JD Wetherspoon (JDW) chairman Tim Martin didn’t dwell too long on the 14.2 per cent decline in half-year operating profit before launching a broadside at the nation’s politicians for not delivering on the EU referendum result. Brexit aside, the value-focused pub chain saw the underlying margin shrink to 7.1 per cent from 8.9 per cent at the 2018 half-year. Increased staff costs added £33m to the cost base, while free cash flow was held in check due to share purchases for employees and payments relating to tax and interest.
The group entered into a new five-year banking agreement, extending its total facilities, excluding finance leases, from £860m to £895m. Net debt stood at £724m at the halfway mark, taking the enterprise value of the underlying business to in excess of £2bn. Leverage on this scale, though hardly advisable, is not unknown in the sector, but net interest cover fell from four times profit before interest, tax and exceptional items from a multiple of 5.5 at the 2018 half-year. It’s envisaged that the net-debt-to-cash profit ratio will be around 3.5 times for the "foreseeable future".
Bloomberg consensus gives pre-tax profits of £102m for the July year-end, leading to EPS of 75.3p, rising to £104m and 78.4p in FY2020.
| JD WETHERSPOON (JDW) | ||||
| ORD PRICE: | 1,302p | MARKET VALUE: | £ 1.37bn | |
| TOUCH: | 1,302-1,305p | 12-MONTH HIGH: | 1,346p | LOW: 1,051p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 296p | NET DEBT: | 232% | |
| Half-year to 27 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 830 | 54.3 | 40.1 | 4.00 |
| 2019 | 890 | 48.6 | 36.8 | 4.00 |
| % change | +7 | -11 | -8 | - |
| Ex-div: | 02 May | |||
| Payment: | 30 May |
