Final Results

1Separately disclosed items as disclosed in account note 2.

Commenting on the results, Tim Martin, the Chairman of J D Wetherspoon plc, said:

"Sales continue to improve. In the last 7 weeks, to 17 March 2024, like-for-like sales increased by 5.8%.

"In contrast, the World Health Organisation (WHO) reported on its findings in 2022.

(see pages 54-56 of Wetherspoon News

"The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance."

• Visit our website jdwetherspoon.com
• The current financial year comprises 52 trading weeks to 28 July 2024.
• The next trading update will be issued on 8 May 2024.

CHAIRMAN'S STATEMENT

Background

The recovery from the effects of the pandemic continued in the period under review.

In the first full post-lockdown financial year (FY22), like-for-like (LFL) sales declined by 4.7% compared to the pre-pandemic FY19.

In the second post-lockdown year (FY23), LFL sales increased by 7.4%, compared to FY19 - and in the half year under review, LFL sales increased to 15.3% compared to the same period in FY19.

In the last decade, there has been a reduction in the number of trading Wetherspoon pubs, which peaked at 955 in December 2015. Some leasehold pubs have been surrendered to landlords at the end of the lease or by negotiation, and other pubs have been sold to third parties. At the end of the period under review, the company traded from 814 pubs.

In spite of a reduction in the overall number of pubs, sales have continued to increase - total sales are now about one third higher than in 2015, when the number of pubs peaked, and sales per pub have increased by about 50% since then.

Since 2010, the company has invested £448m in acquiring the freehold "reversions" of pubs where it was previously the tenant.

71% of pubs are now freehold, an increase from 41% in 2010.

Our best estimate is that the company has potential for about 1,000 pubs in the UK.

Examples of recent pub openings include the Captain Flinders near Euston Station, London; the Stargazer, The O2, Greenwich; The Star Light, Heathrow Airport and the Scribbling Mill, White Rose Shopping Centre, Leeds.

In addition, there is potential to expand existing successful pubs, by adding gardens or, for example, by expanding the existing customer area into adjacent buildings.

Examples of the substantial expansion of existing pubs include the Prince of Wales, Cardiff; the Sir John Moore, Glasgow; the Standing Order, Derby; the Five Swans, Newcastle; the Six Chimneys, Wakefield; Wetherspoons, Victoria Station, London; the Red Lion, Skegness and the Windmill, Stansted Airport.

As previously indicated, the company is also increasing investment in new staff rooms, changing rooms, glass racks above bars (to cater for increased usage of brewers' "branded glasses") and air conditioning.

In summary, the company has recovered steadily from the pandemic, with current sales at record levels, and plans to increase sales in the next decade by investing in the areas outlined above.

Trading Summary

Total sales for the first half of FY24 were £991.0 million, an increase of 8.2%, compared to the first half of FY23.

Like-for-like sales, compared to FY23, increased by 9.9%. Like-for-like bar sales increased by 11.6%, food sales by 7.6%, slot/fruit machine sales by 10.5% and hotel rooms by 2.8%.

Like-for-like (LFL) sales were stronger than total sales due to a small number of pub disposals and lease terminations.

The operating profit, before separately disclosed items, was £67.7 million (2023: £37.4 million). The operating margin, before separately disclosed items, was 6.8% (2023: 4.1%).

The profit before tax and separately disclosed items was £36.0 million (2023: £4.6 million), including property gains of £0.1 million (2023: £0.5 million).

In the period, the company sold five pubs, terminated the lease of five pubs and sublet three pubs. This gave rise to a cash inflow of £3.8 million.

There was a loss on disposal of £5.9 million, recognised in the income statement, relating to these pubs.

The company opened two pubs; The Star Light at Heathrow Airport and the Captain Flinders, close to Euston Station in London.

The first Wetherspoon franchise pub opened at Hull University in January 2022. The second opened at Newcastle University in September 2023. The third opened at Haven Primrose Valley Holiday Park, Filey, North Yorkshire in March 2024.

Earnings per share before separately disclosed items, were 20.3p (2023: 1.0p).

Total capital investment was £57.2 million (2023: £47.8 million). £10.5 million was invested in new pubs and pub extensions (2023: £10.7 million), £34.6 million in existing pubs and IT (2023: £27.1 million) and £12.1 million in freehold reversions of properties where Wetherspoon was the tenant (2023: £10.0 million).

Separately disclosed items

Overall, there was a pre-tax 'separately disclosed loss' of £9.8 million (2023: £52.3 million).

