2015 Interim Results

John Hutson – CEO

Ben Whitley – Interim FD

The Forty Foot, Dún Laoghaire, Republic of Ireland The Old Unicorn, Bramley Ben Whitley Interim FD 13 March 2015

Financial Summary 26 weeks to 25/01/2015 H1 2015 H1 2014 Δ%

Revenue £744.4m £683.2m +9.0% Like-for-like sales +4.5% +5.2% Operating profit £55.1m £55.7m -1.1% Profit before tax and exceptional items £37.5m £37.8m -0.9% Earnings per share 22.6p 22.1p +2.3% Earnings per share (excluding shares held in trust) 23.5p 22.9p +2.6% Free cash flow £44.9m £42.6m +5.4% Free cash flow per share 36.5p 33.8p +8.0% Dividend 4.0p 4.0p -

After Exceptional Items: Profit before tax £37.5m £36.0m +4.1% Earnings per share 22.6p 20.7p +9.2% Earnings per share (excluding shares held in trust) 23.5p 21.4p +9.8%

3 Average Weekly Sales Per (including VAT)

£000 38 36.9 36.0 35.3 36 34.0 34 32.3 31.1 32 30.3 30.1 29.9 30.1 29.0 30 28.2 28

26

24

22 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 H1 2014 2015

Record average weekly sales per pub

4 Like-for-like Performance

% H1 H1 H2 2015 2014 2014 2014 2013 2012 2011 2010 Bar +1.5 +3.4 +1.9 +2.7 +3.8 +2.8 +1.7 -0.8

Food +10.1 +10.5 +13.5 +12.0 +10.9 +4.8 +4.2 +0.1

Machines +1.1 -9.5 +3.8 -3.1 +0.4 -2.8 -3.9 +12.1

Total LFL sales +4.5 +5.2 +5.8 +5.5 +5.8 +3.2 +2.1 +0.1

LFL Pub Profit* +0.9 +4.3 +1.7 +2.6 +4.4 -2.2 -1.2 -2.0

Reasonable LFL sales and profit growth

* Excludes head office, depreciation, share incentive plan and interest costs 5 Operating Margin - Summary

H1 2015 H1 2015 H1 2014 H1 2014 £000 % of Sales £000 % of Sales Turnover 744,367 683,229 Pub profit (pre repairs) 148,292 19.9 145,122 21.2 Repairs (26,509) (3.6) (26,900) (3.9) Head office costs (30,736) (4.1) (30,307) (4.4) Share incentive plan (3,724) (0.5) (3,800) (0.5) Depreciation (32,234) (4.3) (28,399) (4.2) Operating profit 55,089 7.4 55,716 8.2

Note: There was a change in the internal cost allocation. The comparatives has been amended accordingly.

6 Cost Increases

• Tax increases – business rates and carbon tax (36% from April) • Bar and supplies increased in the region of 2% • Utility costs increased by 11% (price up 5% and consumption up 6% including new ) • Pub based salary increases averaged 5% in October • Continued investment in repairs and

central overheads 7 Allocation of Resources £90m £123m £161m £90m £59m £108m £164m £159m £117m £217m £96m £106m

£15m Dividend £24m FH reversions & investment £5m £25m properties £10m £5m £15m Buybacks £33m £8m £23m £7m Capex £76m £15m £10m £26m £8m £10m £13m £8m £17m £7m £2m £78m £153m £3m £12m £43m £121m £10m £113m £94m £75m £82m £76m £81m £61m £49m £39m £38m

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 H1 2014 2015 Increase in capital expenditure due to new openings, reinvestment and freehold reversions

8 Capital Expenditure

H1 2015 H1 2014 £m £m Freehold reversions 12.8 7.1 Acquisition and development costs Current year 46.1 34.5 Future year 13.5 16.4 New openings and freehold reversions 72.4 58.0 Fixtures, fittings & equipment 8.0 11.1 Refurbishments 10.5 10.4 Investment in IT 2.9 3.2 Reinvestment 21.4 24.7 Total 93.8 82.7

9 Movement in Net Debt inc. Finance leases  Free cash flow increased to £44.9m (2014: £42.6m).

£m  Total net bank borrowing (including finance FY 2014 Net debt 556.6 leases) of £597.2m, an increase of £40.6m in the last 6 months (July 2014: £556.6m) Free cash flow (44.9)  Unutilised bank facilities and cash balances New pub capex 72.4 of £146.2m as at 25 January 2015 (July Dividends 9.8 2014: £138.1m) * Share buy backs 2.4  Following the period end, the Company Other 0.9 concluded an amendment and extension of its existing banking facility to £820m, H1 2015 Net debt 597.2 expiring in February 2020.

