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Doubled profits for pub operator

JD WETHERSPOON, the pub operator that joined the stock market last October, has doubled profits in the year to 31 July.

Pre-tax profits raced ahead to pounds 4.1m from pounds 926,000. The comparable figure, however, was reduced by pounds 1.1m because the group lost money disposing of unwanted outlets. Adjusted for the property element, Wetherspoon's profit rose from pounds 2m to pounds 4.1m.

Most of the increase was due to pub openings. Like-for-like the performance was flat.

At flotation Wetherspoon had 44 outlets but a further 23 were added between then and the company's year-end.

It aims to open another 20 pubs this year. It is also expanding from its base area within the M25.

The company has debts of pounds 22m, compared to assets of pounds 44m, equating to 50 per cent gearing. Tim Martin, chairman, said the ratio might go to 60 per cent but most of the cost of expanding would be paid out of profits generated by the existing businesses.

Wetherspoon has also signed three-year beer supply agreements with the brewers Scottish & Newcastle, Courage and Greene King. Despite aggressive price-cutting by brewers in the 18 months since Wetherspoon struck the supply agreements, Mr Martin said he was happy with the arrangements.

'Prices we are buying at now would be very hard to beat,' he said, but added that the deals would be reviewed. 'A couple of other brewers have been knocking hard on our door so we will have a very good look when the time comes.'

Wetherspoon's share price has risen steadily since flotation at 160p, outperforming the market average by 70 per cent. Yesterday the price was unchanged at 341p. Earnings per share were 14.7p and the total dividend is 5.4p.