Interim Results May 2005

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Interim Results May 2005
www.wdb.co.uk www.pathfinderpubs.co.uk www.tupc.co
.uk
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Interim results 2005
1. Strong first half results -
turnover and profit growth in each of our trading
divisions
2. Successful integration of recent
acquisitions - Wizard, Burtonwood
integrated ahead of schedule -
expected synergies from both acquisitions
exceeded
3. Earnings per share up 10.2 -
strong growth in profit before tax
4. Dividend 10.0 to 13.2 pence per share
- average increase over 30 years of over
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We are confident that our performance and
out-turn for the year will be satisfactory
Before goodwill and exceptional items
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Interim results 2005 profit and loss account
2005 2004 change
Turnover m 277.6 233.9
18.7 Operating profit m
57.4 48.5 18.4

Operating
margin 20.7 20.7
- Profit before tax m 36.0 31.7
13.6 Earnings per share p 33.6
30.5 10.2 Dividend per share p
13.2 12.0 10.0
Before goodwill and exceptional items
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Interim results 2005 like-for-like sales growth

• c.600 21 year leases agreed

• community 3.7 (85 of estate)
• town centre 0.8 (15 of estate)
• includes Wizard

24 weeks to 19 March 2005, excludes Burtonwood
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Interim results 2005 integration of Wizard,
Burtonwood
White Lion, Thornbury, Bristol
Hoghton Arms, Newton Le Willows
Crown, Heathfield, East Sussex
Dwyeyfylchi Hotel, Penmaenmawr
Childwell Abbey Hotel, Liverpool
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Interim results 2005 successful acquisitions
1. Higher pub profits (before admin savings)
- Wizard like-for-like profit 4.3
2. Greater cost savings -
Burtonwood¹ at least 3.5m pa vs estimate
3.0m pa - Wizard² at
least 2.8m pa vs estimate 2.5m pa
3. Fast and efficient integration -
Burtonwood, Wizard both integrated ahead of
schedule - aided by use of consistent,
experienced integration teams - SAP
platform across the Group provides robust systems
framework
Trading from acquisitions has been strong and
cost savings delivered.
¹ 460 pubs acquired January 2005 for
consideration of 167.6m² 63 pubs acquired June
2004 for consideration of 91.3m
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Interim results 2005 successful acquisitions
4. Disposals at above book value -
three Wizard sites sold for 4.7m, book profit
1.8m - several potential AUV
disposals within the Burtonwood estate
5. Potential for increased value from acquired
freeholds - Red Lion, Wendover and
Café Mango, Sutton 3.1m

• Further development potential to exploit -
  Wizard 6 major and 6 minor refurbishments
  planned in H2 - Burtonwood
• 9 transfers to tenancy in H2
• considerable scope for profitable investment in
  remainder of estate
• up to 50 of estate suitable for long lease

Our acquisitions offer considerable potential for
value enhancement
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Interim results 2005 integration of Wizard,
Burtonwood

• Acquisitions principally debt funded m
  mWizard (100 cash) 91
• Burtonwood (c.75 cash) 168 259

debt 216 83 equity 43 17
consideration 259 100
2. Acquisitions achieved at attractive
multiples - Wizard 7.8x
EBITDA (historic post overhead, post synergies)
- Burtonwood 8.4x EBITDA (historic
post overhead, post synergies)
3. Total acquisition goodwill estimated at 3m -
Burtonwood element is provisional
Acquisitions have been earnings enhancing, with
returns gt WACC
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Interim results 2005 financing
1. Financing remains conservative, with strong
asset backing - debt EBITDA 4.1x
- interest cover 3.2x - freehold/long
leaseholds 97 (by value)
2. Estate revaluation demonstrates further
increase in value - 2004 75 of estate
revalued, 170m valuation uplift - 25 of
estate currently being revalued in accordance
with policy - expected net uplift c50m -
will be accounted for in full year results
Despite impact of acquisitions, gearing has
reduced vs 2004
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Interim results 2005 objectives of refinancing

• Increasing maturity profile of debt
• Increasing flexibility and acquisition headroom
• Reduced borrowing costs
• Maintaining operational flexibility
• Continued flexibility over capex and dividends

Debt re-financing offers scope for greater
flexibility and lower costs whilst reducing risk
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Interim results 2005 background to results
1. Investment is generating good returns
- pub refurbishment and site development,
Pathfinder Pubs - pub acquisitions, The
Union Pub Company
2. Margins and costs have been well managed
- operating margin of 20.7 unchanged

• Acquisitions have been effectively and quickly
  integrated - focussed, experienced integration
  teams- robust systems platform capable of
  expansion

4. Significant future opportunity clearly
identified - from the core Pathfinder Pubs, UPC
estates - from the further development of
the Wizard, Burtonwood estates - through
refinancing
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Interim results 2005 Pathfinder Pubs investment,
margins
0.7
(1.0)

• 2.5m of cost increases gt inflation 1.9 of
  operating margin.
• Investment, management of margins and cost
  have more than offset impact of cost
  increases.
• higher margins through - pricing -
  purchasing terms - estate repositioning
• wet, food margin ahead of last year.
• labour costs as percentage of sales unchanged.

