J D Wetherspoon

J D Wetherspoon plc Annual report and accounts 2004

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.

Contents

Financial calendar

Financial highlights  1

Annual General Meeting

Chairman’s statement and operating review  2

11 November 2004

Finance review  5

Directors, officers and advisers  8

Directors’ report  9

Final dividend for 2004

26 November 2004

Directors’ remuneration report  12

Interim report for 2005

Corporate social responsibility report  16

March 2005

Corporate governance  17

Independent auditors’ report  19

Profit and loss account  20

Note of historical cost profits  20

Cash flow statement  21

Balance sheet  22

Notes to the accounts  23

Financial record  35

Interim dividend for 2005

May 2005

Year end

31 July 2005

Preliminary announcement for 2005

September 2005

Information for shareholders  36

Report and accounts for 2005

Notice of Annual General Meeting  37

October 2005

Financial highlights

Sales (£m)

787.1

730.9

601.3

484.0

369.6

2000

2001

2002

2003

2004

Profit before
tax and
exceptional
items (£m)

44.3

36.1

53.6

56.1

54.1

Turnover up 8% to

£787.1m

Operating profit up 4% to 

£77.6m

Net operating margin

9.9% (2003: 10.3%)

Profit before tax (before exceptional
items) down 4% to 

2000

2001

2002

2003

2004

£54.1m

EPS before 
exceptional 
items 
(pence)

14.2

11.8

16.6

17.0

17.7

Profit before tax (after exceptional
items) 

£46.3m (2003: £52.5m)

2000

2001

2002

2003

2004

Earnings per share (before exceptional
items) up 4% to 

Free cash flow
per share
(pence)

38.8

37.5

32.4

27.6

24.2

2000

2001

2002

2003

2004

Dividend per
share (pence)

3.9

3.5

3.2

2.9

2.7

17.7p 

Earnings per share (after exceptional
items) 

14.6p (2003: 15.9p)

Free cash flow per share down 3% to

37.5p more than double EPS

Dividend per share increased by 

2000

2001

2002

2003

2004

10%

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

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Chairman’s statement and operating review

After a good first half to the financial year (six months to 25 January 2004),

sales in the second half of the year slowed, which affected profits. For the

year as a whole, sales increased by £56.2 million to £787.1 million, a rise of

8%. Operating margins were 9.9%, compared with 10.3% last year, mainly 

as a result of higher labour and other pub costs. Operating profit increased by

4% to £77.6 million, and profit before tax (before exceptional items) reduced

by 4% to £54.1 million. Profit before tax (after exceptional items) was 

£46.3 million (2003: £52.5 million). Earnings per share (before exceptional

items) increased by 4% to 17.7p, due to the benefit of share buybacks, with

earnings per share (after exceptional items) being 14.6p (2003: 15.9p). 

Cash outflow in respect of capital investment was 

The company recorded an exceptional loss in the year of

£74.6 million, and net gearing at the year end was 117%

£7.8 million before taxation. This included the sale of 20

(2003: 97%). This increase was due to the ongoing share

pubs, together with provisions against the disposal of

buyback programme. Net interest was covered 3.3 times

further properties. 

(2003: 4.0 times) by operating profit. Free cash flow, after

payments of tax, interest and capital investment of 

We opened 28 pubs during the year, compared with 45 in

£20.6 million in existing pubs, decreased by 10% to 

the previous year. The total number of pubs now operated

£75.0 million, resulting in free cash flow per share of

by the company is 643. As in previous years, the new pubs

37.5p, more than double earnings per share. Free cash

opened are bigger than the average of our estate and have

flow decreased, primarily as a result of both a higher cash

helped average sales per pub to rise by 6% in the year

tax charge and capital reinvestment in existing pubs rising

under review. Like-for-like sales increased by 3.4%,

from 2.2% of turnover to 2.6% of turnover. 

although like-for-like profits declined by 1%, principally as

..cash flow per share of

37.5p, more than double

earnings per share…

Economic profit, calculated by adding back depreciation

to profit before tax (before exceptional items) and

subtracting capital expenditure on existing pubs and cash

tax, decreased by 8% to £64.3 million. As with cash flow,

economic profits were affected by a higher tax charge and

an increased level of capital reinvestment. 

a result of higher costs for labour and repairs.

D I V I D E N D S

The board proposes, subject to shareholders’ consent, to

pay a final dividend of 2.56p per share on 26 November

2004 to those shareholders on the register on 29 October

2004, bringing the total dividend for the year to 3.89p

per share, a 10% increase on the previous year. 

F I N A N C E  

The company had £74.7 million (2003: £103.1 million) 

of unutilised banking facilities and cash balances as at the

balance sheet date, with total facilities of £412 million

(2003: £412 million). The year’s capital expenditure on

new pub developments was more than covered by free

cash flow. As a result of reductions in our planned new

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J   D   W E T H E R S P O O N   P L C

C H A I R M A N ’ S   S TAT E M E N T   A N D   O P E R AT I N G   R E V I E W  

opening programme we, anticipate that, in the current

business, 25 years ago, off-trade sales accounted for

financial year, the company is expected to generate a cash

about 20% of beer, wine and spirit consumption.

surplus after capital expenditure and dividends which will

Estimates suggest that off-sales rose to a record 40% of

be available for debt reduction or share buybacks or both.

overall sales during Euro 2004 and that present trends

indicate that off-sales could rise to about 50% by 2010. 

R E T U R N   O F   C A P I TA L

During the year, 19,010,000 shares (representing

This situation has put pressure on Wetherspoon’s prices

approximately 9% of the issued share capital) were

and margin, as well as on the pub trade generally, and we

purchased by the company for cancellation, at a cost of

are today launching a new marketing campaign,

£51.1 million, representing an average cost per share of

emphasising a new traditional ale range, featuring

269p. £48.6 million of the cost was a cash outflow in the

Marston’s Burton Bitter at £1.29 per pint and Marston’s

year under review.

Pedigree at £1.49 per pint. 

R E G U L AT I O N   A N D   TA X AT I O N

From 4 to 17 October 2004, we are holding our 

As we have indicated in previous years, pubs pay

biggest-ever beer festival, featuring traditional ales from

approximately 40% of their turnover in tax, equivalent to

British and Irish regional and micro breweries. These

a contribution to public finances by Wetherspoon and its

festivals have been very successful in the past, but we are

employees of approximately £315 million. This level of tax

doubling the duration to two weeks this year and hope to

is about nine times our profit after tax (before exceptional

sell one million pints of traditional ale during the

items) and, like many businesses, we are very concerned

fortnight, five times as much as the excellent CAMRA

about continuing increases in taxation of one type or

Great British Beer Festival held at Olympia annually.

another. In particular, the government has increased excise

duty by considerable amounts in the last two years,

We are also reducing the price of our biggest-selling

collectively costing Wetherspoon approximately £7 million.

standard-strength lager, Carling, to £1.49 per pint.

Since the public is free to import alcohol from abroad at

Following the recommendation of the Glasgow Licensing

low or negligible rates of duty, the competitiveness of

Board, we have stopped all 2-for-1 offers and have

pubs and restaurants, important parts of the British

stopped offering financial incentives to customers to 

economy, is being reduced. 

buy double measures of spirits instead of singles. This 

T H E   T R A D I N G   E N V I R O N M E N T  

25ml (equivalent to 1 unit of alcohol) measures of 

Like-for-like sales declined from 4.8% in the first half to

spirits, although it has reduced our sales and profits 

has resulted in an increase in the number of single 

1.9% in the second half of the financial year. Food sales

to some extent. 

growth remained strong, but bar sales came under

increasing pressure, even leaving aside the impact of the

B I N G E   D R I N K I N G

Euro 2004 football tournament. We believe that this

There has been a lot of media attention over the issue of

pressure is due to several factors, including greater

binge drinking and there can be no doubt that attitudes

competition from supermarkets, themselves responding, 

to drinking need to change in some sections of society, as

in part, to a growth in imports from the continent, leading

has successfully been achieved in the area of drink driving.

to off-trade prices remaining at approximately the levels of

However, it is doubtful whether binge drinking is a new

1997. Pub prices have continued to increase since 1997

phenomenon or uniquely applicable to young people or

at, or above, the level of inflation, so that a greater

pubs. Approximately forty per cent of our sales now relate

percentage of beer, wine and spirit consumption now

to food and soft drinks, a percentage which is increasing.

takes place at home. When Wetherspoon started

We believe that our strong training ethos, recently

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

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C H A I R M A N ’ S   S TAT E M E N T   A N D   O P E R AT I N G   R E V I E W

winning the British Institute of Innkeeping Supreme

deemed to be operating a monopoly and pushing up the

Training Award for the second year in a row, combined

price of a pint, beyond the level of inflation, which was

with an average of six managers per pub, helps to create

seen to be against the public interest. It would be ironic if

a safe and controlled environment. In addition, our 

efforts to bring down the price of a pint were reversed by

non-music policy and relatively low pricing attract an older

individual licensing authorities, often following consultation

clientele, as well as young people, creating a more

with local publicans, imposing their own views on the

convivial atmosphere for the consumption of alcohol. The

prices which customers should pay. The likely long-term

introduction of family areas in our pubs, so that families

winners of price-fixing will be the supermarkets; this may

can dine until the early evening, has also contributed to a

result in more alcohol consumption in circumstances where

better pub environment. 

there is less control and supervision. 

We do not believe that competitive prices in our pubs 

P E O P L E

lead to lower standards of behaviour. Companies like

I would like to thank, again, our employees, partners and

Wetherspoon and brewers such as Samuel Smith and

suppliers for their dedicated work in creating another year

Joseph Holt, as well as working men’s clubs, have 

of progress for the company.

lower-than-average bar prices, but are not generally

associated with rowdy behaviour in town centres on Friday

C U R R E N T   T R A D I N G   A N D   O U T L O O K

and Saturday nights.  We have tried to lead the way in

Like-for-like sales in August were flat, and total company

areas such as the prohibition of ‘selling-up’, through the

sales increased by 3%. Sales per pub in the last financial

removal of financial incentives to do so, and have also

year recorded another increase to their highest level ever,

been proactive in the marketing of food and soft drinks,

although the rate of growth slowed over the summer

alongside alcoholic products. In addition to our investment

months. Together with the initial impact of our

in management training, we participate actively, wherever

competitive pricing initiatives and anticipated cost

we can, with bodies such as the police and local

increases, this slowdown in sales will affect our profits –

authorities, to improve matters in this difficult area. 

although it is certainly too early in the current financial

year to predict the probable outcome.  

M I N I M U M   P R I C I N G

Several licensing authorities in Scotland and England,

Reflecting uncertainties in sales, the approach of licensing

combined with the police and local publicans, are

authorities and continued cost and taxation increases, we

introducing minimum-pricing schemes in an effort to

are reducing further the number of pubs we plan to open

control anti-social behaviour. We believe that it would be

to about 15 in the current financial year, to maintain a

better to introduce a broad range of measures, such as

cash flow surplus after all capital investment.

those relating to selling-up, training, making food available

all day in pubs and so on. Minimum-pricing schemes for

The competitive and political climate for pubs is

pubs will, in our opinion, dramatically improve the

challenging at the current time, but our track record over

competitive position of supermarkets and will encourage

25 years and our committed and experienced

people to drink at home and elsewhere, which is unlikely

management team, combined with our strong cash flow,

to result in an improvement in behaviour. It will also

give confidence for our future prospects. 

penalise those on a low income, including senior citizens

and students, who are important customer groups. The

pub industry has been repeatedly investigated during

1960–1980s, culminating in the beer orders in the late

Tim Martin

Chairman

1980s forcing brewers to divest their pubs. Brewers were

3 September 2004

4

J   D   W E T H E R S P O O N   P L C

Finance review for the year ended 25 July 2004

S A L E S   A N D   O P E R AT I N G   P R O F I T

TA X AT I O N

In the year under review, total sales increased by 8% to

A full analysis of the taxation charge for the year is set out

£787.1 million. Bar sales increased by 7%, with a 10%

in note 7 to the accounts. 

increase in food sales which now represent 24% of 

total revenue. Operating profit increased by 4% to 

As previously reported, the accounting standard on the

£77.6 million, and profit before tax (before exceptional

provision for deferred taxation (FRS19) requires a full

items), of £54.1 million (after exceptional items 

provision for future tax liabilities, excluding any potential

£46.3 million), represents a 4% decrease on the previous

future benefit from ongoing capital investment. This results

year. Net operating margins, excluding interest, were

in an overall tax charge for the year of 36% (2003: 35%),

9.9%, compared with 10.3% in the previous year. Further

in line with the previous year. The amount of corporation

information on the performance of the business is given 

tax to be paid on the results for the year is 24% 

in the chairman’s statement and operating review on

(2003: 24%), before the impact of exceptional items. 

pages 2 to 4. 