There was a £4.1 million depreciation credit in relation to previously impaired fixed assets. The company had, in previous financial years, continued to depreciate pubs at the level which applied before the impairments. This credit corrects the 'over-depreciation'.

There was also:

• a £0.6 million charge relating to the fair value movement of interest rate swaps.
• a £1.6 million credit relating to overcharged interest in respect of IFRS-16 leases.
• a £5.9 million charge, reflecting the loss on disposal referred to above.
• a £9.3 million property impairment charge, in respect of pubs which were deemed unlikely to generate sufficient cash flows, in the future, to support their carrying value.

The tax effect on separately disclosed items is a credit of £3.7 million (2023: debit of £16.8 million).

The net book value of the company's assets in the balance sheet is £1.38 billion, which is approximately seven times the company's EBITDA (pre IFRS-16), in the last 12 months, of £198 million.

Free cash flow

There was a free cash outflow of £6.1 million in the period (2023: £166.0 million inflow). The main reason for the outflow is that 'trade and other payables', the amount that the company owed to suppliers and other third parties, such as HMRC, were £329 million at the end of FY23, reducing to £281 million at the end of the period under review.

Free cash flow benefitted from proceeds of approximately £14.8 million from a sale of interest rate swaps (please see the 'Financing' section below).

Free cash flow was calculated after capital payments of £34.6 million for existing pubs (2023: £27.1 million), £6.6 million for share purchases for employees (2023: £7.5 million) and payments of tax and interest.

Balance sheet

Debt levels, excluding IFRS-16 lease debt, were £694.2 million at the period end (30 July 2023: £641.9 million). As indicated in the 'Free cash flow' section above, there was a reduction in trade and other payables of £48 million between the last year end and the end of the period under review, which contributed to the increase in borrowings.

On an IFRS-16 basis, which includes notional debt from leases, debt increased from £1.06 billion to £1.11 billion in the first half of FY24.

Debt levels, excluding IFRS-16 lease debt, have decreased from £804.5 million to £694.2 million since January 2020, just before the first lockdown. On an IFRS-16 basis, debt decreased from £1.45 billion to £1.11 billion.

Dividends and return of capital

The board has not recommended the payment of an interim dividend (2023: £0).

During the period, 4,497,959 shares (3.5% of the share capital) were purchased by the company for cancellation, at a cost of £34.1m, including stamp duty and fees, representing an average cost per share of 779p.

Financing

The company has total available finance facilities of £963 million.

On 22 August 2023, the company disposed of all interest rate swaps in place, receiving £14.8 million to do so. At the same time, the company took out a new interest-rate swap of £200 million from 23 August 2023 through to 6 February 2025 at a rate of 5.665%. On 25 September 2023, the company took out a further interest-rate swap of £400 million from 6 February 2025 to 6 February 2028 at a rate of 4.225%.

The total cost of the company's debt, in the period under review, including the banks' margin was 7.03%.

Taxation

The total tax charge for the period was £11.1 million in respect of profits before separately disclosed items (2023: £3.3 million).

The total tax charge comprises two parts. The first part is the actual current tax (the 'cash' tax) which this year is £0.1 million (2023: £0.9 million).

The second part is deferred tax (the 'accounting' tax), which is tax payable in future periods, that must be recognised in the current period for accounting purposes. The accounting tax charge for the period is £11.1 million (2023: £2.4 million).

Scottish Business Rates

In appendix 1 below, we explain how business rates for Scottish pubs, theoretically based on property values, have, by a strange process of legal reasoning, become a de facto sales tax, based on the sales performance of the occupier. As the famous baseball coach, Yogi Berra said: "In theory there is no difference between theory and practice - in practice, there is."

VAT equality

Wetherspoon, along with many in the hospitality industry, has been a strong advocate of tax equality between the off-trade, which consists mainly of supermarkets, and the on-trade, consisting mainly of pubs, clubs and restaurants.

It does not make economic sense for the tax system to favour mainly out-of-town supermarkets over mainly high-street pubs. This imbalance is a major factor in town centre and high street dereliction.

Our more detailed arguments on this point, from our last annual report, can be found in appendix 2.

How pubs contribute to the economy

Wetherspoon and other pub and restaurant companies have always generated far more in taxes than are earned in profit.

In the six months ended 28 January 2024, the company generated taxes of £383.1 million.

The table below shows the £5.8 billion of tax revenue generated by the company, its staff and customers in the last nine and a half years. Each pub, on average, generated £6.6 million in tax during that period. The tax generated by the company, during this period, equates to approximately 28 times the company's profits after tax.

