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J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
1
FINANCIAL HIGHLIGHTS
s
J D Wetherspoon plc
erspoon plc
RECONCILIATION TO STATUTORY PROFIT for the 52 weeks ended 25 July 2021
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
company aims to
provide customers
with good-quality
food and drinks,
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.
Contents
SECTION 1
1
Chairman’s statement
11
Income statement
11
Statement of comprehensive income
12
Cash flow statement
13
Balance sheet
14
Statement of changes in equity
15
Notes to the financial statements
SECTION 2
43
Accounting policies
49
54
Strategic report
Task Force on Climate-related Financial
Disclosures (TCFD)
55
Independent auditors’ report
65
Directors and officers
66
Directors’ report
69
Directors’ remuneration report
78
Corporate governance
85
Information for shareholders
86
Pubs opened and closed during the
financial year
87
Company information
88
Glossary
Financial calendar
Year end
30 July 2023
Preliminary announcement for 2023
October 2023
Interim report for 2023
March 2023
Annual general meeting
17 November 2022
View this report online:
jdwetherspoon.com/investors-home
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
1
CHAIRMAN’S STATEMENT
SECTION 1
Financial performance
The company was founded in 1979 – and this is the 39th year since incorporation in 1983.
The table below outlines some key aspects of our performance during that period.
Summary accounts for the years 1984-2022
Financial year
Total number
of Pubs
(Sites)
Total sales
£000
Profit/(loss)
before tax and
exceptional items
£000
Earnings per
share before
exceptional items
pence
Free cash flow
£000
Free cash flow
per share
pence
1984
1
818
(7)
0
1985
2
1,890
185
0.2
1986
2
2,197
219
0.2
1987
5
3,357
382
0.3
1988
6
3,709
248
0.3
1989
9
5,584
789
0.6
915
0.4
1990
19
7,047
603
0.4
732
0.4
1991
31
13,192
1,098
0.8
1,236
0.6
1992
45
21,380
2,020
1.9
3,563
2.1
1993
67
30,800
4,171
3.3
5,079
3.9
1994
87
46,600
6,477
3.6
5,837
3.6
1995
110
68,536
9,713
4.9
13,495
7.4
1996
146
100,480
15,200
7.8
20,968
11.2
1997
194
139,444
17,566
8.7
28,027
14.4
1998
252
188,515
20,165
9.9
28,448
14.5
1999
327
269,699
26,214
12.9
40,088
20.3
2000
428
369,628
36,052
11.8
49,296
24.2
2001
522
483,968
44,317
14.2
61,197
29.1
2002
608
601,295
53,568
16.6
71,370
33.5
2003
635
730,913
56,139
17.0
83,097
38.8
2004
643
787,126
54,074
17.7
73,477
36.7
2005
4
655
809,861
47,177
16.9
68,774
37.1
2006
657
847,516
58,388
24.1
69,712
42.1
2007
671
888,473
62,024
28.1
52,379
35.6
2008
694
907,500
58,228
27.6
71,411
50.6
2009
731
955,119
66,155
32.6
99,494
71.7
2010
775
996,327
71,015
36.0
71,344
52.9
2011
823
1,072,014
66,781
34.1
78,818
57.7
2012
860
1,197,129
72,363
39.8
91,542
70.4
2013
886
1,280,929
76,943
44.8
65,349
51.8
2014
927
1,409,333
79,362
47.0
92,850
74.1
2015
951
1,513,923
77,798
47.0
109,778
89.8
2016
926
1,595,197
80,610
48.3
90,485
76.7
2017
895
1,660,750
102,830
69.2
107,936
97.0
2018
883
1,693,818
107,249
79.2
93,357
88.4
2019
879
1,818,793
102,459
75.5
96,998
92.0
2020
6
872
1,262,048
(44,687)
(35.5)
(58,852)
(54.2)
2021
861
772,555
(154,676)
(119.2)
(83,284)
(67.8)
2022
3
852
1,740,477
(30,448)
(19.6)
21,922
17.3
Notes
Adjustments to statutory numbers
1. Where appropriate, the earnings/losses per share (EPS), as disclosed in the
statutory accounts, have 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 for all
years prior to 2022.
4. Before 2005, the accounts were prepared under UKGAAP.
All accounts from 2005 to date have been prepared under IFRS.
5. Apart from the items in notes 1–4, all numbers are as reported in
each year’s published accounts.
6. From financial year 2020 data is based on post-IFRS 16 numbers following
the transition from IAS17 to IFRS 16.
7. Free cash flow is defined in the APM section within accounting policies on
page 48. The calculation of free cash flow can be found on the cash flow
statement.
2
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CHAIRMAN’S STATEMENT
Background
To coin a Shakespeare phrase, “the multiplying
villainies of nature do swarm upon” the hospitality
industry, following the lockdowns and restrictions of
the pandemic - and surprisingly perhaps, the
aftermath has been just as difficult for many
companies.
Most commentators, including most publicans,
understandably predicted a post-lockdown boom, in
which the public would react to enforced cabin fever
by embarking on a celebratory spree, but the reality
has, in contrast, been a painstakingly slow recovery
in sales, for some but not all, accompanied by great
inflation in costs.
A possible reason for the much slower-than-
anticipated recovery has been an underestimation
of the power of habit in determining human
behaviour.
During lockdown, dyed-in-the-wool pub-goers, many
for the first time, filled their fridges with supermarket
beer - and it has proved to be a momentous
challenge to persuade them to return to the more
salubrious environment of the saloon bar.
Even so, Wetherspoon’s trading performance in
FY22 improved versus the annus horribilis of FY21,
but was still markedly adverse to pre-pandemic
FY19.
Although like-for-like sales decreased by 4.7%
compared to FY19, sales trends improved in the
financial year. In the first half, like-for-like sales were
-7.4%; in the third quarter they were -4.0% and in
the fourth quarter they were -0.6%.
Like-for-like sales have improved in the first 9 weeks
of the current financial year (FY23) and are 10.1%
ahead of the first 9 weeks of FY22.
In addition to the slowly improving sales trend, there
was a significant turnaround of £105 million in free
cashflow, which improved to an inflow of £21.9
million in FY22 compared to an outflow of £83.3
million in FY21.
Perhaps surprisingly, the Wetherspoon balance
sheet is also stronger than before the pandemic, at
the expense of some dilution to pre-pandemic
shareholders.
Debt levels, combined with trade creditors
(excluding notional IFRS 16 lease debt), have
increased by £53 million since January 2020, just
before the first lockdown, substantially less than a
total of £158.3 million invested in freehold
“reversions” and new pubs during the period.
Since January 2020, £70.5 million has been spent
on freehold reversions (where Wetherspoon was
previously the tenant) and £87.8 million on new
pubs.
Two equity issues during the pandemic were, of
course, key factors in this strengthening of the
balance sheet.
On an IFRS 16 basis, which includes notional debt
from leases, debt decreased from £1.45 billion to
£1.29 billion between January 2020 and the end of
FY22.
In this context, Wetherspoon has, as reported
below, fixed £770 million of its debt until November
2031, at an average of 1.24%, excluding the banks’
margin, a significant benefit at a time of rising
interest rates.
Fortunately, the company was able to extend these
swaps by 32 months in the first half of FY22 - before
sharply rising inflation and interest rates were
anticipated by the market.
The mark-to-market value of these swaps was
£182.7 million, as of 2 October 2022.
Trading Summary
In the summary below we have compared sales and
profits with FY19, but cash flow, debt and other
areas are compared with FY21. To try to avoid
confusion, we also provide a table, below, showing
some key indicators referred to in this section of the
annual report, for the last four financial years.
Total sales for FY22 were £1,740.5 million, a
decrease of 4.3%, compared to the pre-pandemic
52 weeks ended 28 July 2019.
Like-for-like sales, as indicated above, compared to
FY19, decreased by 4.7%. Like-for-like bar sales
decreased by 6.5% and food sales by 3.2%.
Slot/fruit machine sales increased by 12.3% and
hotel room sales increased by 6.5%.
The operating profit, before exceptional items, was
£25.7 million (2019: £131.9 million). The operating
margin, before exceptional items, was 1.5% (2019:
7.3%).
The loss before tax and exceptional items was
£30.4 million (2019: £102.5 million profit). This
included property gains of £2.1 million (2019: £5.6
million).
The company sold, closed, or terminated the leases
of 15 pubs, giving rise to a cash inflow of £5.9
million.
Losses per share, including shares held in trust by
the employee share scheme, before exceptional
items, were 19.6p (2019: earnings per share of
75.5p).
Total capital investment was £127.3 million (2021:
£62.7 million). £58.8 million was invested in new
pubs and pub extensions (2021: £24.1 million),
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
3
CHAIRMAN’S STATEMENT
£42.8 million in existing pubs and IT (2021: £20.0
million) and £25.8 million in freehold reversions of
properties where Wetherspoon was the tenant
(2021: £16.9 million).
The company continued to increase investment
levels, on the basis that the adverse effects of
Covid-19 would eventually diminish.
IFRS 16 ‘Leases’ replaced IAS 17 ‘Leases’ for
accounting periods beginning on or after 1 January
2019. IFRS 16 was adopted by the Company on 29
July 2019 using the ‘modified retrospective
approach’.
Sales, profits and cash flow FY19 to FY22
Exceptional items
There was a pre-tax exceptional gain of £56.7
million (2021: £27.5 million loss).
£52.9 million of the gain related to the fair value
movement of interest rate swaps, which the
company has in place for approximately the next 9
years, as reported above, at an average rate of
1.24%, excluding the banks’ margin. In addition,
there was a gain of £27.8 million in relation to an
HMRC claim, regarding the historic VAT treatment
of slot/fruit machines. There was also a gain of £1.4
million in respect of government support grants,
associated with the pandemic. Finally, there was a
£24.4 million property impairment charge, in respect
of pubs which were deemed unlikely to generate
sufficient cash flows, in the future, to support their
carrying value.
Free Cash Flow
There was a free cash inflow of £21.9 million (2021:
£83.3 million outflow), after capital payments of
£45.9 million for existing pubs (2021: £22.3 million),
£12.8 million for share purchases for employees
(2021: £7.7 million) and payments of tax and
interest. Free cash inflow per share was 17.3p
(2021: 67.8p outflow).
Dividends and return of capital
The board has not recommended the payment of a
final dividend (2021: £0). There have been no share
buybacks in the financial year to date (2021: £0).
Financing
As at 31 July 2022, the company’s total net debt,
excluding derivatives and lease liabilities, was
£891.6 million (2021: £845.5 million), an increase of
£46.1 million.
The company has an agreement in place with its
lenders which waives debt covenants until October
2023 and replaces them with a minimum liquidity
requirement of £100 million in the first half of FY23,
followed by relaxed leverage covenants in the
second half of the year.
There has been no change in the total available
finance facilities of £1,083.0 million during the
period.
During the year, as reported above, the company
has extended the period of its interest rate swaps, in
respect of £770 million, from March 2029 to
November 2031. The swap rate currently being
paid, excluding the banks’ margin, is 1.61%. The
total cost of the company’s debt, in the year under
review, including the banks’ margin was 4.46%. The
cost of the swaps is illustrated in the table below:
Property
The company opened seven pubs during the year
and sold, closed or terminated the leases of 15
pubs. The company had a trading estate of 852
pubs at the financial year end.
The company is currently marketing 32 pubs, most
of which are within a close radius of other pubs we
own. The strategy of opening larger pubs, at a
considerable distance from each other, reflects a
long-term strategy, rather than a reaction to trading
difficulties in the Covid era, as some commentators
have incorrectly said.
FY22
FY21
FY20
FY19
Total sales
excluding
VAT (£m)
1,740.5
772.6
1,262.0
1,818.8
Like-for-like
sales vs
prior year
29.9%
-38.4%
-29.5%
6.8%
Operating
profit/(loss)
before
exceptional
items (£m)
25.7
-100.4
17.0
131.9
Profit/(loss)
before tax
and
exceptional
items (£m)
-30.4
-167.2
-44.7
102.5
Free cash
flow (£m)
21.9
-83.3
-58.9
97.0
Swap
Value
Start Date
End Date
Weighted
Average %
£770m
30-Jul-21
30-Jul-23
1.61%
£770m
31-Jul-23
30-Jul-26
1.10%
£770m
31-Jul-26
30-Jun-28
1.33%
£770m
01-Jul-28
29-Mar-29
1.32%
£770m
31-Mar-29
30-Nov-31
1.02%
4
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CHAIRMAN’S STATEMENT
The full-year depreciation charge, excluding
depreciation of “right-of-use” assets (a new charge
to the profit and loss account, post-IFRS 16) was
£74.6 million (2021: £76.4 million).
The company has increased the percentage of
freehold pubs it owns in the last 11 years.
As at 24 July 2011, the company’s freehold/
leasehold ratio was 43.4%/56.6%. As at 31 July
2022, as a result of investment in freehold
reversions and freehold pub openings, the ratio was
68.8%/31.2%.
As at 31 July 2022, the net book value of the
property, plant and equipment of the company was
£1.4 billion, including £1.1 billion of freehold and
long-leasehold property.
The properties have not been revalued since 1999.
Taxation
The current corporation tax charge for the year is
£7.0 million (2021: £17.6 million credit). The
‘accounting’ tax credit, which appears in the income
statement, is £5.6 million (2021: £20.7 million
credit).
The accounting tax credit comprises two parts: the
actual current tax credit (the ‘cash’ tax) and the
deferred tax credit (the ‘accounting’ tax). The tax
losses arising in the financial year will be carried
forward for use against profits in future years,
meaning that the cash tax benefit will be received in
future years. Therefore, a ‘deferred tax’ benefit is
created which will reverse in future years when the
cash tax benefit of the losses is realised.
The company is seeking a refund of historic excise
duty from HMRC, totalling £524k, in relation to
goods sent to the Republic of Ireland, when
Wetherspoon pubs first opened in that country. The
company has been charged excise duty on the
same goods twice, as they were purchased in the
UK, and excise duty was paid in full. Irish excise
duty was then paid in addition.
Owing to a paperwork error, in the early days of our
business in the Republic, which the company has
sought to rectify, it has, to date, been unable to
reclaim this duty, even though it is transparently
clear that the duty has been paid.
Scotland Business Rates
Business rates are supposed to be based on the
value of the building, rather than the level of trade of
the tenant. This should mean that the rateable value
per square foot is approximately the same for
comparable pubs in similar locations. However, as a
result of the valuation approach adopted by the
government “Assessor” in Scotland, Wetherspoon
often pays far higher rates per square foot than its
competitors.
This is highlighted (in the tables below) by
assessments for the Omni Centre, a modern leisure
complex in central Edinburgh, where Wetherspoon
has been assessed at more than double the rate per
square foot of the average of its competitors, and for
The Centre in Livingston (West Lothian), a modern
shopping centre, where a similar anomaly applies.
As a result of applying valuation practice from
another era, which assumed that pubs charged
approximately the same prices, the raison d’être of
the rating system - that rates are based on property
values, not the tenants trade- has been undermined.
Similar issues are evident in Galashiels, Arbroath,
Wick, Anniesland - and indeed most Wetherspoon
pubs in Scotland. In effect, the application of the
rating system in Scotland discriminates against
businesses like Wetherspoon, which have lower
prices, and encourages businesses to charge higher
prices. As a result, consumers are likely to pay
higher prices, which cannot be the intent of rating
legislation.
Omni Centre, Edinburgh
Occupier Name
Rateable
Value (RV)
Customer
Area (ft²)
Rates per
square
foot
Playfair (JDW)
£218,750
2,756
£79.37
Unit 9 (vacant)
£48,900
1,053
£46.44
Unit 7 (vacant)
£81,800
2,283
£35.83
Frankie & Benny's
£119,500
2,731
£43.76
Nando's
£122,750
2,804
£43.78
Slug & Lettuce
£108,750
3,197
£34.02
The Filling Station
£147,750
3,375
£43.78
Tony Macaroni
£125,000
3,427
£36.48
Unit 6 (vacant)
£141,750
3,956
£35.83
Cosmo
£200,000
7,395
£27.05
Average (exc JDW)
£121,800
3,358
£38.55
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
5
CHAIRMAN’S STATEMENT
The Centre, Livingston
Occupier Name
Rateable
Value (RV)
Customer
Area (ft²)
Rates per
square
foot
The Newyearfield
(JDW)
£165,750
4,090
£40.53
Paraffin Lamp
£52,200
2,077
£25.13
Wagamana
£67,600
2,096
£32.25
Nando’s
£80,700
2,196
£36.75
Chiquito
£68,500
2,221
£30.84
Ask Italian
£69,600
2,254
£30.88
Pizza Express
£68,100
2,325
£29.29
Prezzo
£70,600
2,413
£29.26
Harvester
£98,600
3,171
£31.09
Pizza Hut
£111,000
3,796
£29.24
Hot Flame
£136,500
4,661
£29.29
Average (exc JDW)
£82,340
2,721
£30.40
VAT equality
As we have previously stated, the government
would generate more revenue and jobs 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%. This
has enabled supermarkets to subsidise the price of
alcoholic drinks, widening the price gap, to the
detriment of pubs and restaurants. Pubs also pay
around 20 pence a pint in business rates, whereas
supermarkets pay only about 2 pence, creating
further inequality.
Pubs have lost 50% of their beer sales to
supermarkets in the last 35 or so years. It makes no
sense for supermarkets to be treated more leniently
than pubs, since pubs generate far more jobs per
pint or meal than do supermarkets, as well as far
higher levels of tax. Pubs also make an important
contribution to the social life of many communities
and have better visibility and control of those who
consume alcoholic drinks.
Tax equality is particularly important for residents of
less affluent areas, since the tax differential is more
important there – people can less afford to pay the
difference in prices between the on and off trade.
As a result, in these less affluent areas, there are
often fewer pubs, coffee shops and restaurants, with
less employment and increased high-street
derelication. Tax equality would also be in line with
the principle of fairness – the same taxes should
apply to businesses which sell the same products.
6
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CHAIRMAN’S STATEMENT
How pubs contribute to the economy
Wetherspoon and other pub and restaurant
companies have always generated far more in taxes
than are earned in profits. Wetherspoon, it’s
customers and staff, generated total taxes in FY19,
before the pandemic, of £763.6 million. This
equated to one pound in every thousand of UK
government revenue.
In the financial year ended 31 July 2022, the
company generated taxes of £662.7 million.
The table below shows the £5.8 billion of tax
revenue generated by the company, its staff and
customers in the last 10 years. Each pub, on
average, generated £6.5 million in tax during that
period. The tax generated by the company, during
this 10-year period, equates to approximately 20
times the company’s profits after tax.
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
TOTAL
2013 to
2022
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
VAT
287.7
93.8
244.3
357.9
332.8
323.4
311.7
294.4
275.1
253.0
2,774.1
Alcohol duty
156.6
70.6
124.2
174.4
175.9
167.2
164.4
161.4
157.0
144.4
1,496.1
PAYE and NIC
141.9
101.5
106.6
121.4
109.2
96.2
95.1
84.8
78.4
70.2
1,005.3
Business rates
50.3
1.5
39.5
57.3
55.6
53.0
50.2
48.7
44.9
46.4
447.4
Corporation tax
1.5
-
21.5
19.9
26.1
20.7
19.9
15.3
18.4
18.4
161.7
Corporation tax
credit (historic
capital
allowances)
-
-
-
-
-
-
-
-2.0
-
-
-2.0
Fruit/slot
Machine duty
12.8
4.3
9.0
11.6
10.5
10.5
11
11.2
11.3
7.2
99.4
Climate change
levies
9.7
7.9
10.0
9.6
9.2
9.7
8.7
6.4
6.3
4.3
81.8
Stamp duty
2.7
1.8
4.9
3.7
1.2
5.1
2.6
1.8
2.1
1.0
26.9
Sugar tax
2.9
1.3
2.0
2.9
0.8
-
-
-
-
-
9.9
Fuel duty
1.9
1.1
1.7
2.2
2.1
2.1
2.1
2.9
2.1
2.0
20.2
Carbon tax
-
-
-
1.9
3.0
3.4
3.6
3.7
2.7
2.6
20.9
Premise licence
and TV licences
0.5
0.5
1.1
0.8
0.7
0.8
0.8
1.6
0.7
0.7
8.2
Landfill tax
-
-
-
-
1.7
2.5
2.2
2.2
1.5
1.3
11.4
Employee
support grants
-4.4
-213.0
-124.1
-
-
-
-
-
-
-
-341.5
Eat out to help
out
-
-23.2
-
-
-
-
-
-
-
-
-23.2
Local
Government
Grants
-1.4
-11.1
-
-
-
-
-
-
-
-
-12.5
TOTAL TAX
662.7
37.0
440.7
763.6
728.8
694.6
672.3
632.4
600.5
551.5
5,784.1
TAX PER PUB
0.78
0.04
0.53
0.87
0.83
0.77
0.71
0.67
0.66
0.63
6.49
TAX AS % OF
NET SALES
38.1%
4.8%
34.9%
42.0%
43.0%
41.8%
42.1%
41.8%
42.6%
43.1%
37.4%
LOSS/PROFIT
AFTER TAX
-24.9
-146.5
-38.5
79.6
83.6
76.9
56.9
57.5
58.9
65.2
268.7
Note – this table is prepared on a cash basis.
IFRS 16 was implemented in the year ending 26 July 2020 (FY20). From this period all profit numbers in the above table are on
a Post-IFRS 16 basis. Prior to this date all profit numbers are on a Pre-IFRS 16 basis.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
7
CHAIRMAN’S STATEMENT
Corporate Governance
Wetherspoon has been a strong critic of the
composition of the boards of UK-quoted companies.
As a result of the “nine-year rule”, limiting the tenure
of NEDs and the presumption in favour of
“independent”, part-time chairmen, boards are often
composed of short-term directors, with very little
representation from those who understand the
company best - people who work for it full-time, or
have worked for it full-time.
Wetherspoon’s review of the boards of major banks
and pub companies, which teetered on the edge of
failure in the 2008-2010 recession, highlighted the
short “tenure”, on average, of directors.
In contrast, Wetherspoon noted the relative
success, during this fraught financial period, of pub
companies Fuller’s and Young’s, the boards of
which were dominated by experienced executives,
or former executives.
As a result, Wetherspoon has increased the level of
experience on the Wetherspoon board by
appointing four “worker directors”.
All four worker directors started on the “shop floor”
and eventually became successful pub managers.
Three have been promoted to regional management
roles. They have worked for the company for an
average of 24 years.
Board composition cannot guarantee future
success, but it makes sensible decisions, based on
experience at the coalface of the business, more
likely.
The UK Corporate Governance Code 2018 (the
“Code”) is a vast improvement on previous codes,
emphasising the importance of employees,
customers and other stakeholders in commercial
success. It also emphasises the importance of its
‘comply or explain’ ethos, and the consequent need
for shareholders to engage with companies in order
to understand their explanations.
A major impediment to the effective implementation
of comply or explain seems to be the undermanning
of the corporate governance departments of major
shareholders.
For example, Wetherspoon has met a compliance
officer from one major institution who is responsible
for around 400 companies - an impossible task,
since the written regulatory output of each company
is vast, coupled with the practical impossibility of
meeting with so many companies in any meaningful
way.
As a result, it appears that compliance officers and
governance advisors, in practice, often rely on a
“tick-box” approach, which is, itself, in breach of the
Code.
A further issue is that many major investors, in their
own companies, for sensible reasons, do not
observe the nine-year rule, and other rules,
themselves. An approach of “do what I say, not
what I do” is clearly unsustainable.
Further progress
As always, the company has tried to improve as
many areas of the business as possible, on a week-
to-week basis, rather than aiming for ‘big ideas’ or
grand strategies.
Frequent calls on pubs by senior executives, the
encouragement of criticism from pub staff and
customers and the involvement of pub and area
managers, among others, in weekly decisions, are
the keys to success.
Wetherspoon paid £30.1 million in respect of
bonuses and free shares to employees in the period
ended 31 July 2022, of which 98.8% was paid to
staff below board level and 91.5% was paid to staff
working in our pubs.
Wetherspoon has been the biggest corporate
sponsor of ‘Young Lives vs Cancer’ (previously CLIC
Sargent), having raised a total of £20.6 million since
2002. During the pandemic, our contributions had
been reduced, but since the reopening of our pubs
there have been great efforts seen and our
contributions have bounced back significantly.
Bonuses and Free Shares
As indicated above, Wetherspoon has, for many
years (see table below), operated a bonus and
share scheme for all employees. Before the
pandemic, these awards increased, as earnings
increased for shareholders.
8
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CHAIRMAN’S STATEMENT
Financial
year
Bonus
and free
shares
(Loss)/Profit
after tax
1
Bonus and
free shares
as % of
profits
£m
£m
2007
19
47
41%
2008
16
36
45%
2009
21
45
45%
2010
23
51
44%
2011
23
52
43%
2012
24
57
42%
2013
29
65
44%
2014
29
59
50%
2015
31
57
53%
2016
33
57
58%
2017
44
77
57%
2018
43
84
51%
2019
46
80
58%
2020
33
(39)
-
2021
23
(146)
-
2022
30
(25)
-
Total
467
557
49.7%
2
1
(IFRS 16 was implemented in the year ending 26 July 2020 (FY20). From this
period all profit numbers in the above table are on a Post-IFRS 16 basis. Prior
to this date all profit numbers are on a Pre-IFRS 16 basis.
2
Excludes 2020, 2021 and 2022.
Length of Service
The attraction and retention of talented pub and
kitchen managers is important for any hospitality
business. As the table below demonstrates, the
retention of managers has improved, even during the
pandemic.
Financial
year
Average pub
manager length
of service
Average kitchen
manager length of
service
(Years)
(Years)
2013
9.1
6.0
2014
10.0
6.1
2015
10.1
6.1
2016
11.0
7.1
2017
11.1
8.0
2018
12.0
8.1
2019
12.2
8.1
2020
12.9
9.1
2021
13.6
9.6
2022
13.9
10.4
Food Hygiene Ratings
Wetherspoon has always emphasised the
importance of hygiene standards.
We now have 775 pubs rated on the Food
Standards Agency’s website (see table below). The
average score is 4.98, with 98.6% of the pubs
achieving a top rating of five stars. We believe this
to be the highest average rating for any substantial
pub company.
In the separate Scottish scheme, which records
either a ‘pass’ or a ‘fail’, all of our 60 pubs have
passed.
Financial
Year
Total Pubs
Scored
Average
Rating
Pubs with
highest
Rating %
2013
771
4.85
87.0
2014
824
4.91
92.0
2015
858
4.93
94.1
2016
836
4.89
91.7
2017
818
4.89
91.8
2018
807
4.97
97.3
2019
799
4.97
97.4
2020
781
4.96
97.0
2021
787
4.97
98.4
2022
775
4.98
98.6
Property litigation
As previously reported, Wetherspoon agreed on an
out-of-court settlement with developer Anthony
Lyons, formerly of property leisure agent Davis
Coffer Lyons, in 2013 and 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
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
9
CHAIRMAN’S STATEMENT
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.
Press corrections
The press and media have generally been fair and
accurate in reporting on Wetherspoon over the
decades. However, in the febrile atmosphere of the
first lockdown, something went awry and a number
of harmful inaccuracies were published.
In order to try and set the record straight, a special
edition of Wetherspoon News was published, which
includes details of the resulting apologies and
corrections, which can be found on the Company’s
website
(https://www.jdwetherspoon.com/~/media/files/pdf-
documents/wetherspoon-news/does-truth-
matter_.pdf ).
Board changes
Su Cacioppo is retiring from the Wetherspoon board
today, 7th October 2022, after 31 years with the
company. Su started as a pub manager in 1991,
then became an area manager, before eventually
becoming the board director responsible for the
personnel, legal and marketing departments in
2008.
Sir Richard Beckett KC is also retiring from the
board at this year’s AGM, after 13 years as a non-
executive director of the company, latterly as head
of the nominations committee.
I would like to thank sincerely Su and Richard for
their dedicated, creative and conscientious work
over many years.
Pubwatch
Pubwatch is a forum where pubs in a town or city
can meet together regularly, often with a police
licensing officer, responsible for pubs in the area.
Local authorities sometimes attend and issues
around maintaining good behaviour in pubs and in
the town or city generally are debated.
A wide range of initiatives is promoted, including
drink spiking awareness, town centre radio links,
vulnerability training and refusal of entry to all pubs
in the area for customers who misbehave.
Pubwatch has improved wider town and city
environments, by bringing together pubs, local
authorities and the police, in a concerted way, to
encourage good behaviour and to reduce anti-social
activity.
Wetherspoon has been a long-standing supporter of
local Pubwatch schemes and has helped to
organise 16 new schemes in the last year.
Wetherspoon pubs are members of over 600
schemes country wide. The company also helps to
fund National Pubwatch, founded by just 2 licensees
and a police officer in 1997, which is the umbrella
organisation that helps set up, coordinate and
support local schemes.