I N T E R E S T

E X C E P T I O N A L   I T E M S

The company reported an exceptional loss during the year

The net interest charge during the year increased from

of £7.8 million (2003: £3.7 million). This comprised losses

£18.8 million to £23.6 million. The increase in this charge

and anticipated losses on the disposal of 20 public houses

was affected by the significant cash flow involved in the

of £6.2 million, together with a loss of £1.6 million in

share buyback programme, which is covered in more

respect of non-trading properties. 

detail below. The company took the decision, at the start

of the year, to cease the capitalisation of interest on new

S H A R E H O L D E R S ’   R E T U R N  

pub developments, as the cash flow for new pubs is now

Earnings per share (before exceptional items) increased by

funded by cash from operations. The previous financial

4% to 17.7p (with a decrease of 8% in earnings per share

year included capitalised interest of £2.0 million. The net

(after exceptional items) to 14.6p). Although the

interest charge also includes the amortisation of 

underlying free cash flow per share decreased by 3% to

£1.6 million (2003: £0.3 million) with respect to

37.5p, this figure remained at more than double earnings

refinancing fees, the majority of which was incurred in the

per share. 

year. The interest charge to the profit and loss account

was covered 3.3 times (before exceptional items),

The proposed final dividend of 2.56p per share, together

compared with 4.0 in the previous year. Fixed-charge

with the interim dividend of 1.33p per share, already paid,

cover (interest and rent) was in line with last year, at 1.8

represents a 10% increase on the previous year. The total

times (2003: 1.9 times). Excluding depreciation, 

dividend per share will be covered 4.6 times by earnings

fixed-charge cover (interest and rent), on a cash basis, 

per share (before exceptional items), compared with 4.8

was 2.4 times (2003: 2.7). 

times in the previous year. The company has maintained

Interest 
cover

4.5

4.2

4.2

4.0

3.3

2000

2001

2002

2003

2004

its previous policy of regular increases in dividends, while

maintaining sufficient cash to fund capital expenditure.

Shareholders’ funds at the year end were £289.0 million. 

The company purchased £51.1 million of its own shares

during the year. The cash outflow in the year, with regard

to share buybacks, was £48.6m, reflecting some timing

differences on the settlement of share purchases at both

the start and end of the financial year. These transactions

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

5

F I N A N C E   R E V I E W

represented a share buyback and cancellation of 9% of

F I N A N C I A L   P O S I T I O N

the share capital in issue at the start of the financial year,

Net debt at the year end amounted to £337.6 million,

before the commencement of the buyback, in addition to

representing a balance sheet gearing ratio of 117%

the 4% cancelled in the previous financial year.

(2003: 97%). Excluding the cumulative impact of the

The middle-market quotation of the company’s ordinary

of FRS19 deferred taxation, the underlying level of

shares at the end of the financial year was 254.5p. The

balance sheet gearing is 95%, which compares with the

reduction in shareholders’ funds, owing to the adoption

highest price during the year was 324.0p, while the

previous year’s 81%. 

lowest was 225.5p. The company’s market capitalisation

as at 25 July 2004 was £481.4 million.

At the balance sheet date, the company had £74.7 million

Operating
profit 
(£m)

75.0

77.6

70.1

58.4

46.3

2000

2001

2002

2003

2004

C A S H   F L O W

As set out on page 21, the company continues to

generate significant amounts of cash, with a net cash

inflow from operating activities of £128.9 million. Free

cash flow in the year, which is defined as cash from

operations after deducting interest, taxation and the

purchase of fixed assets for existing pubs, was 

£75.0 million, compared with the previous year’s 

of unutilised banking facilities and cash balances. This

level of unused facilities, coupled with the continuing

strong cash generation, provides a significant cushion

against any future changes in the expected cash flow

position of the company. The company restructured a

significant part of its UK banking facilities during the year.

This consolidated some of the current facilities and also

introduced two new banks to the existing bank group. 

Free cash
flow (£m)

83.2

75.0

69.1

58.2

45.4

2000

2001

2002

2003

2004

£83.3 million. This level of free cash flow covered all 

F I N A N C I A L   R I S K S   A N D   T R E A S U RY

of our investment in new pub openings, producing a 

P O L I C I E S

net cash inflow, before financing, of £18.7 million

The company’s main treasury risks relate to the availability

(2003: £11.1 million).

of funds to meet its future requirements and fluctuations

in interest rates. The treasury policy of the company is

C A P I TA L   I N V E S T M E N T

determined and monitored by the board.

Twenty-eight new pubs were opened during the year,

compared with 45 in the previous year. The cash outflow,

The company has no foreign currency risk, given that the

with respect to these new pubs, totalled £54.1 million.

US senior loan notes are hedged into sterling. The impact

Investment in existing pubs was £20.6 million,

of this is that there is no exposure to movements in the

representing 2.6% of sales, compared with 2.2% of sales

exchange rate between sterling and the dollar. As the

in the previous financial year. 

company has no trading requirements in any foreign

6

J   D   W E T H E R S P O O N   P L C

F I N A N C E   R E V I E W

currency, the overall treasury policy in this area is to

I N T E R N AT I O N A L   F I N A N C I A L   R E P O R T I N G

ensure that there are no currency risks attached to any

S TA N D A R D S

part of its business. The interest payments under the US

The company will be required to adopt International

senior loan notes are also covered by an interest-rate

Financial Reporting Standards (IFRSs) when preparing its

swap, resulting in a floating sterling interest payment

accounts for 2005/06. In preparation for this, all existing

throughout the term of the notes.

IFRSs have been reviewed in detail, so as to assess their

likely impact on our reported figures and the actions

The company’s policy, with regard to interest-rate risk, is

required to collect the necessary data. 

to monitor and review anticipated levels of expansion and

expectations on future interest rates, in order to hedge

Adoption of IFRS, with its focus on the balance sheet and

the appropriate level of borrowings by entering into 

the incorporation of fair-value accounting, together with

fixed- and floating-rate agreements, as appropriate. 

the requirement to incorporate the market values of

financial derivatives into our balance sheet will increase the

At the balance sheet date, the company had entered into

volatility of reported profits. Where such derivatives can be

fixed interest-rate swap agreements over a total of 

demonstrated to have operated as an effective hedge

£150 million of borrowings, covering a six-year period at

against certain underlying financial instruments (which

an average rate of interest (excluding bank margin) of

would normally be their intended purpose), the value of

6.46%. The board continues to explore current market

those instruments will also be adjusted in the balance sheet.

opportunities in this area.

The company monitors its cash resources through short-,

affected by several other areas, including lease

medium- and long-term cash-forecasting. Surplus cash is

classification and the requirement to account for deferred

pooled into an interest-bearing account or placed on short-

tax on gains on sales of property rolled over into new

term deposit for periods of between one and three months.

assets and on previously reported gains on the revaluation

Our opening IFRS balance sheet will also be potentially

The company monitors its overall level of financial gearing

weekly, with our short- and medium-term forecasts

showing underlying levels of gearing which remain within

Jim Clarke

of properties. 

our targets. 

Finance Director

3 September 2004

A C C O U N T I N G   P O L I C I E S

As explained in note 1 to the accounts, the Urgent Issues

Task Force (UITF) abstracts 17 (Employee Share Schemes),

as amended, and 38 (Accounting for ESOP trusts) were

adopted in the year. The comparative figures have been

restated to comply with these extracts, although the

changes are not material. All of the other accounting

policies adopted in preparing these accounts are

consistent with those used in the previous year. 

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

7

Directors, officers and advisers

Tim Martin Non-Executive Chairman, aged 49

Registered Office

Tim founded the business in 1979, having previously
studied law at Nottingham University and qualified as a
barrister. He became executive chairman in 1983 and 
non-executive chairman in 2004.

John Hutson Chief Executive Officer, aged 39

John joined the company in 1991 and was appointed to
the board in 1996. He is a graduate of Exeter University
and previously worked with Allied Domeq. 

Jim Clarke Finance Director and Company Secretary, 
aged 44

Jim joined the company and was appointed to the board
in 1998, having previously worked for David Lloyd Leisure
(a division of Whitbread plc) and HP Bulmer Holdings plc.
He is a graduate of Stirling University and qualified as a
chartered accountant in 1984.

Suzanne Baker Commercial Director, aged 41

Suzanne joined the company in 1992 and was appointed
to the board in 1997. She has previously worked for
Grand Metropolitan plc.

John Herring Senior Independent Non-Executive Director
and Deputy Chairman, aged 46

John was appointed to the board in 1997 and is chairman
of the audit committee, the remuneration committee and
the nomination committee. A chartered accountant, he is an
associate of Corbett Keeling Ltd. He is a non-executive
director of Kensington Group plc and Workplace-Systems plc
and is a former director of Kleinwort Benson Securities Ltd.

Tony Lowrie Non-Executive Director, aged 62

Tony was appointed to the board in 1987 and is a
member of the audit committee, the remuneration
committee and the nomination committee. He is a
managing director of ABN AMRO Bank NV and a former
chairman of ABN AMRO Asia Securities.

Wetherspoon House
Central Park
Reeds Crescent
Watford 
WD24 4QL

Company Number 

1709784

Registrars

Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH

Registered Auditors

PricewaterhouseCoopers LLP

Solicitors

Macfarlanes

Bankers

Allied Irish Banks plc
Bank of Scotland
Bayerische Landesbank
Lloyds TSB Bank plc
National Australia Bank Ltd
Scotiabank Europe plc
The Royal Bank of Scotland plc

Financial Advisers

Dresdner Kleinwort Wasserstein Limited

Stockbrokers

Brian Jervis Non-Executive Director, aged 69

Dresdner Kleinwort Wasserstein Securities Limited

Brian was appointed to the board in 1991 and is a member
of the audit committee, the remuneration committee and
the nomination committee. A chartered secretary, Brian is a
former director of John Govett and Co Ltd.

8

J   D   W E T H E R S P O O N   P L C

Directors’ report for the year ended 25 July 2004

The directors present their report and audited accounts for the
year ended 25 July 2004.

Principal activities and business review
The principal activities of the company are the development and
management of public houses. Details of progress and future
developments are given on pages 2 to 4.

Results and dividends
The profit on ordinary activities (including exceptional items) for
the year, after taxation, was £29,274,000. 

On 26 November 2004, the company proposes to pay a final
dividend for the year ended 25 July 2004 of 2.56 pence per share
to shareholders on the share register as at the close of business
on 29 October 2004.

Profit retained for the financial year amounted to £21,943,000
and will be transferred to reserves.

Return of capital
At the Annual General Meeting of the company, held on 
11 November 2003, the company was given authority to make
market purchases of up to 31,097,740 of its own shares. During
the year to 25 July 2004 a total of 19,010,000 shares has been
purchased at an average cost of 269p per share. As at 25 July
2004, the authority given to the company at the last Annual
General Meeting remained outstanding in relation to 18,152,740
shares. As a result of the share buyback programme, the
company expects earnings per share to be enhanced, in both the
current and future years.

Directors
The directors listed on page 8 served throughout the financial
year. Mr Martin, Mr Herring and Mr Lowrie retire by rotation and
offer themselves for re-election. Details of the terms under which
the directors, who were in office during the year, serve and their
remuneration, together with their interests in the shares of the
company, are given in the directors’ remuneration report on
pages 12 to 15.

No director has any material interest in any contractual
agreement, subsisting during or at the end of the year, which is
or may be significant to the company.

Insurance against the liabilities of directors and officers of the
company was in place throughout the year, in respect of their
duties as directors and officers of the company.

Company’s shareholders
Details of the company’s shareholders, including those beneficial
interests notified to the company as accounting for over 3% of
the issued share capital, are given on page 36.

Statement of directors’ responsibilities
Company law requires the directors to prepare financial
statements for each financial year which give a true and fair view
of the state of affairs of the company and of the profit or loss of
the company for that period. The directors are required to
prepare the financial statements on a going-concern basis, unless
it is inappropriate to presume that the company will continue in
business.

The directors confirm that suitable accounting policies have been
used and applied consistently. They also confirm that reasonable
and prudent judgements and estimates have been made in
preparing the financial statements for the year ended 25 July 2004
and that applicable accounting standards have been followed.

The directors are responsible for keeping proper accounting
records which disclose, with reasonable accuracy at any time, the
financial position of the company and to enable them to ensure
that the financial statements comply with the Companies Act
1985. 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.

