J D Wetherspoon

JJ  DD  WWeetthheerrssppoooonn  ppllcc

ANNUAL REPORT AND ACCOUNTS 2012

Wetherspoon owns
and operates pubs
throughout the UK.
The company aims 
to provide customers
with good-quality
food and drinks,
served by well-trained
and friendly staff, at
reasonable prices.
The pubs are

individually designed,
and the company aims
to maintain them in
excellent condition.

Contents

SECTION 1

2
3

Financial highlights
Chairman’s statement, operating and
finance review
Income statement
Statement of comprehensive income 
Cash flow statement
Balance sheet
Statement of changes in shareholders’ equity

6
6
7
8
9
10 Notes to the financial statements
31 Financial record

SECTION 2

34 Authorisation of financial statements and
statement of compliance with IFRSs

35 Accounting policies
40 Principal risks and uncertainties

facing the company

42 Independent auditors’ report
43 Corporate social responsibility report
46 Directors, officers and advisers
47 Directors’ report
52 Directors’ remuneration report
58 Corporate governance
63 Information for shareholders
65 Notice of annual general meeting

Financial calendar

Annual general meeting
8 November 2012

Interim report for 2013
March 2013

Year end
28 July 2013

Preliminary announcement for 2013
September 2013

Report and accounts for 2013
October 2013

SECTION 1

FINANCIAL HIGHLIGHTS

Revenue up 11.7% to 
£1,197.1m
(excluding week 53: +9.3%)

Like-for-like sales up 3.2% 
and profit down 2.2%

Operating profit before exceptional
items* up 4.9% to £107.3m 
(excluding week 53: +2.6%)

Operating profit down 3.2% 
to £93.8m

Operating margin before
exceptional items* 9.0% 
(last year: 9.5%)

Operating margin 7.8% 
(last year: 9.0%)

Profit before tax and exceptional
items* up 8.4% to £72.4m 
(excluding week 53: +5.8%)

Profit before tax down 4.1% 
to £58.9m

Earnings per share before
exceptional items* 
up 17.0% to 41.3p 
(excluding week 53: +14.4%)

Basic earnings per share up
0.6% to 35.6p

Free cash flow per share 73.2p 
(last year: 59.7p)

40 pubs opened, 3 closed,
creating a total of 860

*Exceptional items as disclosed in account note 3.

2

J D WETHERSPOON PLC

CHAIRMAN’S STATEMENT, OPERATING AND
FINANCE REVIEW

Two years ago, we attempted to make our report and accounts more readable by dividing them into two
sections. Section 1 contained the main financial statements, while section 2 contained mainly corporate
governance reports.

Many investors feel that annual reports are too long, with the level of detail often hindering an
understanding of the business. This year, we have made a start in trying to reduce repetition and jargon,
but there is more work to do in the future.

‘
Record sales, profit and earnings per share before exceptional items’

I am pleased to report a year of further progress for the company, with record sales, profit and earnings
per share before exceptional items. The company was founded in 1979 – and this is the 29th year since
incorporation in 1983. The table below outlines some key indicators of our performance during that
period. As this demonstrates, since our flotation in 1992, earnings per share before exceptional items
have grown by an average of 16.8% per annum and free cash flow per share by an average of 19.3%.

Summary accounts for the years ended July 1984 to 2012

Financial year

Total sales

£000

818

1,890

2,197

3,357

3,709

5,584

7,047

13,192

21,380

30,800

46,600

68,536

100,480

139,444

188,515

269,699

369,628

483,968

601,295

730,913

787,126

809,861

847,516

888,473

907,500

955,119

996,327

1,072,014

1,197,129

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Profit before
tax and
exceptional items
£000

Earnings 
per share before
exceptional items
pence

Free cash flow

Free cash flow 
per share

£000

pence

(7)

185

219

382

248

789

603

1,098

2,020

4,171

6,477

9,713

15,200

17,566

20,165

26,214

36,052

44,317

53,568

56,139

54,074

47,177

58,388

62,024

58,228

66,155

71,015

66,781

72,363

0.0

0.2

0.2

0.3

0.3

0.6

0.4

0.8

1.9

3.3

3.6

4.9

7.8

8.7

9.9

12.9

11.8

14.2

16.6

17.0

17.7

16.9

24.1

28.1

27.6

32.6

36.0

35.3

41.3

915

732

1,236

3,563

5,079

5,837

13,495

20,968

28,027

28,448

40,088

49,296

61,197

71,370

83,097

73,477

68,774

69,712

52,379

71,411

99,494

71,344

78,818

91,542

0.4

0.4

0.6

2.1

3.9

3.6

7.4

11.2

14.4

14.5

20.3

24.2

29.1

33.5

38.8

36.7

37.1

42.1

35.6

50.6

71.7

52.9

59.7

73.2

Notes
Adjustments to statutory numbers 
1. Where appropriate, the EPS, as disclosed in the statutory accounts, have
been recalculated to take account of share splits, the issue of new shares
and capitalisation issues.
2. Free cash flow per share excludes dividends paid which were included in
the free cash flow calculations in the annual report and accounts for the
years 1995–2000.

3. The weighted average number of shares, EPS and free cash flow per
share have been adjusted, to exclude shares held in trust for employee
share schemes. 
4. Before 2005, the accounts were prepared under UKGAAP. All accounts
from 2005 to date have been prepared under IFRS.

ANNUAL REPORT AND ACCOUNTS 2012

3

CHAIRMAN’S STATEMENT, OPERATING AND FINANCE REVIEW

Like-for-like sales in the year under review increased by
3.2%, with total sales, including week 53 and new pubs,
increasing by £125.1 million to £1,197.1 million, a rise of
11.7% (2011: 7.6%). Like-for-like bar sales increased by
2.8% (2011: increased by 1.7%), like-for-like food sales
increased by 4.8% (2011: increased by 4.2%) and machine
sales decreased by 2.8% (2011: decreased by 3.9%).

Operating profit before exceptional items increased by
4.9% to £107.3 million (2011: £102.3 million) and, after
exceptional items, decreased by 3.2% to £93.8 million
(2011: £96.9 million). The operating margin, before
exceptional items, decreased to 9.0% (2011: 9.5%),
mainly as a result of increases in taxation, utilities and bar
and food costs. The operating margin after exceptional
items was 7.8% (2011: 9.0%).

Profit before tax and exceptional items increased by 8.4%
to £72.4 million (2011: £66.8 million) and, after
exceptional items, decreased by 4.1% to £58.9 million
(2011: £61.4 million). Earnings per share before
exceptional items increased by 17.0% to 41.3p 
(2011: 35.3p), while basic earnings after exceptional
items increased by 0.6% to 35.6p (2011: 35.4p).

Net interest was covered 3.1 times by operating profit
before exceptional items (2011: 2.9 times) and 2.7 times 
by operating profit after exceptional items (2011: 2.7 times).
Total capital investment was £120.6 million in the period
(2011: £126.0 million), with £75.4 million on new pub
openings (2011: £87.6 million) and £45.2 million on
existing pubs (2011: £38.4 million). 

Exceptional items before tax totalled £13.5 million 
(2011: £5.4 million) of which £0.6 million resulted in a
cash charge. The exceptional items relate to the
impairment of trading pub assets of £7.8 million 
(2011: £4.4 million), a provision for onerous leases of
£2.2 million, an IT-related asset write-off of £1.7 million, 
a loss on the disposal of property, plant and equipment 
of £1.1 million and restructuring costs of £0.6 million.
The total impairment provision is now £30.1 million,
compared with the original cost of our assets of £1.5 billion. 

Free cash flow, after capital investment of £45.2 million on
existing pubs (2011: £38.4 million), £5.8 million in respect
of share purchases for employees under the company’s
share-based payment schemes (2011: £5.8 million) and
payments of tax and interest, increased by £12.7 million
to £91.5 million (2011: £78.8 million). Free cash flow per
share was 73.2p (2011: 59.7p). 

Property
The company opened 40 pubs during the year, 18 of
which were freehold, while three others closed, resulting
in a total estate of 860 pubs at the financial year end. The
average development cost for a new pub (excluding the
cost of freeholds), in the financial year under review, was
£1.42 million, compared with £1.21 million a year ago, as
we continue to increase expenditure on kitchens, customer
areas and beer gardens. The full-year depreciation charge
was £49.2 million (2011: £44.4 million).

4

J D WETHERSPOON PLC

We currently intend to open around 25 pubs in 
the year ending July 2013.

Taxation
The overall tax charge (including deferred tax) on 
pre-exceptional items before taking into account the
effect of the tax-rate change on deferred tax is 28.6%
(2011: 30.2%). The UK standard average tax rate for the
period is 25.3% (2011: 27.3%). The difference between
that rate and the company tax is 3.3% (2011: 2.9%), 
due primarily to the level of non-qualifying depreciation
(depreciation which does not qualify for tax relief).

The current tax rate (excluding deferred tax) has fallen 
to 25.6% (2011: 28.7%). This is due mainly to the
decrease in the UK standard average tax rate for the
period by 2% and the increased availability of capital
allowances in the period.

Financing
As at 29 July 2012, the company’s total net debt,
including bank borrowings and finance leases, but
excluding derivatives, was £462.6 million 
(2011: £437.7 million), an increase of £24.9 million.
Factors which have led to the increase in debt are 
40 new pub openings costing £75.4 million, investment
in existing pubs of £45.2 million, share buybacks of 
£22.7 million and dividend payments of £15.5 million.
Year-end net-debt-to-EBITDA was 2.96 times 
(2011: 2.98 times).

As at 29 July 2012, the company had £128.5 million
(2011: £120.2 million) of unutilised banking facilities and
cash balances, with total facilities of £575.0 million
(2011: £550.0 million). The company’s existing interest-
rate swap arrangements remain in place.

Dividends and return of capital
The board proposes, subject to shareholders’ approval, 
to pay a final dividend of 8.0p per share 
(2011: 8.0p per share), on 29 November 2012, to those
shareholders on the register on 26 October 2012, giving 
a total dividend for the year of 12.0p per share 
(2011: 12.0p per share). The dividend is covered 3.0 times
(2011: 3.0 times) by earnings.

During the year, 5,602,174 shares (representing
approximately 4.3% of the issued share capital) were
purchased by the company for cancellation, at a total 
cost of £22.7 million, representing an average cost 
per share of 405p.

Further progress
As in the past, the company has tried to concentrate on
improving every area of the business, with a particular
emphasis on customer service. In this connection, for
example, we have introduced a Catering Academy, so
that kitchen managers benefit from several days’ off-site
training. In addition, we now have a record number of
employees on our apprenticeship programme and have
also extended the general range of our training courses.
Bonuses and free shares were at record levels during the

CHAIRMAN’S STATEMENT, OPERATING AND FINANCE REVIEW

As we have previously indicated, the pub trade has lost
50% of its beer sales, for example, in the last 30 years, 
to supermarkets. We believe that supermarkets have been
increasingly able to undercut pubs’ prices, as a result of the
tax disparity between these types of business. In particular,
pubs pay 20% VAT in respect of food sales, while
supermarkets pay virtually nothing. This enables
supermarkets to cross-subsidise their alcoholic drinks’ prices,
resulting in large numbers of pub closures and also applying
enormous pressure to those pubs which remain open.

We believe that the government has accepted that banks,
manufacturers and many other businesses need to remain
competitive, both domestically and internationally. The tax
régime has often been cited as an important factor, by the
prime minister and the chancellor of the exchequer, for
example, in gaining a competitive advantage for the nation.
In this regard, pubs need a level tax playing field with
supermarkets, in order to be able to compete effectively in
the long run. Unless there is tax equality, pubs will continue
to lose trade to supermarkets – and this will be detrimental
to the government, since pubs pay far more tax per meal or
per pint, and employ more people, than do supermarkets.

In addition, the government continues to impose stealth
taxes on the pub industry. Changes to fruit/slot machine
duty, recently announced, will cost Wetherspoon an extra
£2.0 million per annum, while the so-called late-night
levy, which applies to pubs, but not supermarkets, will
result in Wetherspoon paying an extra £2.0 million in tax,
in order to be able to open between midnight and 1am,
once or twice per week, at the majority of our pubs.

All pubs and pub companies are, or should be, happy to
pay their share of tax, but the pub industry has been
fleeced by the government, in the last decade and a half
in particular – resulting in fewer jobs and lower taxes, but
more supermarkets, in the UK.

Current trading and outlook
The biggest danger to the pub industry, as indicated
above, is the VAT disparity between supermarkets and
pubs, combined with the continuing imposition of stealth
taxes, such as the late-night levy and the increase in
fruit/slot machine taxes.

In the six weeks to 9 September 2012, like-for-like sales
increased by 8.4%, with total sales increasing by 12.8%,
helped by a strong performance during the Olympic and
Paralympic Games.

Sales this summer have been enhanced by a number of
one-off events and we do not expect to sustain this level
of growth. As previously indicated, it is anticipated that
taxation and input costs will continue to rise. Overall,
therefore, the company is aiming for a reasonable
outcome, in the current financial year.

year, amounting to £24.1 million, equivalent to 33.3% 
of our profits before tax, 85% of which was paid to
employees working in our pubs.

We have continued to upgrade the range and quality of
products on our drinks and food menus. We have 256 pubs
recommended in the 2013 Good Beer Guide, a record
number and more than any other company. In addition,
98% of our pubs are Cask Marque* approved. We are
selling record numbers of breakfasts, teas and coffees, with
virtually all of our pubs now open from 8am, seven days a
week, and a significant number opening even earlier. 

In the IT area, we have continued to make progress,
creating a ‘MyJDW’ Web site – a greatly improved
communications tool between the company and its
28,500 employees. We have also introduced a ‘time and
attendance’ system which has improved the recording of
employees’ hours and creates the potential for improved
labour-scheduling in the future. We have been working,
in the course of the last financial year, on a new
accounting system which ‘went live’ on 29 July.

Due to dedicated work by our pub and head office teams,
we remain the biggest corporate partner for the charity
CLIC Sargent, which supports young cancer patients and
their families. In the year under review, we raised 
£1.4 million, bringing the total raised to over £6 million.

*

Cask Marque is a system backed by several real-ale
brewers, whereby inspectors independently verify the
quality of ales at many of Britain’s pubs.

Taxation and regulation
As the table below illustrates, the company and its
employees paid total taxes of £519.3 million in the
financial year, compared with £461.0 million in 2011, 
an increase of £58.3 million. The company pays over 
£11 of tax for every £1 of net profit. 

2012
£m

241.2
136.8
67.1
43.9
18.2
3.3
1.9
2.4
1.9
0.8
1.3
0.5

519.3

2011
£m

204.8
120.2
65.2
39.8
21.2
2.9
1.9
0.8
1.6
1.1
1.1
0.4

461.0

VAT
Alcohol duty
PAYE and NIC
Business rates
Corporation tax
Machine duty
Fuel duty
Carbon tax
Climate change levy
Stamp duty
Landfill tax
Premises licence and TV licences

Total tax

Tax as % of sales

Profit after tax 

PAT as % of sales

43.4%

43.0%

44.6

3.7%

46.8

4.4%

Tim Martin
Chairman
14 September 2012

ANNUAL REPORT AND ACCOUNTS 2012

5

INCOME STATEMENT for the 53 weeks ended 29 July 2012

J D Wetherspoon plc, company number: 1709784

Notes

53 weeks
ended
29 July 2012
Before
exceptional
items
Total
£000

53 weeks 
ended
29 July 2012
Exceptional
items
(note 3)
Total
£000

53 weeks
ended
29 July 2012
After
exceptional
items
Total
£000

52 weeks
ended
24 July 2011
Before
exceptional
items
Total
£000

52 weeks 
ended 
24 July 2011
Exceptional
items
(note 3)
Total
£000

52 weeks
ended
24 July 2011
After 
exceptional
items
Total
£000

Revenue
Operating costs

Operating profit
Finance income
Finance costs

Profit before taxation
Income tax expense

1

2

5

5

6

1,197,129
(1,089,811)

–
(13,481)

1,197,129
(1,103,292)

1,072,014
(969,705)

–
(5,389)

1,072,014
(975,094)

107,318
55
(35,010)

72,363
(15,038)

(13,481)
–
–

(13,481)
723

93,837
55
(35,010)

58,882
(14,315)

102,309
36
(35,564)

66,781
(14,600)

(5,389)
–
–

(5,389)
–

96,920
36
(35,564)

61,392
(14,600)

Profit for the year

57,325

(12,758)

44,567

52,181

(5,389)

46,792

Earnings per ordinary share

7

41.3

35.6

35.3

35.4

STATEMENT OF COMPREHENSIVE INCOME for the 53 weeks ended 29 July 2012

Interest-rate swaps: (loss)/gain taken to other comprehensive income
Tax on items taken directly to other comprehensive income

Net (loss)/gain recognised directly in other comprehensive income
Profit for the year

Total comprehensive income for the year

Notes

20

6

53 weeks 
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

(8,149)
717

(7,432)
44,567

3,511
(2,466)

1,045
46,792

37,135

47,837

6

J D WETHERSPOON PLC

CASH FLOW STATEMENT for the 53 weeks ended 29 July 2012

J D Wetherspoon plc, company number: 1709784

Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Corporation tax paid
Purchase of own shares for share-based payments 

Notes

8

53 weeks 
ended
29 July 2012
£000

53 weeks 
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

52 weeks 
ended
24 July 2011
£000

196,733
49
(36,091)
(18,168)
(5,756)

196,733
49
(36,091)
(18,168)
(5,756)

178,197
39
(34,020)
(21,215)
(5,783)

178,197
39
(34,020)
(21,215)
(5,783)

Net cash inflow from operating activities

136,767

136,767

117,218

117,218

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds on sale of property, plant and equipment
Investment in new pubs and pub extensions
Purchase of lease premiums

(36,578)
(8,647)

(36,578)
(8,647)
887
(74,859)
(489)

(31,787)
(6,613)
1,100
(86,793)
(825)

(31,787)
(6,613)

Net cash outflow from investing activities

(119,686)

(45,225)

(124,918)

(38,400)

Cash flows from financing activities
Equity dividends paid
Proceeds from issue of ordinary shares
Purchase of own shares
Advances under bank loans
Advances under finance leases
Finance costs on new loan
Finance lease principal payments

Net cash (outflow)/inflow from financing activities 

Net increase in cash and cash equivalents

Opening cash and cash equivalents
Closing cash and cash equivalents

Free cash flow

Free cash flow per ordinary share

(15,544)
95
(22,711)
18,059
10,474
(2,731)
(4,373)

(16,731)

350

27,690
28,040

10

25

9

9

9

9

9

17

17

7

7

(5,211)
225
(32,759)
49,962
–
–
(2,908)

9,309

1,609

26,081
27,690

91,542

73.2

78,818

59.7

ANNUAL REPORT AND ACCOUNTS 2012

7

BALANCE SHEET for the 53 weeks ended 29 July 2012

J D Wetherspoon plc, company number: 1709784

Assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non-current assets

Total non-current assets

Current assets
Inventories
Other receivables
Assets held for sale
Cash and cash equivalents

Total current assets

Total assets

Liabilities
Current liabilities
Trade and other payables
Financial liabilities
Current income tax liabilities

Total current liabilities 

Non-current liabilities
Financial liabilities 
Derivative financial instruments
Deferred tax liabilities
Other liabilities

Total non-current liabilities

Net assets

Shareholders’ equity
Ordinary shares
Share premium account
Capital redemption reserve
Hedging reserve
Retained earnings

Total shareholders’ equity

Notes

29 July 2012
£000

24 July 2011
£000

11

12

6

13

14

15

16

17

18

19

19

20

6

21

25

924,341
16,936
16,198
10,682

881,271
11,525
15,569
10,520

968,157

918,885

20,975
18,685
2,055
28,040

21,488
21,623
70
27,690

69,755

70,871

1,037,912

989,756

(207,114)
(5,880)
(9,103)

(189,777)
(3,129)
(9,457)

(222,097)

(202,363)

(484,771)
(66,029)
(67,860)
(27,511)

(462,254)
(57,880)
(71,448)
(24,766)

(646,171)

(616,348)

169,644

171,045

2,521
143,294
1,910
(50,842)
72,761

2,632
143,199
1,798
(43,410)
66,826

169,644

171,045

The notes on pages 10 to 30 form an integral part of these financial statements. 

