19 May 2004

Roger CarrRoger Carr

Chairman

19 May 2004

Karim NaffahKarim Naffah

Finance Director

3

Financial Highlights

Turnover £823m up 4%

EBITDA £197m up 3%

Operating profit £140m up 2%

Profit before tax £88m down 5%

Adjusted EPS* 10.0p up 16%

Interim dividend per share 2.85p

* Adjusted to exclude exceptional items. 2003 comparative, proforma figures

4

Interim Results - Summary

Note: All numbers are stated pre-exceptional items* Proforma

HY 04 HY 03*£m £m

EBITDA 197 191 + 3.1%

Operating Profit 140 137 + 2.2%

Interest (52) (44)

PBT 88 93 - 5.4%

Tax (29) (30)

Earnings 59 63 - 6.3%

EPS 10.0p 8.6p + 16.3%

Average no. of shares 591m 734m

5

Presentational Points to Note

FRS 5Turnover recorded net of coupons and staff discounts

Sales comparative reduced by £4m – no profit impact

Treatment of EasterStraddles period end vs. entirely in H2 last year

Like for likes quoted for 32 weeks

Reporting to Debt InvestorsFirst public reporting

Covers securitised estate from 13 November 2003

6

Operating Performance

HY 04 HY 03£m £m

Turnover Pubs & Bars 485 464 + 4.5 %Restaurants 333 321 + 3.7 %SCPD 5 4 + 25 %

823 789 + 4.3 %

Operating Profit*Pubs & Bars 92 91 + 1.1 %Restaurants 47 45 + 4.4 % SCPD 1 1 -

140 137 + 2.2 %

Note: 2003 turnover restated on the adoption of the Amendment to FRS 5* Before exceptional items

7

Key Operating Statistics*

Net retail operating margin 17%

Food sales : up 6%

Food mix 29.5% sales : up 0.4% points

Outlet staff costs : constant at 24% of sales

Retail staff productivity

Contribution per staff hour – held constant

Support cost savings of £5m

*All figures MAB Retail; 2003 restated for FRS5

8

Operating Profit Movement

*Includes £1m EBIT from SCPD in both years

H12003

H12004

£137m*

+5+1 £140m*

+5-8

Trading SupportCosts External

Costs

Easter

9

Retail Sales Growth

Same outlet = uninvested + invested All comparatives restated for the amendment to FRS 5* 32 weeks

84% of pubs +10% = 94% of pubs +6% = 100% of pubs

+ 3.4%*

+ 5.3%*

+ 4.4%

0%

1%

2%

3%

4%

5%

6%

H1 2004 H1 2004 H1 2004

UNINVESTED SAME OUTLET TOTAL SALES

10

Like-for-Like Sales

H1 04 H2 03

Same Outlet (i.e. Invested + Uninvested)

Residential + 6.4% + 3.3%

High Street + 3.1% - 0.6%

Total + 5.3% + 1.8%Uninvested

Residential + 4.4% + 0.8%

High Street + 1.3% - 3.0%

Total + 3.4% - 0.1%

H1 like for likes reflect wks 1-32 to include Easter in both periods. H2 like for likes reflect wks 33-52.All figures restated for the amendment to FRS 5

11

Balancing Sales Growth & Margin

H1 2004

Uninvested LFL Sales + 3.4%

Average Selling Price* c.- 3%

Movement in Gross Margin (%) -ve

Movement in LFL Gross Profit (£) +ve

*Food & Drink

12

H1 2004 Expansionary Capital

High Street

Pub Restaurants

Restaurants

Locals

City Centre

Foodled

Drinksled

Residential

Note: UK only and excludes Hollywood Bowl at £2m

£8m £16m

£3m £0m

13

High Street

Pub Restaurants

Restaurants

Locals

City Centre

Foodled

Drinksled

Residential

Inc. ROI 16% Inc. ROI 14%

Inc. ROI 9%Inc. ROI 14%

Performance by Segment

Note: UK only – excludes Hollywood BowlCumulative £1bn expansionary investment over the last 10 years

14

Net Cashflow (a)

HY 04£m

EBITDA 197

Working capital movement 44

Maintenance Capital Expenditure (48)

Expansionary Capital Expenditure (29)

Disposals 29

Additional pension contributions (40)

Other items 2

Net Operating Cashflow 155

15

Net Cashflow (b)

HY 04£m

Net Operating Cashflow 155

Net interest paid (45)

Tax paid (9)

Normal Dividends Paid (29)

Special Dividend (501)

Securitisation Costs* (26)

Other Items 1

Net cash flow ** (454)

* Includes £4m operating exceptionals** Before £11m of bond repayments

16

Financing

* Based on EBITDA for FY 2003**Net Debt / (Net Assets + Net Debt)

Closing Net Debt £1.7bn

Net Debt : EBITDA* 4.5x

Book Gearing** 51%

Interest Cover 2.7x

Securitisation FCF/Debt Service 2.0x

17*Unleveraged tax rate (estimated at c. 26% for FY 2004)

Strong Cash Returns

£m

278

(61)

217

3,450

(735)

50

2,765

10%10%

12 months to 10 April 2004 £m

EBIT 278

Depreciation/Amortisation 102

EBITDA 380

Cash Tax (at 22% of EBIT)* (61)

