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Interim Results May 2005. www.wdb.co.uk www.pathfinderpubs.co.uk www.tupc.co.uk. Interim results 2005. 1. Strong first half results - turnover and profit growth in each of our trading divisions. 2. Successful integration of recent acquisitions

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Interim Results May 2005

www.wdb.co.uk

www.pathfinderpubs.co.uk

www.tupc.co.uk

slide2

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 10%

We are confident that our performance and out-turn for the year will be satisfactory

*Before goodwill and exceptional items

2

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Interim results 2005 : profit and loss account

20052004% 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

3

interim results 2005 like for like sales growth
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
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

- Burtonwood*¹ : at least £3.5m pa vs estimate £3.0m pa - Wizard*² : 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 £167.6m*² 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)168259

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 > WACC

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interim results 2005 financing
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 c£50m - 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
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
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
Interim results 2005: Pathfinder Pubs investment, margins

0.7

(1.0)

  • £2.5m of cost increases > 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.

30

5.5

(1.1)

29

(0.4)

28

27.2

27

26

25

EBIT £m

24

23.5

23

22

21

20

2004

Sales

Gross

NMW

Utilities

Sky

2005

growth

margin

A good combination of sales growth and strong margins

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The Old College, Barry, S Glamorgan

College Farm, Swindon

Pitcher & Piano, Nottingham

Plas Coch, Wrexham

Cronkinsons Farm, Nantwich

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
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%
  • Marston’s 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

interim results 2005 wdb brands performance
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
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 c£1m - main brand Cumberland Ale – strong local franchise - opportunities for wider distribution within W&DB pub estates

3. Combined W&DB estate of 2,275 pubs- 1,738 tenanted, 537 managed

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interim results 2005 acquisition of jennings20
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
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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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

20052004% 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 20052006 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