBP000      GBP000    GBP000 
Paid in the period 
2018 final dividend                           -       8,435     8,435 
2019 interim dividend                         -           -     4,217 
2019 final dividend                       8,371           -         - 
                                          8,371       8,435    12,652 
 
Dividends in respect of the period 
Interim dividend                              -       4,217     4,217 
Final dividend                                -           -     8,371 
                                              -       4,217    12,614 
 
Dividend per share                            -          4p       12p 
Dividend cover                              3.1         4.5       5.8 
 

Dividend cover is calculated as profit after tax and exceptional items over dividend paid.

   12.    Intangible assets 
 
                                                Computer        Assets     Total 
                                                software         under 
                                                     and 
                                             development  construction 
                                                  GBP000        GBP000    GBP000 
Cost: 
At 29 July 2018                                   66,944         1,799    68,743 
Additions                                            658         1,723     2,381 
Transfers                                            165         (165)         - 
At 27 January 2019                                67,767         3,357    71,124 
Additions                                          1,075         2,469     3,544 
Transfers                                          1,397       (1,397)         - 
Disposals                                           (22)             -      (22) 
At 28 July 2019                                   70,217         4,429    74,646 
Additions                                              7           766       773 
Transfers                                          3,857       (3,857)         - 
At 26 January 2020                                74,081         1,338    75,419 
 
Accumulated amortisation and impairment: 
At 29 July 2018                                 (43,964)             -  (43,964) 
Provided during the 
 period                                          (3,847)             -   (3,847) 
At 27 January 2019                              (47,811)             -  (47,811) 
Provided during the 
 period                                          (3,787)             -   (3,787) 
Disposals                                             22             -        22 
At 28 July 2019                                 (51,576)             -  (51,576) 
Provided during the 
 period                                          (1,925)             -   (1,925) 
Impairment loss (note 
 4)                                              (9,540)             -   (9,540) 
At 26 January 2020                              (63,041)             -  (63,041) 
 
 
Net book amount at 
 26 January 2020                                  11,040         1,338    12,378 
Net book amount at 
 28 July 2019                                     18,641         4,429    23,070 
Net book amount at 
 27 January 2019                                  19,956         3,357    23,313 
Net book amount at 
 29 July 2018                                     22,980         1,799    24,779 
 

The majority of intangible assets relates to computer software and software development. Examples include the development

costs of our SAP accounting system, our Wisdom property-maintenance system and the Wetherspoon app.

   13.    Property, plant and equipment 
 
                                 Freehold     Short-    Equipment,        Assets      Total 
                                      and 
                           long-leasehold  leasehold      fixtures         under 
                                 property   property  and fittings  construction 
                                   GBP000     GBP000        GBP000        GBP000     GBP000 
Cost: 
At 29 July 2018                 1,110,875    356,160       617,800        54,202  2,139,037 
Additions                          40,278      1,602        14,438        36,714     93,032 
Transfers                          18,461      1,034         5,107      (24,602)          - 
Exchange differences                (367)       (68)         (137)         (595)    (1,167) 
Transfer to held for 
 sale                             (5,450)          -         (600)             -    (6,050) 
Disposals                         (2,122)    (1,975)       (1,754)             -    (5,851) 
Reclassification                   17,641   (17,641)             -             -          - 
At 27 January 2019              1,179,316    339,112       634,854        65,719  2,219,001 
Additions                          35,269        827        23,776         8,338     68,210 
Transfer from investment 
 properties                         1,984          -             -             -      1,984 
Transfers                           5,228        458           209       (5,895)          - 
Exchange differences                  593         90           227           889      1,799 
Transfer to held for 
 sale                                 374          -         (210)             -        164 
Disposals                         (5,483)    (1,437)       (2,595)             -    (9,515) 
Reclassification                   11,891   (11,891)             -             -          - 
At 28 July 2019                 1,229,172    327,159       656,261        69,051  2,281,643 
Additions                          64,215        480        15,650        41,342    121,687 
Transfers                          18,826        636         5,963      (25,425)          - 
Exchange differences              (1,426)      (148)         (424)       (1,608)    (3,606) 
Transfer to held for 
 sale                             (1,335)          -         (458)             -    (1,793) 
Disposals                         (4,677)    (3,828)       (4,492)             -   (12,997) 
Reclassification                   24,914   (24,914)             -             -          - 
At 26 January 2020              1,329,689    299,385       672,500        83,360  2,384,934 
 
Accumulated depreciation and impairment: 
At 29 July 2018                 (222,037)  (184,575)     (426,352)             -  (832,964) 
Provided during the 
 period                           (9,058)    (6,019)      (21,748)             -   (36,825) 
Exchange differences                   39          -            41             -         80 
Impairment loss                         -      (545)         (261)             -      (806) 
Transfer to held for 
 sale                               2,067          -           600             -      2,667 
Disposals                           1,459      2,000         1,647             -      5,106 
Reclassification                 (10,308)     10,308             -             -          - 
At 27 January 2019              (237,838)  (178,831)     (446,073)             -  (862,742) 
Provided during the 
 period                           (9,213)    (5,714)      (22,027)             -   (36,954) 
Transfer from investment 
 properties                          (76)          -             -             -       (76) 
Exchange differences                 (84)       (18)         (158)             -      (260) 
Impairment loss                   (1,326)      (859)         (559)             -    (2,744) 
Transfer to held for 
 sale                                 (4)          -            77             -         73 
Disposals                           2,189      1,497         2,345             -      6,031 
Reclassification                  (7,473)      7,473             -             -          - 
At 28 July 2019                 (253,825)  (176,452)     (466,395)             -  (896,672) 
Provided during the 
 period                           (9,697)    (5,501)      (22,520)             -   (37,718) 
Exchange differences                  122       (40)           178             -        260 
Impairment loss                     (495)      (682)       (1,609)             -    (2,786) 
Transfer to held for 
 sale                               1,028          -           415             -      1,443 
Disposals                           1,030      3,841         4,199             -      9,070 
Reclassification                 (14,860)     14,860             -             -          - 
At 26 January 2020              (276,697)  (163,974)     (485,732)             -  (926,403) 
 
