TIDMJDW
RNS Number : 8926W
Wetherspoon (JD) PLC
24 August 2020
24 August 2020
J D WETHERSPOON PLC
UPDATE ANNOUNCEMENT
J D Wetherspoon plc (the "Company") today publishes an update
announcement. The preliminary results are due to be released on 9
October 2020.
Current trading
Apart from a small number of development sites, and pubs in
airports and stations, Wetherspoon reopened all its pubs in
England, Scotland and Wales as soon as permitted.
Some airport and station pubs have now reopened, but some remain
closed. 844 pubs are now open, out of a total of 873.
LFL bar and food sales are -16.9% for the 44 days to 16 August
2020.
Sales have gradually improved, with a rapid acceleration
recently, largely due to subsidised food, coffee and soft drinks in
the early part of the week.
Sales have also been helped by the addition of extra outside
seating.
Landlords, landowners and local and licensing authorities have
been extremely flexible in accommodating extra outside space -
which has helped Wetherspoon and the licensed trade generally.
The company nonetheless expects a period of more subdued sales
once the scheme for subsidised early-week meals and drinks
ends.
VAT
The 'on-trade' (mainly pubs and restaurants) has been the
subject of a much more onerous tax regime in recent decades than
the 'off-trade' (mainly supermarkets). Pubs and restaurants have
been paying VAT on food sales of 20% and supermarkets zero.
In addition, pubs have been paying about 20p per pint of
business rates versus about 2p for supermarkets.
This tax differential has created an increasing gap between
on-trade and off-trade pricing, as VAT rates increased from 8% 40
years ago to 20% today.
Supermarkets appear to have used their VAT advantage in respect
of food to subsidise lower beer prices, in particular, and have
taken approximately half of pub beer sales in that period.
Pubs, restaurants, cafes and coffee shops are integral to the
success of high streets.
As well as benefitting high streets and the public, tax equality
would make general economic sense - it is an important principle of
taxation that taxes should be fair and equitable.
It makes no sense for supermarkets, often operating outside town
centres, to have a tax advantage. The Chancellor, Rishi Sunak, has
recently closed the VAT gap between the on and off-trade, by
temporarily reducing VAT on food sales in the on-trade to 5%.
If this major step towards tax equality is maintained in the
long term, it will result in a significant increase in investment
and employment in the on-trade.
Property
Since the beginning of July the Company has opened two new pubs,
in Crossgates, a suburb of Leeds and in Kingswinford in the West
Midlands.
Financial position
The Company remains in a sound financial position. Net debt at
the end of the last financial year is estimated to have been about
GBP825m.
Since the closure of pubs in March 2020, the Company has
received a waiver of bank covenants for April and July 2020.
In addition, a share placing raised GBP141 million and a GBP48.3
million loan was agreed under the government loan ("CLBILS")
scheme.
The Company proposes to enter discussions with its lenders
regarding waivers for the current financial year, in due
course.
Misrepresentations
The Company was the subject of a large number of harmful media
misrepresentations in the aftermath of lockdown.
The issue was taken up with various media organisations, and
corrections and apologies were forthcoming from, among others, The
Times, The Daily Mail, The Independent, The Mirror, The Sun,
Forbes, the BBC, Huffington Post, Sky News and local
newspapers.
The corrections, available at the time it went to press, were
published in the last edition of Wetherspoon News, which has been
available in all Wetherspoon pubs.
The Company is particularly concerned about Twitter comments
made by Jo Stevens (MP for Cardiff Central) and Rachel Reeves (MP
for Leeds West) - neither of which has been deleted.
Jo Stevens said (25 March, 2020) that "after a session in front
of Rachel Reeves and BEIS Wetherspoons have u-turned on decision
not to pay 43,000 staff".
As both Jo Stevens and Rachel Reeves know, Mr Martin never
appeared in front of the BEIS (Business, Energy and Industrial
Strategy) committee, chaired by Rachel Reeves, and never
'u-turned', since no decision was ever made not to pay staff.
