378 roles made redundant at JDW

By Nikkie Thatcher

- Last updated on GMT

Looking ahead: JD Wetherspoon also revealed it expects pubs to remain closed until at least the end of March
Looking ahead: JD Wetherspoon also revealed it expects pubs to remain closed until at least the end of March

Related tags: Jd wetherspoon, Tim martin, Finance, Redundancy

More than 300 staff have been made redundant across JD Wetherspoon (JDW)’s airport sites and head office, as the operator revealed it expects pubs to remain closed until at least the end of March.

The pub behemoth revealed in September that staff at its airport sites had been told a possible 400 to 450 roles were at risk​ due to a drop in passenger numbers.

This followed news in August that the business notified its head office workforce potentially 110 to 130 positions were at risk​.

Now, according to a coronavirus update, JDW stated it currently has 99% (37,000) of its employees on furlough.

The company also estimated the cost of employees not on furlough alongside taxes and other costs of furloughed employed meant it was spending £800,000 a week while pubs are closed.

It has managed to reduce costs across a plethora of areas in the business including repairs, maintenance, IT, head office, executive pay, capital expenditure and rents. The pub group also worked out its cash burn is about £4.1m a week during the closure period.

Funds raised

On 29 April last year, JDW raised £137.7m of new funds through a 15% share placing at £9 per share. It also received a £48.3m worth of funding under the Coronavirus Large Business Interruption Scheme and has made a further application for an additional loan of £51.7m under the scheme.

As of last week (14 January 2021), the business had liquidity of £139.1m.

The company also announced it had raised £93.7m investment following a share placing, which is looking to use to help with low sales upon reopening and acquisitions in London. Some 8,370,000 new ordinary shares were placed by Investic Bank at 1,120p per share.

The additional cash will be utilised to help deal with expected low sales when reopening in a bid to help the business return to growth as the market stabilises.

It is also looking acquire new sites in central London. These look to include the freehold reversions of pubs it is currently the tenant of and venues adjacent to existing pubs.

Severe impact

In a statement to the London Stock Exchange, JDW said: “It may be possible to achieve a higher-than-average return on capital on properties acquired in the next few years, based on the company’s past experience.”

JDW chairman Tim Martin was hopeful the roll out of Covid vaccines could mean a more normal trading landscape for the sector.

He added: “The Covid-19 outbreak is having a severe impact on the UK pub sector. After a number of false starts, the hospitality industry generally anticipates a return to more normal trading patterns in the spring and summer, as a result of the introduction of a mass vaccination programme.

“The equity placing announced will help the company, along with the other actions it has taken, to emerge from the pandemic in a strong position.

“Very many thanks to everyone at the company and also to its shareholders, suppliers, landlords and banks, for their support and commitment.”

The update also stated it had paid more than 80% of suppliers in full throughout the pandemic with deferred payment plans agreed with a number of larger suppliers.

As of 14 January 2021, the company had £25.2m of deferred payments outstanding to suppliers. This was reduced from £102.7m when the majority of pubs reopening last summer (4 July).

JDW also agreed a deferral of rents with about 90% of landlords during the first lockdown.

Following the additional lockdowns, the business entered further discussions with landlords with a view to reaching a mutually acceptable agreement. As of 14 January 2021, JDW had £18m of deferred rental payments outstanding.

Related topics: JD Wetherspoon

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