J.D. Wetherspoon PLC

Earnings Release • Sep 12, 2014

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RNS Number : 4812R

Wetherspoon (JD) PLC

12 September 2014

12 September 2014              

J D WETHERSPOON PLC

PRELIMINARY RESULTS

(For the 52 weeks ended 27 July 2014)

FINANCIAL HIGHLIGHTS
Before exceptional items	52 weeks to 27 July 2014
Ÿ  Revenue £1,409.3m (2013: £1,280.9m)	+10.0%
Ÿ  Like-for-like sales	+5.5%
Ÿ  Operating profit £115.6m (2013: £111.3m)	+3.8%
Ÿ  Profit before tax and exceptional items* £79.4m (2013: £76.9m) Ÿ  Earnings per share (including shares held in trust) 47.0p (2013: 44.8p)	+3.1% +4.9%
Ÿ  Free cash flow £92.9m (2013: £65.3m) Ÿ  Free cash flow per share 74.1p (2013: 51.8p) Ÿ  Full year dividend 12.0p (2013: 12.0p)	+42.1% +43.1% Maintained
After exceptional items*
Ÿ  Operating profit £115.6m (2013: £91.5m)	+26.3%
Ÿ  Profit before tax £78.4m (2013: £57.1m) Ÿ  Earnings per share (including shares held in trust) 32.8p (2013: 36.6p)	+37.1% -10.4%

*Exceptional items as disclosed in account note 4.

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

"I am pleased to report another year of progress, with record sales, profit and earnings per share. The company generated £600.2 million in taxes, an increase of £48.7 million, compared with the previous year, equivalent to £662,000 per pub. We now employ over 34,000 people, an increase of over 3,000 in the last year. In addition, £29.2 million in bonuses and free shares was paid to employees, 82% to those working in our pubs.

"The biggest danger to the pub industry is the VAT disparity between supermarkets and pubs. Wetherspoon, along with many pub and restaurant companies, is supporting Jacques Borel's VAT Club on Tax Equality Day (Wednesday 24 September 2014) to publicise this inequality.

"A similar danger relates to the general tone of corporate governance advice and practice which has helped to create unstable board rooms, often preoccupied by the wrong considerations. For example, many do not even recognise the danger from the VAT disparity, despite the high weekly level of pub closures which has lasted for many years. 

"In the six weeks to 7 September 2014, like-for-like sales increased by 6.3%, with total sales increasing by 11.4%.

The company is aiming for a reasonable outcome in the current financial year."

Enquiries:

John Hutson                  Chief Executive Officer                01923 477777

Kirk Davis                      Finance Director                        01923 477777

Eddie Gershon                Company Spokesman                07956 392234

CHAIRMAN'S STATEMENT

Financial performance

I am pleased to report a year of further progress for the company, with record sales, profit and earnings per share before exceptional items. The company was founded in 1979 - and this is the 31st year since incorporation in 1983. The table below outlines some key aspects of our performance during that period. Since our flotation in 1992, earnings per share before exceptional items have grown by an average of 15.8% per annum and free cash flow per share by an average of 17.5%. Summary accounts for the years ended July 1984 to 2014

Financial year		Total sales		Profit before tax and exceptional items		Earnings per share before exceptional items		Free cash flow		Free cash flow per share
		£000		£000		pence		£000		pence
1984		818		(7)		0.0
1985		1,890		185		0.2
1986		2,197		219		0.2
1987		3,357		382		0.3
1988		3,709		248		0.3
1989		5,584		789		0.6		915		0.4
1990		7,047		603		0.4		732		0.4
1991		13,192		1,098		0.8		1,236		0.6
1992		21,380		2,020		1.9		3,563		2.1
1993		30,800		4,171		3.3		5,079		3.9
1994		46,600		6,477		3.6		5,837		3.6
1995		68,536		9,713		4.9		13,495		7.4
1996		100,480		15,200		7.8		20,968		11.2
1997		139,444		17,566		8.7		28,027		14.4
1998		188,515		20,165		9.9		28,448		14.5
1999		269,699		26,214		12.9		40,088		20.3
2000		369,628		36,052		11.8		49,296		24.2
2001		483,968		44,317		14.2		61,197		29.1
2002		601,295		53,568		16.6		71,370		33.5
2003		730,913		56,139		17.0		83,097		38.8
2004		787,126		54,074		17.7		73,477		36.7
2005		809,861		47,177		16.9		68,774		37.1
2006		847,516		58,388		24.1		69,712		42.1
2007		888,473		62,024		28.1		52,379		35.6
2008		907,500		58,228		27.6		71,411		50.6
2009		955,119		66,155		32.6		99,494		71.7
2010		996,327		71,015		36.0		71,344		52.9
2011		1,072,014		66,781		34.1		78,818		57.7
2012		1,197,129		72,363		39.8		91,542		70.4
2013		1,280,929		76,943		44.8		65,349		51.8
2014		1,409,333		79,362		47.0		92,850		74.1

Notes

Adjustments to statutory numbers

1.   Where appropriate, the earnings per share (EPS), as disclosed in the statutory accounts, has been recalculated to take account of share splits, the issue of new shares and capitalisation issues.

2.   Free cash flow per share excludes dividends paid which were included in the free cash flow calculations in the annual report and accounts for the years 1995-2000.

3.   The weighted average number of shares, EPS and free cash flow per share include those shares held in trust for employee share schemes.

4.   Before 2005, the accounts were prepared under UKGAAP. All accounts from 2005 to date have been prepared under IFRS.

Like-for-like sales increased by 5.5%, with total sales of £1,409.3 million, an increase of 10.0% (2013: 7.0%). Like-for-like bar sales increased by 2.7% (2013: 3.8%), food sales by 12.0% (2013: 10.9%) and slot/fruit machine sales decreased by 3.1% (2013: increased by 0.4%).

Operating profit before exceptional items increased by 3.8% to £115.6 million (2013: £111.3 million) and, after exceptional items, increased by 26.3% to £115.6 million (2013: £91.5 million). The operating margin, before exceptional items, decreased to 8.2% (2013: 8.7%), mainly as a result of increases in staff costs and repairs. The operating margin after exceptional items was 8.2% (2013: 7.1%).

