Company Announcements

13 September 2019

 

J D WETHERSPOON PLC

PRELIMINARY RESULTS

(For the 52 weeks ended 28 July 2019)

 

FINANCIAL HIGHLIGHTS	Var%
Before exceptional items
-     Like-for-like sales	+6.8%
-     Revenue £1,818.8m (2018: £1,693.8m)	+7.4%
-     Profit before tax £102.5m (2018: £107.2m)	-4.5%
-     Operating profit £131.9m (2018: £132.3m)	-0.3%
-     Earnings per share (including shares held in trust) 75.5p (2018: 79.2p)	-4.7%
-     Free cash flow per share 92.0p (2018: 88.4p)	+4.1%
-     Full year dividend 12.0p (2018: 12.0p)	Maintained
After exceptional items*
-     Profit before tax £95.4m (2018: £89.0m)	+7.2%
-     Operating profit £131.9m (2018: £132.3m)	-0.3%
-     Earnings per share (including shares held in trust) 69.0p (2018: 63.2p)	+9.2%

 

*Exceptional items as disclosed in account note 4.

 

 

Commenting on the results, Tim Martin, the Chairman of

J D Wetherspoon plc, said:

 

"Journalists regularly ask Wetherspoon for comments on Brexit - although some publications begrudge our few paragraphs on the subject in this section.

 

"The UK is clearly in political deadlock, parliament having refused to carry out the pre-referendum promise in the leaflet (Appendix 2) sent to every household which said "The Government will implement what you decide."

 

"Democratic power in the UK in the last 30 years has been diluted by a political faction in parliament, the media and boardrooms, which has a quasi-religious belief in the undemocratic EU - with its unelected presidents, MEPs who cannot instigate legislation and unaccountable court. Voters resent this loss of power - and distrust of politicians and the 'elite' is the result.

 

"In recent weeks, the 21 'Tory rebels' (over half Oxbridge), who helped to block 'no-deal' were joined by 25 bishops (two-thirds Oxbridge), the latter group asserting (Appendix 3), contrary, many of us believe, to common sense, that no-deal will be disadvantageous to the poor.

 

"As another straw in the wind, former Supreme Court judge and Reith lecturer Lord Sumption described Brexit supporters as 'grim fanatics' (Appendix 4).

 

"John Bercow, Emily Thornberry, Dominic Grieve, Keir Starmer, Jo Johnson, Philip Hammond, David Gauke, David Lidington, Hilary Benn, Rory Stewart and many other pro-EU Oxbridge MPs have played a leading role in frustrating the referendum result, by enmeshing parliament in a legal and administrative spider's web.

 

"The economic judgement of this faction, led in the past by the likes of Michael Heseltine, Peter Mandelson and Tony Blair, the CBI and the Financial Times, has been extremely poor.

 

"It advocated joining the disastrous predecessor of the euro, the exchange rate mechanism, the euro itself, and incorrectly forecast an immediate recession in the event of a Leave vote in the referendum.

 

"Author and athlete Matthew Syed has recently illustrated how a lack of diversity among elites leads to poor decisions. Investment guru Warren Buffett has pointed out that forecasts tell you a lot about the forecaster - but nothing about the future.

 

"The faction's forecast today is that leaving the EU without a deal will be a 'cliff-edge', a 'catastrophe' or a 'disaster'.

 

"Remainer MPs' main argument - having consistently voted against the only deal on offer - to justify their attempts to scupper Brexit, is that costs for consumers and businesses will axiomatically increase in the event of 'no deal'.

 

"However, leaving without a deal avoids a legal liability to pay £39 billion (Appendix 5), allows the UK to eliminate protectionist import taxes (tariffs) on over 12,000 non-EU products, (including rice, oranges, bananas, Antipodean wine, children's clothes and car parts etc) and results in resumption of the control of fishing waters.

 

"Above all, no-deal increases UK democracy - the most powerful economic stimulant.

 

"It is an absurdity to argue that a reduction in UK input costs, combined with increased democracy, will have a harmful effect on the economy - just as it would be absurd for a business to adopt this argument if its own costs were reduced.

