McColl’s Retail Group plc

Interim Results 26 Weeks to 28 May 2017 Important notice

This presentation has been prepared by investments and who fall within the definition and should not be read as guarantees of McColl’s Retail Group plc (the “Company”) in of “investment professionals” in Article 19(5) future performance or results and will not connection with the publication of the of the Financial Services and Markets Act necessarily be accurate indications of whether Company’s interim results for the 26 weeks 2000 (Financial Promotion) Order 2005 (the or not such results will be achieved. As a ended 28 May 2017. “Order”) or are high net worth companies, result, recipients of this presentation, should unincorporated associations or partnerships or not rely on such forward-looking statements This presentation does not constitute an trustees of high value trusts as described in due to the inherent uncertainty therein. invitation, offer to sell or any solicitation of any Article 49(2) of the Order and investment Forward-looking statements speak only as of offer to buy or subscribe for any securities in personnel of any of the foregoing (each within the date such statements and, except as the company or any of its subsidiaries or the meaning of the Order); and (C) otherwise required by the Financial Conduct Authority, associated companies or its or their affiliates to persons to whom, or at which, it may the London Stock Exchange or applicable (the “Group”). otherwise be lawfully made, supplied or law, the company undertakes no obligation to No reliance may be placed for any purpose directed (each a “Relevant Person”). No update or revise publicly any forward-looking whatsoever on the completeness or accuracy other person should act or rely on this statements, whether as a result of new of the information or opinions contained in this presentation and by accepting this information, future events or otherwise. presentation and no member of the group or presentation you represent, warrant and This presentation is not for distribution, directly any of their respective officers, directors, agree that you are a Relevant Person. or indirectly, in whole or in part, in or into the employees, representatives, agents or This presentation may include statements, United States of America, Canada, the advisers take any responsibility for, or accepts estimates, opinions and projections with Republic of South Africa, Australia, Japan or any liability in respect of, the accuracy or respect to anticipated future performance of any jurisdiction where it would be unlawful to completeness of such information. the group (“forward-looking statements”) do so. The distribution of this presentation or This presentation is directed at and is only which reflect various assumptions concerning any information contained in it may be being distributed (A) in member states of the anticipated results taken from the group’s restricted by law in certain jurisdictions, and European Economic Area to persons who are current business plan or from public sources any person into whose possession any “qualified investors” within the meaning of which may or may not prove to be correct. document containing this presentation or any Article 2(1)e of the Prospectus Directive Such forward-looking statements reflect part of it should inform themselves about, and (Directive 2003/71/EC, as amended); (B) in current expectations based on the current observe, any such restrictions. the United Kingdom to persons who have business plan and various other assumptions professional experience in matters relating to and involve significant risks and uncertainties

Interim Results 26 weeks to 28 May 2017 2 2017 – H1 highlights

H1 2017 – building momentum A multi-part growth strategy 2017 – a year of change and McColl’s well positioned Slide 4 Slide 12 an evolving sector Slide 17 Slide 14

Growing convenience offer Increase neighbourhood Excellent customer service Maximising opportunities for Slide 19 presence Slide 24 growth Slide 22 Slide 26

Interim Results 26 weeks to 28 May 2017 3 2017 H1 – building momentum

Revenue (£million) 2017 504.8 2016 469.2 £504.8 2015 +7.6% vs 2016 459.3

Adjusted EBITDA (1) (£million) 2017 16.5 2016 16.0 £16.5 2015 16.2 +2.9% vs 2016

(2) 3.4pInterim dividend per share (pence) 5.9pUnderlying adjusted earnings per share (pence) Maintained vs 2016 -2.3% vs 2016

2017 3.4 2017 5.9 2016 3.4 2016 6.1 2015 3.4 2015 6.1 4 Interim Results 26 weeks to 28 May 2017 (1) Before exceptional items and excluding property gains and losses (2) Before exceptional items and £1.3m pre-opening costs 1

Financial Review

Interim Results 26 weeks to 28 May 2017 1 Strong revenue and margin growth

Summary income statement (£million, unless stated) H1 2017 H1 2016 Year on year growth principally driven by on-boarding Revenue 504.8 469.2 of stores acquired from the Co-op Like-for-like sales (1) 0.2% (2.2%) Supported by favourable weather and an improving mix of products Gross profit 128.3 115.0 Increased mix of convenience stores and margin Gross profit margin 25.4% 24.5% accretive products, and improvement in trading terms (2) Administrative expenses (131.5) (118.0) Legislative wage inflation and higher cost (but also Administrative expenses/revenue 26.0% 25.2% profit) of operating convenience stores Other operating income, including property profits (2) 12.1 12.6 Reflects lower contribution from property profits and lower number of Post Office conversions Operating profit (2) 8.9 9.6

