Wetherspoon (J.D) Regulatory News (JDW)

11 March 2016

PRESS RELEASE

J D WETHERSPOON PLC

INTERIM RESULTS

(For the 26 weeks ended 24 January 2016)

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

"As previously highlighted, the biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs. There is a growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country.

"In the six weeks to 6 March 2016, like-for-like sales increased by 3.7%, with total sales increasing by 5.7%.

"Sales comparisons in the second half of the financial year will be slightly more favourable, although further wage increases are due in April. As a number of pub companies have indicated, the pub and restaurant market is highly competitive, but we are aiming for a reasonable outcome for the financial year, before the impact of the £3.8m property gain referred to today.

"A wide debate is taking place as to whether the United Kingdom should leave the European Union. I have written an article on the subject, favouring withdrawal from the Union, since returning power to the national parliament will increase the level of democracy and accountability. This article is reproduced below."

Enquiries:

John Hutson Chief Executive Officer 01923 477777

Ben Whitley Finance Director 01923 477777

Eddie Gershon Company spokesman 07956 392234

Photographs are available at: www.newscast.co.uk

Notes to editors

1. JD 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 JD 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 next trading statement will be issued on 4 May 2016.

CHAIRMAN'S STATEMENT AND OPERATING REVIEW

In the 26 weeks ended 24 January 2016, like-for-like sales increased by 2.9%, with total sales increasing by 6.2% to £790.3m (2015: £744.4m). 

Like-for-like bar sales increased by 2.9% (2015: 1.5%), food by 2.9% (2015: 10.1%) and fruit/slot machines decreased by 2.9% (2015: increased by 1.1%). Like-for-like room sales at our hotels increased by 7.5% (2015: 11.8%). Bar sales were 59.2% of the total, food was 37.0%, fruit machines were 2.8% and room sales were 0.8%.

Operating profit decreased by 10.8% to £49.4m (2015: £55.4m). The operating margin was 6.3% (2015: 7.4%). Profit before tax and exceptional items decreased by 3.9% to £36.0m (2015: £37.5m). The decline in operating margin was mainly due to a lower gross margin and higher rates of pay for pub staff. The reduction in PBT was partially offset by a property gain of £3.8m (2015: loss of £0.3m).

Underlying earnings per share, before exceptional items, the property gain and the benefits of a deferred tax credit decreased by 16.6% to 19.1p (2015: 22.9p).

As illustrated in the table in the tax section below, the company paid taxes of £333.0m in the period under review, an increase of 9.4% compared with the £304.5m paid in the same period last year - and about 50% higher than five years ago (2011: £225.6m).

Net interest was covered 3.1 times by profit before interest, tax and exceptional items (2015: 3.1 times). Total capital investment was £75.6m in the period (2015: £93.8m). £15.5m was spent on freehold reversions of properties where Wetherspoon was the tenant (2015: £12.8m), £17.4m was spent on existing pubs (2015: £21.4m) and £42.7m was spent on new pub openings and extensions (2015: £59.4m).

Exceptional items before tax were £0.6m. A charge of £0.2m relates to the pub disposal programme and the company recognised a benefit of £0.8m resulting from a reduction in the onerous lease provision.

Free cash flow, after capital investment of £17.4m on existing pubs and payments of tax and interest, increased to £55.7m (2015: £44.9m). Free cash flow per share was up by 28.2% at 46.8p (2015: 36.5p). The free cash flow increase in the period was mainly due to reduced expenditure on existing pubs and the timing of payables at the period end.

Dividends

The board declared an interim dividend of 4.0p per share for the current interim financial period ending 24 January 2016 (2015: 4.0p per share). The interim dividend will be paid on 26 May 2016 to those shareholders on the register at 29 April 2016.

Corporation tax

We expect the overall corporation tax charge for the financial year, including current and deferred taxation, to be approximately 26.9% before exceptional items (July 2015: 26.1%).

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.