It is our experience that in some towns and cities,
where the authorities have struggled to control anti-
social behaviour, the setting up of a Pubwatch has
been instrumental in improving safety and security -
not only of licensed premises, but also of the town
and city in general, as well as assisting the police in
bringing down crime.
Conversely, we have found that in a number of
towns, including some towns on the outskirts of
London, that the absence of an effective Pubwatch
scheme results in higher incidents of crime, disorder
and anti-social behaviour.
In our view, Pubwatch is integral to making towns
and cities a safe environment for everyone.
Therefore, licensees, the police and local authorities
throughout the land should give Pubwatch their full
support.
Current trading and outlook
As reported above, in the first 9 weeks of the current
financial year, to 2 October 2022, like-for-like sales
increased by 10.1%, compared to the 9 weeks to 3
October 2021.
As we have also outlined above, the company has
improved its prospects in a number of ways in
recent financial years - we own an increasing
percentage of freehold properties; the balance sheet
has been strengthened; interest rates have been
fixed at low levels until 2031; we have a large
contingent of long-serving pub staff and underlying
sales are improving.
However, as a result of the previously reported
increases in labour and repair costs and the
potentially adverse effects of rises in interest rates
and energy costs on the economy, firm predictions
are hard to make.
Perhaps the biggest threat to the hospitality industry
is the possibility of further lockdowns and
restrictions.
Those interested in the UK government response to
the pandemic may like to read the reports by
10
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CHAIRMAN’S STATEMENT
Professor Francois Balloux, director of the UCL
Genetics Institute, in the Guardian, and by
Professor Robert Dingwall, of Trent University, in
the Telegraph (see pages 54 to 56 of Wetherspoon
News
https://www.jdwetherspoon.com/~/media/files/pdf-
documents/wetherspoon-news/wetherspoon-news-
autumn-2022.pdf ).
The conclusion of Professor Balloux, broadly
echoed by Professor Dingwall, based on an analysis
by the World Health Organisation of the pandemic,
is that Sweden (which did not lock down), had a
Covid-19 fatality rate “of about half the UK’s” and
that “the worst performer, by some margin, is Peru,
despite enforcing the harshest, longest lockdown.”
Professor Balloux concludes that “the strength of
mitigation measures does not seem to be a
particularly strong indicator of excess deaths.”
Indeed, as some commentators have noted,
lockdowns were not contemplated in the UK’s
laboriously compiled pre-pandemic plans. It appears
that these plans were jettisoned, early on in the
pandemic, in favour of copying China’s lockdown
approach - an example, perhaps, of Warren
Buffett’s so-called “institutional imperative” -
“everyone else has locked down, so we will, too”.
The other major threat to the hospitality industry, as
reported above, is the huge and unjustifiable tax
advantage that supermarkets enjoy. The hospitality
industry pays far higher levels of VAT and business
rates than supermarkets. This competitive
disadvantage has had an increasingly debilitating
impact on the hospitality industry and will
undoubtedly result in long-term financial weakness
vis a vis supermarkets - which will also be harmful to
employees, the Treasury and the overall economy.
These caveats aside, in the absence of further
lockdowns or restrictions, the company is cautiously
optimistic, for the reasons we have outlined, about
future prospects.
Tim Martin
Chairman
6 October 2022
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
11
INCOME STATEMENT for the 53 weeks ended 31 July 2022
J D Wetherspoon plc, company
number: 1709784
53 weeks
53 weeks
53 weeks
52 weeks
Restated
1
52 weeks
Restated
1
52 weeks
ended
ended
ended
ended
ended
ended
31 July
31 July
31 July
25 July
25 July
25 July
Notes
2022
2022
2022
2021
2021
2021
Before
Exceptional
After
Before
Exceptional
After
exceptional
items
exceptional
exceptional
items
exceptional
items
(note 4)
items
items
(note 4)
items
£000
£000
£000
£000
£000
£000
Revenue
1
1,740,477
-
772,555
-
Other operating income
-
29,384
-
15,541
Operating costs
(1,714,757)
-
(1,714,757 )
(872,913)
(24,482)
(897,395 )
Operating profit/(loss)
2
25,720
29,384
(100,358)
(8,941)
(109,299 )
Property gains/(losses)
3
2,142
(24,526)
(22,384 )
(123)
(5,839)
(5,962 )
Finance income
6
531
51,859
595
-
Finance costs
6
(58,841)
-
(58,841 )
(67,280)
(12,690)
(79,970 )
(Loss)/profit before tax
(30,448)
56,717
(167,166)
(27,470)
(194,636 )
Income tax
1
7
5,560
(12,562)
(7,002 )
20,695
(3,065)
(Loss)/profit for the period
1
(24,888)
44,155
(146,471)
(30,535)
(177,006 )
(Loss)/earnings per ordinary share
(p)
- Basic
1
8
(19.6)
34.8
(119.2)
(24.9)
(144.1 )
- Diluted
1
8
(19.6)
34.8
(119.2)
(24.9)
(144.1 )
1
Restated 25 July 2021. See Accounting policies page 48
Notes
53 weeks
Restated
1
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Items which will be reclassified subsequently to profit or loss:
Interest-rate swaps: gain taken to other comprehensive income
22
Interest-rate swaps: (loss)/gain reclassification to the income statement
22
(4,332 )
Tax on items taken directly to other comprehensive income
1
7
(11,051 )
(9,133 )
Currency translation losses
(1,474 )
(3,510 )
Net gain recognised directly in other comprehensive income
1
Profit/(loss) for the period
1
(177,006 )
Total comprehensive profit/(loss) for the period
(133,391 )
1
Restated 25 July 2021. See Accounting policies page 48
STATEMENT OF COMPREHENSIVE INCOME for the 53 weeks ended 31 July 2022
12
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CASH FLOW STATEMENT for the 53 weeks ended 31 July 2022
J D Wetherspoon plc, company number: 1709784
Notes
1
Free cash
Free cash
flow
flow
53 weeks
53 weeks
52 weeks
52 weeks
ended
ended
ended
ended
31 July
31 July
25 July
25 July
2022
2022
2021
2021
£000
£000
£000
£000
Cash flows from operating activities
Cash generated from operations
9
178,510
25,208
Interest received
97
187
Interest paid
(41,044 )
(41,044)
(48,428 )
(48,428)
Corporation tax (paid)/received
(715 )
(715)
7,673
Lease interest
(17,501 )
(17,501)
(19,942 )
(19,942)
Net cash flow from operating activities
119,347
(35,302 )
(35,302)
Cash flows from investing activities
Reinvestment in pubs
(42,777 )
(42,777)
(19,692 )
(19,692)
Reinvestment in business and IT projects
(3,113 )
(3,113)
(2,620 )
(2,620)
Investment in new pubs and pub extensions
(51,083 )
–
(21,131 )
–
Purchase of freeholds
(25,773 )
–
(16,858 )
–
Proceeds of sale of property, plant and equipment
–
–
Net cash flow from investing activities
(112,199 )
(45,890)
(57,726 )
(22,312)
Cash flows from financing activities
Purchase of own shares for share-based payments
(12,808 )
(12,808)
(7,684 )
(7,684)
Loan issue cost
10
(192 )
(192)
(434 )
(434)
Advances/(repayments) under bank loans
10
–
(195,000 )
–
Advances under CLBILS
10
–
–
Other loan receivables
10
(3,542 )
–
–
Lease principal payments
23
(38,535 )
(38,535)
(17,552 )
(17,552)
Issue of share capital
27
–
–
Asset-financing principal payments
10
(7,132 )
–
(6,901 )
–
Net cash flow from financing activities
(12,209 )
(51,535)
(36,015 )
(25,670)
Net change in cash and cash equivalents
10
(5,061 )
(129,043 )
Opening cash and cash equivalents
18
Closing cash and cash equivalents
18
Free cash flow
21,922
(83,284)
1
Free cash flow is a measure not required by accounting standards; a definition is provided in the accounting policies.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
13
BALANCE SHEET as at 31 July 2022
J D Wetherspoon plc, company number: 1709784
Notes
31 July
Restated
1
25 July
2022
2021
£000
£000
Assets
Non-current assets
Property, plant and equipment
13
Intangible assets
12
Investment property
14
Right-of-use assets
23
Other loan receivable
16
Derivative financial instruments
22
Lease assets
23
Total non-current assets
Current assets
Lease assets
23
Assets held for sale
17
Inventories
15
Receivables
16
Current income tax receivables
Cash and cash equivalents
18
Total current assets
Total assets
Current liabilities
Borrowings
20
(5,137 )
(7,610 )
Trade and other payables
19
(282,481 )
(259,791 )
Provisions
21
(2,661 )
(3,004 )
Lease liabilities
23
(48,471 )
(65,219 )
Total current liabilities
(338,750 )
(335,624 )
Non-current liabilities
Borrowings
20
(930,404 )
(883,272 )
Derivative financial instruments
22
(2,031 )
(37,643 )
Deferred tax liabilities
7
(34,718 )
(16,546 )
Lease liabilities
23
(421,583 )
(458,596 )
Total non-current liabilities
(1,388,736 )
(1,396,057 )
Total liabilities
(1,727,486 )
(1,731,681 )
Net assets
Shareholders’ equity
Share capital
27
Share premium account
Capital redemption reserve
Other reserves
Hedging reserve
1
22
(19,452 )
Currency translation reserve
(144 )
Retained earnings
1
(74,373 )
(87,207 )
Total shareholders’ equity
1
Restated 25 July 2021. See Accounting policies page 48
The financial statements, on pages 11–42, approved by the board of directors and authorised for issue on 6 October 2022, are
signed on its behalf by:
John Hutson Ben Whitley
Director Director
14
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
STATEMENT OF CHANGES IN EQUITY
J D Wetherspoon plc, company
number: 1709784
Notes
Share
Share
premium
Capital
Other
Restated
1
Currency
Restated
1
Total
1
capital
account
redemption
Reserves
Hedging
translation
Retained
reserve
reserve
reserve
earnings
£000
£000
£000
£000
£000
£000
£000
£000
At 26 July 2020
(66,577 )
Total comprehensive income
(5,238 )
(175,278 )
(133,391 )
Loss for the period
1
(177,006 )
(177,006 )
Interest-rate swaps: cash flow
hedges
22
Interest-rate swaps: amount
reclassified to the income statement
22
Tax on items taken directly to
comprehensive income
1
7
(9,133 )
(9,133 )
Currency translation differences
(5,238 )
(3,510 )
Issued share capital (net of
expenses)
(2,221 )
Share-based payment charges
Tax on share-based payment
Purchase of own shares for share-
based payments
(7,684 )
(7,684 )
As at 25 July 2021 as previously
reported
(15,403 )
(91,256 )
Effect of restatment
1
(4,049 )
Restated
1
At 25 July 2021
(19,452 )
(87,207 )
Total comprehensive income
(1,995 )
Profit for the period
Interest-rate swaps: cash flow
hedges
22
Interest-rate swaps: amount
reclassified to the income statement
22
(4,332 )
(4,332 )
Tax on items taken directly to
comprehensive income
7
(11,051 )
(11,051 )
Currency translation differences
(1,995 )
(1,474 )
Share-based payment charges
Tax on share-based payment
(20 )
(20 )
Purchase of own shares for share-
based payments
(12,808 )
(12,808 )
At 31 July 2022
(144 )
(74,373 )
1
Restated 25 July 2021. See Accounting policies page 48
The currency translation reserve contains the accumulated currency gains and losses on the long-term financing and balance
sheet translation of the overseas branch. The currency translation difference reported in retained earnings is the retranslation of
the opening reserves in the overseas branch at the current period end’s currency exchange rate.
As at 31 July 2022, the company had distributable reserves of £173.7m (2021: £129.8m).
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
15
NOTES TO THE FINANCIAL STATEMENTS
1. Revenue
`
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Bar
1,024,677
440,119
Food
639,683
283,192
Eat out to help out scheme (note 24)
-
23,248
Slot/fruit machines
51,639
17,059
Hotel
22,848
8,592
Other
1,630
345
1,740,477
772,555
2. Operating profit/(loss) – analysis of costs by nature
This is stated after charging/(crediting):
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Variable concession rental payments (note 23)
8,799
2,801
Short-term leases (note 23)
10
784
Cancelled principal payments (note 23)
(4,726)
(10,933)
Repairs and maintenance
101,520
64,020
Net rent receivable
(2,001)
(1,873)
Share-based payments (note 5)
5,874
10,267
Depreciation of property, plant and equipment (note 13)
71,227
73,193
Amortisation of intangible assets (note 12)
3,240
3,151
Depreciation of investment properties (note 14)
87
44
Depreciation of right-of-use assets (note 23)
42,291
44,532
Analysis of continuing operations
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Revenue
1,740,477
772,555
Cost of sales
1
(1,640,202)
(844,574)
Gross profit/(loss)
100,275
(72,019)
Administration costs
(45,171)
(37,280)
Operating profit/(loss) after exceptional items
55,104
(109,299)
Auditor’s remuneration
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Fees payable for the audit of the financial statements
– Audit fees
415
303
– Additional audit work (for previous year audit)
85
100
Fees payable for other services:
– Audit related services (interim audit procedures)
55
33
Total auditor’s fees
555
436
1
Included in cost of sales is £599.8m (2021: £272.8m) relating to cost of inventory recognised as expense.
16
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
3. Property losses and gains
53 weeks
53 weeks
53 weeks
52 weeks
52 weeks
52 weeks
ended
ended
ended
ended
ended
ended
31 July
2022
31 July
2022
31 July
2022
25 July
2021
25 July
2021
25 July
2021
Before
Exceptional
After
Before
Exceptional
After
exceptional
items
exceptional
exceptional
items
exceptional
items
(note 4)
items
items
(note 4)
items
£000
£000
£000
£000
£000
£000
Disposals
Fixed assets
3,492
(16)
3,476
1,548
1,592
3,140
Leases
(7,368)
–
(7,368)
(2,200)
–
(2,200)
Additional costs of disposal
1,857
112
1,969
775
115
890
(2,019)
96
(1,923)
123
1,707
1,830
Impairments
Property, plant and equipment (note 13)
–
19,451
19,451
–
1,999
1,999
Investment properties (note 14)
–
1,015
1,015
–
–
–
Right-of-use assets (note 23)
–
3,964
3,964
–
2,133
2,133
–
24,430
24,430
–
4,132
4,132
Other
Other property gains
(123)
–
(123)
–
–
–
(123)
–
(123)
–
–
–
Total property losses/(gains)
(2,142)
24,526
22,384
123
5,839
5,962
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
17
NOTES TO THE FINANCIAL STATEMENTS
4. Exceptional items
53 weeks
Restated
1
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Exceptional operating items
Rank settlement
(27,771)
–
Local government support grants
(1,443)
(11,123)
Duty drawback
(170)
(4,418)
Exceptional operating income
(29,384)
(15,541)
Equipment
–
3,753
Stock losses
–
4,158
Staff costs
–
15,692
Other
–
879
Exceptional operating costs
–
24,482
Total exceptional operating (profit)/loss
(29,384)
8,941
Exceptional property losses
Disposal programme
Loss on disposal of pubs
96
1,707
96
1,707
Other property losses
Impairment of assets under construction
2,215
–
Impairment of property, plant and equipment
17,236
1,999
Impairment of investment properties
1,015
–
Impairment of right of use assets
3,964
2,133
24,430
4,132
Total exceptional property losses
24,526
5,839
Other exceptional items
Exceptional finance costs
1,000
12,690
Exceptional finance income
(52,859)
–
(51,859)
12,690
Exceptional tax
Exceptional tax Items
1
(2,102)
6,336
Tax effect on exceptional items
14,664
(3,271)
12,562
3,065
Total exceptional items
1
(44,155)
30,535
1
Restated 25 July 2021. See Accounting policies page 48
Rank Settlement
The company has recognised £27,771,000 from HMRC in relation to a long-standing claim, regarding the historic VAT treatment
of slot/fruit machines.
The cash received from HMRC was £17,202,000. An amount of £10,569,000 was withheld to settle tax liabilities.This cash was
received at the beginning of FY23.
Local government support grants
The company has recognised £1,443,000 (2021: £11,123,000) of local government support grants in the UK and the Republic of
Ireland, associated with the COVID-19 pandemic.
18
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
Duty drawback
A credit of £170,000 (2021: £4,418,000) for duty drawback was received for perished stock during the period in relation to the
COVID-19 lockdown in the UK.
Disposal programme
The company has offered several of its sites for sale. At the end of the period, one (2021: one) further site had been sold.
In the table on the previous page, the costs classified under the ‘exceptional property losses – disposal programme’ relate to the
loss on disposal of this sold site.
Other property losses
Property impairment relates to pubs which are deemed unlikely to generate sufficient cash flows in the future to support their
carrying value. In the year, a total impairment charge of £23,415,000 (2021: £4,132,000) was incurred in respect of the
impairment of assets as required under IAS 36. This included £3,420,000 reversal of impairments recognised in the year (2021:
£Nil).
In the year, a total impairment charge of £1,015,000 (2021: £Nil) was incurred in respect of the impairment of our investment
properties.
Exceptional finance costs
The exceptional finance costs of £1,000,000 relates to covenant-waiver fees.
Exceptional finance income
The company has recognised exceptional finance income of £52,859,000, which relates to the fair value movement on a
proportion of its interest rate swaps. £48,527,000 relates to swap transactions where hedge accounting does not apply resulting
in fair value movements being recognised through the profit or loss. £4,332,000 relates to hedge ineffectiveness. See page 37
for details.
Taxation
The exceptional tax credit of £2,102,000 relates to the impact of the change in UK tax rate on deferred tax balances.
The tax effect on exceptional items is a charge of £14,664,000 and primarly relates to; derivative contracts (£10,009,000
charge), and the reduction of deferred tax assets in respect of tax losses (£4,653,000 charge).
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
19
NOTES TO THE FINANCIAL STATEMENTS
5. Employee benefits expenses
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Wages and salaries
639,366
520,339
Employee support grants (note 24)
(4,473)
(208,986)
Social security costs
41,637
23,380
Other pension costs
9,657
7,877
Share-based payments
5,874
10,267
Redundancy and restructuring costs
–
6,179
692,061
359,056
Directors’ emoluments
2022
2021
£000
£000
Aggregate emoluments
1,984
1,709
Aggregate amount receivable under long-term incentive schemes
527
181
Company contributions to money purchase pension scheme
195
178
2,706
2,068
Employee support grants disclosed above are amounts claimed by the company under the coronavirus job retention schemes in
the UK and the Republic of Ireland.
For further details of directors’ emoluments including the highest paid director, please see the directors’ remuneration report on
pages 69–77.
2022
2021
Number
Number
Full-time equivalents
Head office
332
315
Pub managerial
4,648
4,271
Pub hourly paid staff
19,791
18,736
24,771
23,322
2022
2021
Number
Number
Total employees
Head office
342
326
Pub managerial
4,757
4,377
Pub hourly paid staff
37,028
34,322
42,127
39,025
The totals above relate to the monthly average number of employees during the year, not the total of employees at the end of
the year.
Share-based payments
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
Shares awarded during the year (shares)
2,048,275
852,261
Average price of shares awarded (pence)
909
957
Market value of shares vested during the year (£000)
7,122
9,169
Share awards not yet vested (£000)
11,275
14,608
20
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
5. Employee benefits expenses (continued)
For details of the share incentive plan and the deferred bonus scheme, refer to the directors’ remuneration report on pages 69–
77.
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 over their three-year life. The share-based payment charge above
represents the annual cost of bonuses awarded over the past three years. All awards are settled in equity.
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 which affect their ability to vest.
6. Finance income and costs
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Finance costs
Interest payable on bank loans and overdrafts
22,869
21,903
Amortisation of bank loan and private placement issue costs (note 10)
1,983
1,746
Interest payable on swaps
9,220
18,228
Interest payable on asset-financing
448
664
Interest payable on private placement
6,238
4,907
Finance costs excluding lease interest
40,758
47,448
Interest payable on leases
18,083
19,832
Total finance costs
58,841
67,280
Bank interest receivable
(103)
(188)
Lease interest receivable
(428)
(407)
Total finance income
(531)
(595)
Net finance costs before exceptionals
58,310
66,685
Exceptional finance costs (note 4)
1,000
12,690
Exceptional finance income (note 4)
(52,859)
-
Total exceptional finance (income)/costs
(51,859)
12,690
Net finance costs after exceptionals
6,451
79,375
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
21
NOTES TO THE FINANCIAL STATEMENTS
7. Income tax expense
(a) Tax on loss on ordinary activities
The standard rate of corporation tax in the UK is 19.0%. The company’s profits for the accounting period are taxed at a rate of
19.0% (2021: 19.0%).
53 weeks
53 weeks
53 weeks
52 weeks
Restated
1
52 weeks
Restated
1
52 weeks
ended
ended
ended
ended
ended
ended
31 July 2022
31 July 2022
31 July 2022
25 July 2021
25 July 2021
25 July 2021
Before
Exceptional
After
Before
Exceptional
After
exceptional
items
exceptional
exceptional
items
exceptional
items
(note 4)
items
items
(note 4)
items
£000
£000
£000
£000
£000
£000
Taken through income statement
Current income tax:
Current income tax charge
22
–
22
(380)
–
(380)
Previous period adjustment
–
2
2
–
1,836
1,836
Total current income tax
22
2
24
(380)
1,836
1,456
Deferred tax:
Origination and reversal of temporary differences
1
(4,529)
14,662
10,133
(19,158)
(2,546)
(21,704)
Prior year deferred tax credit
(1,053)
–
(1,053)
(1,157)
(2,561)
(3,718)
Impact of change in UK tax rate
–
(2,102)
(2,102)
–
6,336
6,336
Total deferred tax
1
(5,582)
12,560
6,978
(20,315)
1,229
(19,086)
Tax (credit)/charge
1
(5,560)
12,562
7,002
(20,695)
3,065
(17,630)
53 weeks
53 weeks
53 weeks
52 weeks
52 weeks
52 weeks
ended
ended
ended
ended
ended
ended
31 July 2022
31 July 2022
31 July 2022
25 July 2021
25 July 2021
25 July 2021
Before
Exceptional
After
Before
Exceptional
After
exceptional
items
exceptional
exceptional
items
Exceptional
items
(note 4)
items
items
(note 4)
Items
£000
£000
£000
£000
£000
£000
Taken through equity
Current tax
(2)
–
(2)
6
–
6
Deferred tax
22
–
22
(22)
–
(22)
Tax charge/(credit)
20
–
20
(16)
–
(16)
53 weeks
53 weeks
53 weeks
52 weeks
Restated
1
52 weeks
Restated
1
52 weeks
ended
ended
ended
ended
ended
ended
31 July 2022
31 July 2022
31 July 2022
25 July 2021
25 July 2021
25 July 2021
Before
Exceptional
After
Before
Exceptional
After
exceptional
items
exceptional
exceptional
items
exceptional
items
(note 4)
items
items
(note 4)
items
£000
£000
£000
£000
£000
£000
Taken through comprehensive income
Deferred tax charge on swaps
1
8,404
–
8,404
6,241
4,049
10,290
Impact of change in UK tax rate
2,647
–
2,647
(1,157)
–
(1,157)
Tax charge/(credit)
1
11,051
–
11,051
5,084
4,049
9,133
1
Restated 25 July 2021. See Accounting policies page 48
22
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
7. Income tax expense (continued)
(b) Reconciliation of the total tax charge
The taxation charge for the 53 weeks ended 31 July 2022 is based on the pre-exceptional loss before tax of £30.4m and the
estimated effective tax rate before exceptional items for the 53 weeks ended 31 July 2022 of 18.3% (Restated
1
2021: 14.8%).
This comprises a pre-exceptional current tax rate of 0.1% (Restated
1
2021: 0.2%) and a pre-exceptional deferred tax charge of
18.3% (Restated
1
2021: 14.6% charge).
The UK standard weighted average tax rate for the period is 19.0% (2021: 19.0%). The current tax rate is lower than the UK
standard weighted average tax rate, owing to tax losses in the period.
53 weeks
53 weeks
52 weeks
Restated
1
52 weeks
ended
ended
ended
ended
31 July 2022
31 July 2022
25 July 2021
25 July 2021
Before
After
Before
After
exceptional
exceptional
exceptional
exceptional
items
items
items
items
£000
£000
£000
£000
(Loss)/profit before income tax
(30,448)
26,269
(167,166)
(194,636)
(Loss)/profit multiplied by the UK standard rate of
(5,785)
4,991
(31,762)
(36,981)
corporation tax of 19.0% (2021: 19.0%)
Abortive acquisition costs and disposals
498
498
-
-
Expenditure not allowable
1,001
1,001
1,791
4,680
Fair value movement on SWAP disregarded for tax
–
34
-
-
Other allowable deductions
168
(9)
(19)
(19)
Non-qualifying depreciation
60
4,105
7,029
7,029
Capital gains - effect of reliefs
396
380
728
728
Share options and SIPs
(669)
(669)
955
955
Deferred tax on balance-sheet-only items
(162)
(162)
-
-
Effect of different tax rates and unrecognised losses in overseas
companies
(14)
(14)
1,740
1,524
Rate change adjustment
1
–
(2,102)
-
6,336
Previous year adjustment – current tax
–
2
-
1,836
Previous year adjustment – deferred tax
(1,053)
(1,053)
(1,157)
(3,718)
Total tax expense reported in the income statement
1
(5,560)
7,002
(20,695)
(17,630)
1
Restated 25 July 2021. See Accounting policies page 48
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
23
NOTES TO THE FINANCIAL STATEMENTS
7. Income tax expense (continued)
(c) Deferred tax
The deferred tax in the balance sheet is as follows:
The main rate of corporation tax is currently 19%, but this will increase to 25% from 1 April 2023. The rate increase has been
substantively enacted; therefore, the deferred tax balances have been recognised at the rate they are expected to reverse. It is
noted that the government intends to hold the main rate of corporation tax at 19% but this decision had not been substantively
enacted at the reporting date.
Deferred tax liabilities
Accelerated
tax
depreciation
Other
temporary
differences
Interest-rate
swaps
Total
£000
£000
£000
£000
At 25 July 2021
50,593
5,536
–
56,129
Previous year movement posted to the income statement
(908)
(146)
–
(1,054)
Movement during year posted to the income statement
837
(12)
–
825
Impact of tax rate change posted to the income statement
266
140
–
406
Reclassification from deferred tax asset to deferred tax
liability
–
–
14,834
14,834
At 31 July 2022
50,788
5,518
14,834
71,140
Deferred tax assets
Share based
payments
Tax losses and
interest
capacity
carried forward
Interest-rate
swaps
Total
£000
£000
£000
£000
At 25 July 2021
807
29,365
9,412
39,584
Movement during year posted to the income statement
(139)
875
(10,043)
(9,307)
Movement during year posted to comprehensive income
–
–
(8,384)
(8,384)
Movement during year posted to equity
(22)
–
–
(22)
Impact of change in tax rate posted to income statement
–
5,536
(3,172)
2,364
Impact of change in tax rate posted to comprehensive income
–
–
(2,647)
(2,647)
Reclassification from deferred tax asset to deferred tax liability
–
–
14,834
14,834
At 31 July 2022
646
35,776
-
36,422
The company has recognised deferred tax assets of £36.4m (2021: £39.6m), which are expected to be offset against future
profits. This includes a deferred tax asset of £35.8m (2021: £29.4m), in respect of UK tax losses and current-year interest
restrictions capable of reactivation in future periods. This is on the basis that forecasts have been prepared indicating that profits
will arise in the foreseeable future, enabling the assets to be utilised.
Deferred tax assets and liabilities have been offset as follows:
2022
2021
£000
£000
Deferred tax liabilities
71,140
56,129
Offset against deferred tax assets
(36,422)
(39,584)
Deferred tax liabilities
34,718
16,545
Deferred tax assets
36,422
39,584
Offset against deferred tax liabilities
(36,422)
(39,584)
Deferred tax asset
-
–
As at 31 July 2022, the company had a potential deferred tax asset of £10.9m (2021: £9.1m) relating to capital losses (gross tax
losses £35.0m (2021: £26.1m)) and tax losses in the Republic of Ireland (gross tax losses £18.4m (2021: £18.3m)). Both types
of losses do not expire and will be available to use in future periods indefinitely. A deferred tax asset has not been recognised,
as there is insufficient certainty of recovery.
24
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
8. Earnings and free cash flow per share
Weighted average number of shares
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) after tax for the period by the weighted average number
of ordinary shares in issue during the financial year of 128,750,155 (2021: 124,668,915) less the weighted average number of
shares held in trust during the financial year of 1,924,810 (2021: 1,841,667). Shares held in trust are shares purchased by the
company to satisfy employee share schemes that have not yet vested.