In a separate Twitter comment, (24 March, 2020) Rachel Reeves
said Wetherspoon "refused to pay its 40,000 employees" and "refused
to lockdown altogether". Both these statements by Reeves are
completely untrue.
More recently, the Guardian (Philip Inman, 17 August, 2020) ran
a headline, apparently based on allegations regarding one pub (The
Fox on the Hill, London SE5) that "overcrowding in Wetherspoon pubs
may lead to [a] Covid spike", and said that that "pubs will become
a breeding ground for the next surge in the virus".
The Guardian quoted Helen Hayes (MP for Dulwich and West
Norwood) who said that Wetherspoon is "putting lives at risk" and
is "allowing overcrowding".
These statements are irresponsible and untrue.
Wetherspoon has made strenuous efforts to adhere to government
regulations and guidance.
Covid-19 operating plans have been developed for all countries
in the United Kingdom, as well as Ireland.
Each pub has a specific Covid-19 risk assessment and an
occupancy level based on the number of seats, so that all customers
can be seated.
Tables have been spaced out to comply with social distancing
requirements at all pubs.
The company has also installed floor screens between the tables
and "till surround" screens at the bar.
There is an average of ten hand sanitiser stations around each
bar area, as well as additional stations 'back of house' for
staff.
Training has been provided for all staff on the safety
procedures.
In the week ending 16 August nearly a million (912,688)
customers across the company registered their "Test and Trace"
details using either the paper or digital (QR) systems in place in
all pubs. Bearing in mind that only one customer from each group
needs to register, these numbers indicate that the systems are
effective.
As a result of the Guardian article, the Fox on the Hill
received separate visits from the Police, the licensing authorities
and public health officials.
Following these investigations, the company received the
following email on 21 August 2020 from an official at the London
Coronavirus Response Cell:
"I am writing to confirm that we are satisfied following our
risk assessment of the infection control measures you have in place
at Fox on the Hill, and recommend no further action be taken with
regard to the recent anonymous tips you received of there being
COVID-19 positive people in the pub."
During the Leveson Inquiry, MPs made it abundantly clear that
journalists have a duty to correct misleading statements. MPs
clearly have a duty to uphold the same principles themselves.
Outlook
The chairman of Wetherspoon, Tim Martin, said:
"There is a debate in the scientific community, and among
observers and commentators, as to whether lockdowns are beneficial
in battling Covid-19.
"Many academics, including Nobel Prize winner Michael Levitt of
Stanford University and Swedish government adviser Johan Giesecke,
believe that they are not - and that social distancing, combined
with rigorous handwashing are the practises for which there is
genuine scientific evidence.
"Johan Giesecke explained his arguments in a short interview on
Sky News Australia on 29 April 2020 (see transcript below, appendix
1), which can be viewed on YouTube. He correctly anticipated the
problems of renewed outbreaks in countries placing excessive
reliance on lockdowns.
"The debate is riven with rancour and political factionalism,
but I believe, on the balance of the arguments, that avoiding full
lockdowns and adopting the Swedish approach, is the better
solution. I have written an article on this subject, which has
appeared in the pub trade press (Appendix 2, below).
"Wetherspoon had 5 positive tests for Covid-19 among its 43,000
staff before lockdown and has had 24 positive tests since pubs
reopened on 4 July - since reopening, the amount of testing has
substantially increased.
"Other environments seem to have higher levels of infection. For
example, one sandwich-making facility in Northampton had 287
positive tests among its workforce, and one farm in Hereford had 77
cases.
"Some experts, such as Professor Hugh Pennington of Aberdeen
University, believe that pubs are major centres of infection, but
they have provided no evidence - in fact, our experience suggests
otherwise.
"If Professor Pennington has evidence he should publish it, so
that it can be peer-reviewed, as is standard practise among
scientists.
"Risk cannot be eliminated completely in pubs, but sensible
social distancing and hygiene policies, combined with continued
assistance and cooperation from the authorities, should minimise
it".