Note - this table is prepared on a cash basis. IFRS-16 from FY20 onwards

Corporate governance

Wetherspoon has been a strong critic of the composition of the boards of UK-quoted companies.

Directors of UK PLCs have, on average, relatively little experience of the companies they govern, due to the "nine-year rule", which limits their tenure, combined with the fact that most directors are part-time, and have never worked for the company in question, on a full-time basis.

The combination of arbitrary rules, the preponderance of part-time directors and overloaded institutional governance departments means that bureaucracy and virtue-signalling, rather than innovation and efficacy, dominate most UK PLC boardrooms.

In appendix 3, further details are provided on this issue from our last annual report.

Further progress

The company has always tried to improve as many areas of the business as possible, on a continuing basis.

In the period Wetherspoon awarded £21.2 million in respect of bonuses and free shares to employees, of which 99.0% was paid to staff below board level and 89.6% was paid to staff working in our pubs.

Tenure continued to improve. The average length of service of a pub manager is now 14.6 years, and of a kitchen manager is 10.7 years.

The company's UK nominated charity is Young Lives vs Cancer (previously CLIC Sargent). It supports children and young people with cancer. Since our partnership began in 2002, Wetherspoon has raised over £23 million for the charity, thanks to the generosity of our customers and employees.

In January 2024, the company was awarded the highest rating by the Sustainable Restaurant Association - the world's largest accreditation scheme for pubs and restaurants, see Link to SRA article.

Wetherspoon came first in the 'Out to Lunch' league table, compiled by the Soil Association, when last awarded, in 2019 and 2021. Restaurants and pubs are judged and scored on a range of criteria: family friendliness, healthy options, food quality, value, sustainability and ingredients' provenance.

Cod and haddock are sourced from fisheries which have been certified to the MSC's (Marine Stewardship Council) standards for well-managed and sustainable fisheries.

We are introducing a new chip scuttle to our kitchens, which helps to keep chips hot, while also reducing the risk of fire, and reducing energy consumption by around 10%.

We have introduced a food oil monitoring device to improve oil quality checks, which should reduce oil consumption and improve food quality.

Guinness have a 'Quality Accreditation Programme'. Independent assessors review 17 aspects of quality. All Wetherspoon pubs have received accreditation.

Since 1999, Wetherspoon has worked with independent real-ale quality assessor Cask Marque to gauge the quality of ale being served in its pubs. Cask Marque carries out an 11-point audit covering stock rotation, beer line cleanliness, equipment maintenance, glasswashing cleanliness and hygiene. A star rating is awarded from 1 to 5, with a target or 4 to 5 stars for all pubs. Cask Marque state that 66% of pubs achieve 4 or 5 stars. 99% of Wetherspoon pubs have achieved 4 or 5 stars.

Sustainability, recycling and the environment

Wherever possible, Wetherspoon separates waste into eight streams: glass; tins/cans; cooking oil; paper/cardboard; plastic; lightbulbs; food waste and general waste.

9,911 tonnes of recyclable waste were processed last year at our national recycling centre. In addition, food waste is sent for 'anaerobic digestion' and used cooking oil is converted to biodiesel for agricultural use.

Smart meters are installed in the majority of pubs to facilitate energy consumption reporting.

According to ISTA, a leading company providing energy services, Wetherspoon has reduced greenhouse gas emissions by 60% over the last 10 years, after adjusting for sales growth. During that time, the company has also contributed £107m in climate change levies and carbon taxes.

The company has 'Cleaner Power Certification' from its electricity supplier, Total Gas & Power Ltd, that states that "the electricity supplied by Total Gas & Power Ltd for the supply period of 01/10/22 to 30/09/24 will be 100% generated from renewable schemes as accredited by OFGEM".

Bonuses and free shares

2 Excludes 2020, 2021 and 2022.

Length of service

Food hygiene ratings

Wetherspoon has always emphasised the importance of hygiene standards.

We now have 744 pubs rated on the Food Standards Agency's website (see table below). The average score is 4.99, with 99.1% of the pubs achieving a top rating of five stars. We believe this to be the highest average rating for any substantial pub company.

Property litigation

Some years ago, Wetherspoon took successful legal action for fraud against its own property advisors Van de Berg, who were found, by the court, to have diverted freehold properties to third parties, leaving Wetherspoon with an inferior leasehold interest. Following the Van de Berg case, Wetherspoon instigated further legal actions against a number of individuals and companies who had freehold properties introduced to them by Van de Berg. Liability was denied by all. The cases were contested and settled out of court. Details can be found in appendix 4.