Adjusted EBITDA (3) 16.5 16.0 After absorbing £1.3m pre-opening costs for the Co-op stores, therefore underlying adjusted EBITDA £17.8m (increase of 11%) Adjusted EBITDA (3) margin 3.3% 3.4%

(1) Like-for-like sales reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery, mobile phone top-up and travel tickets (2) Before exceptional items Interim Results 26 weeks to 28 May 2017 (3) Before exceptional items and excluding property gains and losses 6 1 Resilient performance in light of macro tensions • Increasing pressure on incomes – Inflation coupled with falling average weekly earnings • National Living Wage – increase to £7.50 April 2017 • Apprenticeship Levy – 0.5% of payroll, introduced April 2017 6 Change in CPI vs change in average weekly earnings

4 2.7%

2 before before (%) 1.7%

0 Change, rolling 3m on same 3m year year 3m Change, 3m same on rolling -2 May-08 Feb-09 Nov-09 Aug-10 May-11 Feb-12 Nov-12 Aug-13 May-14 Feb-15 Nov-15 Aug-16 May-17 % change in average weekly earnings % change in CPI inflation

Interim Results 26 weeks to 28 May 2017 7 1 Continued improvement in LFL

• Return to positive LFL and another consecutive quarter of improving trend • Prolonged period of good weather (in contrast to prior year) – average temperature in April and May more than 10% higher year-on-year • Well-ordered and well-managed transition to new tobacco regulations (EU TPD2)

LFL sales Q2 H1 2.0

1.0 Convenience stores 1.4% 0.2%

0.0 Newsagents 1.4% 0.4% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 -1.0 Recently acquired or converted stores1 3.8% 2.8% -2.0 Total 1.4% 0.2% -3.0

(1) Like-for-like sales in stores acquired or converted in 2015-16 which have traded for over 12 months

Interim Results 26 weeks to 28 May 2017 8 1 Material increase in asset base

Summary balance sheet (£million, unless stated) H1 2017 H1 2016 Increase reflects the on-boarding of around two thirds of the Non-current assets 322.4 221.8 stores acquired from the Co-op in the first half

Current assets 136.9 106.6 Movement in current assets and liabilities driven by impact of growth on working capital and payment timing differences Current liabilities (174.8) (132.0) versus prior year

Non-current liabilities (151.0) (71.9) Increased borrowings to support the acquisition Net assets 133.5 124.5

Net debt (110.7) (42.3) Partial draw down of £100m term loan to support acquisition, remainder in H2

Interim Results 26 weeks to 28 May 2017 9 1 Significantly cash generative operations

Cash flow (£million) H1 2017 H1 2016 Adjusted EBITDA (1) 16.5 16.0 Relates to legal and professional fees associated with the Cash impact of exceptional items (1.4) (0.0) acquisition Tax paid (2.6) (2.0) Driven by benefits to working capital cycle from increased scale Change in working capital 21.5 (7.3) and a temporary payroll timing benefit Operating Cash flow 34.0 6.7 Significant investment in the business for future growth – Net capital expenditure (96.9) (8.8) acquisition of around two thirds of Co-op stores completed in H1 Net interest paid (3.0) (1.3) Consistent pence per share, but with (final) dividend paid on Dividend paid (7.8) (7.1) c10% increased share capital Net position through operations, and acquisition principally funded Net cash generated (73.7) (10.5) through debt, in-line with managements expectations

Interim Results 26 weeks to 28 May 2017 (1) Before exceptional items and excluding property gains and losses 10 1 Recap – capital allocation principles

• Management focus is to strike right balance between capital investment, deleveraging and dividends

Debt reduction Dividend payments Capex investment

£100m term loan, Maintained at 3.4 pence Forward annual capital with quarterly per share in H1 spend anticipated of repayment c£20m, broadly split: commencing in H2 Dividend pence per share expected to • 30% run and maintain increase as earnings • 70% expansion increase