Financing

As at 24 January 2016, the company's net borrowings (including finance leases) were £626.1m, an increase of £25.0m, compared with those of the previous year end (26 July 2015: £601.1m). The net-debt-to-EBITDA ratio was 3.49 times at the period end. Unutilised facilities were £214.6m at the period end (26 July 2015: £240.9m).

Property

During the period, we opened 5 new pubs and sold 2 pubs, bringing the number of pubs open at the period end to 954. We expect to open approximately 15 pubs in this financial year. Following a review of our estate, we have placed a number of pubs on the market and anticipate that some of these may be sold in the remainder of the financial year.

UK taxes and regulation

Pubs and restaurants pay 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 15p per pint in respect of business rates, while supermarkets pay only about 1.5-2p per pint.

In addition, the government has recently 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 taxes, 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:

Further progress

As previously highlighted, the company`s philosophy is to try continuously to upgrade as many areas of the business as possible. For example, we have recently introduced a new menu with a number of new and improved items. At the same time we continue to increase our range of "craft" beers and traditional ales and have introduced 3 beers from the excellent Hogs Back brewery nationwide. 296 Wetherspoon pubs were recommended in CAMRA`s 2016 Good Beer Guide, more than any other company.

In November the government`s Food Standards Agency (FSA) issued a report which named Wetherspoon equal top of the largest twenty food chains for hygiene standards over the last 5 years. 93% of our pubs have obtained the maximum 5 rating under the FSA scheme. 

We have now been recognised as one of 'Britain's Top Employers' in a Guardian publication for 14 consecutive years. 99% of our pubs have achieved approval from Cask Marque, a brewery-run scheme which encourages high standards in ale quality.

We also allocated £14.4m (2014: £15.3m) in bonuses and free shares to employees, 98.2% of which was paid to those below board level and 90% of which was paid to those working in our pubs.

Brexit

A wide debate is taking place as to whether the United Kingdom should leave the European Union. I have written an article on the subject, favouring withdrawal from the Union, since returning power to the national parliament will, in my view, increase the level of democracy and accountability. This article is reproduced below.

Current trading and outlook

As previously highlighted, the biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs. There is a growing realisation among politicians, the media and the public that pubs are overtaxed and that a level tax playing field will create more jobs and taxes for the country.

In the six weeks to 6 March 2016, like-for-like sales increased by 3.7%, with total sales increasing by 5.7%.

Sales comparisons in the second half of the financial year will be slightly more favourable, although further wage increases are due in April. As a number of companies have indicated, the pub and restaurant market is highly competitive, but we are aiming for a reasonable outcome for the financial year, before the impact of the property gain referred to above.

Tim Martin

Chairman

10 March 2016

WETHERSPOON NEWS - SPRING 2016

Time to leave the EU?

We need a real debate

Wetherspoons's chairman argues that laws and key decisions should be made by national parliaments and not by non-democratic EU.

Say what you like about the euro, but it is certainly not democratic. It involves taking some of the most important economic powers of a government, the ability to set interest rates and a budget, the central controls of any economy, and transferring them to unelected apparatchiks in Europe.

In fact, Wetherspoon opposed the introduction of the euro about 15 years ago, but not really for that reason. Our observation was that the predecessor of the euro, the Exchange Rate Mechanism, had fallen apart at the seams in 1992, but not before a million households in the UK found themselves in "negative equity", as interest rates rose to 15% in an effort to maintain the value of the pound against the Deutschmark. We concluded that fixing currencies in this manner did not work and that, if you wanted a single currency, you had to have a single government. There is no example in history of a sustainable currency which isn't backed by a single government - it's been tried a few times and has always fallen apart, leaving chaos in its wake.

I was a spokesman for the "No" campaign at the time, which opposed the UK's entry into the euro. I was baffled by the fact that most of its political proponents were a middle-aged and older male elite, who'd almost all been to one of Britain's great universities. Yet they wished to surrender power to a non-democratic institution in Europe - what was their motivation?

