JD Wetherspoon, the managed pub operator, has reported a 3.2% rise in like-for-like sales for the 53 weeks to 29 July, and said that with taxation and input costs expected to continue to rise it was aiming for a “reasonable outcome” in its current financial year. Total sales, including week 53 and new pubs, increasing by 11.7% £1.19bn. 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 £107.3m and, after exceptional items, decreased by 3.2% to £93.8m. Operating margin, before exceptional items, decreased to 9%, which the company said was mainly as a result of increases in taxation, utilities and bar and food costs. The operating margin after exceptional items was 7.8%. Pre-tax profit before tax and exceptional items increased by 8.4% to £72.4m and, after exceptional items, decreased by 4.1% to £58.9m. The group said that exceptional items before tax totalled £13.5m (2011: £5.4m) of which £0.6m resulted in a cash charge. It said that the exceptional items relate to the impairment of trading pub assets of £7.8m (2011: £4.4m), a provision for onerous leases of £2.2m, an IT-related asset write-off of £1.7m, a loss on the disposal of property, plant and equipment of £1.1m and restructuring costs of £0.6m. The company said that the total impairment provision was now £30.1m, compared with the original cost of its assets of £1.5bn. Free cash flow, after capital investment of £45.2m on existing pubs (2011: £38.4m), £5.8m in respect of share purchases for employees under the company’s share-based payment schemes and payments of tax and interest, increased by £12.7m to £91.5m during the year. In the six weeks to 9 September, the group said like-for-like sales increased by 8.4%, with total sales up by 12.8%, which it said was helped by a strong performance during the Olympic and Paralympic Games. 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 £1.42m, compared with £1.21ma year ago. The group said it continued to increase expenditure on kitchens, customer areas and beer gardens. The full-year depreciation charge was £49.2m (2011: £44.4m). JDW currently intends to open around 25 pubs in the year ending July 2013. At the end of the period the company’s total net debt, including bank borrowings and finance leases, but excluding derivatives, was £462.6m an increase of £24.9m. The group put the rise in debt down to 40 new pub openings costing £75.4m, investment in existing pubs of £45.2m, share buybacks of £22.7m and dividend payments of £15.5m. 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. It proposes subject to shareholders’ approval, to pay a final dividend of 8p per share. The group said that it and its employees paid total taxes of £519.3m in the financial year, compared with £461.0m in 2011, which equated to £11 of tax for every £1 of net profit. Tim Martin, chairman, said: “I am pleased to report a year of further progress for the company, with record sales, profit and earnings per share before exceptional items. “As previously indicated, the biggest dangers to the pub industry, are 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. “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.”