The financial statements, on pages 6 to 30 and 35 to 41, approved by the board of directors and authorised for issue 
on 14 September 2012, are signed on its behalf by:

John Hutson
Director

Kirk Davis
Director

8

J D WETHERSPOON PLC

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

J D Wetherspoon plc, company number: 1709784

Notes

Called-up
share capital
£000

Share premium Capital redemption
reserve
£000

account
£000

Hedging
reserve
£000

Retained
earnings
£000

Total

£000

At 25 July 2010

2,783

142,975

1,646

(44,821)

59,558

162,141

Profit for the year
Interest-rate swaps: 
loss taken to equity
Tax on items taken 
directly to equity

Total comprehensive income

Exercise of options
Repurchase of shares
Tax on repurchase of shares
Share-based payments
Purchase of shares 
held in trust
Tax on purchase of shares 
held in trust
Dividends

At 24 July 2011

Profit for the year
Interest-rate swaps: 
loss taken to equity
Tax on items taken 
directly to equity

Total comprehensive income

Exercise of options
Repurchase of shares
Tax on repurchase of shares
Share-based payments
Purchase of shares 
held in trust
Tax on purchase of shares 
held in trust
Dividends

20

6

25

10

20

6

25

10

1
(152)

224

152

46,792

46,792

3,511

3,511

(2,100)

(366)

(2,466)

1,411

46,426

47,837

(32,596)
(163)
4,595

225
(32,596)
(163)
4,595

(5,773)

(5,773)

(10)
(5,211)

(10)
(5,211)

2,632

143,199

1,798

(43,410)

66,826

171,045

1
(112)

95

112

44,567

44,567

(8,149)

717

(8,149)

717

(7,432)

44,567

37,135

(22,598)
(113)
5,379

96
(22,598)
(113)
5,379

(5,727)

(5,727)

(29)
(15,544)

(29)
(15,544)

At 29 July 2012

2,521

143,294

1,910

(50,842)

72,761

169,644

The balance classified as share capital includes those proceeds arising on issue of the company’s equity share capital,
comprising 2p ordinary shares and the cancellation of shares repurchased by the company.

The capital redemption reserve arose from the purchase of the company’s share capital.

Shares acquired in relation to the employee Share Incentive Plan and the 2005 Deferred Bonus Scheme are held in trust, 
until such time as the awards vest. At 29 July 2012, the number of shares held in trust was 5,503,428 (2011: 5,038,173) 
with a nominal value of £110,100 (2011: £100,800) and a market value of £25,706,512 (2011: £21,890,862).

Hedging gain/loss arises from the movement of fair value in the company’s financial derivative instruments, in line with the
accounting policy disclosed in section 2.

As at 29 July 2012, the company had distributable reserves of £21.9 million (2011: £23.4 million).

ANNUAL REPORT AND ACCOUNTS 2012

9

NOTES TO THE FINANCIAL STATEMENTS at 29 July 2012

1 Revenue

Revenue disclosed in the income statement is analysed as follows:

53 weeks
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

Sales of food, beverages, hotel rooms and machine income

1,197,129

1,072,014

2 Operating profit before exceptional items – analysis of costs by nature

This is stated after charging/(crediting):

Concession rental payments
Operating lease payments
Repairs and maintenance
Rent receivable
Depreciation of property, plant and equipment (note 11)
Amortisation of intangible assets (note 12)
Amortisation of non-current assets (note 13)
Share-based charges (note 4)

Auditors’ remuneration
Audit services:
– audit fees
– other services supplied pursuant to relevant legislation
– other services

Total auditors’ fees

Analysis of continuing operations

Revenue
Cost of sales

Gross profit
Administration costs

Operating profit before exceptional items 

Exceptional items (note 3)

Operating profit after exceptional items

10

J D WETHERSPOON PLC

53 weeks
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

14,831
53,230
44,575
(540)
47,416
1,423
327
5,379

156
29
64

249

13,586
50,877
37,275
(565)
42,866
1,223
306
4,595

150
28
105

283

53 weeks
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

1,197,129
(1,045,404)

1,072,014
(927,045)

151,725
(44,407)

144,969
(42,660)

107,318

102,309

(13,481)

(5,389)

93,837

96,920

NOTES TO THE FINANCIAL STATEMENTS

3 Exceptional items

In the table below, property impairment relates to situations where pubs are worth considerably less than the company 
paid for them, owing to a poor trading performance, so that they could not be sold or generate sufficient cash in the future
to justify their book value. 

The onerous lease provision relates to pubs where their trading profits do not cover the rent. 

Property-related disposals and write-offs are in respect of the losses following the closure/disposal of three sites and 
write-off of redundant assets during the year.

Property impairment
Onerous lease provision
Restructuring costs
Write-off of IT-related assets 
Loss on disposal of property, plant and equipment

Operating exceptional items

53 weeks 
ended
29 July 2012
£000

52 weeks
ended
24 July 2011
£000

7,823
2,229
625
1,742
1,062

4,410
–
–
–
979

13,481

5,389

During the year under review, an exceptional charge of £7,823,000 (2011: £4,410,000) relates to the impairment 
of property, plant and equipment, following a review of the company’s assets, as required under IAS 36. 

ANNUAL REPORT AND ACCOUNTS 2012

11

NOTES TO THE FINANCIAL STATEMENTS

4 Employee benefits expense

Wages and salaries
Social Security costs
Pension costs
Share-based charges

The totals below relate to the average number of employees during the year, 
not the total number of employees at the end of the year.

Full-time equivalents
Managerial/administration
Hourly paid staff

Total employees
Managerial/administration
Hourly paid staff

Directors’ emoluments

Aggregate emoluments (excluding share-based payments)
Contributions to a defined contribution scheme

53 weeks 
ended
29 July 2012
£000

52 weeks
ended
24 July 2011
£000

305,156
19,544
1,668
5,379

273,685
18,609
1,668
4,595

331,747

298,557

2012
Number

2011
Number

3,584
10,819

3,454
9,557

14,403

13,011

2012
Number

2011
Number 

3,953
22,912

3,828
20,239

26,865

24,067

2012
£000

1,544
101

2011
£000

1,478
95

1,645

1,573

Retirement benefits are accruing to 3 (2011: 3) directors, under a defined contribution scheme. 

Details of directors’ emoluments are disclosed in the remuneration report on pages 52 to 57; these form 
part of these financial statements.

12

J D WETHERSPOON PLC

5 Finance income and costs

Finance costs
Interest payable on bank loans and overdrafts
Amortisation of bank loan issue costs
Interest payable on obligations under finance leases

Total finance costs

Bank interest receivable

Total finance income

Total net finance costs

Further details are provided in account note 20.

Analysis of finance income and costs in categories in accordance with IAS 39
Loans and receivables
Financial liabilities carried at amortised cost
Financial derivatives
Other financial expenses

Total net finance costs

NOTES TO THE FINANCIAL STATEMENTS

53 weeks 
ended
29 July 2012
£000

52 weeks
ended
24 July 2011
£000

32,826
1,709
475

33,143
1,948
473

35,010

35,564

(55)

(55)

(36)

(36)

34,955

35,528

53 weeks 
ended
29 July 2012
£000

52 weeks
ended
24 July 2011
£000

(55)
15,996
18,475
539

(36)
16,136
18,751
677

34,955

35,528

The net finance costs during the year decreased from £35.5 million to £35.0 million. The decrease in finance costs is driven 
by the full-year impact of the bank deal which was signed in August 2011, partially offset by higher net debt levels. 
The finance costs in the income statement were covered 3.1 times (2011: 2.9 times), on a pre-exceptional basis.

ANNUAL REPORT AND ACCOUNTS 2012

13

NOTES TO THE FINANCIAL STATEMENTS

6 Income tax expense

(a) Tax on profit on ordinary activities

Tax charged in the income statement
The standard rate of corporation tax in the UK changed from 26% to 24% with effect from 1 April 2012. 
Accordingly, the company’s profits for this accounting period are taxed at an effective rate of 25.3% (2011: 27.3%).

53 weeks
ended
29 July 2012
Before 
exceptional 
items
£000

53 weeks
ended 
29 July 2012
After 
exceptional
items
£000

52 weeks
ended
24 July 2011
Before
exceptional
items
£000

52 weeks
ended
24 July 2011
After
exceptional
items
£000

Current income tax:
Current income tax charge

18,538

17,815

19,169

19,169

Total current income tax

18,538

17,815

19,169

19,169

Deferred tax:
Origination and reversal of temporary differences
Impact of change in UK tax rate

2,127
(5,627)

2,127
(5,627)

980
(5,549)

980
(5,549)

Total deferred tax

(3,500)

(3,500)

(4,569)

(4,569)

Tax charge in the income statement

15,038

14,315

14,600

14,600

Tax relating to items charged or credited 
to other comprehensive income
Deferred tax:
Tax charge/(credit) on interest-rate swaps

Tax charge/(credit) in the statement of comprehensive income 

(717)

(717)

(717)

2,100

2,100

(717)

2,100

2,100

14

J D WETHERSPOON PLC

NOTES TO THE FINANCIAL STATEMENTS

6 Income tax expense continued

(b) Reconciliation of the total tax charge
The tax expense after exceptional items in the income statement for the year is lower (2011: lower) than the standard rate
of corporation tax in the UK of 25.3% (2011: 27.3%), owing mainly to the impact of the adjustment in respect of change
in tax rate. The differences are reconciled below:

53 weeks 
ended
29 July 2012
Before 
exceptional 
items
£000

53 weeks
ended
29 July 2012
After 
exceptional
items
£000

52 weeks
ended
24 July 2011
Before
exceptional
items
£000

52 weeks
ended
24 July 2011
After
exceptional
items
£000

Profit before income tax

72,363

58,882

66,781

61,392

Profit multiplied by the UK standard rate of 
corporation tax of 25.3% (2011: 27.3%)
Abortive acquisition costs and disposals
Other disallowables
Other allowable deductions
Non-qualifying depreciation
Deduction for share options and SIPs
Deferred tax on balance-sheet-only items
Adjustment to deferred tax in respect of change in tax rate

18,332
39
192
(55)
2,502
(7)
(121)
(5,844)

14,917
39
192
(55)
5,194
(7)
(121)
(5,844)

18,253
309
95
(92)
2,849
(338)
(927)
(5,549)

16,780
309
95
(92)
4,322
(338)
(927)
(5,549)

Total tax expense reported in the income statement

15,038

14,315

14,600

14,600

On 1 April 2013, the UK standard rate of corporation tax is set to fall to 23%. 

ANNUAL REPORT AND ACCOUNTS 2012

15

NOTES TO THE FINANCIAL STATEMENTS

6 Income tax expense continued

(c) Deferred tax
The deferred tax in the balance sheet is as follows:

Deferred tax liabilities

At 25 July 2010
Credited to the income statement

At 24 July 2011
Impact of change in tax rate on opening balance
Movement during year charged to income statement

Accelerated
tax
depreciation
£000

Revaluation of 
land and
buildings
£000

Other 
timing
differences
£000

66,083
(3,253)

62,830
(5,026)
2,092

2,984
(355)

2,629
(210)
(127)

6,512
(523)

5,989
(479)
162

Total

£000

75,579
(4,131)

71,448
(5,715)
2,127

At 29 July 2012

59,896

2,292

5,672

67,860

Deferred tax assets

At 25 July 2010
Credited to the income statement
Debited to other comprehensive income

At 24 July 2011
Impact of change in tax rate on opening balance
Movement during year credited to other comprehensive income

Capital losses 
carried 
forward
£000

Interest-rate 
swaps

Total

£000

£000

661
438
–

1,099
(88)
–

16,936
–
(2,466)

14,470
(1,158)
1,875

17,597
438
(2,466)

15,569
(1,246)
1,875

At 29 July 2012

1,011

15,187

16,198

The Finance Bill 2012 was enacted before the balance sheet date of 29 July 2012. It included legislation to reduce the main
rate of corporation tax to 23%, with effect from 1 April 2013. The lower rate of 23% has been used to determine the
overall net deferred tax liability, as the temporary differences are expected to reverse at a lower rate. 

The March 2012 budget announced a further 1% reduction in the main rate of corporation tax. A lower rate of 24%,
from 1 April 2012, was enacted in July 2012, with the intention for the rate to reduce further, by 1% per annum, to 22%
by 1 April 2014. The proposed rate reduction to 22% had not been substantively enacted at the balance sheet date and
is not included, therefore, in the financial statements. The impact of the further change in rate, from 23% to 22%, applied
to the deferred tax balance at 29 July 2012 would be to increase profit after tax for the year by £2.9 million and increase
other comprehensive losses by £0.7 million in July 2013. 

16

J D WETHERSPOON PLC

NOTES TO THE FINANCIAL STATEMENTS

7 Earnings and cash flow per share

Basic earnings per share have been calculated by dividing the profit attributable to equity holders of £44,567,000 
(2011: £46,792,000) by the weighted average number of shares in issue during the year of 125,079,021 (2011: 132,019,936). 

The weighted average number of shares has been adjusted to exclude shares held in respect of the employee Share Incentive
Plan and the 2005 Deferred Bonus Scheme. 

Earnings before exceptional items per share have been calculated before items detailed in note 3 and take account of 
6,227 (2011: 23,250) potential dilutive shares under option during the year, giving a weighted average number of ordinary
shares adjusted for the effect of dilution of 125,085,248 (2011: 132,043,186).

Adjusted earnings exclude an adjustment in respect of the corporation tax-rate change of £5,627,000 (2011: £5,549,000) 
and exceptional items.

Earnings per share

Earnings (profit after tax)
Exclude one-off tax benefit (rate change)

Adjusted earnings after exceptional items
Exclude effect of exceptional items net of tax

Adjusted earnings before exceptional items

Basic/diluted earnings per share
Adjusted earnings per share before exceptional items
Adjusted earnings per share after exceptional items

53 weeks
ended
29 July 2012
£000

52 weeks
ended
24 July 2011
£000

44,567
(5,627)

38,940
12,758

46,792
(5,549)

41,243
5,389

51,698

46,632

35.6p
41.3p
31.1p

35.4p
35.3p
31.2p

Free cash flow per share
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 current pubs, after funding interest, corporation tax, 
all other reinvestment in pubs open at the start of the period and the purchase of own shares under the employee 
Share Incentive Plan (‘free cash flow’). It is calculated before taking account of proceeds from property disposals, 
inflows and outflows of financing from outside sources and dividend payments.

Free cash flow per share

Free cash flow (£000)
Free cash flow per share (p)

53 weeks 
ended
29 July 2012

52 weeks 
ended
24 July 2011

91,542
73.2

78,818
59.7

ANNUAL REPORT AND ACCOUNTS 2012

17

NOTES TO THE FINANCIAL STATEMENTS

8 Cash generated from operations

Profit before taxation
Adjusted for:
Tax
Impairment charge
Onerous lease provision
Loss on disposal of property, plant and equipment
Amortisation of intangible assets
Depreciation of property, plant and equipment
Lease premium amortisation
Share-based charges
Interest receivable
Amortisation of bank loan issue costs
Interest payable

Change in inventories
Change in receivables
Change in payables

53 weeks 
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

44,567

46,792

14,315
7,823
2,229
2,804
1,423
47,416
327
5,379
(55)
1,709
33,301

161,238
514
2,598
32,383

14,600
4,410
–
979
1,223
42,866
306
4,595
(36)
1,948
33,616

151,299
(1,577)
(1,896)
30,371

Net cash inflow from operating activities

196,733

178,197

9 Analysis of changes in net debt

Cash in hand
Debt due after one year (notes 19 and 20)

Bank borrowing
Finance lease creditor – due less than one year
Finance lease creditor – due after one year

Net borrowings
Derivative – interest-rate swaps (note 20)

At 
24 July 2011
£000

Cash flows

£000

Non-cash 
movement
£000

At
29 July 2012
£000

27,690
(457,522)

(429,832)
(3,129)
(4,732)

(437,693)
(57,880)

350
(15,328)

(14,978)
4,373
(10,474)

(21,079)
–

–
(1,709)

(1,709)
(7,124)
4,994

(3,839)
(8,149)

28,040
(474,559)

(446,519)
(5,880)
(10,212)

(462,611)
(66,029)

Net debt

(495,573)

(21,079)

(11,988)

(528,640)

18

J D WETHERSPOON PLC

10 Dividends paid and proposed

Declared and paid during the year:
Dividends on ordinary shares:
– final for 2010/11: 8.0p (2009/10: 0.0p)
– interim for 2011/12: 4.0p (2010/11: 4.0p)

Dividends paid

Proposed for approval by shareholders at the AGM:
– final dividend for 2011/12: 8.0p (2010/11: 8.0p)

NOTES TO THE FINANCIAL STATEMENTS

53 weeks
ended
29 July 2012
£000

52 weeks 
ended
24 July 2011
£000

10,475
5,069

15,544

–
5,211

5,211

10,006

10,402

As detailed in the interim accounts, the board declared and paid an interim dividend of 4.0p for the financial year ended 
29 July 2012. 

11 Property, plant and equipment

Cost:
At 25 July 2010
Additions
Transfers
Transfer to/from assets held for sale
Disposals

At 24 July 2011
Additions
Transfers
Transfer to/from assets held for sale
Disposals
Reclassification

Freehold and
long-leasehold
property
£000

Short-
leasehold
property
£000

Equipment,
fixtures
and fittings
£000

Expenditure on
unopened 
properties
£000

Total

£000

553,699
15,167
58,728
–
(2,848)

624,746
8,102
34,903
(4,001)
–
4,309

382,646
3,401
6,791
–
(1,387)

391,451
6,302
19,395
(895)
(2,355)
(3,809)

316,062
28,655
13,431
–
(2,185)

355,963
26,083
14,881
(952)
(6,245)
–

28,677
75,485
(78,950)
(611)
(1,496)

23,105
61,652
(69,179)
611
(633)
–

1,281,084
122,708
–
(611)
(7,916)

1,395,265
102,139
–
(5,237)
(9,233)
500

At 29 July 2012

668,059

410,089

389,730

15,556

1,483,434

Accumulated depreciation and impairment:
At 25 July 2010
Provided during the period
Impairment loss
Disposals
Reclassification

At 24 July 2011
Provided during the period
Impairment loss
Disposals
Transfer to/from assets held for sale
Reclassification

87,849
12,118
2,231
(395)
1,503

103,306
11,201
7,317
–
(2,748)
906

146,880
9,906
2,031
(798)
(1,503)

156,516
12,582
715
(1,725)
(315)
(479)

234,421
20,842
148
(1,639)
–

253,772
23,633
(209)
(5,660)
(660)
–

At 29 July 2012

119,982

167,294

270,876

1,220
–
–
(820)
–

400
–
–
–
541
–

941

470,370
42,866
4,410
(3,652)
–

513,994
47,416
7,823
(7,385)
(3,182)
427

559,093

Net book amount at 29 July 2012

548,077

242,795

118,854

14,615

924,341

Net book amount at 24 July 2011

521,440

234,935

102,191

22,705

881,271

Net book amount at 25 July 2010

465,850

235,766

81,641

27,457

810,714

ANNUAL REPORT AND ACCOUNTS 2012

19

NOTES TO THE FINANCIAL STATEMENTS

11 Property, plant and equipment continued

Impairment of property, plant and equipment
In assessing whether a pub has been impaired, the book value of the pub is compared with its anticipated future profit.