Diluted earnings/(loss) per share is calculated by dividing the profit/(loss) after tax for the period by the weighted average
number of ordinary shares in issue during the financial year adjusted for both shares held in trust and the effects of potentially
dilutive shares. For the company, the dilutive shares are those that relate to employee share schemes that have not been
purchased in advance and have not yet vested. For the year ended 31 July 2022 and 25 July 2021, the shares were anti-dilutive
due to the movements in the average share price against the exercise price of the share scheme. In the event of making a loss
during the year, the diluted loss per share is capped at the basic earnings per share as the impact of dilution cannot result in a
reduction in the loss per share.
Weighted average number of shares
53 weeks
52 weeks
ended
ended
31 July
25 July
2022
2021
Shares in issue
128,750,155
124,668,915
Shares held in trust
(1,924,810)
(1,841,667)
Shares in issue - Basic
126,825,345
122,827,248
Dilutive shares
-
-
Shares in issue - Diluted
126,825,345
122,827,248
Earnings / (loss) per share
53 weeks ended 31 July 2022
Profit/(loss)
Basic EPS
Diluted EPS
£000
pence
pence
Earnings (profit after tax)
19,267
15.2
15.2
Exclude effect of exceptional items after tax
(44,155)
(34.8)
(34.8)
Earnings before exceptional items
(24,888)
(19.6)
(19.6)
Exclude effect of property losses (note 3)
(2,142)
(1.7)
(1.7)
Underlying earnings before exceptional items
(27,030)
(21.3)
(21.3)
Restated
1
52 weeks ended 25 July 2021
(Loss)profit
Basic EPS
Diluted EPS
£000
pence
pence
Earnings (loss after tax)
(177,006)
(144.1)
(144.1)
Exclude effect of exceptional items after tax
1
30,535
24.9
24.9
Earnings before exceptional items
1
(146,471)
(119.2)
(119.2)
Exclude effect of property gains (note 3)
123
0.1
0.1
Underlying earnings before exceptional items
1
(146,348)
(119.1)
(119.1)
1
Restated 25 July 2021. See Accounting policies page 48
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
25
NOTES TO THE FINANCIAL STATEMENTS
9. Cash used in/generated from operations
53 weeks
Restated
1
52 weeks
ended
ended
31 July
25 July
2022
2021
£000
£000
Profit/(loss) for the period
1
19,267
(177,006)
Adjusted for:
Tax (note 7)
1
7,002
(17,630)
Share-based charges (note 2)
5,874
10,267
Loss on disposal of property, plant and equipment (note 3)
3,476
3,140
Disposal of capitalised leases (note 3)
(7,368)
(2,200)
Net impairment charge (note 3)
24,430
4,132
Interest receivable (note 6)
(103)
(188)
Interest payable (note 6)
41,395
45,702
Lease interest receivable (note 6)
(428)
(407)
Lease interest payable (note 6)
18,083
19,832
Exceptional interest (note 6)
(51,859)
12,690
Amortisation of bank loan and private placement issue costs (note 6)
1,983
1,746
Depreciation of property, plant and equipment (note 13)
71,227
73,193
Amortisation of intangible assets (note 12)
3,240
3,151
Depreciation on investment properties (note 14)
87
44
Aborted properties costs
2,947
628
Cancelled principal payments (note 23)
(4,726)
(10,993)
Foreign exchange movements
(1,474)
-
Amortisation of right-of-use assets (note 23)
42,291
44,532
175,344
10,633
Change in inventories
452
(3,758)
Change in receivables
(12,171)
15,748
Change in payables
14,885
2,585
Cash flow from operating activities
178,510
25,208
1
Restated 25 July 2021. See Accounting policies page 48
26
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
10. Analysis of change in net debt
25 July
Cash
Other
31 July
2021
flows
changes
2022
£000
£000
£000
£000
Borrowings
Cash and cash equivalents
45,408
(5,061)
–
40,347
Other loan receivable – due before one year
–
803
–
803
Asset-financing obligations – due before one year
(7,610)
2,473
–
(5,137)
Current net borrowings
37,798
(1,785)
–
36,013
Bank loans – due after one year
(776,871)
(49,808)
(1,937)
(828,616)
Asset-financing obligations – due after one year
(8,633)
4,659
–
(3,974)
Other loan receivable – due after one year
–
2,739
–
2,739
Private placement – due after one year
(97,768)
–
(46)
(97,814)
Non-current net borrowings
(883,272)
(42,410)
(1,983)
(927,665)
Net debt
(845,474)
(44,195)
(1,983)
(891,652)
Derivatives
Interest-rate swaps assets - due after one year
–
–
61,367
61,367
Interest-rate swaps liability – due after one year
(37,643)
–
35,612
(2,031)
Total derivatives
(37,643)
–
96,979
59,336
Net debt after derivatives
(883,117)
(44,195)
94,996
(832,316)
Leases
Lease assets – due before one year
1,638
(1,423)
1,786
2,001
Lease assets – due after one year
9,890
–
(626)
9,264
Lease obligations – due before one year
(65,219)
40,049
(23,301)
(48,471)
Lease obligations – due after one year
(458,596)
–
37,014
(421,582)
Net lease liabilities
(512,287)
38,626
14,873
(458,788)
Net debt after derivatives and lease liabilities
(1,395,404)
(5,569)
109,869
(1,291,104)
The cash movement on bank loans of £49,808,000 is disclosed in the cash flow statement. The amount is the net of
£50,000,000 which is shown as an advance/(repayment) under bank loans and the £192,000 of loan issue costs.
The cash movement on asset-financing of £7,132,000 is disclosed in the cash flow statement as ‘asset-financing principal
payments’.
Lease obligations represent long-term payables, while lease assets represent long-term receivables – both are, therefore,
disclosed in the table above.
Non-cash movements
The non-cash movement in bank loans and the private placement relate to the amortisation of loan issue costs. The
amortisation charge for the year of £1,983,000 is disclosed in note 6. These are arrangement fees paid in respect of new
borrowings and are charged to the income statement over the expected life of the loans.
The movement in interest-rate swaps relates to the change in the ‘mark to market’ valuations for the year for swaps subject to
hedge accounting.
Non-cash movement in net lease liabilities 53 weeks ended 31 July 2022
31 July
2022
£000
Recognition of new leases (note 23)
(4,458)
Freehold reversions of existing lease liabilities (note 23)
15,740
Remeasurements of existing leases liabilities (note 23)
(6,742)
Remeasurements of existing leases assets (note 23)
1,160
Disposal of lease (note 23)
4,514
Cancelled principal payments (note 23)
4,726
Exchange differences (note 23)
(67)
Non-cash movement in net lease liabilities
14,873
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
27
NOTES TO THE FINANCIAL STATEMENTS
10. Analysis of change in net debt (continued)
Analysis of changes in net debt for 52 weeks ended 25 July 2021
26 July
Cash
Other
25 July
2020
flows
changes
2021
Restated
£000
£000
£000
£000
Borrowings
Cash and cash equivalents
174,451
(129,043)
–
45,408
Asset-financing obligations – due before one year
(7,610)
–
–
(7,610)
Current net borrowings
166,841
(129,043)
–
37,798
Bank loans – due after one year
(870,572)
95,401
(1,700)
(776,871)
Asset-financing obligations – due after one year
(15,534)
6,901
–
(8,633)
Private placement – due after one year
(97,722)
–
(46)
(97,768)
Non-current net borrowings
(983,828)
102,302
(1,746)
(883,272)
Net debt
(816,987)
(26,741)
(1,746)
(845,474)
Derivatives
Interest-rate swaps liability – due after one year
(82,194)
–
44,551
(37,643)
Total derivatives
(82,194)
–
44,551
(37,643)
Net debt after derivatives
(899,181)
(26,741)
42,805
(883,117)
Leases
Lease assets – due before one year
1,736
(1,323)
1,225
1,638
Lease assets – due after one year
11,115
–
(1,225)
9,890
Lease obligations – due before one year
(65,343)
18,875
(18,751)
(65,219)
Lease obligations – due after one year
(507,803)
–
49,207
(458,596)
Net lease liabilities
(560,295)
17,552
30,456
(512,287)
Net debt after derivatives and lease liabilities
(1,459,476)
(9,189)
73,261
(1,395,404)
Non-cash movement in net lease liabilities 52 weeks ended 25 July 2021
25 July
2021
£000
Recognition of new leases (note 23)
(12,162)
Remeasurements of existing leases liabilities (note 23)
15,602
Disposal of lease (note 23)
15,790
Cancelled principal payments (note 23)
10,993
Exchange differences (note 23)
233
Non-cash movement in net lease liabilities
30,456
11. Dividends paid and proposed
No final dividend has been proposed for approval at the annual general meeting for the 53 weeks ended 31 July 2022 (2021:
Nil). Covenants restrict the payment of dividends while the company is part of the coronavirus large business interruption loan
scheme (CLBILS). The board will continue to review the dividend policy.
28
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
12. Intangible assets
Computer
Assets
Total
software and
under
development
construction
£000
£000
£000
Cost:
At 26 July 2020
33,417
804
34,221
Additions
–
4
4
Transfers
804
(804)
–
Disposals
(1,474)
–
(1,474)
At 25 July 2021
32,747
4
32,751
Additions
2,875
429
3,304
Disposals
(20)
–
(20)
At 31 July 2022
35,602
433
36,035
Accumulated amortisation:
At 26 July 2020
(25,326)
–
(25,326)
Provided during the period
(3,151)
–
(3,151)
Exchange differences
(1)
–
(1)
Disposals
1,085
–
1,085
At 25 July 2021
(27,393)
–
(27,393)
Provided during the period
(3,240)
–
(3,240)
Disposals
7
–
7
At 31 July 2022
(30,626)
–
(30,626)
Net book amount at 31 July 2022
4,976
433
5,409
Net book amount at 25 July 2021
5,354
4
5,358
Net book amount at 26 July 2020
8,091
804
8,895
The majority of intangible assets relate to computer software and software development. Examples include the development
costs of the SAP accounting and property-maintenance systems and bespoke J D Wetherspoon applications.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
29
NOTES TO THE FINANCIAL STATEMENTS
13. Property, plant and equipment
Freehold and
Short-
Equipment,
Assets
Total
long-leasehold
leasehold
fixtures
under
property
property
and fittings
construction
£000
£000
£000
£000
£000
Cost:
At 26 July 2020
1,363,106
295,009
684,732
86,624
2,429,471
Additions
14,783
132
11,251
31,973
58,139
Transfers from investment property
5,768
–
–
–
5,768
Transfers
41,023
4,164
8,385
(53,572)
–
Exchange differences
(1,357)
(144)
(426)
(1,157)
(3,084)
Disposals
(2,623)
(4,385)
(3,631)
–
(10,639)
Reclassification
7,842
(7,842)
–
–
–
At 25 July 2021
1,428,542
286,934
700,311
63,868
2,479,655
Additions
37,019
8,407
33,146
33,700
112,272
Transfers from investment property
-
-
-
(2,170)
(2,170)
Transfers
15,948
1,185
2,572
(19,705)
-
Exchange differences
(1,257)
(53)
(201)
(242)
(1,753)
Transfers to assets held for sale
(1,739)
-
-
-
(1,739)
Disposals
(13,614)
(3,708)
(4,713)
-
(22,035)
Reclassification
12,435
(12,435)
-
-
-
At 31 July 2022
1,477,334
280,330
731,115
75,451
2,564,230
Accumulated depreciation and impairment:
At 26 July 2020
(307,297)
(167,009)
(512,387)
–
(986,693)
Provided during the period
(20,281)
(10,499)
(42,413)
–
(73,193)
Transfers from investment property
(290)
–
–
–
(290)
Exchange differences
282
23
249
–
554
Impairment loss
(1,631)
(368)
–
–
(1,999)
Disposals
874
2,405
2,513
–
5,792
Reclassification
(4,090)
4,090
–
–
–
At 25 July 2021
(332,433)
(171,358)
(552,038)
–
(1,055,829)
Provided during the period
(21,336)
(9,704)
(40,187)
-
(71,227)
Exchange differences
122
19
148
-
289
Impairment loss
(18,617)
279
1,102
(2,215)
(19,451)
Transfers to assets held for sale
939
-
-
-
939
Disposals
3,752
2,288
1,871
-
7,911
Reclassification
(6,960)
6,960
-
-
-
At 31 July 2022
(374,533)
(171,516)
(589,104)
(2,215)
(1,137,368)
Net book amount at 31 July 2022
1,102,801
108,814
142,011
73,236
1,426,862
Net book amount at 25 July 2021
1,096,109
115,576
148,273
63,868
1,423,826
Net book amount at 26 July 2020
1,055,809
128,000
172,345
86,624
1,442,778
During the period, an amount of £42,777,000 (2021: £19,692,000) was spent on the reinvestment of existing pubs. £25,773,000
(2021: £16,858,000) was spent on freehold reversions. £58,789,000 (2021: £24,051,000) was spent on investment in new pubs
and pub extensions. This led to a total capital expenditure of £127,339,000 (2021: £62,671,000).
30
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
14. Investment property
The company owns six (2021: three) freehold properties with existing tenants – and these assets have been classified
as investment properties. During the year, a property which was originally recognised as part of property, plant and equipment
under the category ‘assets under construction’ has been transferred to investment property. During the year, the company has
purchased an additional two investment properties.
£000
Cost:
At 26 July 2020
11,842
Additions
4,528
Transfer to property, plant and equipment
(5,768)
At 25 July 2021
10,602
Transfer from property, plant and equipment
2,170
Additions
11,763
At 31 July 2022
24,535
Accumulated amortisation:
At 26 July 2020
(315)
Provided during the period
(44)
Transfer to property, plant and equipment
290
At 25 July 2021
(69)
Provided during the period
(87)
Impairment loss
(1,015)
At 31 July 2022
(1,171)
Net book amount at 31 July 2022
23,364
Net book amount at 25 July 2021
10,533
Net book amount at 26 July 2020
11,527
Rental income received in the period from investment properties was £790,000 (2021: £397,000).
Operating costs, excluding depreciation, incurred in relation to these properties amounted to £16,000 (2021: £12,000).
At the year end, three investment properties were independently valued at £9,431,000. During the year, an impairment charge
of £1,015,000 was incurred to adjust the three investment properties which were independently valued from their net book value
to their valuation amount. The remaining three investment properties purchased during the period are valued at their purchase
price paid of £13,933,000. This is deemed a reasonable fair value of these properties. The total fair value of all of our investment
properties at the year end is £23,364,000.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
31
NOTES TO THE FINANCIAL STATEMENTS
15. Inventories
Bar, food and non-consumable stock held at pubs and the national distribution centre.
31 July
25 July
2022
2021
£000
£000
Goods for resale at cost
26,402
26,853
16. Receivables
This category relates to situations in which third parties owe the company money. Examples include rebates from suppliers
(volume related discounts on certain products) and refunds from councils and governing bodies.
Prepayments relate to advance payments for certain services, for example insurance and tv licences.
31 July
25 July
2022
2021
£000
£000
Current (due within one year)
Other loan receivables
803
–
Other receivables
18,601
2,004
Rebate receivable
1,998
1,499
Prepayments
7,998
12,924
29,400
16,427
Non-current (due after one year)
Other loan receivables
2,739
–
Total other non-current assets
2,739
–
On 4 August 2022 a cheque was received for £11,347,000 from HMRC in relation to the historic VAT treatment of slot/fruit
machines (see note 4 for further details). This cheque was dated before the year-end of 26 July 2022. However, owing to not
receiving this cheque until after year-end this amount has been recognised as a receivable under ‘other receivables’ rather than
in cash and cash equivalents in note 18.
Credit risk
31 July
25 July
2022
2021
£000
£000
Due from suppliers – not due
937
1,040
Due from suppliers – overdue
193
964
1,130
2,004
Credit risk is the risk that a counterparty does not settle its financial obligation with the company. At the period’s end, the
company has assessed the credit risk on amounts due from suppliers, based on historic experience, meaning that the expected
lifetime credit loss was immaterial. Cash and cash equivalents are also subject to the impairment requirements of IFRS9 – no
impairment loss was identified..
17. Assets held for sale
These relate to situations in which the company had exchanged contracts to sell a property, but the transaction is not yet
complete. As at 31 July 2022, two sites were classified as held for sale (2021:£Nil).
31 July
25 July
2022
2021
£000
£000
Property, plant and equipment
800
–
32
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
18. Cash and cash equivalents
31 July
25 July
2022
2021
£000
£000
Cash and cash equivalents
40,347
45,408
Cash at bank earns interest at floating rates, based on daily bank deposit rates.
On 4 August 2022 a cheque was received for £11,347,000 from HMRC in relation to the historic VAT treatment of slot/fruit
machines (see note 4 for further details). This cheque was dated before the year-end of 26 July 2022. However, owing to not
receiving this cheque until after year-end this amount has been recognised as a receivable under ‘other receivables’ in note 16.
19. Trade and other payables
This category relates to money owed by the company to third parties.
31 July
25 July
2022
2021
£000
£000
Trade payables
107,886
111,918
Other payables
17,267
27,759
Other tax and social security
67,362
44,237
Accruals
88,758
74,787
Deferred income
1,208
1,090
282,481
259,791
Trade payables are obligations to pay for goods and services which are of a trade nature while other payables are of a non-
trade nature.
Included within tax and social security is corporation tax liability owed but not yet due of £280,000 (2021: £20,383,000) and VAT
due of £56,516,000 (2021: £12,069,000).
Accruals relate to allowances made by the company for future anticipated payments, for example; payments to suppliers,
employees’ wages and interest payments to lenders.
Deferred income comprises of money received in advance for future marketing materials and services.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
33
NOTES TO THE FINANCIAL STATEMENTS
20. Borrowings
31 July
25 July
2022
2021
£000
£000
Current (due within one year)
Other
Lease liabilities
48,471
65,219
Asset-financing obligations
5,137
7,610
Total current borrowings (including lease liabilities)
53,608
72,829
Non-current (due after one year)
Bank loans
Variable-rate facility
730,000
680,000
CLBILS
100,033
100,033
Unamortised bank loan issue costs
(1,417)
(3,162)
828,616
776,871
Private placement
Fixed-rate facility
98,000
98,000
Unamortised private placement issue costs
(186)
(232)
97,814
97,768
Other
Lease liabilities
421,582
458,596
Asset-financing obligations
3,974
8,633
425,556
467,229
Total non-current borrowings (including lease liabilities)
1,351,986
1,341,868
Total borrowings (including lease liabilities)
1,405,594
1,414,697
Lease liabilities
The carrying amounts of lease liabilities and the movements during the period are outlined in note 23.
Asset-financing obligations
Asset-financing obligations relate to asset finance leases of equipment in pubs.
Variable-rate facility
The secured Revolving Credit Facility is £875m. As at 31 July 2022, £730m was drawn down (2021: £680m). There are 14
participating lenders. £20m matures in February 2024 while £855m matures in February 2025. The company has hedged its
interest-rate liabilities to its banks by swapping the floating-rate debt into fixed-rate debt, see note 22.
CLBILS
On 7 August 2020 and 18 March 2021, the company agreed to secured loans under the CLBILS for £48,333,332 and
£51,700,000, respectively. The loans have four participating lenders and an average fixed-interest charge of 1.94%; all of loans
mature in August 2023.
Unamortised bank loan issue costs
Unamortised bank loan issue costs primarily relate to refinancing, securing and extending the variable-rate facility.
Private placement
The fixed-rate facility relates to senior secured notes of £98m. The notes mature in 2026.
The company has an overdraft facility of £10m.
34
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
21. Provisions
Total
£000
At 25 July 2021
3,004
Charged to the income statement:
– Additional charges
2,781
– Unused amounts reversed
(2,588)
– Used during year
(536)
At 31 July 2022
2,661
31 July
25 July
2022
2021
£000
£000
Current
2,661
3,004
Non-current
–
–
Total provisions
2,661
3,004
Legal claims
The amounts represent a provision for ongoing legal claims brought against the company in the normal course of business, by
customers and employees. Owing to the nature of the business, the company expects to have a continuous provision for
outstanding employee and public liability claims. All claim provisions are considered current and are therefore not discounted.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
35
NOTES TO THE FINANCIAL STATEMENTS
22. Financial instruments
Fair values
The company has the following financial instruments. IFRS13 requires disclosure of fair value measurements by level, using the
following fair value measurement hierarchy:
Quoted prices in active markets for identical assets or liabilities (level 1)
Inputs other than quoted prices included in level 1 which are observable for the asset or liability,
either directly or indirectly (level 2)
Inputs for the asset or liability which are not based on observable market data (level 3)
31 July
31 July
25 July
25 July
2022
2022
2021
2021
Book value
Fair value
Book value
Fair value
Hierachy
£000
£000
£000
£000
Financial assets at amortised cost
Cash and cash equivalents
40,347
40,347
45,408
45,408
Receivables
1,130
1,130
2,004
2,004
Lease assets
3
11,265
11,378
11,528
11,643
52,742
52,855
58,940
59,055
Financial liabilities at amortised cost
Trade and other payables
(213,911)
(213,911)
(214,464)
(214,464)
Asset-financing obligations
2
(9,111)
(9,111)
(16,243)
(16,406)
Lease obligations
3
(470,054)
(470,054)
(523,815)
(529,053)
Private placement
2
(97,814)
(94,166)
(97,768)
(98,746)
Borrowings
2
(828,616)
(811,795)
(776,871)
(784,639)
(1,619,506)
(1,599,037)
(1,629,161)
(1,643,308)
Derivatives – cash flow hedges
Non-current derivative financial liability
2
(2,031)
(2,031)
(37,643)
(37,643)
Non-current derivative financial asset
2
61,367
61,367
-
-
59,336
59,336
(37,643)
(37,643)
The fair value of derivatives has been calculated by discounting all future cash flows by the market yield curve. The fair value of
borrowings and the private placement has been calculated by discounting the expected future cash flows at the year end’s
prevailing interest rates. The borrowings are deemed to be short-term for the purposes of the fair value calculations (see note 20
for split) given the draw down nature of the Revolving Credit Facility. The fair value of investment properties has been disclosed
in note 14 (hierarchy level of 3).
Maturity profile of financial liabilities
The table below presents the maturity profile of the company’s financial liabilities using the contractual undiscounted cash flows.
Within
More than
1 year
1–2 years
2–5 years
5 years
Total
£000
£000
£000
£000
£000
At 31 July 2022
Borrowings
31,750
51,330
871,461
–
954,541
Borrowings – CLBILS
2,599
100,119
–
–
102,718
Private placement
3,655
3,655
107,138
–
114,448
Trade and other payables
213,911
–
–
–
213,911
Derivatives
3,211
(698)
(353)
(1,858)
302
Lease liabilities
48,471
48,029
133,041
382,369
611,910
Asset-financing obligations
5,137
4,332
–
–
9,469
At 26 July 2021
Borrowings
21,798
21,798
908,406
–
952,002
Borrowings – CLBILS
2,005
2,005
100,138
–
104,148
Private placement
3,655
3,655
10,965
99,828
118,103
Trade and other payables
214,464
–
–
–
214,464
Derivatives
12,054
11,969
15,842
5,231
45,096
Lease liabilities
65,219
49,587
142,670
427,520
684,996
Asset-financing obligations
7,610
5,145
4,323
–
17,078
36
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
22. Financial instruments (continued)
Capital risk management
The company’s capital structure comprises shareholders’ equity and loans. The objective of capital management is to ensure
that the company is able to continue as a going concern and provide shareholders with returns on their investment, while
managing risk.
The company does not have a specific measure for managing capital structure; instead, the company plans its capital
requirements and manages its loans, dividends and share buybacks accordingly. In a normal trading year, the company
measures loans using a ratio of net debt to EBITDA. With covenant waivers agreed until January 2023, relaxed covenants
effective April and July 2023 and returning to normal covenant levels from October 2023 management’s primary metrics are
liquidity until April 2023 and then profitability and net debt thereafter.
Liquidity rate risk management
Outlined in note 20 are the facilities entered into to meet the short and long-term liquidity needs of the business. The objective is
to ensure that the company has sufficient financial resources to meet working capital requirements as well as funds for
reinvestment and development. The company’s borrowings depend on the meeting of financial covenants, which if breached,
could result in funding being withdrawn. The company has agreed on covenant waivers with its lenders as outlined above.
Credit risk management
The company does not have a significant concentration of credit risk, as the majority of its revenue is in cash. There is little
associated credit risk assigned to derivative financial assets as contracts are held with commercial bank counterparties.
Interest rate risk management
The company is exposed to interest rate risk through variable rates on external borrowings. The company’s interest-rate swap
agreements are in place to mitigate this risk. Under these agreements, the company pays a fixed interest charge and receives
variable interest income which matches the variable interest payments made on the company’s borrowings.
The company has hedged its interest-rate liabilities to its banks by swapping the floating-rate debt into fixed-rate debt which
has fixed £770m of these borrowings at rates of between 0.61 and 3.84%. These interest rate swaps are accounted for through
a combination of fair value through profit or loss and hedging reserves within other comprehensive income. The effective
weighted average interest rate of the swap agreements used during the year is 1.61% (2021: 2.42%), fixed for a weighted
average period of 6.4 years (2021: 3.8 years). In addition, the company has entered into forward-starting interest-rate swaps,
detailed in the table below.
Weighted average swap by period:
From
To
Total swap value £m
Weighted average interest %
30/07/2021
30/07/2023
770
1.61
30/07/2023
30/07/2026
770
1.10
31/07/2026
30/06/2028
770
1.33
01/07/2028
29/03/2029
770
1.32
31/03/2029
30/11/2031
770
1.02
Interest-rate sensitivity
The amounts drawn under this agreement can be varied, depending on the requirements of the business. The floating-rate
borrowings are interest-bearing borrowings at rates based on SONIA, fixed for periods of up to one month. During the 53 weeks
ended 31 July 2022, if the interest rates on UK-denominated borrowings had been 1% higher, with all other variables constant,
pre-tax loss for the year would have been reduced by £34,000 and equity increased by £67,660,000. The movement in equity
arises from a change in the ‘mark to market’ valuation of the interest-rate swaps into which the company has entered, calculated
by a 1% shift of the market yield curve. The company notes that an increase in borrowings of 1% would also increase interest
charges. The company considers that a 1% movement in interest rates represents a reasonable sensitivity to potential changes.
However, this analysis is for illustrative purposes only.
An analysis of the interest-rate profile of financial liabilities, is set out below:
31 July
25 July
2022
2021
£000
£000
Analysis of interest-rate profile of financial liabilities
Floating rate due after one year
728,583
676,839
Fixed rate due after one year
100,033
100,033
828,616
776,872
Asset-financing obligations
Fixed rate due in one year
5,137
7,610
Fixed-rate due after one year
3,974
8,633
9,111
16,243
Private placement
Fixed rate due after one year
97,814
97,767
97,814
97,767
935,541
890,882
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
37
NOTES TO THE FINANCIAL STATEMENTS
22. Financial instruments (continued)
The below table outlines the movements in fair value among the hedging reserve, comprehensive income and the income
statement during the year:
2022
Restated
1
2021
Interest-rate swaps
£000
£000
Carrying value of derivative financial instruments - Liability
(2,031)
(37,643)
Carrying value of derivative financial instruments - Asset
61,367
-
Change in fair value of derivatives
96,979
44,551
Hedge (gains)/losses recognised in comprehensive income in respect of continuing hedges
(48,452)
(44,551)
Hedge (gains)/losses recognised in profit or loss in respect of hedges held at fair value through
the profit or loss (Note 4)
(48,527)
-
Hedge ineffectiveness reclassified from the reserve to profit or loss relating to continuing
hedges (Note 4)
(8,134)
11,707
Amortisation to profit or loss of cashflow hedge reserve relating to discontinued hedge
relationships (Note 4)
3,802
-
Hedging reserve balance in respect of continuing hedges
1
(14,516)
19,452
Hedging reserve balance in respect of discontinued hedges
899
-
2022
Restated
1
2021
Hedging Reserve
£000
£000
Opening
19,452
66,577
Hedging (gains)/losses recognised in comprehensive income
(48,452)
(44,551)
Hedge ineffectiveness reclassified from the hedging reserve to profit or loss / Amortisation
to profit or loss of cashflow hedge reserve relating to discontinued hedge relationships
4,332
(11,707)
Deferred tax posted to comprehensive income
1
11,051
9,133
Closing
1
(13,617)
19,452
1
Restated 25 July 2021. See Accounting policies page 48
The company has multiple interest-rate swaps which up to 25 July 2021 were designated in a combination of seven hedge
relationships. In addition one new derivative was entered into during the year which has not been designated for hedge
accounting. The impact on the accounts is as follows:
In the year ended 25 July 2021, three of the company’s hedge relationships were discontinued from hedge accounting
as a result of future variable debt no longer being forecast at the same levels as when the instruments were originally
established. Since 25 July 2021, the fair value movements on the respective derivatives are included in profit and
loss. The cash flow hedge reserve was frozen at the time of discontinuation and is amortised to the profit or loss
accordingly. Fair value movements of -£4,332k have been recognised in the income statement as opposed to other
comprehensive income during the financial period.