No one can be sure, but it was probably the instinct or emotion that the European elite (the French call them "les énarques"), with a strikingly similar education and background to their own, could better handle important matters of state than the great, unwashed, British public, with its interfering courts, aggressive and intruding press, and cantankerous population. In effect, like rulers over the world, the political elite found democracy troublesome and tiring and yearned for a European club where the great and the good could rule with minimal interference.

Advocates of the euro were not confined to politicians. The chief executives of many of our biggest companies lined up to issue blood-curdling warnings of financial catastrophe if we stayed out, and the CBI, the mouthpiece for big business, was evangelical in its support. Even the Financial Times, with enarque Richard Lambert as editor, effectively censored anti-euro views in its pro-euro fervour. As I said then, pro-euro mania was a quasi-religious project, rather than a true economic one.

I took part in a debate on the euro on BBC's "Any Questions" at the time and Michael Heseltine, an arch euro supporter, succinctly summed up the inherent view of the majority (but by no means all) of the educated elite. He stated that the future of world governments lay in reducing the powers of national parliaments and handing them over to what he called "supra-national" organisations like the EU and the UN - let's call the supporters of this view, almost all male, the "Supras".

I recently set out the basis of the alternative philosophy in a recent Wetherspoon News article, commenting on government attempts to curb the press. This view is that all major powers should be permanently retained by national parliaments with a free vote for everyone, a free press, free courts, freedom of speech and religion, and with the church playing a symbolic role only in the constitution. Membership of international organisations like the U.N. is desirable, but law-making is reserved for the national parliament.

Successful constitutions, run along these lines, exist in most of the western world and, for all their faults, have produced by far the highest living standards of any system and by far the highest level of freedom of speech and other "human rights" for their citizens - let's call the believers in this system "democrats" or "Demos".

The main issue in most people's minds in the "in or out" EU debate is immigration. Although I personally strongly believe in the Demo case, I also strongly believe that the UK has been a big beneficiary of the migration of large numbers of Europeans to this country, as indeed we have benefited from an influx of people from other regions of the world. The USA, Australia, New Zealand and Singapore, for example, have all had gradually rising populations for a long time and it's gone hand in hand with great prosperity and the other democratic freedoms referred to above.

The key issue about migration, similar to the issue about the euro, is that the debate needs to take place in each country and the decisions regarding migration need to be made by elected parliaments in those countries. It makes no sense in the UK for these sensitive issues to be decided by faceless bureaucrats in Brussels, when we're just as capable of deciding ourselves - after all, Americans, Australians and Singaporeans, among many others, have managed to do so by themselves.

Clearly, if the UK decides to leave the EU, it would be in the economic and other interests of this country and our European neighbours to have friendly relations, strong business links, including free trade and, I believe , free movement of labour. Norway and Switzerland, for example, 2 of the richest and most successful countries in the world are not in the EU, but EU countries have an open trading relationship with them and citizens from both those countries can live and work in the UK, needing only a passport or identity card.

A very small number of people have said that economic issues like the euro and philosophical issues concerning democracy should not be discussed in a magazine like Wetherspoon News. This can't be right, since good decisions require debate. Who wants important decisions made behind closed doors by know-alls? Perhaps readers will disagree with these views, or perhaps not……

I've told you what I think, but who cares? The important issue is what you think. Are you a Supra or a Demo? Decision time is nigh- or, as those Eurovision songsters Bucks Fizz memorably put it, it's time for making your mind up.

