Wetherspoon Owns and Operates Pubs Throughout the UK
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J D WETHERSPOON PLC Wetherspoon House Central Park Reeds Crescent Watford Hertfordshire WD24 4QL Telephone 01923 477777 www.jdwetherspoon.co.uk 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 excellently maintained. CONTENTS FINANCIAL CALENDAR Financial highlights 1 Annual General Meeting 7 November 2002 Public houses nationwide 2 Final dividend for 2002 29 November 2002 Chairman’s statement and operating review 3 Interim report for 2003 March 2003 Finance review 8 Interim dividend for 2003 May 2003 Directors, officers and advisers 16 Year end 27 July 2003 Directors’ report 17 Preliminary announcement for 2003 September 2003 Remuneration report 20 Report and accounts for 2003 October 2003 Corporate governance 22 Independent auditors’ report 23 Profit and loss account 24 Note of historical cost profits 24 Cash flow statement 25 Balance sheet 26 Notes to the accounts 27 Financial record 39 Information for shareholders 40 Notice of Annual General Meeting 41 Public houses directory 43 FINANCIAL HIGHLIGHTS Sales (£m) 601.3 Number of pubs 608 87 pubs 522 Turnover 484.0 opened, 428 up 24% to 369.6 making a 327 £601.3m 269.7 252 188.5 total of 608 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Profit before tax 53.6 EPS (pence) 16.6 and exceptional Profits items 14.2 Earnings 44.3 before tax 11.8 per share 36.1 up 21% to 9.4 up 17% to 26.2 6.8 20.2 £53.6m 16.6p (after adoption of FRS19 deferred taxation) 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Free cash flow 33.5 Dividend per 3.2 per share Dividend share (pence) Free cash (pence) 29.1 2.9 2.7 flow per 24.2 per share 2.4 2.2 20.3 share up increased 15% to 33.5p 13.4 by 10% to – double EPS 3.22p 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 ANNUAL REPORT AND ACCOUNTS 2002 1 PUBLIC HOUSES NATIONWIDE At the end of July 2002, the number of pubs nationwide was 608. Grampian Region Tayside Region Fife Region Lothian Region Strathclyde Region Borders Dumfriesshire Northumberland County Antrim Tyne & Wear Durham Cumbria Cleveland North Yorkshire Lancashire West Yorks Humberside Greater South Merseyside Manchester Yorkshire Derbyshire Clwyd Cheshire Pubs in Greater London/M25 area Lincolnshire Gwynedd Notts Staffordshire Leicestershire Norfolk Key J D Wetherspoon pubs Shropshire J D Wetherspoon Lodges West Midlands Cambridgeshire Lloyds No.1 pubs Northamptonshire Suffolk Hereford & Warwickshire Worcester Beds Dyfed Gloucestershire Herts A list of all of our pubs can be Gwent Bucks Glamorgan Oxfordshire Essex found on pages 43 to 52. Avon Berkshire Wiltshire Kent Surrey Somerset Hampshire West East Sussex Sussex Devon Dorset 2 J D WETHERSPOON PLC CHAIRMAN’S STATEMENT AND OPERATING REVIEW I am pleased to report a year of excellent progress for Wetherspoon. Sales increased by £117.3 million to £601.3 million, a rise of 24%. Operating profit increased by 20% to £70.1 million and profit before tax rose by 21% to £53.6 million. Earnings per share increased by 17% to 16.6p. Capital investment was £155.9 million and tax charge rising from 5% to 16% of profits. compound annual growth in sales has been net gearing at the year end was 98% (2001: It is anticipated that the cash tax charge will 39%, profits before tax 33% and earnings 88%). Gearing excluding the impact of rise to approximately 30% of profits per share, excluding deferred taxation, deferred taxation was 82%, which by 2010. 25%. compares with 75% at the end of the previous year. Net interest was covered 4.2 ..cash flow per share DIVIDENDS times (2001: 4.2 times) by operating profit. The board proposes, subject to of 33.5p, more than Operating margins were 11.7% compared shareholders’ consent, to pay a final with 12.1% last year, mainly as a result of double earnings per dividend of 2.12p per share on higher labour costs. Cash profits per pub share... 29 November 2002 to those shareholders increased marginally to £207,400. on the register at 27 September 2002, Economic profit, calculated by adding bringing the total dividend for the year to Free cash flow after payments of tax, depreciation to profit before tax and 3.22p per share, a 10% increase on the interest and capital investment of £18.7 subtracting capital expenditure on existing previous year. At this level, dividends will be million in existing pubs increased by 17% to pubs, increased by 22% to £71.2 million, covered 5.2 times by earnings, compared £71.4 million, resulting in a cash flow per with capital investment in existing pubs at with 4.8 times in 2001. A scrip alternative share of 33.5p, more than double earnings 3.1% of turnover, compared with 3.3% of will again be offered