3rd Mar 2006 07:00
Wetherspoon (JD) PLC02 March 2006 J D WETHERSPOON PLC PRESS RELEASE J D Wetherspoon plc announces interim results for the six months to 22 January 2006. Highlights Turnover up 1% to £406.3m Operating profit up 15% to £39.7m* Profit before tax up 21% to £27.4m* Earnings per share up 31% to 10.6p* Earnings per share (after exceptional items in the prior year) up 121% to 10.6p Free cash flow per share 17.6p (prior year 17.4p) Interim dividend per share up 10% to 1.6p *Before exceptional items in the prior year. Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc,said: "The half year to 22 January 2006 was a period of good progress for the Company.Earnings per share increased by 31% (excluding exceptional items in the prioryear) to 10.6p (2005: 8.1p). It is clear from our experience and from the evidence of other areas, such asIreland, California and New York, that the initial effect of a smoking ban canresult in sales and margin declines. However, we believe that sales and marginscan recover over time, once customers adjust to the non-smoking environment. In the light of our strong earnings and cash flow, combined with our continuedconcentration on making many small improvements to the business, I remainconfident of the Company's longer-term future prospects." Enquiries: John Hutson Chief Executive Officer 01923 477777Jim Clarke Finance Director 01923 477777Eddie Gershon Company spokesman 07956 392234 Photographs are available at: www.newscast.co.uk 3 March 2006 Chairman's Statement The half year to 22 January 2006 was a period of good progress for the Company.Sales increased by 1% to £406.3 million (2005: £403.3 million). Operatingprofit increased by 15% (excluding exceptional items in the prior year) to £39.7million (2005: £34.6 million) and profit before tax by 21% (excludingexceptional items in the prior year) to £27.4 million (2005: £22.6 million).Earnings per share increased by 31% (excluding exceptional items in the prioryear) to 10.6p (2005: 8.1p), a faster rate than profit due to our share buybackprogramme. Like-for-like sales decreased by 0.3% in the period and sales at new pubs werein line with expectations. The operating margin before interest and taxincreased to 9.8% (2005: 8.6%), due to lower head office costs and improved pubprofits. Net interest was covered 3.2 times (2005: 2.9 times) by operatingprofit. Total capital investment was £15.9 million and net gearing at theperiod end was 149% (2005: 120%). Free cash flow (after capital investment of £6.7 million in existing pubs, £1.8million in respect of share purchases under the Company's Share Incentive Planand payments of tax and interest) declined to £30 million (2005: £32.9 million).This was due to higher operating profits offset by a reduction in the benefitfrom trade creditors, following the slow down in our opening programme, and anincrease in the bank interest outflow, due to timing differences relating to ournew banking facilities. This resulted in free cash flow per share of 17.6p(2005: 17.4p) before investment in new pubs, proceeds from pub disposals anddividend payments. In the period under review, all our new pub capitalexpenditure was financed from free cash flow. In addition we purchased 7.8million of our own shares for cancellation at a cost of £24.0 million. Dividend The Board has declared an interim dividend of 1.60p per ordinary share (2005:1.46p), a 10% increase on last year, payable on 26 May 2006 to shareholders onthe register at 28 April 2006. Property The first half saw the opening of 5 new pubs with a full year target ofapproximately 13. We also completed the disposal of 6 pubs, which had previouslybeen identified for sale, to end the half year with 654 pubs. Financing As at 22 January 2006, the Company's total net borrowings were £339.9 million(24 July 2005: £334.1 million). Total facilities at 22 January 2006 were £472million, with a new 5 year loan facility finalised on competitive terms. Non-Smoking We now operate 49 non-smoking pubs; 37 were existing pubs which reopened asnon-smoking pubs between March and October 2005. 