The directors are responsible for the maintenance and integrity of
the company’s Web site: www.jdwetherspoon.co.uk. It is stated
clearly on the Web site that information published on the Internet
is accessible in many countries and that legislation in the United
Kingdom, governing the preparation and dissemination of financial
information, may differ from legislation in other jurisdictions. 

Auditors
The company’s auditors, PricewaterhouseCoopers LLP, have
indicated their willingness to continue in office, and a resolution
that they be reappointed will be proposed at the Annual General
Meeting.

Employment policies
Only through the skill and commitment of the company’s
employees will its objectives be met. All staff are encouraged to
make a real commitment to the company’s success and to
progress to more senior roles as they, themselves, develop.

A heavy emphasis is placed on training programmes for all levels
of staff; this highlights the importance placed by the company on
providing service to its customers.

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 &
conditions of employment and personnel & management
practices which ensure that no individual receives less favourable
treatment on the grounds of his or her race, religion, nationality,
ethnic origin, age, disability, gender, sexual orientation or marital
status. Employees who become disabled will be retained, where
possible, and retrained, where necessary.

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

9

D I R E C T O R S ’   R E P O R T  

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.

Internal communications seek to ensure that staff are well
informed about the company’s progress, through the use of
regular newsletters, monthly videos and briefings at staff
meetings, at which employees’ views are discussed and taken
into account.

All staff participate in incentive bonus schemes related to
profitability and/or service standards.

Policy on payment of suppliers
The company agrees on terms and conditions with all suppliers
before business takes place and has a policy of paying agreed
invoices in accordance with the terms of payment. Trade creditors
at the year end represented 44 (2003: 44) days’ purchases.

Political and charitable contributions
Contributions made by the company during the year, for
charitable purposes, were £61,438 (2003: £40,320). No political
contributions were made.

Business at the Annual General Meeting 
On pages 37 and 38 is a notice convening the Annual General
Meeting of the company for 11 November 2004, at which
shareholders will be asked, as items of special business, to give
power to the directors to allot shares, to disapply the pre-emption
requirements of section 89 of the Companies Act 1985 and to
give power to the directors to make market purchases of ordinary
shares in the capital of the company, subject to certain
conditions. The notice also sets out details of the ordinary
business to be conducted at the Annual General Meeting. 

Approval of the directors’ remuneration report
Resolution 2 in the notice of Annual General Meeting, which 
will be proposed as an ordinary resolution, asks shareholders to
approve the directors’ remuneration report, set out on pages 
12 to 15. 

Re-election of Mr T Martin, Mr J Herring and Mr T Lowrie
as directors
The company’s Articles of Association require one-third of the
directors to retire from office at each Annual General Meeting. In
addition, any director who has, at the Annual General Meeting,
been in office for more than three years since his or her last
appointment or re-appointment should also retire and may offer
him or herself for re-election.

Brief biographical details of each of the directors standing for 
re-election may be found on page 8. The re-election resolutions
are set out as resolutions 4 to 6 in the notice of Annual General
Meeting.

Re-appointment of PricewaterhouseCoopers LLP as auditors
Resolution 7, set out in the notice of Annual General Meeting,
proposes that PricewaterhouseCoopers LLP should be
reappointed as the company’s auditors and authorises the
directors to determine their remuneration. 

Authority to allot
The general authority previously given to the directors to allot
‘relevant securities’ will expire at the end of the Annual General
Meeting, convened for 11 November 2004.

Accordingly, resolution 8, set out in the notice of meeting, will be
proposed as an ordinary resolution to authorise the directors
(pursuant to section 80 of the Companies Act 1985) to allot
ordinary shares in the capital of the company, up to a maximum
nominal amount of £1,250,000, being approximately 33% of the
nominal value of the ordinary shares currently in issue. The
company does not currently hold any shares in treasury. The
authority (unless previously varied, revoked or renewed) will
expire on the earlier of 15 months from the date of the passing
of the resolution and the conclusion of the Annual General
Meeting held to approve the report and accounts for the year
ending 31 July 2005.

The directors will exercise such authority to allot shares only when
satisfied that it is in the interests of the company to do so. They
have no present intention, however, of exercising the authority,
except in connection with the issue of shares under the
company’s share option schemes and Share Incentive Plan.

Disapplication of pre-emption rights
The provisions of section 89 of the Companies Act 1985 (which
confer on shareholders rights of pre-emption in respect of the
allotment of ‘equity securities’ which are, or are to be, paid up in
cash, other than by way of allotment to employees under an
employees’ share scheme) apply to the authorised, but unissued,
ordinary shares of the company to the extent that they are not
disapplied, pursuant to section 95 of the Companies Act 1985.

The existing disapplication of these statutory pre-emption rights
will expire at the end of the Annual General Meeting convened
by the notice of meeting. Accordingly, resolution 9, as set out in
the notice of meeting, will be proposed as a special resolution to
permit directors to allot shares without the application of these
statutory pre-emption rights, first, in relation to rights issues and,
secondly, in relation to the issue of ordinary shares in the capital
of the company for cash up to a maximum aggregate nominal
amount of £190,000 (representing approximately 5% of the
nominal value of the ordinary shares of the company currently 
in issue).

The authority (unless previously varied, revoked or renewed) will
expire on the earlier of 15 months from the date of passing of
the resolution and the conclusion of the Annual General Meeting
held to approve the report and accounts for the year ending 
31 July 2005.

1 0

J   D   W E T H E R S P O O N   P L C

D I R E C T O R S ’   R E P O R T  

Repurchase of ordinary shares
In common with many other listed companies, the company
proposes, once again, to seek an authority from shareholders to
permit the company to purchase its own shares for cancellation.
The directors intend to use this authority to buy back the
company‘s shares in accordance with the buyback programme
commenced in May 2003. Accordingly, resolution 10 will be
proposed as a special resolution to authorise the company to
make market purchases of up to just under 15% of the
company’s current issued ordinary share capital, at prices not less
than the nominal value of an ordinary share and not exceeding
105% of the average of the middle-market quotations for the
five business days before each purchase (exclusive of expenses).
The authority will last until the earlier of 30 April 2006 and the
conclusion of the next Annual General Meeting of the company.
The directors envisage that purchases would be made only after
considering the effects on earnings per share and the benefits for
shareholders generally.

As at 3 September 2004, there were outstanding options over
7,679,320 ordinary shares, representing 4.1% of the company’s
issued ordinary share capital. If the authority under resolution 
10 were to be exercised in full, this would increase to 4.8%.

By order of the board

Jim Clarke
Company Secretary
3 September 2004

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

1 1

Directors’ remuneration report for the year ending 25 July 2004

This report outlines the company’s policy on executive
remuneration and gives details of directors’ pay and pensions for
2004, the interest of directors in the company’s shares and the
fees of the non-executive directors. This report has been drawn
up in accordance with, among other things schedule B of the
Combined Code, as set out in the Listing Rules of the UK Listing
Authority (‘Combined Code’). This report will be put to an
advisory vote of the company’s shareholders at the Annual
General Meeting on 11 November 2004.

Composition and role of the remuneration committee
The remuneration committee is appointed by the board and
comprises John Herring (chairman), Brian Jervis and Tony Lowrie,
all of whom are considered by the company to be independent
non-executive directors. 

The committee performs an annual review, covering elements of
executive directors’ remuneration. In addition, it approves all
contractual and other compensation arrangements for the
executive directors. The remuneration committee also approves
any grant of share options and annual performance-related
payments (whether in shares or cash) for executive directors.

The committee has access to advice from external consultants, 
as appropriate. 

Remuneration policy
The aim of the company’s remuneration policy is to provide the
packages required to attract, retain and motivate directors and
senior executives of high quality. 

The following comprises the components of the remuneration of
all executive directors:

(cid:2) Salary
Salaries and other benefits are determined annually after a review
of the individual’s performance, by reference to industry and
other comparisons and consideration of reports from specialist
consultants.

(cid:2) Annual performance-related payments
It is the policy of the company to operate bonus arrangements, 
at all levels of staff, which are performance-related, the primary
performance measures being profitability and operating
standards. The executive directors participate in a management
bonus scheme, designed to incentivise senior management in the
achievement of financial and personal targets. The financial
targets are based on the company’s performance on profits and
cash flow having regard to internal and external factors. 
The maximum bonus attainable under normal circumstances
represents 35% of year-end salary. The executive directors also
receive bonuses in shares under the Share Incentive Plan as
described further below.

(cid:2) Pension provision
The company makes contributions to personal pension schemes
on behalf of all staff who opt to participate in these schemes,
including executive directors and senior executives. It does not
operate any defined benefit pensions scheme.

(cid:2) Share schemes/share incentive plan
The company’s policy on share incentives under its various
employee schemes has been, and continues to be, to distribute
them widely across the company’s pub staff and head office
employees. In this way, the company seeks to encourage and
motivate those key employees involved at all levels of the
company and, in particular, those employees who have direct
interface with the public. 

The company has monitored the debate on the question of share
options and, in particular, both the dilutive impact on existing
shareholders and the desire to create real employee shareholders,
rather than simply option holders. As a result, it has been decided
not to issue any further options in the foreseeable future (other
than any options which may be granted in recruitment situations
under the 2001 scheme). The company has established a new
Share Incentive Plan (incorporating an Inland Revenue-approved
element), with effect from 1 August 2003, as a replacement for
new share option issues. The Share Incentive Plan is an 
‘all-employee plan’ providing qualifying employees, including
executive directors (normally those who have given at least 18
months’ service), with bonuses in the form of shares in the
company twice each year. The value of shares awarded has
regard to performance over the preceding half year and currently
provides for annual awards of up to 25% of annual salary.
Awards under the Share Incentive Plan were made in March 2004
of between 5% and 15% of salary earned in the six month
period. Shares will not vest for three years under this plan, and
the cost of the shares will be reflected in the company’s profit
and loss account for financial years in which any part of the
vesting period falls. There are no specific share option
arrangements for directors, although the company allows
executive directors to participate in the non-discretionary 
Save-As-You-Earn scheme, and the Share Incentive Plan.

The rules of the company’s discretionary share option schemes,
the Executive Share Option (ESOP) scheme, the New Discretionary
Share Option (NDSO) scheme and the 2001 Executive scheme
(2001 scheme) require certain performance criteria to be met
before an option can be exercised. In the case of the ESOP options
are exercisable only on condition that the earnings per share
(excluding exceptional items) of the company, between the date
of grant of an option and the date of an exercise, increase by at
least the increase in RPI.

Both the NDSO scheme and the 2001 scheme require normalised
earnings per share (excluding exceptional items) to exceed the
growth in RPI, over any three-year period, by an average of at
least 3% per annum. 

These performance targets were set in line with remuneration
trends when the schemes were introduced and are easily
understood by the participants. Performance against these targets
is measured by reference to government statistics for RPI and the
company’s accounts for earnings per share growth.

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J   D   W E T H E R S P O O N   P L C

D I R E C T O R S ’   R E M U N E R AT I O N   R E P O R T

The discretionary All-Employee Share Option (AESOP) plan has
previously granted modest levels of options to all staff meeting
certain eligibility criteria; as such, there are no performance
conditions attached to the exercise of an option under it.

Options granted under the Save-As-You-Earn (SAYE) scheme
require a savings contract to be entered into for three or five
years and for options to be exercised within six months of the
completion of the savings contract. The SAYE scheme is open to
all employees satisfying certain eligibility criteria.

Options are not normally exercisable for a period of three years
from the date of grant. 

Details about the participation of each of the executive directors
in each of the above schemes can be found on pages 14 and 15.

(cid:2) Benefits in kind
A range of taxable benefits is available to executive directors.
These benefits comprise principally the provision of a company
car, fuel, life assurance and private medical insurance.

Directors’ service contracts
The executive directors are employed on rolling contracts,
requiring the company to give 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 policy on the
duration of director’s service contracts, notice periods and
termination payments are all in accordance with best industry
practice. The commencement dates for the executive directors’
service contracts were as follows:

John Hutson
Jim Clarke
Suzanne Baker 

2 February 1998
2 March 1998
2 February 1998

Non-executive directors
The non-executive directors hold their positions, pursuant to
letters of appointment dated 1 November 2003 with terms of 
twelve months. During the year, Tim Martin resigned as executive
chairman and was appointed non-executive chairman, and John
Herring was appointed non-executive deputy chairman.

The non-executive directors are entitled to the fees to which they
would have been entitled up to the end of their term, if their
appointment is terminated early, and 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.

Directors’ remuneration
Audited information:
The table below shows a breakdown of the various elements of directors’ remuneration for the year ended 25 July 2004.