 

"Free trade, which the ending of tariffs implies, never made any country poorer, as former Australian High Commissioner, Alexander Downer, recently said (Appendix 6).

 

"Elite Remainers are ignoring the 'big picture', regarding lower input costs and more democracy, and are mistakenly concentrating on assumed short-term problems, such as potential delays at Channel ports - which are easier to extrapolate on their computer models.

 

"Despite continuing political problems, stemming from the transfer of democratic power to a technocratic elite, Wetherspoon continues to perform well. Like-for-like sales for the six weeks to 8 September 2019 were up 5.9%.

 

"We currently anticipate a reasonable outcome (pre IFRS16) for the current financial year, subject to our future sales performance.

 

"As in previous years, we will provide updates, during the year, on the company's trading.

 

Enquiries:

 

John Hutson                         Chief Executive Officer      01923 477777

Ben Whitley                          Finance Director                01923 477777

Eddie Gershon                     Company spokesman        07956 392234

 

Photographs are available at: www.newscast.co.uk         

 

 

Notes to editors

1.         J D Wetherspoon owns and operates pubs throughout the UK. The Company aims to provide customers with good-quality food and drink, served by well-trained and friendly staff, at reasonable prices. The pubs are individually designed and the Company aims to maintain them in excellent condition.

2.         Visit our website jdwetherspoon.com

3.         This announcement, which does not constitute the Company's annual report for the 52 weeks ended 28 July 2019, has been prepared solely to provide additional information to the shareholders of J D Wetherspoon, in order to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied on by any other party, for other purposes. Forward-looking statements have been made by the directors in good faith using information available up until the date that they approved this statement. Forward-looking statements should be regarded with caution because of inherent uncertainties in economic trends and business risks.

4.         The annual report and financial statements 2019 has been published on the Company's website on 13 September 2019.

5.         The current financial year comprises 52 trading weeks to 26 July 2020.

6.        The next trading update will be issued on 13 November 2019.

 

 

CHAIRMAN'S STATEMENT

 

Financial performance

 

I am pleased to report a year of record sales for the company.

 

The company was founded in 1979 - and this is the 36th year since incorporation in 1983. The table below outlines some key aspects of our performance during that period. Since our flotation in 1992, earnings per share before exceptional items have grown by an average of 14.6% per annum and free cash flow per share by an average of 15.0%.

 

Summary accounts for the years ended July 1984 to 2019

Financial year	Total sales	Profit/(loss)	Earnings	Free cash flow	Free cash flow
		before tax and exceptional items	per share before exceptional items		per share
	£000	£000	pence	£000	pence
1984	818	(7)	0
1985	1,890	185	0.2
1986	2,197	219	0.2
1987	3,357	382	0.3
1988	3,709	248	0.3
1989	5,584	789	0.6	915	0.4
1990	7,047	603	0.4	732	0.4
1991	13,192	1,098	0.8	1,236	0.6
1992	21,380	2,020	1.9	3,563	2.1
1993	30,800	4,171	3.3	5,079	3.9
1994	46,600	6,477	3.6	5,837	3.6
1995	68,536	9,713	4.9	13,495	7.4
1996	100,480	15,200	7.8	20,968	11.2
1997	139,444	17,566	8.7	28,027	14.4
1998	188,515	20,165	9.9	28,448	14.5
1999	269,699	26,214	12.9	40,088	20.3
2000	369,628	36,052	11.8	49,296	24.2
2001	483,968	44,317	14.2	61,197	29.1
2002	601,295	53,568	16.6	71,370	33.5
2003	730,913	56,139	17.0	83,097	38.8
2004	787,126	54,074	17.7	73,477	36.7
2005	809,861	47,177	16.9	68,774	37.1
2006	847,516	58,388	24.1	69,712	42.1
2007	888,473	62,024	28.1	52,379	35.6
2008	907,500	58,228	27.6	71,411	50.6
2009	955,119	66,155	32.6	99,494	71.7
2010	996,327	71,015	36.0	71,344	52.9
2011	1,072,014	66,781	34.1	78,818	57.7
2012	1,197,129	72,363	39.8	91,542	70.4
2013	1,280,929	76,943	44.8	65,349	51.8
2014	1,409,333	79,362	47.0	92,850	74.1
2015	1,513,923	77,798	47.0	109,778	89.8
2016	1,595,197	80,610	48.3	90,485	76.7
2017	1,660,750	102,830	69.2	107,936	97.0
2018	1,693,818	107,249	79.2	93,357	88.4
2019	1,818,793	102,459	75.5	96,998	92.0