Press corrections

In the febrile atmosphere of the first UK lockdown, a number of harmful inaccuracies were published in the press. A large number of corrections and apologies were received, as a result of legal representations by Wetherspoon.

(https://www.jdwetherspoon.com/~/media/files/pdf-documents/wetherspoon-news/does-truth-matter_.pdf ).

Pubwatch

Wetherspoon pubs are members of 541 schemes country wide, with 5 new schemes and 2 less schemes due to disposals.

The company also helps to fund National Pubwatch, founded in 1997 by just two licensees and a police office. This is the umbrella organisation which helps to set up, co-ordinate and support local schemes.

In our view, Pubwatch is integral to making towns and cities a safe environment for everyone.

Current trading and outlook

As indicated above, sales continue to improve. In the last 7 weeks, to 17 March 2024, like-for-like sales increased by 5.8%.

In contrast, the World Health Organisation (WHO) reported on its findings in 2022.

(see pages 54-56 of Wetherspoon News

The company currently anticipates a reasonable outcome for the financial year, subject to our future sales performance.

APPENDIX 1 Extract from Wetherspoon FY23 Annual report, Chairman's Statement

Business rates transmogrified to a sales tax

APPENDIX 2 Extract from Wetherspoon FY23 Annual report, Chairman's Statement:

VAT equality

Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20%. This has enabled supermarkets to subsidise the price of alcoholic drinks, widening the price gap, to the detriment of pubs and restaurants. Pubs also pay around 20 pence a pint in business rates, whereas supermarkets pay only about 2 pence, creating further inequality.

.

APPENDIX 3 Extract from Wetherspoon FY23 Annual report, Chairman's Statement

Corporate Governance

APPENDIX 4 Extract from Wetherspoon FY23 Annual report, Chairman's Statement:

Property Litigation

In 2013, Wetherspoon agreed an out-of-court settlement of approximately £1.25 million with developer Anthony Lyons, formerly of property leisure agent Davis Coffer Lyons, relating to claims that Mr Lyons had been an accessory to frauds committed by Wetherspoon's former retained agent Van de Berg and its directors Christian Braun, George Aldridge and Richard Harvey in respect of properties in Leytonstone (which currently trades as the Walnut Tree), Newbury (which was leased to Café Rouge) and Portsmouth (which currently trades as The Isambard Kingdom Brunel).

As part of a series of cases, Wetherspoon also agreed out-of-court settlements with:

• Property investor Jason Harris, formerly of First London and now of First Urban Group who paid £400,000 to Wetherspoon to settle a claim in which it

was alleged that Harris was an accessory to frauds committed by Van de Berg. Harris contested the claim and did not admit liability.

Messrs Ferrari and Harris both contested the claims and did not admit liability.

INCOME STATEMENT for the 26 weeks ended 28 January 2024

J D Wetherspoon plc, company number: 1709784

1 Restated, see note 5.

STATEMENT OF COMPREHENSIVE INCOME for the 26 weeks ended 28 January 2024

Items which will be reclassified subsequently to profit or loss:

CASH FLOW STATEMENT for the 26 weeks ended 28 January 2024

J D Wetherspoon plc, company number: 1709784

1 Free cash flow is a measure not required by accounting standards; a definition is provided in the accounting policies within the 2023 Annual Report.

BALANCE SHEET as at 28 January 2024

The share premium account represents those proceeds received in excess of the nominal value of new shares issued. £124,000 was recognised in the 2023 in relation to the issue of shares in previous periods.

Other reserves contain net proceeds received for share placements which took place in previous periods. The other reserve is determined to be distributable for the purposes of the Companies Act 2006.

During the year, 4,497,959 shares were repurchased by the company and cancelled, representing approximately 3.5% of the issued share capital, at a cost of £34.1 million, including stamp duty and fees, representing an average cost per share of 779p. As at 28 January 2024, the company had committed to, but not yet purchased 630,000 shares.

See note 10 for details on the hedging reserve.

As at 28 January 2024, the company had distributable reserves of £221.3 million (2023: £251.4 million).

NOTES TO THE FINANCIAL STATEMENTS

Revenue

Separately disclosed items (continued)

Other operating income

Other income of £1,402,000 has been recognised in the period relating to a settlement agreement (2023: nil). This is offset by costs of £517,000 (2023: nil) due to an ongoing contractual dispute with a large supplier, as outlined in note 14 and costs of £682,000 (2023: nil) in relation to a historic employment tax issue.