Profit before tax and exceptional items increased by 3.1% to £79.4 million (2013: £76.9 million) and, after exceptional items, increased by 37.1% to £78.4 million (2013: £57.1 million). Earnings per share (including shares held in trust by the employee share scheme), before exceptional items, increased by 4.9% to 47.0p (2013: 44.8p). Earnings per share (including shares held in trust by the employee share scheme), after exceptional items, decreased by 10.4% to 32.8p (2013: 36.6p), owing to a deferred tax credit in the previous year.

Net interest was covered 3.2 times by operating profit before exceptional items (2013: 3.2 times) and 3.1 times by operating profit after exceptional items (2013: 2.7 times). Total capital investment was £177.5 million in the period (2013: £101.8 million), with £97.7 million on new pub openings (2013: £53.2 million), £56.2 million on existing pubs and IT infrastructure (2013: £40.9 million) and £23.6 million on freehold reversions, where Wetherspoon was already a tenant, and investment properties (2013: £7.7 million).

Exceptional items totalled £17.7 million (2013: £19.0 million). An exceptional item of £1.0 million relates to the interest repayment to HMRC, following the unsuccessful outcome of the 'Rank' gaming duties case. In addition, an agreement was reached with HMRC in respect of a long-outstanding dispute over the treatment of capital allowances. As a result of this agreement, tax computations have been resubmitted and have resulted in a claim for a tax refund of £4.4 million and a deferred tax liability of £21.1 million. This has resulted in an exceptional tax charge £16.7 million.

Free cash flow, after capital investment of £56.2 million on existing pubs (2013: £40.9 million), £7.3 million in respect of share purchases for employees (2013: £8.8 million) and payments of tax and interest, increased by £27.6 million to £92.9 million (2013: £65.3 million), partly owing to a working capital inflow of £29.9 million in the year under review, compared with an outflow of £6.0 million in the previous year. Free cash flow per share was 74.1p (2013: 51.8p).

Property

The company opened 46 pubs during the year, with 5 pubs sold or closed, resulting in a total estate of 927 pubs at the financial year end. The average development cost for a new pub (excluding the cost of freeholds) was £1.64 million, compared with £1.55 million a year ago, as we continue to increase expenditure on kitchens, customer areas and beer gardens. The full-year depreciation charge was £58.1 million (2013: £53.1 million). We currently intend to open around 30-40 pubs in the year ending July 2015.

Property litigation 

As reported at the interim results in March 2013, Wetherspoon agreed on an out-of-court settlement with developer Anthony Lyons, formerly of property leisure agent Davis Coffer Lyons, and has received approximately £1.25 million from Mr Lyons.

The payment relates to litigation in which Wetherspoon claimed that Mr Lyons had been an accessory to frauds committed by Wetherspoon's former retained agent Van de Berg and its directors Christian Braun, George Aldridge and Richard Harvey. Mr Lyons denied the claim - and the litigation was contested.

The claim related to properties in Portsmouth, Leytonstone and Newbury. The Portsmouth property was involved in the 2008/9 Van de Berg case itself. In that case, Mr Justice Peter Smith found that Van de Berg, but not Mr Lyons (who was not a party to the case), fraudulently diverted the freehold from Wetherspoon to Moorstown Properties Limited, a company owned by Simon Conway. Moorstown leased the premises to Wetherspoon. Wetherspoon is still a leaseholder of this property - a pub called The Isambard Kingdom Brunel.

The properties in Leytonstone and Newbury (the other properties in the case against Mr Lyons) were not pleaded in the 2008/9 Van de Berg case. Leytonstone was leased to Wetherspoon and trades today as The Walnut Tree public house. Newbury was leased to Pelican plc and became Café Rouge.

As we have also reported, the company agreed to settle its final claim in this series of cases and accepted £400,000 from property investor Jason Harris, formerly of First London and now of First Urban Group. Wetherspoon alleged that Harris was an accessory to frauds committed by Van de Berg. Harris contested the claim and has not admitted liability.

Before the conclusion of the above cases, Wetherspoon also agreed on a settlement with Paul Ferrari of London estate agent Ferrari Dewe & Co, in respect of properties referred to as the 'Ferrari Five' by Mr Justice Peter Smith.

Further shareholder information about these cases is available in a short article which I wrote for the trade publication Propel (reproduced below).

Corporation tax

The overall tax charge (including deferred tax) on pre-exceptional items is 25.8% (2013: 26.6%). The UK standard average tax rate for the period was 22.3% (2013: 23.7%). The difference between the rate of 25.8% and the standard average rate of UK corporation tax of 22.3% is 3.5% (2013: 2.9%) which is due primarily to the level of non-qualifying depreciation (depreciation which does not qualify for tax relief).

The pre-exceptional current tax rate, which excludes deferred tax, has fallen by 3.7% to 21.4% (2013: 25.1%), mainly owing to the UK corporation tax rate falling from 23.7% to 22.3% and greater capital allowances.

Financing

As at 27 July 2014, the company's total net debt, including bank borrowings and finance leases, but excluding derivatives, was £556.6 million (2013: £474.2 million), an increase of £82.4 million. Factors which have led to the increase in debt are 46 new pub openings costing £97.7 million, investment in existing pubs of £56.2 million, the acquisition of freehold reversions and investment properties of £23.6 million, the repurchase of shares of £24.6 million, a repayment of £16.7 million to HMRC in respect of a gaming machine legal judgement and dividend payments of £14.9 million. Year-end net-debt-to-EBITDA was 3.21 times (2013: 2.88 times).

As at 27 July 2014, the company had £138.1 million (2013: £111.0 million) of unutilised banking facilities and cash balances, with total facilities of £690.0 million (2013: £575.0 million). The company's existing interest-rate swap arrangements remain in place.

Dividends and return of capital

The board proposes, subject to shareholders' approval, to pay a final dividend of 8.0p per share (2013: 8.0p per share), on 27 November 2014, to those shareholders on the register on 24 October 2014, giving a total dividend for the year of 12.0p per share (2013: 12.0p per share). The dividend is covered 2.8 times (2013: 3.2 times). In view of high levels of capital expenditure in recent years and the potential for advantageous investments in the future, the board has decided to maintain the dividend at its current level for the time being.

During the year, 3,068,088 shares (representing 2.4% of the issued share capital) were purchased by the company for cancellation, at a total cost of £24.6 million, including stamp duty, representing an average cost per share of 800p. 

