Drummond HallChairman

Interim Results – 21 May 2009

Jeremy TownsendFinance Director

Interim Results – 21 May 2009

3

Key Messages

Robust current trading

Cost pressure impacts first half profits

Capital investment continuing to earn good returns

Substantial debt reduction

Swap position settled and financed

Well positioned to deliver continuing market out-performance

4

Closure of Retained Property JV Swap

Swap originated from proposed property JV

Majority of swaps closed out in January 2008

Residual swap retained to hedge core debt

Core debt planned to be refinanced through long term debt/securitisation

Discussion with banks ceased in March and exposure frozen at c.£70m net

Additional facility negotiated to close the swap

5

Financial Highlights

28 weeks ended 11 April 2009 Growth

Revenue £1,024m 2.9%

EBITDA* £209m (13.3)%

Operating profit* £139m (17.3)%

Net Interest* £95m (13.1)%

Profit before tax* £44m (47.6)%

EPS* 7.9p (47.0)%

Strong sales impacted by H1 cost pressures*Before exceptional items and IAS 39 movements

6

Like-for-Like Sales Growth

1.0%

1.5%

1.0%

Improving like-for-like sales trend

7

Operating Performance

H1 09 H1 0828 wks £m 28 wks £m

Revenue

Pubs & Bars 512 508 0.8%

Restaurants 511 485 5.4%

SCPD 1 2

1,024 995 2.9%

Operating Profit*

Pubs & Bars 81 90 (10.0)

Restaurants 58 77 (24.7)

SCPD - 1

139 168 (17.3)%

Retail3.0%

Retail(16.8)

* Before exceptional items and IAS 39 movements

8

Key Operating Statistics

Same outlet food sales up 2.5%*

Same outlet drink sales up 1.7%*

Gross margin down 2.0% points

Outlet staff costs 24.5% of sales

Tight cost controls

Net operating margin down 3.3% points

Good sales growth with strong operational controlNote: all figures relate to Retail* 33 weeks

9

Operating Profit Movement

+7Total acquired

sites+11

* Before exceptional items and IAS 39 movements

Regulatory

£(29)m

2009

£139m*

(14)Disposals

(4)

2008

£168m*

Food & Energy

(27)

Trading

(16)

10

H1 09 Capital Expenditure

Focus on maintenance

£40m spent on maintenance capex

Expansionary Capex

£19m on newly acquired Whitbread sites

£7m on conversions in core pubs

ROI on last two years investments at 12%

Good returns on capex

11

Cash Flow (a)

H1 09 £m

EBIT 139

Depreciation & amortisation 70

EBITDA 209

Working capital / non cash items (6)

Maintenance capex (40)

Expansionary capex (37)

Disposals 53

Additional pension contributions (15)

Operating Cash Flow after Net Capex 164

£77m

12

Cash Flow (b)

H1 09 £m

Operating Cash Flow after Net Capex 164

Net Interest paid (82)

Tax credits received 21

Issue of share capital 2

Net Cash Flow* 105

Exceptional Cash Flow Items £3m

Continuing strong operating cash flows* Before total expenditure on exceptional items

13

Group Debt and Outstanding Facilities

April 09 Sept 08 Feb 08£m £m £m

Securitisation gross debt (2,345) (2,361) (2,391)

Cash / other 120 140 76

Unsecured drawings (411) (514) (595)

Net debt (2,636) (2,735) (2,910)

Unsecured facility £550m £600m £700mHeadroom +£139m +£86m +£105m

Unsecured facility reduction of £184m in 15 months

14

Unsecured Facilities

New Facility

Previous Facility

Facility Profile

May-09 Dec-09 Jun-10 Dec-10 Jun-11 Nov-11

15

Financing

Net Debt : EBITDA* 5.9x

Book Gearing** 71%

Interest Cover*** 1.5x

IAS 19 Pension deficit £39m

Fixed Asset Value £4.6bn

Strong balance sheet and financial platform* MAT** Net Debt / (Net Assets + Net Debt)*** Excluding net finance income from pension

16

Summary

Strong sales performance in a challenging environment

Significant cost pressures mitigated by efficiencies and productivity

Conversions to our brands & formats continue to perform well

Swap settled to remove balance sheet risk

Continued strong operating cash flows

Well positioned to accelerate market share gains

Adam FowleActing Chief Executive

Interim Results – 21 May 2009

18

Strategy for a RecessionStrategy for a Recession

Generating robust like-for-like sales growth

Accelerating market share gains

Efficiency gains to mitigate input cost pressures

Strong conversion uplifts on newly acquired sites

Capex focus on sustaining high amenity levels

Prioritising operational outperformance and cash generation

19

Operating PrioritiesOperating Priorities

Value and volume strategy

Incremental drinks sales from maximising food volumes

Profitable optimisation of price, volume and mix

Sales generation from scale brand marketing

Use purchasing scale to deliver customer value

Customer satisfaction, service quality and productivity gains

Delivering profitable volume gains

20

LikeLike--forfor--Like SalesLike Sales

H1 09* FY 08

Divisional

Pubs & Bars 1.9 (0.4)

