JD Wetherspoon this morning reported a 15% fall in full year pre-tax profits before exceptionals to £46.1m. Like-for-like sales for the year to 24 July were down by 0.6%, with the company adding that like-for-likes in August had fallen by 1.7%. The group said that it was "keeping a tight grip on capital investments, pending clarity on the impact of a smoking ban - initially in Scotland and then in the rest of the UK." The company currently has 29 non-smoking pubs and said that it intended to have converted approximately 50 pubs to non-smoking by Christmas, slower than the anticipated roll-out. Tim Martin, the company’s chairman, said: "The initial impact of introducing non-smoking in existing pubs has resulted in turnover declining by approximately 7% and profit margins declining, as there is a significant swing from bar sales to lower-margin food sales and a consequential increase in labour costs." Sales for the year increased by £22.7m to £809.9m, a rise of 3%. Operating profit decreased by 9% to £70.4m. Operating margins (before exceptional items) were 8.7%, compared with 9.9% last year, as a result of higher labour, utilities and repair costs. Net gearing at the year end was 129%, against 117% in 2004, as a result of the group’s share buyback programme, which saw it spend £45.7m on 16,455,000 shares, or approximately 9% of the issued share capital. Martin said that pubs had seen an increase in competition from supermarkets, the off-trade and duty-free imports, while the number of people visiting many city centres had fallen over binge-drinking fears. During the period the company opened 13 pubs and sold one, leaving it with a 655-strong estate.