Salary/fees

Performance
bonus – cash

Performance
bonus – shares 

Taxable
benefits

Expense
allowances

Pension
contributions

Total 2004
£000

Total 2003
£000

Executive directors
J Hutson
J Clarke
S Baker

Non-executive directors
T R Martin
J Herring 
B R Jervis
A C Lowrie

Total

2003

248
177
133

109
42
29
29

767

933

61
43
36

–
–
–
–

140

142

18
13
10

–
–
–
–

41

–

1
1
–

11
–
–
–

13

20

14
14
14

–
–
–
–

42

39

25
16
12

–
–
–
–

53

50

367
264
205

120
42
29
29

1,056

294
226
158

421
31
27
27

–

–

1,184

Taxable benefits include the provision of a company car, fuel and health cover. Directors may opt for a taxable allowance in lieu of a 
company car, shown above under expense allowances.

The performance bonus – shares consist of the value of bonuses paid in shares under the company’s Share Incentive Plan (described above),
which are subject to forfeiture on cessation of employment in certain circumstances. These shares are also included in the relevant director’s
interest shown in the table overleaf.

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

1 3

D I R E C T O R S ’   R E M U N E R AT I O N   R E P O R T

Directors’ interests in shares – non-audited information:

The interests of the directors in the shares of the company, as at 25 July 2004, were as follows: 

Ordinary shares of 2p each, held beneficially

T R Martin
B R Jervis
A C Lowrie 
J Herring
J Hutson 
J Hutson – Share Incentive Plan
J Clarke
J Clarke – Share Incentive Plan
S Baker
S Baker – Share Incentive Plan

2004

2003

32,997,807
34,549
7,471,619
6,000
79,425
6,089
13,489
4,334
16,919
3,256

32,997,807
34,549
8,471,619
6,000
57,812
–
13,489
–
24,319
–

There have not been any changes to these interests since 25 July 2004. Each of the executive directors (including Tim Martin who was
previously an executive director) is also interested in all of the 91,457 shares held by the trustee of the J D Wetherspoon Restricted Share Plan
Trust by virtue of being a potential beneficiary of that trust.

Directors’ interest’s in share options – audited information:

Share options have previously been granted under the various share option schemes at an exercise price based on the average share price over 
a number of days preceding the grant. The number of days used is detailed in the rules for each scheme. Share options are not granted at a
discount, with the exception of grants under the SAYE scheme (granted at a 20% discount). Directors’ share options under the various executive
share option schemes comprise:

J Hutson

J Clarke

S Baker

28 July 2003

Options exercised

25 July 2004

Exercise price

50,000
15,000
50,000
49,750
10,000
40,000
49,000
14,000
10,613
2,500
400
25,420
12,465
6,750
8,500
20,000

107,362
23,000
2,500
400
11,230
6,371
3,450
8,500
3,166
17,000

25,000
50,000
37,250
10,000
24,500
91
23,000
2,500
400
11,230
6,371
3,450
8,500
3,166
17,000

50,000(a)

10,613(b)

–
15,000
50,000
49,750
10,000
40,000
49,000
14,000
–
2,500
400
25,420
12,465
6,750
8,500
20,000

107,362
23,000
2,500
400
11,230
6,371
3,450
8,500
3,166
17,000

25,000
50,000
37,250
10,000
24,500
91
23,000
2,500
400
11,230
6,371
3,450
8,500
3,166
17,000

78.4p
92.4p
127.2p
244.2p
237.0p
299.0p
326.0p
167.0p
159.0p
268.0p
333.8p
356.5p
361.0p
343.6p
339.0p
301.5p

326.0p
167.0p
268.0p
333.8p
356.5p
361.0p
343.6p
339.0p
300.0p
301.5p

92.4p
127.2p
244.2p
237.0p
299.0p
326.0p
167.0p
268.0p
333.8p
356.5p
361.0p
343.6p
339.0p
300.0p
301.5p

Exercisable
date

25/10/97
17/04/98
16/11/98
03/01/00
10/04/00
05/10/00
16/04/01
25/10/01
01/02/04
20/04/02
09/09/02
07/03/03
15/09/03
14/03/04
12/09/04
09/09/05

16/04/01
25/10/01
20/04/02
09/09/02
07/03/03
15/09/03
14/03/04
12/09/04
01/06/05
09/09/05

17/04/98
16/11/98
03/01/00
10/04/00
05/10/00
16/04/01
25/10/01
20/04/02
09/09/02
07/03/03
15/09/03
14/03/04
12/09/04
01/06/05
09/09/05

Expiry date

25/10/04
17/04/05
16/11/05
03/01/07
10/04/07
05/10/07
16/04/08
25/10/08
01/08/04
20/04/09
09/09/09
07/03/10
15/09/10
14/03/11
12/09/11
09/09/12

16/04/08
25/10/08
20/04/09
09/09/09
07/03/10
15/09/10
14/03/11
12/09/11
01/12/05
09/09/12

17/04/05
16/11/05
03/01/07
10/04/07
05/10/07
16/04/08
25/10/08
20/04/09
09/09/09
07/03/10
15/09/10
14/03/11
12/09/11
01/12/05
09/09/12

Scheme
(see below)

ESOP
ESOP
ESOP
ESOP
ESOP
ESOP
ESOP
ESOP
SAYE (5yr)
NDSO
NDSO
NDSO
NDSO
NDSO
NDSO
2001

ESOP
ESOP
ESOP
NDSO
NDSO
NDSO
NDSO
NDSO
SAYE (3yr)
2001

ESOP
ESOP
ESOP
ESOP
ESOP
ESOP
ESOP
NDSO
NDSO
NDSO
NDSO
NDSO
NDSO
SAYE (3yr)
2001

ESOP – Executive Share Option scheme
NDSO – New Discretionary Share Option scheme
SAYE – Save-As-You-Earn scheme
2001 – 2001 Executive share scheme

(a) Mr J Hutson exercised this option during the year for a gain of £98,300.
The market price on the date of exercising the option was 275.0p.
(b) Mr J Hutson exercised this option during the year for a gain of £15,177.
The market price on the date of exercising the option was 302.0p. 

1 4

J   D   W E T H E R S P O O N   P L C

D I R E C T O R S ’   R E M U N E R AT I O N   R E P O R T

Interests in the schemes which vested during the year were as follows:

J Hutson

J Clarke

S Baker

Number

10,613
12,465
6,750

6,731
3,450

6,371
3,450

Date
awarded

Market price 
at award date

Market price
at vesting date

Scheme

26/10/99
15/09/00
14/03/01

15/09/00
14/03/01

15/09/00
14/03/01

159.0p
355.5p
355.5p

355.5p
355.5p

355.5p
355.5p

277.0p
252.5p
252.0p

252.5p
252.0p

252.5p
252.0p

SAYE (5yr)
NDSO
NDSO

NDSO
NDSO

NDSO
NDSO

NDSO – New Discretionary Share Option scheme
SAYE – Save-As-You-Earn scheme

There have not been any changes to these interests since 25 July 2004.

Details of the year end, the year high and the year low share price for the shares which are subject to the options detailed above can be
found on page 36. 

Share Incentive Plan – audited information:
The interests of directors in share options have not changed since the financial year end. In addition to the interest in shares and share 
options disclosed above, the following awards have been made of shares under the Share Incentive Plan during the year.

J Hutson

J Clarke

S Baker

Number of shares awarded
in the year and still subject
to awards at 25/07/04

Date
awarded

Market price 
at award date

Date on which 
risk of forfeiture 
will cease

6,089

26/03/04

303.0p

26/03/07

4,334

26/03/04

303.0p

26/03/07

3,256

26/03/04

303.0p

26/03/07

There were no shares subject to awards at the beginning of the financial year.

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 Leisure
and Hotels sector index for each of the last five financial
years. 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 28 July 1999, based
on 30 trading day average values

130

120

110

100

90

80

70

60

)
£
(

i

g
n
d
o
h

l

0
0
1
£

l
a
c
i
t
e
h
t
o
p
y
h

f
o

e
u
l
a
V

On behalf of the board:

John Herring
Chairman of the remuneration committee
3 September 2004

Jul 99

Jul 00

Jul 01

Jul 02

Jul 03

Jul 04

J D Wetherspoon plc

FTSE Leisure & Hotels sector

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

1 5

 
 
 
 
 
Corporate social responsibility report

Supporting the people, communities and businesses 
around us

J D Wetherspoon is a central part of local communities all over
the UK, bringing benefits to millions of people in their daily lives
through social enjoyment, as well as providing direct or indirect
employment for many thousands.

The company recognises the importance of environmental and
social issues and has a dedicated corporate social responsibility
(CSR) steering group chaired by the commercial director. 

The company, under the CSR group’s stewardship, is able to
ensure that it is fostering the preservation and protection of the
environment, while recognising its wider social responsibility
throughout all of its commercial activities and operations. 

The company is committed to continually challenging and
reviewing its CSR policies and ensures that it protects itself from
any significant risks to which it may be exposed.

It is the policy of the company to:

(cid:2) minimise the extent of the environmental impact of its
operations, as far as is reasonably practical.

strive to minimise any emissions or effluents which may cause

environmental damage.

The CSR steering group has ensured that significant progress
continues to be made across all of the areas listed opposite.
Successful initiatives in the last twelve months include:

(cid:2) Hi-tech taps introduced in new openings save 400 litres of
water every single day – that’s the equivalent of over 4 million
litres a year.

(cid:2) By using specialist motor-controllers on our air-handling units,
we have achieved savings of up to 27% on our energy usage on
our new openings. A similar system on our fridge and freezer
units has achieved savings of up to 12% on our energy usage on
our new openings.

(cid:2) This year, we will recycle 44,985 litres of oil from recycled
water. This demonstrates significant progress since 2002, when
we recycled just 547 litres.

(cid:2)  Our brand-new central distribution centre in Daventry will
enable us to develop a single drop-off point for recyclable
materials, eliminating millions of lorry miles. Our strategy in this
area will develop more fully in the next twelve months.

(cid:2) All of our pubs and staff are encouraged to engage actively in
raising money for our chosen charity CLIC – Cancer and
Leukaemia in Childhood. Such is the enthusiasm of this activity
that we have doubled our initial pledge to raise £1,000,000 to
£2,000,000. 

(cid:2) conserve energy through minimising consumption and
maximising efficiency.

(cid:2) minimise the use of materials which may be harmful to the
environment. 

(cid:2) promote efficient purchasing which will both minimise waste
and allow materials to be recycled, where appropriate.

The company is in active dialogue with all of its suppliers to
ensure that they play an integral role in achieving our business
objectives and meeting our social and environmental policies. We
believe that a shared approach in addressing the issues ensures
the most practical identification of opportunities. This approach
has enabled the setting of some key environmental targets for
2004/05, the progress of which will be reported on in the next
annual report. These include:

(cid:2) adopt efficient waste-management strategies which reduce the
amount of waste going to landfill or to other disposable sites.

(cid:2) embrace the use of recycled materials and ensure that materials
or waste generated by the business are recycled, where
appropriate.

(cid:2) An overall reduction of packaging materials used across the
business of 2%
(cid:2) Reduce energy consumption by 5% across the business
(cid:2) Reduce water usage across the business by 5%
(cid:2) Reduce the volume of solid waste into the waste stream by
30% by redirecting waste into the recycling stream

raise awareness of environmental issues among all of its

employees and suppliers/partners.

(cid:2) ensure appropriate training, in environmental issues, of all
employees. 

These aims are incorporated and developed within the company’s
environmental management system which is implemented
throughout the business.

The environmental policy is reviewed at least annually by the
board of directors, so as to ensure that it reflects the business’s
needs and addresses all current and relevant environmental issues.

The company once again participated in the annual survey by
EIRIS (Ethical Investment Research Service) and, for the fourth
consecutive year, was included in the FTSE4Good index, designed
to identify those companies with good records in corporate social
responsibility. The main selection criteria cover three areas:

(cid:2) Working towards environmental sustainability
(cid:2) Developing positive relationships with stakeholders
(cid:2) Upholding and supporting universal human rights

1 6

J   D   W E T H E R S P O O N   P L C

(cid:2)
(cid:2)
Corporate governance

The company is committed to the highest standards of corporate
governance as set out in section 1 of the Combined Code. The
company is considering the revisions made to the code by the
Financial Reporting Council in July 2003 which are effective for
reporting periods beginning on or after November 2003. A full
explanation to shareholders will be provided, where any
diversions from the new code are considered appropriate. 

This report refers to and sets out how the principles identified in
the Combined Code effective for the year under review have
been applied to the company. 

Statements of compliance
The company complied with the requirements of section 1 of the
Combined Code throughout the year.