"The Company expects to make a loss for the year ending 26 July
2020, both before and after exceptional items. Some of these
exceptional items will be related to the Covid pandemic."
Appendix 1 - Transcript of interview, former Swedish chief
epidemiologist Johan Giesecke, SKY NEWS AUSTRALIA - 29th April
2020
Question: You've been a strong critic of the idea of lockdowns,
Sweden has avoided these sort of lockdowns that we're seeing here
in Australia. Tell us your thoughts - are lockdowns the correct way
to go?
Johan: You introduced me by saying that I would say that you got
it all wrong. I don't think you go it all wrong but you painted
yourself into a corner and I'm watching with interest how you and
100 other countries will climb out of the lockdown, because I don't
think any government that I know gave a minute's thought about how
they would get out of the different lockdowns that are installed.
Take the school closure for example, if you close the schools, when
are you going to open them, what's the criteria? I don't think
anyone thought about that when the closure was decided on. Anyway,
so Sweden doesn't have such a strict lockdown, there are a few
things that are forbidden - the crowd can't be more than 50 people,
at restaurants that are mostly open, there should be 5ft or 1.5
meters between the tables, you have to sit down to eat, there are a
few things like that but rather mild things... there are very few
laws and ordinances passed, you can go out without being stopped by
the police and fined or threatened with prison and mostly we talk
about trust... we trust the people - people are not stupid.
That's... the basic line [in Sweden]. If you tell people what's
good for them and what's good for their neighbours and other
people, they do that. You take a restriction that's sensible and
understandable, people will follow it.
Question: You said that you think the results are going to be
similar across most countries regardless of the approach they've
taken, can you take us through that?
Johan: There is a tsunami of a rather mild infection spreading
around the globe and I think that's there's very little chance to
stop it by any measure we take. Most people will become infected by
this and most people won't even notice. We have data now from
Sweden that shows between 98 and 99 percent of the cases have had a
very mild infection or didn't even realise they were infected. So
we have this spread of this mild disease around the globe and most
of it is happening where we don't see it. It's among people that
don't get very sick, spread it to someone else that doesn't get
very sick and what we're looking at is a thin layer at the top of
people who do develop the disease and even thinner layer of people
that go into intensive care and then even thinner layer of people
who die. But the real outbreak is happening where we don't see
it.
Question: So.....you're saying that at some point pretty much
everybody is going to get this disease to some degree or another.
Here in Australia we've done an incredibly good job suppressing it.
I'm wondering do you think we've done too good a job, is it
possible to do too good a job suppressing it in the early stages
such that you won't ever be able to take the foot off the break on
your restrictions to get the disease just to a manageable flow of
cases that the health system, which we were told this was all about
preparing for that, be allowed to handle the cases as they come
through.
Johan: Yes... one point is to flatten the curve a bit so that
the health care isn't overused. You may succeed, and New Zealand
may also succeed, but I've been asking myself when New Zealand or
Australia has stamped out every case in the country, what do you do
for the next 30 years. Will you close your borders completely?
Quarantine everyone who is going to Australia or New Zealand?
Because the disease will be out there. I don't know how you are
going to handle that. That's your problem.
Question: You've said you think in most countries regardless of
the measures we take, eg. Taiwan has been very successful and other
countries like Italy have been disaster cases, but you think at the
end of the day they're all pretty much going to end up with the
same fatalities, the same results, the same deaths regardless of
what measures they took. Explain that.
Johan: Yes. Basically I think it will be the same because, like
I said, the real epidemic is invisible and it's going on all the
time around us. The other thing with a lockdown is when you open
it, you will have more cases, so the countries who pride themselves
in having a few deaths now, will get these deaths when they start
lifting the lockdown.
Question: Tell us briefly about the Imperial College results
that sparked this worldwide panic. You believe they were flawed,
these were the initial results that were coming out and the
modelling that was saying millions are gonna die. You thought that
was flawed, tell us why.
Johan: Yes, there are a few procedural things... One is that the
paper was never published which is normal scientific behaviour. The
second thing it wasn't peer-reviewed, which means it wasn't looked
upon by other people, which is also normal scientific procedure. So
it was more like an internal departmental communication, a memo.
