views

JD Wetherspoon restores dividend after record profit

PUB chain Wetherspoon today announced the end of a year-long dividend freeze after successfully completing its debt refinancing.

Shareholders will receive a 12p dividend on 1 April for the year to July 2009 with a further special dividend of 7p a share.

Last year it scrapped its dividend payment as negotiated its refinancing. It has now arranged a new £530m banking facility "on competitive market terms" with a syndicate of 11 banks which expires in March 2014 to allow it make the payment.

The FTSE 250 group was also toasting record pre-tax profits of £36.2m for the 26 weeks to 24 January with total sales reaching at £488.1m.

Wetherspoon, which has 746 pubs across the UK, said its remains positive on its future prospects despite challenges being placed on the industry by government legislation.

It opened 17 pubs during the period and closed two.

This replaces the £435m facility which is due to expire in December.

Chairman Tim Martin said: "As a result of our sales, profits and free cash flow, together with our continued efforts to improve every area of the business, I remain confident of our future prospects."

Wetherspoon added that trading in the six weeks to 7 March continues in a similar vein to last year with like-for-like sales were down 0.4 per cent and total sales up nearly four per cent.

It said food and coffee continue to be areas with strong potential for future growth. Weekly coffee sales have recently reached record levels and the group now sells around 25m coffees a year.

The pub group has also decided to extend its morning trade hours and will open its doors for breakfast at 7am at the end of April after five years of 9am starts.

However, analysts warned that the pubs industry is likely to remain under pressure despite a strong recovery post the January snow and a reasonably successful weathering of the VAT increase.

Paul Leyland of Collins Stewart said: "We continue to see Wetherspoon as an excellent company operationally, which is doing all the right things to manage through the recession.

"However, lacklustre like-for-likes are unlikely to improve and are highly exposed to another VAT hike. Other costs are also likely to begin rising again, meaning margins can quickly come under pressure."