On 29 October 2021, several interest-rate swaps that were designated within three of the hedge relationships were
novated from HSBC to Barclays. On novation, the interest-rate swap and the variable-rate debt no longer qualified for
hedge accounting, resulting in partial discontinuation being recognised.
On 15 November 2021, a new derivative made up of one interest-rate swap was entered into for the purposes of fixing
variable rate debt from 2029 to 2031. The interest rate swap does not qualify for hedge accounting on the basis that
no hedge documentation was put in place to permit it. During the financial year, fair value movements of £16,230k
were recognised in the income statement as opposed to comprehensive income.
During the year ended 31 July 2022, two relationships were deemed to be partially ineffective as a result of future
variable debt no longer being forecast at the same levels as when the instruments were originally established.
£4,013k was reclassified from the hedging reserve to profit or loss during the financial year as a result of partial
ineffectiveness of this swap. The company reviews and forecasts it’s variable debt financing requirements at each
reporting period. Any changes in forecasts impact the effectiveness of the interest-rate hedges in place which are for
a nominal value of £770m per period.
Remaining in the hedging reserve, is -£14,516k of fair value relating to continuing hedges (Restated
1
2021: £19,452k) and
£899k of fair value relating to hedges which have been discontinued (2021: £Nil). The fair value of discontinued hedges will be
recycled to the income statement over the remaining period of maturity.
Interest-rate benchmark (IBOR) reform
The company’s interest-rate swaps, which swap floating interest rates paid for a fixed interest rate, were previously based on an
index called the London interbank offered rate (LIBOR). The IBOR issued in September 2019 has resulted in LIBOR being
replaced with an index called sterling overnight index average (SONIA). The amendments of the reform have been adopted, as
at 1 January 2022, to hedging relationships which already existed, or were designated thereafter.
The amendments provided temporary relief from applying specific hedge accounting requirements to hedging relationships
directly affected by IBOR reform. Hedges have still been measured for effectiveness, with any ineffectiveness being charged in
the income statement. No hedges have been derecognised as a result of the IBOR reform.
38
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
22. Financial instruments (continued)
Obligations under asset-financing
The minimum lease payments under asset-financing fall due as follows:
31 July
25 July
2022
2021
£000
£000
Within one year
5,137
7,610
In the second to fifth year, inclusive
4,332
9,468
9,469
17,078
Less future finance charges
(358)
(835)
Present value of lease obligations
9,111
16,243
Less amount due for settlement within one year
(5,137)
(7,610)
Amount due for settlement during the second to fifth year, inclusive
3,974
8,633
All asset-financing obligations are in respect of various equipment used in the business. No escalation clauses are included
in the agreements.
23. Leases
The following amounts, relating to lease cashflows, were debited/credited to the income statement during the period:
Rent cash flow analysis
31 July
2022
25 July
2021
£000
£000
Cash outflows relating to capitalised leases
57,630
35,829
Expense relating to short-term leases
10
784
Expense relating to variable element of concessions
8,799
2,801
Total cash outflows
66,439
39,414
Cash inflows relating to capitalised leases
(1,852)
(1,736)
Income relating to lessor sites
(2,001)
(1,609)
Total cash inflows
(3,853)
(3,345)
The balance sheet shows the following amounts relating to leases. These have been reconciled in sections (a) to (d) below:
Balance sheet position
31 July
2022
25 July
2021
£000
£000
Right-of-use asset
1
(a)
419,416
468,538
Non-current lease asset
9,264
9,890
Current lease assets
2,001
1,638
Total lease assets
2
(b) (d)
11,265
11,528
Current lease liability
(48,471)
(65,219)
Non-current lease liability
(421,583)
(458,596)
Total lease liability
1
(c) (d)
(470,054)
(523,815)
1
Right-of-use assets and lease liabilities relate to leasehold properties occupied by J D Wetherspoon.
2
Lease assets relate to leasehold properties sublet by J D Wetherspoon.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
39
NOTES TO THE FINANCIAL STATEMENTS
23. Leases (continued)
(a) Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Cost:
£000
As at 25 July 2021
558,897
Reclassification of prior year remeasurement
1
3,704
Restated as at 25 July 2021
562,601
Additions
4,458
Remeasurement
10,148
Freehold reversions
(16,492)
Disposals and derecognised leases
(3,453)
At 31 July 2022
557,262
Accumulated depreciation and impairment:
£000
As at 25 July 2021
(90,359)
Reclassification of prior year remeasurement
(3,704)
Restated as at 25 July 2021
(94,063)
Provided during the period
(42,291)
Exchange differences
(77)
Impairment loss
(3,964)
Freehold reversions
1,878
Disposals and derecognised leases
671
At 31 July 2022
(137,846)
Net book amount at 31 July 2022
419,416
Net book amount at 25 July 2021
468,538
1
A reclassification of prior year remeasurments has been made between cost and accumulated depreciation. This
reclassification does not impact the net book value of right-of-use assets.
During the period, additions related to four new lease contracts that were signed. 41 leases were remeasured as a result of
changes in the agreed payments under the lease contracts and changes in the lease terms. Exchange differences occur as a
result of translating the capitalised leases in the Republic of Ireland. 13 freehold reversions took place in the year while
disposals and derecognised leases totalled six. In the year ended 25 July 2021, lease additions totalled £12,162k and
depreciation £44,532k.
(b) Sublet properties
Set out below are the carrying amounts of the lease assets recognised and the movement during the period. The company
sublets several of its leases, with lease assets being the capitalised future rent receivable from sublet sites.
Lease assets
£000
As at 26 July 2020
12,851
Interest due in period
413
Cash inflows for the period
(1,736)
As at 25 July 2021
11,528
Remeasurement of leases
1,160
Interest due in the period
428
Cash inflows for the period
(1,851)
At 31 July 2022
11,265
Where needed, deferral terms were agreed on with lessees in relation to COVID-19 pandemic. There are no material expected
credit losses.
The interest payable and receivable shown in the table above is the interest element of the payments made and received in the
period. These amounts differ from the lease interest charged/credited to the income statement in the period – see note 6. The
amounts charged/credited to the income statement in the period will also include amounts due, yet not paid, in the period. The
incremental borrowing rate applied to lease liabilities and assets was 1.9–3.6%, depending on the lease’s length.
40
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
23. Leases (continued)
(c) Lease liability
Set out below are the carrying amounts of lease liabilities and the movements during the period:
Lease liability
2022
2021
£000
£000
Lease liability as at commencement of period
523,815
573,146
Additions
4,458
12,162
Freehold reversions
(15,740)
-
Remeasurements of leases
6,742
(15,602)
Disposals
(4,514)
(15,790)
Cancelled principal payments (due to expedient)
(4,726)
(10,993)
Exchange differences
67
(233)
Lease liabilities before payments
510,102
542,690
Interest payable in period:
Interest expense within period (discounting
element)
18,083
19,872
Cancelled interest expense (due to expedient)
(501)
(2,918)
17,582
16,954
Total cash outflow for leases in period:
Lease payment commitments for
period
(62,857)
(53,602)
Cancelled payment commitments (due to
expedient)
5,227
13,911
Deferred payment commitments
-
3,862
(57,630)
(35,829)
Net principal payments at 31 July
2022
(40,048)
(18,875)
At 31 July 2022
470,054
523,815
The company has applied the rent concessions practical expedient during the financial period, allowing reductions in rent
payments due on or before June 2022 to be credited to the income statement, rather than requiring remeasurement of the
lease.
Included within remeasurement of leases are principal payments of £4,726k (2021: £10,993k) credited to the income statement,
and a reduction in associated interest charges of £501k (2021: £2,918k) resulting in a total credit to the income statement of
£5,227k (2021: £13,911k) which is disclosed in cash generated from operations, note 9. Future rental payments, up to the end
of the lease, are capitalised, including any agreed increases.
Future rent payments could change as a result of open-market rent reviews or options being exercised to terminate a lease
early. Any changes in the minimum unavoidable lease payments will be included as a remeasurement of the lease liability. The
accounting policies (page 46) further describe the policy in relation to the termination of leases.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
41
NOTES TO THE FINANCIAL STATEMENTS
23. Leases (continued)
(d) Lease maturity profile
Set out below are the remaining maturities (period between the balance sheet date and the end of the lease) of the lease
liabilities and lease assets, which are undiscounted:
Lease liabilities
Lease assets
31 July
2022
25 July
2021
31 July
2022
25 July
2021
£000
£000
£000
£000
Within one year
48,471
65,219
2,001
1,638
Between one and two years
48,029
49,587
1,332
1,586
Between two and three years
46,233
49,508
1,140
1,130
Between three and four years
43,777
47,872
1,128
1,084
Between four and five years
43,031
45,290
1,124
1,070
After five years
382,369
427,520
6,518
7,255
Lease commitments payable / receviable
611,910
684,996
13,243
13,763
Discounting
(141,856)
(161,181)
(1,978)
(2,235)
Lease liability / lease asset
470,054
523,815
11,265
11,528
24. Government support
31 July
25 July
2022
2021
£000
£000
Eat out to help out (note 1)
–
(23,248)
Local government grants (note 4)
(1,443)
(11,123)
Employee support grants (note 5)
(4,473)
(208,986)
(5,916)
(243,357)
The government support in the table above should be viewed in context of the contribution to the economy as on page 6.
Local government grants
From 9 September 2020, the UK Government made available several grants to support those businesses adversely affected by
the pandemic. Applications were made to the respective local authorities in line with the eligibility criteria for each scheme. The
Irish Government introduced a similar grant (COVID Restrictions Support Scheme), for which the company applied for centrally.
Government grants were recognised at the point at which funds were receipted. In the year, £1.4m was receipted (£1.3m in
relation to the UK and £0.1m in relation to the Republic of Ireland). The grants were treated as exceptional income.
Employee support grants
The coronavirus job retention scheme,(CJRS) and equivalent Republic of Ireland schemes, were introduced at the beginning of
the pandemic to support companies in retaining employees, in the form of grants to cover a proportion of the wages and salaries
of furloughed staff. The claims have been made weekly since April 2020 for weekly paid employees and monthly for salaried
employees. These are accounted for as a credit to wages and salaries within employee costs. In the year, £4.5m was receipted
(£0.2m in relation to the UK and £4.3m in relation to the Republic of Ireland).
25. Capital commitments
At 31 July 2022, the company had £9.8m (2021: £10.0m) of capital commitments, relating to the purchase of nine (2021: eight)
sites, for which no provision had been made in respect of property, plant and equipment.
The company had some other sites in the property pipeline; however, any legal commitment is contingent on planning and
licensing. Therefore, there are no commitments at the balance sheet date.
42
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
NOTES TO THE FINANCIAL STATEMENTS
26. Related-party disclosures
J D Wetherspoon is the owner of the share capital of the following companies:
Company name
Country of incorporation
Ownership
Status
J D Wetherspoon (Scot) Limited
Scotland
Wholly owned
Dormant
J D Wetherspoon Property Holdings Limited
England
Wholly owned
Dormant
Moon and Spoon Limited
England
Wholly owned
Dormant
Moon and Stars Limited
England
Wholly owned
Dormant
Moon on the Hill Limited
England
Wholly owned
Dormant
Moorsom & Co Limited
England
Wholly owned
Dormant
Sylvan Moon Limited
England
Wholly owned
Dormant
Checkline House (Head Lease) Limited
Wales
Wholly owned
Dormant
All of these companies are dormant and contain no assets or liabilities and are, therefore, immaterial. As a result, consolidated
accounts have not been produced. The company has an overseas branch in the Republic of Ireland.
The registered office of all of the above companies is the same as that for J D Wetherspoon plc, as disclosed on the final page
of these accounts.
As required by IAS 24, the following information is disclosed about key management compensation.
Key management compensation
2022
2021
£000
£000
Short-term employee benefits
2,950
2,493
Post-employment pension benefits
611
280
Share-based payment
300
273
3,861
3,046
Key management comprises the executive directors, non-executive directors and management board, as detailed on page 65.
For additional information about directors’ emoluments, please refer to the directors’ remuneration report on pages 69–77.
Directors’ interests in employee share plans
Details of the shares held by executive members of the board of directors’ are included in the remuneration report on pages 69–
77 which forms part of these financial statements.
27. Share capital
Number of
Share
shares
capital
000s
£000
At 26 July 2020
120,380
2,408
Issue of shares
8,370
167
At 25 July 2021
128,750
2,575
At 31 July 2022
128,750
2,575
The total authorised number of 2p ordinary shares is 500,000,000 (2021: 500,000,000). All issued shares are fully paid.
While the memorandum and articles of association allow for preferred, deferred or special rights to attach
to ordinary shares, no shares carried such rights at the balance sheet date.
28. Events after the balance sheet date
On 23 September 2022, the government announced a growth plan which included an intention for the main rate of corporation
tax to remain at 19%. This announcement does not affect the year ended 31 July 2022 and the change has not been
substantively enacted at the reporting date.
On 26 September 2022, the company announced that 32 of its pubs will be put on the market as part of a one-off disposal
programme. Mangaement has concluded this to be a non-adjusting event on the basis that events and conditions arose after
the end of the financial period. Of the 32 pubs being marketed, 10 are freehold and 22 are leasehold units. A reasonable
estimate of the financial effect cannot be made at this time, while valuations are still being determined.
fdfdfds
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
43
ACCOUNTING POLICIES
SECTION 2
Authorisation of financial statements and
statement of compliance with IFRSs
The financial statements of J D Wetherspoon plc
(the ‘Company’) for the 53 weeks ended 31 July 2022
were authorised for issue by the board of directors on
6 October 2022, and the balance sheet was signed
on the board’s behalf by John Hutson and Ben Whitley.
J D Wetherspoon plc is a public limited company ,
incorporated and domiciled in England and Wales .
The Company’s ordinary shares are traded on the
London Stock Exchange.
Basis of preparation
The Company’s financial statements have been
prepared in accordance with the UK-adopted
international accounting standards and have been
prepared in accordance with the requirements of the
Companies Act 2006.
The financial statements have been prepared on the
going-concern basis, using the historical cost
convention, except for the revaluation of financial
instruments.
The principal accounting policies adopted by the
Company are set out on pages 43–48. The accounting
policies which follow set out those policies which apply
in preparing the financial statements for the year ended
31 July 2022.
These policies have been consistently applied to
all of the years presented, unless otherwise stated.
Going concern
The directors have made enquiries into the adequacy
of the Company’s financial resources, through a review
of the Company’s budget and medium-term financial
plan, including capital expenditure plans and cash flow
forecasts.
The Company has modelled a base forecast in which,
over the period to 28 January 2024 as it continues to
emerge from the pandemic, sales, profit and cash flow
growth continues. The Company has anticipated within
this forecast continued high levels of inflation,
particularly on food products, wages and repairs.
A more cautious scenario has been analysed, in which
sales decline by 5% in the next 12 months, compared
with FY19. The Company has reviewed, and is
satisfied with, the mitigating actions which it could take
if such a decline were to occur. Such actions could
include reducing discretionary expenditure and/or
implementing price increases.
The directors are satisfied that the Company has
sufficient resources (eg profitability/liquidity) to
withstand adjustments to the base forecast, as well as
the downside scenario.
The Company has agreed with its lenders to replace
normal financial covenant tests with a minimum liquidity
covenant for the period up to and including January
2023, and relaxed leverage covenant tests for the
second half of the financial year to 30 July 2023. The
Company is confident that it will be in a position to
return to normal financial covenant tests thereafter. The
Company has re-financing options available including
possible extensions on the revolving credit facility.
As a result, the directors have satisfied themselves that
the Company will continue in operational existence for
the foreseeable future. For this reason, the Company
continues to adopt the going-concern basis in
preparing its financial statements.
Important judgements
The key judgements made in preparing the financial
statements are detailed below.
Hedging
The Company hedge accounts for interest-rate swaps if
it meets the specified qualifying criteria outlined by
IFRS 9. When these criteria are met, the Company is
required to measure the effectiveness of the hedged
relationship, which is defined as the extent to which
changes in the fair value of the interest-rate swap offset
changes in the fair value of the hedged item, being the
drawdowns of borrowings. Management makes
judgements in forecasting drawdowns of future
borrowings, as well as future interest rates. Changes in
these forecasts may result in all or part of the gain or
loss, which was originally reported in comprehensive
income, being deemed ineffective and therefore
transferred to the income statement. Once deemed
ineffective, the adjustment cannot be reversed. As
outlined in note 22, hedge ineffectiveness of £8,134k
has been recognised within the income statement in
the period.
The application of the IBOR reform amendments are
further discussed on page 37.
Exceptional items
A degree of judgement is required in determining
whether certain transactions merit separate
presentation to allow shareholders to better understand
financial performance in the year, when compared with
that of previous years and trends.
44
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
ACCOUNTING POLICIES
Important estimates
The areas where the Company has made significant
estimates are listed below.
Impairment of property, plant and equipment
The Company recognised impairment charges of
£26,836k (2021: £4,132k) and impairment reversals of
£3,420k during the period (2021: £Nil). Impairment
tests are performed at the end of each reporting period,
when there are indicators to do so. Impairments are
made if future cash flows are lower than the carrying
value of assets. Impairment reversals are made if
future cash flows are higher than the carrying value of
assets and the previous impairments made.
Management exercises judgement in determining
future cash flows. Assets include property, plant and
equipment, right-of-use-assets and other intangible
assets. Each pub is treated as a separate cash
generating unit. Cash flows are discounted by the
Company’s weighted average cost of capital (WACC)
of 10.2% (2021: 8.7%). For leasehold pubs, a
combination of both the WACC and the internal rate of
borrowing (IBR) per specific lease is used. Both WACC
and IBR are independently calculated. In some
instances, management recognises impairment
through obtaining the fair value less costs of disposal
for an individual pub. On these occasions, external
valuations are obtained.
Sensitivity analysis has been performed to determine
the theoretical impact on impairment should scenarios
occur which are alternative to those included within the
impairment workings. These sensitivities have been
applied to the properties impaired during the period:
A 25% reduction of year one future cash flows would
increase the impairment charge by £1,267k.
An increase of 0.8% in the WACC would increase
the impairment charge by £2,582k.
The below sensitivity has been applied to the
properties included in the company’s watch list. The
determination of the watch list considers both
quantitative and qualitative factors:
A 25% reduction of year one future cash flows would
increase the impairment charge by £3,438k.
If a previously recognised impairment charge is
reversed, the value of the pub will be increased
to the lower of the book value as if the asset had not
been impaired and the future cash flows which the
pub would generate.
Segmental reporting
The Company operates predominantly one type of
business (pubs) in the United Kingdom and the
Republic of Ireland. The company does not separately
disclose the results of the hotel business or Republic of
Ireland trading given the size, sensitive nature and
level of review by the board.
Exceptional items
The Company presents, on the face of the income
statement, those items of income and expense which,
because of the nature and magnitude of the event
giving rise to them, merit separate presentation to allow
shareholders to better understand the elements of
financial performance in the year. This helps to
facilitate comparison with previous years and to better
assess trends in financial performance. Impairment
charges, reversals of fixed assets and fair value
movements in interest-rate swaps are reported as
exceptional, regardless of magnitude, to provide
consistency of treatment with previous
years and a better understanding for the financial
statement’s users.
Property gains and losses
The Company defines property gains and losses as
those items of income and expenditure which are the
result of owning and leasing assets which are non-
recurring in nature. These include the impairment of
fixed assets, along with the proceeds and costs from
the disposal of assets. These items are presented on
the face of the income statement to more clearly
show the Company’s underlying performance. The
Company does not consider these costs to be
operating in nature.
Fixed assets
Fixed assets include property, plant and equipment,
intangible assets and investment properties’. They are
all stated at cost, less accumulated depreciation and
any impairment in value.
Cost of assets includes acquisition costs, as well as
other directly attributable costs in bringing the asset
into use.
Within note 13: property, plant and equipment, fixed
assets are categorised as:
Asset
category
Description
Depreciation policy
(straight line)
Freehold
and long-
leasehold
property
Land, buildings and
structural/building
improvement
assets at freehold
and long-
leasehold pubs.
Depreciated to their
estimated residual
values over 50
years. Land is not
depreciated.
Short-
leasehold
property
Structural/building
improvement
assets at leasehold
pubs.
Depreciated over
the lease period.
Equipment,
fixtures and
fittings
Assets within pubs
including kitchen,
bar and cellar
equipment,
furniture, IT
software and IT
hardware.
Depreciated over 3
to 10 years.
Assets
under
construction
Assets at sites
which are not yet
trading and/or
extension works to
existing pubs.
Assets are not
depreciated until
they are ready for
use.
Residual values and useful economic lives are
reviewed and adjusted, if appropriate, at each balance
sheet date.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
45
ACCOUNTING POLICIES
Profits and losses on disposal of fixed assets reflect
the difference between the net selling price and the
carrying amount at the date of disposal and are
recognised in the income statement.
The carrying value of fixed assets is reviewed annually
for impairment, with any impairment losses recognised
in the income statement.
Assets held for sale
Where the value of an asset will be recovered through
a sale transaction, rather than continuing use, the asset
is classified as held for sale. It is the view of
management that the Company is not committed to
selling a site until a contract for sale has been
exchanged. Assets held for sale are valued at the lower
of book value and fair value, less any costs of disposal,
and are no longer depreciated.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is calculated on a weighted
average basis, with net realisable value being the
estimated selling price, less any costs of disposal.
Provision is made for obsolete, slow-moving or
damaged inventory, where appropriate.
Bar and food inventory is recognised as an expense
when sold. Non-consumable inventory is recognised as
an expense immediately on receipt at a pub or hotel.
Provisions
Provisions are recognised when the Company has
a present legal or constructive obligation as a result of
a past event and it is probable that an outflow of
resources will be required to settle the obligation and
a reliable estimate can be made of that
obligation’s amount.
Revenue recognition
Revenue is recognised when bar and food products
are served to customers, after deducting discounts and
sales-based taxes.
Slot/fruit machine sales are recognised as the net
proceeds taken from the machines, after deducting
gaming duty.
Revenue from hotel rooms is recognised when
rooms are occupied and services are provided,
after deduction of discounts and sales-based taxes.
The Company operates a gift card scheme – revenue
from these cards is deferred until the card is redeemed
in pubs.
Except for hotel revenue, which is generally received in
advance of occupation, all other payments for goods
and services are received at the point of sale.
There are no significant judgements or estimations
made in calculating and recognising revenue.
Revenue is not materially accrued or deferred between
one accounting period and the next.
Government grants
Monetary and non-monetary resources transferred to
the Company by government, government agencies or
similar bodies are recognised at fair value, when the
Company receives the grant. Grants will be recognised
net in the income statement, on a systematic basis,
over the same period during which the expenses, for
which the grant was intended to compensate, are
recognised.
Grants are disclosed in the note 24 to the accounts on
page 41, which discloses government support.
Leases
The Company has leases for properties across the UK
and the Republic of Ireland. There are no other
material leases recognised under other IFRS 16
categories.
Lessee accounting
On completion of a contract (the point at which a
contract becomes legally binding), the Company
assesses whether the contract is or contains a lease.
A lease is present where the contract conveys, over a
period of time, the right to control the use of an
identified asset in exchange for a consideration.
The lease liability is measured initially at the present
value of unavoidable lease payments over the term of
the lease which in all cases is to the end of the lease.
These payments are discounted at the Company’s
incremental borrowing rate. For sites at which rent is
payable as a percentage of revenue, the lease liability
is measured at the present value of the unavoidable
minimum guarantee payments over the term of the
lease. While any amounts above this minimum amount
will be expensed to the income statement.
Where a lease is identified, the Company recognises a
right-of-use asset and a corresponding lease liability.
The lease assets are presented as a separate line in
the balance sheet.
Leases with terms of under one year are not
capitalised.
Lessor accounting
Leases, where the lessor retains substantially all of the
asset’s risks and benefits of ownership, are classified
as operating leases. If the operating lease is subject to
fixed uplifts over the term of the lease, rental payments
are charged to the income statement on a straight-line
basis, over the period of the lease, in line with adopted
accounting standards. If the operating lease is subject
to open-market rents, rental payments are charged at
the prevailing rates.
Leases where the lessor transfers substantially all of
the asset’s risks and benefits of ownership are
classified as lease assets. This occurs when the
Company sublets a leasehold site. The lease asset is
measured initially at the present value of lease
receipts, discounted at the Company’s incremental
46
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
ACCOUNTING POLICIES
borrowing rate. The lease assets are presented as a
separate line in the balance sheet.
Remeasurement
When the Company agrees to a term extension or a
change to the minimum payments made under a lease,
the lease liability or asset will be remeasured on that
date; the resulting increase or decrease to the asset or
liability will be accounted for with an offsetting
adjustment to the right-of-use asset. Reasurement is
completed at the new incremental borrowing rate. Any
remeasurement adjustment which reduces the right-of-
use asset below zero will be credited to the income
statement.
IFRS 16 Rent concession
The Company has adopted the amendment to IFRS 16
which provides lessees with an exemption from
assessing whether a COVID-19 related rent
concession is a lease modification.
Applying the practical expedient, the Company has
recognised the rent forgiveness as a variable lease
payment in accordance with IFRS 16. There is a
corresponding adjustment to the lease liability,
derecognising the part of the lease liability which has
been forgiven, with the corresponding adjustment to
operating expenses.
Where amounts have been deferred they do not
extinguish the lessee’s liability or substantially change
the consideration of the lease. These have been
accounted for as an increase in the accrual for rent
outstanding.
The Company stopped the application of COVID-19
related rent concession in June 2022.
Right-of-use asset
The right-of-use asset comprises the initial
measurement of the corresponding lease liability, any
initial direct costs and the cost of any obligation to
restore the site at the end of the lease. They are
subsequently measured at cost less accumulated
depreciation and impairment losses. Right-of-use
assets are depreciated over the term of the lease.
Termination and break of leases
Where the Company notifies the landlord to purchase
the freehold of a leasehold site, the lease is
derecognised with any difference in the value of the
lease liability and the right-of-use asset charged to the
income statement as a property gain or loss.
Where the Company notifies the landlord of the
intention to terminate (break) a lease early, the lease is
remeasured.
Borrowing costs
Borrowing costs are recognised as an expense
in the period in which they are incurred, unless
the requirements by the adopted accounting standards
for the capitalisation of borrowing costs relating
to assets are met. For the purpose of cash flow
reporting, interest paid and received is considered
to be operating cash flows.
Income taxes
Current tax assets and liabilities are measured at the
amount expected to be recovered from, or paid to, the
taxation authorities, based on tax rates and laws which
are enacted or substantively enacted by the balance
sheet date.
Deferred income tax is recognised on all temporary
differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, with the following exceptions:
Where the temporary difference arises from an
asset or liability in a transaction which, at the time of
the transaction, affects neither accounting nor
taxable profit or loss.
Deferred income tax assets are recognised only to
the extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, carried-forward tax credits or tax losses
can be utilised.
Deferred income tax assets and liabilities are
measured at the tax rates which are expected to apply
when the related asset is realised or liability settled,
based on tax rates and laws enacted or substantively
enacted at the balance sheet date.
Income tax is charged or credited directly to the
income statement, comprehensive income or equity.
The income tax charged or credited will follow the
accounting treatment of the underlying item which has
given rise to the income tax charged or credited.
Financial instruments
Financial assets and liabilities are recognised on the
date on which the Company becomes party to the
contractual provisions of the instrument giving rise to
the asset or liability.
Financial assets held at amortised cost
Financial assets held at amortised cost are non-
derivative financial assets which are held within a
business model where the objective is to collect the
contractual cash flow at the same time as the
contractual terms give rise to cash flows which are
solely payments of principal and interest. They are
included in current assets, except for maturities greater
than 12 months after the balance sheet date. These
are classified as non-current assets.
Other receivables
Other receivables are recognised initially at transaction
value and carried at amortised cost less any expected
credit losses. The Company has a small number of
receivables at any one time; these are generally with
companies with which the Company has an established
trading relationship.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
47
ACCOUNTING POLICIES
Cash and cash equivalents
Cash and short-term deposits in the balance sheet
comprise cash at bank and in hand and short-term
deposits. For the purpose of the cash flow statement,
cash and cash equivalents comprise cash and
short-term deposits as defined above. Bank overdrafts
are shown within current financial liabilities on the
balance sheet. Cash and cash equivalents include
recognition of amounts for cash in transit, including
electronic card payments not yet receipted as these are
highly liquid and low credit risk.
Credit risk
Credit risk losses arise when debtors fail to pay their
obligation to the Company. The Company assesses
credit risk, based on historic experience. The Company
has no significant history of non-payment; as a result,
the expected credit losses on financial assets are not
material.
Financial liabilities
The Company classifies its financial liabilities as other
financial liabilities. These are measured at fair value on
initial recognition and subsequently measured at
amortised cost, using the effective-interest method.
