JD Wetherspoon, the managed pub operator, has reported a 20% increase in pre-tax profit to £58.4m for the year to 30 July. Sales for the company, which operates 657 pubs, rose 5.0% to £847.5m over the same period. Operating margins were up from 8.8% to 9.9%. Averages sales per pub increased by 3.0%, with like-for-like sales increasing by 2.0% compared to the previous year. However, like-for-like sales through 17 pubs in England and Wales converted to non-smoking in the first half of the year declined by 6.5% in the second half of the period. In the company’s 39 Scottish sites, like-for-like sales over the quarter (May-July) dropped by 0.3%, and pub operating profits, before head office costs, fell by 11.0%. In total, the group has converted 92 pubs to non-smoking, which represents 14% of its estate. It said it was difficult to quantify the overall like-for-like picture, as many pubs were converted to non-smoking at different times during the last six months. JDW said that overall it believed sales started to improve in these pubs after the initial 12 months but “remain below the levels of two years ago and represents a mixed picture”. Tim Martin, chairman, said: “Wetherspoon has strongly supported the principle of pubs becoming non-smoking, and is confident about the company's medium and long term prospects in this environment. “Typically, however, the short-term effect of a change to non-smoking results in a drop in sales and profits. “Although the adjustment to a non-smoking environment can be difficult, the company is confident that the long-term benefits will outweigh the short term issues.” The company opened nine pubs during the year, compared with 13 in the previous 12 months. It sold seven pubs, creating a total of 657 pubs. It intends to open about 15 pubs during its current financial year. The group purchased 21.56m shares for cancellation during the period, at a cost of £78.7m, representing an average cost per share of 365p. The company said it believed it now had 6.0% of the UK “chain” coffee market, after a significant push on coffee through its sites over the 18 months. It also said that its coffee sales now approximately match those of Caffe Nero in volume and are about a quarter of Starbucks. The group also reported it was now selling approximately 200,000 breakfasts per week. JDW said it had made “an encouraging start” to its new financial year, with continued sales improvements, combined with a tight grip on costs. It plans to spend £15m on a new cooling system for draught beers designed to produce lower temperatures of dispense and has recently introduced an enhanced range of bottled beers, wines and spirits, plus an upgraded menu. The company said these investment and improvements would “put it in a strong position for smoking ban in England, Wales and Northern Ireland expected in the course of next year”.