12 are new pubs which openedfor the first time in the last year. Like-for-like sales in the converted pubshave continued the sales trend disclosed previously, declining by 7.6% in thequarter ended 22 January 2006. As stated previously, the increase in thepercentage of food sales, combined with the decline in bar and fruit machinesales in non-smoking pubs, has resulted in a considerable drop in theiroperating margin. This amounted to a reduction of 4% in the last quarter. We announced in March 2005 plans to convert approximately 10% of our pubs tonon-smoking, followed by the rest of the estate in May 2006. Given thegovernment's decision to bring forward a complete national smoking ban by 18months to the middle of 2007, and the initial financial performance describedabove, we have decided to await the complete ban imposed by the government in2007. In the meantime, new pub openings will continue to be non-smoking and wewill complete the small number of conversions already in the pipeline. Inaddition, the ban on smoking in Scotland, due to take place on the 26th of thismonth, will result in a further 36 pubs becoming non-smoking. It is clear from our experience and from the evidence of other areas, such asIreland, California and New York, that the initial effect of a smoking ban canresult in sales and margin declines. However, we believe that sales and marginscan recover over time, once customers adjust to the non-smoking environment. New Licensing Legislation The Company has successfully adjusted to the major challenge of a new licensingsystem and longer opening hours. The new licensing legislation has resulted inlonger opening hours for our pubs, which now open from 9am for food and coffeeas well as alcoholic drinks, and close around midnight, or slightly later insome pubs at the weekends. There was considerable anxiety that this extension ofhours would result in an increase in binge drinking. However, the majority ofpolice forces and local authorities have reported an improvement in theunderlying situation, as people drink more slowly with a flexible terminal hour,and pubs and clubs close at different times. Sales figures from our own andother licensed trade companies have not indicated, on average, an increase inconsumption, in keeping with the pattern experienced by the licensingauthorities. Current trading and prospects Like-for-like sales in February 2006 increased by 1.9%, in comparison with adecline of the same amount in February 2005. Profits and cash flows continue tobe enhanced by the cost reductions outlined in our results announcement of 4March 2005. The imminent Scottish smoking ban, combined with the potentialimpact of the football World Cup in June and July 2006, leads us, as previouslyindicated, to take a cautious view of the possible outcome for the second halfof the current financial year. The level of capital investment in existing pubs, excluding new pubs, has beenabout 2% of sales in recent years, below the historical average. We intend toincrease this level of investment to approximately 4% as we increase expenditureon refurbishments, gardens, kitchen equipment and IT systems. Our aim is toensure we are in the best position to deal with the challenges facing the pubindustry over the next few years. The main issue for the future relates to the smoking bans in Britain andNorthern Ireland. However, in the light of our strong earnings and cash flow,combined with our continued concentration on making many small improvements tothe business, I remain confident of the Company's longer-term future prospects. Tim MartinChairman3 March 2006 Income statement for the 26 weeks ended 22 January 2006 Notes Unaudited Unaudited Unaudited Unaudited Unaudited 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks ended ended ended ended ended 22 January 23 January 23 January 24 July 24 July 2006 2005 2005 2005 2005 £000 £000 £000 £000 £000 Before After Before After exceptional exceptional exceptional exceptional items items items items Revenue 406,326 403,341 403,341 809,861 809,861Operating costs 2 (366,634) (368,695) (368,695) (738,355) (738,355) Operating profit before 39,692 34,646 34,646 71,506 71,506exceptional itemsExceptional items 3 - - (8,047) - (7,380) Operating profit 39,692 34,646 26,599 71,506 64,126Net interest payable (12,339) (12,021) (12,021) (24,329) (24,329) Profit on ordinary activities 27,353 22,625 14,578 47,177 39,797before taxationTax on profit on ordinary 4 (9,281) (7,263) (5,566) (14,926) (14,155)activities Attributable to equity 18,072 15,362 9,012 32,251 25,642shareholders Earnings per ordinary share 5 10.6p 8.1p 4.8p 17.4p 13.8pDiluted earnings per ordinary 5 10.6p 8.1p 4.8p 17.4p 13.8pshare All activities relate to continuing operations. Statement of recognised income and expense Notes Unaudited Unaudited Unaudited 26 weeks ended 26 weeks ended 52 weeks ended 22 January 23 January 24 July 2006 2005 2005 £000 £000 £000 Cash flow hedges: losses taken to equity (1,068) - -Tax on items taken directly to equity 320 - - Net expense recognised directly in equity (748) - -Profit for the period 18,072 9,012 25,642 Total recognised income for the period 10 17,324 9,012 25,642 Cash flow statement for the 26 weeks ended 22 January 2006 Notes Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited 26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks ended 22 ended 22 ended 23 ended 23 ended ended January January January January 24 July 24 July 2006 2006 2005 2005 2005 2005 £000 £000 £000 £000 £000 £000 