Trade and other payables
These are recognised initially at fair value
and subsequently at amortised cost, using the
effective-interest method.
Bank loans and borrowings
Interest-bearing bank loans and other borrowings are
recorded initially at fair value of consideration received,
net of direct issue costs. Borrowings are subsequently
recorded at amortised cost, with any difference
between the amount recorded initially and the
redemption value recognised in the income statement
over the period of the bank loans, using the effective-
interest method.
Bank loans and loan notes are classified as current
liabilities, unless the Company has an unconditional
right to defer settlement of the liability for at least
12 months after the balance sheet date.
Derivative financial instruments
and hedging activities
Derivative financial instruments used by the
Company are stated at fair value on initial recognition
and at subsequent balance sheet dates.
Hedge accounting is used to mitigate the Company’s
exposure to variable interest rate risks on borrowings.
Derivatives qualify for hedge accounting only where, at
inception, there is formal designation and
documentation of the hedging relationship, there is an
economic relationship between the item being hedged
and the hedging derivative and credit risk does not
dominate the economic relationship.
The Company classifies its interest-rate swap
derivatives as cash flow hedges, on the basis they
hedge the exposure to variable cash flows. A hedging
ratio of 1:1 is adopted between the interest-rate swaps
and the Company’s floating-rate borrowings, meaning
that floating interest rates paid should be identical to
those amounts received for a given amount of
borrowings.
The Company tests hedge effectiveness prospectively
using the hypothetical derivative method and compares
the changes in the fair value of the hedging instrument
with those in the fair value of the hedged item
attributable to the hedged risk.
Hedges could be deemed ineffective if the:
Period over which the borrowings were drawn were
changed. This could result in the borrowings being
made at a different floating rate than the interest-rate
swap.
Gross amount of borrowings were less than the
value swapped.
Impact of LIBOR reform were to cause a mismatch
between the interest rate of the swaps and that of the
company’s debt.
The effective element of any gain or loss from
remeasuring the derivative designated as the hedging
instrument is recognised in other comprehensive
income with the ineffective element recognised
immediately in the income statement.
Hedge accounting is discontinued when the hedge
expires, is sold, terminated or no longer meets the
Company’s risk management objective.
Share capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
When the Company repurchases its own shares,
the cost of the shares purchased and associated
transaction costs are taken directly to equity and
deducted from retained earnings. The nominal value of
shares purchased is transferred from share capital to
the capital redemption reserve.
Foreign currencies
Transactions denominated in foreign currencies
are recorded at the rates of exchange prevailing
at the transaction date. Monetary assets and liabilities
are translated at year-end exchange rates, with the
resulting exchange differences taken to the income
statement.
The Irish branch’s results are translated at the average
exchange rate for the reporting period; the balance
sheet is translated at the year-end exchange rate.
Resulting exchange differences are recognised in
comprehensive income.
Revaluation gains and losses on the long-term
financing of the Irish branch are recognised in
comprehensive income.
48
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
ACCOUNTING POLICIES
Retirement benefits
Contributions to personal pension schemes are
recognised in the income statement in the period in
which they fall due. All contributions are in respect of
a defined contribution scheme. Once the contributions
have been paid, the Company has no future payment
obligations.
Dividends
Dividends recommended by the board, but unpaid at
each period end, are not recognised in the financial
statements until they are paid (in the case of the interim
dividend) or approved by shareholders at the annual
general meeting (in the case of the final dividend).
Changes in net debt
These are both the cash and non-cash movements
of the year, including movements in asset-financing,
borrowings, cash and cash equivalents.
Share-based charges
The Company has an employee share incentive plan
which awards shares to qualifying employees; there is
also a deferred bonus scheme which awards shares to
directors and senior managers, subject to specific
performance criteria.
The cost of the awards in respect of these plans is
measured by reference to the fair value at the date at
which they are granted and is amortised as an expense
over the vesting period. In assessing the initial fair
value, no account is taken of any vesting conditions,
other than market conditions linked to the price of the
shares of the Company.
The Company currently has no other share-based
transactions.
Shares purchased for share-based payment awards
are held in equity at historic cost, until the awards vest,
when they are transferred to employees.
New accounting standards adopted in the year
Amendments to IFRS9, IAS39 and IFRS7
Interest Rate Benchmark Reform (Phase 2)
COVID-19 Related Rent Concessions beyond 30
June 2021 (Amendments to IFRS 16)
New accounting standards in issue but not yet
effective
New accounting standards and interpretations which
are in issue but not yet effective are listed below. The
Company has chosen not to adopt these early:
Disclosure of Accounting Policies (Amendments to
IAS1 and IFRS Practice Statement 2)
Classification of Liabilities as Current or Non-current
(IAS 1)
Definition of Accounting Estimates (Amendments to
IAS8)
Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (Amendments to IAS12)
Plant and Equipment – Proceeds before Intended
Use (Amendments to IAS16)
Onerous Contracts – Cost of Fufilling a contract
(Amendments to IAS37)
Alternative performance measures (APMs)
The Company uses several alternative performance
measures (APM’s) throughout the annual report and
accounts which are not defined by International
Financial Reporting Standards (IFRS). APMs are used
in conjunction with IFRS measures in reporting
financial information and assessing performance, but
are not given greater prominence. The APMs used
have been defined below, alongside reconciliations to
IFRS measures:
Free cash flow - the calculation of free cash flow 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, lease principal payments, loan issue
costs, all reinvestment in information technology, head
office and pubs trading at the start of the period
(excluding extensions) and the purchase of own shares
under the employee share incentive plan. See
reconciliation on page 12.
Like for like – compares year on year performance of
pubs and hotels which were trading in the equivalent
weeks in both FY22 and FY21.
Before exceptional items – this measure excludes
exceptional items, which are presented separately to
allow shareholders to better understand financial
performance in the year, when compared with that of
previous years and trends. See exceptional items
reconciliation on page 17.
Restatement
The income tax credit within the Income Statement for
the 52 weeks ended 25 July 2021 has been restated
from £13,581k to £17,630k. This is due to the prior year
deferred tax on hedges being incorrectly allocated
between the other comprehensive income and the
Income Statement.
The disclosures impacted have been identified
throughout the financial statements. The effect on
specific financial statement line items within the Income
Statement, Statement of Comprehensive Income and
Balance Sheet are as follows:
Income Statement
1
Reported in
52 weeks
ended 25
July 2021
£000
Restatement
£000
Restated
52 weeks
ended 25
July 2021
£000
Income tax credit
13,581
4,049
17,630
Loss for the period
(181,055)
4,049
(177,006)
Loss per ordinary share – basic (p)
(147.4)
3.3
(144.1)
Loss per ordinary share – diluted (p)
(147.4)
3.3
(144.1)
Statement of Comprehensive Income
Tax on items taken to OCI
(5,084)
(4,049)
(9,133)
Net gain recognised directly in OCI
47,664
(4,049)
43,615
Balance Sheet
Hedging reserve
(15,403)
(4,049)
(19,452)
Retained earnings
(91,256)
4,049
(87,207)
1
After exceptional items
fdfdfds
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
49
STRATEGIC REPORT
Strategy
The Company’s strategy is to seek a return on capital
in excess of the cost of the capital which will provide
funds for developments, dividends and reinvestment.
Business model
The Company operates pubs in the UK and the
Republic of Ireland and aims to sell high-quality
products, at reasonable prices, in well-maintained
premises.
Business review and future trends
A review of the Company’s business and the
key measures of its performance, sometimes called
key performance indicators (KPIs), can be found in the
chairman’s statement under the financial performance
section. The chairman’s statement also discusses
those trends and factors likely to affect the future
development, performance and position of the
Company.
Social matters
Wetherspoon provides jobs for over 40,000 people,
paying a reasonable percentage of its profits as bonus
for those working in our pubs and head office, training
large numbers of staff and paying a significant
percentage of our sales as taxes to the government.
Further information about these policies are published
on: jdwetherspoon.com
Environment
The Company is committed to operating ethically and
sustainably and to finding ways, over time, to reduce
our carbon emissions. The Company is committed to
achieve net zero emissions in the UK and Ireland by
2050 and will, if possible, reach this goal sooner.
We are currently developing a net-zero road map. In
October 2021 the Company committed to the Science
Based Targets initiative for all pub operations and the
global supply chain. Agreeing on science based targets
will ensure that the Company follows a credible and
scientifically verified carbon-reduction pathway. As part
of the plan we will work with our suppliers, building
designers, equipment providers, employees and other
business partners to minimise any effects. The
Company is working with an organisation called
Carbon Intelligence and expects to make the
submission to the Science Based Targets Initiative in
January 2023. In addition, the Company is a Zero
Carbon Forum member, a non-profit-making
organisation which is supporting the hospitality industry
to comply with government reporting requirements and
implement a roadmap to net-zero carbon emissions.
The Company has been recognised for reducing its
greenhouse gas emissions. It has been listed in the
2022 FT-Statista Europe’s Climate Leaders list,
highlighting companies which, over a five-year period,
have achieved the greatest reduction in emissions.
Overall the company has achieved a reduction of
23.6% in Scope 1 and Scope 2 emissions since 2019.
The Company is focused on reducing annual electricity,
gas and water consumption through a combination of
operational initiatives and the introduction of energy-
efficient technology. This approach will also reduce
carbon emissions.
The Company has an energy and environment group,
which meets regularly, chaired by the finance director,
Ben Whitley.
Each pub has an energy, environment and recycling
champion, responsible for reducing consumption at his
or her pub and communicating ideas and initiatives to
staff. These energy champions help to encourage
changes in behaviour, like using ‘fire up’ and ‘power
down’ guides to ensure that pubs minimise energy
consumption when they are closed. Each pub receives
a monthly report, detailing the amount of electricity and
gas consumed, highlighting periods of excessive
consumption and communicating ideas about how to
reduce consumption.
Several pieces of energy-saving technology are
now installed as standard in any new pubs and will be
retrospectively fitted into existing pubs across the
estate. These include:
free-air cellar-cooling systems (these cool the cellar
by bringing in outside air, when the external
temperatures are low enough)
movement-sensor lighting
LED lighting
heat-recovery systems
Cheetah extraction management systems controlling
ventilation in kitchens
The Company trials new ideas and energy-saving
technology consistently to reduce consumption and
CO2 emissions, these have included:
solar panels
rainwater-harvesting systems
ground-source-heat pumps
adiabatic cooling systems
wind turbines
building energy management systems (BMS)
voltage-optimising equipment
With effect from October 2022, all electricity supplied to
the Company’s pubs in the UK, head office, and the UK
distribution centre will have been generated from 100%
renewable sources.
Water usage is monitored in pubs and head office.
Where possible, we are installing low-flow or push
button taps, along with toilets which require less water
to flush. In addition, the Company is trialling data
management systems which help to pinpoint water
consumption changes which may indicate a change in
behaviour or a supply leak.
Scope 3 emissions are the largest contributor to the
Company’s overall carbon emissions, representing an
estimated 89% of our total output, however measuring
carbon emissions in our supply chain is complex.
50
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
STRATEGIC REPORT
As our starting point we are allocating carbon
emissions to every product which we sell, including
food, drinks and hotel rooms. Where detailed data is
not currently available, we are making assumptions
based on industry averages. Over time, this data
quality will improve. Reducing our scope 3 emissions
will rely ultimately on a partnership approach with our
UK and worldwide suppliers and on their own plans to
reduce carbon emissions.
Pollution and waste
As a business, we aim to minimise waste and
maximise recycling. Our target is to recycle 95% of
recyclable waste.
The pubs and head office segregate waste into a
minimum of seven streams: glass, tin/cans, cooking oil,
paper/cardboard, plastic, lightbulbs and general waste.
In addition, food waste is also separated and sent for
anaerobic digestion. Any remaining non-recyclable
waste is sent to waste-to-energy power plants which
reduce CO2 and the use of fossil fuels. No waste is
sent to landfill.
The Company has a national distribution centre for
food, some bottled drinks and non-consumable
products. This also includes a recycling centre. When
making deliveries to pubs, lorries collect mixed
recycling, used cooking oil, textiles and aluminium for
return to the recycling centre for processing.
During the financial year 2021/22, the pubs sent 10,681
tonnes of waste to the recycling centre, an increase of
4,723 tonnes, or 79%, on the previous year.
Any unwanted, yet fit-for-consumption, food is donated
to our charity partner FareShare, which distributes it to
food banks, community centres and others in need.
Cooking oil is converted to biodiesel for agricultural
use.
The volume of paper used to print menus and other
marketing materials has reduced by about 35% in the
last three years, partly through improved management
at pub level and also changing customer habits.
The Company has set the following targets by 2025:
100% of plastic packaging to be reusable, recyclable
or compostable
70% of plastic packaging to be effectively recycled or
composted
30% average recycled content across plastic
packaging
Action, through redesign, innovation or alternative
(reuse) delivery models, to elimate problematic or
unnecessary single-use plastic items
To date, the following steps have been taken to reduce
the use of single-use plastics:
Plastic straws were removed in December 2017 and
replaced with 100% biodegradable and 100%
recyclable paper straws and wrappers.
Complimentary water fountains available in all pubs,
offering an alternative to plastic water bottles.
Plastic containers used in the kitchen are now
reusable.
The Company no longer uses cling film.
Plastic milk cartons are segregated and recycled
separately. Coloured lids have been replaced with clear
recyclable lids.
Working with suppliers and with the support of
WRAP and the Sustainable Restaurant Association to
reduce and, where possible, remove the use of plastic
packaging for food.
The Company does not create any toxic emissions or
waste. Electronic waste is disposed of using
specialised contractors to safely dispose of the items.
Where possible, computer equipment is sent suppliers
to refurbish and reuse. Any disposal is compliant with
the EU Waste from Electrical and Electronic Equipment
(WEEE) directive.
On construction sites, there is a site waste
management plan, managed by the main contractor
and covering all waste disposal from sites.
Human rights
The Company is committed to respecting human rights
across our business by complying with all relevant laws
and regulations. The Company prohibits any form of
discrimination, forced, trafficked or child labour and is
committed to safe and healthy working conditions for all
individuals, whether employed by the Company directly
or by a supplier in our supply chain.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
51
STRATEGIC REPORT
Legal and ethical conduct
The Company has comprehensive measures to meet
its statutory requirements across all areas of its
operation and also those expected by our customers
and employees, as necessary, for the long-term
success of the business. Risks in this area can occur
from corruption, bribery and human rights abuses,
including discrimination, harassment and bullying.
The Company has training programmes for all
employees. It also has a documented whistleblowing
programme, documented processes and procedures
and a supply chain audit programme.
Employees
All employees are encouraged to participate
in the business, some examples of how this is
achieved being:
Several Company initiatives to encourage
employees to suggest small and continuous
improvements to the running of their pubs
‘Tell Tim’ suggestion scheme for all employees
Pub managers, area managers and other pub
employees attending and contributing to weekly
operations meetings, hosted by the chairman or
chief executive
Area managers invited to meet the
board of directors (before each board meeting)
Regular liaison meetings held with employees,
at all levels, to gain feedback on aspects of the
business and ideas for improvement
Directors and senior management completing
regular visits to pubs – and pub employees regularly
visiting head office
The appointment this year of two employee directors
to the full board of the Company and two associate
employee directors
Weekly e-mail from the chief executive
to all employees
Employee-related measures being
part of the pub bonus scheme
Head-office staff completing regular pub and kitchen
shifts (both front of house and in the kitchen) to help
in understanding any staff/customer issues
Pub employees involved in the decision-making
process for key business issues
Employee diversity
The table below shows the breakdown of directors,
senior managers and employees at the end of the
period.
Male
Female
Directors
7
2
Senior managers
558
382
All employees
19,998
22,750
Section 172 statement
Section 172 of the Companies Act 2006 requires that
directors of a Company act in good faith to promote the
success of the Company for all stakeholders.
In the period, all directors of the Company have acted
in a manner most likely to achieve the long-term
success of the business for its shareholders,
employees, customers, suppliers and the wider
community in which the Company operates.
In the period, the directors have taken decisions in a
number of areas, including: the safe operation of its
pubs and compliance with COVID-19 legislation and
guidance and loan waivers and liquidity.
Examples of the Company’s engagement with
stakeholders are:
Wherever practical, directors consult widely among
the Company’s employees, about decisions made
about the Company. The directors believe that wide
consultation and a management team with extensive
industry experience are likely to result in the best long-
term decisions. The Company’s senior management
team regularly engages with pub-based employees
through meetings, pub visits and surveys.
Most of the Company’s employees are customers
and many are shareholders. The Company encourages
its employees to feed back their views, as well as those
of their friends and familiy. The Company operates a
suggestion scheme whereby any employee can send in
ideas and/or make a recommendation for the
improvement of the Company.
Details of the Company’s employment policy are
disclosed on pages 83-84. Information on employee
engagement can be found above.
Where possible, the Company forms long-term
relationships with suppliers, so that all parties have a
more certain environment in which to operate. The
Company’s responsible retailing policy is published on
the website.
The Company communicates with its customers
through its website and Wetherspoon News. A special
magazine edition of which focuses on press
misrepresentations.
Information on human rights, environmental and
social matters, food safety, cyber security and
reputational matters is provided in this strategic report,
while further information is published on our website.
Information on shareholder engagement is provided
in the corporate governance report. Questions and
answers from the interim results investor roadshow
(March 2022) were published on the Company’s
website and the London Stock Exchange Regulatory
News Service (RNS).
52
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
STRATEGIC REPORT
Principal risks and uncertainties facing the Company
In the course of normal business, the company continually assesses significant risks, categorised based on impact and
likelihood. The following risks, while not intended to be a comprehensive analysis, constitute (in the opinion of the board)
the principal risks and uncertainties currently facing the company.
Business strategy
Supply chain disruption
Risk description
The Company is aware that, in operating in a
consumer-facing business, its business reputation,
built over many years, can be damaged in a
significantly shorter time frame. The Company
faces further risks through the competitive nature
of the industry and the ‘staying in fashion’.
.
Risk description
There is a risk that we will be unable to supply
our pubs with the right products, when they need
them, at a competitive price. All of which are
fundamental to the success of the company.
Changes during the year
Industry is increasingly competitive.
Changing consumer habits (post COVID-19, health
reasons & cost of living crisis).
Changes during the year
Inflationary pressures across the sector increasing
costs of products.
Availability of products owing to disruptions in global
markets (eg war, COVID-19, climate change).
Residual risk and impact on the business
Failure to execute the right strategy could damage reputation
and affect profits.
Residual risk and impact on the business
Loss of profits owing to high product prices would reduce
profits. Equally, reputation could be damaged through
availability of items on the menu or passing on cost
increases to customers through price rises.
Risk mitigation
Challenging incorrect publications about the Company.
Staying relevant through innovation of offerings in pubs.
Key competitor monitoring their offerings and prices.
Regular senior management reviews of strategic
positioning and performance.
Risk mitigation
The Company works closely with its suppliers and
central distribution partners, in order to maintain
availability of products.
The Company conducts audits of its supply chain.
Long-term relationships with suppliers allow savings to
be made through the purchase of large volumes.
Health and safety
Legal and regulatory
Risk description
There is a risk relating to the health and safety of
our customers, employees and contractors if
correct processes are not followed in relation to
food contamination, equipment failure, harmful
surroundings and hazardous substances (eg
asbestos).
Risk description
The industry is highly regulated, with frequent
increases in alcohol duty and other taxes. There
is a risk that the Company does not comply with
regulations or there are breaches of internal
policies.
Changes during the year
Continued focus on food hygiene ratings and overall
improvement across the estate.
Changes during the year
Introduction of TCFD reporting requirements.
COVID-19 regulations.
Residual risk and impact on the business
Ineffective health and safety practices could result in
prosecution, closure of pubs and reputational damage.
Residual risk and impact on the business
Non-compliance could result in financial penalties, criminal
prosecution and reputational damage.
Risk mitigation
Food hygiene audits are performed.
All employees are provided with health and safety
training.
Pubs are provided with the necessary resources and
support to ensure that safe working practices are
maintained.
Buildings are reviewed for asbestos at the investment
stage.
Risk Mitigation
In-house legal team who have regular meetings with
the executive team.
Continued update of knowledge on changing
regulations through training, completion of qualifications
and communication with third party specialists.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
53
STRATEGIC REPORT
Technology, cyber security, data security
People
Risk description
There is a risk of losing key information or
disrupting the operation of the business through
system failures, cyber-attacks and internal or
external data breaches.
Risk description
Attracting the right people to ensure the
Company succeeds, ensuring that our pubs are
sufficiently staffed and retaining key personnel
who hold company knowledge.
Changes during the year
There have been no material changes during the year.
Changes during the year
The market has become increasingly competitive owing
to inflationary pressures on wages.
Absences due to the impact of COVID-19.
Residual risk and impact on the business
Any prolonged or significant failure of these systems could
pose a risk to trading, including loss of profits and
reputational damage.
Residual risk and impact on the business
Failure to retain or attract the right people could result in the
Company being unable to implement its strategies, resulting
in market and reputational risks.
Risk Mitigation
The Company seeks to minimise this risk by ensuring
that there are technologies, policies and procedures to
ensure protection of hardware, software and
information (by various means), including a disaster-
recovery plan, systems of backups and external
hardware and software.
The Company continually assesses the risks posed by
cyber threats and makes changes to its technologies,
policies and procedures to mitigate identified risks.
Risk mitigation
The Company offers bonuses, free shares, long-service
awards, paid training, staff discounts and a genuine
opportunity to progress within the business.
The Company involves the broader senior management
team in decision-making to provide it with sufficient
exposure, so that, if the need to replace an executive
management team member were to arise there are
well-qualified internal candidates.
Business continuity, crisis management and disaster
recovery
Liquidity and financing
Risk description
There is a risk that unexpected events such as
fires, floods and pandemics will affect the
Company’s ability to operate.
Risk description
The Company has a risk of being unable to
maintain cash flows to meet the needs of the
business and/or meet its covenants.
Changes during the year
Continued impact of COVID-19, primarily the Omicron
variant in December 2021.
COVID-19 government support no longer available.
Changes during the year
Waivers on external borrowings have been negotiated
with lenders whilst the business recovers post COVID-
19.
No dividends have been paid or announced in the
financial year.
Residual risk and impact on the business
The nature of these risks is outside of the Compay’s control,
therefore without sufficient disaster-recovery plans, the
impact could be catastrophic. Examples of such impacts
could be loss of buildings, people and customers.
Residual risk and impact on the business
With insufficient funding, the business may not be able to
grow in line with plans. Breaches of covenants could result in
financial penalties. Cash-flow may disrupt payment of
employees and suppliers, damaging relationships and the
Company’s reputation.
Risk mitigation
Mitigating actions taken by the Company will depend on
the nature of the event, how much foresight the
Company had of the event and the reaction of the
government, business and the public.
Comprehensive disaster-recovery plan, seeking to
minimise the impact of any such incidents.
Risk mitigation
Sales, profitability, debt requirements and cash flow are
reviewed weekly by a team which includes the
chairman, chief executive, finance director and senior
finance managers
The Company has dealt with the risks of an increase in
interest rates by swapping the majority of its floating-
rate borrowings into fixed rates which expire in 2029.
Risk change year on year:
Increased
Unchanged
Decreased
By order of the board
Nigel Connor
Company Secretary
6 October 2022
54
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
Task Force on Climate-related Financial Disclosures (TCFD)
J D Wetherspoon recognises the risk of climate change and is committed to incorporating the recommendations outlined by the
Task Force on Climate-related Financial Disclosure (TCFD).
This report outlines the assessment performed by management in establishing the key climate-risks and opportunities to the
business which have been identified to date, split by the four TCFD pillars; governance, risk management, strategy and metrics
& targets. Management deems these disclosures to be compliant with TCFD’s recommendations.
Governance
Climate change is an established risk on the Company’s risk register. It is reviewed with prominence equal to that of the
Company’s other risks. The board of directors has overall responsibility for the risk register, which is a permanent item on the
board’s monthly agenda.
The Company’s energy and environment group meets on a fortnightly basis. The Group is chaired by Ben Whitley (Finance
Director). The group tracks the progress of goals and targets, and will monitor the Company’s science-based target plan once
submitted to the Science Based Target initiative (SBTi) by the end of the calendar year. Key initiatives discussed by this focus
group are communicated to the business via environment champions, who are responsible for communicating energy,
environment, waste & recycling best practice back to their pubs. All employees receive training on environmental matters.
Risk management
As mentioned on page 82, the internal audit department is responsible for the day-to-day management of the risk register,
including identifying and assessing of new and current risks. Risks are categorised according to the probability of occurrence
and severity of impact. The internal audit team works alongside risk owners to determine and document mitigations to each of
the Company’s risks.
The Company is a member of the Zero Carbon forum – a group which supports the hospitality sector to meet its carbon
reduction targets. The Company is also working with Carbon Intelligence to develop and implement a robust and credible
carbon reduction strategy through the implementation of science based targets.
Strategy
The Company recognises that it faces both environmental risks and opportunities relating to climate change. To date,
discussions and analysis has focused on, but is not limited to, the following impacts on the business; carbon taxes, availability of
electricity, changes to transport networks, changes in customers’ behaviour, coastal erosion, flooding, supply chain disruption,
availability and pricing of products. Management has disclosed three of these risks and one opportunity. Management assess
the impact of climate charge over the short, medium and long term and estimate the financial impact.
As climate change evolves, management will continue to assess new risks and opportunities, measure against those already
identified, explore potential mitigations, and in the future, consider incorporating into the strategic and financial planning of the
business. The Company deems the current energy saving and consumption reduction ideas in place to be a resilient and
positive start, but will continue to assess the impact and changes required. (See pages 49-50 for details).
Key
Metrics and targets
The energy and environment group is working towards submitting a credible science based target plan to the SBTi (Science
Based Target initiative) by the end of the calendar year, in the future will split by FLAG emissions. The Company is working
towards the Government Net Zero Strategy by 2050 and will provide updates on progress within future reports.
The Company has reported its GHG emissions since 2014. Emission and consumption data can be found on page 68. In the
future, once established, this will include scope 3. A list of the environmental initiatives already under way can be found on
pages 49-50.
Risk/opportunity
Impact
Risk type
Time
horizon
Financial
impact
Lack of availability of
products from the supply
chain.
A lack of availability of products would increase costs and
lower profitability. Any increased costs passed onto the
customer or a reduced availability of products available to
purchase could affect sales.
Physical/
transitional
Medium
High risk
Increased likelihood of
flooding from more rain
and rising sea levels.
Pub closures would affect the profitability of the Company,
through lower sales, potential insurance premiums and the
relocation of staff.
Physical
Medium
Medium risk
Negative stakeholder
perception if J D
Wetherspoon is seen to
not be doing enough to
tackle climate change.
Reputational damage could result in fewer customers visiting
the pubs and therefore lower sales.
The Company may struggle to attract investors, affecting its
ability to access finance.
Transitional
Short
High risk
UK heat waves may result
in produce typically grown
in warmer climates being
grown closer to home.
If temperatures were to rise by 2° C or more, produce such as
tomatoes, oranges, grapes for wine and more could be grown
in the UK. This could lower the Company’s carbon footprint
while reducing produce costs due to less transportation and
import fees.
Physical
Long
Opportunity
Risk Type
Physical
Risks due to longer-term shifts in climate patterns
such as weather disruption.
Transitional
Risks in transitioning to a lower-carbon economy, for
example new policies or regulations.
1
Risk categories defined by the TCFD
Time horizon
Long
25 years +
Medium
10-25 years
Short
0-10 years
Financial Impact
2
High risk
>£25m
Medium risk
£5-25m
Low risk
<£5m
2
Annual impact
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
55
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF J D WETHERSPOON PLC
Opinion
Our opinion on the financial statements is
unmodified
We have audited the financial statements of J D
Wetherspoon plc (the ‘company’) for the 53 weeks
ended 31 July 2022, which comprise the Income
statement, the Statement of comprehensive income,
the Cash flow statement, the Balance sheet, the
Statement of changes in equity and notes to the
financial statements, including a summary of significant
accounting policies. The financial reporting framework
that has been applied in their preparation is applicable
law and UK-adopted international accounting
standards.
In our opinion, the financial statements:
give a true and fair view of the state of the
company’s affairs as at 31 July 2022 and of its profit for
the 53 weeks then ended;
have been properly prepared in accordance with UK-
adopted international accounting standards; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the ‘Auditor’s
responsibilities for the audit of the financial statements’
section of our report. We are independent of the
company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the
appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the company’s ability to continue
as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in
our report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to
modify the auditor’s opinion. Our conclusions are
based on the audit evidence obtained up to the date of
our report. However, future events or conditions may
cause the company to cease to continue as a going
concern.
A description of our evaluation of management’s
assessment of the ability to continue to adopt the going
concern basis of accounting, and the key observations
arising with respect to that evaluation is included in the
Key Audit Matters section of our report.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the company’s ability to continue
as a going concern for a period of at least twelve
months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is appropriate.