The board of directors
The board comprises Tim Martin, the non-executive chairman,
John Hutson, the chief executive officer, Jim Clarke, the finance
director and company secretary, Suzanne Baker, the commercial
director, and three non-executive directors. The senior
independent non-executive director is John Herring. The members
of the board are described on page 8, and the board considers
that all the non-executive directors (other than Tim Martin) are
independent of the executive team and of the company, which
provides a good balance for the proper governance of the
company. The board meets formally at least eight times each
year, with other meetings as appropriate, and has a formal
schedule of matters reserved to it for decision. Directors are given
appropriate and timely information for each board meeting,
including monthly reports on the current financial and trading
position of the business. 

All directors have access to independent professional advice, if
required, at the company’s expense. The directors’ responsibilities
in respect of the financial statements are detailed on page 9.

On appointment, all executive directors undertake a
comprehensive induction programme, covering all aspects of the
company’s operations. Formal appraisals take place bi-annually,
with any training and development needs evaluated as part of
that process.

The articles require that one-third of directors retire by rotation,
subject to the requirement that each director seek re-election
every three years.

Nomination committee
A formal nomination committee has been established, comprising
John Herring (chairman), Brian Jervis and Tony Lowrie. The
nomination committee meets as appropriate and considers all
possible board appointments and also the re-election of directors,
both executive and non-executive. No director is involved in any
decision about his or her own re-appointment. 

Audit committee
The audit committee comprises all of the non-executive directors
and is chaired by John Herring. The committee meets at least
three times a year with the external auditors and one or more
executive directors, as appropriate. The audit committee, which
has written terms of reference, is responsible for reviewing the
company’s internal controls, risk-management procedures and the
audit process, both internally and externally, and seeks to ensure
that the financial and non-financial information supplied to
shareholders is complete and accurate, presenting a balanced
assessment of the company’s position. The committee reviews the
objectivity and independence of the external auditors and also
considers the scope of their work and their fees. 

Particular attention is paid to the engagement of the company’s
auditors on non-audit work. For several years, the company has
separated the provision of taxation compliance from the provision
of audit services. In the current year, additional fees were paid for
non-audit work to the company’s auditors with regard to a 
review of the company’s long-term funding strategy as detailed
on page 25.

Communications with shareholders
Representatives of the company have regular meetings and
dialogue with institutional shareholders. The Annual General
Meeting is considered to be an important forum for
communicating with private shareholders, allowing them 
to raise questions with the board.

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, cash flow forecasts and facilities available to
the company, and have satisfied themselves that the company
will continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going-concern basis in
preparing the company’s financial statements.

Risk assessment
To ensure that the company has an ongoing process for
identifying, evaluating and managing the significant risks faced
by the company, the board has established a risk-management
group which contains senior representatives from all aspects of
the business and is chaired by the finance director. This group is
responsible for the administration of a risk register which looks at
all areas of the business and formulates detailed action plans to
mitigate any risks identified.

On behalf of the board, the audit committee reviews the
effectiveness of the risk-management group and, where
appropriate, identifies any matters requiring specific consideration
by the board. Similarly, the audit committee reviews the scope of
the work undertaken by the internal auditor and receives regular
updates on its work and findings and monitors the
implementation of recommended actions. 

This process has been in place throughout the year under review
and up to the date of approval of the annual report and
accounts. It has been regularly reviewed by the board and
accords with the Combined Code. 

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

1 7

C O R P O R AT E   G O V E R N A N C E

Internal control
The directors acknowledge their responsibility for the company’s
system of internal control, which can be defined as the controls
established in order to provide reasonable assurance that the
assets have been protected against unauthorised use, that proper
accounting records have been maintained and that the financial
information which is produced is reliable. Such a system can,
however, provide only reasonable and not absolute assurance
against material misstatement or loss. The directors recognise
that, in attaining long-term shareholder value, they are
responsible for providing a return which is consistent with a
responsible assessment and mitigation of risks. The key
procedures in place to enable this responsibility to be discharged
are as follows:

(cid:2) A comprehensive budgeting process is in place, with a detailed
operating plan for twelve months and a mid-term financial plan,
both approved by the board. Business results are reported weekly
for key items and monthly in full and compared with budget.
Forecasts are prepared regularly throughout the year, for review
by the board.
(cid:2) Clearly defined authority limits and controls are in place over
cash-handling, purchasing commitments and capital expenditure.   
(cid:2)  A retail audit function monitors the control of cash, stock and
operating procedures, in operating units. A separate internal
audit function also looks at the overall business risks facing the
company and reviews general business processes.
(cid:2)  Complex treasury instruments are not used. Decisions on
treasury matters are reserved for the board.
(cid:2)  The directors confirm that they have reviewed the effectiveness
of the system of internal control.

1 8

J   D   W E T H E R S P O O N   P L C

Independent auditors’ report to the members of J D Wetherspoon plc

Independent auditors’ report to the members of 
J D Wetherspoon plc
We have audited the financial statements which comprise the
profit and loss account, the balance sheet, the cash flow
statement, the note of historical cost profits and the related
notes. We have also audited the disclosures required by Part 3 of
Schedule 7A to the Companies Act 1985 contained in the
directors’ remuneration report (‘the auditable part’).

We review whether the corporate governance statement reflects
the company’s compliance with the seven provisions of the
Combined Code specified for our review by the Listing Rules of
the Financial Services Authority, and we report if it does not. We
are not required to consider whether the board’s statements on
internal control cover all risks and controls or to form an opinion
on the effectiveness of the company’s corporate governance
procedures or its risk and control procedures. 

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the annual report and
the financial statements in accordance with applicable United
Kingdom law and accounting standards are set out in the
statement of directors’ responsibilities. The directors are also
responsible for preparing the directors’ remuneration report.

Our responsibility is to audit the financial statements and the
auditable part of the directors’ remuneration report, in accordance
with relevant legal and regulatory requirements and United
Kingdom auditing standards issued by the Auditing Practices
Board. This report, including the opinion, has been prepared for
and only for the company’s members as a body, in accordance
with Section 235 of the Companies Act 1985 and for no other
purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come, 
save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the auditable part of the directors’ remuneration
report have been properly prepared in accordance with the
Companies Act 1985. We also report to you whether, in our
opinion, the directors’ report is not consistent with the financial
statements, whether the company has not kept proper
accounting records, whether we have not received all of the
information and explanations we require for our audit or whether
information specified by law, regarding directors’ remuneration
and transactions, is not disclosed.

We read the other information contained in the annual report
and consider the implications for our report, if we become aware
of any apparent misstatements or material inconsistencies with
the financial statements. The other information comprises only
the directors’ report, the unaudited part of the directors’
remuneration report, the chairman’s statement and operating
review, the finance review the corporate social responsibility
report and the corporate governance statement. 

Basis of audit opinion
We conducted our audit in accordance with auditing standards
issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements and the auditable part
of the directors’ remuneration report. It also includes an
assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the company’s
circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all of the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements and the auditable part of
the directors’ remuneration report are free from material
misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of
the presentation of information in the financial statements.

Opinion
In our opinion:

the financial statements give a true and fair view of the state of

the company’s affairs at 25 July 2004 and of its profit and cash
flows for the year then ended;

the financial statements have been properly prepared in

accordance with the Companies Act 1985; and

those parts of the directors’ remuneration report required by
Part 3 of Schedule 7A to the Companies Act 1985 have been
properly prepared in accordance with the Companies Act 1985.

PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London
3 September 2004

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

1 9

(cid:2)
(cid:2)
(cid:2)
Profit and loss account for the year ended 25 July 2004

Notes

Before
exceptional
items
2004
£000

Exceptional
items
(note 4)
2004
£000

After
exceptional
items
2004
£000

Before
exceptional
items
2003
£000

After
exceptional
items
2003
£000

Turnover

787,126

–

787,126

730,913

730,913

Operating profit
Loss on disposal of tangible fixed assets
Net interest payable

Profit on ordinary activities before taxation
Tax on profit on ordinary activities 

Profit on ordinary activities after taxation
Dividends

Retained profit for the year

Earnings per ordinary share

Diluted earnings per ordinary share

All activities relate to continuing operations.

2

4

5

6

7

8

19

9

9

77,628
–
(23,554)

54,074
(18,727)

35,347
(7,331)

–
(7,758)
–

(7,758)
1,685

(6,073)
–

77,628
(7,758)
(23,554)

46,316
(17,042)

29,274
(7,331)

74,983
–
(18,844)

56,139
(19,744)

36,395
(7,434)

74,983
(3,688)
(18,844)

52,451
(18,407)

34,044
(7,434)

28,016

(6,073)

21,943

28,961

26,610

17.7p

17.6p

14.6p

14.6p

17.0p

16.9p

15.9p

15.9p

The company has no recognised gains or losses, other than the profit above; therefore, no separate statement of recognised gains and 
losses has been presented.

Note of historical cost profits

Reported profit on ordinary activities before taxation
Difference between historical cost depreciation charge and actual 
depreciation charge for the year, calculated on the revalued amount
Realisation of property (deficits)/surplus of previous years

Historical cost profit on ordinary activities before taxation

2004
£000

2003
£000

46,316

52,451

574
(1,252)

606
341

45,638

53,398

Historical cost profit for the year retained after taxation and dividends

21,265

27,557

2 0
2 0

J   D   W E T H E R S P O O N   P L C
J   D   W E T H E R S P O O N   P L C

Cash flow statement for the year ended 25 July 2004

Net cash inflow from operating activities

10

128,874

128,874

130,565

130,565

Notes

2004
£000

2004
£000

2003
£000

2003
£000

Returns on investments and servicing of finance
Interest received
Interest paid 
Refinancing costs paid

Net cash outflow from returns on 
investment and servicing of finance

Taxation
Corporation tax paid

Capital expenditure and financial investment
Purchase of tangible fixed assets for existing pubs
Proceeds of sale of tangible fixed assets
Purchase of own shares for ESOP trust
Purchase of own shares for Employee Share Incentive Plan
Investment in new pubs and pub extensions

Net cash outflow from capital expenditure 
and financial investment

Equity dividends paid

Net cash inflow before financing

Financing
Issue of ordinary shares
Purchase of own shares
Repayment of bank loans
Advances under bank loans
Advances under US senior loan notes

Net cash (outflow) from financing

Decrease/increase in cash 

Free cash flow

Cash flow per ordinary share

20
(19,329)
(1,325)

20
(19,329)

109
(21,251)
–

109
(21,251)

(20,634)

(21,142)

(13,942)

(13,942)

(10,277)

(10,277)

(20,590)
7,891
–
(1,556)
(54,056)

(68,311)

(7,322)

18,665

1,219
(48,583)
(25,000)
47,928
271

(24,165)

(5,500)

11

9

9

(15,896)

(20,590)

(15,896)
10,732
(153)
–
(77,275)

(82,592)

(5,438)

11,116

233
(17,369)
(25,000)
32,527
44

(9,565)

1,551

75,033

37.5p

83,250

38.8p

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

2 1

Notes

2004
£000

2003
£000 
Restated

13

783,574

773,823

12,009
1,933
9,005
11,897
9,660

10,752
–
8,448
12,655
15,160

44,504
(150,368)

47,015
(140,150)

(105,864)

(93,135)

677,710
(322,512)
(66,244)

680,688
(299,942)
(62,419)

288,954

318,327

3,783
128,340
545
23,117
133,169

4,149
126,739
165
22,439
164,835

288,954

318,327

14

14

15

16

17

18

19

19

19

19

19

Balance sheet at 25 July 2004

Fixed assets
Tangible assets

Current assets
Stocks
Assets held for resale
Debtors due after more than one year 
Debtors due within one year
Cash

Creditors due within one year

Net current liabilities

Total assets less current liabilities
Creditors due after more than one year
Provisions for liabilities and charges

Total net assets

Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Revaluation reserve
Profit and loss account

Equity shareholders’ funds

The accounts on pages 20 to 34
were approved by the board on 3 September 2004
and signed on its behalf by:

John Hutson
Jim Clarke
Directors

2 2

J   D   W E T H E R S P O O N   P L C

Notes to the accounts for the year ended 25 July 2004

1 Principal accounting policies
The financial statements are prepared under the historical cost
convention, as modified by the revaluation of property, and in
accordance with applicable accounting standards.

The Urgent Issues Task Force (UITF) abstracts 17 (Employee Share
Schemes), as amended, and 38 (Accounting for ESOP trusts) have
been adopted in the current year and have given rise to a prior
year adjustment, as disclosed in note 19. The net results in
respect of the current and prior periods are unchanged, but
reserves have reduced by £301,000 in respect of prior years.