If the value, based on future anticipated profit, is lower than the book value, the difference is written off as a 
property impairment.

For the year under review, the company projected cash flows for the pubs under review for the 52 weeks to July 2013, 
with certain assumptions about sales, costs and profit, using a pre-tax discount rate for future years of 10% (2011: 10%).

As a result of this exercise, an impairment loss of £7,823,000 (2011: £4,410,000) was charged to operating costs in the 
income statement.

Management believes that a reasonable change in any of the key assumptions, for example the discount rate applied 
to each pub, could cause the carrying value of the pub to exceed its recoverable amount, but that the change would 
be immaterial.

Finance leases
Certain items of furniture, kitchen and IT equipment are subject to finance leases. 

The carrying value of these fixed assets, held under finance leases at 29 July 2012, included within equipment, fixtures 
and fittings, was as follows: 

Cost
Accumulated depreciation

Net book amount

2012
£000

2011
£000

22,622
(9,828)

13,399
(7,862)

12,794

5,537

20

J D WETHERSPOON PLC

12 Intangible assets

Cost:
At 25 July 2010
Additions
Disposals

At 24 July 2011
Additions
Disposals

At 29 July 2012

Accumulated amortisation
At 25 July 2010
Amortisation during the period
Disposals

At 24 July 2011
Amortisation during the period
Disposals

At 29 July 2012

Net book amount at 29 July 2012

Net book amount at 24 July 2011

Net book amount at 25 July 2010

NOTES TO THE FINANCIAL STATEMENTS

£000

16,987
6,049
(49)

22,987
8,647
(2,021)

29,613

10,287
1,223
(48)

11,462
1,423
(208)

12,677

16,936

11,525

6,700

Amortisation of £1,423,000 (2011: £1,223,000) is included in operating costs in the income statement.

The majority of intangible assets relates to computer software and development. 

Included within the intangible assets is £10,575,000 of assets in the course of development (2011: £5,819,000). 

Finance lease
The carrying value of fixed assets held under finance leases at 29 July 2012, included within intangible assets, was as follows:

Cost
Accumulated depreciation

Net book amount

2012
£000

5,216
(46)

2011
£000

1,909
–

5,170

1,909

ANNUAL REPORT AND ACCOUNTS 2012

21

NOTES TO THE FINANCIAL STATEMENTS

13 Other non-current assets

These assets relate to lease premiums whereby the company has paid a tenant a sum of money to take over the benefit of a lease.

Cost:
At 25 July 2010
Additions

At 24 July 2011
Additions
Reclassification

At 29 July 2012

Accumulated amortisation
At 25 July 2010
Amortisation during the period

At 24 July 2011
Amortisation during the period
Transfer to/from assets held for sale
Reclassification

At 29 July 2012

Net book amount at 29 July 2012

Net book amount at 24 July 2011

Net book amount at 25 July 2010

14 Inventories

Lease premiums
£000

13,163
825

13,988
489
(500)

13,977

3,162
306

3,468
327
(73)
(427)

3,295

10,682

10,520

10,001

Bar, food and non-consumable stock held at the pubs or at our national distribution centre. 

Goods for resale at cost

2012
£000

2011
£000

20,975

21,488

22

J D WETHERSPOON PLC

NOTES TO THE FINANCIAL STATEMENTS

15 Other receivables

Receivables relate to situations where third parties owe the company money. Examples include rebates from suppliers and
overpayments of certain taxes. 

Prepayments relate to payments which have been made in respect of liabilities after the period end.

Other receivables
Prepayments and accrued income

2012
£000

5,159
13,526

2011
£000

4,429
17,194

18,685

21,623

At the balance sheet date, the company was exposed to a maximum credit risk of £5.2 million, of which £210,000 was
overdue. The company holds no collateral for these receivables. An impairment of £105,000 was charged to the income
statement in the year. No further impairment to receivables was deemed necessary at the balance sheet date.

16 Assets held for resale

This relates to situations where the company has decided to sell a property, but the transaction is not yet under contract. 

As at 29 July 2012, 3 units were classified as held for sale (2011: 1 unit).

The major classes of assets held, comprising the units classified as held for sale, were as follows:

Property, plant and equipment

2012
£000

2,055

2011
£000

70

A total loss of £957,000, in writing these assets down to fair value less costs to sell, has been included in exceptional items
(note 3). 

It is expected that these sites will be disposed of in the new financial year. 

17 Cash and cash equivalents

Cash at bank and in hand

2012
£000

2011
£000

28,040

27,690

Cash at bank earns interest at floating rates, based on daily bank deposit rates. 
There is no difference between the fair value and book value of cash and cash equivalents.

ANNUAL REPORT AND ACCOUNTS 2012

23

NOTES TO THE FINANCIAL STATEMENTS

18 Trade and other payables

This category relates to money owed by the company to suppliers and the government. 

Accruals refer to allowances made by the company for future anticipated payments to suppliers and other creditors.

2012
£000

106,681
7,922
39,180
53,331

2011
£000

94,713
5,878
30,099
59,087

207,114

189,777

2012
£000

2011
£000

5,880

3,129

474,559

457,522

10,212

4,732

484,771

462,254

Trade payables
Other payables
Other tax and Social Security
Accruals and deferred income

19 Financial liabilities

Current (due within one year)
Finance lease obligations

Non-current (due after one year)
Bank loans
Variable-rate facility 
Other
Finance lease obligations 

Total non-current financial liabilities

24

J D WETHERSPOON PLC

NOTES TO THE FINANCIAL STATEMENTS

20 Financial instruments

For a discussion on capital risk management, please refer to section 2 on page 40. Also discussed in section 2 on page 40 
and 41 are the financial risks associated with financial instruments, including credit risk and liquidity risk.

The table below analyses the company’s financial liabilities which will be settled on a net basis into relevant maturity
groupings, based on the remaining period at the balance sheet date to the contractual maturity date. The amounts 
disclosed in the table are the contractual undiscounted cash flows.

Maturity profile of financial liabilities

As at 29 July 2012
Bank loans
Other long-term payables
Finance lease obligations
Trade and other payables
Derivatives

At 24 July 2011
Bank loans
Other long-term payables
Finance lease obligations
Trade and other payables
Derivatives

Within
1 year
£000

12,163
818
6,496
167,934
19,428

Within 
1 year
£000

15,397
729
3,480
159,678
18,553

1–2 years
£000

2–3 years
£000

3–4 years
£000

4–5 years
£000

12,163
778
5,949
–
19,428

12,163
778
2,801
–
13,722

493,198
778
2,101
–
11,862

–
778
–
–
4,761

1–2 years
£000

2–3 years
£000

3–4 years
£000

4–5 years
£000

15,397
698
2,856
–
18,553

489,703
698
2,171
–
18,553

–
698
–
–
10,248

–
698
–
–
6,986

More than
5 years
£000

–
4,880
–
–
4,683

More than 
5 years
£000

–-
5,215
–
–
115

Total
£000

529,687
8,810
17,347
167,934
73,884

Total
£000

520,497
8,736
8,507
159,678
73,008

At the balance sheet date, the company had loan facilities of £575 million (2011: £550 million) as detailed below:

(cid:2) Unsecured revolving-loan facility of £555 million

(cid:2)(cid:2) Matures March 2016
(cid:2)(cid:2) 11 participating lenders

(cid:2) Overdraft facility of £20 million 

The company has hedged its interest-rate liabilities to its banks by swapping the floating-rate debt into fixed-rate debt which
fixed £400 million of these borrowings at rates of between 5.25% and 5.35%. The effective weighted average interest rate 
of the swap agreements is 5.33% (2011: 5.47%), fixed for a weighted average period of 2.9 years (2011: 3.9 years). 

During the financial year, the company entered into forward-starting interest-rate swap agreements totalling £250 million, 
to replace the existing swaps which expire in 2014. The weighted average interest rate of these swaps is 2.43% from
November 2014 to July 2018. 

After the balance sheet date, the company entered into forward-starting interest-rate swap agreements, totalling 
£150 million, in addition to the existing swaps which expire in 2016. The weighted average interest rate of the new swaps 
is 1.78% from July 2016 to July 2018.

At the balance sheet date, £485 million (2011: £480 million) was drawn down under the £555-million unsecured-term
revolving-loan facility, with interest rates set for periods of between one and six months, at which point monies are repaid
and, if appropriate, redrawn. 

ANNUAL REPORT AND ACCOUNTS 2012

25

NOTES TO THE FINANCIAL STATEMENTS

20 Financial instruments continued

Interest-rate and currency risks of financial liabilities
An analysis of the interest-rate profile of the financial liabilities, after taking account of all interest-rate swaps, is set out in
the following table.

Analysis of interest-rate profile of the financial liabilities
Floating-rate borrowings
Fixed-rate borrowings:
– bank loans
– finance lease obligations 

2012
£000

2011
£000

74,559

57,522

400,000
16,092

400,000
7,861

490,651

465,383

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

Obligations under finance leases
The minimum lease payments under finance leases fall due as follows:

Within one year
In the second to fifth year, inclusive

Less future finance charges

Present value of lease obligations

Less amount due for settlement within one year

2012
£000

6,496
10,852

2011
£000

3,481
5,026

17,348

8,507

(1,255)

(646)

16,093

7,861

(6,496)

(3,481)

Amount due for settlement during the second to fifth year, inclusive

9,597

4,380

All finance lease obligations are in respect of various equipment and software used in the business. No escalation clauses are
included in the agreements. 

26

J D WETHERSPOON PLC

NOTES TO THE FINANCIAL STATEMENTS

20 Financial instruments continued

Fair values
In some cases, payments which are due to be made in the future by the company or to be received by the company have to
be given a fair value. An attempt has been made to calculate the value today of the future financial impact. 

The table below highlights any difference between book value and fair value of financial instruments.

Financial assets 

Loans and receivables 
Cash and cash equivalents
Other receivables

Financial liabilities at amortised cost
Other financial liabilities
Trade and other payables
Finance lease obligations
Long-term borrowings

2012
Book value
£000

2012
Fair value
£000

2011
Book value
£000

2011
Fair value
£000

28,040
5,159

28,040
5,159

27,690
4,429

27,690
4,429

(167,934)
(16,092)
(474,559)

(167,934)
(16,236)
(513,831)

(159,678)
(7,861)
(457,522)

(159,678)
(8,328)
(495,060)

Financial liabilities at fair value through profit or loss
Interest-rate swaps

(66,029)

(66,029)

(57,880)

(57,880)

The fair value of finance leases has been calculated by discounting the expected cash flows at the year end’s prevailing 
interest rates.

The fair value of derivatives has been calculated by discounting all future cash flows by the market yield curve at the 
balance sheet date. 

The fair value of borrowings has been calculated by discounting the expected future cash flows at the year end’s prevailing
interest rates.

Interest-rate swaps
At 29 July 2012, the company had fixed-rate swaps designated as hedges of floating-rate borrowings. The floating-rate
borrowings are interest-bearing borrowings at rates based on LIBOR, fixed for periods of up to six months.

The interest-rate swaps of the floating-rate borrowings were assessed to be effective; a cumulative loss of £66,029,000 
(2011: a loss of £57,880,000), with a deferred tax credit of £15,187,000 (2011: a credit of £14,470,000), relating to the
hedging instrument, is included in equity. A loss of £8,149,000 for the year (2011: gain of £3,511,000) is reflected in equity.

Fair value of financial assets and liabilities
Effective from 27 July 2009, the company adopted the amendment to IFRS 7 for financial instruments which are measured 
in the balance sheet at fair value. This requires disclosure of fair value measurements by level, using the following fair value
measurement hierarchy:

–  Quoted prices in active markets for identical assets or liabilities (level 1)
– 

Inputs other than quoted prices included in level 1 which are observable for the asset or liability,
either directly or indirectly (level 2)
Inputs for the asset or liability which are not based on observable market data (level 3) 

– 

The fair value of the interest-rate swaps of £66.0 million is considered to be level 2. All other financial assets and liabilities are
measured in the balance sheet at amortised cost. 

ANNUAL REPORT AND ACCOUNTS 2012

27

NOTES TO THE FINANCIAL STATEMENTS

21 Other liabilities 

Operating lease incentives 
Onerous lease provision
Amount held in respect of gaming machine settlement under appeal by HMRC

Other liabilities

2012
£000

10,817
1,747
14,947

2011
£000

9,819
–
14,947

27,511

24,766

Included in other liabilities are lease incentives on leases where the lessor retains substantially all of the risks and benefits 
of ownership of the asset. The lease incentives are recognised as a reduction in rent paid over the lease term, resulting in 
a liability recognised on the balance sheet.

The weighted average period to maturity of operating lease incentives is 15.9 years (2011: 16.1 years). 

Also included is an amount held in respect of the company’s gaming machine VAT claim. HMRC made a repayment of 
the existing claim, subject to the company providing a guarantee to HMRC that, in the event that the existing decision 
is overturned in a higher court, the amount will be repayable in full. The company is holding the repayment amount of
£14,947,000 as a liability, until the Rank plc case has reached its final conclusion.

The European Court of Justice’s decision in respect of Rank plc’s gaming claim was handed down on 10 November 2011. 
It was left as a matter for the national courts to determine how the decision would be applied. Following on from this, 
a hearing was held at the Upper Tribunal, on 15 June 2012. A decision had not been released at the balance sheet date 
as to whether the case would be referred back to the First Tier Tribunal, held at the Upper Tribunal, or whether HMRC’s 
appeal would be dismissed. 

22 Financial commitments

About 55–60% of the company’s pubs are leasehold. New leases are normally for 30 years, with a tenant break clause after
15 years. Most leases have upwards-only rent reviews, based on open-market rental at the time of review, but the majority 
of new pub leases have an uplift in rent which is fixed at the start of the lease.

The minimum contractual operating lease commitments fall due as follows:

Land and buildings

Within one year
Between one and five years
After five years

2012
£000

2011
£000

62,379
241,646
894,242

60,736
228,286
916,432

1,198,267

1,205,454

The company has lease commitments, with rentals determined in relation to sales. An estimate of the future minimum rental
payments under such leases of £62 million (2011: £58 million) is included above. 

23 Capital commitments

The company had £nil capital commitments for which no provision had been made, in respect of property, plant and
equipment, at 29 July 2012 (2011: £nil). 

28

J D WETHERSPOON PLC

NOTES TO THE FINANCIAL STATEMENTS

24 Related-party disclosures

No transactions have been entered into with related parties during the year. 

As required by IAS 24, the following information is disclosed about key management compensation.

Key management compensation 

Salaries and short-term employee benefits
Post-employment pension benefits
Termination benefits
Share-based charges

2012
£000

2,699
164
132
366

2011
£000

2,578
154
366
350

3,361

3,448

For additional information about directors’ emoluments, please refer to the directors’ remuneration report. 

Directors’ interests in employee share plans
Details of the shares held by executive members of the board of directors are included in the remuneration report on 
pages 52 to 57 which forms part of these financial statements.

25 Share capital

At 25 July 2010
Allotments
Repurchase of shares

At 24 July 2011
Allotments
Repurchase of shares

At 29 July 2012

Number of
shares
000s

139,125
68
(7,585)

131,608
30
(5,602)

Share
capital
£000

2,783
1
(152)

2,632
1
(112)

126,036

2,521

The total authorised number of 2p ordinary shares is 500 million (2011: 500 million). All issued shares are fully paid.
Proceeds from the issuance of shares amounted to £96,000 (2011: £225,000).

During the year, 5,602,174 shares (representing approximately 4.3% of the issued share capital) were repurchased by the
company for cancellation, at a cost of £22.7 million, including stamp duty, representing an average cost per share of 405p.

The aim of the buyback programme is to enhance the earnings per share in the current and future years. 

While the memorandum and articles of association allow for preferred, deferred or special rights to attach to ordinary shares,
no shares carried such rights at the balance sheet date. 

ANNUAL REPORT AND ACCOUNTS 2012

29

NOTES TO THE FINANCIAL STATEMENTS

26 Share-based payments 

Movements in the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, each 
category of share options during the year. The significance of options granted before 7 November 2002 is that they have 
been excluded from the IFRS 2 share-based payment charge, on the basis of their date of grant. No options were granted
after 7 November 2002. 

(a) New Discretionary Share Option Scheme (NDSO)

Outstanding at the beginning of the year
Lapsed in the year
Exercised in the year
Outstanding at the end of the year

2012
Number

13,490
(5,130)
(8,360)
–

2012
WAEP

339.0
339.0
339.0
339.0

2011
Number

67,296
(5,568)
(48,238)
13,490

Weighted average contractual life remaining for share options 
outstanding at the year end
Exercise price for options outstanding at the year end

–
–

–
–

0.1 year
339.0p

(b) 2001 Executive Scheme (2001 scheme)

Outstanding at the beginning of the year
Lapsed in the year
Exercised in the year
Outstanding at the end of the year

2012
Number

37,455
(15,483)
(21,972)
–

2012
WAEP

301.5
301.5
301.5
301.5

2011
Number

60,110
(2,960)
(19,695)
37,455

Weighted average contractual life remaining for share options 
outstanding at the year end
Exercise price for options outstanding at the year end

–
–

–
–

1.1 years
301.5p

At 29 July 2012, there were no members and no shares held in the NDSO scheme or the 2001 scheme.

2011
WAEP

339.0
339.0
339.0
339.0

–
–

2011
WAEP

301.5
301.5
301.5
301.5

–
–

27 Events after the balance sheet date

After the balance sheet date, the company entered into forward-starting interest-rate swap agreements, totalling 
£150 million, in addition to the existing swaps which expire in 2016. The weighted average interest rate of the 
new swaps is 1.78% from July 2016 to July 2018. 

30

J D WETHERSPOON PLC

FINANCIAL RECORD for the five years ended 29 July 2012

Sales and results
Revenue from continuing operations

Operating profit before exceptional items
Exceptional items
Finance income
Finance costs
Fair value loss on financial derivatives

Profit on ordinary activities before taxation
Taxation

2008
£000

2009
£000

2010
£000

2011
£000

2012
£000

907,500

955,119

996,327

1,072,014

1,197,129

90,457
(3,275)
337
(32,566)
(794)

54,159
(18,624)

97,001
(21,920)
336
(31,182)
794

45,029
(19,730)

100,013
(10,557)
16
(29,014)
–

102,309
(5,389)
36
(35,564)
–

107,318
(13,481)
55
(35,010)
–

60,458
(19,680)

61,392
(14,600)

58,882
(14,315)

Profit for the year

35,535

25,299

40,778

46,792

44,567

Net assets employed
Non-current assets
Net current liabilities
Non-current liabilities
Deferred tax and other liabilities 

805,017
(80,806)
(458,732)
(84,932)

797,496
(199,468)
(346,259)
(84,076)

845,012
(111,164)
(473,034)
(98,673)

918,885
(131,492)
(520,134)
(96,214)

968,157
(152,342)
(550,800)
(95,371)

Shareholders’ funds

180,547

167,693

162,141

171,045

169,644

Ratios
Operating margin (excluding exceptional items)
Earnings per share (excluding exceptional items)
Free cash flow per share
Dividends per share (interim and final)

10.0%
27.6p
50.6p
12.0p

10.2%
32.6p
71.7p
0p

10.0%
36.0p
52.9p
19.0p

9.5%
35.3p
59.7p
12.0p

9.0%
41.3p
73.2p
12.0p

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.

