Wetherspoon blames tax and interest charges for profit decline
Pub chain JD Wetherspoon has blamed higher taxes, labour and food costs, and interest charges for an 11% slump in pre-tax profit to £32.2m in the half year to 23 January 2011.
The company also saw operating margin decline to 9.4%, compared to 10% in 2010 because of the increased costs. The higher interest charges came after the company renewed its bank facilities.
Wetherspoon warned that the tax burden on pubs businesses was "unsustainable" as it revealed that despite making a £22.1m profit after tax, it had paid over £220m in taxes including: VAT of £95.1m, excise duty of £57.5m, PAYE and National Insurance of £32.9m, property taxes of £20.6 million and corporation tax of £11.1m.
But chairman Tim Martin hailed record sales and operating profits for the half year in spite of the "pernicious combination of increasing taxes and regulation".
Like-for-like sales at the firm climbed 2.3% over the period and total sales increased 7.6% to £525.4m thanks to the opening of 14 new pubs (two were closed over the period).
Meanwhile Kirk Davis, who was appointed interim finance director in October last year following the abrupt departure of his predecessor Keith Down and chief operating officer Paul Harbottle, takes up the position permanently.
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<span class="Á"noindexÁ"">By Neil Gerrard
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