Further progress

As in previous years, the company has tried to improve as many areas of the business as possible. For example, our food hygiene ratings are at record levels. We have 824 pubs rated on the Food Standards Agency's website. The average score is 4.91, with 92% of the pubs achieving a top rating of five stars and 7% receiving four stars. This is the highest average rating for any pub or restaurant company. In the separate Scottish scheme, which records either a 'pass' or 'fail', all of our 65 pubs have passed.

In the 2015 Good Beer Guide, a CAMRA publication, 317 of our pubs have been recommended, more than any other pub company. In addition, over 900 of our pubs are Cask Marque approved - Cask Marque is a pub-industry scheme, run in conjunction with several brewers, which checks and approves the quality of real ale in pubs. We continue to source our traditional ales from a large number of microbreweries of varying sizes and believe that we are the biggest purchaser of microbrewery beer in the UK.

We continue to run the world's biggest real-ale festival twice per annum and have added a cider festival in recent times, featuring a wide variety of suppliers from the UK, Europe and elsewhere in the world.

We continue to work with our suppliers on both a quality and marketing basis. For example, 97% of our pubs have achieved 'Master Brewer Accreditation' from Guinness; we are still the world's number-one seller of Pimm's, having sold more Pimm's in one day on 16 August 2014 than any other company has ever done.

We paid £29.2 million in respect of bonuses and free shares to employees in the year, slightly more than the previous year, of which 96% was paid to staff below board level and 82% was paid to staff working in our pubs.

As in previous years, we continue to concentrate on areas such as training, where we have won numerous awards and endorsements over the years. We also continue to invest in our pubs and have upgraded, and continue to upgrade, many of our kitchens and back-of-house facilities. For example, we plan to spend £16.0 million in the next four years, creating and improving staff rooms.

In the field of charity, thanks to the work of our dedicated pub and head-office teams, we continue to raise record amounts of money for CLIC Sargent, which supports young cancer patients and their families. In the last year, we raised approximately £1.7 million, bringing the total raised to over £9.2 million - more than any other corporate partner has raised for this charity.

General tax matters

We continue to believe that pubs are taxed excessively and that the government would create more jobs and receive higher levels of overall revenue, if it were to create tax equality among supermarkets, pubs and restaurants. Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20% - and this disparity enables supermarkets to subsidise their alcoholic drinks sales to the detriment of pubs and, indeed, restaurants. This serious economic disadvantage has contributed to the closure of many thousands of pubs, and the pub industry has lost approximately 50% of its beer sales to supermarkets since VAT was increased from 8% over 30 years ago.

Wetherspoon is happy to pay its share of tax and, in this respect, is a major contributor to the economy. In the year under review, we paid total taxes of £600.2 million, an increase of £48.7 million, compared with the previous year, which equates to approximately 43% of our sales.

This equates to an average payment per pub of £662,000 per annum or £12,700 per week.

		2014 £m	2013 £m
VAT		275.1	253.0
Alcohol duty		157.0	144.4
PAYE and NIC		78.4	70.2
Business rates		44.9	46.4
Corporation tax		18.1	18.4
Machine duty		11.3	7.2
Climate change levies		6.3	4.3
Carbon tax		2.7	2.6
Fuel duty		2.1	2.0
Stamp duty		2.1	1.0
Landfill tax		1.5	1.3
Premises and TV licences		0.7	0.7
TOTAL TAX		600.2	551.5
TAX PER PUB (£000)		662	632
TAX AS % OF SALES		42.6%	43.1%
PRE-EXCEPTIONAL PROFIT AFTER TAX		58.9	56.5
PROFIT AFTER TAX AS % OF SALES		4.2%	4.4%

Tax Equality Day

In order to draw attention to the current unfair tax régime, Wetherspoon is supporting Tax Equality Day (Wednesday 24 September 2014), in association with Jacques Borel's VAT Club - also supported by many others, including Punch, Fuller's, Adnams and thousands of individual publicans. At Wetherspoon, we are reducing our prices by about 7.5%, to reflect the likely reduction in prices which consumers would see, if VAT in pubs were reduced. We are sure that this offer will be extremely popular with customers and will, undoubtedly, increase the amount of revenue for the government as well, if it succeeds in reversing the increase in off-sales through supermarkets - even for one day.

Corporate governance

Last year, I expressed scepticism about aspects of corporate governance 'best practice', based on the observation that, in recent years, compliant pub companies had often fared disastrously in comparison with non-compliant ones. In particular, pub companies in which the CEO became chairman and which had a majority of executives and 'non-independent' non-executives, usually with previous experience in the pub trade, avoided making the catastrophic errors to which compliant companies seemed prone. Compliant companies, with a so-called independent non-executive chairman and dominated by non-executive directors, often with a very small number of executive directors, tended to be excessively influenced by City fashions, creating instability and poor performance as a result. In addition, I expressed the view that performance-based pay was, in effect, a double-edged sword, since setting targets for achievement often resulted in, for example, excessive debt as a means of enhancing earnings, as well as other distortions in behaviour. It was noted that banks in the credit crunch were also compliant, but this had not prevented disaster.

These views, clearly set out in last year's chairman's statement, have not been contradicted by any party in the interim. No questions have been raised about this aspect of the chairman's statement in meetings between the company and our shareholders. Indeed, corporate governance issues have almost never been raised by shareholders in all of our meetings with them in the 22 years since our flotation on the stock market. This year, several Wetherspoon executives and I have considered the UK Corporate Governance Code (2012), to try to throw light on this divergence in performance, bearing in mind the problems in recent times at companies like Marks and Spencer, Tesco and Morrisons, with ever-changing compliant boards struggling to run what were previously successful and stable companies.

The general view of our management team is that the UK Corporate Governance Code does not, as it purports to do, 'facilitate effective, entrepreneurial and prudent management that can deliver the long-term success' of companies. The main fault we see is that the code is much too 'City centric' and 'board centric', emphasising the importance of meetings between shareholders and the chairman and between various permutations of board members. These meetings may be desirable or necessary, from time to time, but are much less important than directors of a pub company, for example, visiting its pubs and making a note of the comments of staff and customers (as is the practice at Wetherspoon), for the purpose of board and other discussions. The road to hell in pub companies lies in emphasising the views of shareholders over those of employees on the 'front line'.

This point was best summed up by the legendary Sam Walton of Walmart in 'Made in America':

'As companies get larger … it becomes … tempting to … go to New York and speak to the … people that own your stock … I feel our time is best spent with our own people in the stores … Not that we don't go out of our way to keep Wall Street up to date on what's going on with the company.'