Restaurants 0.6 2.6Segmental

Residential 2.0 1.5

High Street 0.3 0.1

Total** 1.2 1.0

*Same Outlet like-for-like sales for wks1-33 to include the entire Easter period** Includes Hollywood Bowl

21

LikeLike--forfor--Like Sales by ProductLike Sales by Product

Sales Mix Last 16 wks H1 09*

Drinks 53% +2.2% +1.7%

Food 40% +2.5% +2.5%

Other** 7% -8.5% -8.2%

Total +1.5% +1.2%

* Same outlet like-for-like sales for wks 1-33 to include the entire Easter period**Other includes accommodation, bowling, door money and machines

22

Profitable Market Share GainsProfitable Market Share Gains

MAB EstimatedVolume Growth (1) Market Volume Growth (2)

Food 6% -4%

Wine & Soft Drinks 1% -6%

Spirits -6% -9%

Beer & Cider flat -8%

Acceleration in market share gains(1) Same outlet like-for-like volume growth for wks 1-28(2) MAB estimates based on BBPA/AC Neilsen / CREST data, the NPD Group

23

Trading Strategy

Peak of input cost pressures in H1: £43m

High consumer price sensitivity

Maximise cash contribution at net operating margin level

High demand growth in value food, lower margin offers

Maintain top line momentum in operationally geared business

Volume market share gains underpin purchasing and productivity efficiencies

Sustainable volume driven, cash profit focus to mitigate margin pressures

24

Defending Margins

Continuous testing and trial of elasticities by:

Format, timeslot, product and demographics

Margin reinvestment in high elasticity areas

Price increases focused on low elasticity areas

Introduced new premium products and menu items to offset trading down trends

Renewed drinks sales growth off-setting lower margin food growth

Focus on optimising cash margin

2525

Retail Price

22

33

11

44

11

22

33

44

DrinksDrinks

55

FoodFood

Ave

rage

Ret

ail P

rice

(%)

Ave

rage

Ret

ail P

rice

(%)

Mix/RangeMix/Range

LFL PriceLFL Price

+3.1%+3.1%

2.9%2.9%

--0.2%0.2%

LFL PriceLFL Price

Mix/RangeMix/Range

--4.0%4.0%

+1.3%+1.3%

--5.3%5.3%

Note: Prices exclusive of VATNote: Prices exclusive of VAT

26

UK Food GrowthUK Food Growth -- H1 FY09H1 FY09

Food sales mix 40%*

Like-for-like food sales up 2.5%**

Like-for-like food volumes up 6.3%***

Total food sales up 7.7%

Average weekly food sales per pub up 7.7% to £8,000*

Average number of meals per pub per week up 12.4% to 1,320*

Serving 120 million meals per annum*

Enhanced purchasing scale

Food volumes up 85% up in 6 years* Last 12 months basis** Same outlet like-for-like sales for wks1-33 to include the entire Easter period*** Same outlet like-for-like volume growth for wks1-28

27

MAB Food Volume Growth vs Market

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09

MAB total volume

Quick service*

Total Market*Pub market*Full service restaurants*

Leisure*

MAB like-for-like volume

Food

Vol

ume

Gro

wth

(%)

Source: CREST data, the NPD Group and Company* Closest data point to MAB quarters chosenNB. Transport and Leisure, includes hotels,motorway and railway service stations, cinemas, garden centres, department stores etc.

28

Year on Year Price Inflation

85

90

95

100

105

110

115

120

125

ONS Grocery (MAB Weighted Basket) ONS Grocery (Unweighted) ONS Catering MAB Average Main Meal RSP

MAB vs Total Grocery and Total Catering

Pric

e In

flatio

n In

dex

(Feb

200

7 =

100)

28%

Source: ONS, Crest data, the NPD Group, MAB EPOS

29

Trading ActionsTrading Actions

Food

Protecting KVI price points on entry products

Increased levels of mid-week food promotional activity

Specials boards and menus for premium occasions

Drinks

Incremental drinks serve opportunity with meals growth

Widening the premium range

Value positioning on standard beers to take “solus” drinks market share

Proactive response to recessionary spending patterns

Note: KVI = Key Value Item

30

Menu OffersMenu Offers

Harvester

Sizzling Pub Co.

O’Neill’s

Town Pubs

31

Food: Promotional ActivityFood: Promotional Activity

Vintage Inns

Sizzling Pub Co.

Toby Carvery

Ember Inns

Harvester

32

Food: Value Added TradingFood: Value Added Trading

Sizzling Pub Co.