 Net debt for the year expected to increase by between £50 - £70m due to increased investment in new properties and a greater proportion of Freeholds.

* The amended facility, referred to in the Chairman’s Statement, provides an additional £100m of funds 10 Debt Position H1 H1 FY 2015 2014 2014 Net debt/EBITDA 3.38 2.93 3.21

Interest cover (times) 3.13 3.01 3.11 Interest cover pre exceptional (times) 3.13 3.11 3.19

Fixed charge cover (times) statutory 1.72 1.70 1.75 excluding depreciation 2.33 2.25 2.31 excluding depreciation and exceptionals 2.33 2.28 2.33 Average interest rate 5.65% 6.87% 6.63%

11 Financial Summary

• Reasonable sales performance

• Continue to generate strong cash flows

• Significant investment in core estate and new openings

The Picture House, Morley

12 John Hutson CEO

The Saxon Crown, Corby Business Update

• Property • People • Changing sales mix • Peach Brandtrack • Continued improvement • Cost outlook • Taxation • Current trading and outlook

14 Property Update  Average cost of development of £1.9m, £0.3m higher than in 2014

 Higher proportion of freehold pubs H1 FY

2015 2014  18 pubs opened as of 13 March 2015 Trading pubs at start of FY 927 886 Freehold pubs opened 11 31  9 pubs on site as of 13 March 2015

Leasehold pubs opened 1 15  We anticipate opening approximately 30 Closures -3 -5 pubs this financial year Total trading pubs 936 927 New Mexican Monday range

Freehold, Leasehold, (48%) (52%)

15 “It’s a people thing” • Circa 34,000 employees (2007: 20,588) • Created over 13,500 jobs since the start of the credit crunch and over 800 jobs in the last six months • Dedicated employee website & e-learning suite • Catering Academy – 212 employees have graduated with 665 employees currently going through the programme. Graduates • Staff retention at its highest ever level. Average length of service for:

• pub managers now over 10 years and 5 month,

• kitchen managers 6 years and 8 months.

• We have been recognised as one of ‘Britain’s Top Employers’ in a Guardian publication for 12 consecutive years.

• We have signed up to the Government ‘Think, Act, Report’ campaign Our team at the Crown Rivers, Heathrow T5 aiming to improve gender equality in the workplace.

• Around 10,000 employees are shareholders in the Company.

16 Changing Sales Mix 100.0% 0.4% 0.5% 0.8% 4.8% 4.5% 3.1% Other 90.0% 23.2% Machines 80.0% 29.4% 36.6% 70.0% Food 60.0%

50.0% Bar

40.0% 71.6% 65.6% 30.0% 59.5%

20.0%

10.0%

0.0% FY 2003 FY 2008 H1 2015

Long-term growth in food sales mix

17 Peach BrandTrack: Britain’s favourite big brand

If the following brands were available in the same location, which would be your first choice to at? (ranked by % of adults choosing each brand)

(out of a list of 16 – the May October April Oct April Oct top 6 ) 2012 2012 2013 2013 2014 2014 Wetherspoon 10% 11% 11% 12% 13% 13%

Nandos 11% 9% 9% 8% 8% 7%

Toby 5% 5% 5% 5% 7% 6%

Pizza Express 7% 7% 7% 7% 7% 6%

Wagamama - - 6% 5% 7% 6%

Harvester 8% 8% 8% 8% 6% 6%

Respondents first choice of brand from following list: , , Brewer’s Fayre, Café Rouge, Fayre & Square, Frankie & Benny’s, , , Nando’s, Pizza Express, , Sizzling Pubs, Slug & Lettuce, T.G.I Friday’s, , , JD Wetherspoon

Source: Peach BrandTrack, May 2012, Oct 2012, April 2013, Oct 2013, April 2014, Oct 2014 18 Continued Improvement

• 317 pubs are in the 2015 CAMRA Good Beer Guide

• Raised over £867k in the last 6 months and over £10.2m during the 12 year partnership with CLIC Sargent (Charity caring for children with cancer providing support for families at home and in hospital from the day of diagnosis.)