He further stated:

'What's really worried me over the years is not our stock price, but that we might someday fail to take care of our customers or that our managers might fail to motivate and take care of our (employees)…. Those challenges are more real than somebody's theory that we're heading down the wrong path…. As business leaders, we absolutely cannot afford to get all caught up in trying to meet the goals that some … institution … sets for us. If we do that, we take our eye off the ball…. If we fail to live up to somebody's hypothetical projection for what we should be doing, I don't care. We couldn't care less about what is forecast or what the market says we ought to do.'

As Sam Walton indicated, it is clearly a vital priority for pub and retail company directors, for example, to keep in touch with employees and customers' views, yet the code does not mention these aspects at all. In this respect, the theoretical separation of the running of a board and a company, as advanced by the code, is a highly dangerous concept. In order to run a business well, the directors need to appear regularly on the 'front line'. This excessive emphasis on City/shareholders' views is likely to stem from the nature of the FRC board itself, whose membership is dominated by individuals, no doubt well intentioned, with finance and City backgrounds, with few or no representatives from other spheres. 

Recent reports have stated that the average institutional fund manager turns over his share portfolio about twice a year. Inevitably, in these circumstances, advice from an average fund manager may tend to be based on short-term considerations and of no, or limited, use to directors. Sensible institutional shareholders recognise these parameters and will offer an opinion, if asked, and mostly restrict themselves to asking questions, enabling them to form an investment view. Anyone who has read the works of Benjamin Graham or Warren Buffett will be aware of their views that markets often suffer from deep and serious mental instability, so the idea of consulting 'Mr Market' as a regular source of wisdom is unrealistic and potentially dangerous. On the other hand, by concentrating on listening to the views of employees who understand best the challenges facing the business, directors will make a positive contribution to their companies.

As an illustration of this imbalance, a word search indicates 65 references in the code to shareholders, three to employees and none to customers - a reversal of this ratio would indicate a better sense of priorities.

Emphasising the pitfalls, the only serious approach from a shareholder, regarding Wetherspoon's corporate strategy since our 1992 flotation, concerned the desire of one large shareholder, Hermes, in 2005, which urged Wetherspoon to start converting its pubs to tenancies, in order to take advantage of the higher share valuation which applied to Punch Taverns and Enterprise Inns at that time. This was not helpful advice then and appeared to us to be focused on short-term share performance at the expense of any other considerations and was advice which the board chose not to follow.

The current advice that non-executives should remain on boards for a maximum of nine years, combined with the normal short tenure of chief executive officers of four to five years, has created boardrooms in which inexperience and short-term City considerations dominate and in which there is a demoralising instability for employees. As one sage has stated, 'when experience is not retained, infancy is perpetual'.

The code should also, we believe, be franker in admitting to the shortcomings of current and previous guidance. Remuneration committees, for example, which were introduced to control pay which was perceived to be excessive, have overseen an explosion in the levels of remuneration. The 'pay for performance' mantra has meant, in effect, the setting of complex targets for bonuses which have greatly lengthened and complicated reports and accounts, but have exacerbated, not alleviated, the basic problem. As a general observation, far too much financial reporting is couched in financial jargon and 'business speak', making corporate documents difficult to understand and being contrary to the stated approach of making reporting more transparent.

In conclusion, it is our view that corporate governance, as reflected in the code and in common practice is, in many respects, deeply flawed as regards pub companies and probably many other types of company as well. The boards of many PLCs are often highly unstable owing to their domination by non-executive directors on relatively short-term contracts. A greater percentage of executive representation on the board, greater emphasis on all directors liaising with staff on the front line, rather than shareholders, and less emphasis on pay for performance are the key elements which need to be modified. 

Current trading and outlook

The biggest danger to the pub industry, as indicated above, is the VAT disparity between supermarkets and pubs. Wetherspoon, along with many pub and restaurant companies, is supporting Jacques Borel's VAT Club on Tax Equality Day (Wednesday 24 September 2014) to publicise this inequality.

A similar danger relates to the general tone of corporate governance advice and practice, as discussed above, which has helped to create unstable board rooms, often preoccupied by the wrong considerations. For example, many do not even recognise the danger from the VAT disparity, despite the high weekly level of pub closures which has lasted for many years. 

In the six weeks to 7 September 2014, like-for-like sales increased by 6.3%, with total sales increasing by 11.4%.

The company is aiming for a reasonable outcome in the current financial year. 

Tim Martin

Chairman

11 September 2014

INCOME STATEMENT for the 52 weeks ended 27 July 2014

J D Wetherspoon plc, company number: 1709784

	Notes	52 weeks ended 27 July 2014 Before exceptional items	52 weeks ended 27 July 2014 Exceptional items (note 4)	52 weeks ended 27 July 2014 After exceptional items	52 weeks ended 28 July 2013 Before exceptional items	52 weeks ended 28 July 2013 Exceptional items (note 4)	52 weeks ended 28 July 2013 After exceptional items
		Total  £000	Total  £000	Total  £000	Total  £000	Total  £000	Total  £000
Revenue	2	1,409,333	-	1,409,333	1,280,929	-	1,280,929
Operating costs		(1,293,758)	-	(1,293,758)	(1,169,619)	(19,800)	(1,189,419)
Operating profit	3	115,575	-	115,575	111,310	(19,800)	91,510
Finance income	6	67	-	67	118	-	118
Finance costs	6	(36,280)	(997)	(37,277)	(34,485)	-	(34,485)
Profit before taxation		79,362	(997)	78,365	76,943	(19,800)	57,143
Income tax expense	7	(20,499)	(16,744)	(37,243)	(11,731)	776	(10,955)
Profit for the year		58,863	(17,741)	41,122	65,212	(19,024)	46,188
Basic earnings per share	8	48.6		33.9	46.2		37.8
Basic diluted earnings per share	8	47.0		32.8	44.8		36.6

STATEMENT OF COMPREHENSIVE INCOME for the 52 weeks ended 27 July 2014

	Notes	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Items which may subsequently be reclassified to profit or loss
Interest-rate swaps: gain taken to other comprehensive income		13,879	21,984
Tax on items taken directly to other comprehensive income	7	(2,776)	(6,378)
Net gain recognised directly in other comprehensive income		11,103	15,606
Profit for the year		41,122	46,188
Total comprehensive income for the year		52,225	61,794