Interim Results 26 weeks to 28 May 2017 11 1 A multi-part growth strategy

• Return to acquisitions – 10-12 convenience stores • Refresh of existing estate – Over 20 stores • Further expansion of Subway partnership – 4 new units • Continued optimisation of the estate – 19 closures/disposals in H1 – Further sales in H2

Interim Results 26 weeks to 28 May 2017 12 2 Market Review

Interim Results 26 weeks to 28 May 2017 2 2017 – a year of significant change

+0.2% First price inflation recorded New tobacco General election for over 2 years Article 50 triggered regulations come results in hung into force parliament Jan Feb March April May June Tesco-Booker Aldi overtakes All major Sainsbury’s merger announced Co-op as the grocery reported as 5th largest retailers in exclusive bidder grocer growth for for Nisa first time in 3.5 years

Interim Results 26 weeks to 28 May 2017 14 2 A growing, evolving sector Convenience channel forecast to grow 18% to £47.1bn by 2022 (1)

• Operates 1,740 Tesco Express • Exploring wholesale/franchise c-stores options • c. 575 c-stores • Operates 780 One Stop c-stores • Trial with MRH – forecourt • 60% franchised stores plus 185 franchised stores franchise • Increasing rate of openings • Proposed merger with Booker • Trial with McColl’s – Co-op • Announced 250 new food stores products in 24 stores by 2020

Wholesalers • Booker – proposed merger with Tesco • Operates c. 800 c-stores • Nisa reportedly seeking a buyer • Exploring franchise convenience • Sold convenience business My • P&H reportedly seeking a buyer model via trial with Euro Garages Local in 2015 – forecourt franchise (7 trading) • Relaunching Safeway brand • Reportedly preferred bidder for • Trial with Rontec, Morrisons Nisa Daily – forecourt franchise Independents remain c.75% of stores, c.55% of sales

Interim Results 26 weeks to 28 May 2017 (1) IGD Channel forecast June 2017 15 3 Strategy and operations update

Interim Results 26 weeks to 28 May 2017 3 McColl’s well positioned to succeed

Growing estate of 1,292 convenience stores, as well as 358 newsagents Opportunity for organic growth through investment in existing stores Fully managed estate One of UK’s largest wholesale accounts

90% of stores in neighbourhood locations and most frequently compete with independent retailers

Interim Results 26 weeks to 28 May 2017 17 3 A clear strategy for growth

Slide 19 Slide 24 Slide 22

Interim Results 26 weeks to 28 May 2017 18 3 Growing convenience offer – wholesale supply opportunity • Reviewing our route to market – Leveraging our increased scale – Improving our customer offer • Highly competitive wholesale sector – Multiple interested parties • Timeline – First stage completed end of June – Second stage underway – Partner selection in H2

Interim Results 26 weeks to 28 May 2017 19 3 Growing convenience offer – developing fresh food credentials • Focus on fresh and chilled – Significant learnings from acquired stores – Over 30% growth in chilled foods and 60% growth in fruit and vegetables – Key categories for top-up – Investing in fresh food training

• Trialling a recognised own-brand offer McColl’s Pudsey – Co-op conversion – Three month pilot with Co-op launched in June – Fresh, chilled, ambient grocery, wine – 24 stores

McColl’s Borehamwood – Co-op trial

Interim Results 26 weeks to 28 May 2017 20 3 Growing convenience offer – driving growth in existing stores • Designed to meet customer needs – Improved ranges – Layouts to suit different shopping missions – Environment fit for fresh foods • First two project refresh stores trading well – LFL sales up 10% Before – McColl’s West Horndon • Further 20 stores in H2 2017 • Potential future opportunity for hundreds of stores

After – McColl’s West Horndon

Interim Results 26 weeks to 28 May 2017 21 3 Increasing neighbourhood presence – a very successful integration • Integration of 298 stores completed – Opened on time – Minimal operational issues – Successful retention of colleagues • Good customer feedback – 800 interviews conducted – Net promoter scores on all metrics • Performance in-line with Before – The Co-op Bushey Heath management’s expectations • Phase II of integration underway – Further develop offer in all stores – Consider opportunities for FTG, parcel collections, Post Office, Subway

After – McColl’s Bushey Heath

Interim Results 26 weeks to 28 May 2017 22 3 Increasing neighbourhood presence – growing scale and visibility • Acquisition programme restarted – Typically single store, independently owned – New acquisition criteria