Net book amount at 
 26 January 2020                1,052,992    135,411       186,768        83,360  1,458,531 
Net book amount at 
 28 July 2019                     975,347    150,707       189,866        69,051  1,384,971 
Net book amount at 
 27 January 2019                  941,478    160,281       188,781        65,719  1,356,259 
Net book amount at 
 29 July 2018                     888,838    171,585       191,448        54,202  1,306,073 
 
   14.    Investment property 

The company owns three (2019: two) freehold property with existing tenants - and these assets have been classified

as investment properties. Last year, the company started developing one of its investment properties into a pub.

The property was transferred to property, plant and equipment. During this year, the company has purchased a further

two investment properties.

 
                                                GBP000 
Cost: 
At 29 July 2018                                  7,751 
At 27 January 2019                               7,751 
Transfer to property, plant and 
 equipment                                     (1,984) 
At 28 July 2019                                  5,767 
Additions                                        6,075 
At 26 January 2020                              11,842 
 
Accumulated depreciation and impairment: 
At 29 July 2018                                  (257) 
Provided during the 
 period                                           (27) 
At 27 January 2019                               (284) 
Provided during the 
 period                                           (28) 
Transfer to property, plant and 
 equipment                                          76 
At 28 July 2019                                  (236) 
Provided during the 
 period                                           (34) 
At 26 January 2020                               (270) 
 
 
Net book amount at 
 26 January 2020                                11,572 
Net book amount at 
 28 July 2019                                    5,531 
Net book amount at 
 27 January 2019                                 7,467 
Net book amount at 
 29 July 2018                                    7,494 
 

Rental income received in the period from the current investment properties was GBP 326,000 (2019: GBP 157,000 ).

Operating costs, excluding depreciation, incurred in relation to these properties amounted to GBP2 ,000 (2019: GBP 4,000 ).

In the opinion of the directors, the fair value of the investment properties is approximately GBP18,000,000.

   15.    Other non-current assets 
 
                                                 GBP000 
Cost: 
At 29 July 2018                                  12,727 
Additions                                            93 
At 27 January 2019                               12,820 
Additions                                           358 
Disposals                                          (75) 
At 28 July 2019                                  13,103 
Transferred to right-of-use 
 assets                                        (13,103) 
At 26 January 2020                                    - 
 
Accumulated amortisation and impairment: 
At 29 July 2018                                 (4,802) 
Provided during the 
 period                                           (169) 
At 27 January 2019                              (4,971) 
Provided during the 
 period                                           (174) 
Impairment loss                                   (145) 
Disposals                                            75 
At 28 July 2019                                 (5,215) 
Transferred to right-of-use 
 assets                                           5,215 
At 26 January 2020                                    - 
 
 
Net book amount at                                    - 
 26 January 2020 
Net book amount at 
 28 July 2019                                     7,888 
Net book amount at 
 27 January 2019                                  7,849 
Net book amount at 
 29 July 2018                                     7,925 
 

Other non-current assets are leases premiums, paid on leasehold properties. Please see note 25 for all

IFRS 16 migration adjustments.

   16.    Inventories 

Bar, food and non-consumable stock held at our pubs and national distribution centre.

 
                         Unaudited    Unaudited   Audited 
                        26 January   27 January   28 July 
                              2020         2019      2019 
                            GBP000       GBP000    GBP000 
                                    -----------  -------- 
Goods for resale 
 at cost                    23,453       22,769    23,717 
 
   17.    Receivables 

This category relates to situations in which third parties owe the company money. Examples include rebates from suppliers

and overpayments of certain taxes.

Prepayments relate to payments which have been made in respect of liabilities after the period's end.

 
                         Unaudited   Unaudited  Audited 
                        26 January  27 January  28 July 
                              2020        2019     2019 
                            GBP000      GBP000   GBP000 
Other receivables            1,810       1,054    1,135 
Receivables loss 
 allowance                       -        (22)      (8) 
Accrued income               1,777       1,593    2,327 
Prepayments                 18,804      21,710   18,449 
                            22,391      24,335   21,903 
 

Accrued income relates to discounts which are calculated based on certain products being delivered at an agreed rate per item.

 
Credit risk               Unaudited   Unaudited  Audited 
                         26 January  27 January  28 July 
                               2020        2019     2019 
                             GBP000      GBP000   GBP000 
Due from suppliers 
 - not due                    1,451         996      898 
Due from suppliers 
 - overdue                      359          58      237 
                              1,810       1,054    1,135 
 

Credit risk is the risk that a counterparty does not settle its financial obligation with the company. At the year end, the company has assessed the credit risk on amounts due from suppliers, based on historic experience, meaning that the expected

lifetime credit loss was GBPNil. Cash and cash equivalents are also subject to the impairment requirements of IFRS 9 - the identified impairment loss was immaterial.

   18.    Assets held for sale 

These relate to situations in which the company has exchanged contracts to sell a property, but the transaction is

not yet complete. As at 26 January 2020, one site was classified as held for sale (2019: two).

 
                           Unaudited   Unaudited  Audited 
                          26 January  27 January  28 July 
                                2020        2019     2019 
                              GBP000      GBP000   GBP000 
Property, plant and 
 equipment                       350       3,383    3,146 
 
   19.    Cash and cash equivalents 
 
                                 Unaudited   Unaudited  Audited 
                                26 January  27 January  28 July 
                                      2020        2019     2019 
                                    GBP000      GBP000   GBP000 
Cash and cash equivalents           47,413      37,354   42,950 
 

Cash at bank earns interest at floating rates, based on daily bank deposit rates.