CASH FLOW STATEMENT for the 52 weeks ended 27 July 2014

J D Wetherspoon plc, company number: 1709784

	Notes	52 weeks ended 27 July 2014 £000	Free cash flow 52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000	Free cash flow 52 weeks ended 28 July 2013 £000
Cash flows from operating activities
Cash generated from operations	9	212,505	212,505	164,922	164,922
Interest received		78	78	122	122
Interest paid		(33,996)	(33,996)	(31,569)	(31,569)
Corporation tax paid		(18,070)	(18,070)	(18,370)	(18,370)
Gaming machine settlement	4	(16,696)		-
Net cash inflow from operating activities		143,821	160,517	115,105	115,105
Cash flows from investing activities
Purchase of property, plant and equipment		(46,300)	(46,300)	(35,051)	(35,051)
Purchase of intangible assets		(9,926)	(9,926)	(5,880)	(5,880)
Proceeds on sale of property, plant and equipment		505		645
Investment in new pubs and pub extensions		(97,694)		(53,135)
Freehold reversions		(14,823)		(7,660)
Investment properties		(8,754)		-
Lease premiums paid		(10)		(93)
Net cash outflow from investing activities		(177,002)	(56,226)	(101,174)	(40,931)
Cash flows from financing activities
Equity dividends paid	11	(14,949)		(15,053)
Purchase of own shares for cancellation		(24,550)		-
Purchase of own shares for share-based payments		(7,338)	(7,338)	(8,825)	(8,825)
Advances under bank loans	10	92,151		17,585
Loan issue costs	10	(4,103)	(4,103)	-
Finance lease principal payments	10	(5,552)		(5,841)
Net cash inflow/(outflow) from financing activities		35,659	(11,441)	(12,134)	(8,825)
Net increase in cash and cash equivalents	10	2,478		1,797
Opening cash and cash equivalents		29,837		28,040
Closing cash and cash equivalents		32,315		29,837
Free cash flow	8		92,850		65,349
Free cash flow per ordinary share	8		74.1p		51.8p

BALANCE SHEET for the 52 weeks ended 27 July 2014

J D Wetherspoon plc, company number: 1709784

	Notes	27 July 2014 £000	28 July 2013 £000
Assets
Non-current assets
Property, plant and equipment	12	1,068,067	956,928
Intangible assets	13	26,838	20,166
Deferred tax assets	7	6,033	8,808
Investment properties	14	8,713	-
Other non-current assets Derivative financial instruments	15	9,766 1,723	9,897 -
Total non-current assets		1,121,140	995,799
Current assets
Inventories		22,312	19,857
Receivables		23,901	23,940
Cash and cash equivalents		32,315	29,837
Total current assets		78,528	73,634
Assets held for sale		-	422
Total assets		1,199,668	1,069,855
Liabilities
Current liabilities
Trade and other payables		(243,160)	(201,456)
Borrowings		(2,636)	(5,552)
Provisions		(4,442)	(6,491)
Derivative financial instruments		(3,149)	-
Current income tax liabilities		(3,872)	(9,313)
Total current liabilities		(257,259)	(222,812)
Non-current liabilities
Borrowings		(586,230)	(498,498)
Derivative financial instruments		(28,740)	(44,045)
Deferred tax liabilities	7	(83,686)	(58,408)
Provisions		(3,055)	(3,520)
Other liabilities		(13,530)	(27,657)
Total non-current liabilities		(715,241)	(632,128)
Net assets		227,168	214,915
Shareholders' equity
Share capital		2,460	2,521
Share premium account		143,294	143,294
Capital redemption reserve		1,971	1,910
Hedging reserve		(24,133)	(35,236)
Retained earnings		103,576	102,426
Total shareholders' equity		227,168	214,915

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

	Notes	Share  capital £000	Share premium account £000	Capital redemption reserve £000	Hedging reserve £000	Retained earnings £000	Total £000
At 29 July 2012		2,521	143,294	1,910	(50,842)	72,761	169,644
Profit for the year						46,188	46,188
Interest-rate swaps: gain taken to equity					21,984		21,984
Tax on items taken directly to equity	7				(6,378)		(6,378)
Total comprehensive income					15,606	46,188	61,794
Share-based payments						6,539	6,539
Deferred tax on share-based payments						816	816
Purchase of shares held in trust						(8,787)	(8,787)
Tax on purchase of shares held in trust						(38)	(38)
Dividends	11					(15,053)	(15,053)
At 28 July 2013		2,521	143,294	1,910	(35,236)	102,426	214,915
Profit for the year						41,122	41,122
Interest-rate swaps: gain taken to equity					13,879		13,879
Tax on items taken directly to equity	7				(2,776)		(2,776)
Total comprehensive income					11,103	41,122	52,225
Repurchase of shares		(61)		61		(24,428)	(24,428)
Tax on repurchase of shares						(122)	(122)
Share-based payments						7,521	7,521
Deferred tax on share-based payments						(663)	(663)
Purchase of shares held in trust						(7,304)	(7,304)
Tax on purchase of shares held in trust						(34)	(34)
Currency translation reserve						7	7
Dividends	11					(14,949)	(14,949)
At 27 July 2014		2,460	143,294	1,971	(24,133)	103,576	227,168

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 capital redemption reserve increased owing to the purchase of a number of shares in the period. Shares acquired in relation to the employee Share Incentive Plan and the 2005 Deferred Bonus Scheme are held in trust, until such time as the awards vest. At 27 July 2014, the number of shares held in trust was 3,852,077 (2013: 4,297,392), with a nominal value of £77,042 (2013: £85,948) and a market value of £28,235,724 (2013: £32,745,127) and are included in retained earnings.
Hedging gain/loss arises from the movement of fair value in the company's financial derivative instruments.
As at 27 July 2014, the company had distributable reserves of £79.4 million (2013: £67.2 million).

1 Accounting policies and basis of preparation

The preliminary announcement for the 52-week period ended 27 July 2014 has been prepared in accordance with the accounting policies as disclosed in J D Wetherspoon plc's annual report and accounts for 2013.

The annual financial information presented in this preliminary announcement for the 52-week period ended 27 July 2014 is based on, and is consistent with, that in the company's audited financial statements for the 52-week period ended 27 July 2014, and those financial statements will be delivered to the Registrar of Companies, following the company's annual general meeting. The independent auditors' report on those financial statements is unqualified and does not contain any statement under section 498 (2) or 498 (3) of the Companies Act 2006.