• 4.93 average food hygiene ratings out of a maximum of 5. A total of 93.6% of pubs achieving the maximum score of 5.

• Won The Loo of the Year Awards in six categories

The Star, Hoddesdon

19 Cost Outlook

• Tax increases: business rates and carbon tax (36% higher since April)

• Input cost inflation expected to be around 1-2% (excluding duty)

• Utility rates expected to be flat from October 2015

• Continued investment in staffing

• Continued focus on maintaining a well-invested estate for the long-term benefit of the Company

The Chief Justice of the Common Pleas, Keswick

20 Taxation 2015 2014 H1 H1 £m (estimate)* £m (rebased)* VAT 144.8 133.6 Alcohol duty 75.2 74.7 PAYE and NIC 40.7 38.0 Business rates 24.0 22.5 Corporation tax 7.8 8.8 Corporation tax credit (historic capital allowances) (2.0) – Machine duty 5.7 5.5 Climate change levy 3.0 3.0 Fuel duty 1.9 1.1 Carbon tax 1.8 1.3 Stamp duty 1.2 1.2 Landfill tax 0.8 0.7 Premise licence and TV licences 0.4 0.3 TOTAL TAX £305.3m £290.7m PROFIT AFTER TAX (excluding exceptionals) £27.8m £27.9m

* UK taxes only

Taxes increased by £14.6m compared to £0.1m decrease in profit after tax (before exceptional items) 21 Current Trading and Outlook

• 50m Lavazza coffees and teas sold per annum

• 24m breakfasts sold per annum

• Aim to triple coffee and breakfast sales over the next 18 months

• From 18 March, in approximately 880 pubs:

– 99p (or under) for a Lavazza filter coffee with free refills between 8am and 2pm every day

– More competitive breakfast pricing

– Magners Cider (568ml) and Punk IPA (330ml) priced at £1.99 each

22 Current Trading and Outlook

• LFL sales for the six weeks to 8 March 2015 increased by 1.6% with total sales growth of 5.6%

• The largest ever ale festival starting today running through to 29 March

• Continuing pressure from increased taxation and inflation

• Strong H2 profit performance last financial year

• Marketing and labour costs may be higher in the second half

• Continue to expect a reasonable outcome for the year

The Dairyman, Brentwood 23 Questions

The Sawyer’s Arms, Maesteg 24 Gin Palace Appendix Appendices

• A 10 year overview • B 10 year financial trends • C 10 year capital trends • D1 ROC/CROCCE/ROE calculations • D2 ROC/CROCCE/ROE calculations • E Cash flow • F SWAP maturity profile

26 Appendix A 10 Year Overview

£000 Average gross sales per pub week Number of pubs 38.0 950 36.0 900 34.0 850 32.0 800 936 36.0 36.9 927 30.0 35.3 750 886 860 34.0 32.3 823 28.0 31.1 700 775 30.3 30.1 29.9 30.1 28.2 29.0 731 26.0 650 694 655 657 671 24.0 600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 H1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 2014 2015 2015

£ millions Turnover £ millions Profit before tax (before exceptional items) 80.0 1,400 75.0 70.0 1,200 65.0 60.0 1,000 55.0 79.4 1,409 76.9 1,281 50.0 71.0 72.4 800 1,197 66.2 66.8 1,072 45.0 62.0 996 58.4 58.2 908 955 40.0 810 848 889 47.2 600 774 683 35.0 37.8 37.5 30.0 400 25.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 H1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 H1 2014 2015 2014 2015

27 Appendix B 10 Year Financial Trends

H1 H1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 2015

Sales per pub (£000) 1,246 1,283 1,354 1,333 1,344 1,335 1,360 1,401 1,476 1,566 766 801

EBITDA per pub (£000) (1) 195.7 205.6 219.0 211.6 212.9 205.8 198.7 194.9 200.9 205.0 99.8 99.0