In relation to the company’s reporting on how it has
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements
about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
The responsibilities of the directors with respect to
going concern are described in the ‘Responsibilities of
directors for the financial statements’ section of this
report.
56
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
INDEPENDENT AUDITORS’ REPORT
Our approach to the audit
Overview of our audit approach
Overall materiality: £5,000,000, which represents 0.29% of the company’s
revenue.
Key audit matters were identified as:
The impairment of property, plant and equipment and right of use
assets (same as previous period); and
Going concern (in the prior year this was included as a matter
described in the ‘Material uncertainty related to going concern’
section).
Our auditor’s report for the 52 weeks ended 25 July 2021 included the
following matters which have not been reported as a key audit matter in our
current period’s audit report:
Management override of controls – the presentation of exceptional
items; and
The application of International Financial Reporting Standard (IFRS)
16 “Leases”.
Management override of control - the presentation of exceptional items
remains a significant risk. However, due to a decrease in the level of
judgement in relation to those items included as exceptional items, this is no
longer identified as a key audit matter.
The application of International Financial Reporting Standard (IFRS) 16
“Leases” was included as a key audit matter in the previous period due to the
identification of a prior period adjustment in respect of 2020 and the impact of
rental concessions granted in relation to the Covid-19 pandemic. We do not
consider these items to be a significant risk in the current year.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit
matters
Scoping
Materiality
Description
Audit reponse
Disclosures
Our results / Key
observations
KAM
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
57
INDEPENDENT AUDITORS’ REPORT
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
58
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
INDEPENDENT AUDITORS’ REPORT
Key Audit Matter
How our scope addressed the matter
The impairment of property, plant and
equipment (“PPE”) and right of use assets
(“ROU assets”)
We identified impairment of PPE and ROU
assets as one of the most significant assessed
risks of material misstatement due to error.
PPE represents the largest balance on the
balance sheet (31 July 2022: £1.4bn / 25 July
2021: £1.4bn). Further to this, there are ROU
assets recognised which must be considered for
impairment (31 July 2022: £0.4bn / 25 July
2021: £0.5bn).
The directors consider each individual pub to be
a separate cash generating unit. The directors
are required to undertake an impairment
assessment where events indicate that the
carrying value of the cash generating unit may
not be recoverable.
The process for measuring and recognising
impairment under International Accounting
Standard (IAS) 36 ‘Impairment of Assets’ is
complex and requires significant judgement,
including assumptions within management’s
assessment of the impact of the geopolitical and
cost of living factors on future trading activity for
each pub, the determination of the appropriate
discount rate to be applied to those cashflows,
as well as the valuation of properties.
Management identify pubs which have an
indicator of impairment (management’s
“Watchlist” of pubs) and management then risk
rate the Watchlist of pubs into “moderate” and
“high risk” based on recent trading performance.
Our significant risk has been pinpointed to those
pubs classified as high risk on management’s
“Watchlist” of pubs.
Relevant disclosures in the Annual Report
and Financial Statements 2022
Financial Statements: Note 13, PPE
Accounting Policies: Important estimates,
Impairment of PPE
Corporate Governance: Significant financial
reporting items.
In responding to the key audit matter, we performed the following
audit procedures:
Considering the accounting policy for compliance with IAS 36 and
that the application by the company is consistent with the stated
policy;
Assessing the design effectiveness of controls, including the
methodology applied by management to identify indicators of
impairment and when performing their impairment test for each of the
relevant pubs;
Understanding and challenging management on the approach to
creating the watchlist and challenging management on its
completeness, including any pubs which are performing below the
remainder of the estate since returning to a more “normal” trading
period;
Recalculating the arithmetical accuracy and integrity of
management’s impairment model, by checking the internal
consistency of formulae and performing sample checks on the inputs
and assumptions made in managements model to identify indicators
of impairment;
Validating that the methodology of the impairment exercise is
consistent with the requirements of IAS36 Impairment of Assets,
including appropriate identification of CGUs and the allocation of costs
in the value in use calculations;
Agreeing a sample of impairment model inputs to supporting
documentation, including lease agreements, historic pub profit figures
and the fixed asset register;
Engaging our internal valuation experts to independently calculate
the discount rate and compare it to the discount rate applied in the
models by management;
Identifying pubs with declining profits from our revenue testing
which could have indicators of impairment;
Comparing management’s assumptions within the impairment
model against external economic forecasts reflecting the uncertainties
inherent within the current economic environment;
Obtaining management’s risk categorisation between ‘high-risk’
and ‘moderate-risk’ pubs and ensuring the correct classification of
pubs in the impairment review and consistency between periods;
Obtaining corroborative evidence to support management’s
judgements used for those pubs with indicators of impairment, with
special audit consideration on pubs classified as “high risk” including
evidence for changes made to the pubs, discussions with pub
managers / area managers, review of pub space and plans and
evidence for changes made to operations;
Performing sensitivity analysis based on reasonably possible
changes to key assumptions determined by management being the
discount and cost inflation rates; and
Assessing the disclosures in the notes to the financial statements
against the requirements of IAS 36 Impairment of Assets, in particular
the requirement to disclose further sensitivities for CGUs where a
reasonably possible change in a key assumption would cause an
impairment.
Key observations
We identified that additional immaterial impairments were required in
relation to the impairment of PPE and ROU assets.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
59
INDEPENDENT AUDITORS’ REPORT
Key Audit Matter
How the scope addressed the matter
Going concern
We identified going concern as a significant risk
due to the ongoing impact of Covid-19,
geopolitical and inflationary cost pressures on
current and forecast trading performance,
liquidity levels and covenant compliance and the
challenges these factors present to
management when preparing their going
concern assessment.
In addition to this, as auditors, we are required
to “obtain sufficient appropriate audit evidence
about the appropriateness of management's use
of the going concern assumption in the
preparation and presentation of the financial
statements and to conclude whether there is a
material uncertainty about the entity's ability to
continue as a going concern” (ISA (UK) 570).
Management has modelled a base case
forecast in which, over the period to 28 January
2024 as it continues to emerge from the
pandemic, sales, profit and cash flow growth
continues. Management have anticipated within
this forecast continued high levels of inflation,
particularly on food products, wages and
repairs.
A more cautious “downside” scenario has been
analysed, where sales decline by 5% in the 52
weeks ending 30 July 2023, compared to last
comparable full trading period pre the pandemic
and then converges with the base case for the
remainder of the going concern period to 28
January 2024. The company has reviewed, and
is satisfied with, the mitigating actions it could
take if such a decline were to occur. Such
actions could include reducing discretionary
expenditure and/or implementing price
increases.
The company has two EBITDA-related
covenants attached to two of their debt facilities,
the RCF and USPP loan. These covenants
have been waived until the end of January 2023
(Q2 FY23), with the first forecast assessment
period set to be the end of April 2023 (Q3 FY23)
albeit at a reduced level to normal covenant
levels. Covenants will return to normal levels
from the end of the October 2023 (Q1 FY24).
Relevant disclosures in the Annual Report
and Financial Statements 2022
The company’s accounting policy on going
concern is shown in ‘accounting policies’ to the
financial statements on page 43.
In responding to the key audit matter, we performed the following
audit procedures:
obtained and challenged management’s base case forecast for the
period to 28 January 2024, together with supporting evidence for all
key trading, working capital and cash flow assumptions;
obtained and challenged management’s downside scenario, which
reflects a reasonably possible sales decline and management’s
response via controllable mitigating actions;
tested the clerical accuracy of management’s assessment,
including forecast liquidity and covenant compliance under
management’s base and downside scenarios;
assessed the robustness of forecasts prepared by comparison to
forecasts made in prior periods, including assessing management’s
historic ability to forecast, and in light of our understanding of the
company’s operations;
following our review of management’s board memorandum, we
identified the areas of business operations which could be most
affected by rising costs and sought evidence to corroborate
management’s attempts to quantify the potential impact. We also
sought evidence to support that the mitigating actions highlighted by
management would be achievable and effective;
applied professional scepticism in performing our own independent
reverse stress test of management’s cash flow forecast models and
their impact on forecast liquidity and banking covenants to identify
under what circumstances the company’s covenants and liquidity
would be compromised, and whether the scenario has no more than a
remote possibility of occurring;
obtained correspondence in relation to covenant waivers and
amendments and confirmed that the terms and conditions therein
were consistent with those applied by management in their base case
and downside scenario forecasts, including the period over which the
banks have confirmed that these waivers and amendments are in
place; and
assessed the disclosures made within the financial statements for
consistency with management’s assessment of going concern and
whether they are in line with the accounting standards.
Key observations
We have nothing to report in addition to that stated in the ‘Conclusions
relating to going concern’ section of our report.
.
.
60
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
INDEPENDENT AUDITORS’ REPORT
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the
opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Company
Materiality for
financial statements
as a whole
We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of these financial statements. We
use materiality in determining the nature, timing and extent of our audit work.
Materiality threshold
£5,000,000, which is 0.29% of revenue.
Significant judgements
made by auditor in
determining the
materiality
In determining materiality, we made the following significant judgements:
We evaluated a range of benchmarks, including revenue, profit before tax and
total assets. We consider revenue to be the most appropriate benchmark given
the recent volatility of earnings and we selected a percentage at the lower end of
our acceptable range. This represents a change from the prior year when
materiality was based on a 3 year average of profit / (loss) before tax.
Materiality for the current period is lower than we determined for the period ended
25 July 2021. We lowered materiality as we did not consider an increase from the
prior year and / or pre-Covid levels to be appropriate given profitability has not yet
returned to pre Covid-19 levels. The materiality was consistent with 2019
materiality, the last normal period of trading prior to Covid-19.
Performance
materiality used to
drive the extent of our
testing
We set performance materiality at an amount less than materiality for the
financial statements as a whole to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Performance materiality
threshold
£3,750,000, which is 75% of financial statement materiality.
Significant judgements
made by auditor in
determining the
performance materiality
In determining performance materiality, we made the following significant
judgements;
Whether there were any significant adjustments made to the financial
statements in prior years
Whether there were any significant control deficiencies identified in prior years
Whether there were any changes in senior management during the period
Whether there were any significant changes in business objectives/strategy
Specific materiality
We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of lesser
amounts than materiality for the financial statements as a whole could reasonably
be expected to influence the economic decisions of users taken on the basis of
the financial statements.
Specific materiality
We determined a lower level of specific materiality for certain specific areas,
being directors’ remuneration and related party transactions.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
61
INDEPENDENT AUDITORS’ REPORT
Materiality measure
Company
Communication of
misstatements to the
audit committee
We determine a threshold for reporting unadjusted differences to the audit
committee.
Threshold for
communication
£250,000 and misstatements below that threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the company’s business and in particular matters
related to:
Understanding the company and its environment, including controls
The engagement team obtained an understanding of the company and its environment, including the controls and the
assessed risks of material misstatement. We performed interim and advanced audit procedures as well as an evaluation
of the internal control environment, including the company’s IT systems and controls.
Performance of the audit
We performed the majority of our work on-site and undertook substantive testing on significant transactions and material
account balances, including the procedures outlined above in relation to key audit matters. There were no significant
changes to the scope of the audit compared to the prior period audit.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
Annual Report and Financial Statements, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Revenue
£1.74bn
PM
£3.750m,
75%
TFPUM
£1.250m, 25%
FSM
£5.0m,
0.29%
FSM: Financial statements materiality
PM: Performance materiality
TFPUM: Tolerance for potential uncorrected
misstatements
62
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
INDEPENDENT AUDITORS’ REPORT
Our opinions on other matters prescribed by the Companies Act 2006 are unmodified
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements and those reports have been prepared in accordance
with applicable legal requirements;
the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency
Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements; and
information about the company’s corporate governance code and practices and about its administrative, management
and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit,
we have not identified material misstatements in:
the strategic report or the directors’ report; or
the information about internal control and risk management systems in relation to financial reporting processes and
about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
the financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the
accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
a corporate governance statement has not been prepared by the company.
Corporate governance statement
The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements, or our knowledge obtained
during the audit:
the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting in preparing the financial statements and the directors’ identification of any material
uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements.
the directors’ explanation in the Annual Report and Financial Statements as to how they have assessed the prospects
of the company, over what period they have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the company will be able to continue in operation and
meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention
to any necessary qualifications or assumptions;
the directors’ statement that they consider the annual report and financial statements taken as a whole is fair,
balanced and understandable and provides the information necessary for shareholders to assess the company’s
performance, business model and strategy;
the directors’ confirmation in the annual report that they have carried out a robust assessment of the principal and
emerging risks facing the company including the impact of Covid-19 and the disclosures in the annual report that
describe the principal risks, procedures to identify emerging risks and an explanation of how they are being managed or
mitigated including the impact of Covid-19;
the section of the annual report that describes the review of the effectiveness of the company’s risk management and
internal control systems, covering all material controls, including financial, operational and compliance controls; and
the section of the annual report describing the work of the audit committee, including significant issues that the audit
committee considered relating to the financial statements and how these issues were addressed.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
63
INDEPENDENT AUDITORS’ REPORT
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. The description forms part of the auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial
statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs
(UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
We obtained an understanding of legal and regulatory frameworks applicable to the company and the industry in
which it operates through review of prior year financial statements, enquiries of management, the finance team, Head of
Legal and the Audit Committee. We determined that the following laws and regulations were most significant: UK-
adopted international accounting standards, IFRIC Interpretations, Companies Act 2006, Listing Rules and the UK
Corporate Governance Code;
We enquired of management and the board of directors whether they were aware of any instances of non-
compliance with laws and regulations and whether they had any knowledge of actual, suspected alleged fraud;
We enquired of management, the finance team, Head of Legal and the Audit Committee about the company’s policies
and procedures relating to the identification, evaluation and compliance with laws and regulations and the detection and
response to the risks of fraud and the establishment of internal controls to mitigate risks related to fraud or non-
compliance with laws and regulations;
We obtained an understanding of how the company is complying with those legal and regulatory frameworks by
making enquiries of management, those responsible for legal and compliance procedures and the company secretary.
Our findings were corroborated by review of the board minutes and papers provided to the audit committee and a
review of HMRC correspondence;
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud
might occur. Audit procedures performed by the engagement team included:
- Obtaining an understanding of how those charged with governance considered and addressed the potential
for override of controls or other inappropriate influence over the financial reporting process;
- Challenging assumptions and judgements made by management in its significant accounting estimates;
- Identifying and testing journal entries with a focus on journals indicating large or unusual transaction or
account combinations based on our understanding of the business, including material journal entries
impacting the profit and loss accounts as well as journal entries posted by key management personnel;
- Applying audit data analytics techniques across the revenue population to match revenue recorded to cash
receipts and investigating and corroborating any expected exceptions;
- Applying audit data analytics techniques across the costs of goods sold population to match revenue recorded
to cost of goods sold and investigating and corroborating any expected exceptions;
- Assessing matters reported through the company’s whistleblowing programme and the results of
management’s investigation of such matters; and
-
64
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
INDEPENDENT AUDITORS’ REPORT
- Identifying and assessing the design effectiveness of controls management has in place to prevent and detect
fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from
fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that
result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also,
the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial
statements, the less likely we would become aware of it;
The engagement partner assessed the appropriateness of the collective competence and capabilities of the
engagement team, by considering the engagement team’s understanding of, and practical experience with, audit
engagements of a similar nature and complexity;
We communicated relevant laws and regulations and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Other matter which we required to address
Following the recommendation of the audit committee, we were appointed by the board on 9 November 2017 to audit
the financial statements for the period ended 29 July 2018 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 5 years,
covering the periods ended 29 July 2018 to 31 July 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company and we remain
independent of the company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Marc Summers BSc (Hons) FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
6 October 2022
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
65
DIRECTORS AND OFFICERS
A founder-led company with a combined executive board experience of 86 years.
Key
Ⓑ
Board
member
Ⓜ
Management
board
Ⓐ
Audit
committee
Ⓝ
Nomination
committee
Ⓡ
Remuneration
committee
EXECUTIVE BOARD
DIRECTORS
Tim Martin, Chairman, aged 67
Founded the Company in 1979, having previously studied law at
Nottingham University and qualified as a barrister. He became
chairman in 1983.
Ⓑ
Su Cacioppo, Personnel and Legal Director, aged 55
Joined in 1991 and was appointed to the board in 2008. She is a
graduate of South Bank University and London Guildhall
University.
Ⓑ Ⓜ
James Ullman, Personnel and Retail Auditor Director, aged 51
Joined in 1994 and was appointed to the board in 2022. He is a
graduate of Brighton University and Birmingham City University.
He became a chartered internal auditor in 2011.
Ⓑ Ⓜ
John Hutson, Chief Executive Officer, aged 57
Joined in 1991 and was appointed to the board in 1996. He is a
graduate of Exeter University.
Ⓑ Ⓜ
Ben Whitley, Finance Director, aged 44
Joined in 1999 and was appointed to the board in 2015. He is a
graduate of Durham University and qualified as a chartered
management accountant in 2012.
Ⓑ Ⓜ
EMPLOYEE
DIRECTORS
Hudson Simmons, Employee Director, aged 50
Joined in 1997 and was appointed to the board in 2021 and is
area manager for the Sheffield area. He is a graduate of
Nottingham Trent University.
Ⓑ
Debbie Whittingham, Employee Director, aged 53
Joined in 1992 and was appointed to the board in 2021. She is
regional manager for the West Midlands.
Ⓑ
NON
-EXECUTIVE
DIRECTORS
Ben Thorne, Senior Independent Director, aged 63
Appointed to the board in 2020. He is a graduate of Westminster
University. He qualified as a solicitor in 1985. He is managing
director at WH Ireland.
Ⓑ Ⓐ Ⓝ Ⓡ
Harry Morley Non-Executive Director, aged 57
Appointed to the board in 2016 and is chair of the audit committee.
He is a graduate of Oxford University. He is a non-executive
director of The Mercantile Investment Trust plc, TheWorks.co.uk
plc and of Cadogan Group. He is a trustee of the Ascot Authority.
He qualified as a chartered accountant in 1991.
Ⓑ Ⓐ Ⓝ Ⓡ
Debra van Gene, Non-Executive Director, aged 68
Appointed to the board in 2006 and is chair of the remuneration
committee. She is a graduate of Oxford University. She has
previously been a partner at Heidrick and Struggles Inc and a
commissioner with the Judicial Appointments Commission.
Ⓑ Ⓐ Ⓝ Ⓡ
Sir Richard Beckett, Non-Executive Director, aged 78
Appointed to the board in 2009 and is chair of the nomination
committee. He was called to the bar in 1965 and took silk in 1987.
He was one of the pre-eminent practitioners in regulatory and
licensing matters.
Ⓑ Ⓐ Ⓝ Ⓡ
MANAGEMENT
BOARD
Nigel Connor, Company Secretary and Legal Director, aged 53
Joined in 2009 and was appointed company secretary in 2014. He
is a graduate of Newcastle University and qualified as a solicitor in
1997.
Ⓑ Ⓜ
Michael Barron, Commercial Director, aged 36
Joined in 2011 and appointed to the management board in 2022.
He is a graduate of Sheffield University and qualified as a
chartered accountant in 2010.
Ⓜ
Paul Brimmer, Purchasing Director, aged 47
Joined in 2006 and appointed to the management board in 2022.
He became a member of the Chartered Institute of Procurement
and Supply in 2002.
Ⓜ
David Capstick, IT and Property Director, aged 61
Joined in 1998 and appointed to the management board in 2003.
He is a graduate of the University of Surrey.
Ⓜ
Martin Geoghegan, Operations Director, aged 53
Joined in 1994 and appointed as operations director in 2004.
Ⓜ
Tom Ball, People Director, aged 46
Joined in 2009 and appointed to the management board in 2022.
He is a graduate of Bournemouth University.
Ⓜ
Hannah Young, Deputy Finance Director, aged 41.
Joined in 2013 and appointed to the management board in 2022.
She is a graduate of Bristol University and qualified as a chartered
management accountant in 2006.
Ⓜ
ASSOCIATE
EMPLOYEE
DIRECTORS
Will Fotheringham, Associate Employee Director, aged 48
Joined in 1998. Appointed as an associate employee director in
2021. He is general manager for the north west England and north
Wales.
Emma Gibson, Associate Employee Director, aged 36
Joined in 2004. Appointed as an associate employee director in
2021. She is pub manager of The Imperial, Exeter.
66
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
DIRECTORS’ REPORT
Directors
The directors of the Company who were in office
during the year and up to the date of signing
the financial statements are listed on page 65.
Dividends
No dividend will be paid for the year.
Return of capital
At the annual general meeting of the Company, held on
18 November 2021, the Company was given authority
to make market purchases of up to 19,312,523 of its
own shares. During the year to 31 July 2022, we
purchased 1,396,204 shares for share-based
payments.
Directors’ interest in contracts
No director has any material interest in any contractual
agreement, other than an employment contract,
subsisting during or at the end of the year, which is,
or may be, significant to the Company.
Takeover directive disclosures
The Company has an authorised share capital
comprising 500,000,000 ordinary shares of 2p each.
As at 31 July 2022, the total issued share capital
comprised 128,750,155 fully paid-up shares of 2p
each. The rights to these shares are set out in the
Company’s articles of association. There are
no restrictions on the transfer of these shares
or their attached voting rights.
Details of significant shareholdings at year end
and as at 31 July 2022 are given on page 85.
No person holds shares with specific rights regarding
control of the Company.
The Company operates an employee share incentive
plan. However, no specific rights with respect to the
control of the Company are attached to these shares.
In addition, the Company operates a deferred
bonus scheme, whereby, should a takeover occur,
all shares held in trust would be transferred to the
employee immediately.
The Company is not aware of any agreements among
holders of securities known to the Company which may
result in restrictions on the transfer of securities or
voting rights.
The Company has the power to issue and buy back
shares as a result of resolutions passed at the
annual general meeting in 2021. It is the Company’s
intention to renew these powers; the resolutions
approving them are found in the notice of the
annual general meeting for 2022.
In the event of a change of control, the Company is
obliged to notify its main bank lenders. The lenders
shall not be obliged to fund any new borrowing
requests; facilities will lapse 10 days after the change
of control, if the terms on which they can continue have
not been agreed on.
Any borrowings, including accrued interest, will become
immediately repayable on such lapse.
There are no other significant agreements to which
the Company is party which may be subject to change-
of-control provisions.
There are no agreements with the Company’s
directors or employees which provide for compensation
for loss of office or employment which occurs because
of a takeover bid.
Statement of directors’ responsibilities
The directors are responsible for preparing the annual
report, the directors’ remuneration report and the
financial statements, in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the
directors have prepared the financial statements in
accordance with the UK-adopted international
accounting standards and have been prepared in
accordance with the requirements of the Companies
Act 2006. Under company law, the directors must not
approve the financial statements, unless they are
satisfied that they give a true, fair and balanced view of
the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these
financial statements, the directors are required to:
select suitable accounting policies and
then apply them consistently
make judgements and accounting estimates
which are reasonable and prudent
state whether applicable UK-adopted international
accounting standards (IASs) in accordance with the
requirements of the Companies Act 2006 have been
followed, subject to any material departures disclosed
and explained in the financial statements
prepare the financial statements on the going-
concern basis, unless it is inappropriate to presume
that the Company will continue in business
The directors are responsible for keeping adequate
accounting records which are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and to enable them to ensure that the
financial statements and the directors’ remuneration
report comply with the Companies Act 2006 and article
4 of the IAS regulation. They are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
67
DIRECTORS’ REPORT
The directors confirm that:
so far as each director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware
the directors have taken all the steps which they
ought to have taken as directors to make themselves
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
The directors are responsible for preparing the annual
report in accordance with applicable law and
regulations. The directors consider that the annual
report and financial statements, taken as a whole,
provide the information necessary to assess the
Company’s performance, business model and strategy
and are fair, balanced and understandable.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
To the best of our knowledge:
the Company’s financial statements are prepared in
accordance with the UK-adopted international
accounting standards and have been prepared in
accordance with the requirements of the Companies
Act 2006; and
the strategic report and directors’ report include a fair
review of the development and performance of the
business and the position of the Company, together
with a description of the principal risks and
uncertainties which it faces.
Business relations
Information on the Company’s relations with customers
and suppliers is disclosed in the strategic report on
page 51.
Employment policies
Information on the Company’s employment policies
is disclosed in the corporate governance report on
pages 83-84.
Directors’ indemnities
As permitted by the articles of association, the directors
have the benefit of an indemnity which is a qualifying
third-party indemnity provision, as defined by section
234 of the Companies Act 2006. The indemnity was in
force throughout the last financial year and is currently
in force. Throughout the financial year, the Company
also purchased and maintained, directors
and officers’ liability insurance, in respect of itself
and its directors.
Viability statement
In accordance with provision 31 of the UK Corporate
Governance Code 2018, the directors confirm that they
have a reasonable expectation that the Company will
continue to operate and meet its liabilities, as they fall
due, until the financial year in 2025.
The directors have determined that a three-year
period is an appropriate period over which to assess
viability, as it aligns with the Company’s capital
investment plans and gives a greater certainty over the
forecasting assumptions used.
The directors’ assessment has been made with
reference to the Company’s current position, financial
plan and its principal risks and uncertainties set out on
pages 52–53, specifically economic, regulatory,
reputational and interest-rate risks. To assess the
impact of the Company’s principal risks and
uncertainties on its long-term viability, scenarios were
applied to the Company’s financial forecasts in the form
of reduced like-for-like sales compared to FY19 . It is
assumed that the Company’s financial plans would be
adjusted in response, such actions could include
reducing discretionary expenditure and/or
implementing price increases.
The Company has Revolving Credit Facilities in place
of £875m until February 2024 and £855m until
February 2025. The company has re-financing options
available including possible extensions on the
Revolving Credit Facility.
In making this statement, the directors carried out
a robust assessment of the principal risks and
uncertainties facing the Company, including those
which would threaten its business model, future
performance, solvency or liquidity. Principal risks and
uncertainties set out on pages 52–53 are the
result of internal risk management and control
processes, with further details set out in the
audit committee’s report on pages 81-84.
Going concern
The directors have made enquiries into the adequacy
of the Company’s financial resources, through a review
of the Company’s budget and medium-term financial
plan, including capital expenditure plans and cash flow
forecasts.
The Company has modelled a base forecast in which,
over the period to 28 January 2024 as it continues to
emerge from the pandemic, sales, profit and cash flow
growth continues. The Company has anticipated within
this forecast continued high levels of inflation,
particularly on food products, wages and repairs.
A more cautious scenario has been analysed, in which
sales decline by 5% in the next 12 months, compared
with FY19. The Company has reviewed, and is
satisfied with, the mitigating actions which it could take
if such a decline were to occur. Such actions could
include reducing discretionary expenditure and/or
implementing price increases.
68
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
DIRECTORS’ REPORT
The directors are satisfied that the Company has
sufficient resources (eg profitability/liquidity) to
withstand adjustments to the base forecast, as well as
the downside scenario.
The Company has agreed with its lenders to replace
normal financial covenant tests with a minimum liquidity
covenant for the period up to and including January
2023, and relaxed leverage covenant tests for the
second half of the financial year to 30 July 2023. The
Company is confident that it will be in a position to
return to normal financial covenant tests thereafter. The
Company has re-financing options available including
possible extensions on the revolving credit facility.
As a result, the directors have satisfied themselves that
the Company will continue in operational existence for
the foreseeable future. For this reason, the Company
continues to adopt the going-concern basis in
preparing its financial statements.
Financial instruments
The Company’s policy on the use of financial
instruments is set out in note 22.
Greenhouse gas (GHG) emissions
GHG emissions
Unit
Quantity
2022
2021
Scope 1
Tonnes CO
2
e
41,324
24,726
Scope 2
Tonnes CO
2
e
65,971
57,079
Fuel (car)
Tonnes CO
2
e
454
33
Intensity
Tonnes CO
2
e /
£m revenue
61.9
105.9
Consumption (kWh)
2022
2021
Scope 1
226,818,295
134,994,694
Scope 2
205,305,472
178,260,013
Fuel (car)
1,917,037
139,138
Total
434,040,804
313,393,845
The data in the above tables is calculated by taking
consumption data and converting it using conversion
factors published by the Department for Business,
Energy & Industrial Strategy.
All emissions have been produced within the UK.
This data doesn’t include amounts from the Republic
of Ireland, owing to us not holding this information.
Reported data is for the year ended 31 July 2022
Scope 1 – combustion of gas
Scope 2 – purchase of electricity
Refrigerant emissions from our pubs are
not reported, as they are immaterial
The amounts for 2022 are for the 53 week period
ending 31 July 2022, while the amounts for 2021 are
for the 52 week period ending 25 July 2021.
Overseas branches
The Company has an overseas branch
in the Republic of Ireland.