Cash flows from operatingactivitiesCash generated from operations 6 60,826 60,826 62,002 62,002 123,460 123,460Interest received 125 125 3,571 16 3,598 43Interest paid (15,625) (15,625) (12,590) (12,590) (24,108) (24,108)Refinancing costs paid (1,367) - -Corporation tax paid (6,850) (6,850) (6,363) (6,363) (12,632) (12,632)Purchase of own shares for Share (1,765) (1,765) (1,989) (1,989) (3,816) (3,816)Incentive Plan Net cash inflow from operating 35,344 36,711 44,631 41,076 86,502 82,947activities Cash flows from investingactivitiesPurchase of tangible fixed assets (6,695) (6,695) (8,180) (8,180) (14,173) (14,173)for existing pubsProceeds of sale of tangible fixed 2,448 6,546 8,547assetsInvestment in new pubs and pub (9,242) (18,616) (24,495)extensions Net cash out flow from investing (13,489) (6,695) (20,250) (8,180) (30,121) (14,173)activities Cash flows from financing activitiesEquity dividends paid 7 (4,749) (4,839) (7,520)Issue of ordinary shares 1,082 86 271Purchase of own shares (24,042) (9,416) (45,718) Advances/(repayments) under bank 6,786 (2,500) (25,000)loansAdvances under US senior notes - - 29,999Net cash outflow from financing (20,923) (16,669) (47,968)activitiesNet increase in cash and cash 8 932 7,712 8,413equivalentsOpening cash and cash equivalents 18,073 9,660 9,660Closing cash and cash equivalents 19,005 17,372 18,073Free cash flow 5 30,016 32,896 68,774 Free cash flow per ordinary share 5 17.6p 17.4p 37.1p Balance sheet as at 22 January 2006 Notes Unaudited 22 Unaudited 23 Unaudited January January 2005 24 July 2006 £000 2005 £000 £000 AssetsNon-current assetsIntangible assets 2,929 4,008 3,042Property, plant and equipment 747,535 764,811 756,761Other non-current assets 9,352 5,060 5,397 759,816 773,879 765,200 Current AssetsInventories 13,639 12,684 12,777Assets available for sale - 4,554 1,691Trade and other receivables 16,158 11,562 12,195Cash and cash equivalents 9 19,005 17,372 18,073 48,802 46,172 44,736 LiabilitiesCurrent LiabilitiesTrade and other payables (77,961) (81,531) (80,578)Borrowings 9 - (25,000) (25,000)Current income tax liabilities (9,079) (6,742) (7,556)Accruals and other liabilities (32,145) (26,453) (32,580) (119,185) (139,726) (145,714) Non-current LiabilitiesBorrowings 9 (359,004) (319,718) (327,218)Derivative financial instruments (11,464) - -Deferred tax liabilities (84,120) (82,210) (83,211)Provisions and other liabilities (6,718) (6,350) (7,048) (461,306) (408,278) (417,477) Net Assets 228,127 272,047 246,745 Shareholders EquityOrdinary shares 3,312 3,748 3,458Share premium account 129,679 128,425 128,607Capital redemption reserve 1,030 581 874Retained earnings 94,106 139,293 113,806 Total shareholders' equity 10 228,127 272,047 246,745 Notes 1 Interim statement The interim statement does not constitute full accounts as defined by S.240 ofthe Companies Act 1985. The figures for the year ended 24 July 2005 have beenderived from the UK GAAP statutory accounts, which have been filed with theRegistrar of Companies and on which the auditors gave an unqualified report. Change in accounting policies In accordance with the directive of the Council of the European Union, JDWetherspoon plc ('the Company') has adopted International Financial ReportingStandards ('IFRS') with effect from 25 July 2005, having previously applied UKaccounting standards. These interim statements are the first that the Companyhas prepared under IFRS and they have been prepared in accordance with the IFRSaccounting policies that management expects to apply in the 2006 IFRS -compliant full year financial statements. These accounting policies areconsistent with those adopted for the restatement of the 2005 financialinformation. Both the restatement and a summary of significant accountingpolicies are available on the Company's website, www.jdwetherspoon.co.uk/investors, and are also available on request from the Company Secretary on 01923477777. The results of prior periods have been restated under the new accountingpolicies so that proper comparison can be made with the results for the currentperiod. For the year ended 24 July 2005 profit after tax and exceptional itemshas increased by £1,122,000 and net assets have reduced by £13,139,000. Thisrepresents an increase in profits of 2.4% and a reduction in net assets of 5.0%.The corresponding figures for the half year to 23 January 2005 are £281,000 and£16,716,000. Note 11 provides further detail. As permitted, this interim report has been prepared in accordance with UKlisting rules and not in accordance with IAS34 'Interim Financial Reporting' andis therefore not fully compliant with IFRS. The Company has taken the option to only apply IAS 32 'Financial Instruments:Disclosure & Presentation' and IAS 39 'Financial Instruments: Recognition &Measurement' prospectively, with