   20.    Trade and other payables 

This category relates to money owed by the company to suppliers and the government.

Accruals refer to allowances made by the company for future anticipated payments to suppliers and other creditors.

 
                                      Unaudited    Unaudited  Audited 
                                     26 January   27 January  28 July 
                                           2020         2019     2019 
                                         GBP000       GBP000   GBP000 
                                                 ----------- 
Trade payables                          165,309      202,514  162,070 
Other payables                           27,362       18,073   18,056 
Other tax and Social Security            55,398       53,266   62,081 
Accruals and deferred income             67,704       46,648   66,119 
                                        315,773      320,501  308,326 
 
   21.    Borrowings 
 
                                      Unaudited    Unaudited   Audited 
                                     26 January   27 January   28 July 
                                           2020         2019      2019 
                                         GBP000       GBP000    GBP000 
                                                 -----------  -------- 
Current (due within 
 one year) 
Other 
Finance lease obligations                 3,286        3,207     3,287 
Total current borrowings                  3,286        3,207     3,287 
                                                 -----------  -------- 
 
Non-current (due after 
 one year) 
Bank loans 
Variable-rate facility                  750,000      750,000   775,000 
Unamortised bank loan 
 issue costs                            (4,222)           17   (4,924) 
                                        745,778      750,017   770,076 
Private placement 
Fixed-rate facility                      98,000            -         - 
Unamortised private placement 
 issue costs                              (301)            -         - 
                                         97,699            -         - 
Other 
Finance lease obligations                 5,177        8,095     6,607 
Total non-current borrowings            848,654      758,112   776,683 
                                                 -----------  -------- 
 
   22.    Provisions 
 
                                           Legal     Onerous    Total 
                                          claims       lease 
                                          GBP000      GBP000   GBP000 
At 28 July 2019                            3,523       2,483    6,006 
Charged to the income statement: 
- Transferred to right-of-use 
 assets (note 25)                              -     (2,483)  (2,483) 
- Additional charges                       1,053           -    1,053 
- Unused amounts reversed                  (496)           -    (496) 
- Used during year                         (964)           -    (964) 
At 26 January 2020                         3,116           -    3,116 
 
                                       Unaudited   Unaudited  Audited 
                                      26 January  27 January  28 July 
                                            2020        2019     2019 
                                          GBP000      GBP000   GBP000 
Current                                    3,116       5,499    4,072 
Non-current                                    -       2,453    1,934 
Total provisions                           3,116       7,952    6,006 
 

Legal claims

The amounts represent a provision for ongoing legal claims brought against the company by customers and employees

in the normal course of business. Owing to the nature of the business, we expect to have a continuous provision for outstanding

employee and public liability claims. All claim provisions are considered current and are not, therefore, discounted to take into account the passage of time.

Onerous lease

The amounts represent a provision for future rent payments on sites which are not expected to generate sufficient profits.

Also included are provisions on any sublet properties for which rent is not fully recovered. These provisions are expected to be utilised over a period of up to 22 years and are discounted to take into account the passage of time.

These amounts were transferred into the right-of-use assets created on migration to IFRS 16.

   23.    Financial instruments 

The table below analyses the company's financial liabilities in relevant maturity groupings, based on the remaining period

at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Maturity profile of financial liabilities

 
                                                                            More 
                             Within                                         than 
                                        1-2     2-3      3-4 
                             1 year   years   years    years  4-5 years  5 years    Total 
                             GBP000  GBP000  GBP000   GBP000     GBP000   GBP000   GBP000 
At 26 January 2020 
Bank loans                   20,310  20,310  20,310  770,317          -        -  831,248 
Private placement             2,920   2,920   2,920    2,920      2,920  103,841  118,443 
Trade and other payables    260,375       -       -        -          -        -  260,375 
Derivatives                  13,141  10,120   6,929    5,113      3,017   17,332   55,653 
Finance lease obligations     3,286   3,286   2,465        -          -        -    9,037 
 
 
                                                                            More 
                             Within                                         than 
                                        1-2     2-3     3-4 
                             1 year   years   years   years   4-5 years  5 years    Total 
                             GBP000  GBP000  GBP000  GBP000      GBP000   GBP000   GBP000 
At 28 July 2019 
Bank loans                   20,039  20,039  20,039  20,039     786,726        -  866,882 
Trade and other payables    246,245       -       -       -           -        -  246,245 
Derivatives                  13,089  13,089   6,962   6,877       3,052   18,651   61,720 
Finance lease obligations     3,287   3,287   3,287     819           -        -   10,680 
                                                             ---------- 
 

On 20 August 2019, the company authorised the issue and sale of GBP98m aggregate principal amount of its

Senior Secured Notes due 20 August 2026; this extends its total facilities, excluding finance leases, from GBP895m to GBP993m.

At the balance sheet date, the company had loan facilities of GBP993m (2019: GBP895m) as detailed below:

n Secured revolving-loan facility of GBP875m

o Matures January 2024

o 14 participating lenders

n Private placement of GBP98m

o Matures August 2026

o The purchase of loan notes split among five participants

n Overdraft facility of GBP20m

The company has hedged its interest-rate liabilities to its banks by swapping the floating-rate debt into fixed-rate debt which

has fixed GBP770m of these borrowings at rates of between 0.61% and 3.84%. The effective weighted average interest rate of

the swap agreements used during the year is 2.82% (2019: 2.88%), fixed for a weighted average period of 4.6 years

(2019: 4.8 years). In addition, the company has entered into forward-starting interest-rate swaps as detailed in the table below.