Number of pubs 655 657 671 694 731 775 823 860 886 927 905 936

% freeholds (%) 41 41 42 42 42 41 44 44 44 47 45 48

CROCCE (%) (2) 11.9 12.1 12.3 11.3 11.0 10.8 10.7 10.9 10.6 10.5 10.7 10.2

Cash return on investment (%) (2) 14.4 14.8 15.4 14.0 13.6 12.9 11.8 12.6 12.4 12.3 12.5 12.2

Free cash flow per share (pence) 37.1 42.1 35.6 50.6 71.7 52.9 57.7 70.4 51.8 74.1 33.8 36.5

Diluted earnings per share 16.9 24.1 28.1 25.7 32.6 36.0 35.3 41.3 46.8 47.0 22.1 22.6 (pence) (3)

(1) Excluding sale & leaseback (2) See appendix D for calculation (3) Excluding exceptional items

28 Appendix C 10 Year Capital Trends

H1 H1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 2015 Average Size (sq.ft.) 4,176 3,928 3,855 3,618 3,359 3,781 3,572 3,325 3,643 3,585 3,538 4,080 – Openings

Number of openings 13 9 18 23 39 47 50 40 29 46 19 12

% which are 54 22 61 57 33 32 68 45 48 67 74 92 freehold Freehold average 873 625 750 958 765 857 825 639 589 559 401 811 cost (£k) Average development cost 1,401 1,301 1,520 1,498 851 857 1,207 1,420 1,552 1,643 1,505 1,948 (£k, excluding FH) Average development cost 335 331 394 414 253 226 338 427 426 458 425 478 per sq.ft. Population within 2 64,000 59,000 45,000 50,000 38,000 67,000 54,000 39,000 30,000 27,000 28,000 46,000 miles

29 Appendix D1 ROC/CROCCE/ROE 12 months to Jan 2015 12 months to Jan 2014 £000 £000 EBITDA (cash return) (a) 176,877 170,773 Depreciation (b) (61,911) (55,823) Operating profit (c) 114,966 114,950

Interest (35,935) (35,061) Profit before tax 79,031 79,889

Current tax (d) (16,440) (18,641)

Profit after cash tax (e) 62,591 61,248

Deferred tax (charge)/credit (excluding exceptional items) (3,761) 6,619 Profit after tax 58,830 67,867

Return on capital employed [(c+d)/average h) 10.7% 11.7% Cash return on cash capital employed [(a+d)/average h) 10.2% 10.7% P&L return on shareholders equity [e/average f] 17.0% 18.1% Cash return on investment [(b-e)/average (i-g) 12.2% 12.5% 30 *All returns are calculated after tax. Appendix D2 ROC/CROCCE/ROE

H1 H1 2015 2014 £000 £000 Shareholders equity per accounts 219,622 234,467

Deferred tax balances 73,498 53,177

Interest rate swaps valuations 56,796 33,688

Impairment balances 39,071 42,105

Net book value of revalued assets (7,603) (8,322)

Adjusted shareholders equity (f) 381,384 355,115

Debt (g) 597,167 499,586

Capital employed (h) 978,551 854,701

Accumulated depreciation (excluding impairments) 682,872 624,885

Cash capital employed (i) 1,661,423 1,479,586

31 Appendix E Cash Flow H1 H1 FY 2015 2014 2014 £000 £000 £000 Free Cash Flow 44,877 42,597 92,850

Proceeds on Disposal 3 - 505

Investment in new pubs (59,656) (50,875) (97,704)

Freehold reversions & investment properties (12,763) (7,135) (23,577)

HMRC – Rank Claim Repayment - - (16,696)

Dividends (9,761) (9,987) (14,949)

Loan issue cost 379 4,080 4,103

Share Buy Backs (2,413) (2,893) (24,550)

Other (1,282) (1,160) (2,320)

Movement in net debt (40,616) (25,373) (82,338)

32 Appendix F Swap Maturity Profile

Swap Value From To Weighted Average %

£400m 12 Nov 2014 31 Jul 2016 3.5%

£400m 31 Jul 2016 31 Jul 2018 2.2%

£400m 31 July 2018 31 July 2021 3.7%

£150m 31 July 2021 31 July 2023 3.8%

33 This document may contain forward-looking statements that may or may not prove accurate. Phrases such as "target", "intend", "anticipate", "believe", "estimate", "expect" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to the Company as of the date of this presentation. All written or oral forward-looking statements attributable to the Company are qualified by this caution. The Company does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in the Company’s expectations.

34