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Preliminary Results 30 September 2008

Preliminary Results 30 September 2008. VISIT OUR WEBSITE www.enterpriseinns.com. Financial highlights 12 months to 30 September 2008. EBITDA reduced by 3% to £512m Profit before tax and exceptional items fell by 13% to £263m Adjusted earnings per share down just 1% to 39.2 pence

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Preliminary Results 30 September 2008

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  1. Preliminary Results 30 September 2008 VISIT OUR WEBSITEwww.enterpriseinns.com

  2. Financial highlights12 months to 30 September 2008 • EBITDA reduced by 3% to £512m • Profit before tax and exceptional items fell by 13% to £263m • Adjusted earnings per share down just 1% to 39.2 pence • Full year dividend up 4% to 16.2 pence • Flexible financing structure in place

  3. EBITDAEBITDA of £512m

  4. Profit & loss accountAdjusted EPS down just 1%

  5. Gross margin analysisIncreased margin on beer sales

  6. Cash flow statementFree cash inflow of £62m

  7. Balance sheet Loan to value at 64%

  8. Debt structureUnderlying net debt reduced by £12m

  9. Weighted average life & cost of debt89% fixed at 6.5% for an average of 10 years

  10. Three pronged financingFlexible debt structure £m Bank debt Corporate bonds Securitised bonds

  11. Three pronged financingLoan to value at 64% £m Gross debt Pub value Gross debt Pub value Gross debt Pub value Bank debt Securitised bonds Corporate bonds

  12. ETI pub value headroom Pub value headroom of 17% £m Pub value secured against debt Headroom Gross debt Gross debt Gross debt Bank debt Corporate bonds Total ETI • No pub value covenant in the securitised bonds

  13. Bank debtHeadroom of £94m • * Additional borrowing of a further £100m allowed under the bank facility

  14. Bank debtComfortable covenant headroom * EBITDA includes dividends from Unique of circa £70m per annumCovenants tested semi annually on a MAT basis

  15. Corporate bondsFlexibility to match actual leverage to covenant • Post substitution of pubs • Pubs withdrawn or introduced as necessary to ensure covenant compliance • Covenants tested annually on a MAT basis

  16. Securitised bonds£115m of debt prepaid • Next mandatory repayments: June 2010 £2m, Sept 2010 £7m. £m A4 £535m A2N 201m A3 £435m

  17. Securitised bondsSignificant liquidity and headroom on covenants • Covenants • Liquidity • Liquidity facility - £190m • Cash balance of £89m at 30 September 2008 • No pub value covenant • DSCR cash trap test at 1.5x • Covenants tested quarterly on a MAT basis

  18. Debt reduction programmeSignificant debt reduction potential

  19. Group financingFlexible financing structure • 3 prongs provide flexibility • 89% of debt is fixed at 6.5% for an average of 10 years • Net debt at 64% of freehold estate value • Fixed charge cover at 2.1 times is comfortable • Significant headroom to financial covenants • Debt reduction programme in place

  20. Operating highlights12 months to 30 September 2008 • Group EBITDA of £512m, operating cash inflow £536m • Solid performance in a tough market • Increased support for licensees through discounts and concessions • Average EBITDA per pub up 2% in 82% of estate let on substantive agreements • £68m capital expenditure invested into the estate • 58 high quality acquisitions for £48m • Surplus land, underperforming & HAUV pubs sold for £30m

  21. Adjusted earnings per shareResilient performance in a tough market

  22. EBITDA per pubResilient performance in a tough market

  23. Top quality pub estateEnterprise secured the best available pub assets • Historic cost includes post acquisition capital expenditure

  24. Pub estate valuation

  25. Capital investmentConsistent investment targeting 12% return * Value of projects completed £75m, cash paid out £68m.

  26. Acquisitions & disposalsEffective estate churn • FY06 excludes sale of 769 pubs to Admiral Taverns for £318m • FY07 excludes sale of 137 pubs to Retail & Licensed Properties Ltd for £115m

  27. Estimate of potential licensee profitability Source: Estates Review – completed September 2008

  28. Estimate of potential licensee profitability • * Excludes 66 pubs, the majority of which are closed pending disposal Source: Estates Review – completed September 2008

  29. Estimate of actual licensee profitability Source: Estates Review – completed September 2008

  30. Licensee profitabilityWhat’s it really like out there? • 7,161 enquiries converted to 1,566 formal applications • 577 fully screened applicants on the database • 80% of estate let on long term assignable leases • 483 lease assignments, average premium £63k (£79k including tenants fixtures and fittings) • Rent concessions increased to 2.1% of rent roll at the year end • 915 rent reviews were completed at an average annual increase of 2.2% • Overdue balances at less than 1% of turnover, bad debts low at 0.1% of turnover

  31. Plan for 2008-09 • Maximise pub estate potential • Support licensees as appropriate • Minimal acquisitions • Return to normal levels of capital investment • Accelerate the disposal programme • Manage cash flows and debt profile

  32. Summary • 1% decline in adjusted earnings per share • Best quality pub estate • Tenanted model remains robust and fair • Strong cash generation • Debt reduction programme in place • Well placed to benefit from recovery

  33. QUESTIONS www.enterpriseinns.com

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