to shareholders. per share, before investment in new pubs, turnover in the previous period. loan repayments, proceeds from the sale of FINANCE fixed assets and dividends paid. Free cash We are now approaching the 10th The company had £36 million of unutilised flow growth was slightly lower than turnover anniversary of our flotation on the stock banking facilities and £14 million of cash at growth, principally as a result of the cash market. During this period, our the balance sheet date. Since the year end, ANNUAL REPORT AND ACCOUNTS 2002 3 CHAIRMAN’S STATEMENT AND OPERATING REVIEW £55 million of new banking facilities have that we have experienced. example, our IT systems, food delivery been agreed. Total facilities, which are now systems, training, buying and design of new in excess of £400 million, coupled with our We acquired the first 10 Lloyds pubs 2 years pubs. strong organic free cash flow, underpin the ago and sales at those pubs have more than company’s expansion plans for the doubled. In addition, we have opened 24 In terms of external recognition, we are foreseeable future. new Lloyds pubs which have achieved very pleased to have won the Supreme extremely high levels of initial sales. Training Award from the British Institute of The company continues to fund an Innkeeping for the second year in a row increasing percentage of capital investment ..54% of our new pub and to have won other awards, for from organic free cash flow. In 1998, 26% development, example, for the quality of the design of our of new pub development was financed in pubs in Llandudno and Ross-on-Wye. excluding capitalised this way, and this percentage has steadily interest, was increased so that 54% of our new pub Historically, pubs in Britain have not allowed development, excluding capitalised interest, financed access to children. In individual pubs over was financed organically in the year under organically... recent years, we have applied for children’s review and we anticipate internally licences which allow accompanied children financing an increasing proportion of our Like-for-like sales increased by 5.0% to use certain areas of the pub during capital expenditure over the next few years. and like-for-like profits by 3.8% in the year, restricted hours. In April, we successfully resulting in our 22nd year of like-for-like extended this experiment to nearly all our FURTHER PROGRESS increases. pubs, resulting in a considerable We opened 87 pubs during the year, improvement in food and soft drink sales. compared with 94 in the previous year. The As we have indicated in the past, our total number of pubs now operated by us is approach is to try and make small, Following the successful introduction of 610, including 2 opened since the year end. incremental improvements to the business cappuccinos some time ago, we now intend The new pubs are in a variety of locations regularly, rather than instigating major to open all our pubs at 10am, throughout Britain and Northern Ireland, are reorganisation. To this end during the year, approximately 1 hour earlier than slightly larger in size than recent years, and we have endeavoured to upgrade every currently, for the provision of coffee and opened at the highest level of initial sales area of the business, including, for breakfasts, and believe that this will 4 J D WETHERSPOON PLC CHAIRMAN’S STATEMENT AND OPERATING REVIEW The Postern Gate, York ANNUAL REPORT AND ACCOUNTS 2002 5 CHAIRMAN’S STATEMENT AND OPERATING REVIEW create further momentum in the food side of rising from the current £10 per annum to an work in creating another year of great the business. average of approximately £400 per annum, progress for the company. leaving aside other costs. Any other REGULATION proposed savings can be just as well PROSPECTS A number of organisations including the CBI achieved using the magistrates’ system. Like-for-like sales increased by 5.9% in (Confederation of British Industry) have August, helped by good summer weather, criticised the increasing amounts of and total company sales increased regulation from the government and Like-for-like sales by 25%. from Europe. increased by 5.9% in We have 25 sites in the course of As stated previously, increased regulation August, helped by construction, 60 with the necessary increases pub costs, but the government is good summer permissions for development, a further 60 also proposing to interfere with the regulation on which terms have been agreed and 166 weather, and total of pub licences by transferring jurisdiction to currently in negotiation. local authorities from magistrates. This company sales transfer will be a laborious and expensive As a result of another strong trading increased by 25%.