effect from 25 July 2005. The comparativeperiods have therefore not been restated for IAS 32 or 39. The effect of IAS 39is to reduce equity by £10,397,000 as at 25 July 2005 by recognising gains andlosses on interest rate and currency swaps. IAS 39 has had no effect on amountsrecognised in the income statement or balance sheet. Neither IAS 32 nor IAS 39have had any effect on basic or diluted earnings per share. Note 10 providesfurther detail. IFRS currently in issue are subject to ongoing review and endorsement by theEuropean Commission as well as possible amendment by the IASB, and therefore aresubject to possible change. Further standards or interpretations may also beissued that could be applicable for the full year consolidated financialstatements. These potential changes could result in change to the basis ofaccounting or presentation of certain financial information from that presentedin this document. 2 Operating costs Unaudited Unaudited Unaudited 26 weeks ended 26 weeks ended 52 weeks ended 22 January 23 January 24 July 2006 2005 2005 £000 £000 £000 Cost of sales (350,142) (351,382) (705,942)Administration costs Head office costs (15,681) (16,908) (31,428)Employee Share Incentive Plan charge (811) (405) (985) (366,634) (368,695) (738,355) 3 Exceptional items Unaudited Unaudited Unaudited 26 weeks ended 26 weeks ended 52 weeks ended 22 January 23 January 24 July 2006 2005 2005 £000 £000 £000 Distribution start up costs - 2,229 2,984Restructuring costs - - 859Impairment of fixed assets - - 1,068Net loss on disposal and anticipated disposal of - 5,818 2,306trading propertiesNet loss on disposal and anticipated disposal of - - 163non trading properties - 8,047 7,380 4 Taxation The taxation charge for the six months ended 22 January 2006 is calculated byapplying an estimate of the effective tax rate for the year ending 30 July 2006.The UK standard rate of corporation tax is 30% (2005: 30%), and the latestestimate of the current tax payable on profits before exceptional items for thefinancial year ending 30 July 2006 is 31% (2005: 30%). Unaudited Unaudited Unaudited Unaudited Unaudited 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks ended ended ended ended ended 22 January 23 January 23 January 24 July 24 July 2006 2005 2005 2005 2005 £000 £000 £000 £000 £000 Before After Before After exceptional exceptional exceptional exceptional items items items items Current tax 8,373 6,705 6,036 14,270 14,270Deferred tax 908 558 (470) 656 (115)Tax on profit on ordinary 9,281 7,263 5,566 14,926 14,155activities 5 Earnings and cash flow per share The calculation of basic earnings per share is based on profits on ordinaryactivities after taxation of £18,072,000 (January 2005: £9,012,000; July 2005:£25,642,000) and on 170,220,787 (January 2005: 188,616,286; July 2005:185,524,467) ordinary shares, being the weighted average number of ordinaryshares in issue and ranking for dividend during the period. Earnings per share before exceptional items is calculated as follows: Unaudited Unaudited Unaudited Earnings Earnings Earnings Earnings Earnings Earnings per share per share per share for 26 for 26 for 52 for 26 For 26 for 26 weeks weeks weeks weeks weeks weeks ended 22 ended 23 ended 24 ended 22 ended 32 ended 24 January January July January January July 2006 2005 2005 2006 2005 2005 £000 £000 £000 pence pence pence Earnings and basic earnings per 18,072 9,012 25,642 10.6 4.8 13.8shareExceptional costs, net of tax - 6,350 6,609 - 3.3 3.6 Earnings and earnings per share 18,072 15,362 32,251 10.6 8.1 17.4before exceptional items Diluted earnings per share have been calculated using the weighted averagenumber of shares in issue diluted for the effect of share options, where theoption price has a diluting effect. The number of shares used for the fullydiluted calculation is 170,537,340 (January 2005: 188,845,052; July 2005:185,760,654). The calculation of free cash flow per share is based on the net cash generatedby business activities and available for investment in new pub developments andextensions to existing pubs, after funding interest, tax, all other reinvestmentin pubs open at the start of the period and the purchase of own shares under theemployee Share Incentive Plan ('free cash flow'). It is calculated before takingaccount of proceeds from property disposals and inflows and outflows offinancing from outside sources, dividend payments and is based on the samenumber of shares in issue as that for the calculation of basic earnings pershare. 