 

 

 

Notes

Adjustments to statutory numbers

1. Where appropriate, the earnings 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.

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 to 4, all numbers are as reported in each year's published accounts.

 

 

 

 

Total sales were £1,818.8m, an increase of 7.4%. Like-for-like sales increased by 6.8%, bar sales by 5.8%, food sales by 8.3%, slot/fruit machine sales by 10.3% and hotel room sales by 3.9%.

 

Operating profit, before exceptional items, decreased by 0.3% to £131.9m (2018: £132.3m). The operating margin, before exceptional items was 7.3% (2018: 7.8%).

 

Profit before tax and exceptional items decreased by 4.5% to £102.5m (2018: £107.2m), including property profit of £5.6m (2018: £2.9m). Earnings per share, including shares held in trust by the employee share scheme, before exceptional items, were 75.5p (2018: 79.2p).

 

Net interest was covered 3.9 times by operating profit before interest, tax and exceptional items (2018: 4.8 times), owing mainly to an increase in the cost of interest-rate 'swaps' or hedges and a reduction in operating profit. Total capital investment was £167.6m in the period (2018: £110.1m). £35.2m was invested in new pubs and pub extensions (2018: £35.9m), £55.2m in existing pubs and IT (2018: £64.7m) and £77.2m in freehold reversions, where Wetherspoon was already a tenant (2018: £9.5m).

 

Exceptional items totalled £7.0m (2018: £18.3m). There was a £1.6m loss on disposal and an impairment charge of £5.5m.

 

The total cash effect of exceptional items is a cash outflow of £6.0m. The outflow related to payments to landlords in relation to lease terminations. Since starting the current disposal programme in 2015, the company has had a net inflow of £20m from the disposal of 101 pubs.

 

Free cash flow, after capital payments of £54.3m for existing pubs (2018: £68.9m), £16.0m for share purchases for employees (2018: £13.6m) and payments of tax and interest, increased by £3.6m to £97.0m (2018: £93.4m). Free cash flow per share was 92.0p (2018: 88.4p).

 

Dividends and return of capital

The board proposes, subject to shareholders' approval, to pay an unchanged final dividend of 8.0p per share, on 28 November 2019, to shareholders on the register on 25 October 2019, giving an unchanged total dividend for the year of 12.0p per share. The dividend is covered 5.8 times (2018: 5.3 times).

 

In view of the level of capital investment made and the potential for further investment going forward, the board has decided to maintain the dividend per share at its current level for the time being.

 

During the year, 402,899 shares (0.38% of the share capital) were purchased by the company for cancellation, at a cost of £5.4m, an average cost per share of 1,327p.

 

My shareholding over the last 15 years has increased, as a result of the company's share 'buybacks', to 31.8% of the issued share capital. The company has in place a rule 9 'whitewash', under the UK City Code on Takeovers and Mergers, allowing further buybacks. At the annual general meeting this year, the company will seek approval for a renewal of the whitewash.

 

Financing

As at 28 July 2019, the company's total net debt, excluding derivatives, was £737.0m (2018: £726.2m), an increase of £10.8m.

 

Year-end net-debt-to-EBITDA was 3.36 times (2018: 3.39 times) - EBITDA was £5m higher in 2019, offsetting a small increase in debt.