And then the big mistake of the Imperial group was under-estimating
the proportion of the very mild cases that would never be detected,
that's the main thing with that prediction. And it's fascinating
how it changed the policy of the world. The UK made a u-turn
overnight [upon] the publication of the paper which is fascinating.
So, yes, there were several other mistakes with the paper but it
gets very technical to get into that.
Question: You mention that the overwhelming majority of people
that get this disease have no symptoms or very minimal symptoms. Do
we even know the real fatality rate of the coronavirus?
Johan: No. Well it's around 0.1%.
Question: We were told it was 3% initially, initially 2%, are
you saying now that it's 0.1%., that's pretty much the same
fatality rate as the regular flu isn't it?
Johan: I think it's a bit higher actually. I said before in
Sweden that this is like a severe influenza. I don't think that's
completely true - it will be a bit more severe than the influenza,
maybe double but not tenfold.
Question: With all of the health care systems focusing on
flattening the curve and being prepared for these waves of
infection, which aren't necessarily coming because of the very
restrictive measures, overall are we gonna see more people dying,
we talked a little bit about this before on the show, of cancers,
heart attacks, things like that, simply because they're too scared
to go to the hospital because they think they won't get treated. Is
there going to be other deaths that are going to be caused by our
overweighting focus just on this one particular disease?
Johan: Could well be. The emergency rooms here in Stockholm have
about 50% of the usual number of patients coming in, and one reason
is probably that people are scared of contracting the disease when
they go into hospitals, and another is that, I think, they say they
can wait a bit until the thing is over.
Question: You've said the best policy, the correct policy, would
be to simply protect the old and the frail. Is that correct?
Johan: Yes, and that's the Swedish model. It has... two pillars.
One is only use measures that are evidence-based. And there are two
that are evidence-based... one is washing hands... we've known that
for 150 years since Semmelweis in Austria a long time ago. The
other is social distancing. If you don't get too close to other
people, they won't infect you. And the third may be trust people.
People are not stupid, if you tell them what's good for them they
will do what you say. You don't need soldiers on the street - and
police. It's unnecessary.
.
Appendix 2 - Article by Tim Martin, MCA, 17 August 2020
THE ICE-COOL SWEDES ARE RIGHT
The debate about Covid-19 has created fireworks and polemics
between stay-insiders who, as commentator Christopher Snowdon has
said, "consider any relaxation of lockdown as tantamount to
genocide", and lets-go-outers, who laud Bjorn Borg, Volvo, ABBA and
the more relaxed Swedish approach to the virus.
The public is intelligent and understands, to paraphrase Leonard
Cohen, that both sides cannot be wrong.
The truth is out there somewhere, but is hidden in a fog by a
lack of reliable information - and by political and tribal conflict
in which heavily doctored evidence has become the norm.
A volte face by the advisory committee Sage, and the government,
has added to the confusion. Sage said in March that it "was
unanimous that measures seeking to completely suppress the spread
of Covid-19 will cause a second peak".
The committee and the government nevertheless u-turned and
sought to suppress the virus, following the publication of disputed
research by Imperial College which, according to the Swedish
epidemiologist Johan Giesecke, was deeply flawed and "changed the
policy of the world", leaving the Swedes in isolation.
Professor Giesecke highlights three fault lines with Imperial's
research: it wasn't published "which is normal scientific
behaviour", it wasn't peer-reviewed "which is also normal
behaviour", and, most importantly, it greatly overestimated the
severity of the infection by "underestimating the proportion of
very mild cases."
The UK public's perplexity was further exacerbated by
exhortations to "follow the science" - falsely implying that
disputatious scientists had sunk their differences on the subject
and were all promoting the same path.
As anyone running a business knows, experts and scientists
promote all sorts of conflicting opinions and the true gift of
leadership is to use common sense and debate to sift the wheat from
the chaff. The same applies to politics: to govern is to choose,
according to the political adage.