ANNUAL REPORT AND ACCOUNTS 2012

31

SECTION 2

AUTHORISATION OF FINANCIAL STATEMENTS AND
STATEMENT OF COMPLIANCE WITH IFRSs

The financial statements of J D Wetherspoon plc 
(‘the Company’) for the year ended 29 July 2012 
were authorised for issue by the board of directors on 
14 September 2012, and the balance sheet was signed
on the board’s behalf by J Hutson and K Davis. 
J D Wetherspoon plc is a public limited company,
incorporated and domiciled in England and Wales. 
The Company’s ordinary shares are traded on the 
London Stock Exchange. 

The Company’s financial statements have been prepared
in accordance with the EU-endorsed IFRSs and IFRIC
interpretations as adopted by the EU and as applied in
accordance with the provisions of the Companies Act
2006. The principal accounting policies adopted by the
Company are set out on pages 35 to 39.

34

J D WETHERSPOON PLC

ACCOUNTING POLICIES

Basis of preparation
The financial statements of the Company have been
prepared in accordance with IFRSs as adopted by the EU,
IFRIC interpretations and the Companies Act 2006
applicable to companies reporting under IFRS. The
financial statements have been prepared on the going-
concern basis, using the historical cost convention, 
except for the revaluation of financial instruments.

Hedging
The Company applies assumptions on future transactions
which could have an impact on those future borrowings
which are critical in the effectiveness calculations of its
interest-rate swaps. If these transactions were not to
occur, it may result in all or part of the cumulative gain or
loss which was originally reported in equity being
transferred to the income statement.

The Company’s financial statements are presented in
sterling, with all values rounded to the nearest 
thousand pounds (£000), except where otherwise
indicated. The accounting policies which follow set out
those policies which apply in preparing the financial
statements for the year ended 29 July 2012; they have
been consistently applied. 

Taxation
Significant judgement is required to determine the
provision for taxes, as the tax treatment for some
transactions cannot be fully determined, until a formal
resolution has been reached with the tax authorities. 
Tax benefits are not recognised until it is probable 
that the benefit will be obtained.

Critical accounting estimates and judgements 
The preparation of financial statements in conformity with
IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its
judgement in the process of applying the Company’s
accounting policies. The estimates and judgements are
based on historical experience and other factors,
including expectations of future events which are believed
to be reasonable and constitute management’s best
judgement at the date of the financial statements. In the
future, actual experience could differ from those
estimates. The areas involving a higher degree of
judgement or complexity or where assumptions and
estimates are significant to the financial statements are
disclosed below.

Insurance accrual
A provision for public liability insurance is made for the
estimated exposure of the Company to claims. This has
been based on experience of historical claims.

Impairment of property, plant and equipment
The Company determines whether property, plant and
equipment is impaired by estimating a unit’s value in use
and fair value less costs to sell, to determine the
recoverable amounts of cash-generating units (CGUs). 

Fair value less costs to sell is determined using external
and internal estimates of the value of the Company’s
CGUs. The value in use is calculated using the estimated
earnings and cash flows derived by management
estimates and applying a suitable pre-tax discount rate to
these cash flows.

Any changes in the level of forecast earnings or cash
flows, the discount rate applied or the estimate in fair
value less costs to sell could give rise to an additional
impairment provision.

Deferred tax
Deferred tax assets and liabilities require management’s
judgement in determining the amounts to be recognised.
In particular, significant judgement is used when assessing
the extent to which deferred tax assets and liabilities
should be recognised, with consideration given to the
timing and level of future taxable income and any future
tax-planning strategies. 

Segmental reporting
The Company reports in one business segment (that of
public houses) and one geographical segment (being the
United Kingdom). Given the immaterial size of the
Company’s hotel business, this has not been separately
disclosed as a business segment.

Exceptional items
The Company presents, on the face of the income
statement, those material items of income and expense
which, because of the nature and expected infrequency
of the event giving rise to them, merit separate
presentation to allow shareholders to better understand
the elements of financial performance in the year, so as
to facilitate comparison with previous periods and to
better assess trends in financial performance. 

Property, plant and equipment
Property, plant and equipment is stated at cost or deemed
cost, less accumulated depreciation and any impairment
in value. Cost of assets includes acquisition costs, as well
as other directly attributable costs in bringing the asset
into a working condition.

Depreciation is charged on a straight-line basis, over the
estimated useful life of the asset as follows:

Freehold land is not depreciated.

Freehold buildings are depreciated to their estimated
residual values over periods of 50 years.

ANNUAL REPORT AND ACCOUNTS 2012

35

ACCOUNTING POLICIES

Short-leasehold buildings are depreciated over the 
lease period.

Equipment, fixtures and fittings are depreciated 
over three to 10 years. 

Unopened properties are not depreciated until 
such time as economic benefits are derived.

amount cannot exceed the carrying amount which would
have been determined, net of depreciation, had no
impairment loss been recognised for the asset in previous
years. Such a reversal is recognised in the income
statement. After such a reversal, the depreciation charge
is adjusted in future periods, to allocate the asset’s revised
carrying amount, less any residual value, on a systematic
basis, over its remaining useful life.

As required by IAS 16, property, plant and 
equipment’s expected useful life and residual 
values are reviewed annually. 

Intangible assets
Intangible assets are carried at cost, less accumulated
amortisation and accumulated impairment losses.

The carrying values of property, plant and equipment are
reviewed for impairment, if events or changes in
circumstances indicate that their carrying values may not
be recoverable. Any impairment in the value of property,
plant and equipment is charged to the income statement. 

Profits and losses on disposal of property, plant and
equipment reflect the difference between the net selling
price and the carrying amount at the date of disposal and
are recognised in the income statement.

Impairment
At each reporting date, the Company assesses whether
there is an indication that an asset may be impaired. If
any such indication exists, or when annual impairment
testing for an asset is required, the Company makes an
estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset or CGU’s fair
value less costs to sell and its value in use; this is
determined for an individual asset, unless the asset does
not generate cash inflows which are largely independent
of those from other assets or groups of assets. Where the
carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written
down to its recoverable amount. In assessing value in use,
the estimated future cash flows are discounted to their
present value, using a pre-tax discount rate which reflects
current market assessments of the time value of money
and the risks specific to the asset. Impairment losses of
continuing operations are recognised in the income
statement in those expense categories consistent with the
function of the impaired asset.

An assessment is made at each reporting date about
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable
amount is estimated. A previously recognised impairment
loss is reversed only if there has been a change in the
estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. 
If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increased

Intangible assets with a finite life are amortised on a
straight-line basis over their expected useful life, as follows:

Computer software – 3 to 10 years

The carrying value of intangible assets is reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. 

Lease premiums
Payments made on entering into or acquiring leaseholds
which are accounted for as operating leases represent
prepaid lease payments. These are amortised on a
straight-line basis, over the lease term. Lease premiums
are disclosed as other non-current assets.

Assets held for sale
Where the value of an asset will be recovered through a
sale transaction, rather than continuing use, the asset is
classified as held for sale. Assets held for sale are valued
at the lower of book value and fair value, less any costs
of disposal, and are no longer depreciated. 

Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is calculated on the basis of ‘first in,
first out’, with net realisable value being the estimated
selling price, less any costs of disposal. Provision is made
for obsolete, slow-moving or damaged inventory, where
appropriate.

Provisions
Provisions are recognised when the Company has a
present legal or constructive obligation as a result of a
past event and it is probable that an outflow of resources
will be required to settle the obligation and a reliable
estimate can be made of the obligation’s amount.

Revenue recognition
Revenue is the value of goods and services sold to third
parties as part of the Company’s trading activities, after
deducting discounts and sales-based taxes. 

36

J D WETHERSPOON PLC

Revenue is recognised when the significant risks and
rewards of ownership are transferred. Revenue represents
amounts derived principally from the sale of goods (drink
and food sales, recognised at the point at which the
goods are provided) and the rendering of services.
Machine revenue is recognised after deducting sales-
based taxes. All costs in relation to machine sales are
included in cost of sales.

Leases
Leases where the Company assumes substantially all of
the risks and rewards of ownership are classified as
finance leases. Assets acquired under finance leases are
capitalised at the lower of their fair value and the present
value of future lease payments. The corresponding liability
is included in the balance sheet as a finance lease
payable. Lease payments are apportioned between
finance charges and reduction of the lease payable, so as
to obtain a constant rate of interest on the remaining
balance of the liability. Finance charges are charged as an
expense to the income statement, and the asset
depreciation is charged in line with the accounting policy
for property, plant and equipment. 

Leases where the lessor retains substantially all of the risks
and benefits of ownership of the asset are classified as
operating leases. Rental payments in respect of operating
leases are charged against operating profit, on a straight-
line basis, over the period of the lease. 

The Company also has contingent rentals payable, based
on turnover. These are charged to operating profit at the
higher of minimum contractual obligations under the
agreements or based as a percentage of turnover. 

Lease incentives
Lease incentives are recognised as a reduction of rental
expense to the break clause. These are amortised on a
straight-line basis. 

Borrowing costs
Borrowing costs are recognised as an expense in the
period in which they are incurred, unless the requirements
under IAS 23, for the capitalisation of borrowing costs
relating to assets, are met. 

Income taxes 
Current tax assets and liabilities are measured at the
amount expected to be recovered from, or paid to, the
taxation authorities, based on tax rates and laws which are
enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised on all temporary
differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial
statements, with the following exceptions:

ACCOUNTING POLICIES

(cid:2) Where the temporary difference arises from an 
asset or liability in a transaction which, at the time of 
the transaction, affects neither accounting nor taxable
profit or loss.

(cid:2) Deferred income tax assets are recognised only to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, carried-forward tax credits or tax losses can
be utilised.

Deferred income tax assets and liabilities are measured 
at the tax rates which are expected to apply when the
related asset is realised or liability settled, based on tax
rates and laws enacted or substantively enacted at the
balance sheet date.

Income tax is charged or credited directly to equity, 
if it relates to items which are credited or charged to
equity. Otherwise, income tax is recognised in the 
income statement.

Free cash flow
The calculation of free cash flow is based on the net cash
generated by business activities after funding interest,
corporation tax, all other reinvestment in current pubs at
the start of the period and the purchase of own shares
under the employee share-based plan. 

Financial instruments
Financial assets and liabilities are recognised on the date
on which the Company becomes party to the contractual
provisions of the instrument giving rise to the asset 
or liability.

Financial assets
The Company classifies its financial assets in the following
categories: at fair value through profit or loss, and loans
and receivables. The classification depends on the
purpose for which the financial assets were acquired.

a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is
classified in this category, if acquired principally for the
purpose of selling in the short term. 

Gains and losses arising from changes in the fair value of
the ‘financial assets at fair value through profit or loss’
category are presented in the income statement within
‘fair value gain/loss on financial derivatives’ in the period
in which they arise.

b) Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments which are not

ANNUAL REPORT AND ACCOUNTS 2012

37

ACCOUNTING POLICIES

quoted in an active market. They are included in current
assets, except for maturities greater than 12 months after
the balance sheet date. These are classified as non-current
assets. Loans and receivables are classified as ‘other
receivables’ on the balance sheet.

Other receivables
Other receivables are initially recognised at fair value and
carried at amortised cost less an allowance for any
uncollectible amounts. An estimate for doubtful debts is
made when collection of the full amount is no longer
probable. Bad debts are written off when identified.

Cash and cash equivalents
Cash and short-term deposits in the balance sheet
comprise cash at bank and in hand and short-term
deposits with an original maturity of one month or under.
For the purpose of the cash flow statement, cash and
cash equivalents comprise cash and short-term deposits
as defined above. Bank overdrafts are shown within
current financial liabilities on the balance sheet.

Financial liabilities
The Company classifies its financial liabilities in the
following categories: at fair value through profit or loss,
and other financial liabilities. The classification depends on
the purpose for which the financial liabilities were acquired.

a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are
financial liabilities held for trading. A financial liability is
classified in this category, if acquired principally for the
purpose of selling in the short term. Financial liabilities
with a designated hedge may also be categorised as
financial liabilities at fair value through profit or loss. They
are included in current liabilities, except for maturities
greater than 12 months after the balance sheet date.

b) Other financial liabilities
Other financial liabilities are measured at fair value on
initial recognition and subsequently measured at
amortised cost, using the effective-interest method.

Trade and other payables
Trade and other payables are initially recognised at fair
value and subsequently at amortised cost, using the
effective-interest method.

Bank loans and loan notes
Interest-bearing bank loans and loan notes are recorded
initially at fair value of consideration received net of direct
issue costs. Borrowings are subsequently recorded at
amortised cost, with any difference between the amount
initially recorded and the redemption value recognised in
the income statement over the period of the bank loans,
using the effective-interest method.

38

J D WETHERSPOON PLC

Bank loans and loan notes are classified as current
liabilities, unless the Company has an unconditional right
to defer settlement of the liability for at least 12 months
after the balance sheet date.

Derivative financial instruments and hedging activities
Derivative financial instruments used by the Company are
stated at fair value on initial recognition and at
subsequent balance sheet dates. 

Hedge accounting is used only where, at the inception
of the hedge, there is formal designation and
documentation of the hedging relationship, it meets 
the Company’s risk-management objective strategy 
for undertaking the hedge and is expected to be 
highly effective. 

Interest-rate swaps
Interest-rate swaps are classified as hedges where they
hedge exposure to cash flow variability which is
attributable to either a particular risk associated with a
recognised asset or liability or a forecast transaction. 

For interest-rate swaps, the effective portion of the gain
or loss on the hedging instrument is recognised directly in
equity, while the ineffective portion is recognised in the
income statement within ‘fair value gain/loss on financial
derivatives’. Amounts taken to equity are transferred to
the income statement when the hedged transaction
affects profit or loss, such as when a forecast sale or
purchase occurs. Where the hedged item is the cost of a
non-financial asset or liability, the amounts taken to
equity are transferred to the initial carrying amount of the
non-financial asset or liability. 

If a forecast transaction is no longer expected to occur,
amounts previously recognised in equity are transferred to
the income statement. If the hedging instrument expires
or is sold, terminated or exercised without replacement or
roll-over or if its designation as a hedge is revoked,
amounts previously recognised in equity remain in equity,
until the forecast transaction occurs and are transferred to
the income statement or to the initial carrying amount of
a non-financial asset or liability, as above. If the related
transaction is not expected to occur, the amount is taken
to the income statement.

Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from 
the proceeds.

ACCOUNTING POLICIES

The movement in cumulative expense since the previous
balance sheet date is recognised in the income statement,
with a corresponding entry in equity.

Where an equity-settled award is cancelled, it is treated as
if it had vested on the date of cancellation, with any cost
not yet recognised in the income statement for the award
being treated as an expense immediately. Any
compensation paid, up to the fair value of the award at
the cancellation or settlement date, is deducted from
equity, with any excess over fair value being treated as an
expense in the income statement.

New standards, amendments and interpretations
effective in the current year:

Annual improvements 2010: This is a collection of
amendments to two standards as part of the IASB
programme of annual improvements. The standards
affected are:

(cid:2) IFRS 7 – Financial instruments – disclosures
(cid:2) IAS 1 – Presentation of financial statements

The adoption of these amendments had no impact on the
Company’s results or financial position.

Standards, amendments and interpretations
effective in the current year, but not relevant 
to the Company:

(cid:2) Amendment to IFRIC 14, IAS 19 ‘Prepayments of 
a minimum funding requirement’
(cid:2) Amendments to IAS 24 (revised) ‘Related-party
disclosures’
(cid:2) Amendments to IFRS 7 ‘Financial instruments:
Disclosures on derecognition’ 

Standards and interpretations which are not yet
effective and have not been early adopted by 
the Company:

(cid:2) Amendment to IAS 1: Presentation of financial
statements, on other comprehensive income (OCI)
(cid:2) Annual improvements 2011

The above standards and interpretations are not expected
to have a significant impact on the Company’s results or
financial position.

Foreign currencies
Transactions denominated in foreign currencies are
recorded at the rates of exchange prevailing at the date
of transaction. Monetary assets and liabilities are
translated at the year-end exchange rates, with the
resulting exchange differences taken to the income
statement, except where hedge accounting is applied. 

Retirement benefits
Contributions to personal pension schemes are
recognised in the income statement in the period 
in which they fall due. All contributions are in respect 
of a defined contribution scheme.

Dividends
Dividends recommended by the board, but unpaid at
each period end, are not recognised in the financial
statements until they are paid (in the case of the interim
dividend) or approved by shareholders at the annual
general meeting (in the case of the final dividend). 

Changes in net debt
Changes in net debt are both the cash and non-cash
movements of the year, including movements in derivative
financial instruments, of finance leases, borrowings, cash
and cash equivalents.

Share-based charges
The Company has an employee share incentive plan
which awards shares to qualifying employees; there is also
a deferred bonus scheme which awards shares to
directors and senior managers, subject to specific
performance criteria. 

The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date at
which they are granted and is recognised as an expense
over the vesting period, which ends on the date on which
the relevant employees become fully entitled to the award.
In valuing equity-settled transactions, no account is taken
of any vesting conditions, other than market conditions
linked to the price of the shares of the Company. 

No expense is recognised for awards which do not
ultimately vest, except for awards where vesting is
conditional on a market condition, which are treated as
vesting, irrespective of whether or not the market
condition is satisfied, provided that all other performance
conditions are satisfied. At each balance sheet date
before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has
expired, being management’s best estimate of the
achievement or otherwise of non-market conditions and
of the number of equity instruments which will ultimately
vest or, in the case of an instrument, subject to a market
condition, be treated as vesting as described previously.

ANNUAL REPORT AND ACCOUNTS 2012

39

PRINCIPAL RISKS AND UNCERTAINTIES 
FACING THE COMPANY 

In the course of normal business, the Company
continually assesses significant risks faced and takes
action to mitigate the potential impacts.

The following risks, while not intended to be a
comprehensive analysis, constitute (in the opinion of the
board) the principal risks and uncertainties currently
facing the Company:

Regulation of the sale of alcohol
The pub business is highly regulated, with increases in
alcohol duty, as well as increased regulation, a constant
feature of the industry for many years. 

Health and safety
The Company endeavours to ensure that all reasonable
standards of health and safety are met, including a
process by which risks are identified in a timely manner
and remedied accordingly.

Economic outlook
The Company aims to improve its customer offering
continually, so that it remains competitively placed in the
market in which it operates. Adverse economic conditions
can theoretically have an effect on the Company’s
performance, although, historically, these effects have
been muted. 

Cost increases
Inflationary pressures on the Company’s costs pose a risk
to margins, although the Company has been able to
achieve satisfactory arrangements with its suppliers, up
until now, in both good and difficult economic conditions.