A summary of the more important accounting policies, which are
being applied consistently, other than as set out below, follows.

Comparative amounts
Comparative balance sheet amounts have been restated, where
necessary, to conform to current presentation. This has had no
impact on net assets or equity shareholders’ funds.

Prior to 27 July 2003, interest on new pub developments was
capitalised and excluded from free cash flow; reflecting the then
current treatment of interest incurred on new pub developments.
The comparative figures have been amended to include all
interest as a deduction from free cash flow.

Turnover
The company’s operations comprise pub retailing and the
provision of lodge accommodation in the United Kingdom.
Turnover excludes value added tax.

Tangible fixed assets
Tangible fixed assets are stated at cost or historic valuation less
accumulated depreciation.

Depreciation is calculated so as to write off the cost or valuation
of a fixed asset on a straight-line basis over its estimated useful
life, taking account of expected residual values, based on prices
prevailing at the date of acquisition or subsequent valuation,
using the following rates:

Freehold and long leasehold property

50 years

Leasehold property

Renovations of properties already
trading, fixtures and fittings, 
computer equipment

Shorter of life of lease
or 50 years

At rates from
10% to 33% pa

Depreciation commences when the relevant public house begins
trading.

Valuation of properties
Following the adoption of FRS15 in the year ended 30 July 2000,
the company stopped its policy of cyclically revaluing its
properties. In accordance with the transitional rules of FRS15, all
properties are now shown at cost or, where a valuation has been
applied before 2 August 1999, at that valuation.

The carrying values of tangible fixed assets are reviewed for
impairment, if events or changes in circumstances indicate that
the carrying value may not be recoverable. Any impairment in the
value of fixed assets below depreciated historical cost is charged
to the profit and loss account.

Capitalised interest 
In prior years, interest costs relating to the financing of the
development of a public house were capitalised before the public
house was substantially complete. Capitalisation of interest
ceased when the relevant public house commenced business.
Since the start of the year, interest is no longer capitalised on
new pub developments, reflecting the fact that all cash invested
in new pubs is now funded from organic cash flow. 

Stocks
Stocks are held for resale and are stated at the lower of invoiced
cost and net realisable value.

Deferred taxation
Deferred tax is recognised on all timing differences which have
originated, but not reversed, at the balance sheet date. Timing
differences represent accumulated differences between the
company’s taxable profit and its financial profit and arise primarily
from the difference between accelerated capital allowances and
depreciation. Deferred tax liabilities and assets are not discounted. 

Pensions
The company makes contributions to defined contribution
personal pension schemes, the costs of which are accounted for
as they become due.

Operating leases
The costs of operating leases, in respect of land, buildings and
other assets, are charged on a straight-line basis over the lease
term, except where, on acquisition of a property, a reverse
premium or capital contribution is granted by the lessor. Where
such amounts arise, they are released to profit from the date on
which the pub opened through to the date of the first rent review
to market value, usually on the fifth anniversary of the lease.

Financial instruments
The company uses derivative instruments to hedge its exposure to
fluctuations in interest rates. Instruments accounted for as hedges
are designated as a hedge at the inception of contracts. Receipts
and payments on interest-rate instruments are recognised on an
accruals basis, over the life of the instrument.

Monetary liabilities denominated in foreign currencies are
retranslated at the rate fixed by the relevant forward exchange
contract.

Unrecognised gains and losses on financial instruments are not
accounted for in the profit and loss account.

Investments in own shares 
The Urgent Issues Task Force (UITF) abstracts 17 (Employee Share
Schemes), as amended, and 38 (Accounting for ESOP Trusts) have
been adopted in the current year. This has resulted in shares held
by the Trust being reclassified as a reduction in shareholders
funds, rather than within current asset investments.

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

2 3

N O T E S   T O   T H E   A C C O U N T S

2 Analysis of continuing operations

Turnover
Cost of sales

Gross profit
Administrative expenses

Operating profit 

Cost of sales includes distribution costs and all pub operating costs.

3 Employee information

The average weekly number of persons employed during the year was as follows:

Total employees
Managerial/administration
Hourly paid staff

Full-time equivalents
Managerial/administration
Hourly paid staff

Employment costs were:

Wages and salaries
Social Security costs
Other pension costs

Total direct costs of employment

2004
£000

2003
£000

787,126
(672,332)

730,913
(621,894)

114,794
(37,166)

109,019
(34,036)

77,628

74,983

2004
Number

2003
Number

3,898
11,472

3,806
10,497

15,370

14,303

2004
Number

2003
Number

3,898
5,810

9,708

3,806
5,541

9,347

2004
£000

2003
£000

185,592
13,148
741

167,236
11,102
671

199,481

179,009

A detailed numerical analysis of directors’ remuneration and share options forms part of these accounts. This analysis is included in the
directors’ remuneration report on pages 12 to 15 and shows the highest-paid director and the number of directors accruing benefits under
money-purchase personal pension schemes.

2 4

J   D   W E T H E R S P O O N   P L C

4 Exceptional items

Non-operating items:
Net loss on disposal and anticipated disposal of trading properties
Provision against future disposal of non-trading properties
Net loss on disposal of non-trading properties

5 Net interest payable

Interest payable on bank loans and overdraft
Interest payable on US senior loan notes
Refinancing costs
Less:
Interest capitalised 
Interest receivable

N O T E S   T O   T H E   A C C O U N T S

2004
£000

6,159
1,249
350

7,758

2004
£000

17,629
4,915
1,602

–
(592)

2003
£000

2,732
956
–

3,688

2003
£000

16,429
4,850
329

(1,954)
(810)

Charge to profit and loss account

23,554

18,844

6 Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging/(crediting):

Depreciation
Repairs and maintenance
Auditors’ remuneration for: audit

: other services*

Rent receivable
Loss on disposal of fixed assets
Provision against future disposal of non-trading properties
Operating lease rentals:
– property rents
– equipment and vehicles

2004
£000

43,948
24,111
89
49
(434)
6,509
783

46,437
405

2003
£000

43,209
19,666
82
14
(457)
2,732
956

41,493
587

* Payment is in relation to a review of the interim statements as part of the half-year results announcement and tax consultancy fees with

regard to a review of the company’s long-term funding strategy.

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

2 5

N O T E S   T O   T H E   A C C O U N T S

7 Taxation

a) Analysis of current period tax charge

Current tax
UK corporation tax on profits before exceptional items
Current tax on exceptional items

Total current tax (note 7(b))

Deferred tax
Origination and reversal of timing differences
Movement arising from disposals (exceptional items)

Total deferred tax

Total tax charge

b) Factors affecting current period tax charge

2004
£000

2004
£000

2003
£000

2003
£000

13,165
52

5,562
(1,737)

13,317
70

13,217

13,387

6,427
(1,407)

3,825

17,042

5,020

18,407

The current year tax charge for the year is less than the statutory rate of corporation tax in the UK of 30%. The reasons for this difference are
explained below:

Profit on ordinary activities before tax

Current tax on profit on ordinary activities calculated at the 
standard rate of corporation tax in the UK of 30%
Accelerated capital allowances
Capitalised interest allowable for tax purposes
Movement in other short-term timing differences
Disposals
Other allowable deductions
Expenses not deductible for tax purposes

Current tax charge for period (note 7(a))

c) Factors which may affect future tax charges

2004
£000

46,316

13,895
(4,820)
–
(467)
1,953
(371)
3,027

13,217

2004
%

30
(10)
–
(1)
4
(1)
7

29

2003
£000

52,451

15,735
(5,884)
(472)
–
1,107
(182)
3,083

13,387

2003
%

30
(11)
(1)
–
2
–
6

26

Current levels of investment ensure that capital allowance claims exceed depreciation; while this will continue, the company would expect 
the excess of capital allowances over depreciation to diminish over time.

No provision has been made for deferred tax on gains recognised on revaluing properties to their market value. Such tax would become
payable only if the properties were sold without it being possible to claim roll-over relief. The total amount unprovided for is approximately
£6.9 million. At present, it is not envisaged that any tax will become payable in respect of such properties in the foreseeable future.

2 6

J   D   W E T H E R S P O O N   P L C

8 Dividends

Interim paid of 1.33p per share (2003: 1.21p)
Final proposed of 2.56p per share (2003: 2.33p)

N O T E S   T O   T H E   A C C O U N T S

2004
£000

2,488
4,843

7,331

2003
£000

2,600
4,834

7,434

9 Earnings and cash flow per share
The calculation of basic earnings per share is based on profits on ordinary activities after taxation and exceptional items of £29,274,000
(2003: £34,044,000) and on 200,067,030 (2003: 214,312,883) ordinary shares, being the weighted average number of ordinary shares in
issue and ranking for dividend during the period.

Earnings per share before exceptional items is calculated as follows:

Earnings and basic earnings per share
Exceptional costs, net of tax

Earnings
£000
2004

29,274
6,073

Earnings
£000
2003

34,044
2,351

Earnings and earnings per share before exceptional items

35,347

36,395

Earnings
per share (p)
2004

Earnings
per share (p)
2003

14.6
3.1

17.7

15.9
1.1

17.0

Diluted earnings per share has been calculated in accordance with FRS14 and is after allowing for the dilutive effect of the conversion into
ordinary shares of the weighted average number of options outstanding during the period. The number of shares used for the diluted
calculation is 200,636,714 (2003: 214,725,340).

The calculation of free cash flow per share is based on the net cash generated by business activities and available for investment in new pub
developments and extensions to existing pubs, after funding interest on existing pubs, tax and all other reinvestment in those pubs open at
the start of the period (‘free cash flow’). It is calculated before taking account of proceeds from property disposals, inflows and outflows of
financing from outside sources, purchase of own shares and dividend payments and is based on the same number of shares in issue as that
for the calculation of basic earnings per share. Prior to 27 July 2003, interest on new pub developments was capitalised and excluded from
free cash flow; reflecting the then current treatment of interest incurred on new pub developments. The comparative figures have been
amended to include all interest as a deduction from free cash flow.

10 Net cash inflow from operating activities

Operating profit 
Depreciation of tangible fixed assets
Employee Share Incentive Plan charge
Change in stocks
Change in debtors
Change in creditors

2004
£000

77,628
43,948
149
(1,257)
(37)
8,443

2003
£000

74,983
43,209
–
(1,007)
(1,238)
14,618

Net cash inflow from operating activities

128,874

130,565

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

2 7

N O T E S   T O   T H E   A C C O U N T S

11 Reconciliation of net cash flow to movement in net debt

(Decrease)/increase in cash in the year
Cash inflow from increase in debt financing

Movement in net debt during the period
Opening net debt

Closing net debt

2004
£000

(5,500)
(23,199)

2003
£000

1,551
(7,571)

(28,699)
(308,860)

(6,020)
(302,840)

(337,559)

(308,860)

12 Analysis of net debt

Cash at bank and in hand
Debt due within one year
Debt due after one year

Net debt

13 Tangible fixed assets

Cost or valuation
At 28 July 2003
Reclassification
Additions
Transfer to assets held for resale
Disposals

2003
£000

Cash flow
£000

15,160
(24,799)
(299,221)

(5,500)
24,799
(47,998)

Non-cash
movement
£000

–
(25,000)
25,000

2004
£000

9,660
(25,000)
(322,219)

(308,860)

(28,699)

–

(337,559)

Freehold and 
long leasehold 
property
£000

Short
leasehold
property
£000

Equipment,
fixtures and
fittings
£000

Expenditure 
on unopened 
properties
£000

Total

£000

397,236
8,980
21,013
–
(11,895)

311,810
3,210
21,983
(1,765)
(4,112)

208,636
–
22,419
(178)
(5,402)

25,507
(12,190)
8,128
(1,683)
(1,769)

943,189
–
73,543
(3,626)
(23,178)

At 25 July 2004

415,334

331,126

225,475

17,993

989,928

Depreciation
At 28 July 2003
Charge for the year
Transfer to assets held for resale
Disposals

At 25 July 2004

Net book value

At 25 July 2004

At 27 July 2003

19,912
7,164
–
(936)

41,503
8,533
(945)
(1,105)

107,495
28,251
(66)
(3,452)

456
–
–
(456)

169,366
43,948
(1,011)
(5,949)

26,140

47,986

132,228

–

206,354

389,194

283,140

93,247

17,993

783,574

377,324

270,307

101,141

25,051

773,823

Included in the cost of fixed assets at 25 July 2004 is £16,954,000 (2003: £17,304,000) of capitalised interest. No interest was capitalised
during the year (2003: £1,954,000).

Reclassifications represent the transfer of development costs incurred on properties completed in the year from unopened properties to 
other fixed asset captions.

