Wetherspoon boss says pub values hit by ‘anomalies’
Wetherspoon boss Tim Martin has bemoaned “anomalies” in the valuations of pubs that he said fail to reflect their business returns.
In a statement alongside results for the year to 30 July, chairman Martin said the company had taken a £38.3m property impairment charge.
This, he said, was based on pubs “deemed unlikely to generate sufficient cash flows in the future to support their carrying value”.
Wetherspoon boss Tim Martin has bemoaned “anomalies” in the valuations of pubs that he said fail to reflect their business returns.
In a statement alongside results for the year to 30 July, chairman Martin said the company had taken a £38.3m property impairment charge.
This, he said, was based on pubs “deemed unlikely to generate sufficient cash flows in the future to support their carrying value”.
A year ago that same charge was £24.4m. This year’s is the highest since the £39.3m recorded in 2020.
The book value of the company’s assets is £1.38bn. “There are many pubs in the estate where expected future cash flows would result in a valuation which is considerably in excess of book value,” Martin said. “However, accounting rules do not take account of these potential valuations.”
Martin added that the historical cost accounting approach “can also create anomalies in pub valuations”.
“One pub in south London has made an estimated return on equity, since opening over 20 years ago, after all costs including interest and tax, of £4.4m yet its valuation has been impaired due to low profitability in the aftermath of the pandemic.”
The company posted a profit of £42.6m, having lost £30.4m a year ago.
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