Reputational risk
The Company is aware that, in operating in a consumer-
facing business, its business reputation, built over many
years, can be damaged in a significantly shorter
timeframe. The Company, therefore, in its day-to-day
business, maintains substantial efforts in this area, 
to improve operational controls.

Supply-chain risks
It is fundamental to our operations that we should be able
to supply our pubs with the required goods and services.

We work closely with our suppliers and central
distribution partners, in order to maintain availability of
products, at all times. 

Head office and distribution centre
Any disasters at the Company’s head office (in Watford)
or its distribution centre (in Daventry) could seriously
disrupt its day-to-day operations. Various measures have
been undertaken by the Company, including a
comprehensive disaster-recovery plan, seeking to minimise
the impact of any such incidents.

Information technology
The Company’s daily operations are increasingly reliant on
its information technology systems. Any prolonged or
significant failure of these systems could pose a risk to
trading. The Company seeks to minimise this risk by
ensuring that there are policies and procedures to ensure
protection of hardware, software and information, by
various means, including a disaster-recovery plan, a
system of backups and external hardware and software.

Capital risk management
The Company aims to increase sales, earnings and
distributions to shareholders, while maintaining
reasonable levels of capital and debt. Financial conditions
since 2007/08 demonstrate that banking facilities may
not be available for some companies in extraordinary
circumstances – and this is a risk to the Company.
However, in spite of extreme financial conditions, the
Company was able to refinance its debt in March 2010
and August 2011. 

Interest-rate risk
The Company manages the risks of an increase in interest
rates by swapping the majority of its floating-rate
borrowings into fixed rates. 

During the 53 weeks ended 29 July 2012, if the interest
rates on UK-denominated borrowings had been 1%
higher, with all other variables constant, pre-tax profit for
the year would have been reduced by £1,047,000 and
equity increased by £20,963,000. The movement in
equity arises from a change in the ‘mark to market’
valuation of the interest-rate swaps into which the
Company has entered, calculated by a 1% shift of the
market yield curve. The Company considers that a 1%
movement in interest rates represents a reasonable
sensitivity to potential changes. However, this analysis is
for illustrative purposes only.

Credit risk
The Company does not have significant concentration of
credit risk, as the majority of revenue is in cash.

40

J D WETHERSPOON PLC

PRINCIPAL RISKS AND UNCERTAINTIES FACING THE COMPANY 

At the balance sheet date, the Company was exposed to
a maximum credit risk of £5.2 million, of which £210,000
was overdue, and an impairment charge of £105,000 was
taken to the income statement in the year. 

Cash deposits with financial institutions and derivative
transactions are permitted with investment-grade financial
institutions only.

The Company receives a small amount of income from
properties which it has sublet to third parties, but the
sums involved from any one letting are immaterial. 

Liquidity risk
The Company regularly monitors cash flow forecasts and
endeavours to ensure that there are enough funds,
including committed bank and finance lease facilities, 
to meet its business requirements and comply with
banking covenants. 

The risks in this area relate to miscalculating cash flow
requirements, being unable to renew credit facilities or a
substantial fall in sales and profits.

ANNUAL REPORT AND ACCOUNTS 2012

41

INDEPENDENT AUDITORS’ REPORT to the members of J D Wetherspoon plc

We have audited the financial statements of 
J D Wetherspoon plc for the 53-week period ended 
29 July 2012 which comprise the income statement, the
statement of comprehensive income, the cash flow
statement, the balance sheet, the statement of changes
in shareholders’ equity and the related notes. The
financial reporting framework which has been applied in
their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the
European Union.

Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’
responsibilities, set out on page 48, the directors are
responsible for the preparation of the parent company
financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements, in
accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.

This report, including the opinions, has been prepared for
and only for the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, 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 on by our prior consent in writing.

Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the
accounting policies are appropriate to the Company’s
circumstances and have been consistently applied and
adequately disclosed, the reasonableness of significant
accounting estimates made by the directors, and the overall
presentation of the financial statements. In addition, we
read all of the financial and non-financial information in
the annual report and accounts to identify material
inconsistencies with the audited financial statements. If we
become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.

Opinion on financial statements
In our opinion, the financial statements:

(cid:2) have been prepared in accordance with the
requirements of the Companies Act 2006.

Opinion on other matters prescribed by the
Companies Act 2006
In our opinion:

(cid:2) the part of the directors’ remuneration report to be
audited has been properly prepared in accordance with
the Companies Act 2006.
(cid:2) the information given in the directors’ report for the
financial year for which the financial statements are
prepared is consistent with the financial statements.
(cid:2) the information given in the corporate governance
statement, set out on pages 58 to 62, with respect 
to internal control and risk management systems and
about share capital structures, is consistent with the
financial statements.

Matters on which we are required to report 
by exception
We have nothing to report in respect of the following:

Under the Companies Act 2006, we are required to
report to you whether, in our opinion:

(cid:2) adequate accounting records have not been kept or
returns adequate for our audit have not been received
from branches not visited by us.
(cid:2) the financial statements and the part of the directors’
remuneration report to be audited are not in agreement
with the accounting records and returns.
(cid:2) certain disclosures of directors’ remuneration specified
by law are not made.
(cid:2) we have not received all of the information and
explanations which we require for our audit.
(cid:2) a corporate governance statement has not been
prepared by the Company.

Under the Listing Rules, we are required to review:

(cid:2) the directors’ statement, set out on pages 48 and 49, 
in relation to going concern.
(cid:2) the parts of the corporate governance statement
relating to the Company’s compliance with the nine
provisions of the UK Corporate Governance Code
specified for our review.
(cid:2) certain elements of the report to shareholders, 
by the board, on directors’ remuneration.

(cid:2) give a true and fair view of the state of the Company’s
affairs as at 29 July 2012 and of its profit and cash flows
for the 53-week period then ended.
(cid:2) have been properly prepared in accordance with IFRSs
as adopted by the European Union.

Andrew Paynter (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
14 September 2012

42

J D WETHERSPOON PLC

CORPORATE SOCIAL RESPONSIBILITY REPORT

The Company aims to be an important part of the 
local communities in which it trades, managing its
responsibilities from both corporate and social
perspectives. The Company’s corporate social responsibility
plan identifies four areas: people; responsible retailing;
community and charity; the environment. 

People 

The Company aims to be a highly regarded employer,
through its investment in training and development,
policies on equality, a competitive remuneration package
and the encouragement of employees to participate
actively in business strategy. 

The Company created over 2,500 new jobs in 2011/12
and is working with government agencies and charities to
offer jobs to the long-term unemployed. 

In relation to training, the Company held over 1,200
separate training courses in 2011/12, attended by over
11,500 employees, and promoted over 1,800 staff to
shift leader or management positions. 

In addition, the professional diploma in leisure retail
management, run in conjunction with Leeds Metropolitan
University, is offered to all pub managers and area
managers. We believe this diploma to have been the first
in-house programme in the licensed trade which allows
employees to gain a professional qualification while
working. The programme now includes a ‘degree top-up’,
also in conjunction with the university. In the last year, 41
employees have benefited from the scheme. 

The quality and volume of the Company’s training courses
help to create motivation and to provide employees with
the necessary skills to carry out their job to a consistently
high standard. All employees are now able to participate
in e-learning, through a dedicated employee Web site. 

The Company offers a range of nationally recognised
qualifications available to employees, including an
apprenticeship programme.

The Company is committed to equal opportunities and
the elimination of discrimination, harassment and
victimisation of employees. Of our workforce, 51% is
female and 49% male.

The Company has also been recognised as an ‘Age
Positive’ employer, by the Department for Work and
Pensions. It has also been recognised by the Corporate
Research Foundation, in association with The Guardian
newspaper, as one of ‘Britain’s Top Employers’, for nine
consecutive years, including 2012. 

The Company regularly benchmarks its remuneration
packages. In addition to competitive pay rates, the
Company has created a bonus scheme for all employees.
In this connection, the Company awarded bonuses and
shares (SIPs) for employees of £24.1 million in the year, an
increase of 6.3% (2011: £22.6 million). Of the payments,
98.5% were made to employees below board level, with
approximately 85% of payments made to employees
working in our pubs. In addition to this, all employees are
able to join the Company’s health plan and pension plan,
as well as obtain tax-efficient childcare vouchers. 

Responsible retailing 

Responsible drinks retailing 
The Company supports practices which promote sensible
drinking and has established a ‘code of conduct for
responsible retailing’, outlining its approach in this area. 

We also seek to develop partnerships with local
authorities and the police. All pubs are requested to
become a member of the local pubwatch scheme (which
promotes a safe and responsible drinking environment). 
In a number of locations, a Company pub manager chairs
the scheme and, where there is no pubwatch, we try to
work with the local police and council to establish one. 
A Company representative sits on the National Pubwatch
committee – and the business financially supports the
Drinkaware Trust and the British Institute of Innkeeping. 

We encourage our pubs to enter the ‘Best Bar None’
schemes (run by local authorities and the police, to
encourage good behaviour in town centres), promoting a
safe and secure environment. 

Food information and quality 
The Company aims to improve the quality of its food
offering continually and to provide customers with the
required information about our product range, to allow
them to make informed decisions about their food
consumption. This includes nutritional information for 
all dishes, via our Web site and a printed leaflet,
available in pubs.

The Company endeavours to ensure strict specifications
for all of its products, so that high standards of quality
are met. For example, the sausages which the Company
sources from the Welsh Sausage Company contain only
British pork, with no artificial colours or flavours; the
Company uses only dolphin-friendly tuna; the haddock,
cod and salmon in our dishes are sourced from
recognised, sustainable fisheries; all fishcakes are made
with oak-smoked, line-caught, sustainable haddock; we
use only British Lion Quality free-range eggs and cook
with virtually trans-fat-free oil. 

ANNUAL REPORT AND ACCOUNTS 2012

43

CORPORATE SOCIAL RESPONSIBILITY REPORT

Our beef & Abbot Ale pie was overall winner of England’s
Best Steak Pie 2011, sponsored by the English Beef and
Lamb Executive (EBLEX); our Lincolnshire pork sausage
won the gold award from the British Pig Executive (BPEX)
in 2012; our Bramley apple, pear & raspberry crumble
received Best Bramley Apple Food service product 2012,
in the ‘Brammy’ Awards. 

All of the Company’s food suppliers are accredited by the
British Retail Consortium. 

Working with suppliers 
The Company usually seeks to promote long-term
relationships with its suppliers and supports UK farming,
using British chips and hash browns and British beef in its
beef burgers, lasagne, chilli con carne, steak & kidney
pudding and beef & Abbot Ale pie. All of our steaks are
from Britain and Ireland. 

Where practicable, the Company works with suppliers,
contractors and partners to minimise environmental
impact and encourage sustainable sourcing. 

The Company supports brewers of all sizes, across the UK
and Ireland, so that customers can enjoy a diverse range
of real ales. Wetherspoon is supporting over 400 UK
microbrewers, delivering 5,100 ales through real-ale
festivals, exhibitions, meet-the-brewer events and the
promotion and stocking of their beers. Every pub
endeavours to have at least four ales available at all times,
of which two are locally sourced. There are 256
Wetherspoon pubs listed in the CAMRA Good Beer Guide
2012 (2011: 235) – a larger proportion than any other
pub company.

There are 825 pubs (98%) accredited by Cask Marque for
the quality and consistency of the real ale which they serve. 

The Company seeks to carry out its business honestly,
ethically and with respect for the rights and interests of
all of those involved. The Company endeavours to ensure
that relations with customers, suppliers and business
partners are mutually beneficial and expects its business
practices and standards to be upheld. 

Health and safety 
The Company seeks to promote high standards of safety,
throughout the business, by endeavouring to ensure that
employees attend appropriate training. Pubs are regularly
assessed for risks, with relevant solutions identified to
address them. Pubs are also regularly audited for safety.
There is a ‘Food Hygiene Rating Scheme’ system – a local
authority scheme to measure good practice in these areas
– which awards between zero and five. Of our pubs,
95% of those listed now have scores of four or five.

44

J D WETHERSPOON PLC

We have signed a Primary Authority Partnership (under
the Better Regulation Delivery Office scheme) for Health &
Safety, Food Safety and Trading Standards, with Reading
Borough Council. 

Community 

Historically, pubs have always been a focal point of any
community, and we aim to continue that tradition by
supporting and building relationships with the local
community, through employment and the provision of
services and investment in the local area. We aim to ensure
that we provide full access for those with disabilities. 

In the last year, the Company has received a number of
design awards for pub development, including the
Pontefract Civic Society Heritage Award (The Broken
Bridge), the Malvern Civic Society Award (The Foley
Arms), the Louth Civic Society Heritage Award (The
Joseph Morton) and, most recently, Melksham in Bloom.

The Company is the largest single corporate fund-raiser
for the CLIC Sargent charity (caring for children with
cancer and their families), a partnership now in its ninth
consecutive year, raising over £6 million to date, with a
pledge to raise a further £1 million annually. During the
past financial year, we have raised £1,409,139.

Environment

The environment
The Company encourages measures which promote
recycling and reduced energy consumption. It is the
Company’s policy to:

(cid:2) minimise the extent of the environmental impact,
where reasonably practicable.
(cid:2) conserve energy through minimising consumption and
maximising efficiency.
(cid:2) promote efficient purchasing which will both minimise
waste and allow materials to be recycled.
(cid:2) adopt efficient waste-management strategies which
reduce the amount of waste going to landfill or other
disposal sites.
(cid:2) seek to minimise any emissions or effluents which may
cause environmental damage.

Over the past 12 months, the Company has
complemented its policy with several initiatives, including
areas around energy-efficiency, recycling, ethical working
and health and safety.

CORPORATE SOCIAL RESPONSIBILITY REPORT

Energy-efficiency
The Company recognises that energy consumption is
unavoidable, but understands that we have a
responsibility for those resources which we use and that
good environmental management is an essential part of
being a responsible business. 

Glass-recycling continues to be a major focus. During the
financial year, we recycled 11,800 tonnes of glass, in
partnership with BIFFA and other operators, a glass-
recycling rate of 75%. We aim to increase this recycling
rate to at least 90%, by other initiatives, such as glass-
crushers and improved waste segregation. 

In 2010, the Company was awarded ‘Recycling
Performance of the Year’ from the Chartered Institute of
Waste Management (CIWM), in recognition of excellent
waste-minimisation progress achieved to date. In 2011,
the national distribution centre was awarded the DHL
Food Retail Environmental Award for initiatives in
reducing carbon emissions across the operation.

Su Cacioppo
Personnel and Legal Director
14 September 2012

In the last year, we have continued to work with Carbon
Statement to measure each pub’s carbon footprint.
Carbon Statement produces a weekly carbon-emission
report for each pub, detailing the amount of carbon
dioxide (CO2) emitted by each pub, through energy usage
and waste disposal, as well as the CO2 emission reduction
through recycling. Carbon Statement has also assisted us
in ensuring that we comply with the government’s
Carbon Reduction Commitment (CRC) Energy Efficiency
Scheme, which started in April 2010.

The Company also aims to ensure that, when new pubs
are developed or current ones upgraded, equipment 
and processes are introduced to minimise ongoing 
energy consumption. 

Sustainability – reduce, reuse, recycle 
The Company aims to reduce the amount of waste going
to landfill and other disposal sites, through a combination
of packaging reduction, reusing packaging and the
recycling of waste products. 

Reduce
The Company continues to work with suppliers, to
reduce packaging materials brought into the pubs. 
This leads to fewer deliveries and reduces the required
number of road miles.

Reuse
Where possible, unwanted equipment is transferred
among pubs by our distribution fleet, so that it can be
used elsewhere. 

Recycle
The Company has a dedicated supply chain for 
its food, bottled drinks and non-consumable products, 
so that material can be returned to the Company’s
recycling operation, reducing the required number of 
road miles. 

During the financial year 2011/12, the Company recycled
7,775 tonnes of waste at its distribution centre, an
increase of 4% on the previous year. This included 56
tonnes of aluminium, 4,857 tonnes of cardboard and
paper, 2,363 tonnes of cooking oil, 315 tonnes of plastic
and 184 tonnes of steel.

ANNUAL REPORT AND ACCOUNTS 2012

45

DIRECTORS, OFFICERS AND ADVISERS

Tim Martin Chairman, aged 57

Founded the business in 1979, having previously studied law at Nottingham University and
qualified as a barrister. He became chairman in 1983.

John Hutson Chief Executive Officer, aged 47

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 Domecq.

Kirk Davis Finance Director and Company Secretary, aged 41

Joined the Company in 2008 as deputy finance director and was appointed as company
secretary in October 2010 and became finance director in March 2011. He previously
worked for Tesco plc and qualified as a chartered management accountant in 2004.

Su Cacioppo Personnel and Legal Director, aged 45

Joined the Company in 1991 and was appointed to the board in 2008. 
She is a graduate of South Bank University and London Guildhall University 
and previously worked for Courage Ltd and Allied Leisure.

She worked in several operational roles in the Company, before being appointed 
as personnel director in 1999 and personnel and legal director in 2006. 

Elizabeth McMeikan Non-Executive Director, aged 50

Appointed to the board in 2005 and is a member of the audit, remuneration and
nomination committees. She is a graduate of Cambridge University. She is a non-executive
director of several privately owned companies and chairs the Membership Selection Panel
for Network Rail. She also holds several independent positions in government and Whitehall. 

Elizabeth previously worked for Tesco plc for 12 years, in a wide variety of commercial and
operational roles, both in the UK and overseas.

Debra van Gene Non-Executive Director, aged 57

Appointed to the board in 2006 and is the remuneration committee chair and a member
of the audit and nomination committees. She is a graduate of Oxford University. She spent
17 years in the advertising industry, ending as deputy managing director of Butterfield Day
Devito Hockney. Since then, she has worked in the executive search industry. She was a
partner at Heidrick and Struggles and now runs her own company, Debra van Gene
Associates Ltd, of which she is managing director. 

Sir Richard Beckett Non-Executive Director, aged 68

Appointed to the board in 2009 and is a member of the audit, remuneration and
nomination committees. He was called to the bar in 1965 and took silk in 1987. 
He was one of the pre-eminent practitioners in regulatory and licensing matters. 
He is also a non-executive director of Mercantile Investment Trust plc.

Registered office
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

Independent auditors
PricewaterhouseCoopers LLP
Chartered accountants and 
statutory auditors
1 Embankment Place
London 
WC2N 6RH

Solicitors
Macfarlanes LLP 
20 Cursitor Street
London 
EC4A 1LT

Bankers
Abbey National Treasury Services plc 
Bank of Tokyo-Mitsubishi UFJ
Barclays Bank plc
BNP Paribas
Crédit Industriel et Commercial
HSBC Bank plc
Lloyds TSB Bank plc
Scotiabank Europe plc
Svenska Handelsbanken AB
The Co-operative Banking Group
The Royal Bank of Scotland plc

Mark Reckitt Non-Executive Director, aged 54

Appointed to the board in May 2012 and is a member of the audit, remuneration and
nomination committees. He has been group strategy director at Smiths Group plc since
February 2011. Before joining Smiths, he was chief strategy officer at Cadbury plc, from
2004 to 2010, and held a range of strategy and finance roles at Cadbury since joining in
1989, including UK finance director. Before joining Cadbury, he spent six years in
investment banking and retailing, after qualifying as a chartered accountant in 1983.

Financial advisers
Investec Securities

Stockbrokers
Investec Securities

Management board
The management board comprises John Hutson, Kirk Davis, Su Cacioppo and the following:

David Capstick IT and Property Director, aged 51

Joined the Company in 1998 and is a graduate of the University of Surrey. He previously
worked for Allied Domecq, as well as working in other areas of the hospitality industry, such as
hotels and outside catering companies. He was appointed to the management board in 2003. 