Weighted average by swap period:

 
From         To            Total swap   Weighted average 
                            value GBPm        interest % 
02/07/2018   29/07/2021    770                      2.42 
30/07/2021   30/07/2023    770                      1.61 
31/07/2023   30/07/2026    770                      1.10 
31/07/2026   30/06/2028    770                      1.33 
01/07/2028   29/03/2029    770                      1.32 
 

At the balance sheet date, GBP750m (2019: GBP750m) was drawn down under the GBP875m unsecured-term revolving-loan facility.

The amounts drawn under this agreement can be varied, depending on the requirements of the business. In future, it is

expected that the draw-down required by the company will be more than GBP770m for the duration of the interest-rate swaps

detailed above.

   23.    Financial instruments (continued) 

Capital risk management

The company's capital structure comprises shareholders' equity and loans. The objective of capital management

is to ensure that the company is able to continue as a going concern and provide shareholders with returns on

their investment, while managing risk.

The company does not have a specific measure for managing capital structure; instead, the company plans its capital

requirements and manages its loans, dividends and share buybacks accordingly. The company measures loans using

a ratio of net debt to EBITDA which was 3.54 times (2019: 3.47 times) at the period end.

Financial risks associated with financial instruments, including credit risk and liquidity risk, are discussed in the

annual report 2019 in section 2 on page 49.

Fair value of financial assets and liabilities

IFRS 7 requires disclosure of fair value measurements by level, using the following fair value measurement hierarchy:

n Quoted prices in active markets for identical assets or liabilities (level 1)

n Inputs other than quoted prices included in level 1 which are observable for the asset or liability,

either directly or indirectly (level 2)

n Inputs for the asset or liability which are not based on observable market data (level 3)

The fair value of the interest-rate swaps is considered to be level 2. All other financial assets and liabilities

are measured in the balance sheet at amortised cost - and their valuation is also considered to be level 2.

Interest-rate and currency risks of financial liabilities

An analysis of the interest-rate profile of financial liabilities, after taking account of all interest-rate swaps,

is set out in the following table.

 
Interest-rate and currency risks 
 of financial liabilities 
                                                     Unaudited   Unaudited  Audited 
                                                    26 January  27 January  28 July 
                                                          2020        2019     2019 
                                                        GBP000      GBP000   GBP000 
Analysis of interest-rate profile of financial 
 liabilities 
Bank loans 
Floating rate due after one 
 year                                                        -           -       76 
Fixed rate due after one year                          745,778     750,017  770,000 
                                                       745,778     750,017  770,076 
Finance lease obligation 
Fixed rate due in one year                               3,286       3,207    3,287 
Fixed rate due after one year                            5,177       8,095    6,607 
                                                         8,463      11,302    9,894 
Private placement 
Fixed rate due after one year                           97,699           -        - 
                                                        97,699                    - 
 
                                                       851,940     761,319  779,970 
 

The floating-rate borrowings are interest-bearing borrowings at rates based on LIBOR, fixed for periods of up to one month.

The fixed-rate loan is that element of the company's borrowings which has been fixed with interest-rate swaps.

   23.   Financial instruments (continued) 

Fair values

In some cases, payments which are due to be made in the future by the company or due to be received by the company

have to be given a fair value.

The table below highlights any differences between book value and fair value of financial instruments.

 
                                  Unaudited    Unaudited    Unaudited    Unaudited      Audited      Audited 
                                 26 January   26 January   27 January   27 January      28 July      28 July 
                                       2020         2020         2019         2019         2019         2019 
                                       Book         Fair         Book         Fair         Book         Fair 
                                      value        value        value        value        value        value 
                                     GBP000       GBP000       GBP000       GBP000       GBP000       GBP000 
Financial assets at amortised 
 cost 
Cash and cash equivalents            47,413       47,413       37,354       37,354       42,950       42,950 
Operating lease assets               12,880       12,955            -            -            -            - 
Receivables                           1,810        1,810        1,032        1,032        1,127        1,127 
                                     62,103       62,178       38,386       38,386       44,077       44,077 
 
Financial liabilities 
 at amortised cost 
Trade and other payables          (260,375)    (260,375)    (267,235)    (267,235)    (246,245)    (246,245) 
Finance lease obligations           (8,463)      (8,478)     (11,302)     (11,600)      (9,894)      (9,915) 
Operating lease obligations       (596,826)    (606,018)            -            -            -            - 
Private placement                  (97,699)     (99,457)            -            -            -            - 
Borrowings                        (745,778)    (746,554)    (750,017)    (749,150)    (770,076)    (771,093) 
                                (1,709,141)  (1,720,882)  (1,028,554)  (1,027,985)  (1,026,215)  (1,027,253) 
 
Derivatives - cash flow 
 hedges 
Non-current derivative 
 financial asset                          -            -       11,420       11,420          321          321 
Non-current derivative 
 financial liability               (57,096)     (57,096)     (35,465)     (35,465)     (49,393)     (49,393) 
                                   (57,096)     (57,096)     (24,045)     (24,045)     (49,072)     (49,072) 
 

The fair value of derivatives has been calculated by discounting all future cash flows by the market yield curve at the

balance sheet date. The fair value of borrowings has been calculated by discounting the expected future cash flows at the year end's prevailing interest rates.

Obligations under finance leases

The minimum lease payments under finance leases fall due as follows:

 
                                           Unaudited   Unaudited  Audited 
                                          26 January  27 January  28 July 
                                                2020        2019     2019 
                                              GBP000      GBP000   GBP000 
Within one year                                3,286       3,207    3,287 
In the second to fifth 
 year, inclusive                               5,751       9,116    7,393 
                                               9,037      12,323   10,680 
Less future finance 
 charges                                       (574)     (1,021)    (786) 
Present value of lease 
 obligations                                   8,463      11,302    9,894 
 
Less amount due for settlement 
 within one year                             (3,286)     (3,207)  (3,287) 
Amount due for settlement during the 
 second to fifth year, inclusive               5,177       8,095    6,607 
 
   All finance   lease obligations are in respect of various equipment used in the business. 