Ember Inns

Vintage Inns Premium Country Dining Group

3333

Beer Market Volume Outperformance*

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Sep‐06 Nov‐06 Jan‐07 Mar‐07 May‐07 Jul‐07 Sep‐07 Nov‐07 Jan‐08 Mar‐08 May‐08 Jul‐08 Sep‐08 Nov‐08 Jan‐09 Mar‐09

MA

T Vo

lum

e ou

tM

AT

Volu

me

out -- p

erfo

rman

ce (%

poi

nts)

perf

orm

ance

(% p

oint

s)

Strategy is driving increasing market share gains Strategy is driving increasing market share gains * Rolling MAT volume out* Rolling MAT volume out--performance by MAB of onperformance by MAB of on--trade beer market (% points)trade beer market (% points)Source:BBPASource:BBPA

34

Drinks: Driving Volume

Increasing availability of value draught beer

Over 750 pubs selling draught beer at £2.00 a pint or less

Value led wine promotion

99p 125ml wine in Town Pubs, accounting for 39% of wine purchases

Like-for-like soft drinks sales +3% as meal volumes grow

Dedicated drinks table service in pub restaurants

Responding to key market trends

35

Drinks: Adding Value

Beer quality: over 730 pubs cask marque accredited

Cask ale distribution and range

Number of pubs selling cask ale +11%

Volume +16%*

Cider

Range increased from 42 to 60 products

Volume +13%*

Premium Imported Draught Lager

Volume +12%*

Soft Drinks

New carbonates dispense equipment

Consistency of taste, carbonation and temperature

*Same outlet like-for-like volume growth for wks 1-28

36

Customer Satisfaction and ServiceCustomer Satisfaction and Service

Substantial customer satisfaction programme in place

c.300k responses in H1 across 1,500 pubs

Customer satisfaction measurement now instigated into:

Manager bonus scheme

Food and drinks development

Staff training and incentives

Enhancing operational service delivery

Improved customer satisfaction

37

Efficiency GainsEfficiency Gains

Productivity

Rapid growth in staff contribution per hour +5.6%

New real time scheduling and rostering system

Kitchen, floor service and bar working practices

Purchasing and menu management

LFL Food COGS inflation held to 7.5% versus 10% general food inflation

Food cost of goods per unit up only 1.6%

£7m of menu reformulation

On target for £20m of fixed and variable costs reduction in FY09

38

Maintenance Capital

Sustaining high amenity standards

Reduced overall levels of capital investment

Focus on larger number of small refurbishments of >£40k/pub

250 completed in first half

500 expected to be completed for full year

300 properties in H1 with maintenance projects of average £25k

Customer facing standards prioritised

39

Residential Pub Restaurants

Targeted response to recessionSuburban pub restaurants

Pressures on family spending

Value focus on sustaining volumes

Crown Carveries strong

Turnaround in Harvester

Country pub restaurantsMore affluent customers

Defending premium occasions

Value on week days

Vintage Inns strong

Premium Country Dining resilient

The Oystercatcher, Vintage Inn, Climping

Same outlet like-for-likes up 0.8%Mason’s Arms, Crown Carveries, Bristol

40

Recently Acquired Sites

44 pub restaurants acquired in September swap

All conversions completed in six months

Sales uplifts over 30%

Demonstrating the power of MAB formats

Brampton Mill, PCDG, Huntingdon

Harvester, Windhover, Southampton

41

Residential Pubs

Repositioning to food: 24% of sales

Like-for-like food sales up 8%

Like-for-like drinks sales up 3%

Accelerating market share gains

Strong performances from Ember Inns, Sizzling Pub Co., Cornerstone and Metro-professionals

Hollybrook Tavern, Ember, Littleover

Newlands, Sizzling Pub Co, Coventry

Same outlet like-for-likes up 3.6%

42

High Street and City Centre Markets

23% of sales

Continued central London growth

Benefit from inbound tourism

Strong performance of Town Pubs

O’Neill’s resilient

Pressure on late evening venues

Like-for-like food growth +5%

Breakfast growth +17%

Same outlet like-for-like sales growth +0.3%

Philharmonic, Classic Pubs, Liverpool

O’Neill’s, Cheltenham

43

Current Trading

Underlying trading has strengthened since January (AGM)

Weeks 1-17 Weeks 18-33

Same outlet like-for-likes + 1.0% + 1.5%

Uninvested like-for-likes - 0.5% + 0.9%

Trading has been volatile due to late Easter and uneven weather comparatives

Locals pubs trading strongly

Recent improvements in Pub Restaurant trends

Improvement in trading trends driven by market share gains

44

Outlook

Weak consumer spending through 2009

Value and volume strategy

Some signs of slowing in market declines

Improving disposable income offset by rising unemployment

Reduced supermarket drinks discounting

High consumer price elasticities in eating out and drinking out markets

Input cost pressures reversing or abating

Competitor pub closures and capacity withdrawal

Focus on profitable market share gains

45

Summary

Intensive focus on trading business through recession

Actions to conserve cash

Rapid debt reduction in past 15 months

Swap refinancing

Balancing the drive for volume with defence of margins

Intensive focus on cost efficiencies

Accelerating market share gains

Sales uplifts on recently acquired sites demonstrates value fromMAB-led consolidation

Robust trading performance and strong cash generation

Questions & AnswersQuestions & Answers

Interim Results – 21 May 2009