Martin Geoghegan Operations Director, aged 43

Joined the Company in May 1994, having previously worked for Safeway plc. He worked
in several operational roles, before being appointed as operations director in 2004.

Paul Hine Director of Purchasing and Logistics, aged 40

Joined the Company in August 2001, having previously worked for Jungheinrich AG. 
He worked in several roles in purchasing, before being appointed as purchasing and
distribution director in January 2012.

Miles Slade Deputy Operations Director, aged 31

Joined the Company in December 2000, as a bar associate. He worked in several pub and
operational roles, before being appointed as deputy operations director in January 2012. 

46

J D WETHERSPOON PLC

DIRECTORS’ REPORT for the 53 weeks ended 29 July 2012

The directors present their report and audited accounts
for the 53 weeks ended 29 July 2012.

from that date until the end of the financial year and up
to the date of signing the financial statements.

Principal activities, business review and 
future developments
The principal activities of the Company are the
development and management of public houses. 
Details of progress and future developments are given 
on pages 3 to 5.

Results and dividends
The profit on ordinary activities for the year, after
taxation, was £44,567,000 or 35.6p per share. 

The board proposes, subject to shareholders’ 
consent, to pay a final dividend of 8.0p per share, 
on 29 November 2012, to those shareholders on the
register on 26 October 2012, giving a total dividend 
for the year of 12.0p per share. 

Return of capital 
During the year to 29 July 2012, the Company purchased
5,602,174 of its own shares with a nominal value of
£112,000, for £22.6 million (£22.7 million including
stamp duty). This represented 4.3% of the issued share
capital of the Company as at 29 July 2012.

Land
In the opinion of the directors, the difference between
the market value and book value of land is not of such
significance as to require the attention of the members of
the Company to be drawn to the difference.

Principal risks and uncertainties
A discussion of the risks and uncertainties facing the
Company is included in section 2 on pages 40 and 41
and incorporated by reference.

Financial and non-financial 
key performance indicators (KPIs)
A review of the business, using financial and non-financial
KPIs, has been included in the chairman’s statement,
operating and finance review on pages 3 to 5.

Significant contractual or other arrangements
The Company has a number of major suppliers and
operates a central distribution centre. All of the major
suppliers, except one, have worked with the Company for
over five years, and the directors believe that the basis of
these relationships is stable.

Directors
The directors listed on page 46, other than Mark Reckitt,
served throughout the financial year and up to the date of
signing the financial statements. Mr Reckitt was appointed
as a non-executive director on 1 May 2012 and served

In accordance with the Company’s articles of association:
(i) Mark Reckitt, who was appointed to the board after
the last annual general meeting, is required to retire and
(ii) following updated guidance in the UK Corporate
Governance Code, all of the directors of the Company are
to be subject to election by shareholders every year.
Accordingly, all members of the board will retire and seek
re-election at this year’s annual general meeting. 

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 52 to 57.

All appointments to the board are recommended by the
nomination committee and are made in accordance with
the provisions of the articles of association.

Third-party indemnity insurance to cover against any
liabilities of directors and officers of the Company, in
respect of their duties as directors and officers of the
Company, was in place throughout the year and at the
date of approval of the financial statements. 

Interest in contracts
No director has any material interest in any contractual
agreement, other than an employment contract,
subsisting during or at the end of the year, which is or
may be significant to the Company.

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 of the Company,
are given on page 63.

Takeover directive disclosures
The Company has an authorised share capital comprising
500 million ordinary shares of 2p each. As at 29 July
2012, the total issued share capital comprised
126,036,296 fully paid-up shares of 2p each. The rights
to these shares are set out in the Company’s articles of
association. There are no restrictions on the transfer of
these shares or their attached voting rights.

Details of significant shareholdings are given on page 63.

No person holds shares with specific rights regarding
control of the Company.

The Company operates an employee share incentive plan.
However, no specific rights with respect to the control of

ANNUAL REPORT AND ACCOUNTS 2012

47

DIRECTORS’ REPORT 

the Company are attached to these shares. In addition,
the Company operates a deferred bonus scheme,
whereby, should a takeover occur, all shares held in trust
would be transferred to the employee immediately. 

The Company is not aware of any agreements among
holders of securities known to the Company which 
may result in restrictions on the transfer of securities or
voting rights.

The Company has the power to issue and buy back shares
as a result of resolutions passed at the annual general
meeting in 2011. It is the Company’s intention to renew
these powers; the resolutions approving them are found in
the notice of the annual general meeting for 2012.

In the event of a change of control, the Company is
obliged to notify its main bank lenders. The lenders shall
not be obliged to fund any new borrowing requests;
facilities will lapse 10 days after the change of control, if
the terms on which they can continue have not been
agreed on. Any borrowings, including accrued interest,
will become immediately repayable upon such lapse. 

There are no other significant agreements to which the
Company is party which may be subject to change of
control provisions.

There are no agreements with the Company’s directors or
employees which provide for compensation for loss of office
or employment which occurs because of a takeover bid.

Statement of directors’ responsibilities
The directors are responsible for preparing the annual
report, the directors’ remuneration report and the
financial statements, in accordance with applicable law
and regulations.

Company law requires the directors to prepare financial
statements for each financial year. Under that law, the
directors have prepared the Company financial statements
in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
Under company law, the directors must not approve the
financial statements, unless they are satisfied that they
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. In preparing these financial statements, the
directors are required to:

(cid:2) select suitable accounting policies and then 
apply them consistently.
(cid:2) make judgements and accounting estimates 
which are reasonable and prudent.
(cid:2) state whether applicable IFRSs as adopted by the
European Union have been followed, subject to any

material departures disclosed and explained in the
financial statements.
(cid:2) prepare the financial statements on the going-concern
basis, unless it is inappropriate to presume that the
Company will continue in business.

The directors are responsible for keeping adequate
accounting records which are sufficient to show and
explain the Company’s transactions and which disclose,
with reasonable accuracy, the financial position of the
Company, at any time. The accounting records enable the
directors to ensure that the financial statements and the
directors’ remuneration report comply with the
Companies Act 2006 and that the Company’s financial
statements comply with Article 4 of the IAS regulation.
They are also responsible for safeguarding the assets of
the Company and 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. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.

Each of the directors, whose names and functions are listed
in the section headed ‘directors, officers and advisers’,
confirms, to the best of his or her knowledge, that:

(cid:2) the Company financial statements, which have been
prepared in accordance with IFRSs as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit of the Company.
(cid:2) the directors’ report includes a fair review of the
development and performance of the business and the
position of the Company, together with a description of
the principal risks and uncertainties which it faces.
(cid:2) so far as each of the directors is aware, there is no
relevant audit information of which the Company’s
auditors are unaware.
(cid:2) he or she has taken all steps which he or she ought 
to have taken as a director, in order to make himself 
or herself aware of any relevant audit information and 
to establish that the Company’s auditors are aware of
that information.

Directors’ indemnities
The Company maintains directors and officers’ 
liability insurance which gives appropriate cover for any
legal action brought against its directors. 

Going concern
The directors have made enquiries into the adequacy of
the Company’s financial resources, through a review of
the Company’s budget and medium-term financial plan,
including capital expenditure plans and cash flow

48

J D WETHERSPOON PLC

forecasts; they 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.

Employment policies
All staff are encouraged to make a real commitment to
the Company’s success and to progress to a more senior
role as they, themselves, develop.

In selecting, training and promoting staff, the Company
has to take account of the physically demanding nature
of much of its work. The Company is committed to
equality of opportunity and to the elimination of
discrimination in employment. The Company aims to
create and maintain a working environment, terms and
conditions of employment and personnel and
management practices which ensure that no individual
receives less favourable treatment on the grounds of his
or her race, religion, nationality, ethnic origin, age,
disability, gender, sexual orientation or marital status.
Employees who become disabled will be retained, where
possible, and retrained, where necessary.

The Company has established a range of policies,
covering issues such as diversity, employees’ well-being
and equal opportunities, aimed at ensuring that all
employees are treated fairly and consistently.

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

All pub staff participate in incentive bonus schemes
related to sales, profits 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 58
(2011: 56) days’ purchases. 

Political and charitable contributions
The Company supports CLIC Sargent (caring for children
with cancer and their families) and has helped to raise
£1,409,139 in the current year. It also provides advice and
marketing support to the charity, at no cost. The
Company has not made any political or charitable
donations in the year. 

Events after the reporting period
The details of events after the reporting period can be
found in note 27 on page 30.

DIRECTORS’ REPORT 

Business at the annual general meeting 
On pages 65 to 67 is a notice convening the annual
general meeting of the Company for 8 November 2012, at
which shareholders will be asked, as items of special
business, to give power to the directors to allot shares, to
give power to the directors to disapply the pre-emption
requirements of section 561 of the Companies Act 2006,
to give power to the directors to make market purchases of
ordinary shares in the capital of the Company, subject to
certain conditions, and to retain the ability to hold general
meetings on 14 clear days’ notice. The notice also sets out
details of the ordinary business to be conducted at the
annual general meeting. Set out below is an explanation of
the effect and purpose of the resolutions proposed. 

Resolution 1: Receive and adopt the audited accounts
The directors recommend that the Company adopt the
reports of the directors and the auditors and the audited
accounts of the Company for the year ended 29 July 2012.

Resolution 2: 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 52 to 57. 

Resolution 3: Declaration of a final dividend
The Company paid an interim dividend of 4.0p per share
on 23 May 2012. The directors recommend a final
dividend of 8.0p per share, bringing the total dividend for
the year to 12.0p per share. Subject to final approval by
shareholders, the final dividend will be paid to
shareholders who are on the register at close of business
on 26 October 2012. 

Resolutions 4–10: Re-election of Mr Martin, 
Mr Hutson, Mr Davis, Ms Cacioppo, Ms van Gene,
Ms McMeikan and Sir Richard Beckett 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 reappointment should
also retire and may offer himself or herself for re-election. 

However, the UK Corporate Governance Code now
provides that all directors of FTSE 350 companies should
be subject to annual election by shareholders.
Accordingly, all members of the board will retire and seek
re-election at this year’s annual general meeting. 

Brief biographical details of each of the directors standing
for re-election may be found on page 46 and on the
Company’s Web site. The re-election resolutions are set
out as resolutions 4, 5, 6, 7, 8, 9 and 10 in the notice of
annual general meeting.

ANNUAL REPORT AND ACCOUNTS 2012

49

DIRECTORS’ REPORT 

Mr Martin, Mr Hutson, Mr Davis, Ms Cacioppo, 
Ms van Gene, Ms McMeikan and Sir Richard Beckett all
have extensive experience of the Company or in business
generally, allowing them, subject to their re-election to
the board, to contribute to the Company’s development.
The chairman confirms that the performance of each of
the directors has been evaluated and that each of the
directors’ performance continues to be effective and
demonstrates commitment to his or her respective role,
including time commitments for board and committee
meetings. The board is therefore of the opinion that 
Mr Martin, Mr Hutson, Mr Davis, Ms Cacioppo, 
Ms van Gene, Ms McMeikan and Sir Richard Beckett
should be re-elected at the annual general meeting.

Resolution 11: Election of Mr Mark Reckitt as director
Mr Reckitt was appointed as a new director of the
Company on 1 May 2012. Under the Company’s articles
of association, when the board appoints a new director,
that director must stand for election at the next annual
general meeting. Mr Reckitt will therefore stand for
election at this year’s annual general meeting. 

Brief biographical details of Mr Reckitt can be found on
page 46 and on the Company’s Web site. The election
resolution will be proposed as an ordinary resolution 
and is set out as resolution 11 in the notice of annual
general meeting. 

Mr Reckitt has extensive experience of business generally,
allowing him, subject to his election to the board, to
contribute to the Company’s development. The board is
therefore of the opinion that Mr Reckitt should be elected
at the annual general meeting.

Resolution 12: Reappointment of
PricewaterhouseCoopers LLP as auditors
Resolution 12, set out in the notice of annual general
meeting, proposes that PricewaterhouseCoopers LLP be
reappointed as the Company’s auditors and authorises the
directors to determine their remuneration. 

Resolution 13: Authority to allot
The Companies Act 2006 prevents directors of a public
company from allotting unissued shares, other than
pursuant to an employee share scheme, without the
authority of shareholders in a general meeting. In certain
circumstances, this could be unduly restrictive. The
general authority previously given to the directors to allot
‘relevant securities’ will expire at the end of the annual
general meeting convened for 8 November 2012.

Accordingly, resolution 13, set out in the notice of annual
general meeting, will be proposed as an ordinary
resolution to authorise the directors (pursuant to section

551 of the Companies Act 2006) to allot ordinary shares
in the capital of the Company:

(A) up to an aggregate nominal amount of £839,402,
representing approximately 33.3% of the nominal value
of the ordinary shares currently in issue.

(B) up to a further aggregate nominal amount of
£839,402, representing approximately 33.3% of the
nominal value of the ordinary shares currently in issue,
provided that they are offered by way of a rights issue in
favour of ordinary shareholders.

The authority (unless previously varied, revoked or
renewed) will expire on the earlier of 15 months from the
date of passing the resolution and the conclusion of the
next annual general meeting of the Company.

The Association of British Insurers (ABI) revised its
guidelines on share allotments, in 2010, following a
report of the Rights Issue Review Group. Based on the
guidelines, the limit on the directors’ authority to allot
shares under section 551 of the Companies Act 2006
may be increased from one-third to two-thirds of the
Company’s issued share capital. The guidelines provide
that the amount of any authority above one-third must
be applied to fully pre-emptive rights issues only and
should be valid for one year only. If the Company makes
an allotment pursuant to such additional authority, the
ABI will expect that all directors will stand for re-election
at the next annual general meeting following the decision
to make the allotment in question. 

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 of
exercising the authority.

Resolution 14: Disapplication of pre-emption rights
The provisions of section 561 of the Companies Act 2006
(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 employee share scheme)
apply to the unissued ordinary shares of the Company to
the extent that they are not disapplied, pursuant to
sections 570 and 573 of the Companies Act 2006.

The current disapplication of these statutory pre-emption
rights will expire at the end of the annual general
meeting convened for 8 November 2012. Accordingly,
resolution 14, as set out in the notice of annual general
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

50

J D WETHERSPOON PLC

DIRECTORS’ REPORT 

The shorter notice period would not be used as a matter
of routine for such meetings, but only where the flexibility
is merited by the business of the meeting and is thought
to be to the advantage of shareholders as a whole. 

Annual general meetings will continue to be held on at
least 21 clear days’ notice.

Recommendation
The directors believe that the resolutions which are to be
proposed at the annual general meeting are in the best
interests of the Company and its shareholders as a whole
and recommend all shareholders to vote in favour of
them, as each of the directors intends to do, in respect of
his or her own beneficial holding. 

By order of the board

Kirk Davis 
Company Secretary
14 September 2012

offers of equity securities by way of rights issue, open
offer or similar arrangements (save that, in the case of an
allotment pursuant to the authority in paragraph (B) of
resolution 14, such allotment shall be by way of rights
issue only); second, in relation to the allotment of equity
securities for cash, up to a maximum aggregate nominal
amount of £126,036 (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 the resolution and the conclusion of the
next annual general meeting of the Company.

Resolution 15: Purchase of ordinary shares
In common with many other listed companies, the
Company proposes, once again, to seek an authority
from shareholders to permit it to purchase its own
shares. Accordingly, resolution 15 will be proposed as a
special resolution to authorise the Company to make
market purchases of up to 18,892,841 shares, 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 an ordinary
share for the five business days before each purchase
(exclusive of expenses). The authority will last until the
earlier of 15 months from the date of passing the
resolution 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.

Resolution 16: 14 days’ notice for general meetings
Changes made to the Companies Act 2006 by the
Shareholders’ Rights Regulations increase the notice
period required for general meetings of the Company to
21 clear days, unless shareholders approve a shorter
notice period, which cannot, however, be fewer than 
14 clear days. Resolution 16 seeks such approval. The
approval will be effective until the Company’s next annual
general meeting, when it is intended that a similar
resolution will be proposed. 

Note that the changes to the Companies Act 2006 mean
that, in order to be able to call a general meeting on
under 21 clear days’ notice, the Company must make a
means of electronic voting available to all shareholders for
that meeting.

ANNUAL REPORT AND ACCOUNTS 2012

51

DIRECTORS’ REMUNERATION REPORT for the 53 weeks ended 29 July 2012

This report has been drawn up in accordance with,
among other things, the UK Corporate Governance Code
2010. This report will be put to an advisory vote of the
Company’s shareholders at the annual general meeting
on 8 November 2012.

Composition and role of the remuneration committee
The remuneration committee is appointed by the board
and comprises Debra van Gene (chair), Elizabeth
McMeikan, Sir Richard Beckett and Mark Reckitt. 

The committee meets throughout the year and 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 committee approves annual
performance-related payments (whether in shares or cash)
for executive directors. In the year ended 29 July 2012,
the committee met eight times.

No member of the committee has any personal financial
interest, other than as a shareholder, in the matters 
to be decided by the committee. None of the executive
directors attended a meeting on matters relating to 
his or her own remuneration. 

Remuneration policy
The aim of the Company’s remuneration policy is to: 

(cid:2) provide those packages required to attract, retain and
motivate directors and senior executives of high quality. 
(cid:2) align directors and senior executives’ long-term interests
with those of shareholders.
(cid:2) incentivise directors and senior executives to perform 
to a high level.

In fixing remuneration, we take account of the leisure
industry and also the remuneration structure throughout
the organisation. For example, the Company awarded
bonuses and shares for employees of £24.1 million in the
year, 98.5% of which were made to employees below
board level. This amount is included in total wages and
salaries in note 4 to these financial statements.

Overall reward levels are subject to the discretion of the
remuneration committee and depend partly on the
achievement of corporate performance targets and partly
on the performance of the individual. The Company
measures the performance of the executive directors in
respect of several main areas, including: 

(cid:2) Annual growth in profits before tax
(cid:2) Annual growth in owners’ earnings (cash profits) 
per share
(cid:2) Standards of service and amenities in the pubs
(cid:2) The number and quality of pub calls carried out 
by each executive director

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

Salary
Salaries and other benefits are determined annually in the
autumn. The remuneration committee aims to take a fair
and commonsense approach, following a review of the
individual’s performance and by reference to the industry
and consideration of other comparisons and reports. The
review in September 2011 concluded that, at executive
board level, there would be an increase of 5–14% in base
salary for executive directors, taking into account the
restructuring of the board and reflecting individuals’
increased responsibilities, workload and personal
performance in the year.

Annual performance-related payments
It is the policy of the Company to operate bonus
arrangements, at all staff levels, which are performance
related, the primary performance measures being sales,
profitability and operating standards. The executive
directors participate in a management bonus scheme,
designed to incentivise business performance. 

The financial targets are based on annual growth in
profits before tax, excluding exceptional items, which is
multiplied by a factor of 1.5 to arrive at the level of
bonus. This bonus is paid in cash after the end of the
financial year to which it relates. The maximum bonus
attainable represents 50% of salary for the year. 

Annual profits before tax, excluding exceptional items, 
in the year ended 29 July 2012, increased by 8%.
Accordingly, executive directors received 12% of their
salary as a cash bonus based on profitability, plus 5% 
for performance against key service standards.