No escalation clauses are included in the agreements.

   23.    Financial instruments (continued) 

Interest - rate swaps

At 26 January 2020, the company had fixed-rate swaps designated as hedges of floating-rate borrowings.

The floating-rate borrowings are interest-bearing borrowings at rates based on LIBOR, fixed for periods of up to one month.

 
                                                  Loss/(gain)  Deferred    Charged 
                                                           on 
                                                interest-rate       tax  to equity 
                                                        swaps 
                                                       GBP000    GBP000     GBP000 
As at 27 January 2019                                  24,045   (4,088)     19,957 
Change in fair value posted to comprehensive 
 income                                                25,027         -     25,027 
Deferred tax posted to comprehensive income                 -   (4,254)    (4,254) 
As at 28 July 2019                                     49,072   (8,342)     40,730 
Change in fair value posted to comprehensive 
 income                                                 8,024         -      8,024 
Deferred tax posted to comprehensive income                 -   (1,364)    (1,364) 
As at 26 January 2020                                  57,096   (9,706)     47,390 
 

No ineffectiveness arose during the period (2019: GBPNil). Amounts charged to the profit and loss account in relation

to interest-rate swaps are charged to finance costs - see note 6.

Interest-rate hedges

The company's interest-rate swap agreements are in place as protection against future changes in borrowing costs.

Under these agreements, the company pays a fixed interest charge and receives variable interest income which matches

the variable interest payments made on the company's borrowings.

There is an economic relationship among the company's revolving-loan facility, the hedged item and the company's interest-rate swaps, the hedging instruments, where the company pays a floating interest charge on the loan and receives a floating

interest-rate credit on the interest-rate swap. The interest-rate swap agreement allows the company to receive a floating interest-rate credit and requires the company to pay an agreed fixed interest charge.

The company has established a hedging ratio of 1:1 between the interest-rate swaps and the company's floating-rate borrowings, meaning that floating interest rates paid should be identical to the amounts received for a given amount

of borrowings.

These hedges could be ineffective, if the:

n period over which the borrowings were drawn were changed. This could result in the borrowings

being made at a different floating rate than the interest-rate swap.

n gross amount of borrowings were less than the value swapped.

n impact of LIBOR reform were to cause a mismatch between the interest rate of the swaps and

that of the company's debt.

The company tests hedge effectiveness prospectively using the hypothetical derivative method and compares the changes

in the fair value of the hedging instrument with those in the fair value of the hedged item attributable to the hedged risk.

Interest rate sensitivity

During the 26 weeks ended 26 January 2020, if the interest rates on UK-denominated borrowings had been 1% higher,

with all other variables constant, pre-tax profit for the year would have been increased by GBP146,000 and equity increased by GBP67,386,000. The movement in equity arises from a change in the 'mark to market' valuation of the interest-rate swaps into which the company has entered, calculated by a 1% shift of the market yield curve. The company considers that a 1% movement in interest rates represents a reasonable sensitivity to potential changes. However, this analysis is for illustrative purposes only.

   24.    Other liabilities 
 
                          Unaudited   Unaudited  Audited 
                         26 January  27 January  28 July 
                               2020        2019     2019 
                             GBP000      GBP000   GBP000 
                       ------------ 
Operating lease 
 incentives                       -      11,235   10,930 
                            ------- 
 

Included in other liabilities were lease incentives on leases where the lessor retains substantially all of the risks and benefits of ownership of the asset. The lease incentives were recognised as a reduction in rent over the lease term and shown as a liability on the balance sheet. These amounts now form part of the right-of-use assets, please see note 25.

   25.    Leases 

About 36% of the company's pubs are leasehold. New leases are normally for 30 years, with a break clause after 15 years. Most leases have upwards-only rent reviews, based on open-market rental at the time of review, but most new pub leases

have an uplift in rent which is fixed at the start of the lease.

   (a)   Right-of-use assets 

The table below shows the movements in the company's right-of-use assets.

 
                                                 GBP000 
Cost: 
Recognition of assets                           617,837 
Additions                                        27,361 
Remeasurement                                      (77) 
Exchange differences                              (216) 
Disposals                                      (41,886) 
At 26 January 2020                              603,019 
 
 
Accumulated depreciation and impairment: 
Provided during the 
 period                                        (24,425) 
Exchange differences                                  4 
Disposals                                           577 
At 26 January 2020                             (23,844) 
 
 
Net book amount at 
 26 January 2020                                579,175 
 
   25.    Leases (continued) 
   (b)   Leas e maturity profile 

The tables below analyse the company's lease liabilities and assets in relevant maturity groupings, based on the remaining period at the balance sheet date to the end of the lease. The amounts disclosed in the table are the contractual undiscounted cash flows. The impact of discounting reconciles these amounts to the values disclosed in the balance sheet.

 
Lease liabilities             Unaudited  Unaudited 
 maturity profile 
                             26 January    28 July 
                                   2020       2019 
                                 GBP000     GBP000 
 
Within one year                  59,328     61,252 
Between one and two 
 years                           58,597     61,177 
Between two and three 
 years                           55,965     58,523 
Between three and 
 four years                      55,074     57,050 
Between four and 
 five years                      54,623     56,400 
After five years                506,892    541,916 
Lease commitments 
 payable                        790,479    836,318 
 
 
Discounting lease 
 liability                    (193,653)  (205,014) 
Lease liability                 596,826    631,304 
 
 
 
Lease assets maturity         Unaudited  Unaudited 
 profile 
                             26 January    28 July 
                                   2020       2019 
                                 GBP000     GBP000 
Within one year                   1,561      1,583 
Between one and two 
 years                            1,501      1,545 
Between two and three 
 years                            1,413      1,448 
Between three and 
 four years                       1,258      1,391 
Between four and 
 five years                       1,110      1,125 
After five years                  8,850      9,338 
                                 15,693     16,430 
 
Discounting lease 
 asset                          (2,813)    (2,994) 
Lease asset                      12,880     13,436 
 

The comparative numbers disclosed above are those included in the migration note in the 2019 annual report.