 

As at 28 July 2019, the company had £158.0m (2018: £133.9m) of unutilised banking facilities and cash or cash equivalents, with a slight increase in total facilities to £895.0m (2018: £860.0m). In August the company raised an additional £98m from a private placement debt facility.

 

In order to avoid increased costs, the company has fixed its LIBOR interest rates in respect of £770m until March 2029.

 

Corporation tax

The current tax charge (ie the cash the company will pay to HMRC) for the period is £22.5m (2018: £23.7m). The rate of corporation tax paid on current year profits is the same as that of the previous year at 22.8%. The 'accounting' tax charge, which appears in the income statement, is £22.8m (2018: £23.6m).

 

IFRS 16

On 29 July 2019, the company adopted the IFRS 16 leases standard. This has not affected the financial statements for the year under review (ended 28 July 2019). All things being equal, the company estimates that for the year ending 26 July 2020, EBITDA will increase by c£58m and operating profit by c£8m. The interest charge will increase by c£22m and profit before tax will decrease by c£14m. On the balance sheet, a net lease liability of c£617m and total assets of c£618m will be recognised, with no change to net assets. There will be no impact on cash flows except in relation to tax payments. Further detail will be included in the accounting policies note in the 2019 annual report.

 

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 supermarkets do, 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, there are often fewer pubs, coffee shops and restaurants, with less employment and increased high-street dereliction, in less affluent areas.

 

Tax equality would also be in line with the principle of fairness in applying taxes to different businesses.

 

Contribution to the economy

Wetherspoon is proud to pay its share of tax and, in this respect, is a major contributor to the economy. In the year under review, we generated total taxes of £764.4m, an increase of £35.6m, compared with the previous year, which equates to approximately 42% of our sales - and also amounts to approximately one-thousandth of all UK government revenue.

 

This results in an average payment per pub of £871,400 per annum or £16,800 per week.

 

	2019	2018
	£m	£m
VAT	357.9	332.8
Alcohol duty	174.4	175.9
PAYE and NIC	121.4	109.2
Business rates	57.3	55.6
Corporation tax	19.9	26.1
Machine duty	11.6	10.5
Climate change levy	10.4	9.2
Stamp duty	3.7	1.2
Sugar tax	2.9	0.8
Fuel duty	2.2	2.1
Carbon tax	1.9	3.0
Premise licence and TV licences	0.8	0.7
Landfill tax	-	1.7
TOTAL TAX	764.4	728.8
Tax per pub (£000)	871.4	825.0
Tax as % of sales	42.0%	43.0%
Pre-exceptional profit after tax	79.6	83.7
Profit after tax as % of sales	4.4%	4.9%

 

 

Corporate governance

The underlying ethos of corporate governance is to comply with the guidelines or to explain why you do not.

 

The original creators of the rules must have realised that business success takes many forms, so a rigid structure, applicable to all companies cannot be devised - hence the requirement to explain non-compliance.

 

Wetherspoon has always explained its approach. For example, in 2016, our approach to corporate governance was summed up in the annual report as follows:

 

"..I have said that many aspects of current corporate governance advice, as laid out in the Combined Code, are deeply flawed…"

 

I then went on to say:

 

"I believe that the following propositions represent the views of sensible shareholders:

 

-The Code itself is faulty, since it places excessive emphasis on meetings between directors and shareholders and places almost no emphasis on directors taking account of the views of customers and employees which are far more important, in practice, to the future well-being of any company. For example, in the UK Corporate Governance Code (September 2014), there are 64 references to shareholders, but only three to employees and none to customers - this emphasis is clearly mistaken.

 

-The average institutional shareholder turns over his portfolio twice annually, so it is advisable for directors to be wary of the often perverse views of 'Mr Market' (in the words of Benjamin Graham), certainly in respect of very short-term shareholders.

 

-A major indictment of the governance industry is that modern annual reports are far too long and often unreadable. They are full of semiliterate business jargon, including accounting jargon, and are cluttered with badly written and incomprehensible governance reports.