6 Cash generated from operations Unaudited Unaudited Unaudited 26 weeks 26 weeks 52 weeks ended ended ended 22 January 23 January 24 July 2006 2005 2005 £000 £000 £000 Profit attributable to equity shareholders 18,072 9,012 25,642Adjusted for:Tax 9,281 5,566 14,155Depreciation of tangible fixed assets 21,136 22,072 47,256Distribution start up costs - 2,229 2,984Restructuring costs - - 859Impairment of fixed assets - - 1,068Net loss on disposal and anticipated disposal of trading - 5,818 2,306propertiesNet loss on disposal and anticipated disposal of non-trading - - 163propertiesShare Incentive Plan 811 405 985Interest income (28) (210) (232)Interest expense 12,367 12,231 24,561 61,639 57,123 119,747Change in inventories (862) (675) (768)Change in receivables (1,536) 391 (247)Change in payables 1,585 7,461 8,571 Net cash inflow from operating activities pre exceptional 60,826 64,300 127,303Outflow related to exceptional items - (2,298) (3,843) Net cash inflow from operating activities 60,826 62,002 123,460 7 Dividends paid Unaudited Unaudited Unaudited 26 weeks ended 26 weeks ended 52 weeks ended 22 January 23 January 24 July 2006 2005 2005 £000 £000 £000 Declared and paid in the periodFinal dividend for 2004/05 - 2.82p (2003/04 - 2.56p) 4,749 4,839 4,839Interim dividend for 2004/05 - 1.46p (2003/04 - 1.33p) - - 2,681 4,749 4,839 7,520 On 26 May 2006 the Company will pay an interim dividend of 1.60 pence per share,for the half year ended 22 January 2006 to shareholders on the register at theclose of business on 28 April 2006. 8 Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Unaudited 26 weeks ended 26 weeks ended 52 weeks ended 22 January 23 January 24 July 2006 2005 2005 £000 £000 £000 Increase in cash in the year 932 7,712 8,413Cash outflow/(inflow) from movement in debt financing (6,786) 2,500 (4,999) Movement in net debt during the period (5,854) 10,212 3,414Opening net debt (334,145) (337,559) (337,559) Closing net debt (339,999) (327,347) (334,145) 9 Analysis of net debt Unaudited at Non-cash Unaudited 24 July Cash movement at 22 January 2005 flow 2006 2006 £000 £000 £000 £000 Cash at bank and in hand 18,073 932 - 19,005Debt due within one year (25,000) - 25,000 -Debt due after one year (327,218) (6,786) (25,000) (359,004) Net debt (334,145) (5,854) - (339,999) 10 Movement in equity Called Unaudited up Share Capital at 22 January share premium redemption Retained 2006 capital account reserve earnings Total £000 £000 £000 £000 £000 At 25 July 2005 3,458 128,607 874 113,806 246,745Effect of adoption of IAS 32 and IAS 39 - - - (10,397) (10,397)Tax on items taken directly to equity 3,119 3,119At 25 July 2005 (restated) 3,458 128,607 874 106,528 239,467Allotments 10 1,072 - - 1,082Re-purchase of shares (156) - 156 (24,042) (24,042)Share Incentive Plan - - - (955) (955)Profit for the period - - - 18,072 18,072Cash flow hedges: losses taken to equity - - - (1,068) (1,068)Tax on items taken directly to equity - - - 320 320Dividends - - - (4,749) (4,749)At end of period 3,312 129,679 1,030 94,106 228,127 11 Impact of IFRS on prior reporting period 26 Weeks ended 52 weeks ended 23 January 2005 24 July 2005 Profit before Net assets Profit before Net assets tax and tax and exceptional exceptional items items £000 £000 £000 £000 As reported under UK GAAP 22,344 288,763 46,055 259,884Depreciation adjustment re residual values 450 450 901 901Lease incentives (deferred income) (169) (4,834) 221 (4,755)Income tax and deferred tax - (15,013) - (14,156)Dividend declared * - 2,681 - 4,871 281 (16,716) 1,122 (13,139)As reported under IFRS 22,625 272,047 47,177 246,745 *Dividends amounting to £122,000 in respect of the purchase of the company's ownshares have been deducted in arriving at the aggregate of dividends paid andproposed as disclosed for the 26 weeks ended 22 January 2006 (see note 10). Property, plant and equipment Under IAS 16, residual values are based on prices current at the balance sheetdate, whereas under previous UK GAAP residual values were based on prices at thedate of acquisition or later revaluation. Changes to residual values are accounted for prospectively but first-timeadopters should adjust residual values of their assets at the date of transitionto IFRS and then use the amended depreciation that this implies from the date oftransition. This adjustment leads to a reduction in depreciation of £450,000 and£901,000 for the 26 weeks ended 23 January 2005 and for the year ended 24 July2005 respectively. Leases Under UK GAAP, lease incentives on leases where the lessor retains substantiallyall the risks and benefits of ownership of the asset, are recognised as areduction in rent paid over the period up to the first rent review. Under IFRS, lease incentives on leases where the lessor retains substantiallyall the risks and benefits of ownership of the asset, are recognised as areduction in rent paid over the lease term. The effect of the change is an increase in deferred income of £4,834,000 and£4,755,000 at 23 January 2005 and 24 July 2005 respectively. Income Taxes The Company's IAS 12 amendments affect those