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5.5
(1.1)
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(0.4)
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27.2
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EBIT m
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23.5
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2004
Sales
Gross
NMW
Utilities
Sky
2005
growth
margin
A good combination of sales growth and strong
margins
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Interim results 2005 investment in Pathfinder
Pubs

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Interim results 2005 Pathfinder Pubs
1. Average per pub - turnover per pub
(mat) 608k 11.4 - EBITDA per
pub (mat) 184k 9.5 2. Operating
margin 19.0 (0.5) 3. Total
Pathfinder Pubs - turnover 143.5m
19.2 - operating profit 27.2m
15.7
Pathfinder Pubs has developed strong momentum
Excluding 40 acquired Burtonwood managed pubs
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Interim results 2005 The Union Pub Company
1. Reduced costs from pubs transferred from
Pathfinder Pubs - 41 transferred in 2004,
20 planned in H2
2. Continued strong sales performance by
lessees - like-for-like sales 3.2,
ahead of the market - 600 21-year leases
now agreed - Over 200 suitable pubs for
conversion to lease within the Burtonwood estate

• Growth being achieved through single site
  acquisition, refurbishment - 11 pubs acquired
  in H1- 7.8m invested in pub refurbishment -
  returns achieved on acquisitions and
  refurbishments are on target

UPC continues to offer significant further
development potential
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Interim results 2005 The Union Pub Company
Change
1. Average per pub - profit per pub (mat
EBITDA) 59.2k 5.0 - average rent roll
per pub 24.5k 4.3 2. Operating margin
43.1 0.2 3. Total UPC -
turnover 62.4m 10.1 - operating
profit 26.9m 10.7
UPC has achieved growth in sales, margin and
profits
Excluding 420 acquired Burtonwood tenanted pubs
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Interim results 2005 WDB Brands brand
performance
WDB Brandsvs Market ()
WDB Brands Ale Market Change
Change
Premium ale 13.9 (3.4) 17.3 Standard
ale 0.2 (6.0) 6.2 Total ale 4.3
(5.5) 9.8

• On-trade vs market 11.0 off-trade vs
  market 5.2
• Marstons Pedigree market share increased 1.9
  to 11.0 (on-trade)
• WDB Brands share of premium cask ale market now
  14

Our brands have significantly outperformed the
market
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sources BBPA statistics, own data. Owned
brands only. UK market shares, 6 months to March
2005
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Interim results 2005 WDB Brands performance
1. Turnover growth is being achieved across
the division
increased distribution new account gains
growth in core brands
- independent free trade 6.9 - pub
companies 9.3 - off trade 0.1
- total WDB Brands 5.5
2. Operating margin of 15.4 (2004 16.0)
- growth in distribution to pub companies at
lower margin - continuing pricing
pressure in the off-trade - some cost
increases eg. utilities
3. Operating profit 1.1 to 9.2 million
New business won has offset rising costs.
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Interim results 2005 acquisition of Jennings
1. Pub estate of 128 high quality pubs
- freehold tenanted estate - average
EBITDA per pub 54k - situated in North
of England, mainly Cumbria and the North West
2. Small profitable brewing operation -
annual turnover 6.0m, profit c1m -
main brand Cumberland Ale strong local
franchise - opportunities for wider
distribution within WDB pub estates
3. Combined WDB estate of 2,275 pubs -
1,738 tenanted, 537 managed
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Interim results 2005 acquisition of Jennings
1. The offer has been declared wholly
unconditional - acceptances received
and shares held in respect of 82.5 of shares

2. Benefits of the acquisition -
synergies of at least 2m per annum -
development opportunities pub
estate beer brands -
excellent geographical fit - earnings
enhancing in first full financial year of
ownership - expected to generate return
in excess of WACC in first full financial year

3. Total acquisition cost of 67m financed
from debt
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Jennings acquisition multiples (historic)

Assumed enterprise value of 67 million
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Jennings an estate of high quality
The Sun Inn, Ullswater
The Bush, Whitehaven
The Oddfellows Arms, Wigton
The Hermitage Inn, Warkworth
The Bank Tavern, Keswick
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Interim results 2005 summary
1. Strong, record results reflecting
- high quality pub estate, strong beer brand
performance - organic development,
including investment - effective
integration of acquisitions
2. Significant development potential -
Wizard - Burtonwood - Jennings
- refinancing
3. Strong current trading -
Pathfinder Pubs like-for-like sales 3.2
- The Union Pub Company like-for-like sales
3.0 - Own brewed beer brands 4.3
32 weeks to 14 May 2005.
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Interim results 2005
Appendices
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Appendix 1
Interim results 2005 free cashflow
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Pathfinder Pubs key financials
Appendix 2
2005 2004
change
Turnover m 143.5 120.4
19.2 EBITDA m
36.1 31.0
16.5Operating profit m
27.2 23.5
15.7 Operating margin
19.0 19.5
(0.5)
excluding the acquisition of Burtonwood
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Appendix 3
Union Pub Company key financials
2005 2004
change Turnover m 62.4
56.7 10.1EBITDA m 30.9
28.1 10.0 Operating profit m
26.9 24.3 10.7 Operating
margin 43.1 42.9 0.2
excluding the acquisition of Burtonwood
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Appendix 4
WDB Brands key financials
2005 2004 change Turnover m
59.9 56.8
5.5EBITDA m 12.3 12.4
(0.8)Operating profit m 9.2 9.1
1.1 Operating margin 15.4 16.0
(0.6)
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Appendix 5
Interim results 2005 additional information and
guidance

• - Average number of shares in H1 2005
  74.1m- Number of shares in issue as at 20
  May 2005 76.6m
• - Additional dilutive number of shares
  0.9m
• - Forecast tax rates
  2005 2006 30.0
  30.8 30.0 - 31.0
• Capex forecast Existing business 50m 45m
• New builds/sites 34m 35m
  Pub acquisitions 11m 15m
  95m 95m
• - Forecast disposal proceeds
  15m 15m

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Interim Results 20 May 2005
www.wdb.co.uk www.pathfinderpubs.co.uk www.tupc.co
.uk