 

-It would be very helpful for companies, shareholders and the public, if the limitations of corporate governance systems were explicitly recognised. Common sense, management skills and business savvy are more important to commercial success than board structures. All of the major banks and many supermarket and pub companies have suffered colossal business and financial problems, in spite of, or perhaps because of, their adherence to inadvisable governance guidelines.

 

-There should be an approximately equal balance between executives and non-executives. A majority of executives is not necessarily harmful, provided that non-executives are able to make their voices heard.

 

-It is often better if a chairman has previously been the chief executive of the company. This encourages chief executives, who may wish to become a chairman in future, to take a long-term view, avoiding problems of profit-maximisation policies in the years running up to the departure of a chief executive.

 

-A maximum tenure of nine years for non-executive directors is not advisable, since inexperienced boards, unfamiliar with the effects of the 'last recession' on their companies, are likely to reduce financial stability.

 

-An excessive focus on achieving financial or other targets for executives can be counter-productive. There's no evidence that the type of targets preferred by corporate governance guidelines actually works and there is considerable evidence that attempting to reach ambitious financial targets is harmful.

 

-As indicated above, it is far more important for directors to take account of the views of employees and customers than of the views of institutional shareholders. Shareholders should be listened to with respect, but caution should be exercised in implementing the views of short-term shareholders. It should also be understood that modern institutional shareholders may have a serious conflict of interest, as they are often concerned with their own quarterly portfolio performance, whereas corporate health often requires objectives which lie five, 10 or 20 years in the future."

 

I also quoted Sam Walton of Walmart in the 2014 annual report. He said:

 

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

 

It is, therefore, very disappointing that one large institutional shareholder does not appear, by its actions, to support the central tenet of our stance on the issue of governance, which is that experience is extremely important and that the so-called 'nine-year rule' is perverse and counterproductive.

 

This shareholder failed to support the re-election of two of our non-executive directors at last year's AGM. I arranged a meeting for all of our main institutional shareholders in April 2019, to further explain our position, which the shareholder in question failed to attend. I then arranged a further meeting with the shareholder at their offices in May 2019.

 

Following the meeting there was no confirmation that the shareholder would support the re-election of our long-serving non-executive directors. As a result, three of our four non-executives, in the best interests of the company, offered to leave, on a rotational basis.

 

The company contacted all of its main shareholders to inform them of this proposal. The shareholder in question agreed. However, a number of other shareholders expressed their discontent with the proposed resignations (Appendix 1).

 

The executive board and I strongly feel that these sorts of board changes disrupt and weaken the company. I wrote to the shareholder on 9 September 2019 to ask them to reconsider their position, but have not received a reply.

 

Wetherspoon has had harmonious relationships with almost all of its shareholders over many years and has complied with the corporate governance requirement for explanation. Judging from the absence of any adverse comment, our approach has generally been accepted by investors.

 

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.

 

We now have 799 pubs rated on the Food Standards Agency's website - the average score is 4.97, with 97.4% of the pubs achieving a top rating of five stars and 2.1% receiving four 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 65 pubs have passed.

 

We paid £46m in respect of bonuses and free shares to employees in the year, of which 98% was paid to staff below board level and 86% was paid to staff working in our pubs

 

The company has been recognised as a Top Employer UK (2019) by The Top Employers Institute for the 16th consecutive year.

 

Thanks to fantastic efforts by our employees and customers, in association with the charity CLIC Sargent, approximately £1.6m was raised, bringing the total (since August 2002) to over £17.6m.

 

Property

The company opened five pubs during the year, with nine sold or closed, resulting in a trading estate of 879 pubs at the financial year end.

 

The average development cost for a new pub (excluding the cost of freeholds) was £2.6m, compared with £2.8m a year ago. The full-year depreciation charge was £81.8m (2018: £79.3m). We currently intend to open 10-15 pubs in the year ending July 2020.

 

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 £1.25m from Mr Lyons.

 

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

 

The claim related to properties in Portsmouth, Leytonstone and Newbury. The Portsmouth property was involved in the 2008/9 Van de Berg case itself.