Tim Martin

Chairman 

INCOME STATEMENT FOR THE 26 WEEKS ENDED 24 JANUARY 2016

STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE 26 WEEKS ENDED 24 JANUARY 2016

CASH FLOW STATEMENT FOR THE 26 WEEKS ENDED 24 JANUARY 2016

BALANCE SHEET AS AT 24 JANUARY 2016

The financial statements, on pages 6 to 18, approved by the board of directors and authorised for issue on 10 March 2016,

are signed on its behalf by:

John Hutson Ben Whitley

Director Director

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

NOTES TO THE FINANCIAL STATEMENTS

1. General informationJ 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 10 March 2016.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 26 July 2015 were approved by the board of directors on 10 September 2015 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.There are no changes to the principal risks and uncertainties as set out in the financial statements for the 52 weeks ended 26 July 2015, which may affect the company's performance in the next six months. The most significant risks and uncertainties relate to the taxation on, and regulation of, the sale of alcohol, cost increases and UK disposable consumer incomes. For a detailed discussion of the risks and uncertainties facing the company, refer to the annual report for 2015, pages 41 and 42.

2. Basis of preparationThis 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 26 July 2015 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; they 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 26 July 2015 is extracted from the statutory accounts of the Company for that year.The interim results for the 26 weeks ended 24 January 2016 and the comparatives for 25 January 2015 are unaudited, but have been reviewed by the independent auditors. A copy of the review report is included at the end of this report.

3. Accounting policiesWith the exception of tax, 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 26 July 2015 - and the same methods of computation and presentation are used.

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

Changes in standardsThe following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 27 July 2015 and will have a minimal impact on the financial statements:

· Annual improvements to IFRS 2010 - 2012 cycle

· Annual improvements to IFRS 2011 - 2013 cycle

The following amendments are mandatory for the first time for the financial year beginning 27 July 2015, but are not relevant

for the company:

· Amendment to IAS 19, 'Employee benefits',

on defined benefit plans

On 13 January 2016, the International Accounting Standards Board issued IFRS 16 - 'leases' which is effective for periods starting on or after 1 January 2019, subject to EU endorsement. IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a right-of-use asset for lease contracts, subject to exceptions for short-term leases and leases of low-value assets.

4. Revenue

5. Operating profit - analysis of costs by nature

6. Property (gains)/losses

7. Exceptional items

The Company has offered a number of its sites for sale. At the half year end, one site had been sold and three were classified as held for sale.

The costs classified above as disposal programme and impairment of property, plant and equipment are the loss on disposal, write-down of assets classified as held for sale to their assessed recoverable amount and additional operating costs incurred in support of the disposal programme.

The onerous lease credit relates to one site where the Company has purchased the freehold and a leasehold site which the Company

is contractually committed to sell.

8. Income tax expense

The taxation charge for the period ended 24 January 2016 is based on the pre-exceptional profit before tax of £36.0m and the estimated effective

tax rate before exceptional items for the year ending 24 July 2016 of 26.9% (2015: 26.1%). This comprises a pre-exceptional current tax rate of

24.2% (July 2015: 27.7%) and a pre-exceptional deferred tax charge of 2.7% (July 2015: credit 1.6%).

The UK standard weighted average tax rate for the period is 20.0% (2015: 20.7%). 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. On 18 November 2015, the UK Corporation tax rate of 18% for

1 April 2020 onwards was substantively enacted. As a result, the deferred tax liability (which predominantly unwinds in periods on or after

1 April 2020) has been remeasured from 20% to 18%. This has resulted in a one-off credit of £3,786,000.

9. Earnings and free cash flow per share

Earnings per share, in the chairman's statement, have been calculated using the weighted average number of shares in issueof 119,030,301 (2015: 122,876,804) which include 3,417,799 (2015: 4,282,562) shares held in trust, in respect of theemployee Share Incentive Plan and the 2005 Deferred Bonus Scheme.

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

Underlying earnings per share is adjusted for the impact of one off benefits resulting from changes in the corporation tax rate and property

gains and losses.

9. Earnings and free cash flow per share (continued)

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, loan issue costs, all other reinvestment in pubs open at the start of the period and the purchase of own shares under the employee share-based schemes ('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.

10. Cash generated from operations

11. Property, plant and equipment

During the period, three pubs, with a carrying value of £196,000, were classified as held for sale. The pubs are being disposed ofas part of the Company's pub-disposal programme. Other movements include property impairment and foreign currency translation.

12. Intangible assets