Listing Rule 9.8.4 R
Information required by this rule to be disclosed
(starting on page indicated, if applicable):
Details of long-term incentive schemes,
page 70–71
Provision of services by a controlling shareholder
page 69–77,
Agreements with controlling shareholders, page 42
Corporate governance (DTR 7.2.9 R),
pages 78–84.
Future developments
The Company intends to continue to operate pubs and
hotels throughout the UK and Ireland. The Company aims
to continue to provide customers with good-quality food
and drinks, served by well-trained and friendly staff, at
reasonable prices.
Events after the reporting period
There are no events to disclose.
By order of the board
Nigel Connor
Company Secretary
6 October 2022
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
69
DIRECTORS’ REMUNERATION REPORT
Annual statement
Dear shareholder
The following salary increases and awards were made
to executive board members this year, in accordance
with the remuneration policy agreed by shareholders at
the Company’s AGM in December 2020:
Salary
The salaries of the CEO, the Finance Director and the
Personnel and Legal Director were unchanged. This
compares with a 7.89% increase for the general
salaried workforce.
The Personnel and Legal Director is retiring on 7
October 2022. The Company has promoted the Retail
Audit Director to Personnel and Retail Audit Director.
His salary was increased by 20% on promotion.
Annual cash bonus
There will be no annual cash bonus awarded to
executive directors this year.
Deferred bonus scheme
The deferred bonus scheme is a scheme which may
award shares to all senior managers throughout the
business including executive directors.
Given the extraordinary circumstances of the past year,
the scheme was not due to deliver any award of
shares.
In recognition of the enormous effort and hard work
since March 2020, and in order to continue to motivate
all senior managers throughout the business in their
continued focus to rebuild the business, the
Remuneration Committee agreed to award a
discretionary bonus based on 10% increase in owners’
earnings. At executive board level this will result in an
award of 25% of basic salaries in shares.
Company share incentive plan (SIP)
The Company SIP is open to all employees in the
Company, at varying levels, according to each
individual’s seniority and length of service.
Executive Directors received an amount equivalent to
25% of their salary in shares. The CEO and Personnel
and Legal Director received an additional award
equivalent to 10% of their salary, because of their
length of service. This additional 10% is available to all
employees with over 30 years’ service with the
Company.
Pension
A new all employee pension scheme has been
introduced, in line with current guidance and applies to
all new employees from 1 August 2022.
The Remuneration Committee agreed that no
reductions would be made to pension contribution
levels for existing directors and employees. This is on
the basis that the current pension contribution
percentage is part of existing directors’ and employees’
contractual arrangements and complies with the
Company remuneration policy agreed by shareholders
at the December 2020 AGM.
Accordingly, the Company paid 12% pension
contributions or a cash equivalent to executive
directors this year.
The CEO and the Personnel and Legal Director
received an additional 4% of their salary, because of
their length of service. This additional 4% is available to
all employees with over 30 years’ service with the
Company.
Workforce engagement
Wider workforce policies and issues, including (but not
exclusively) remuneration, are a standing item on
board agendas.
In the current year two employee directors and two
associate employee directors were appointed. This was
in order that debate and decision making at board level
shared the benefit of the “front line” experience that the
company ‘s other regular meetings benefit from. This
sharing of experience is vital to preserving the culture
of the company in the future
In setting remuneration for the executive board, the
committee takes into account wider workforce
remuneration policies throughout the Company. Many
of the elements of executive board remuneration
outlined above extend throughout much of the
Company, at varying levels
Debra van Gene
Chair of the Remuneration Committee
6 October 2022
70
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
DIRECTORS’ REMUNERATION REPORT
Remuneration policy
The committee reviews the executive directors’ remuneration packages at least annually.
The aim of the remuneration policy is to:
Provide attractive and fair remuneration for directors
Align directors’ long-term interests with those of shareholders, employees and the wider community
Incentivise directors to perform to a high level
In agreeing on remuneration, account is taken of the pay levels at Wetherspoon, as well as those in the
hospitality industry in general, along with other comparisons and reports. The committee aims to take a fair and
commonsense approach.
This statement of our remuneration policy was approved by shareholders at the Company’s AGM on 17 December 2020.
The policy is put forward to shareholders’ for approval every three years.
Component
Reason
Operation, maximum achievable and performance criteria
Base salary
Provide attractive
and fair
remuneration
for directors.
Salaries are reviewed at least annually, with any changes
normally taking effect from 1 October each year.
Salary increases are awarded at the discretion of the
remuneration committee.
When considering salary levels and whether an increase should be offered, the
committee takes account of a variety of factors, including Company performance,
individual performance, experience and responsibilities, market information and the level
of increase being offered to other employees.
Benefits
Provide attractive
and fair
remuneration
for directors.
A range of taxable benefits is available to executive directors.
These benefits comprise principally the provision of a car allowance,
life assurance, private medical insurance and fuel expenses.
In addition, an allowance equivalent to 5% of salary is paid for a set number of calls to
monitor service and standards in pubs, predominantly in the evening and at weekends.
This is paid quarterly.
The cost of benefits provided changes in accordance with market conditions.
The committee monitors the overall cost of the package periodically.
Pension
Provide attractive
and fair
remuneration
for directors.
The Company does not operate any defined benefit pension schemes.
Newly appointed executive directors will receive a pension contribution of 6% which is
aligned with that made on average to the wider workforce at the date of this policy. For
the basis of this, please see the table on page 74.
Existing executive directors will continue to receive 12% of base salary,
on the basis that this has never been excessive, is lower than the average for FTSE250
firms and is not disproportionate with that of the wider workforce.
After 25 years’ service, all employees in the Company, including executive directors
receive additional pension payments of 2% of their salary. This rises by a further 2%
after each additional five years’ service.
Executive directors may receive a salary supplement in lieu of pension, at the discretion
of the remuneration committee.
Annual bonus
plan
Incentivise
directors
to perform to a
high level.
Annual bonus payments are paid in cash, at the discretion of the remuneration
committee.
The bonus is based on profit growth, multiplied by a factor of 1.5 and paid to a maximum
of 45% of salary. Profit growth is calculated on profit before tax, property gains/losses
and exceptional items.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
71
DIRECTORS’ REMUNERATION REPORT
Component
Reason
Operation, maximum achievable and performance criteria
Share
incentive
plan (SIP)
Align directors’
interests with
those of
shareholders,
employees and
the wider
community.
The SIP allocates shares equivalent to 5% of salary to all Company employees after an
18-month qualifying period. Shares do not vest for at least three years under this plan –
and tax-free returns are possible, if the shares are held for five years or more.
The Company offers extra shares under this scheme to some employees:
pub managers receive an extra 5% annual award; head-office staff 10–15%; directors,
including executive board directors, 20%.
After 25 years’ service, executive directors receive additional SIPs of 5% of their salary.
This rises by a further 5% after each additional five years’ service. The increases which
apply to directors after 25 years and after each additional five years also apply to all
other employees.
Awards under this scheme are not based on financial or other targets.
The Company believes that excessive use of financial targets can lead to distortions in
companies’ behaviour and that it is important for there to be some share awards which
can be accumulated gradually, the value of which depends on the overall success of
the Company. The aim is for all employees to be able to accumulate shares over time,
to encourage loyalty and joint purpose.
Awards are made twice yearly throughout the Company.
Directors must be in office when the shares vest.
If changes are made to SIPs which apply to all employees in the schemes, they may be
applied to executive directors, at the discretion of the remuneration committee.
Deferred
bonus
scheme
Align directors’
interests with
those of
shareholders,
employees and
the wider
community.
The Company does not operate a shareholding scheme with a minimum vesting period
of five years.
The deferred bonus scheme may award shares to all senior managers, including
executive directors. Bonus awards are made under the scheme, annually, at the
discretion of the remuneration committee.
Bonus awards are satisfied in shares. One-third of a participant’s shares will vest to the
participant on calculation of the amount of the award, one-third
will vest after one year and the remaining third will vest to the participant after two years
(in each case subject to the participant being employed at the release date).
The current performance criteria are based on earnings per share and owners’
earnings per share. The performance criteria for executive directors are the same as
those for senior managers who are eligible for the scheme. Awards are made using a
multiple based on an employee’s grade. The maximum bonus to be earned under the
scheme is 100% of annual salary.
Any changes made to the deferred bonus scheme for eligible senior managers may, at
the discretion of the remuneration committee, be applied to executive directors.
Non-
executive
directors’
fees
Provide
attractive and
fair
remuneration
for directors.
The fees paid to non-executive directors are determined by the executive board, taking
into account the level of fees for similar positions in the market and the time
commitment which each non-executive director makes.
The non-executive directors receive no other remuneration or benefits
from the Company.
72
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
DIRECTORS’ REMUNERATION REPORT
Shareholdings
Executive directors are required to maintain a minimum
shareholding. Minimum holding requirements are set
by the remuneration committee for each director and
reviewed every three years, when the remuneration
policy is reviewed. Minimum holding requirements
include awarded shares which have not yet vested.
To the extent that any executive director holds under
the required number of shares, he or she has a five-
year period to meet this requirement from the date on
which the requirement was set (17 December 2020).
During this period, at least 50% of any vested share
awards must be retained, until the required
shareholding is attained.
On ceasing to be an executive director, a minimum
holding of 50% of the previous requirement must be
maintained for a minimum period of 12 months.
This guideline applies to shares which vest following
the adoption of this guideline. Any shares purchased by
executives would not be subject to the guideline.
The application of the minimum shareholding
requirement is at the discretion of the remuneration
committee.
The current minimum shareholding requirements are
200% of base salary, calculated on a £15.71 share
price at 29 July 2019, this was the share price at the
start of the previous financial year:
Number of shares
Minimum
Shares held
Requirement
as 31 July 2022
B Whitley
28,000
25,957
J Hutson
76,000
196,618
S Cacioppo
44,000
58,158
T Martin
41,000
28,174,709
Difference between the policy for
directors and that for employees
Members of the wider management team may
receive each of the components of remuneration
awarded to the executive directors, although the
amounts due for each component may vary,
depending on their level of seniority.
Non-executive directors are not entitled to any
component, other than fees.
The wider employee population of the Company
will receive remuneration which is considered
appropriate to their level of responsibility
and performance.
Withholding and recovery of awards
Awards made under the bonus scheme and
the deferred bonus scheme may be reclaimed,
in exceptional circumstances of misstatement
or misconduct.
In the event of serious misstatement or misconduct,
the remuneration committee can stop bonuses from
being paid and prevent share awards from vesting.
The remuneration committee will make reasonable
judgement, based on the facts at hand. Any
actions taken will be at the discretion of the
remuneration committee.
Approach to recruitment remuneration
The aim, when agreeing on components of
a remuneration package, including any variable pay
for incoming directors, would be in accordance with
the table above.
Account is taken of the individual’s experience, the
nature of the role being offered and his or her existing
remuneration package. Relocation expenses or
allowances may be paid, as appropriate.
The committee may, at its discretion, offer cash, share-
based elements or additional pension contributions, as
necessary, to secure an appointment, although it does
not normally do so. Shareholders will be informed of
any such payments at the time of appointment.
Our main principle is that payments made to
prospective directors as compensation for loss of
benefits at a previous Company are inherently unfair,
since it would be extremely rare for anyone below
board level to receive this sort of compensation.
Chairman and directors’ service contracts
The executive directors are employed on rolling
contracts, requiring the Company to give up to one
year’s notice of termination, while the director may give
six months’ notice.
In the event of termination of employment with the
Company, without the requisite period of notice,
executive directors’ service contracts provide for the
payment of a sum equivalent to the net value of salary
and benefits to which the executive would have been
entitled during the notice period.
The executive is required to mitigate his or her loss and
such mitigation may be taken into account in any
payment made. The Company’s policies on the
duration of directors’ service contracts, notice periods
and termination payments are all in accordance with
best industry practice.
The commencement dates for executive directors’
service contracts were as follows:
Tim Martin – 20 October 1992
John Hutson – 2 February 1998
Su Cacioppo – 10 March 2008
Ben Whitley – 5
November 2015
James Ullman – 22 September 2022
All executive directors apart from Su Cacioppo, will be
standing for re-election at the AGM. Their current
service contracts do not have an explicit expiry date.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
73
DIRECTORS’ REMUNERATION REPORT
Non-executive directors
The non-executive directors hold their positions,
pursuant to letters of appointment dated 12 November
2021, with a term of 12 months.
If their appointment is terminated early, non-executive
directors are entitled to the fees to which they would
have been entitled up to the end of their term. They do
not participate in the Company’s bonus or share
schemes. Their fees are determined by the executive
directors, following consultation with professional
advisers, as appropriate.
Employee directors
The employee directors hold their positions, pursuant
to letters of appointment dated 9 December 2021, with
a term of three years.
External appointments
Executive directors are not allowed to take external
appointments without the prior consent of the
Company. The Company has not released any
executive directors to serve as non-executive director
elsewhere.
Illustration of the application of the
remuneration policy
The charts below set out the composition of the
chairman and executive directors’ remuneration
packages in £000, at a minimum, a reasonable
expectation target and as a possible maximum:
The fixed annual values include:
Fixed annual salary, benefits and allowances, in line
with those outlined in the policy section, and based on
the salaries applicable as at 31 July 2022
The annual variable values include the cash bonus
which may be achievable. In the case of ‘expected’, an
average percentage achieved over the last five years
has been used as a basis.
The long-term incentive plan values include:
The fixed 25% awarded under the Company’s
share incentive plan
An average achieved in respect of the
deferred bonus scheme over the last five years
Payments for loss of office
The Company’s policy is that the period of notice for
executive directors will not exceed 12 months;
accordingly, the employment contracts of the executive
directors are terminable on 12 months’ notice by the
Company or six months’ notice by a director.
In the event of gross misconduct, the Company may
terminate a director’s employment without notice or
compensation.
In the event of a director’s departure, the Company’s
policy on termination payments is as follows:
The Company will seek to ensure that no more
is paid than is warranted in each individual case
Salary payments will be limited to notice periods
There is no entitlement to bonus paid
(or associated deferred shares or SIPs) following
notice of termination
The committee’s normal policy is that, where the
individual is considered a ‘good leaver’, a prorated
bonus may be paid
The Company may enable the provision of
outplacement services to a departing director
Retirement policy
The Company does not have a mandatory retirement
age. Employees wishing to retire should be aged at
least 55 years at the date of leaving (the minimum age
a person can access a workplace pension) and serve
their contractual notice period. Retiring employees are
permitted to retain any unvested shares held in any
Company scheme.
Consideration of employment conditions
elsewhere in the Company
The committee receives information on salary
increases, bonus payments and other benefits
available at the Company. These are taken into
consideration when conducting the review of executive
remuneration, although no formal consultation with
employees is undertaken in this regard.
Consideration of shareholders’ views
Any views in respect of directors’ remuneration
expressed to the Company by shareholders have been,
and will be, taken into account in the formulation of the
directors’ remuneration policy.
Details of votes cast for and against the resolution to
approve last year’s remuneration report and any
matters discussed with shareholders during the year
are provided in the annual report on remuneration.
100%
100%
100%
£338
£338
£338
£0 £100 £200 £300
Minimum
Expected
Maximum
Tim Martin
77%
64%
42%
4%
15%
19%
32%
43%
£986
£1,259
£1,912
£0 £400 £800 £1,200 £1,600 £2,000
Minimum
Expected
Maximum
John Hutson
76%
63%
40%
5%
15%
21%
32%
45%
£371
£479
£734
£0 £200 £400 £600 £800
Minimum
Expected
Maximum
Ben Whitley
78%
63%
40%
5%
17%
19%
32%
43%
£561
£714
£1,081
£0 £300 £600 £900 £1,200
Minimum
Expected
Maximum
Su Cacioppo
Fixed Annual variable Long-term incentive
74
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
DIRECTORS’ REMUNERATION REPORT
Annual report on remuneration
The table below sets out in a single figure the total amount of remuneration, including each element, received by each
director for the year ended 31 July 2022.
Single-figure table – audited
Full basic salary
(pre deductions)
Voluntary COVID-
19 reductions
Taxable
benefits/allowance
1
Performance
bonus
2
Long-term
incentives
4
Pension
contributions
3
Total
Total fixed
Total variable
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
Executive
directors
John Hutson
638
638
–
(51)
54
33
–
–
223
96
102
97
1,017
813
794
717
223
96
Su Cacioppo
358
358
–
(6)
38
24
–
–
125
54
57
51
578
481
453
427
125
54
Ben Whitley
250
250
–
(4)
29
20
–
–
62
31
30
30
371
327
309
296
62
31
James Ullman
45
–
–
–
9
–
–
–
–
–
6
–
60
–
60
–
–
–
1,291
1,246
–
(61)
130
77
–
–
410
181
195
178
2,026
1,621
1,616
1,440
410
181
Chairman, non-
executive
directors and
employee
directors
Tim Martin
324
324
–
(51)
13
14
–
–
–
–
–
–
337
287
337
287
–
–
Ben Thorne
54
32
–
(7)
–
–
–
–
–
–
–
–
54
25
54
25
–
–
Debra van Gene
54
54
–
(9)
–
–
–
–
–
–
–
–
54
45
54
45
–
–
Richard Beckett
54
54
–
(9)
–
–
–
–
–
–
–
–
54
45
54
45
–
–
Harry Morley
54
54
–
(9)
–
–
–
–
–
–
–
–
54
45
54
45
–
–
Hudson Simmons
5
–
–
–
–
–
–
–
–
–
–
–
5
–
5
–
–
–
Deborah
Whittingham
5
–
–
–
–
–
–
–
–
–
–
–
5
–
5
–
–
–
550
518
–
(85)
13
14
–
–
–
–
–
–
563
447
553
447
–
–
Total
1,841
1,764
–
(146)
143
91
–
–
410
181
195
178
2,589
2,068
2,179
1,887
410
181
1) Taxable benefits include car allowances and the provision of rail travel for Tim Martin, as well as
private health and fuel expenses for executive directors. In respect of the element for pub calls made to monitor
standards, 5% was awarded, in line with policy.
2) No bonus was awarded under the profit growth element of the bonus scheme, in line with policy. This bonus is only
awarded to the executive directors and not the employee directors, Hudson Simmons and Deborah Whittingham.
3) Existing executive directors receive either pension contributions, equivalent to 12% of salary, to the stakeholder
pension plan or salary in lieu of pension contributions. Additional pension payments are made, equivalent to 2% of
salary for 25–29 years’ service, a further 2% for 30–34 years’ service and a further 2% at 35+ years’ service. Su
Cacioppo, John Hutson and Ben Whitley took, in salary, the portion of their Company pension contribution which was
above the annual cap. For newly appointed executive directors they receive pension contributions at 6% which aligns
with contributions of the wider workforce.
4) The amount in the table under long-term incentives, includes the monetary value of the share awards which have
taken place during the period for both SIP and RSP payments which took place during October 2021 and March 2022.
The above table is on a cash basis and does not include the monetary value for the share awards that will take place in
October 2022. These have been accrued within note 5.
5) Ben Thorne was appointed a non-executive director on 17 December 2020. In FY21, Ben Thorne’s remuneration is
shown from the date of his appointment.
6) Deborah Whittingham and Hudson Simmons were appointed as employee directors on 20 December 2021. In
addition to the employee director’s fees above, both received earnings from the Company as an employee.
7) James Ullman was appointed personnel and retail audit director on 4
May 2022. James Ullman’s remuneration is
shown from the date of his appointment. He has not been included in the long-term Incentive award table on page 75
owing to these awards taking place prior to 4 May 2022.
The final amount received by executive directors for long-term incentive awards will be affected by future changes in the
Company’s share price. A 50% increase in the share price between the award date and the vesting date would increase
the value of the award by 50%. Conversely, a 50% reduction would reduce the value of the award by 50%.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
75
DIRECTORS’ REMUNERATION REPORT
As at the date of the remuneration policy, the average employer contribution across all levels (pubs and head office) for
the stakeholder plan was 5.4%, with the average employer contribution across all levels (head office only) for the
stakeholder plan being 6.2%.
Details of targets applicable during the year are disclosed in the directors’ remuneration policy statement.
The resultant percentages against each of the bonus measures achieved are shown below, with the percentage
awarded for each director being the same.
Maximum
Awarded
B Whitley
J Hutson
S Cacioppo
J Ullman
Profit growth
45.0%
0.0%
-
-
-
-
Total performance bonus
45.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Employee share scheme
25.0%
25.0%
62,452
186,108
104,478
-
Employee share scheme – long service*
10.0%
10.0%
–
63,808
35,820
-
Deferred Bonus scheme
100.0%
25.0%
62,500
159,591
89,595
11,250
Total long term incentives
130.0%
55.0%
124,952
382,921
214,968
11,250
Total
175.0%
55.0%
124,952
382,921
214,968
11,250
*J Hutson and S Cacioppo receive an additional 10%, as they have completed 30 years’ service with the Company.
James Ullman was appointed personnel and retail audit director on 4
May 2022. James Ullman’s bonus measures are
shown from the date of his appointment.
Long-term incentive awards – audited
Number of shares
Face value in £
*Share
**Deferred
Share
Deferred
incentive
bonus
incentive
bonus
plan
scheme
Total
plan
scheme
Total
B Whitley
6,807
15,447
22,254
62,452
62,500
124,952
J Hutson
24,342
39,444
63,786
223,330
159,591
382,921
S Cacioppo
13,665
21,144
34,809
125,373
89,595
214.968
44,814
76,035
120,849
411,155
311,686
722,841
*Awarded at an average share price of £10.90, three days before grant; shares will vest three years after grant.
**Calculated at an estimated share price of £4.05, which is the share price five days before grant date. The actual award
will be determined by using the share price five days after the grant date.The grant date will be 7 October 2022. These
shares vest in three equal tranches in each of 2022, 2023 and 2024.
All awards have no further performance conditions attached, except to be employed by the Company at the vesting date.
Directors and connected persons’ interests in shares: audited
The interests of the directors in the shares of the Company, as at 31 July 2022, were as follows:
Ordinary shares of 2p each, held beneficially
Shares
Share
incentive
plan
Deferred
bonus
scheme
2022
Shares
Share
incentive
plan
Deferred
bonus
scheme
2021
T R Martin
28,174,709
–
–
28,174,709
28,174,709
–
–
28,174,709
B Whitley
14,064
11,893
–
25,957
12,287
8,987
723
21,997
J Hutson
156,219
40,399
–
196,618
152,035
30,013
2,036
184,084
S Cacioppo
35,479
22,679
–
58,158
38,616
16,848
1,143
56,607
J Ullman
22,629
7,804
–
30,433
–
–
–
–
H Simmons
1,003
1,619
–
2,622
–
–
–
–
D Whittingham
2,969
3,023
–
5,992
–
–
–
–
B Thorne
–
–
–
–
–
–
–
–
D van Gene
3,777
–
–
3,777
3,777
–
–
3,777
R Beckett
2,000
–
–
2,000
2,000
–
–
2,000
H Morley
3,111
–
–
3,111
3,111
–
–
3,111
76
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
DIRECTORS’ REMUNERATION REPORT
With the exception of partnership shares, there have been no changes to these interests since 31 July 2022.
Partnership shares
Su Cacioppo and Ben Whitley are participants of the partnership share scheme and acquired 218 shares each in the
year. John Hutson is a participant in the partnership share scheme and acquired 217 shares in the year. Deborah
Whittingham was also a participant of the partnership share scheme and acquired 141 shares in the year. The market
price of the shares purchased ranged 567.0–1,155.0p.
Partnership shares are shares which can be purchased by individuals who work in the Company for a duration of time.
Participants can elect to purchase these shares which come out each employee’s payroll.
Performance graph – non-audited information
This graph shows the total shareholder return (with dividends reinvested) of a holding of the Company’s shares against a
hypothetical holding of shares in the FTSE All-Share Travel & Leisure sector index. The directors selected this index, as
it contains most of the Company’s competitors and is considered to be the most appropriate index for the Company.
Growth in the value of a hypothetical £100 holding since July 2008, based on 30-trading-day average values
60.0
140.0
220.0
300.0
380.0
460.0
540.0
620.0
700.0
Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22
Value of hypothetical £100 holding (£)
JD Wetherspoon
FTSE All-Share Travel &
Leisure
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
77
DIRECTORS’ REMUNERATION REPORT
Chief executive officer’s remuneration
Single figure
of total
remuneration
Performance
bonus
payment
achieved
against
maximum
possible
Long-term
incentives
scheme
shares
vesting
against
maximum
possible*
John Hutson
£000
%
%
2022
1,017
-
100
2021
813
-
100
2020
738
-
100
2019
1,035
10
100
2018
1,490
29
100
2017
1,698
85
100
2016
1,187
21
100
2015
1,202
10
100
2014
741
19
100
2013
1,079
43
100
* As long-term incentive scheme shares issued have
no further performance criteria attached, all shares
previously awarded vest in full when the vesting date
is reached.
The following table compares the change in
remuneration of all the directors, non-executive
directors and chairman with that of all employees
Change in
annual
salary
Change in taxable
benefits
Change in
annual
bonus
%
%
%
Ben Whitley
-
45.0
-
John Hutson
-
63.6
-
Su Cacioppo
-
58.3
-
Tim Martin
-
(7.1)
-
Debra Van Gene
-
-
-
Richard Beckett
-
-
-
Harry Morley
-
-
-
Ben Thorne
-
-
-
Total Employees
3.7
13.4
64.2
Change in total employees’ salary is calculated
based on the amounts paid to all employees adjusted
for redundancy and employer’s national insurance
payments, divided by the number of hours
worked by employees.
Chief executive’s pay ratios
The table below shows the chief executive’s total
remuneration, as disclosed in the single-figure table,
compared with that of full-time equivalent employees’
median (50th), 25th and 75th percentiles in the UK.
Pay ratios table
Year
Method
25th
50th
75th
2022
Option B
47:1
45:1
41:1
2021
Option B
41:1
40:1
38:1
The Company has used the same data used for gender
pay reporting to determine the median, 25th and 75th
percentile employees. This method is called option B in
The Companies (Miscellaneous Reporting) Regulation
2018.
It is believed that using a consistent methodology with
that of gender pay reporting will produce the most
understandable ratios.
There has been no comparison between dividends and
share buy-backs this year, as there has been no such
events in the current and previous financial year.
Remuneration committee
The remuneration committee comprises the following
independent directors: Debra van Gene (chair),
Sir Richard Beckett, Ben Thorne and Harry Morley.
The committee meets regularly and considers
executive directors’ remuneration annually.
It approves all contractual and compensation
arrangements for the executive directors, including
performance-related payments.
Shareholders’ vote on 2021 directors’
remuneration report
The table below shows the voting outcomes
at the 18 November 2021 AGM for the directors’
remuneration report.
Number of
votes
% of
votes
For
93,104,202
92.36%
Against
7,666,690
7.61%
Abstentions
37,197
0.03%
Total cast
100,808,089
100.00%
All votes at the AGM were passed with at least
80% of the cast votes.
Shareholders’ vote on 2020 directors’
remuneration policy
The table below shows the voting outcomes
at the 17 December 2020 AGM for the directors’
remuneration policy.
Number of
votes
% of
votes
For
86,184,868
84.88%
Against
14,880,202
14.65%
Abstentions
477,476
0.47%
Total cast
101,542,546
100.00%
Resolutions at last year’s AGM seeking the re-election
of Sir Richard Beckett and Debra Van Gene received
less than 80% of the total votes cast.
The Company has stated, on numerous occasions, its
view that the Company benefits from the experience of
directors who have served more than nine years and
does not agree that it impacts the individual’s
independence.
The company has continued to engage with
shareholders regarding its views on board composition
and intends doing so going forwards.
By order of the board
Nigel Connor
Company Secretary
6 October 2022
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ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CORPORATE GOVERNANCE
Introduction
This section of the report sets out how the Company
has applied the relevant principles and provisions of
the 2018 code and identifies and explains where it has
not.
1. Board Leadership and Company Purpose
The Company’s approach is set out on page 79
2. Division of Responsibilities
Details of our governance and management structure
are set out on page 80
3. Composition, Succession and Evaluation
The board’s approach to these areas via the work of
the nomination committee and the Company’s
employment policies are set out on page 83
4. Audit, Risk and Internal Control
An outline of our internal processes in this
area set out on pages 81-84
5. Remuneration
A report on how the Company has applied the current
remuneration policy and payments made to directors
during the period is on pages 69-77.
Statement of compliance
The Company is committed to high standards of
corporate governance. The board believes that
the Company has been compliant with the code
throughout the 53 weeks ended 31 July 2022,
except as described below.
3 – Dialogue with shareholders
The code indicates that the chairman should discuss
governance and strategy with major shareholders. The
chairman has had many discussions with shareholders
since the Company’s flotation in 1992, although
corporate governance has rarely been raised. The
majority of discussions with major shareholders now
takes place among the CEO, finance director and
shareholders. These discussions are relayed to, and
considered by, the board. The chairman and senior
independent director met a number of major
shareholders to discuss the appointment of employee
directors to the board. The chairman is available for
discussion with major shareholders, when requested.