 

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

 

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

 

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

 

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

 

Current trading and outlook

Journalists regularly ask Wetherspoon for comments on Brexit - although some publications begrudge our few paragraphs on the subject in this section.

 

The UK is clearly in political deadlock, parliament having refused to carry out the pre-referendum promise in the leaflet (Appendix 2) sent to every household which said "The Government will implement what you decide."

 

Democratic power in the UK in the last 30 years has been diluted by a political faction in parliament, the media and boardrooms, which has a quasi-religious belief in the undemocratic EU - with its unelected presidents, MEPs who cannot instigate legislation and unaccountable court. Voters resent this loss of power - and distrust of politicians and the 'elite' is the result.

 

In recent weeks, the 21 'Tory rebels' (over half Oxbridge), who helped to block 'no-deal' were joined by 25 bishops (two-thirds Oxbridge), the latter group asserting (Appendix 3), contrary, many of us believe, to common sense, that no-deal will be disadvantageous to the poor.

 

As another straw in the wind, former Supreme Court judge and Reith lecturer Lord Sumption described Brexit supporters as 'grim fanatics' (Appendix 4).

 

John Bercow, Emily Thornberry, Dominic Grieve, Keir Starmer, Jo Johnson, Philip Hammond, David Gauke, David Lidington, Hilary Benn, Rory Stewart and many other pro-EU Oxbridge MPs have played a leading role in frustrating the referendum result, by enmeshing parliament in a legal and administrative spider's web.

 

The economic judgement of this faction, led in the past by the likes of Michael Heseltine, Peter Mandelson and Tony Blair, the CBI and the Financial Times, has been extremely poor.

 

It advocated joining the disastrous predecessor of the euro, the exchange rate mechanism, the euro itself, and incorrectly forecast an immediate recession in the event of a Leave vote in the referendum.

 

Author and athlete Matthew Syed has recently illustrated how a lack of diversity among elites leads to poor decisions. Investment guru Warren Buffett has pointed out that forecasts tell you a lot about the forecaster - but nothing about the future.

 

The faction's forecast today is that leaving the EU without a deal will be a 'cliff-edge', a 'catastrophe' or a 'disaster'.

 

Remainer MPs' main argument - having consistently voted against the only deal on offer - to justify their attempts to scupper Brexit, is that costs for consumers and businesses will axiomatically increase in the event of 'no deal'.

 

However, leaving without a deal avoids a legal liability to pay £39 billion (Appendix 5), allows the UK to eliminate protectionist import taxes (tariffs) on over 12,000 non-EU products, (including rice, oranges, bananas, Antipodean wine, children's clothes and car parts etc) and results in resumption of the control of fishing waters.

 

Above all, no-deal increases UK democracy - the most powerful economic stimulant.

 

It is an absurdity to argue that a reduction in UK input costs, combined with increased democracy, will have a harmful effect on the economy - just as it would be absurd for a business to adopt this argument if its own costs were reduced.

 

Free trade, which the ending of tariffs implies, never made any country poorer, as former Australian High Commissioner, Alexander Downer, recently said (Appendix 6).

 

Elite Remainers are ignoring the 'big picture', regarding lower input costs and more democracy, and are mistakenly concentrating on assumed short-term problems, such as potential delays at Channel ports - which are easier to extrapolate on their computer models.

 

Despite continuing political problems, stemming from the transfer of democratic power to a technocratic elite, Wetherspoon continues to perform well. Like-for-like sales for the six weeks to 8 September 2019 were up 5.9%.

 

We currently anticipate a reasonable outcome (pre IFRS16) for the current financial year, subject to our future sales performance.

 

As in previous years, we will provide updates, during the year, on the company's trading.

 

Tim Martin

Chairman
 

Appendix 1 - Comments from institutional shareholders

 

Shareholder 1

 

"I can confirm that XXX are willing to support all of the proposed resolutions as outlined in your letter dated 28th June 2019.  XXX intends to vote in favour of the re-election of all of the non-executive directors and vote in favour of the remuneration report at the next AGM. 