The executive directors also receive bonuses in shares
under the Share Incentive Plan and the 2005 Deferred
Bonus Scheme, as described below.

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
pension schemes.

Share schemes

Company employees at all levels, with at least 18
months’ service are entitled to receive shares under the
Share Incentive Plan, while executive directors also
receive bonuses in shares under the 2005 Deferred
Bonus Scheme, as described below.

52

J D WETHERSPOON PLC

Share Incentive Plan
The Company’s policy on share incentives is to distribute
them widely across the Company’s pub staff and head-
office employees. In the year to 29 July 2012, £5.8 million 
was awarded in shares, 96% of which were made to
employees below board level. In this way, the Company
seeks to encourage and motivate employees involved at
all levels of the Company, including bar and kitchen staff,
giving all an opportunity to share in the wealth which
they are helping to create.

The Company established a share incentive plan
(incorporating an HM Revenue & Customs-approved
element) in August 2003. This approved plan is an 
‘all-employee plan’, providing all employees, including
executive directors, usually those who have worked with
the Company for at least 18 months, with bonuses in the
form of shares in the Company equivalent to 5% of their
salary each year.

Shares will not vest for at least three years under this
plan. The HMRC-approved element of this plan allows for
tax-free returns, if held for over five years, thus providing
a long-term incentive for employees. The cost of the
shares will be reflected in the Company’s income
statement for those financial years over the period in
which they vest. 

The Company offers extra SIPs under this scheme to all
higher grades of employee who have been with the
company for at least 18 months. Pub managers receive an
extra 5% annual award, head-office staff 10–15% and
senior managers and directors, including executive board
directors, 20%. Extra SIPs do not qualify for the same tax
benefits as those under the approved scheme.

In addition to the above, in November 2009, the
Company commenced offering partnership shares under
the Share Incentive Plan. The scheme allows all employees
(including directors) to use their pre-tax salary to buy
shares in the Company, monthly, using up to 10% (with a
maximum of £1,500 a year) of their pre-tax pay. The
shares will not vest for at least three years and, if held for
over five years, allow for tax-free returns. 

2005 Deferred Bonus Scheme
In addition to the current Share Incentive Plan, the
Company introduced a deferred bonus scheme, for senior
managers, including executive directors, following
shareholders’ approval in 2005. 

Bonus awards are made under the scheme, annually, 
at the discretion of the remuneration committee, 
to executive directors, general managers and 
certain other senior employees. 

DIRECTORS’ REMUNERATION REPORT 

Under the scheme, bonus awards are based on the
increase in owners’ earnings (cash profits) per share, over
the previous financial year. Participants are entitled to an
amount up to 3% of their annual base salary for every
1% increase in owners’ earnings per share. The Company
believes that linking incentives to the growth in cash
profits will align the interests of shareholders generally
with executives in the Company. The maximum bonus to
be earned under this scheme is 100% of annual salary.

Owners’ earnings are calculated as follows:

Profit before tax (excluding unrealised exceptional items)
Depreciation and amortisation
Add: 
Cash reinvestment in current properties
Less:
Cash tax
Less:
Equals: Owners’ earnings

Bonus awards are satisfied in shares. One-third of a
participant’s shares will vest to the participant on
calculation of the amount of the award, one-third will
vest after one year and the remaining third will vest to
the participant after two years (in each case, subject to
the participant’s being employed at the release date).

The shares required under the scheme are purchased 
in the market by an employee benefit trust, funded by
the Company.

In the year ended 29 July 2012, owners’ earnings per
share increased by 13%; therefore executive directors
received bonus shares under this scheme with a value
equal to 39% of salary.

Benefits in kind
A range of taxable benefits is available to executive
directors. These benefits comprise principally the provision
of a Company car allowance, life assurance and private
medical insurance.

Chairman and directors’ service contracts
The executive directors are employed on rolling contracts,
requiring the Company to give up to one year’s notice of
termination, while the director may give six months’
notice. In the event of termination of employment with
the Company, without the requisite period of notice,
executive directors’ service contracts provide for the
payment of a sum equivalent to the net value of salary
and benefits to which the executive would have been
entitled during the notice period. The executive is
required to mitigate his or her loss, and such mitigation
may be taken into account in any payment made. The
Company’s policies on the duration of directors’ service
contracts, notice periods and termination payments are 
all in accordance with best industry practice. 

ANNUAL REPORT AND ACCOUNTS 2012

53

DIRECTORS’ REMUNERATION REPORT 

The commencement dates for the executive directors’
service contracts were as follows:

Tim Martin
John Hutson
Su Cacioppo 
Kirk Davis 

–
–
–
–

20 October 1992
2 February 1998
10 March 2008
11 March 2011

Non-executive directors
The non-executive directors hold their positions, pursuant
to letters of appointment dated 1 November 2011, with a
term of 12 months. 

If their appointment is terminated early, the non-
executive directors are entitled to the fees to which they
would have been entitled up to the end of their term.
They do not participate in the Company’s bonus or share
schemes. Their fees are determined by the executive
directors, following consultation with professional
advisers, as appropriate.

External appointments
The Company has not released any executive directors to
serve as a non-executive director elsewhere.

Directors’ remuneration
Audited information:
The table below shows a breakdown of the various elements of directors’ remuneration for the year ended 29 July 2012.

Performance
bonus –
cash

Salary/fees

Taxable 
benefits

Taxable 
allowances

Sub-
Pension
total contributions

Performance
bonus –
2005
Deferred
Bonus
Scheme – 
shares

Share
Incentive
Plan – 
shares

Total
2012
£000

Total
2011
£000

324

–

27

–

351

–

–

–

351

375

105
49
52

169
78
88

847
400
444

628
117
304

434
201
225

38
40
38
10
18

73
34
38

–
–
–
–
–

1,328

145

1,302

115

1
1
1

–
–
–
–
–

30

30

15
13
13

–
–
–
–
–

41

31

523
249
277

38
40
38
10
18

50
24
27

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

38
40
38
10
18

37
39
37
–
67

–

1,544

101

206

335

2,186

1,478

95

200

–

–

1,773

Chairman
T R Martin

Executive 
directors
J Hutson 
K Davis
S Cacioppo 

Non-executive 
directors
E McMeikan
D van Gene 
R Beckett 
M Reckitt
J Herring (1)

Total

2011

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

The Company’s Share Incentive Plan and 2005 Deferred Bonus Scheme (described on page 53) include the full-year value of
bonuses paid in shares, subject to forfeiture on cessation of employment, in certain circumstances. These shares are also
included in each relevant director’s interest shown in the table below.

The amount included with respect to the Share Incentive Plan reflects the value of the shares issued to the directors 
during the year. 

The pension contributions are made in respect of defined contribution pension arrangements. 

(1) John Herring, as previously reported, retired from the board at the AGM on 3 November 2011. 

54

J D WETHERSPOON PLC

DIRECTORS’ REMUNERATION REPORT 

Directors and connected persons’ interests in shares – non-audited information:

The interests of the directors in the shares of the Company, as at 29 July 2012, were as follows: 

Ordinary shares of 2p each, held beneficially

2012

2011

T R Martin
J Hutson
J Hutson – Share Incentive Plan
J Hutson – 2005 Deferred Bonus Scheme
K Davis
K Davis – Share Incentive Plan
K Davis – 2005 Deferred Bonus Scheme
S Cacioppo
S Cacioppo – Share Incentive Plan
S Cacioppo – 2005 Deferred Bonus Scheme
E McMeikan
D van Gene
R Beckett
M Reckitt

There have been no changes to these interests since 29 July 2012.

33,472,473
38,556
74,904
–
1,654
26,340
–
44,532
38,713
–
1,000
1,000
2,000
2,000

32,815,473
34,801
76,116
8,375
–
17,790
2,526
36,809
37,836
3,973
1,000
1,000
2,000
–

ANNUAL REPORT AND ACCOUNTS 2012

55

DIRECTORS’ REMUNERATION REPORT 

Share Incentive Plan – audited information

In addition to the interests in shares disclosed above, the following awards have been made of shares, during the year, 
under the Share Incentive Plan: 

Name

John Hutson

Kirk Davis

Su Cacioppo

Award date

Shares held 
in trust at 
24 July 2011

Granted in 
the year

Vested in
the year

Shares remaining 
in trust at
29 July 2012

26/03/04
08/10/04
30/09/05
29/09/06
17/09/07
17/09/08
31/03/09
24/09/09
31/03/10
23/09/10
31/03/11
30/03/12

990
1,214
1,022
590
518
16,188
12,180
10,085
9,557
11,658
11,764

Partnership shares*

350

31/03/09
24/09/09
31/03/10
23/09/10
31/03/11
30/03/12

26/03/04
08/10/04
30/03/05
30/09/05
31/03/06
29/09/06
17/09/07
17/09/08
31/03/09
24/09/09
31/03/10
23/09/10
31/03/11
30/03/12

3,384
3,277
3,225
3,934
3,970

881
598
594
926
75
590
518
7,432
5,768
4,790
4,539
5,537
5,588

Partnership shares**

15,124
12,180

3,384

6,368
5,768

25,729
363

11,934

12,713
300

990
1,214
1,022
590
518
1,064
–
10,085
9,557
11,658
11,764
25,729
713

–
3,277
3,225
3,934
3,970
11,934

881
598
594
926
75
590
518
1,064
–
4,790
4,539
5,537
5,588
12,713
300

The market price of the shares awarded on 30 March 2012 was 408.8p.

The market price of shares which vested on 20 September 2011 was 398.3p.
The market price of shares which vested on 2 April 2012 was 411.0p. 

*John Hutson is a participant in the Partnership Share scheme and acquired 363 shares between August 2011 and July 2012.
The market price of the shares awarded ranged from 378.7p to 444.2p. 

**Su Cacioppo is a participant in the Partnership Share scheme and acquired 300 shares between October 2011 and 
July 2012. The market price of the shares awarded ranged from 378.7p to 444.2p. 

56

J D WETHERSPOON PLC

DIRECTORS’ REMUNERATION REPORT 

‘Vested in the year’ indicates the transfer of the beneficial ownership of the shares from the trust to the director.

During the year, the executive directors received shares which vested under the Share Incentive Plan. The value of the 
shares, calculated on the mid-market price on the date of the award maturity, was £173,123.

2005 Deferred Bonus Scheme
The first award of shares under the 2005 Deferred Bonus Scheme was made in September 2006. As set out on page 53,
one-third of the total award vests immediately, with the other two-thirds vesting over the following two years. 

The overall position is as follows:

September 2009 Award – Tranche 3

Total 
awarded

Previously 
vested

Vested

Sold

Shares 
retained

Remaining 
in trust

Date sold

Market price
at sale date

J Hutson

25,121

16,746

8,375

8,375

–

– 17/09/2011

396.4p

K Davis

7,576

5,050

2,526

1,314

1,212

– 17/09/2011

396.4p

S Cacioppo

11,915

7,942

3,973

2,066

1,907

– 17/09/2011

396.4p

Performance graph – non-audited information:
This graph shows the total shareholder return (with
dividends reinvested) of a holding of the Company’s shares
against a hypothetical holding of shares in the FTSE All Share
Travel & Leisure sector index 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
July 2005, based on 30-trading-day average values

)
£
(

i

g
n
d
o
h

l

0
0
1
£

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

f
o

l

e
u
a
V

220.0

200.0

180.0

160.0

140.0

120.0

100.0

80.0

60.0

Jul 05

Jul 06

Jul 07

Jul 08

Jul 09

Jul 10

Jul 11

Jul 12

J D Wetherspoon plc

FTSE All Share Travel & Leisure

On behalf of the board:
Debra van Gene
Chair of the remuneration committee

14 September 2012

ANNUAL REPORT AND ACCOUNTS 2012

57

 
 
 
 
 
CORPORATE GOVERNANCE

Introduction
The Company’s established governance framework is
overseen by the board of directors, which is ultimately
answerable to the Company’s shareholders.

All directors are provided with comprehensive papers, in
advance of all board meetings, and attend key meetings
regularly in the organisation. In addition, directors attend
impromptu meetings with senior managers in the business.

It is not advantageous, in a company like Wetherspoon,
for there to be high barriers or exaggerated distinctions
between the role of chairman and that of chief
executive officer. However, some general distinctions 
are outlined below.

Statement of compliance
The Company is committed to high standards of
corporate governance, as set out in the UK Corporate
Governance Code 2010 (the ‘Code’). The board believes
that the Company has been compliant throughout the 
53 weeks ended 29 July 2012, except that, since 
3 November 2011, when John Herring retired from his
position, the Company has not had a senior independent
director. We have since appointed a new non-executive
director and will review the requirement for a senior
independent director.

A full version of the Code is available on the official Web
site of the Financial Reporting Council (www.frc.org.uk). 

The board of directors
The primary responsibility of the board is to ensure that
the Company’s strategy is appropriate and implemented
effectively. Those matters reserved for the board and the
authorities delegated to management are contained in
the ‘matters reserved for the board’ schedule, as well as
in the various policies covering such matters as treasury
management, capital expenditure approvals, legal
matters, internal audit and risk management. 

The board comprises the following members:
(cid:2) Tim Martin, chairman
(cid:2) John Hutson, chief executive officer
(cid:2) Kirk Davis, finance director and company secretary
(cid:2) Su Cacioppo, personnel and legal director
(cid:2) Elizabeth McMeikan, non-executive director 
(cid:2) Debra van Gene, non-executive director
(cid:2) Sir Richard Beckett, non-executive director
(cid:2) Mark Reckitt, non-executive director

The board considers each of Elizabeth McMeikan, 
Debra van Gene, Sir Richard Beckett and Mark Reckitt 
to be independent. 

Biographies of all non-executive and executive directors
are provided on page 46 and can be viewed on the
Company’s Web site: www.jdwetherspoon.co.uk 

On appointment to the board, every director is provided
with an induction programme, including aspects of the
Company’s day-to-day operations. Regular discussions
and meetings take place regarding the performance of
the board – and the performance of individual executive
directors is discussed regularly by the chairman and the
non-executive directors. Site visits are arranged regularly
to enable non-executive directors to see the operations of
the business, at first hand. 

58

J D WETHERSPOON PLC

CORPORATE GOVERNANCE

Chairman’s responsibility

Chief executive officer’s responsibility

The chairman is responsible for the smooth running of the 
board and ensuring that all directors are fully informed 
of matters relevant to their roles

Delegated responsibility of authority from the Company to 
exchange contracts for new pubs and to sign all contracts 
with suppliers

The chief executive officer is responsible for the smooth 
daily running of the business

Developing and maintaining effective management
controls, planning and performance measurements

Providing support, advice and feedback to the 
chief executive officer 

Maintaining and developing an effective 
organisational structure

Supporting the Company strategy and encouraging the 
chief executive officer with development of that strategy

External and internal communications, in conjunction
with the chairman, on any issues facing the Company

Chairing general meetings, board meetings, operational 
meetings and agreeing on board agendas and ensuring that 
adequate time is available for discussion of agenda items

Management of chief executive officer’s contract, appraisal 
and remuneration, by way of making recommendations to 
the remuneration committee

Implementing and monitoring compliance with 
board policies

Timely and accurate reporting of the above to the board

Providing support to executive directors and senior 
managers of the Company

Recruiting and managing senior managers in 
the business

Helping to provide the ‘ethos’ and ‘vision’ of the Company, 
after discussions and debates with employees of all levels, 
customers, shareholders and including organisations such 
as CAMRA

Developing and maintaining effective risk-management
and regulatory controls

Helping to provide information on customers and employees’ 
views by calling on pubs

Maintaining primary relationships with shareholders
and investors

Helping to make directors aware of shareholders’ concerns 

Chairing the management board responsible for
implementing the Company strategy

Helping to ensure that a culture of openness and debate 
exists in the Company 

Ensuring compliance with the London Stock Exchange, legal 
and regulatory requirements, in consultation with the board 
and the Company’s external advisers 

All directors are provided with, and have full and timely
access to, information which enables them to make informed
decisions on corporate and business issues, including
operational and financial performance. In particular, the board
receives monthly information on the financial trading
performance of the Company and a comprehensive finance
report, including operational highlights. 

The articles of association require that one-third of the
directors retire by rotation, subject to the requirement that
each director seek re-election every three years. However, in
line with the Code, all of the directors of the Company are to
be subject to election by shareholders every year. Accordingly,
all members of the board (and not just those required to do
so by the Company’s articles of association) will retire and
seek re-election at this year’s annual general meeting. 

During the year ended 29 July 2012, non-executive
directors met without the chairman and provided
feedback to the chairman following their meetings. 
The overall effectiveness of the board was the primary
topic, although succession-planning and the provision 
of information to the board were also discussed. The
directors concluded that the board and its committees
continue to work effectively.

In accordance with the Code and corporate governance
best practice, the board has several established
committees as set out below. The board met eight times
during the year ended 29 July 2012; attendance of the
directors and non-executives, where appropriate, is
shown below.

ANNUAL REPORT AND ACCOUNTS 2012

59

CORPORATE GOVERNANCE

Number of meetings held in the year

Board 
8

Audit 
4

Remuneration Nomination
8

6

Tim Martin
John Hutson
Kirk Davis*
Su Cacioppo* 
Elizabeth McMeikan
Debra van Gene
Sir Richard Beckett
Mark Reckitt** 
John Herring**

7
8
8
8
7
7
8
1
2

N/A
N/A
4
4
4
4
4
1
1

3
N/A
N/A
N/A
7
8
7
2
2

2
N/A
N/A
N/A
6
5
6
–
N/A

*Kirk Davis (in his role as finance director) and Su Cacioppo (in her role as personnel and legal director) attended audit
committee meetings by invitation, to provide additional detail on any relevant matters. 

**John Herring retired from the Company in November 2011, while Mark Reckitt joined in May 2012. 

Matters reserved for the board
The following matters are reserved for the board:

(cid:2) Board and management

(cid:2)(cid:2) Structure and senior management responsibilities
(cid:2)(cid:2) Nomination of directors
(cid:2)(cid:2) Appointment and removal of chairman and

company secretary

(cid:2) Strategic matters

(cid:2)(cid:2) Strategic, financing or adoption of new business
plans, in respect of any material aspect of the Company

(cid:2) Business control

(cid:2)(cid:2) Agreement of code of ethics and business practice
(cid:2)(cid:2) Internal audit
(cid:2)(cid:2) Authority limits for heads of department

(cid:2) Operating budgets

(cid:2)(cid:2) The entry into finance leases
(cid:2)(cid:2) Approval of a budget for investments
and capital projects
(cid:2)(cid:2) Changes in major supply contracts

(cid:2) Finance

(cid:2)(cid:2) Raising new capital and confirmation of
major facilities
(cid:2)(cid:2) Specific risk-management policies, including
insurance, hedging and borrowing limits
(cid:2)(cid:2) Final approval of annual and interim accounts
and accounting policies
(cid:2)(cid:2) Appointment of external auditors

(cid:2) Legal matters

(cid:2)(cid:2) Consideration of regular reports on material issues
relating to any litigation affecting the Company
(cid:2)(cid:2) Institution of legal proceedings, where costs exceed
certain values

(cid:2) Secretarial

(cid:2)(cid:2) Call of all shareholder meetings
(cid:2)(cid:2) Delegation of board powers
(cid:2)(cid:2) Disclosure of directors’ interests

(cid:2) General

(cid:2)(cid:2) Board framework of executive remuneration
and costs
(cid:2)(cid:2) Any other matters not within the terms of reference
of any committee of the board
(cid:2)(cid:2) Any other matter as determined from time to time
by the board

Board committees
Audit committee
The committee comprises Elizabeth McMeikan, 
Debra van Gene, Sir Richard Beckett and Mark Reckitt.
Mark Reckitt has recent and relevant financial experience
and is a qualified chartered accountant. 

