22nd Jan 2020 08:21
(Alliance News) - Pub operator JD Wetherspoon PLC on Wednesday reported a rise in like-for-like sales in the 12 weeks to January 19, but warned its year-end net debt will be higher than first thought and it again took aim at City corporate governance rules.
During the first 12 weeks of its second quarter, which included the Christmas trading spell, total sales rose by 4.2% with like-for-like sales 4.7% higher. Total year-to-date sales were 4.9% higher year-on-year, or up 5.0% like-for-like.
Since the end of its last financial year in July 28, the company has opened one new pub and sold five. It eyes opening between 10 and 15 and spending GBP80 million on new units or extensions.
The FTSE 250 pub chain added that it has forked out GBP57 million so far this financial on freehold reversions of 18 pubs.
This type of transaction is common for Wetherspoon. Since 2014 it has spent GBP320 million on freehold reversion - meaning buying the freehold of a property on which it is a tenant - and last year alone it parted with GBP77 million. This year that number is expected to rise 10% to GBP85 million.
Although the company said it is in "a sound financial position", come the July year-end net debt is expected to be between GBP780 million and GBP820 million, "slightly higher than previously anticipated, due to higher than anticipated capital expenditure."
Wetherspoon noted: "If the company had not bought shares or reversions it would be more or less debt-free."
Since starting a share buyback programme in 2003, the company has repurchased GBP516 million worth of stock, the firm noted.
In November, the head of Wetherspoon accused the corporate governance rules of placing too much power in the hands of non-executive directors, "disenfranchising executives and the workforce".
Chair Tim Martin on Wednesday said: "The UK, of course, needs a sensible system of corporate governance. However, the current system is remote, counterproductive and inflexible, which are also the characteristics of many major shareholding institutions and their advisers."
The company added that Columbia Threadneedle Investments, a London-based shareholder, voted against two of Wetherspoon's long-serving non-executives at its 2018 annual general meeting for not observing the "nine-year rule".
The rule states that non-executives should not remain in the role for more than nine years.
Martin added: "CT unilaterally took this action, in spite of detailed explanations in the preceding years in our annual reports. CT and fellow shareholder Blackrock Inc's own boards however, very sensibly, do not observe the nine-year rule - both laud 'independent' non-executive directors with longer tenure than nine years. In other words, one rule for CT and Blackrock - and another for UK PLC.
"The main consequence of the current governance system is short-termist and inexperienced boards, which have minimal representation from executives and the workforce - the people who are best placed to understand and run the business. These factors are obviously damaging for customers, employees and the economy - as well as for shareholders."
Shares in the company were down 0.2% at 1,592.08 pence each in London on Wednesday morning.
By Eric Cunha; [email protected]
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