Information in this preliminary announcement does not constitute statutory accounts of the company within the meaning of section 434 of the Companies Act 2006. The full financial statements for the company for the 52-week period ended 28 July 2013 have been delivered to the Registrar of Companies. The independent auditors' report on those financial statements was unqualified and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

2 Revenue

Revenue disclosed in the income statement is analysed as follows:

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Sales of food, beverages, hotel rooms and machine income	1,409,333	1,280,929

3 Operating profit before exceptional items - analysis of costs by nature

This is stated after charging/(crediting):

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Concession rental payments	17,166	15,054
Minimum operating lease payments	52,538	52,371
Repairs and maintenance	56,603	48,030
Net rent receivable	(845)	(623)
Depreciation of property, plant and equipment (note 12)	54,459	50,084
Amortisation of intangible assets (note 13)	3,254	2,650
Amortisation of non-current assets (note 15)	321	363
Amortisation of investment properties (note 14)	41	-
Share-based payments (note 5) Net impairment charges Net onerous lease provision Loss on disposal of fixed assets	7,869 1,012 (228) 645	6,539 - - -
Auditors' remuneration
Fees payable for the audit of the financial statements Fees payable for other services:	161	165
- assurance services	30	29
- non-audit services	-	20
Total auditors' fees	191	214

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Revenue	1,409,333	1,280,929
Cost of sales	(1,241,584)	(1,121,787)
Gross profit	167,749	159,142
Administration costs	(52,174)	(47,832)
Operating profit before exceptional items	115,575	111,310
Exceptional items (note 4)	-	(19,800)
Operating profit after exceptional items	115,575	91,510

The cost of inventory expensed in the year is not disclosed, as management deems this to be commercially sensitive, in the highly competitive market in which the company operates.

4 Exceptional items

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Operating exceptional items
Property impairment	-	15,551
Onerous lease provision	-	3,278
Loss on disposal of property, plant and equipment	-	971
Total operating exceptional items	-	19,800
Other exceptional items
Interest payable on gaming machine VAT repayment	997	-
Income tax expense - current tax Income tax expense - deferred tax	(4,375) 21,119	(776) -
Exceptional items	17,741	19,024

The exceptional item in the current year of £1.0 million relates to interest which was paid in respect of £15.7 million received from HMRC in April 2010, relating to VAT on gaming machine revenue. This was repaid, along with interest, following the successful appeal by HMRC in October 2013.

In addition, an agreement was reached with HMRC in respect of a long-outstanding dispute about the treatment of capital allowances. As a result of this agreement, tax computations have been resubmitted and have resulted in a refund due of £4.4 million. Deferred tax liabilities arise as a result of capital allowances which can be claimed more quickly than the assets depreciate. As a result of the agreement with HMRC, a one-off charge of £21.1 million was made to reflect the future deferred tax liability.

Charges for the current year, in respect of impairment and onerous leases, were not significant and so are not presented as exceptional items. Details can be found in note 3

5 Employee benefits expense

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Wages and salaries	368,335	326,479
Social Security costs	24,008	21,778
Other pension costs	3,213	2,187
Share-based payments	7,521	6,539
	403,077	356,983

Directors' emoluments	2014 £000	2013 £000
Aggregate emoluments	1,623	1,641
Aggregate amount receivable under long-term incentive schemes	346	938
Company contributions to money purchase pension scheme	113	107
	2,082	2,686

The totals below relate to the monthly average number of employees during the year, not the total number of employees at the end of the year (including directors on a service contract).

	2014 Number	2013 Number
Full-time equivalents
Managerial/administration	4,419	4,065
Hourly paid staff	16,911	15,011
	21,330	19,076
	2014 Number	2013 Number
Total employees
Managerial/administration	4,419	4,065
Hourly paid staff	28,216	25,406
	32,635	29,471

During the year under review, a change in the basis of calculating the full time equivalents was made as a result of a reduction to the working hours per week from 48.0 hours to 37.5 hours for the purpose of this calculation. Comparative figures have been restated to reflect this change.

The shares awarded as part of the above 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 equally over their three-year life. The share-based payment charge above represents the annual cost of bonuses awarded over the past three years.

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 nil exercise price and there are no market based conditions to the shares that impact their ability to vest.

6 Finance income and costs

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Finance costs
Interest payable on bank loans and overdrafts	14,290	12,975
Amortisation of bank loan issue costs Interest payable on swaps	2,320 19,300	1,655 19,233
Interest payable on obligations under finance leases	370	622
Total pre-exceptional finance costs	36,280	34,485
Bank interest receivable	(67)	(118)
Total pre-exceptional finance income	(67)	(118)
Exceptional interest charge (note 4)	997	-
Net finance costs	37,210	34,367

The net finance costs during the year increased from £34.4 million to £37.2 million. The finance costs in the income statement were covered 3.2 times (2013: 3.2 times), on a pre-exceptional basis.

7 Income tax expense

(a) Tax on profit on ordinary activities

The standard rate of corporation tax in the UK changed from 23.0% to 21.0%, with effect from 1 April 2014.  Accordingly, the company's profits for this accounting period are taxed at an effective rate of 22.3% (2013: 23.7%).

	52 weeks ended 27 July 2014	52 weeks ended 27 July 2014	52 weeks ended 27 July 2014		52 weeks ended 28 July 2013	52 weeks ended 28 July 2013	52 weeks ended 28 July 2013
	Before exceptional items	exceptional items (note 4)	After exceptional items		Before exceptional items	Exceptional items (note 4)	After exceptional items
	£000	£000	£000		£000	£000	£000
Current income tax:
Current income tax charge	17,004	(4,375)	12,629	19,356		(776)	18,580
Total current income tax	17,004	(4,375)	12,629	19,356		(776)	18,580
Deferred tax:
Origination and reversal of temporary differences	3,495	21,119	24,614	1,095		-	1,095
Impact of change in UK tax rate	-	-	-	(8,720)		-	(8,720)
Total deferred tax	3,495	21,119	24,614	(7,625)		-	(7,625)
Tax charge in the income statement	20,499	16,744	37,243	11,731		(776)	10,955
Tax relating to items charged or credited to other comprehensive income
Deferred tax:
Tax charge on interest-rate swaps	2,776	-	2,776	6,378		-	6,378
Tax charge in the statement of comprehensive income	2,776	-	2,776	6,378		-	6,378