deferred tax assets or liabilitieswhich taken together comprise the net deferred tax liability at the balancesheet date. The impact of adopting IFRS is an increase in the deferred tax liability of£15,013,000 and £14,156,000 at 23 January 2005 and 24 July 2005 respectively. Adjustments made as a result of implementing IAS 12 are outlined below: • The Standard requires a deferred tax provision for all capital gains that have been subject to rollover relief claims. Under UK GAAP, deferred tax was only provided on assets subject to such claims to the extent that the liability was expected to crystallise. This resulted in an increase in deferred tax liability of £10,994,000 and £10,994,000 as at 23 January 2005 and 24 July 2005 respectively. • Further to the recognition of a deferred tax liability on capital gains, the Company has recognised a deferred tax asset on its capital losses on the basis that should a capital gain crystallise the capital losses will be available to offset against the gain. This resulted in a deferred tax asset of £915,000 and £1,560,000 as at 23 January 2005 and 24 July 2005 respectively. • UK GAAP did not permit the creation of a deferred tax liability for revaluation gains, this is however required under IAS 19. Although the Company has not revalued its properties since the 1999/2000 financial year, the revalued carrying amounts at the date of transition to IFRS will form the deemed costs under IFRS. A transitional deferred tax liability is therefore required of £6,827,000 and £6,766,000 at 23 January 2005 and 24 July 2005 respectively. • A deferred tax asset of £1,493,000 has been recognised at 25 July 2004 in respect of lease incentives relating to below market rent adjustments in existence at the date of transition to IFRS. This has increased to £2,044,000 at 24 July 2005 (23 January 2005: £1,893,000). The deferred tax asset is disclosed separately under non-current assets in the balance sheet. • These assets have been adjusted from the amounts as announced on 20 January 2006 following a more detailed review. Events after the Balance Sheet date Under UK GAAP, Company dividends declared after the balance sheet date have beenrecognised as a liability. Under IFRS final dividends declared after the balance sheet date are notrecognised until approved by the shareholders at the annual general meeting.Interim dividends are only recognised when paid. The effect of the change is an increase in equity of £2,681,000 at 23 January2005 and £4,871,000 at 24 July 2005. Independent review report to J D Wetherspoon plc Introduction We have been instructed by the company to review the financial information forthe twenty six weeks ended 22 January 2006 which comprises interim balance sheetas at 22 January 2006 and the related interim statements of income, cash flowsand statement of recognised income and expense for the twenty six weeks thenended and related notes. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As disclosed in note 1, the next annual financial statements of the company willbe prepared in accordance with accounting standards adopted for use in theEuropean Union. This interim report has been prepared in accordance with thebasis set out in Note 1. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in note 1, there is,however, a possibility that the directors may determine that some changes arenecessary when preparing the full annual financial statements for the first timein accordance with accounting standards adopted for use in the European Union.The IFRS standards and IFRIC interpretations that will be applicable and adoptedfor use in the European Union at 30 July 2006 are not known with certainty atthe time of preparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of management and applying analyticalprocedures to the financial information and underlying financial data and, basedthereon, assessing whether the disclosed accounting policies have been applied.A review excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope than anaudit and therefore provides a lower level of assurance. Accordingly we do notexpress an audit opinion on the financial information. This report, includingthe conclusion, has been prepared for and only for the company for the purposeof the Listing Rules of the Financial Services Authority and for no otherpurpose. We do not, in producing this report, accept or assume responsibilityfor any other purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by our prior consent inwriting. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the twenty sixweeks ended 22 January 2006. PricewaterhouseCoopers LLPChartered AccountantsLondon3 March 2006 Notes: (a) The maintenance and integrity of the J D Wetherspoon plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Wetherspoon (J.D)