 

"Furthermore, I would like to emphasise that XXX are fully supportive of J D Wetherspoon in its position regarding the UK Corporate Governance Code.  The explanations given by the company for its non-compliance to the code are logical and rational in our opinion."

 

 

Shareholder 2

 

"We'd very much appreciate a brief chat on the proposals in this letter-we're happy to chat with whoever can best answer our question:

 

"We'd like to understand why the board feels there's a need for Elizabeth, Debra, or Sir Richard to be succeeded, given the shared views of Tim and ourselves that tenure itself shouldn't be a reason-despite what the UK Corporate Governance Code suggests. Does the board consider Elizabeth, Debra, and Sir Richard to no longer be the most qualified to be non-executive board members, even when taking into account the benefit of their experience with Wetherspoon, including their now very well-developed understanding of its unique approach and culture? Like Tim we believe that experience helps not hinders non-executive directors.

 

"Thank you, and we look forward to talking."

 

Appendix 2 - Extract from HM Government pre-referendum promise leaflet, June 2016

 

A once in a generation decision.

 

"The referendum on Thursday, 23rd June is your chance to decide if we should remain in or leave the European Union.

 

The Government believes it is in the best interests of the UK to remain in the EU.

 

This is the way to protect jobs, provide security, and strengthen the UK's economy for every family in this country - a clear path into the future, in contrast to the uncertainty of leaving.

 

This is your decision. The Government will implement what you decide."

 

Appendix 3 - Extract from open letter from 25 Bishops, 28 August 2019

 

"The Archbishop of Canterbury has conditionally agreed to chair a Citizens Forum in Coventry and, without prejudice for any particular outcome, we support this move to have all voices in the current Brexit debate heard.

 

However, we also have particular concerns about the potential cost of a No Deal Brexit to those least resilient to economic shocks….

 

Exiting the EU without an agreement is likely to have a massive impact on all our people and the Government is rightly preparing for this outcome. The Government believes that leaving the EU on 31 October is essential to restoring trust and confidence. It is unlikely, however, that leaving without an agreement, regardless of consequences, will lead to reconciliation or peace in a fractured country….."

 

 

 

The Rt Revd Nick Baines, Bishop of Leeds

The Rt Revd Donald Allister, Bishop of Peterborough

The Rt Revd Robert Atwell, Bishop of Exeter

And 22 others

 

Appendix 4 - Extract from The Spectator 'Diary' column, 1 June 2019, former Supreme Court judge and Reith lecturer Lord Jonathan Sumption

 

"…Back to London and the Brexit bubble. Theresa May's last days as Prime Minister have finally arrived amid a torrent of abuse on every side. But pause for a moment to reflect upon her personal and political tragedy, for history will be kinder to her than we have been. Faced with what many regard as an act of economic vandalism by a bare majority of the electorate, she did her loyal best to limit the damage. Her mistake was to repudiate those who would have been her natural allies. Instead, she made her pitch to the grim fanatics behind her, with whom no agreement on damage limitation was ever possible. Their guide was faith, not reason; compromise was treason and the EU was the Antichrist. Naturally, they responded by devouring her, and destroying their own party in the process. But by the time she realised this, it was too late. May's courage in the face of adversity commands respect. She was let down by her insularity, which deprived her of wise advice, and by her own utter lack of political imagination, tactical agility or basic communication skills.

 

In Austria for the 150th anniversary of the Vienna State Opera and the opening of Richard Strauss's Die Frau Ohne Schatten. The Viennese are in the middle of their own political crisis, but over sekt and canapés in the intervals, they seem more interested in ours. They have heard of only one candidate for May's job. 'Who is this Joris Hobson who is going to be your next prime minister?', they ask. 'Boris Johnson, but don't count on it.' 'Yes, yes, Morris Watson. Is he some kind of fascist?' 'Not at all. A romantic, a bit of a clown, but perfectly harmless when out of office.' 'Well, if it is not Moggson, then who?' 'No idea.' My short-lived authority as an expert on British politics is over."