Representatives of the Company’s external auditors,
PricewaterhouseCoopers LLP, attend audit committee
meetings.

In respect of the role of the audit committee, it effectively
performs the following:

(cid:2) Assumes direct responsibility for the appointment,
compensation, resignation, dismissal and overseeing of
the independent external auditors, including review of the
external audit, its cost and effectiveness
(cid:2) Reviews the scope and nature of the work to be
performed by the external auditors, before audit
commences
(cid:2) Reviews the half-year and annual financial statements
(cid:2) Ensures compliance with accounting standards

60

J D WETHERSPOON PLC

(cid:2) Monitors the integrity of the financial statements and
formal announcements relating to the financial
performance of the Company
(cid:2) Considers the findings of the internal audit report and
management responses at the half year and year end
(cid:2) Reviews the effectiveness of internal control systems
(cid:2) Final review of the Company’s statement on internal
control systems, before endorsement by the board
(cid:2) Reviews any aspect of the accounts or the Company’s
control and audit procedures, the interim and final audits
and any other matters which the auditors may consider
(cid:2) Ensures that all matters, if appropriate, are raised and
brought to the attention of the board
(cid:2) Reviews all risk-management systems adopted and
implemented by the Company

The minutes of all meetings of the committee are circulated
by the secretary of the committee to all members of the
board. At the annual general meeting of the Company,
representatives of the audit committee are available to
answer questions on financial control and reporting.

The audit committee is aware of the Company’s process
regarding whistle-blowing and has reviewed its
effectiveness.

During the year, the Company made limited use of
specialist teams from PricewaterhouseCoopers LLP,
relating to accounting and tax services. The fees paid to
PricewaterhouseCoopers LLP for non-audit services were
£93,000 (2011: £133,000). The use of
PricewaterhouseCoopers LLP for non-audit work is
monitored regularly, to achieve the necessary
independence and objectivity of the auditors. Where the
auditors provide non-audit services, their objectivity and
independence are safeguarded by the use of different
teams. See note 2 on page 10 for a breakdown of
auditors’ remuneration of audit and non-audit services. 

Following a review by the audit committee, the board
agreed, in September 2012, to recommend to shareholders,
at the annual general meeting, the reappointment of the
external auditors for a period of one year.

The audit committee assesses the ongoing effectiveness of
the external auditors and audit process, on the basis of
meetings and internal review with finance and other senior
executives. In reviewing the independence of the external
auditors, the audit committee considers several factors.
These include the standing, experience and tenure of the
external auditors, the nature and level of services provided
and confirmation from the external auditors that they have
complied with relevant UK independence standards.

The terms of reference of the audit committee are available
on the Company’s Web site.

CORPORATE GOVERNANCE

Remuneration committee
The Company’s remuneration committee is chaired by
Debra van Gene and comprises Elizabeth McMeikan, 
Sir Richard Beckett and Mark Reckitt. The directors’ report
on remuneration is set out on pages 52 to 57. 

The terms of reference of the remuneration committee
are available on the Company’s Web site.

Nomination committee
The non-executive directors Debra van Gene, 
Elizabeth McMeikan, Sir Richard Beckett and Mark Reckitt
meet regularly and consider, among other matters, board
appointments and the re-election of directors. No director
is involved in any decision about his or her own 
re-appointment. In carrying out these activities, the 
non-executive directors follow the guidelines of the
Institute of Chartered Secretaries and Administrators
(ICSA) and comply with the Code. 

Company secretary 
All directors have access to the advice of the company
secretary, responsible to the board for ensuring that
procedures are followed. The appointment and removal of
the company secretary are reserved for consideration by the
board as a whole. Procedures are in place for seeking
independent professional advice, at the Company’s expense.

Relations with shareholders
The board takes considerable measures to ensure that 
all board members are kept aware of both the views 
of major shareholders and changes in the major
shareholdings of the Company. Efforts made 
to accomplish effective communication include:

(cid:2) Annual general meeting, considered to be an important
forum for shareholders to raise questions with the board
(cid:2) Regular feedback from the Company’s stockbrokers
(cid:2) Interim, full and ongoing announcements circulated 
to shareholders
(cid:2) Any significant changes in shareholder movement
being notified to the board by the company secretary,
when necessary
(cid:2) The company secretary maintaining procedures and
agreements for all announcements to the stock market
(cid:2) A programme of regular meetings between investors
and directors of the Company

Risk management 
The board is responsible for the Company’s 
risk-management process. 

The internal audit department, in conjunction with the
management of the business functions, produces a risk
register annually. This register has been compiled by the
business, following feedback from senior management
from the key business functions.

ANNUAL REPORT AND ACCOUNTS 2012

61

The Company has key controls, as follows:

(cid:2) Authority limits and controls over cash-handling,
purchasing commitments and capital expenditure
(cid:2) A budgeting process, with a detailed 12-month
operating plan and a mid-term financial plan, both
approved by the board
(cid:2) Business results reported weekly, with a report
compared with budget and previous year
(cid:2) Forecasts prepared regularly throughout the year, 
for review by the board
(cid:2) Complex treasury instruments are not used. The
Company, from time to time, as revealed in our report
and accounts, enters into swap arrangements which fix
interest rates at certain levels for a number of years and
enters into supply arrangements with fixed prices for
electricity and gas, for example, which run for between
one and three years 
(cid:2) An annual review of the amount of external insurance
which it obtains, bearing in mind the availability of such
cover, its costs and the likelihood of the risks involved
(cid:2) Regular evaluation of processes and controls, in relation
to the Company’s financial reporting requirements

The directors confirm that they have reviewed the
effectiveness of the system of internal control.

The Company maintains adequate directors and officers’
insurance cover.

Kirk Davis
Company Secretary
14 September 2012

CORPORATE GOVERNANCE

The identified risks are assessed based on the likelihood
of a risk occurring and the potential impact to the
business, should the risk occur.

The head of internal audit determines and reviews the
risk-assessment process and will communicate the
timetable annually.

The risk register is presented to the audit committee every
six months, with a schedule of audit work agreed on, on
a rolling basis. The purpose of this work is to review, on
behalf of the Company and the board, those key risks
and the systems of control necessary to manage such
risks. The results of this work are reported back to
relevant senior management and the audit committee.
Where recommendations are made for changes in
systems or processes to reduce risk, internal audit will
follow up regularly to ensure that the recommendations
are implemented.

A summary of the financial risks and treasury policies can
be found on pages 40 and 41, together with other risks
and uncertainties.

Internal control
During the year, the Company provided an internal audit
and risk-management function. The attempt to create a
system of internal control and risk mitigation is a key part
of the Company’s operations and culture. The board is
responsible for maintaining a sound system of internal
control and reviewing its effectiveness. The function can
only manage, rather than entirely eliminate, the risk of
failure to achieve business objectives. It can provide only
reasonable and not absolute assurance against material
misstatement or loss. Ongoing reviews, assessments and
management of significant risks took place throughout
the year under review and up to the date of the approval
of the annual report and accord with the Turnbull
Guidance (Guidance on Internal Control).

The Company has an internal audit function which is
discharged as follows:

(cid:2) Regular audits of the Company stock
(cid:2) Unannounced visits to retail units
(cid:2) Monitoring systems which control the Company’s cash
(cid:2) Health & safety visits, ensuring compliance with
Company procedures
(cid:2) Reviewing and assessing the impact of legislative and
regulatory change
(cid:2) Annually reviewing the Company’s strategy 
(cid:2) Risk-management process, identifying key risks facing
the business

62

J D WETHERSPOON PLC

INFORMATION FOR SHAREHOLDERS

Ordinary shareholdings at 29 July 2012 

Shares of 2p each

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

Number of 
shareholders

% of total 
shareholders

Number

% of total 
shares held

4,816
312
191
20
12
16

5,367

89.73
5.82
3.56
0.37
0.22
0.30

2,319,081
1,448,467
9,955,835
7,080,469
8,963,509
96,268,935

1.84
1.15
7.90
5.62
7.11
76.38

100 126,036,296

100

Substantial shareholdings 
In addition to certain of the directors’ shareholdings, set out on page 55, the Company has been notified of the following
substantial holdings in its share capital at 14 September 2012.

Number of
ordinary shares

% of
share capital 

19,404,121
13,753,411
7,500,000

15.40
10.91
5.95

434.5p
366.9p
467.1p
467.1p

Sanderson Asset Management Ltd
Threadneedle
OppenheimerFunds Inc

Share prices
24 July 2011
Low
High
29 July 2012

Shareholders’ enquiries
The Company’s registrars, Computershare Investor Services plc, keep the Company’s register 
of shareholders up to date, distribute statutory documents and administer the payment of 
dividends. If you have a query about your shareholding, please contact the registrars 
directly, either online or by telephone: 0870 707 1091

Computershare’s investor centre gives access to view your holdings online. To register, 
click on ‘investor centre’ on the Computershare home page and follow the instructions: 
www.uk.computershare.com/investor

You will be able to:
(cid:2) view all of your holding details for companies registered with Computershare.
(cid:2) view the market value of your portfolio.
(cid:2) update your contact address and personal details.
(cid:2) access current and historical market prices.
(cid:2) access trading graphs.
(cid:2) add shareholdings to your portfolio.

ANNUAL REPORT AND ACCOUNTS 2012

63

INFORMATION FOR SHAREHOLDERS

Electronic communications
The Company has introduced innovative ways of communicating with shareholders electronically via eTree, 
an environmental incentive programme. We actively encourage you to play your part in reducing our impact 
on the environment, by choosing to be notified by e-mail when your communications are available online. 
Sign up to receive e-communications using eTree and we will donate £1 on your behalf to the Woodland Trust, 
the UK’s leading woodland conservation charity, for its ‘Tree for All’ programme. 

By providing your e-mail address, you will no longer receive paper copies of this annual report or any other 
shareholders’ communications which are available electronically. Instead, you will receive e-mails advising you 
when and how to access online documents. 

Please submit your e-mail address by visiting the eTree Web site: www.etreeuk.com/jdwetherspoon

Annual reports
If you do require further paper copies of this annual report, these are available from the company secretary, 
at the registered office. Telephone requests can be made: 01923 477777

This annual report is also available on the Company’s Web site: www.jdwetherspoon.co.uk/investors

If you would like to contact us: 

J D Wetherspoon plc, Wetherspoon House, Central Park, Reeds Crescent, Watford, WD24 4QL 

Telephone: 01923 477777

E-mail: investorqueries@jdwetherspoon.co.uk 

64

J D WETHERSPOON PLC

NOTICE OF ANNUAL GENERAL MEETING

This information is important and requires 
your immediate attention.

If you are in any doubt as to what action to take, you
should consult your stockbroker, solicitor, accountant or
other appropriate independent professional adviser
authorised under the Financial Services and Markets Act
2000. If you have sold or otherwise transferred all of your
shares in J D Wetherspoon plc (the ‘Company’), please
forward this document and the accompanying documents
to the person through whom the sale or transfer was
effected, for transmission to the purchaser or transferee.

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 
8 November 2012, at 10am, for the following purposes:

Ordinary business
To resolve as ordinary resolutions:

1 To receive and adopt the reports of the directors and
the auditors and the audited accounts of the Company
for the year ended 29 July 2012.

2 To receive and approve the directors’ remuneration
report for the year ended 29 July 2012.

3 To declare a final dividend for the year ended 
29 July 2012 of 8.0 pence per ordinary share of 
2.0 pence each in the capital of the Company.

4 To re-elect Tim Martin as a director.

5 To re-elect John Hutson as a director.

6 To re-elect Kirk Davis as a director.

7 To re-elect Su Cacioppo as a director.

8 To re-elect Debra van Gene as a director.

9 To re-elect Elizabeth McMeikan as a director.

10 To re-elect Sir Richard Beckett as a director.

11 To elect Mark Reckitt as a director.

12 To reappoint PricewaterhouseCoopers LLP as 
the 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 13 as
an ordinary resolution and, in the case of the resolutions
numbered 14, 15 and 16, as special resolutions.

13 THAT:
in place of all existing authorities, the directors be
generally and unconditionally authorised, pursuant to
section 551 of the Companies Act 2006 (the ‘Act’), to
exercise all the powers of the Company:

(A) to allot shares in the Company and to grant rights to
subscribe for, or to convert any security into, shares in the
Company (‘Relevant Securities’), up to a maximum
aggregate nominal amount of £839,402; and further

(B) to allot Relevant Securities comprising equity securities
(within the meaning of section 560(1) of the Act) up to
an aggregate nominal amount of £839,402 in connection
with an offer by way of a rights issue in favour of holders
of ordinary shares in the capital of the Company in
proportion (as nearly as may be practicable) to their
existing holdings of ordinary shares, but subject to such
exclusions or other arrangements as the directors deem
necessary or expedient in relation to fractional
entitlements or any legal, regulatory or practical problems
under the laws of any territory or the requirements of any
regulatory body or stock exchange;

for a period expiring (unless previously revoked, varied or
renewed) on the date which is 15 months from the date of
the passing of this resolution or, if sooner, the end of the
next annual general meeting of the Company, but the
Company may, before such expiry, make an offer or
agreement which would or might require Relevant
Securities to be allotted after this authority expires, and the
directors may allot Relevant Securities in pursuance of such
offer or agreement as if this authority had not expired.

14 THAT: 
subject to the passing of resolution 13 above and in place
of all existing powers, the directors be generally
empowered, pursuant to sections 570 and 573 of the Act,
to allot equity securities (within the meaning of section
560 of the Act) for cash, pursuant to the authority
conferred by resolution 13 as if section 561(1) of the Act
did not apply to such allotment, provided that this power
shall expire on the date which is 15 months from the date
of the passing of this resolution or, if sooner, the end of
the next annual general meeting of the Company. This
power shall be limited to the allotment of equity securities:

ANNUAL REPORT AND ACCOUNTS 2012

65

NOTICE OF ANNUAL GENERAL MEETING

(i) in connection with an offer of equity securities
(including, without limitation, under a rights issue, open
offer or similar arrangement, save that, in the case of an
allotment pursuant to the authority conferred by
paragraph (B) of resolution 13, such offer shall be by way
of rights issue only) in favour of holders of ordinary shares
in the capital of the Company in proportion (as nearly as
may be practicable) to their existing holdings of ordinary
shares, but subject to such exclusions or other
arrangements as the directors deem necessary or
expedient in relation to fractional entitlements or any
legal, regulatory or practical problems under the laws of
any territory or the requirements of any regulatory body
or stock exchange; and

(ii) otherwise than pursuant to sub-paragraph (i) above up
to an aggregate nominal amount of £126,036, but the
Company may, before such expiry, make an offer or
agreement which would or might require equity securities
to be allotted after this power expires, and the directors
may allot equity securities in pursuance of such offer or
agreement as if this power had not expired.

This power applies in relation to a sale of shares which is
an allotment of equity securities by virtue of section
560(2)(b) of the Act as if, in the first paragraph of this
resolution, the words ‘pursuant to the authority conferred
by resolution 13’ were omitted. 

15 THAT: 
the Company be and is hereby authorised, pursuant to
section 701 of the Act, to make market purchases (as
defined by section 693(4) 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 18,892,841.

(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 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. 

16 THAT:
general meetings (other than any annual general
meeting) of the Company may be called on not less than
14 clear days’ notice.

By order of the board

Kirk Davis
Company Secretary
14 September 2012

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, speak and vote, instead of him or her, provided
that each proxy is appointed to exercise the rights
attached to a different share or shares held by that
member. A proxy need not be a member of the Company.

2 A form of proxy is enclosed which members 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 members 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 form of
proxy and the power of attorney or other authority (if
any) under which it is executed or a notarised 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, or at the following electronic address
www.eproxyappointment.com not later than 10am on 
6 November 2012, being 48 hours before the time
appointed for holding the annual general meeting.

(iii) this authority (unless previously revoked, varied or
renewed) will expire at the earlier of 15 months from the
date of passing of this resolution and the conclusion of
the next annual general meeting of the Company, 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.

4 Any person to whom this notice is sent who is a person
nominated under section 146 of the Act to enjoy
information rights (a ‘Nominated Person’) may, under an
agreement between him or her and the member by
whom he or she was nominated, have a right to be
appointed (or to have someone else appointed) as a proxy
for the annual general meeting. If a Nominated Person
has no such proxy appointment right or does not wish to

66

J D WETHERSPOON PLC

NOTICE OF ANNUAL GENERAL MEETING

public holidays excepted), and there will be available for
inspection at the place of the annual general meeting from
at least 15 minutes beforehand and until the conclusion of
the annual general meeting, copies of the non-executive
directors’ letters of appointment to the Company.

11 Only those members registered on the register of
members of the Company as at 10am on 6 November
2012 (or, in the case of any adjournment, 48 hours
before the time of the adjourned meeting) shall be
entitled to attend or vote at the annual general 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. 

12 You may not use any electronic address provided in
this notice of annual general meeting for communicating
with the Company for any purposes other than those
expressly stated.

exercise it, he or she may, under any such agreement,
have a right to give instructions to the member as to the
exercise of voting rights. 

5 The statement of the rights of members in relation to
the appointment of proxies in notes 1, 2 and 3 above
does not apply to Nominated Persons. The rights
described in those notes can be exercised only by
members of the Company.

6 Any corporation which is a member may appoint one or
more corporate representatives who may exercise on its
behalf all of its powers as a member, provided that they
do not do so in relation to the same shares.

7 Under section 527 of the Act, members meeting the
threshold requirements set out in that section have the
right to require the Company to publish on a Web site a
statement setting out any matter relating to: (i) the audit
of the Company’s accounts (including the auditors’ report
and the conduct of the audit) which is to be laid before
the annual general meeting; or (ii) any circumstance
connected with an auditor of the Company ceasing to
hold office since the previous meeting at which annual
accounts and reports were laid in accordance with section
437 of the Act. The Company may not require the
members requesting any such Web site publication to pay
its expenses in complying with sections 527 or 528 of the
Act. Where the Company is required to place a statement
on a Web site, under section 527 of the Act, it must
forward the statement to the Company’s auditors no later
than the time when it makes the statement available on
the Web site. The business which may be dealt with at
the annual general meeting includes any statement which
the Company has been required, under section 527 of
the Act, to publish on a Web site.

8 A copy of this notice, and other information required by
section 311A of the Act, can be found on the Company’s
Web site: www.jdwetherspoon.co.uk

9 Any member attending the meeting has the right to ask
questions. The Company must cause to be answered any
such question relating to the business being dealt with at
the meeting, but no answer to any such question need be
given if (a) to do so would interfere unduly with the
preparation for the meeting or involve the disclosure of
confidential information, (b) the answer has already been
given on a Web site in the form of an answer to a
question or (c) it is undesirable in the interests of the
Company or the good order of the meeting that the
question be answered.

10 There are available for inspection at Macfarlanes LLP, 
20 Cursitor Street, London, EC4A 1LT, during usual
business hours on any weekday (Saturdays, Sundays and

ANNUAL REPORT AND ACCOUNTS 2012

67

J D Wetherspoon plc
Wetherspoon House, Central Park 
Reeds Crescent, Watford, WD24 4QL

01923 477777
www.jdwetherspoon.co.uk

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