   25.   Leases (continued) 
   (c)   Lease liability 

The tables below show the movements in the period of the lease liability and the lease asset.

 
Lease liability                  Unaudited 
                                26 January 
                                      2020 
                                    GBP000 
At 28 July 2019                          - 
Recognition of liability           631,304 
Additions                           27,361 
Remeasurements of leases              (77) 
Disposals                         (41,656) 
Exchange differences                 (194) 
Lease liabilities before 
 payments                          616,738 
 
Interest due                         9,320 
Payments made                     (29,232) 
Net principal repayments          (19,912) 
 
At 26 January 2020                 596,826 
 

Future rental payments, up to the end of the lease, are capitalised, including any agreed increases. Future rent payments

could change as a result of open-market rent reviews or options being exercised to terminate a lease early. Any changes in the minimum unavoidable lease payments will be included as a remeasurement of the lease liability.

Leases with lease terms of less than one year are not capitalised.

 
Lease assets                     Unaudited 
                                26 January 
                                      2020 
                                    GBP000 
At 28 July 2019                          - 
Recognition of asset                13,436 
Lease assets before 
 payments                           13,436 
 
Interest due                           186 
Payments made                        (742) 
Net principal repayments             (556) 
 
At 26 January 2020                  12,880 
 

The company has sublet several of its leases which have been capitalised above, with lease assets being the capitalised

future rent receivables from sublet sites.

The interest payable and receivable shown in the tables above is the interest element of the payments made and received

in the period. These amounts differ from the lease interest charged/credited to the income statement in the period - see note 6. The amounts charged/credited to the income statement in the period will also include amounts due, but not paid, in the period.

The incremental borrowing rate applied to lease liabilities and assets was 2.7-3.9%, depending on the lease's length.

   25.   Leases (continued) 
   (d)   IFRS 16 migration 

IFRS 16 Leases

This standard replaces IAS 17 Leases and is effective for accounting periods beginning on or after 1 January 2019.

The standard was adopted by the company on 29 July 2019.

When the new standard became effective, the company recognised, on the balance sheet, a right-of-use asset and a lease liability for future lease payments, in respect of all leases, excluding those with terms less than 12 months and those for

low-value assets.

Lessor accounting remains similar to the previous standard. The lessor continues to classify leases as finance or operating leases, depending on whether the risks and rewards of ownership have been transferred to the lessee. Some of the company's sublet properties were classified as finance leases under the new standard, as the risks and rewards of ownership of the IFRS 16 right-of-use asset was transferred to the lessee, whereas, under IAS 17, there was no asset recognised in the accounts;

as a result, the leases were treated as operating leases.

Transition

On 29 July 2019, the company adopted the standard using the modified retrospective approach. The new standard allows, on a lease-by-lease basis, for the value of the right-of-use assets to be determined as if the lease had started on the date of transition or the start date of the lease. This choice does not affect the recognised lease liability, but does affect the value of the asset. Valuing on the day of transition results in a right-of-use asset of broadly the same value as the lease liability. Valuing at the start date of the lease results in a lower asset value at transition, reflecting the amortisation which would have been charged on the asset between the start of the lease and the date of transition. The reduction in the asset value would be offset by a reduction in distributable reserves on the balance sheet. The company has chosen to value all leases on the date of transition.

The company has elected to use the following practical exemptions in transitioning to IFRS 16:

n The application of a single discount rate to a portfolio of leases with reasonably similar characteristics

n The use of existing onerous lease provisions, rather than preforming an impairment review on right-of-use assets

n The use of hindsight in determining the lease term

Balance sheet

On 29 July 2019, the company recognised a right-of-use asset of GBP618m, a lease liability of GBP631m and a finance lease asset

of GBP14m, related to sublet sites. The right-of-use assets comprise the net lease liability of GBP617m, rent prepayments of GBP14m, operating lease incentives of GBP11m and onerous leases of GBP2m. There was no adjustment to retained earnings.

As at 28 July 2019, the company had contractual operating lease commitments payable of GBP836m and contractual operating lease commitments receivable of GBP23m. A reconciliation to the transition value is provided below.

Income statement

The total profit and loss charge over the life of a lease will remain unchanged under IFRS 16, but the new standard will change the pattern of how the expense is recognised in the income statement, over time, with more costs recognised in the early years of a lease and fewer in its later years. The expense will be recognised as a depreciation and interest charge replacing the operating expenses under IAS 17.

In the 2019 annual report, the company estimated that, for the year ending 26 July 2020, EBITDA will have increased by

GBP58m and operating profit by GBP8m. Finance costs are expected to increase by GBP22m, resulting in a decrease in profit before tax of GBP14m. These estimates are based on the leaseholds held at year end and will be affected by the company purchasing the freehold interest in its leasehold sites.

Tax impact on changes to the income statement

The IFRS 16 depreciation and interest expense will be deducted when calculating current tax. It is estimated, in the current financial year, that current tax will be reduced by GBP2m. The reduction in tax payments in the early years of a lease will be offset by higher tax payments in its later years.

The company expects a small increase in the effective tax rate. This is due to disallowable expenses, which will remain unchanged, being a larger proportion of reduced profits.