Where the company’s properties have been subject to revaluation in previous financial periods, they have been valued on an existing-use 
basis by Christie & Co, a specialist licensed property-valuer.

2 8

J   D   W E T H E R S P O O N   P L C

13 Tangible fixed assets continued
Excluding the effects of revaluation, properties, if stated at cost, would be:

Cost 
Depreciation

Net book value 25 July 2004

Net book value 27 July 2003

The valuations were performed during financial years as follows:

Net book value of revalued properties:
31 July 1997 and prior
31 July 1998
31 July 1999

Net book value of properties held at cost

Net book value

14 Debtors 

Amounts falling due after more than one year:
Other debtors

Amounts falling due within one year:
Other debtors
Prepayments

15 Creditors due within one year

Bank loans (note 20)
Trade creditors
Corporation tax
Other tax and Social Security
Other creditors
Dividend payable
Accruals and deferred income

N O T E S   T O   T H E   A C C O U N T S

Freehold and 
long leasehold 
property
£000

Short
leasehold 
property
£000

Total

£000

410,653
(25,536)

308,415
(43,262)

719,068
(68,798)

385,117

265,153

650,270

366,040

259,527

625,567

Freehold and 
long leasehold 
property
£000

20,167
4,815
2,154

Short 
leasehold 
property
£000

20,676
62,039
43,819

Total

£000

40,843
66,854
45,973

27,136
362,058

126,534
156,605

153,670
518,663

389,194

283,139

672,333

2004
£000

2003
£000
Restated

9,005

8,448

4,801
7,096

3,860
8,795

11,897

12,655

2004
£000

25,000
52,661
7,067
21,888
3,989
4,843
34,920

2003
£000

24,799
57,559
7,792
22,616
3,875
4,834
18,675

150,368

140,150

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

2 9

N O T E S   T O   T H E   A C C O U N T S

16 Creditors due after more than one year

Bank loans repayable by instalments (note 20)
US senior loan notes repayable in a single instalment in 2009 (note 20)

Other creditors (note 20)

17 Provisions for liabilities and charges

Deferred tax
Accelerated capital allowances
Other timing differences

Full provision for deferred tax

Provision at start of year
Deferred tax charge in profit and loss account for year

Provision at end of year

2004
£000

2003
£000

235,228
86,991

322,219
293

212,274
86,947

299,221
721

322,512

299,942

2004
£000

2003
£000

57,509
8,735

54,151
8,268

66,244

62,419

62,419
3,825

57,399
5,020

66,244

62,419

The factors which influence the timing of subsequent reversals of the company’s deferred tax provision are detailed 
in note 7(c): Factors which may affect future tax charges.

18 Called up share capital

Authorised:
500,000,000 ordinary shares of 2p each (2003: 500,000,000)

Allotted and fully paid:
189,164,068 ordinary shares of 2p each (2003: 207,456,573)

2004
£000

2003
£000

10,000

10,000

3,783

4,149

405,448 ordinary shares were issued during the year, on the exercise of share options.

312,047 shares were issued under the Qualifying Employee Share Ownership Trust (QUEST) arrangements. 

19,010,000 ordinary shares were purchased by the company and cancelled during the year. 
Further details are provided in the directors’ report on page 9.

3 0

J   D   W E T H E R S P O O N   P L C

N O T E S   T O   T H E   A C C O U N T S

19 Capital, reserves and shareholders’ funds

At start of year as previously stated
Prior year adjustment – UITF17 and UITF38

At start of year 
Allotments
Transfer
Share Incentive Plan
Purchase of shares
Profit for the year
Dividends
QUEST transfer

At end of year

Called up 
share 
capital
£000

4,149
–

4,149
8
–
–
(380)
–
–
6

Share
premium
account
£000

126,739
–

126,739
715
–
–
–
–
–
886

3,783

128,340

Capital
redemption
reserve
£000

Revaluation 
reserve

Profit and 
loss account 

£000

£000

2004
Shareholders’
funds
£000

165
–

165
–
–
–
380
–
–
–

545

22,439
–

22,439
–
678
–
–
–
–
–

165,136
(301)

318,628
(301)

164,835
–
(678)
(1,407)
(51,129)
29,274
(7,331)
(395)

318,327
723
–
(1,407)
(51,129)
29,274
(7,331)
497

23,117

133,169

288,954

The company has adopted Urgent Issues Task Force (UITF) abstracts 17 (Employee Share Schemes), as amended, and 38 (Accounting for ESOP
trusts) and the previous years’ shareholders’ funds have been restated.

20 Financial instruments

The company’s objectives and policies on the use of financial instruments, including derivatives, can be found in the finance review on 
page 6 under the heading ‘financial risks and treasury policies’. Amounts dealt with in this note exclude short-term assets and liabilities,
except cash and bank loans repayable in one year or less.

Interest rate and currency risks of financial liabilities
The company has entered into a cross-currency swap in respect of the $140 million US senior loan notes. The effect of this transaction is to
remove any exposure to currency risk with regard to the settlement of this financial liability in 2009. 

An analysis of the interest-rate profile of the financial liabilities, after taking account of all interest-rate swaps and the cross-currency swap 
on US senior loan notes, is set out in the following table.

Floating-rate borrowings
Fixed-rate borrowings
Non-interest-bearing liabilities

2004
£000

2003
£000

197,219
150,000
293

227,020
97,000
721

347,512

324,741

The floating-rate borrowings are interest-bearing borrowings at rates based on LIBOR, fixed for periods of up to six months.

The fixed-rate borrowings comprise floating-rate borrowings hedged using fixed-rate swaps with an effective weighted average interest rate
(excluding bank margin) of 6.46% (2003: 6.46%) and are fixed for a weighted average period of 5.0 years (2003: 6.0 years). 

The weighted average period to maturity of non-interest-bearing liabilities is 1.9 years (2003: 2.1 years).

Financial assets

Financial assets at the balance sheet date comprised:

Cash and short-term deposits
Debtors due after one year

Total financial assets

2004
£000

9,660
9,005

2003
£000

15,160
8,448

18,665

23,608

All cash and short-term deposits are floating-rate financial assets, earning interest at commercial rates.
The long-term debtor, representing deferred proceeds on a sale & leaseback arrangement, earns interest at 10% compound until repayment 
in September 2005.

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

3 1

N O T E S   T O   T H E   A C C O U N T S

20 Financial instruments continued
Maturity profile of financial liabilities

Between one and two years
Between two and five years
After five years

Due after more than one year
Due within one year

Total at 25 July 2004

Between one and two years
Between two and five years
After five years

Due after more than one year
Due within one year

Total at 27 July 2003

Total

£000

Bank loans
(note 16)
£000

US senior notes
(note 16)
£000

Other long-term
creditors
£000

25,207
210,087
87,218

322,512
25,000

25,000
210,001
–

235,001
25,000

–
–
87,218

87,218
–

347,512

260,001

87,218

155,356
50,161
94,425

299,942
24,799

154,928
49,868
7,478

212,274
24,799

–
–
86,947

86,947
–

324,741

237,073

86,947

207
86
–

293
–

293

428
293
–

721
–

721

The company has total UK committed loan facilities of £325 million which comprise a drawn £75-million unsecured term loan facility,
repayable within four years of the balance sheet date, together with a £250-million unsecured revolving-loan facility, maturing in 2009. 
All UK committed loan facilities are at floating rates based on LIBOR. The company has entered into swap agreements which fix £150 million
of these borrowings at a rate of 6.46% (excluding bank margin). At the balance sheet date, £185 million was drawn down under the
revolving-loan facilities, with interest rates set for periods of between one week and six months, at which point monies are repaid and, 
if appropriate, redrawn. The undrawn facility expires between four and five years.

In addition to the UK facilities, in September 1999, the company issued $140 million unsecured US senior notes due in 2009, carrying a 
fixed rate of interest of 8.48%. The company entered into currency and swap agreements covering the duration of these notes which 
remove all US dollar exposure and convert the interest rate to one based on LIBOR.

Fair values

The table below compares, by category, the book value and fair values of the company’s financial assets and liabilities as at 
25 July 2004.

Financing instruments
Cash deposits
Debtors due after one year
Long-term borrowings
Other long-term creditors
Derivative instruments
Interest-rate and currency swaps

2004
Book value
£000

2004
Fair value
£000

2003
Book value
£000

2003
Fair value
£000

9,660
9,005
(322,219)
(293)

9,660
8,695
(321,479)
(261)

15,160
8,448
(299,221)
(721)

15,160
8,714
(311,344)
(656)

–

(8,145)

–

(1,705)

The fair value of derivative instruments is calculated by discounting all future cash flows by the market yield curve at the balance sheet date.

3 2

J   D   W E T H E R S P O O N   P L C

20 Financial instruments continued
Unrecognised gains and losses on interest rate and currency swaps

Unrecognised gains/(losses) at 27 July 2003
Gains/(losses) arising in previous years which were recognised in 2004

Gains/(losses) arising before 28 July 2003, not recognised in 2004

Gains/(losses) arising in 2004, not recognised during 2004

Unrecognised gains/(losses) at 25 July 2004

Of which:
Gains/(losses) expected to be recognised in less than one year
Gains/(losses) expected to be recognised after more than one year

21 Financial commitments

Capital expenditure contracted, but not provided for

22 Lease commitments

The company operates a number of leasehold public
houses and occupies leasehold office accommodation. 
The total annual rental due under these leases in the next twelve months is as follows:

Expiry between one and two years
Expiry between two and five years
Expiry in greater than five years

The annual rentals pertaining to other leases, primarily motor vehicles, are as follows:

Expiry within one year
Expiry between one and two years
Expiry between two and five years

N O T E S   T O   T H E   A C C O U N T S

Gains
£000

Losses
£000

Net gains/(losses) 

£000

16,580
(2,927)

(18,285)
4,399

13,653

(13,886)

(13,653)

5,741

(1,705)
1,472

(233)

(7,912)

0

0
0

0

(8,145)

(8,145)

(1,714)
(6,431)

(1,216)
(6,929)

(8,145)

(8,145)

2004
£000

2003
£000

3,717

7,975

2004
£000

2003
£000

–
–
50,557

–
–
44,363

50,557

44,363

119
57
14

190

127
112
64

303

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

3 3

N O T E S   T O   T H E   A C C O U N T S

24 Share options 

ESOP scheme
Date granted
April 1994
October 1994
April 1995
November 1995
April 1996
January 1997
April 1997
October 1997
April 1998
October 1998

SAYE scheme
Date granted
February 1999 (5yr)
January 2002 (3yr)

AESOP plan
Date granted
December 1996
April 1997
October 1997
April 1998

NDSO scheme
Date granted
December 1998
April 1999
September 1999
March 2000
September 2000
March 2001
September 2001

28 July
2003

7,500
75,000
46,250
174,750
17,250
231,720
71,250
207,680
286,113
275,900

1,393,413

365,703
704,263

1,069,966

148,275
29,500
194,125
223,975

596,875

393,495
818,172
249,900
1,188,000
743,734
496,510
1,092,115

4,981,926

2001 scheme
Date granted
September 2002

1,887,121

Granted

Exercised

Lapsed

25 July
2004

Exercise price 
per share

Exercisable from

Expiry date

–
–
–
–
–
–
–
–
–
–

–

–
–

–

–
–
–
–

–

–
–
–
–
–
–
–

–

–

7,500
75,000
–
17,250
4,925
25,250
12,500
–
–
47,000

–
–
–
–
300
–
–
7,350
9,755
–

–
–
46,250
157,500
12,025
206,470
58,750
200,330
276,358
228,900

69.4p
78.4p
92.4p
127.2p
176.0p
244.2p
237.0p
299.0p
326.0p
167.0p

18/04/97 18/04/04
25/10/97 25/10/04
17/04/98 17/04/05
16/11/98 16/11/05
11/04/99 11/04/06
03/01/00 03/01/07
10/04/00 10/04/07
05/10/00 05/10/07
16/04/01 16/04/08
25/10/01 25/10/08

189,425

17,405

1,186,583

332,899
–

19,222
237,597

13,582
466,666

159.0p
300.0p

01/02/04 01/08/04
01/06/05 01/12/05

332,899

256,819

480,248

25,900
5,750
–
–

10,500
4,000
17,000
26,000

111,875
19,750
177,125
197,975

243.0p
234.5p
301.0p
326.0p

15/12/99 15/12/06
12/04/00 12/04/07
08/10/00 08/10/07
16/04/01 16/04/08

31,650

57,500

506,725

155,676
28,697
–
–
–
–
–

3,326
74,500
50,400
163,847
109,221
82,575
181,095

234,493
714,975
199,500
1,024,153
634,513
413,935
911,020

184,373

664,964

4,132,589

191.5p
268.0p
333.8p
356.5p
361.0p
343.6p
339.0p

17/12/01 17/12/08
20/04/02 20/04/09
10/09/02 10/09/09
07/03/03 07/03/10
15/09/03 15/09/10
14/03/04 14/03/11
12/09/04 12/09/11

–

339,768

1,547,353

301.5p

09/09/05 09/09/12

At 25 July 2004, there were 61 members of the Executive Share Option (ESOP) scheme, with average option holdings of 19,452 shares; there were 
404 members of the Save-As-You-Earn (SAYE) scheme, with average holdings of 1,189 shares; there were 311 members of the All-Employee Share
Option (AESOP) plan, with average holdings of 1,629 shares; there were 1,665 members of the New Discretionary Share Option (NDSO) scheme, with
average holdings of 2,482 shares; there were 3,002 members of the 2001 Executive scheme, with average option holdings of 515.