 

Appendix 5 - Extract from "Summary" of BREXIT AND THE EU BUDGET (page 3) (House of Lords / European Union Committee - 15th Report of Session 2016-17), 4 March 2017

 

"…the strictly legal position of the UK on this issue appears to be strong. Article 50 provides for a 'guillotine' after two years if a withdrawal agreement is not reached unless all Member States, including the UK, agree to extend negotiations. Although there are competing interpretations, we conclude that if agreement is not reached, all EU law- including provisions concerning ongoing financial contributions and machinery for adjudication-will cease to apply, and the UK would be subject to no enforceable obligation to make any financial contribution at all."

 

 

Appendix 6 - Extract from The Spectator, 12 May 2018, James Forsyth

 

What Aussies really think of Brexit

 

"Alexander Downer is coming to the end of his four-year stint as High Commissioner to the UK. His common sense will be missed

 

When friends speak, you should listen - and you would be hard pressed to find a better friend of this country in the London diplomatic corps than Alexander Downer. The 66-year-old, who has just finished a four-year stint as the Australian High Commissioner, is an Anglophile by instinct and upbringing. He spent much of his childhood here because his father was appointed to the job in 1964.

 

When Downer's father left in 1972, he worried about this country joining the European Economic Community and what that would mean for relations with Australia and other Commonwealth countries. So there is a neat symmetry in his son being High Commissioner when Britain decided to reverse that decision. But Downer is not particularly ideological about Brexit. In 2016 he dutifully joined in the chorus of diplomatic panjandrums urging Britain to vote Remain. But since then, he has been quick to talk about the opportunities it presents.

 

On its own, he says Brexit won't be transformative: 'Your fate when you leave the EU will depend much more on the domestic policies you pursue than the fact you're not in the EU. You will do well if you open your markets and you embrace free trade; there was never a country that embraced free trade that was poor as a result.'

 

Free-trade will also mean leaving the customs union: 'If you stay in the single market and the customs union, you have left

the decision-making part of the EU but you remain in the rest of it… I can tell you what, you wouldn't persuade the average Aussie to contract out decision making to ASEAN [Association of South East Asian Nations], they'd just change the government if the government tried to do that!' Some Tory MPs might think the same is true in Britain.

 

Downer argues that the more attention the customs union gets, the more voters will reject it: 'The more the public understands that remaining in the customs union means that other people make all of your trade policy for you, they would regard that as completely unacceptable. I don't think they necessarily know the details of what all these terms mean, because they've got other things on their minds; you can't blame them for that. But I think if you were a really effective politician, you could make a very strong point on this.'

 

You might think: Downer would say that, wouldn't he? After all, if Britain stays in the customs union there is no chance of that UK Australia trade agreement. But he is surely right that it would be absurd for the sixth largest economy in the world not to have control over its trade policy.

 

On a UK-Australia free trade deal, Downer is keen to offer reassurance, emphasising it is nothing to be afraid of. He stresses that Australia doesn't want 'radical change to regulations' and that farmers shouldn't fear the market being flooded with cheap beef and lamb, as Australia 'doesn't have much interest in the British market'. Rather, its sights are focused on Asia, where 'there is a massive rise of the middle class. Honestly, we cannot produce enough meat at the moment to meet the market demand in Asia.'

 

Whether the agricultural lobby is reassured by this answer remains to be seen. But when Downer talks about the Australia-US free trade deal, you can see why Canberra is so keen on one with Britain. Downer points out that in the 13 years since the deal was signed, trade between the two countries has increased by 50 per cent and investment is up 130 per cent. Interestingly, Downer adds that he would like a UK-Australia trade deal to be accompanied by the kind of immigration accord Australia and the US have, which allows professionals to work in each other's country for two years, with the option to renew indefinitely…

 

Perhaps Downer's most important advice is that the Brexit debate has 'laid a little more bare the division between the liberal elite and the mainstream of British society'. The 'great challenge' will be to reconnect them once this is over. If the two sides were looking for a marriage counsellor, they could do worse than this softly spoken Australian."