Cash flow statement

On the application of IFRS 16, there will be no impact on cash flows, except in relation to tax payments. The presentation of cash flows will change. Cash flows from operating activities will increase, yet will be exactly offset by an increase in interest and lease principal payments.

   25.   Leases (continued) 

The table below shows the transition adjustments applied to the opening balance sheet for the year ending 26 July 2020.

 
                                  July 2019    IFRS 16    Re-stated 
                                     GBP000     GBP000       GBP000 
Other                             1,422,235          -    1,422,235 
Other non-current assets              7,888    (7,888)            - 
Right-of-use assets                       -    617,837      617,837 
Lease receivables                         -     11,853       11,853 
Total non-current assets          1,430,123    621,802    2,051,925 
 
Other current assets                 69,813          -       69,813 
Lease receivables                         -      1,583        1,583 
Receivables                          21,903    (5,693)       16,210 
Total assets                      1,521,839    617,692    2,139,531 
 
Other current liabilities         (326,671)        748    (325,923) 
Lease liabilities                         -   (61,252)     (61,252) 
Total current liabilities         (326,671)   (60,504)    (387,175) 
 
Other non-current liabilities     (865,492)          -    (865,492) 
Lease liabilities                         -  (570,052)    (570,052) 
Provisions                          (1,934)      1,934            - 
Other liabilities                  (10,930)     10,930            - 
Total liabilities               (1,205,027)  (617,692)  (1,822,719) 
Net assets                          316,812          -      316,812 
 
Equity                              316,812          -      316,812 
 

Reconciliation to lease commitments

The table below shows a reconciliation between the operating lease commitments (as disclosed in the 2019 annual report

in note 25) and the lease liability and assets to be recognised under IFRS 16.

 
                                           2019 
                                         GBP000 
Lease commitments, payable              836,318 
Discounting lease liability           (205,014) 
Lease liability recognised              631,304 
 
 
                                           2019 
                                         GBP000 
Lease commitments, receivable            22,857 
Leases not capitalised                  (6,427) 
Discounting lease asset                 (2,994) 
Lease asset recognised                   13,436 
 
   25.   Leases (continued) 

Recognition of right-of-use assets

The table below shows how the value of the right-of-use asset was calculated on migration.

 
                                                        Unaudited 
                                                       26 January 
                                                             2020 
                                                           GBP000 
Recognition of leases 
Lease receivables (note 25)                              (13,436) 
Lease liabilities 
 (note 25)                                                631,304 
 
Non-current assets 
Other non-current assets 
 (note 15)                                                  7,888 
 
Current assets 
Rent prepayments (note 17)                                  5,693 
 
Current liabilities 
Rent payables (note 
 20)                                                        (199) 
Onerous lease creditor less than one 
 year (note 22)                                             (549) 
 
Non-current liabilities 
Other non-current liabilities 
 (note 24)                                               (10,930) 
Onerous lease creditor more than one year (note 
 22)                                                      (1,934) 
 
Right-of-use assets                                       617,837 
 

Determining the right-of-use asset

Lease liabilities and assets were calculated by discounting future unavoidable rental payments and rents receivable

for any of those sites which had been sublet. To the value of the lease liabilities and assets were added all balance

sheet items held in relation to these leases. These included lease premiums paid, disclosed as other non-current

assets, prepaid and accrued rental charges, the onerous lease provision and lease incentives, disclosed as other

non-current liabilities.

Lease terminology

Before the introduction of IFRS 16, leases in a lessee's accounts were defined as finance leases and operating leases. Although this distinction no longer exists within IFRS 16, the distinction has been maintained in the narrative description

of leases within the company's accounts, so that the impact of the new standard can be clearly seen.

   26.    Capital commitments 

At 26 January 2020, the company had GBP 28.2 m (July 2019: GBP 37.9 m) of capital commitments, relating to the purchase of

10 (July 2019: 16) sites, for which no provision had been made, in respect of property, plant and equipment.

The company had some other sites in the property pipeline; however, any legal commitment is contingent on planning

and licensing. Therefore, there are no commitments at the balance sheet date.

   27.    Related-party disclosures 

J D Wetherspoon is the owner of the share capital of the following companies:

 
Company name                                 Country of incorporation    Ownership     Status 
J D Wetherspoon (Scot) Limited               Scotland                    Wholly owned  Dormant 
J D Wetherspoon Property Holdings Limited    England                     Wholly owned  Dormant 
Moon and Spoon Limited                       England                     Wholly owned  Dormant 
Moon and Stars Limited                       England                     Wholly owned  Dormant 
Moon on the Hill Limited                     England                     Wholly owned  Dormant 
Moorsom & Co Limited                         England                     Wholly owned  Dormant 
Sylvan Moon Limited                          England                     Wholly owned  Dormant 
Checkline House (Head Lease) Limited         Wales                       Wholly owned  Dormant 
 

All of these companies are dormant and contain no assets or liabilities and are, therefore, immaterial. As a result,

consolidated accounts have not been produced. The company has an overseas branch located in the Republic of Ireland.

   28.    Share capital 
 
                                                  Number    Share 
                                                      of 
                                                  shares  capital 
                                                    000s   GBP000 
Balance at 29 July 2018 (audited)                105,501    2,110 
Closing balance at 27 January 2019 (unaudited)   105,501    2,110 
Repurchase of shares                               (403)      (8) 
Balance at 28 July 2019 (audited)                105,098    2,102 
Repurchase of shares                               (420)      (8) 
Closing balance at 26 January 2020 (unaudited)   104,678    2,094 
 

The balance classified as share capital represents proceeds arising on issue of the company's equity share capital,

comprising 2p ordinary shares and the cancellation of shares repurchased by the company.

The total authorised number of 2p ordinary shares is 500,000,000 (2019: 500,000,000). All issued shares are fully paid.