Included within other operating income is a reversal of overcharged depreciation in relation to previously impaired fixed assets and right-of-use assets, totalling £4,139,000. The overcharge of depreciation occurred between the periods ended 26 July 2020 through to 30 July 2023, and was not material in any one period to any line item. As such, the overcharge has been reversed in the current year.

Local government support grants

The company has recognised £14,000 (2023: £nil) of local government support grants in the UK and the Republic of Ireland, associated with the COVID-19 pandemic.

Property losses

Costs classified under the 'loss on disposal of pubs' relate to sites sold or surrendered during the year.

Other property (gains)/losses

Property impairment relates to pubs which are deemed unlikely to generate sufficient cash flows in the future to support their carrying value. In the year, a total impairment charge of £9,266,000 (2023: £8,613,000) was incurred in respect of the impairment of assets as required under IAS 36. Included within this charge were impairment reversals of £1,165,000 recognised in the year (2023: £74,000).

Separately disclosed finance costs and income

The separately disclosed finance costs in the prior period of £1,037,000 relate to covenant-waiver fees. The separately disclosed finance costs in the current year of £636,000 (2023: income of £65,091,000) relate to interest-rate swaps.

A charge of £6,237,000 (2023: income of £49,887,000) relates to the fair value movement on interest-rate swaps. Income of £176,000 (2023: income of £1,913,000) relates to the amortisation of the hedge reserve to the P&L relating to discontinued hedges and, £5,425,000 (2023: income of £13,291,000) relates to hedge ineffectiveness reclassified from the reserve to the P&L in relation to terminated swaps.

Included within separately disclosed finance income during the 26 weeks ended 28 January 2024 is the reversal of overcharged interest relating to IFRS-16 leases, of £1,567,000.

Taxation

The tax effect on separately disclosed items is a credit of £3,653,000 (2023: income of £16,767,000).

Employee benefits expenses

The totals above relate to the monthly average number of employees during the period, not the total of employees at the end of the period.

Income tax expense

The taxation charge for the 26 weeks ended 28 January 2024 is based on the pre-separately disclosed items profit before tax of £36.0 million and the estimated effective tax rate before separately disclosed items for the 26 weeks ended 28 January 2024 of 33.0% (July 2023: 20.5%). This comprises a pre-separately disclosed current tax rate of 0.3% (July 2023: 0%) and a pre-separately disclosed deferred tax charge of 32.7% (July 2023: 20.5% charge).

The UK standard weighted average tax rate for the period is 25% (2023: 21%). The current tax rate is lower than the UK standard weighted average tax rate owing to tax losses in the period.

The exceptional current tax charge relates entirely to the tax on profit crystallised when terminating interest rate SWAP contracts in the previous period. For tax purposes the profits are spread over the remaining life of the underlying hedged item which results in the high exceptional ETR in the current period. A deferred tax liability is recognised in respect of this item.

Basic earnings/(loss) per share

Weighted average number of shares

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) after tax for the period by the weighted average number of ordinary shares in issue during the financial year of 127,671,463 (2023: 128,750,155) less the weighted average number of shares held in trust during the financial year of 4,618,943 (2023: 3,296,278). Shares held in trust are shares purchased by the company to satisfy employee share schemes that have not yet vested.

Diluted earnings/(loss) per share is calculated by dividing the profit/(loss) after tax for the period by the weighted average number of ordinary shares in issue during the financial year adjusted for both shares held in trust and the effects of potentially dilutive shares. For the company, the dilutive shares are those that relate to employee share schemes that have not been purchased in advance and have not yet vested. In the event of making a loss during the year, the diluted loss per share is capped at the basic earnings per share as the impact of dilution cannot result in a reduction in the loss per share.

1 Impact of dilutive shares from FY 2023 has been restated.

Earnings / (loss) per share

1 Impact of dilutive shares from FY 2023 has been restated.

Cash used in/generated from operations

The non-cash movement in bank loans and the private placement relate to the amortisation of loan issue costs. These are arrangement fees paid in respect of new borrowings and are charged to the income statement over the expected life of the loans.

Assets held for sale

These relate to situations in which the company had exchanged contracts to sell a property, but the transaction is not yet complete. As at 28 January 2024, one site was classified as held for sale (2023: one site)

Lease liabilities

The carrying amounts of lease liabilities and the movements during the period are outlined in note 11.

Asset-financing obligations

Asset-financing obligations relate to asset finance leases of equipment in pubs.