The exercise of an option under the ESOP scheme, the NDSO scheme and the 2001 scheme will, in accordance with institutional shareholder guidelines,
be conditional on the achievement of performance conditions. In respect of the ESOP scheme, options are exercisable only on condition that the
earnings per share of the company, between the date of grant of an option and the date of exercise, increase by at least the increase in the RPI. 
In respect of the NDSO scheme and the 2001 scheme, options are exercisable three years after they have been granted and only if the company’s
normalised earnings per share (excluding exceptional items), over any three-year period, have exceeded the growth in the RPI by an average of at least
3% per annum. As the AESOP plan is available to all staff, there are no performance conditions attached to the exercise of options under it. 
The options in issue shown above include those of the directors shown on page 14.

3 4

J   D   W E T H E R S P O O N   P L C

Financial record for the five years ended 25 July 2004

2000
£000

2001
£000

2002
£000

2003
£000

2004
£000

Sales and results
Turnover from continuing operations

369,628

483,968

601,295

730,913

787,126

Operating profit from continuing operations
Net interest payable

46,278
(10,226)

58,380
(14,063)

70,085
(16,517)

74,983
(18,844)

77,628
(23,554)

Profit on ordinary activities before 
exceptional items and taxation
Exceptional items
Taxation

Profit after taxation
Dividends

36,052
–
(11,996)

24,056
(5,599)

44,317
–
(14,457)

29,860
(6,185)

53,568
–
(18,152)

35,416
(6,902)

56,139
(3,688)
(18,407)

34,044
(7,434)

54,074
(7,758)
(17,042)

29,274
(7,331)

Retained profit for the year

18,457

23,675

28,514

26,610

21,943

Net assets employed
Fixed assets
Net current assets/(liabilities)
Non current liabilities
Provision for liabilities and charges

504,996
(8,599)
(213,979)
(35,688)

625,903
(50,921)
(253,581)
(47,803)

745,041
(84,797)
(292,915)
(57,399)

773,823
(93,135)
(299,942)
(62,419)

783,574
(105,864)
(322,512)
(66,244)

Shareholders’ funds

246,730

273,598

309,930

318,327

288,954

Ratios
Operating margin
Basic earnings per share (excl. exceptional items)
Free cash flow per share
Dividends per share

12.5%
11.8p
24.2p
2.67p

12.1%
14.2p
27.6p
2.93p

11.7%
16.6p
32.4p
3.22p

10.3%
17.0p
38.8p
3.54p

9.9%
17.7p
37.5p
3.89p

Notes to the financial record
(a) The summary of accounts has been extracted from the annual audited financial statements of the company for the five years shown.
(b) All of the above figures have been adjusted to reflect the impact of adopting FRS19 deferred taxation and to reflect Urgent Issues Task
Force (UITF) abstracts 17 (Employee Share Schemes) and 38 (Accounting for ESOP Trusts).
(c) Free cash flow per share has been adjusted to reflect the current treatment of interest incurred on new pub developments, whereby all
interest is included as a deduction from the free cash flow.

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

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Information for shareholders

Ordinary shareholdings at 25 July 2004

Shares of 2p each

Up to 2,500
2,501 to 10,000
10,001 to 250,000
250,001 to 500,000
500,001 to 1,000,000
Over 1,000,000

Number of 
shareholders

% of total 
shareholders

Number

% of total 
shares held

5,044
480
270
21
14
37

85.99
8.18
4.60
0.36
0.24
0.63

2,859,308
2,239,325
14,618,677
8,162,378
9,743,333
151,541,047

1.51
1.18
7.73
4.32
5.15
80.11

5,866

100.00

189,164,068

100.00

Substantial shareholdings
In addition to certain of the directors’ shareholdings set out on page 14, the company has been notified of the following substantial 
holdings in the share capital of the company at 3 September 2004:

Federated Investors Inc.
Fidelity International Ltd
Goldman Sachs Securities
The Capital Group Companies, Inc.

Share prices
27 July 2003
Low
High
25 July 2004

Number of
ordinary shares

% of
share capital

22,252,736
18,732,648
14,222,298
8,130,428

11.12
9.36
7.11
4.06

233.5p
225.5p
324.0p
254.5p

Annual reports
Further copies of this annual report are available from the company secretary, at the registered office. 
Telephone requests can be made: 01923 477764

This annual report is also available on our Web site: www.jdwetherspoon.co.uk

Copies can also be obtained through the Financial Times’ annual reports service. 
For details, see the London share service pages of the Financial Times.

If you would like to contact us, please write to J D Wetherspoon plc, Wetherspoon House, Central Park, Reeds Crescent, Watford, WD24 4QL
or telephone us on 01923 477777.

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J   D   W E T H E R S P O O N   P L C

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of the
company will be held at The Crosse Keys, 9 Gracechurch Street,
London, EC3V 0DR on Thursday 11 November 2004 at 10.00am
for the following purposes:

Ordinary business
1 To receive the report of the directors and the audited accounts
of the company for the financial year ended 25 July 2004.

2 To receive and approve the directors’ remuneration report for
the year ended 25 July 2004.

3 To declare a final dividend for the year ended 25 July 2004 of
2.56 pence per ordinary share of 2 pence in the capital of the
company.

4 To re-elect Mr T Martin as a director.

5 To re-elect Mr J Herring as a director.

6 To re-elect Mr A Lowrie as a director.

7 To reappoint PricewaterhouseCoopers LLP as auditors of the
company and to authorise the directors to fix their remuneration.

Special business
To consider and, if thought fit, to pass the following resolutions,
in the case of the resolution numbered 8, as an ordinary
resolution and, in the case of the resolutions numbered 9 and 10,
as special resolutions.

8 THAT:
(A) the directors be and are hereby generally and unconditionally
authorised, pursuant to section 80 of the Companies Act 1985
(‘the Act’), to exercise all or any powers of the company to allot
relevant securities (as defined in that section) to such persons, at
such times and on such terms as they think proper, up to a
maximum nominal amount of £1,250,000 during the period (‘the
period of authority’) from the date of the passing of this
resolution until the earlier of:

(i) 15 months from the date of the passing of this resolution; and

(ii) the conclusion of the Annual General Meeting of the company
held to approve the report and accounts of the company for the
financial year of the company ending on 31 July 2005, on which
date such authority will expire, unless previously varied, revoked
or renewed by the company in general meeting (save that, during
the period of authority, the directors shall be entitled to make an
offer or agreement which would or might require relevant
securities to be allotted in pursuance of such an offer or
agreement, as if the authority conferred by this resolution had
not expired); and

(B) the authority to allot, given to the directors by this resolution,
be in substitution for any and all authorities previously conferred
on the directors for the purposes of section 80 of the Act,
without prejudice to any allotments made pursuant to the terms
of such authorities.

9 THAT:
conditionally, on the passing of the resolution numbered 8 above
and in place of all existing powers, the directors be and are
hereby empowered, pursuant to section 95 of the Act, to allot
equity securities (as defined in section 94(2) of the Act) for cash,
pursuant to the authority conferred by the resolution numbered 8
above, as if section 89(1) of the Act did not apply to such
allotment, such power to expire (unless previously varied, revoked
or renewed by the company in general meeting) at the earlier of
15 months from the date of passing of this resolution and the
conclusion of the Annual General Meeting of the company held
to approve the report and accounts of the company for the
financial year of the company ending on 31 July 2005 (save that
the directors shall be entitled, before such expiry, to make an
offer or agreement which would or might require equity securities
to be allotted after such expiry, and the directors may allot equity
securities in pursuance of such an offer or agreement, as if the
power conferred by this resolution had not expired) and to be
limited to:

(i) the allotment of equity securities for cash in connection with
or pursuant to an issue or offer, by way of rights, open offer or
otherwise in favour of the holders of equity securities, where the
equity securities respectively attributable to the interests of such
holders are proportionate (as nearly as may be) to the respective
number of equity securities held by them on the record date for
such allotment, subject only to such exceptions, exclusions or
other arrangements which are, in the opinion of the directors,
necessary or expedient to deal with fractional entitlements or
legal or practical problems under the laws of any territory or the
requirements of any recognised regulatory body or any other
stock exchange or otherwise in any territory; and

(ii) the allotment (otherwise than as referred to in subparagraph
(i) above) of equity securities for cash, up to an aggregate
nominal amount of £190,000.

10 THAT:
the company be and is hereby authorised, pursuant to section
166 of the Act, to make market purchases (as defined by section
163(3) of the Act) of ordinary shares in the capital of the
company on such terms and in such manner as the directors of
the company shall determine, subject to the following conditions:

(i) the maximum number of ordinary shares which may be
purchased is 28,374,610;

A N N U A L   R E P O R T   A N D   A C C O U N T S   2 0 0 4

3 7

N O T I C E   O F   A N N U A L   G E N E R A L   M E E T I N G

(ii) the price at which ordinary shares may be purchased shall not
exceed 105% of the average of the middle-market quotations for
the ordinary shares as derived from the London Stock Exchange
Daily Official List for the five business days preceding the date of
purchase and shall not be less than the nominal value, from time
to time, of an ordinary share, in both cases exclusive of expenses;
and

(iii) this authority (unless previously revoked, varied or renewed)
will expire at the earlier of the conclusion of the next Annual
General Meeting of the company held to approve the report and
accounts of the company for the financial year of the company
ending on 31 July 2005 and 30 April 2006, except that the
company may, before such authority expires, enter into a contract
of purchase under which such purchase may be completed or
executed wholly or partly after the expiry of the authority.

By order of the board

Jim Clarke
Company Secretary

21 September 2004

Registered office:

Wetherspoon House
Central Park
Reeds Crescent
Watford
WD24 4QL

Notes:

1 A member entitled to attend and vote at the Annual General
Meeting is entitled to appoint one or more proxies to attend and,
on a poll, vote instead of him or her. A proxy need not be a
member of the company.

2 A form of proxy is enclosed which holders of ordinary shares in
the company are invited to complete and return in the envelope
provided. Completion and return of the form of proxy, in
accordance with the instructions on it, will not prevent such
shareholders from attending and voting at the Annual General
Meeting in person, should they so wish.

3 To be valid for the Annual General Meeting, the instrument
appointing a proxy and the power of attorney or other authority
(if any) under which it is executed or a notarially certified copy of
such authority must be deposited at the offices of the company’s
registrars, Computershare Investor Services plc, PO Box 82, 
The Pavilions, Bridgwater Road, Bristol, BS99 7NH, not later than
10.00am on 9 November 2004, being 48 hours before the time
appointed for the holding of the Annual General Meeting.

4 There are available for inspection at the registered office of the
company during usual business hours on any weekday (Saturdays,
Sundays and public holidays excepted) and there will be available
for inspection at the place of the Annual General Meeting from
at least 15 minutes prior to and until the conclusion of the
Annual General Meeting:

(a) copies of the directors’ service agreements with the company,
other than those agreements expiring or determinable by the
company without payment of compensation within one year; and

(b) the register of directors’ interests.

5 Only those shareholders registered in the register of members
of the company as at 10.00am on 9 November 2004 shall be
entitled to attend or vote at the meeting in respect of the
number of ordinary shares registered in their name at that time.
Changes to entries on the register of members after that time will
be disregarded in determining the right of any person to attend
or vote at the meeting (regulation 41 of the Uncertificated
Securities Regulations 2001). 

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J   D   W E T H E R S P O O N   P L C

Designed by WLG Design Limited
Printed by Perivan Group
English language advice by www.future-perfect.co.uk

J D Wetherspoon plc 

Wetherspoon House  

Central Park

Reeds Crescent 

Watford 

WD24 4QL

Telephone 01923 477777

www.jdwetherspoon.co.uk