10 – Non-executive directors’ independence
Debra van Gene and Sir Richard Beckett have served
more than nine years on the board and so may not be
considered independent under the code. The board
considers that their performance as non-executive
directors continues to be effective.
They contribute significantly as directors through their
individual skills, considerable knowledge and
experience of the Company. They also continue to
demonstrate strong independence in the manner in
which they discharge their responsibilities as directors.
Consequently, the board has concluded that, despite
their length of tenure, there is no association with
management which could compromise their
independence.
19 – Chairman’s term
Tim Martin has served more than nine years as
chairman of the board. The board considers that his
considerable knowledge and experience from founding
the Company and leading it for over 40 years have had
a positive effect on the Company’s performance.
The board believes that it is in the interest of the
Company and its shareholders for Tim Martin to remain
as chairman.
21 – External board evaluation
A requirement of corporate governance is a
recommendation for a third party to evaluate the
functioning of the board. Delegation of a key task of the
chairman and of the directors of the board itself to a
third party, often with little or no connection with the
Company’s business and with a very limited knowledge
of the directors, may be a dangerous step for a board
to take. It is the function of the board itself to evaluate
its own performance – and that performance is most
evident from the results of the underlying business.
For this reason, it is believed best for the Company to
continue with its current system of ‘self-evaluation’.
30 – Long-term shareholdings
To promote long-term shareholdings by executive
directors and align their interests with shareholders,
the code requires that any share awards given to
executive directors should have a minimum vesting
period of five years. The executive directors receive
shares under schemes which are open to other
employees and have vesting periods of less than five
years. The Company has disclosed details of the share
award schemes in the remuneration policy on pages
70–71. To promote long-term shareholding by
executive directors, the Company requires directors to
hold a minimum number of shares as disclosed on
page 72. Restrictions are in place on the sale of
shares, if directors have not achieved the minimum
holding.
38 – Alignment of pension contribution rate of
executive directors with wider workforce
The code states that pension contribution rates for
executive directors and payments in lieu, should be
aligned with those available to the workforce. As set
out in the 2020 remuneration policy, the company took
the decision that existing executive directors would
continue to receive 12% of base salary on the basis
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
79
CORPORATE GOVERNANCE
that it had never been excessive, is lower than average
for a FTSE 250 company and is not disproportionate to
the wider workforce. In August 2022, the company
changed its employee pension policy to reward long
service rather than being based on rank/job title. As a
consequence the existing pension contributions paid to
executive directors are now more closely aligned with
thepolicy applicable to the wider workforce.
A full version of the code is available on the official
website of the Financial Reporting Council:
frc.org.uk
Board leadership and Company purpose
The board of directors
The board comprises the following members:
Tim Martin, chairman
John Hutson, chief executive officer
Ben Whitley, finance director
Su Cacioppo, personnel and legal director
James Ullman, personnel and retail auditor director
Debra van Gene, non-executive director
Sir Richard Beckett, non-executive director
Harry Morley, non-executive director
Ben Thorne, non-executive and senior independent
director
Deborah Whittingham, employee director
Hudson Simmons, employee director
Will Fotheringham and Emma Gibson attend board
meetings in their capacity as associate employee
directors.
The board considers each of Debra van Gene, Sir
Richard Beckett, Ben Thorne and Harry Morley to be
independent.
Biographies of all non-executive and executive
directors are provided on page 65 and can be viewed
on the Company’s website: jdwetherspoon.com
The chairman regularly meets the non-executive
directors and evaluates the performance of the board,
its committees and its individual directors.
The Company’s purpose and how it establishes
its values and culture through engagement with
employees are disclosed on page 51.
Directors’ conflicts of interest
The board expects the directors to declare any
conflicts of interest and does not believe that any
material conflicts of interest exist.
Relations with shareholders
The board takes measures to ensure that all board
members are kept aware of both the views of major
shareholders and changes in the major shareholdings
of the Company. Efforts made to accomplish effective
communication include:
Annual general meeting, considered to be
an important forum for shareholders to raise
questions with the board
Regular feedback from the Company’s stockbrokers
Interim, full and ongoing announcements circulated
to shareholders
Any significant changes in shareholder movement
being notified to the board by the company secretary,
when necessary
The company secretary maintaining procedures and
agreements for all announcements to the Stock Market
A programme of regular meetings between investors
and directors of the Company
Matters reserved for the board
The following matters are reserved for the board:
Board and management
Structure and senior
management responsibilities
Nomination of directors
Appointment and removal of
chairman and company secretary
Strategic matters
Strategic, financing or adoption of
new business plans, in respect of any
material aspect of the Company
Business control
Agreement of code of ethics
and business practice
Internal audit
Authority limits for heads of department
Operating budgets
Approval of a budget for investments
and capital projects
Changes in major supply contracts
Finance
Raising new capital and confirmation
of major facilities
The entry into asset-financing transactions
Specific risk-management policies, including
insurance, hedging and borrowing limits
Final approval of annual and interim accounts
and accounting policies
Appointment of external auditors
Legal matters
Institution of legal proceedings,
where costs exceed certain values
Secretarial
Call of all shareholders’ meetings
Delegation of board powers
Disclosure of directors’ interests
General
Board framework of executive
remuneration and costs
Culture and values
The board monitors the culture and the values of the
Company in several ways:
The appointment of employee directors to the
board
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ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CORPORATE GOVERNANCE
Meeting and talking with employees from our
pubs during pub visits, regional meetings and at
head office weekly meetings
Attendance of area managers at the opening
section of the board meetings to discuss issues
relating to the operation of their pubs and the
Company generally
Reviewing the outcome of weekly discussion
meetings of selected pub and area managers
led by senior Company employees
Reviewing whistleblowing reports and
outcomes via the audit committee
Division of responsibilities
It is not advantageous, in a company like Wetherspoon,
for there to be high barriers or exaggerated distinctions
between the role of chairman and that of chief
executive officer. However, some general distinctions
are outlined overleaf.
Chairman’s responsibility
Chief executive officer’s responsibility
The chairman is responsible for the smooth running
of the board and ensuring that all directors are
fully informed of matters relevant to their roles
The chief executive officer is responsible for the
smooth daily running of the business
Delegated responsibility of authority from the
Company to exchange contracts for new pubs and to sign
all contracts with suppliers
Developing and maintaining effective management controls,
planning and performance measurements
Providing support, advice and feedback to the
chief executive officer
Maintaining and developing an effective
organisational structure
Supporting the Company’s strategy and encouraging the
chief executive officer with that strategy’s development.
External and internal communications, in conjunction
with the chairman, on any issues facing the Company
Chairing general meetings, board meetings,
operational meetings and agreeing on board agendas
and ensuring that adequate time is available for
discussion of agenda items
Implementing and monitoring compliance
with board policies
Management of the chief executive officer’s contract,
appraisal and remuneration, by way of making
recommendations to the remuneration committee
Timely and accurate reporting of the above to the board
Providing support to executive directors and
senior managers of the Company
Recruiting and managing senior managers in the business
Helping to provide the ‘ethos’ and ‘vision’ of the Company,
after discussions and debates with employees of all levels,
customers, shareholders and including organisations
such as CAMRA
Developing and maintaining effective risk-management
and regulatory controls
Helping to provide information on customers and
employees’ views by calling on pubs
Maintaining primary relationships with shareholders
and investors
Helping to make directors aware of shareholders’ concerns
Chairing the management board responsible for
implementing the Company’s strategy
Helping to ensure that a culture of openness and debate
exists in the Company
Ensuring compliance with the London Stock Exchange
and legal and regulatory requirements, in consultation with
the board and the Company’s external advisers
The board has several established committees as set out below. The board met eight times during the
year ending 31 July 2022. Attendance of the directors,non-executives, employee and associate employee directors
where appropriate, is shown below.
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
81
CORPORATE GOVERNANCE
Number of meetings held in the year
Board
8
Audit
4
Remuneration
1
Nomination
2
Tim Martin
8
N/A
N/A
N/A
John Hutson
5
N/A
N/A
N/A
Su Cacioppo
8
4
N/A
N/A
Ben Whitley
8
4
N/A
N/A
Debra van Gene
7
4
1
2
Sir Richard Beckett
7
4
1
2
Harry Morley
8
4
1
2
Nigel Connor
8
4
N/A
N/A
Ben Thorne
8
4
1
1
James Ullman
2
4
N/A
N/A
Debbie Whittingham
7
N/A
N/A
N/A
Will Fotheringham
7
N/A
N/A
N/A
Hudson Simmons
6
N/A
N/A
N/A
Emma Gibson
7
N/A
N/A
N/A
Audit, risk and internal control
Audit committee
The committee’s primary role is to assist the board
in the provision of effective governance over the
Company’s financial reporting, risk management and
internal control; in particular, it performs the
following activities:
Assumes direct responsibility for the appointment,
compensation, resignation and dismissal of the
external auditors, including review of the external audit,
its cost and effectiveness
Reviews the independence of the external auditors,
including consideration of the level of non-audit work
carried out by them
Reviews the scope and nature of the work
to be performed by the external auditors,
before audit commences
Reviews the half-year and annual
financial statements
Ensures compliance with accounting standards and
monitors the integrity of the financial statements and
formal announcements relating to the financial
performance of the Company and supports the board in
its responsibility to ensure that the annual financial
statements are fair, balanced and understandable
Reviews the internal audit plan, which is updated to
reflect the changing needs of the business and the
concerns of management and the audit committee
Reviews and raises questions on all internal audit
reports and requests management to adjust the
prioritisation of mitigating actions, as needed. Areas
reviewed this year included supply chain and
distribution centre, pub closures, system security, IT,
cyber-crime, changes in business environment, decline
in like-for-like sales volume and escalating costs of
labour
Reviews, with the support of specialists as required,
controls over access to the IT systems used around the
business and agrees with management on the timing of
any mitigating actions to be carried out
Reviews and monitors procedures in relation to the
Company’s whistleblowing policy
Reviews and questions the effectiveness of
all risk-management and internal control systems
Reviews the retail audit director’s statement on
internal controls on completed audits
Considers the overall impact on the business of the
matters arisen from the various reviews described
above and any other matters which the auditors,
internal or external, may bring to the attention
of the committee
Ensures that all matters, where appropriate, are
raised and brought to the attention of the board
Significant financial reporting items
The accounting policies of the Company and the
estimates and judgements made by management are
assessed by the committee for their suitability. The
following areas are those considered by the committee,
to be the most significant:
The provision for the impairment of fixed assets –
several judgements are used in making this calculation,
primarily on expected future sales and profits. The
committee received reports and questioned
management on the calculations made and the
assumptions used
Significant one-off items of expense or income
are reported as exceptional on the face of the income
statement. All exceptional items are reviewed by
the committee
The ongoing application of IFRS 16 – Lease to the
Company’s lease portfolio, including the accounting for
lease modifications and the application of the COVID-
19 related rent concession practical expedient along
with the presentation and disclosure of leases.
The committee reviewed the financial plans,
modelled scenarios and assumptions made by the
Company in support of the presentation of the financial
statements on a going concern basis
The committee reviewed and raised questions
on the calculations made by the Company in relation to
82
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CORPORATE GOVERNANCE
the hedge accounting and effectiveness for interest-
rate swaps
The committee is satisfied that the judgements made
by management are reasonable and that appropriate
disclosures have been included in the accounts.
Non-audit services
During the year, the Company made no use of
specialist teams from Grant Thornton UK LLP, relating
to accounting or tax services. The fees paid to Grant
Thornton UK LLP for non-audit services were £55,000
(2021: £33,000), relating to interim review procedures.
The use of Grant Thornton UK LLP for non-audit work
is monitored regularly, to achieve the necessary
independence and objectivity of the auditors. Where
the auditors provide non-audit services, their objectivity
and independence are safeguarded by the use of
different teams. See note 2 on page 15, for a
breakdown of the auditor’s remuneration for audit and
non-audit services.
External auditors
The audit committee is responsible for making
recommendations to appoint, reappoint or remove
external auditors. Following a review by the audit
committee, the board agreed to recommend the
reappointment of Grant Thornton UK LLP as external
auditors at the AGM in November 2022.
Audit-tendering and rotation
The audit committee keeps under review the regulatory
requirements on audit-tendering and rotation.
The Company will be required to change its audit firm
for the year ending 25 July 2038, at the latest. The
audit was last tendered in 2018 – and Grant Thornton
UK LLP has been in place as the Company’s auditor
for five years.
The disclosures provided within this report constitute
the Company’s statement of compliance with the
requirement of the statutory audit services for large
companies market investigation (Mandatory use of
competitive tender processes and audit committee
responsibilities) order 2014.
Effectiveness of external auditors
The audit committee assesses the ongoing
effectiveness of the external auditors and audit
process, on the basis of meetings and internal
reviews with finance and other senior executives.
In reviewing the independence of the external auditors,
the audit committee considers several factors. These
include the standing, experience and tenure of the
external auditors, the nature and level of services
provided and confirmation from the external auditors
that they have complied with relevant UK
independence standards. The terms of reference
of the audit committee are available on the
Company’s website.
Risk management
The board is responsible for the Company’s
risk-management process.
The internal audit department, in conjunction with
feedback from senior management of the business
functions, produces a risk register annually.
The identified risks are assessed, based on the
likelihood of a risk occurring and the potential impact
to the business, should the risk materialise.
The retail audit director determines and reviews the
risk-assessment process and will communicate the
timetable annually.
The risk register is presented to the audit committee
and management board annually, with a schedule of
audit work agreed on, on a rolling basis. The purpose
of this work is to review, on behalf of the Company and
the board, those key risks and the systems of control
necessary to manage such risks.
Where recommendations are made for changes in
systems or processes to reduce risk, internal audit will
follow up regularly to ensure that the recommendations
are implemented.
No significant failings of internal control were identified
during these reviews.
A summary of the financial risks and treasury policies
can be found on pages 52-53, together with other risks
and uncertainties.
Emerging risks
The Company monitors emerging risks through the
receipt of advice and feedback from head office and
pub staff, customers, suppliers, and several external
advisers and by maintaining an awareness of the wider
economic, political and social environment.
Any potential risks identified will be discussed in the
relevant internal meetings, where any potential impact
on the business will be considered. Any significant
risks identified will be added to the Company’s risk
register.
Internal control
During the year, the Company provided an internal
audit and risk-management function. The creation of
a system of internal control and risk mitigation is a key
part of the Company’s operations and culture. The
board is responsible for maintaining a sound system
of internal control and reviewing its effectiveness.
The function can only manage, rather than entirely
eliminate, the risk of failure to achieve business
objectives. It can provide only reasonable, and not
absolute, assurance against material misstatement or
loss. Ongoing reviews, assessments and management
of significant risks took place throughout the year
under review and up to the date of the approval of the
annual report.
The Company has an internal audit function
which is discharged as follows:
Regular audits of the Company’s stock
Unannounced visits to pub sites
Monitoring systems which control the Company’s
cash
Health and safety visits, ensuring compliance
with Company procedures
Reviewing and assessing the impact of
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
83
CORPORATE GOVERNANCE
legislative and regulatory change
Risk-management process, identifying key risks
facing the business
The Company has key controls, as follows:
Authority limits and controls over cash-handling,
purchasing commitments and capital expenditure
A budgeting process, with a detailed 12-month
operating plan and a mid-term financial plan,
both approved by the board
Business results reported weekly, with a report
compared with budget and the previous year
Forecasts prepared regularly throughout the year,
for review by the board
Complex treasury instruments are not used. The
Company, from time to time, as stated in this report
and accounts, enters into swap arrangements which fix
interest rates at certain levels for a number of years
and enters into supply arrangements with fixed prices
for electricity and gas, for example, which run for
between one and three years
An annual review of the amount of external
insurance which it obtains, bearing in mind the
availability of such cover, its costs and the likelihood of
the risks involved
Regular evaluation of processes and controls,
in relation to the Company’s financial
reporting requirements
The directors confirm that they have reviewed the
effectiveness of the system of internal control.
Remuneration and nomination
Remuneration committee
The committee is responsible for determining the
remuneration received by executive directors and
senior managers. When setting levels of remuneration,
the committee seeks to ensure that they are sufficient
to attract and retain people with the necessary skills
and experience. The committee seeks to ensure that
remuneration is not excessive and is in line with
amounts paid by comparable companies. In setting
executive directors’ remuneration, the committee takes
into account wider workforce remuneration policies
throughout the Company, with many elements
extending throughout much of the Company at varying
levels according to seniority and length of service.
The remuneration policy operated as intended during
the year – no changes were made and normally no
discretion is applied. However, during the current year,
discretion was applied in respect of the deferred bonus
percentage which was awarded to all participants.
The directors’ report on remuneration is set out on
pages 69–77.
Directors’ remuneration is clearly presented in the
accounts. The remuneration policy is clearly stated,
with the calculation of performance measures
explained. The remuneration policy does not rely overly
on target-based incentives, with share awards normally
given based on profits, earnings per share and owners’
earnings growth, as well as some shares awarded
without performance targets as part of a
Companywide scheme. However, during the current
year no such award was given based on such targets.
Awards made are predictable and within a range
of values. The remuneration committee can apply
discretion in the application of awards.
The terms of reference of the remuneration committee
are available on the Company’s website.
Nomination committee
The committee meets at least annually and:
reviews the board structure, size, diversity (including
gender), composition and successional needs, keeping
under review the balance of membership between
executive and non-executive and the required blend
of skills, experience, knowledge and independence
on the board.
formally proposes any new executive or non-
executive directors for the approval of the whole
board, following a reasonable process for such
an appointment. This includes a review of skill set,
industry knowledge and experience to meet the
strategic needs of the business.
reviews the leadership and successional needs of
the organisation, with a view to ensuring the long-term
success of the Company.
ensures that all directors offer themselves for
annual re-election by shareholders.
No director is involved in any decision about his or her
own reappointment. In carrying out these activities,
the non-executive directors follow the guidelines of the
Chartered Governance Institute and comply with the
code.
The terms of reference of the nomination committee
are available on the Company’s website.
In December 2021, the Company appointed two
employee directors to the full board of the Company
and two associate employee directors who attend
board meetings. On 4 May 2022, the Company
announced the retirement of Su Cacioppo and the
appointment of James Ullman to the board. Sir Richard
Beckett will retire as a non-executive director after the
Company’s AGM on 17 November 2022 at which he
will not seek re-election. No other board changes have
been made.
Employment policies
Staff are encouraged to make a commitment to the
Company’s success and to progress to more senior
roles as they develop.
In selecting, training and promoting staff, the Company
has to take account of the physically demanding nature
of much of its work. The Company is committed
to equality of opportunity and to the elimination of
discrimination in employment.
The Company aims to create and maintain a working
environment, terms and conditions of employment and
personnel and management practices which ensure
that no individual receives less favourable treatment
on the grounds of his or her race, religion or belief,
nationality, ethnic origin, age, disability, gender
84
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
CORPORATE GOVERNANCE
(including gender reassignment), sexual orientation,
part-time status or marital status.
Employees who become disabled will be retained,
where possible, and retrained, where necessary.
The Company has established a range of policies,
covering issues such as diversity, employees’ well-
being and equal opportunities, aimed at ensuring that
all employees are treated fairly and consistently.
The Company has also established the following
network groups to foster discussion and generate ideas
about these issues:
LGBTQIA+
Women
Race and ethnic diversity
Internal communications seek to ensure that staff are
well informed about the Company’s progress, through
the use of regular digital newsletters, and staff liaison
meetings, at which employees’ views are discussed
and taken into account.
All pub staff participate in bonus schemes related
to sales, profits, stocks and service standards.
Approved by order of the board
Nigel Connor
Company Secretary
6 October 2022
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J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
85
INFORMATION FOR SHAREHOLDERS
Ordinary shareholdings at 31 July 2022
Substantial shareholdings
The Company has been notified of the following substantial holdings in its share capital at 31 July 2022:
Number of
ordinary shares
% of share
capital
Tim Martin
28,174,709
21.9
Columbia Threadneedle Investments
13,824,766
10.7
FIL Investment International
7,071,516
5.5
MFS Investment Management
6,498,779
5.1
J D Wetherspoon plc Company Share Plan*
4,416,005
3.4
Artemis Investment Management
4,397,259
3.4
Hargreaves Lansdown Asset Management
3,797,892
3.0
Fidelity Investments
3,765,322
2.9
Source: Investec Bank plc. This schedule shows the consolidated shareholdings of individuals and companies,
whereas the first table shows shareholdings by individual holding.
*This represents shares which have been purchased by the Company for the benefit of employees under the SIP.
Please see pages 70–71. This includes vested shares held by employees.
Share prices
25 July 2021
1,124p
Low
516p
High
1,180p
31 July 2022
557p
Shareholders’ enquiries
If you have a query about your shareholding, please contact the Company’s registrars directly:
Computershare Investor Services plc: uk.computershare.com/investor
0370 707 1091
Annual report
Paper copies of this annual report are available from the company secretary, at the registered office.
E-mail: investorqueries@jdwetherspoon.co.uk
This annual report is available on the Company’s website: jdwetherspoon.com/investors-home
Shares of 2p each
Number of
shareholders
% of total
shareholders
Number
% of total shares
held
Up to 2,500
3,626
88.1
1,557,514
1.2
2,501–10,000
235
5.7
1,137,221
0.9
10,001–250,000
195
4.8
11,538,554
9.0
250,001–500,000
23
0.5
8,301,695
6.4
500,001–1,000,000
12
0.3
8,309,785
6.5
Over 1,000,000
24
0.6
97,905,386
76.0
4,115
100.0
128,750,155
100.0
Source: Computershare Investor Services plc
86
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
J D WETHERSPOON PLC
PUBS OPENED DURING THE FINANCIAL YEAR
Name
Address
Town/City
Postcode
Country
Keavan’s Port
1-5 Camden Street Upper
Dublin
D02 TC61
Ireland
The South Strand
1 Hanover Quay
Dublin
D02 E295
Ireland
The Scarsdale Hundred
2 Sevenairs Road
Sheffield
S20 1NZ
England
The Navigation Inn
1 Wharf Road
Birmingham
B30 3LS
England
An Geata Arundel
9 Arundel Square
Waterford
X91 RD35
Ireland
The Raymond Mays
44–48 North Street
Bourne
PE10 9AB
England
The Prense Well
5 The Mount
Heswall
CH60 4RE
England
Name
Address
Town/City
Postcode
Country
St Georges Hall
203 Church Road
Bristol
BS5 9HL
England
The Vulcan
181 Main Street
Coatbridge
ML5 3HH
Scotland
The Running Horses (Lloyds)
Water Street/ Chalon Way
St Helens
WA10 1PY
England
The Pear Tree
25–27 Alcester Road South
Birmingham
B14 7JQ
England
The Drum
557–559 Lea Bridge Road
Leyton
E10 7EQ
England
The Three Tun Tavern
1–5 Temple Road, Carysford Avenue
Dublin
A94 Y5F1
Ireland
The Milan Bar
14–32 High Street
Croydon
CR0 1YA
England
The Oyster Rooms
Unit 3, Fulham Broadway Centre
Fulham
SW6 1AA
England
The Looking Glass
41–43 Buttermarket Street
Warrington
WA1 2LY
England
The London Bar
South Terminal, Airside, Gatwick Airport
Crawley
RH6 0NN
England
The Skylark
34–36 South End
Croydon
CR0 1DP
England
The Robert Peel
5–10 Market Place
Bury
BL9 0LD
England
The Christopher Creeke
2 Holdenhurst Road
Bournemouth
BH8 8AD
England
The Bell Hotel
40 Market Square
Aylesbury
HP20 1TX
England
The Windlesora
17 William Street
Windsor
SL4 1BB
England
PUBS CLOSED DURING THE FINANCIAL YEAR
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
87
COMPANY INFORMATION
Registered office
Company number
1709784
Registrars
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
Independent auditors
Grant Thornton UK LLP
Chartered Accountants and
Statutory Auditors
30 Finsbury Square
London
EC2A 1AG
Solicitors
Macfarlanes LLP
20 Cursitor Street
London
EC4A 1LT
Bankers
Allied Irish Banks
Banco de Sabadell S.A London Branch
Barclays Bank plc
BNP Paribas
Clydesdale Bank plc
Co Operative Rabbobank U.A
Crédit Industriel et Commercial.
Handelsbanken Bank
HSBC Bank plc
Mediobanca S.p.A
MUFG Bank Ltd
National Westminster Bank plc
Santander UK plc
The Governor and Company of the Bank of Ireland
Financial advisers
Investec Bank plc
Rushe Advisors
Stockbrokers
Investec Bank plc
J D WETHERSPOON PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
88
GLOSSARY
AGM = “annual general meeting”. Annual assembly of a company’s stakeholders.
APM = “alternative performance measure” Financial measure of historical/future financial performance, other than a
financial measure defined or specified in the applicable financial reporting framework.
CAMRA = “Campaign for Real Ale”. Organisation which promotes real ales, ciders and perries as well as traditional UK
pubs and clubs.
CEO = “chief executive officer”. Individual responsible for making managerial decisions in the company to which he or she
is contracted to.
CJRS = “Coronavirus job retention scheme”. Initiative introduced by the UK Government allowing employers to access
financial support to pay part of their employees’ wages.
CLBILS = “Coronavirus large business interruption loan scheme”. Financial support created by the UK Government during
the COVID-19 pandemic.
EBITDA = “earnings before interest, taxes, depreciation and amortisation”. An alternative performance measure (APM).
ESG = “environmental, social and governance”. Set of standards measuring a business’s impact on society.
FRC = “Financial Reporting Council”. Independent regulator in the UK and Ireland responsible for regulating auditors,
accountants and actuaries. It also sets the UK corporate governance and stewardship codes.
FTSE = “Financial Times Stock Exchange”. Index tracking the largest companies trading on the London Stock Exchange
(by market capitalization).
FY = “financial year”. For Wetherspoon, the year being reported is 26 July 2021 - 31 July 2022.
GHG = “greenhouse gas”. A gas which absorbs and emits the radiant energy which causes the greenhouse effect.
(Trapping heat in the atmosphere, therefore warming up the planet).
HMRC = ‘Her Majesty’s Revenue and Customs’. Non-ministerial UK Government department responsible for collecting
taxes and paying some forms of state support.
IAS = ‘international accounting standard’. Older accounting standard issued by the International Accounting Standards
Board. IASs were replaced in 2001 by IFRSs.
IASB = ‘International Accounting Standards Board’. Private-sector body developing and approving the international
financial reporting standards (IFRSs).
IBOR = ‘inter-bank offered rate’. Basic rate of interest used in lending among banks on the financial market and as a
reference in setting interest rates on other loans.
IBR = ‘incremental borrowing rate’. Rate of interest which a lessee would have to pay to borrow the funds necessary to
obtain an asset.
IFRIC = ‘international financial reporting standards interpretations committee’. Body which reviews accounting issues, on a
timely basis, which have arisen within the context of current international reporting standards.
IFRS = ‘international financial reporting standards’. Accounting standards issued by the International Accounting Standards
Board.
ISA = ‘international standards on auditing’. Regulatory standards to be followed when auditing financial information, issued
by the International Auditing and Assurance Standards Board.
KPI = ‘key performance indicators’. Measures which companies use to evaluate a company’s success in a particular
activity in which it engages.
LGBTQIA+ = ‘lesbian, gay, bisexual, transgender, queer/questioning, intersex, asexual, pansexual and allies’. An inclusive
term for people of various genders and sexualities.
LIBOR = ‘London inter-bank offered rate’. Basic rate of interest used in lending among banks on the financial market.
LLP = ‘limited liability partnership’. Type of ownership in which some or all partners have limited liabilities.
NIC = ‘national insurance contributions’. Type of income tax paid by both employees and employers.
PAYE = ‘pay-as-you-earn tax’. Type of income tax paid by an employer on behalf of an employee, after being deducted
from the employee’s salary.
RNS = ‘Regulatory News Service’. Service which transmits regulatory and non-regulatory information published by
companies and organisations (eg Share Award) to the local market.
SAP = Accounting software used by Wetherspoon.
SIPs = ‘share incentive plan’. An approved, tax-efficient plan which employers can provide to employees to award their
workforce in shares.
SONIA = ‘sterling overnight interbank average rate’. Interest rate paid by banks on unsecured transactions in the UK
market – an alternative measure to LIBOR.
UK GAAP = ‘UK generally accepted accounting practice’. Body of accounting standards published by the UK’s Financial
Reporting Council.
VAT = ‘value-added tax’. Form of tax paid to HMRC on a product/service at each stage of production, distribution and sale
to the end customer.
WACC = ‘weighted average cost of capital’. Rate which a company is expected to pay, on average, to all of its security
holders to finance its assets.
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89 INTERIM REPORT 2017
01923 477777
jdwetherspoon.com
J D Wetherspoon plc
Wetherspoon House, Central Park
Reeds Crescent, Watford, WD24 4QL