• Creating a more visible brand in the community – Brand review underway – Initial results in August

Interim Results 26 weeks to 28 May 2017 23 3 Excellent customer service – understanding customers through insight • Investing in bespoke customer insight – IGD research into the value of time – 800 customer interviews for former Co-op stores – Customer feedback on trial of Co-op own brand • 2017 him! convenience tracking programme shows consistently high ratings – Colleague friendliness/helpfulness – Ease of shop – Speed of shop • Plus card driving bigger baskets – c.700,000 members – Re-launched in former Co-op stores, double-digit basket penetration

Interim Results 26 weeks to 28 May 2017 24 3 Excellent customer service – services driving satisfaction • Four in ten trips to McColl’s involve services % of most recent trips using services – Compared to convenience average of 25% Any services National lottery • Services drive incremental purchases PayPoint – Over 40% also buy fresh food Cashpoint • Customers highly satisfied with Parcel pick-up/return services missions Post office – 96% satisfaction rate Mobile top-up Café/restaurant Takeaway e.g. Subway

0 10 20 30 40 50

McColl's Convenience

Interim Results 26 weeks to 28 May 2017 25 3 Outlook – a business that is maximising its opportunities for growth • Co-op stores acquisition complete, significant growth in sales and profit expected • Benefits of scale to be further realised through wholesale retender • Increased free cash flow to invest in new stores and existing estate • A clear strategy in a grocery channel that is supportive of growth

Interim Results 26 weeks to 28 May 2017 26 McColl’s Retail Group plc

Appendix – business background

Interim Results 26 Weeks to 28 May 2017 A long and rich history

The Group consolidated its store The Group was The Martin’s chain of fascia – McColl’s for The Group met its founded in newsagents and convenience and target of operating vending convenience stores Martin’s or RS McColl 1,000 convenience operations was acquired for newsagents stores

1901 1973 1994 1998 2000 2005 2014 2016

Robert Smyth Retail operations The Group sold its The Group McColl sets up the were added to the vending interests to successfully floated first RS McColl Group focus entirely on on the London retail operations. Stock Exchange

Interim Results 26 weeks to 28 May 2017 28 A leading neighbourhood retailer Our change in focus Where we operate in – convenience is the the UK future Summer 2017 • Over 22,000 colleagues 1,292 • Over 5 million Convenience stores 1,650 customer Our 1,292 convenience stores stores transactions per provide a great range of week everyday products and local 358 services to our customers • Growing living in neighbourhoods 2016 average basket across the UK. spend of £5.62 1,001 in H1 2017 1,375 (2016: £5.24) stores 374 2011 Newsagents With 358 newsagents across 588 the country, we are the UK’s No. 1 specialist confectioner, 1,263 tobacconist and newsagent. stores 675 Convenience stores Interim Results 26 weeks to 28 May 2017 Newsagents 29 Over 150 years of retail experience

Jonathan Miller Dave Thomas Simon Fuller Chief Executive Chief Operating Officer Chief Financial Officer

David Archibald Neil Hodge Peter Miller Development Director IT Director Trading Director

Steve Goswell Karen Bird Steve Green Retail Operations Director HR Director Retail Finance Director Interim Results 26 weeks to 28 May 2017 30 The McColl’s difference

A well managed Supplying our Delivering great products and services at the heart and efficient growing retail of the neighbourhood supply chain network

1,292 Convenience stores

568358 Newsagents

Interim Results 26 weeks to 28 May 2017 A loyal and local customer base

• Our customers live locally and shop frequently – 90% of our stores are in neighbourhood locations – 53% of our customers live within 400m of our shops – 31% of our customers visit every day • They fulfil a variety of missions – Top-up is fundamental – planned and distress – Services are a key footfall driver “The staff – Food-to-go is rapidly growing are very – Newsagent mission remains important helpful” • Our customers rate us highly on: – “They do do a really Staff friendliness/helpfulness good selection of fruit – Ease of shop and veg” – Speed of service – Community involvement

“If I lost this store it would be an astronomical effect on our family life” Interim Results 26 weeks to 28 May 2017 32 Our clear and progressive strategy

Interim Results 26 weeks to 28 May 2017 33 A highly fragmented sector

Unaffiliated Independents

Interim Results 26 weeks to 28 May 2017 34