In the period, there were no proceeds from the issue of shares (2019: GBPNil).

During the period, 419,741 shares were repurchased by the company for cancellation, representing approximately 0.40%

of the issued share capital, at a cost of GBP6.5m, including stamp duty, representing an average cost per share of 1,523p.

The capital redemption reserve increased owing to the repurchase of a number of shares in the period.

While the memorandum and articles of association allow for preferred, deferred or special rights to attach

to ordinary shares, no shares carried such rights at the balance sheet date.

   29.    Events after the balance sheet date 

On 11 March 2020, the chancellor presented the UK budget announcement and confirmed that the rate of corporation tax would remain at 19% from 1 April 2020. This is expected to be substantively enacted by the year-end balance sheet date.

As a result of this post balance sheet announcement, the prevailing tax rate used to calculate the income and deferred tax

liabilities for the year ended 26 July 2020 will be 19%, instead of 18.33% used in the half-year results. Furthermore, the

deferred tax balances will be recalculated at the year end to 19%; it is anticipated that this will result in a rate-change

adjustment of approximately GBP3.4m.

For information on COVID-19, please see note 31.

   30.    General information 

J D Wetherspoon plc is a public limited company, incorporated and domiciled in England and Wales.

Its registered office address is: Wetherspoon House, Central Park, Reeds Crescent, Watford, WD24 4QL.

The company is listed on the London Stock Exchange.

This condensed half-yearly financial information was approved for issue by the board on 19 March 2020.

This interim report does not comprise statutory accounts within the meaning of Sections 434 and 435 of the Companies Act 2006. Statutory accounts for the year ended 28 July 2019 were approved by the board of directors on 12 September 2019 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis-of-matter paragraph or any statement under Sections 498 to 502 of the Companies Act 2006.

The advent of the COVID-19 virus supersedes the principal risks and uncertainties as set out in the financial statements for the 52 weeks ended 28 July 2019, pages 48 and 49, and will remain the most significant risk facing the company in the next six months, please see note 31.

   31.    Basis of preparation 

This condensed half-yearly financial information of J D Wetherspoon plc (the 'Company'), which is abridged and unaudited, has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standards (IAS) 34, Interim Financial Reporting, as adopted by the European Union. This interim report should be read in conjunction with the annual financial statements for the 52 weeks ended 28 July 2019 which were prepared in accordance with IFRSs, as adopted by the European Union.

The directors have made enquiries into the adequacy of the Company's financial resources, through a review of the Company's budget and medium-term financial plan, including capital expenditure plans and cash flow forecasts. Material uncertainty which may cast significant doubt regarding the Company's ability to trade as a going concern has resulted from the impact of the COVID-19 virus on the economy and the hospitality industry. The directors have considered the impact on the company, including the possibility of temporary closure. The directors are satisfied that the Company will not breach its borrowing covenants during a temporary closure. If the closure is prolonged, the Company would consider whether to take further actions at that time. In that respect, the directors have considered the comments of the Bank of England on 17 March 2020 in which it said that the "CCFF (a new funding facility) will provide funding to businesses by purchasing commercial paper of up to 1 year maturity, issued by firms making a material contribution to the UK economy. It will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows". The directors have also taken account of the suspension of business rates for 12 months from April 2020, which will result in a saving by the Company of over GBP50m. As a result, the directors have satisfied themselves that the Company will continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going-concern basis in preparing the Company's financial statements.

The financial information for the 52 weeks ended 28 July 2019 is extracted from the statutory accounts of the Company for that year.

The interim results for the 26 weeks ended 26 January 2020 and the comparatives for 27 January 2019 are unaudited, yet have been reviewed by the independent auditors. A copy of t he review report is included at the end of this report.

   32.   Accounting policies 

With the exception of tax and IFRS 16, which has been implemented in these financial statements, the accounting policies adopted in the preparation of the interim report are consistent with those applied in the preparation of the Company's annual report for the year ended 28 July 2019 - and the same methods of computation and presentation are used.

Income tax

Taxes on income in the interim periods are accrued using the tax rate which would be applicable to expected total annual earnings.

Changes in standards

At the date of authorisation of these financial statements, certain new standards and amendments to existing standards have been published which are not yet effective and have not been adopted early by the Company. Information on those expected to be relevant to the financial statements is provided below:

   n   Conceptual framework for Financial Reporting 
   n   Amendments to IFRS 3: Definition of a Business 
   n   Amendments to IAS 1 and IAS 8: Definition of a Material 
   n   Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform 
   n   IFRS 17 Insurance contacts 

IFRS 16 Leases is effective for accounting periods starting on or after 1 January 2019, replacing IAS 17 Leases. The impact of this change is disclosed in note 25 of these accounts.

Other standards which are not expected to have a material impact are shown below:

   n   Amendments to IFRS 9: Prepayment Features with Negative Consideration 
   n   Amendments to IAS 28: Long-Term Interest in Associates and Joint Ventures 
   n   Amendments to IAS 19: Plan Amendment, Curtailment or Settlement 
   n   Annual Improvement to IFRS 2015-2017 Cycle 
   n   IFRIC Interpretation 23: Uncertainty Over Income Tax Treatments 

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 rns@lseg.com or visit www.rns.com.

END

IR DDGDXRBBDGGC

(END) Dow Jones Newswires

March 20, 2020 03:00 ET (07:00 GMT)

Wetherspoon ( J.d.) (LSE:JDW)
Gráfica de Acción Histórica
De Jul 2020 a Ago 2020 Haga Click aquí para más Gráficas Wetherspoon ( J.d.).
Wetherspoon ( J.d.) (LSE:JDW)
Gráfica de Acción Histórica
De Ago 2019 a Ago 2020 Haga Click aquí para más Gráficas Wetherspoon ( J.d.).