Thus many of us, supported by most world governments, followed
the science and bought diesel cars - only to discover, after a few
decades, that the science was cobblers.
Indeed, "following the science" has been particularly hazardous
in the pseudo-medical area of dietary advice, for the last half
century at least.
The main advice since the 1970s, swallowed whole by most
commentators, academics and the medical profession, has been to
avoid or minimise consumption of butter, cheese, eggs and full fat
milk - unfortunately, it would seem, that advice has turned out to
be utter cobblers too, as most people now know.
There has also been a consensus of medical advice that heavy
exercise, let's say a daily five mile run, is healthy, but that
also turns out to be untrue for many people - a daily stroll may
well be healthier, after all, it seems.
Risking opprobrium from what comedian Ricky Gervais calls the
"outrage mobs", many observers believe that the Swedes and
let's-go-outers are now building a winning position in this
fractious debate - not through debating prowess or slogans, but
because they're right.
Sweden itself, having avoided a lockdown, is doing well, perhaps
better than the UK, Spain and France - and the serious
repercussions of the virus there appear to be on the wane.
Stay-insiders counter that Sweden's relative success is due to a
less dense population. However, the US and France both locked down
and both are far less densely populated than the UK, yet the
severity of their experience with Covid-19 has been similar to
ours.
Conversely, Singapore is far more densely populated, yet has had
lower fatality rates. So an explanation based on population density
makes no sense.
Swedish epidemiologists, like Johan Giesecke and Anders Tegnell,
supported by an impressive cast of academics in the UK, the US and
elsewhere, have argued that following the science means protecting
the old and vulnerable, washing hands and social distancing -
measures for which there is clear scientific evidence.
There is no evidence, they say, that lockdowns work - when you
lift the lockdowns, the virus resumes its course, which is mild or
asymptomatic in most cases. Indeed this prediction may explain a
resurgence of cases in Australia and New Zealand, once restrictions
were lifted.
However, lockdowns invariably cause massive collateral damage,
devastating economies, inducing mental illness, reducing treatments
for serious conditions and interrupting education.
In addition, if you suppress the virus in one country, as New
Zealand has, the Swedes say, you must keep your borders closed
indefinitely, which is not a practical proposition for a successful
economy.
So for many of us, it seems likely that the ice-cool Swedes, who
kept their heads while others were losing theirs, are right.
However, as pragmatists, we don't blame the government for getting
it wrong in backing the Imperial College horse, under the most
excruciating pressure.
Ironically, since lockdown has ended, we've broadly followed a
course the Swedes have advocated all along. As in medicine,
business, sport, war or any other field of human endeavour, it's
easy to make the wrong move and it's essential to zig zag to the
right conclusion.
Most let's-go-outers believe that the government zigged in the
wrong direction during lockdown - so now it's time to zag.
Eventually, the fog will lift and we'll know for sure who's
right.
END.
Enquiries:
John Hutson Chief Executive Officer 07970 477377
Ben Whitley Finance Director 07970 477428
Eddie Gershon Company Spokesman 07956 392234
Please send any questions by email to
investorqueries@jdwetherspoon.co.uk
Notes to editors
1. J D Wetherspoon owns and operates pubs throughout the UK. The
Company aims to provide customers with good-quality food and drink,
served by well-trained and friendly staff, at reasonable prices.
The pubs are individually designed, and the Company aims to
maintain them in excellent condition.
2. Visit our website: www.jdwetherspoon.com
3. This announcement has been prepared solely to provide
additional information to the shareholders of J D Wetherspoon, to
meet the requirements of the FCA's Disclosure and Transparency
Rules. It should not be relied on by any other party, for any other
purposes. Forward-looking statements have been made by the
directors in good faith, using information available up until the
date on which they approved this statement. Forward-looking
statements should be regarded with caution, because of the inherent
uncertainties in economic trends and business risks.
4. This announcement contains inside information on J D Wetherspoon plc.
5. The current financial year comprises 52 trading weeks to 25 July 2021.
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