(b) Reconciliation of the total tax charge

The tax expense after exceptional items in the income statement for the year is lower (2013: lower) than the standard rate of corporation tax in the UK of 22.3% (2013: 23.7%), owing largely to the adjustment in respect of the change in the tax rate. The differences are reconciled below:

			52 weeks ended  27 July 2014	52 weeks ended 27 July 2014	52 weeks ended  28 July 2013	52 weeks ended 28 July 2013
			Before exceptional items £000	After exceptional items £000	Before exceptional items £000	After exceptional items £000
Profit before income tax			79,362	78,365	76,943	57,143
Profit multiplied by the UK standard rate of corporation tax of 22.3% (2013: 23.7%)			17,722	17,499	18,210	13,524
Abortive acquisition costs and disposals			78	78	88	88
Other disallowables			186	409	116	116
Other allowable deductions			(334)	(334)	(151)	(151)
Non-qualifying depreciation			3,654	3,654	2,995	6,905
Deduction for shares and SIPs			(69)	(69)	(402)	(402)
Deferred tax on balance-sheet-only items			(331)	(331)	(204)	(204)
Prior period adjustment - current tax			-	(4,375)	-	-
Prior period adjustment - deferred tax			-	21,119	-	-
Adjustment to deferred tax in respect of change in tax rate			(407)	(407)	(8,921)	(8,921)
Total tax expense reported in the income statement			20,499	37,243	11,731	10,955

(c) Deferred tax

The deferred tax in the balance sheet is as follows:

Deferred tax liabilities	Accelerated tax depreciation	Other temporary differences	Total
	£000	£000	£000
At 28 July 2013	55,258	5,873	61,131
Prior periods movement posted to the income statement	20,273	893	21,166
Movement during year posted to the income statement	3,775	-	3,775
At 24 July 2014	79,306	6,766	86,072

Deferred tax assets	Share- based payments	Capital losses carried forward	Interest-rate swaps	Total
	£000	£000	£000	£000
At 28 July 2013	1,591	1,131	8,809	11,531
Movement during year posted to the income statement	-	280	-	280
Prior year movement posted to the income statement	-	47	-	47
Movement during year posted to comprehensive income	(663)	-	(2,776)	(3,439)
At 27 July 2014	928	1,458	6,033	8,419

The Finance Bill 2013 was substantively enacted before the balance sheet date of 27 July 2014. It included legislation to reduce the main rate of corporation tax to 20% with effect from 1 April 2015. The lower rate of 20% has been used to determine the overall net deferred tax liability, as the temporary differences are expected to reverse at the lower rate.

The reversal of the deferred tax asset, in relation to capital losses, is dependent on the availability of capital gains on future disposals. This asset is likely to be reversed after more than 12 months. The deferred tax liabilities are likewise expected to unwind after more than 12 months.

Deferred tax assets and liabilities can be offset as follows:

	2014	2013
Deferred tax liabilities	86,072	61,131
Off-set against deferred tax assets	(2,386)	(2,723)
Deferred tax liability	83,686	58,408

Deferred tax assets	8,419	11,531
Offset against deferred tax liabilities	(2,386)	(2,723)
Deferred tax asset	6,033	8,808

8 Earnings and cash flow per share

Earnings per share are based on the weighted average number of shares in issue of 125,312,581 (2013: 126,036,296), 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 the shares in issue are included.

Accounting standards refer to "basic earnings" per share, which exclude those shares held in trust in respect of employee share schemes.

		52 weeks ended	52 weeks ended
Weighted average number of shares		27 July 2014	28 July 2013
Shares in issue (used for diluted EPS)		125,312,581	126,036,296
Shares held in trust		(4,174,284)	(3,780,740)
Shares in issue less shares held in trust (used for basic EPS)		121,138,297	122,255,556

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

				Basic EPS pence per ordinary share	Diluted EPS pence per ordinary share
52 weeks ended 27 July 2014	Profit
	£000
Earnings (profit after tax)	41,122			33.9	32.8
Exclude effect of exceptional items after tax	17,741			14.7	14.2
Adjusted earnings before exceptional items	58,863			48.6	47.0
			Basic EPS pence per ordinary share		Diluted EPS pence per ordinary share
52 weeks ended 28 July 2013		Profit £000
Earnings (profit after tax)		46,188	37.8		36.6
Exclude one-off tax benefit (rate change)		(8,720)	(7.2)		(6.9)
Adjusted earnings after exceptional items		37,468	30.6		29.7
Exclude effect of exceptional items after tax		19,024	15.6		15.1
Adjusted earnings before exceptional items		56,492	46.2		44.8

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 cash flow per share	52 weeks ended 27 July 2014	52 weeks ended 28 July 2013
Free cash flow (£000)	92,850	65,349
Free cash flow per share (p)	74.1	51.8

9 Cash generated from operations

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Profit for the year	41,122	46,188
Adjusted for:
Tax	37,243	10,955
Net impairment charge	1,012	15,551
Net onerous lease provision	(228)	3,278
Loss on disposal of property, plant and equipment	645	971
Amortisation of intangible assets	3,254	2,650
Depreciation of property, plant and equipment	54,459	50,084
Lease premium amortisation	321	363
Depreciation on investment properties	41	-
Share-based charges	7,521	6,539
Interest receivable	(67)	(118)
Amortisation of bank loan issue costs	2,320	1,655
Interest payable	33,960	32,830
Exceptional interest	997	-
	182,600	170,946
Change in inventories	(2,455)	1,118
Change in receivables	39	(5,255)
Change in payables	32,321	(1,887)
Net cash inflow from operating activities	212,505	164,922

10 Analysis of changes in net debt

	At 28 July 2013 £000	Cash flows £000	Non-cash movement £000	At 27 July 2014 £000
Cash in hand	29,837	2,478	-	32,315
Debt due after one year	(493,799)	(88,048)	(2,320)	(584,167)
Bank borrowing	(463,962)	(85,570)	(2,320)	(551,852)
Finance lease creditor - due less than one year	(5,552)	5,552	(2,636)	(2,636)
Finance lease creditor - due after one year	(4,699)	-	2,636	(2,063)
Net borrowings	(474,213)	(80,018)	(2,320)	(556,551)
Derivative: interest-rate swaps	(44,045)	-	17,028	(27,017)
Derivative: interest-rate swaps - due in one year	-	-	(3,149)	(3,149)
Net debt	(518,258)	(80,018)	11,559	(586,717)

Non-cash movements

The non-cash movement in debt due after one year relates to the amortisation of bank loan issue costs.

