JD WETHERSPOON, the pub operator, vehemently scotched rumours of a management buyout yesterday, and instead raised the possibility that it could use its financial muscle to make a “significant acquisition”.

Rumours of an MBO, which have been circulating since Tim Martin, its chairman and founder, announced a year ago that he was taking a six-month sabbatical, have gathered pace recently in the wake of a deterioration in trading.

But despite a poor set of full-year results yesterday and a cut in the pub-opening programme to 15 a year, against 90 in its heyday, Jim Clarke, finance director, declared: “We’re not intending to take the company private. We quite like our independence.”

Mr Clarke added that, despite using its strong cashflow to buy back 13 per cent of its shares in the past 14 months, it wanted to remain a public company to “keep our options open”. Asked what he meant, he explained: “We’ve never made a significant acquisition, but that’s not to say that there isn’t one out there that’s a perfect fit.”

Wetherspoons yesterday reported a 4 per cent decline in profits before tax and exceptionals to £54.1 million in the year to July 25 — the first fall since its 1992 flotation — from turnover up 8 per cent to £787.1 million. A £50 million share buyback programme meant earnings per share rose 4 per cent to 17.7p and a final dividend of 2.56p makes a total of 3.89p, up 10 per cent.

Although like-for-like sales for the year rose 3.4 per cent, like-for-like profits were 0.7 per cent lower owing to mounting cost pressures and the impact of discounting by competitors such as Mitchells & Butlers and Spirit Group.

Wetherspoons was also hit by a fall-off in sales in the second half, with comparable sales growth slowing from 4.8 per cent in the first half to 1.9 per cent in the second half. “We’ve had no like-for-like sales growth for three or four months,” Mr Clarke said.

Although the Euro 2004 football championship hit Wetherspoons, which has TV screens in only 150 of its 643 pubs, the group cited the growth in supermarket drink sales as a big factor. It said that off-trade sales accounted for 40 per cent of total drink consumption, against just 20 per cent when Wetherspoons was founded 25 years ago.

Analysts reacted to the figures by cutting their pre-tax profit estimates for the present year from between £55 million and £57 million to about £50 million to £52 million. Alan Millar, at Arbuthnot Securities, suggested the company was in a “strategic cul-de-sac”.

John Hutson, chief executive, said: “Without a doubt the trading environment is as challenging as I’ve known it during my 14 years at Wetherpoons. But not for a second do we believe there’s no long-term growth. People like going to pubs.”

One of the initiatives that Mr Hutson is hoping will pep up sales is a marketing campaign in which Carling lager and Marston’s Pedigree bitter will be sold at £1.49 a pint and Burton bitter at £1.29. He admitted that this would have an impact on margins.

He rejected accusations that such price cuts flew in the face of the Government’s anti-binge drinking policy, pointing out that the company had removed all promotions that encouraged excessive drinking such as two-for-one offers.

The shares rose 2½p to 247p.