Variable-rate facility

The secured revolving credit facility is £875 million. As at 28 January 2024, £645 million was drawn down (30 July 2023: £630 million). There are 14 participating lenders. £20 million matured in February 2024 while £855 million matures in February 2025. The company has hedged its interest-rate liabilities to its banks by swapping the floating-rate debt into fixed-rate debt, see note 10.

Unamortised bank loan issue costs

Unamortised bank loan issue costs primarily relate to refinancing, securing and extending the variable-rate facility.

Private placement

The fixed-rate facility relates to senior secured notes of £98 million. The notes mature in 2026.

The company has an overdraft facility of £10 million, which is undrawn as at 28 January 2024.

Financial instruments

The below table outlines the movements in fair value among the hedging reserve, comprehensive income and the income statement during the year.

At the beginning of the reporting period, the company had four designated hedge relationships, each of which held several interest-rate swaps. Hedge relationships refer to interest-rate swaps entered into at the same time. Hedge accounting was applied to two of these hedge relationships. The following changes have taken place during the 26 weeks ended 28 January 2024:

• On 31 July 2023, the two hedge relationships whereby hedge accounting applied matured (hedge relationships one and four).
• On 22 August 2023, the company terminated the remaining two of its interest-rate swaps (hedge relationships nine and ten. On termination, the company received a cash inflow of £14,783,000, being proceeds less termination fees. Hedge accounting did not apply to either interest-rate swap and therefore their fair value was realised in the P&L.
• On 23 August 2023, a new interest-rate swap was entered into (hedge relationship eleven), with a total nominal value of £200 million. On 25 September 2023, a further interest-rate swap was entered into (hedge relationship twelve), with a nominal value of £400m. Management elected not to apply hedge accounting to the hedge relationships from inception, as they did not meet the company's risk strategy.

The liability of £9.1 million (30 July 2023: £0.078 million) is made up of the two remaining active interest-rate swaps (eleven and twelve) whereby hedge accounting does not apply. The hedge reserve of £26.2 million is made up of fair value relating to hedges which have been previously been derecognised/discontinued (30 July 2023: £0.3m of fair value relating to continuing hedges and £32.1 million relating to those which have been derecognised/discontinued).

Leases

The following amounts, relating to lease cash flows, were debited/credited to the income statement during the period.

The balance sheet shows the following amounts relating to leases. These have been reconciled in sections (a) to (d) below:

1Right-of-use assets and lease liabilities relate to leasehold properties occupied by J D Wetherspoon.

2Lease assets relate to leasehold properties sublet by J D Wetherspoon.

Going Concern

In line with accounting standards, the going concern assessment period is the 12-months from the date of approval of this report (approximately the end of quarter 3 of FY25).

The Company has modelled a 'base case' forecast in which recent momentum of sales and profit is sustained. The Company has anticipated within this forecast continued high levels of inflation, particularly on wages, utility costs and repairs. The base case scenario indicates that the Company will have sufficient resources to continue to settle its liabilities as they fall due and operate comfortably within its leverage covenants for the going concern assessment period.

A more cautious but plausible scenario has been analysed, in which lower sales growth is realised. The Company has reviewed, and is satisfied with, the mitigating actions that it could take if such an outcome were to occur. Such actions could include reducing discretionary expenditure and/or implementing price increases. Under this scenario, the Company would still have sufficient resources to settle liabilities as they fall due and headroom within its covenants throughout the going concern review period.

The Company has also performed a 'reverse stress case' which shows that the Company could withstand a 9% reduction in sales from those assessed in the 'base case' throughout the going concern period, as well as similar cost assumptions to the 'base case' scenario, before the covenant levels would be exceeded towards the end of the period. The directors consider this scenario to be remote as, other than when the business was closed during the pandemic, it has never seen such sales declines. Furthermore, the Company has concluded it could take additional mitigating actions, in such a scenario, to prevent a covenant breach.

The Company's secured Revolving Credit Facility totalling £855 million matures in February 2025. As part of the ongoing refinancing process, the feedback we have received from existing and potential new lenders to date, provides the Directors with appropriate assurance that the prospect of not being able to refinance is remote and as such no material uncertainty exists.

Contingent liability

The company is in an ongoing contractual dispute with a large supplier. The outcome of the dispute is yet to be determined and

may be resolved by a legal process. Disclosing any further information at this stage about the ongoing contractual dispute, its financial effect (if any) and uncertainties relating to the amount or timing of any outflow might be prejudicial to the company's position.