The movement in interest-rate swaps of £13.9 million relates to the change in the 'mark to market' valuations for the year.

11 Dividends paid and proposed

	52 weeks ended 27 July 2014 £000	52 weeks ended 28 July 2013 £000
Declared and paid during the year:
Dividends on ordinary shares:
- final for 2012/13: 8.0p (2011/12: 8.0p)	9,987	10,021
- interim for 2013/14: 4.0p (2012/13: 4.0p)	4,962	5,032
Dividends paid	14,949	15,053
Proposed for approval by shareholders at the AGM:
- final dividend for 2013/14: 8.0p (2012/13: 8.0p)	9,751	9,623

As detailed in the interim accounts, the board declared and paid an interim dividend of 4.0p for the financial year ended 27 July 2014.

12 Property, plant and equipment

	Freehold and long- leasehold property £000	Short- leasehold property £000	Equipment, fixtures and fittings £000	Expenditure on unopened properties £000	Total £000
Cost:
At 29 July 2012	668,059	410,089	389,730	15,556	1,483,434
Additions	2,852	11,645	27,791	55,650	97,938
Transfers	26,470	11,302	13,090	(50,862)	-
Transfer to/from assets held for sale	1,693	1,135	-	-	2,828
Disposals	(1,693)	(1,952)	(2,536)	-	(6,181)
Reclassification	6,090	(6,090)	-	-	-
At 28 July 2013	703,471	426,129	428,075	20,344	1,578,019
Additions	27,525	22,732	38,494	78,767	167,518
Transfers	28,355	19,692	19,784	(67,831)	-
Disposals	(1,316)	(2,692)	(4,429)	-	(8,437)
Reclassification	40,622	(40,622)	-	-	-
At 27 July 2014	798,657	425,239	481,924	31,280	1,737,100
Accumulated depreciation and impairment:
At 29 July 2012	119,982	167,294	270,876	941	559,093
Provided during the period	11,107	13,127	25,850	-	50,084
Impairment loss	6,458	6,809	1,191	-	14,458
Disposals	(1,320)	(797)	(2,179)	-	(4,296)
Transfer to/from assets held for sale	1,328	424	-	-	1,752
Reclassification	1,899	(1,899)	-	-	-
At 28 July 2013	139,454	184,958	295,738	941	621,091
Provided during the period	9,465	16,096	28,887	11	54,459
Impairment loss (reversal)	2,234	(1,179)	137	-	1,192
Disposals	(668)	(2,849)	(3,792)	(400)	(7,709)
Reclassification	5,627	(5,627)	-	-	-
At 27 July 2014	156,112	191,399	320,970	552	669,033
Net book amount at 27 July 2014	642,545	233,840	160,954	30,728	1,068,067
Net book amount at 28 July 2013	564,017	241,171	132,337	19,403	956,928
Net book amount at 29 July 2012	548,077	242,795	118,854	14,615	924,341

Impairment of property, plant and equipment

In assessing whether a pub has been impaired, the book value of the pub is compared with its anticipated future cash flows. Assumptions are used about sales, costs and profit, using a pre-tax discount rate for future years of 9% (2013: 10%).

If the value, based on future anticipated cash flows, is lower than the book value, the difference is written off as property impairment.

As a result of this exercise, a net impairment loss of £1,192,000 (2013: £14,458,000) was charged to operating costs in the income statement, as described in note 3. Included within this charge was a reversal of previously impaired assets of £2,211,000 (2013: £766,000). Impairment losses were reversed, as the financial performance of the impaired sites had improved to a point at which management was satisfied that the impairment was no longer required.

Management believes that a reasonable change in any of the key assumptions, for example the discount rate applied to each pub, could cause the carrying value of the pub to exceed its recoverable amount, but that the change would be immaterial.

Finance leases

Certain items of furniture, kitchen and IT equipment are subject to finance leases.

The carrying value of these assets, held under finance leases at 27 July 2014, included in equipment, fixtures and fittings, was as follows:

	2014 £000	2013 £000
Net book value	8,580	10,554

13 Intangible assets

	£000
Cost:
At 29 July 2012	29,613
Additions	5,880
At 28 July 2013	35,493
Additions	9,926
At 27 July 2014	45,419
Accumulated amortisation:
At 29 July 2012	12,677
Amortisation during the period	2,650
At 28 July 2013	15,327
Amortisation during the period	3,254
At 27 July 2014	18,581
Net book amount at 27 July 2014	26,838
Net book amount at 28 July 2013	20,166
Net book amount at 29 July 2012	16,936
Amortisation of £3,254,000 (2013: £2,650,000) is included in operating costs in the income statement. The majority of intangible assets relates to computer software and software development. Examples include the development costs of our SAP accounting system and "Wisdom" property maintenance system. Included in the intangible assets is £9,298,000 of software which are in the course of development (2013: £4,258,000).

Finance leases

Certain intangible assets, for example EPOS and accounting systems, have been purchased using finance leases. The amounts below show the reduction in net book value of assets held under finance leases which are released from security when the debt is repaid.

	2014 £000	2013 £000
Net book value	696	4,626

14 Investment properties

During the financial year ending 27 July 2014, the company acquired three freehold properties with existing tenants - and these assets have been classified as investment properties.

	2014 £000	2013 £000
Investment property	8,713	-

Rental income received in the period from investment properties was £328,000 (2013: £nil). Operating costs incurred in relation to these properties amounted to £41,000 (2013: £nil).

In the opinion of the directors, the cost as stated above is equivalent to the fair value of the properties.

15 Other non-current assets

These assets relate to lease premiums whereby the company has paid a landlord a sum of money to take over the benefit of a lease.

	Lease premiums £000
Cost:
At 29 July 2012	13,977
Additions	93
At 28 July 2013	14,070
Additions	10
At 27 July 2014	14,080
Accumulated amortisation and impairment:
At 29 July 2012	3,295
Amortisation during the period	363
Impairment	515
At 28 July 2013	4,173
Amortisation during the period	321
Impairment reversal	(180)
At 27 July 2014	4,314
Net book amount at 27 July 2014	9,766
Net book amount at 28 July 2013	9,897
Net book amount at 29 July 2012	10,682

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.co.uk

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 on which 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 interim management statement will be issued on 5 November 2014.

This information is provided by RNS

The company news service from the London Stock Exchange

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