Cash Return 319

Average Net Operating Assets 3,450

Accumulated Depreciation 273

Revaluations (735)

Goodwill written off 50

Cash Capital Employed 3,038

CROCCE

8%8%

NOPAT

18

Interim 2.85p

Final 6.65p

Dividends

Progressive policy to deliver real dividend growth

Total 9.5p

19

Summary

Good performance in first half

Refinancing successfully completed

Emphasis on organic growth is bearing fruit

Tougher sales comparatives in second half

Focus on cash and high investment returns

Progressive dividend policy

Commitment to most value creative use of cash

19 May 2004

Tim ClarkeTim Clarke

Chief Executive

21

Operational Delivery of Strategy

Profitable Sales Growth

Focus on best value experience

Growing food sales and capturing drinks market share

Efficiency gains from growing volumes

Strategy on course and building momentum

22

Five Key Levers

Consumer value proposition

Optimal combination of price, volume and mix

Cost efficiencies from unit and corporate scale

Evolving consumer appeal of brands and formats

Proactive estate development

Drive earnings growth, cash returns and property appreciation

23

Estate Repositioning to Growth Segments

Integrated, informal food and drink offers* Managed pub sales

Sales = £1.5bn

Beer69%

Machines 7%

Accommodation& Other

2%

Soft Drinks and

Wines & Spirits11%

Food11%

Beer35%

Food29%

Sales = £0.9bn*

H1’04

MAT1994

Accommodation & Other6%

Soft Drinks and

Wines & Spirits25%

Machines 5%

24

Strong Sales Performance

Adjusted for FRS 5Uninvested LFL Same Outlet LFL Total Sales

0%

1%

2%

3%

4%

5%

6%

First 16 weeks wks 17-32 First 16 weeks wks 17-32 First 16 weeks wks 17-32

5.8%

3.9%

4.8%

2.8%

4.0%

4.8%

25

Gaining Share Among Managed Pubs

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Weeks 10 - 31** Weeks 25 - 31**

MAB % Drink Share of Managed Market*

Movement in Volume % Share Movement in Value % Share*Beer, cider, soft drinks, FABs and spirits** Period to 1 May 2004

% points

Source: AC Neilsen Pubtrack

26

Focus on Profitable Sales Growth

Unit scale economies of high take managed houses

Average Weekly Takes + 7% to £14.7k per week

Regulatory cost inflation exceeding consumer price inflation

Volume growth from recruiting customers and increasing frequency

Pursuing best combination of volume, price and mix enhancement

Total food and drink volumes up 8%

Average prices down 3%

Profits growth best delivered by cash generative volume growth

Volume Growth key to driving higher asset productivity

27

Draught Beer

Good, better, best pricing architecture

PremiumisationConsumers trading up to Stella ( 0 to 100k barrels p.a.)

Driving value on standard products14% price reduction, 32% volume increase in Carlsberg

Widening RangeIntroduction of Scot Co beers

£1.75 £1.95 £2.20 £2.50

28

Wines

Proprietary brands in each main grape variety

“Own label” sourced direct from the growers

Silverland (own label) from 0% to 10% of wine volume

Improving Consumer Choice

29

Soft Drinks

Range extensions to meet changing customer tastes

Fresh fruit juices available alongside packaged products

Offer better value for money

Harvester fresh juice servings doubled

Product innovation to capture

new market trends

30

Revenue and Product Yield Management

Targeting market growth segments for volume gains

Food volumes up 9%

Soft drinks volumes up 10%

Wines & spirits volumes up 13%

Managing product range and pricing for mix margin benefits

Beer volumes up 5%, Draught lager volumes up 10%

PPL’s : volume flat, PPS’s : volume down 9%

Increasing purchasing power

4% reduction on 60% of COGS re-negotiated

To Maximise Gross Profits

PPL = Premium Package Lager PPS = Premium Packaged Spirits

31

Cost Efficiencies: Staff Productivity

Improvements in scheduling and base rosters

Minimising hours required to service incremental volumes

Kitchen work methods

Sales training and product knowledge

Trialling incentives link to sales performance

32

Residential Areas: 70% of Estate

Integrated Food and Drink Offers

Same outlet like for likes + 6.4%

Un-invested like for likes + 4.4%

Drinks Volume + 7.0%

Drinks Price - 2.0%

Food Volume + 9.0%

Food Price Flat

Growth driven by 5 key brands

*

*

* 32 weeks

33

Residential Areas: Customer Demand Factors

Real growth in eating out market

Fast growing ancillary sales

Wine

Soft drinks

Coffee

Widening competitive gap driving beer market share

Estate and brand strategy focused on opportunity

34

Pub RestaurantsToby Carvery, Washington

Harvester,Barnet

Vintage Inns,Cunning Man, Reading

35

Pub Restaurants: Evolving the Offers

36

Residential Pubs: Conversion

Royal Oak, HalesowenEmber Inns

White Hart, NottinghamSizzling Pub Co

Prince of Wales, Notting HillMetropolitan Professionals

Mid-Market Suburbs

Urban Residential Areas

Affluent London Villages

37

Residential Pubs: Sales Development

38

High Street/City Centre Market: 30% of Estate

Same outlet like for likes + 3.1%Univested like for likes + 1.3%Drinks volumes +10.0%Drinks prices -6.0%

Pubs for office staff, shoppers, tourists.

Day time / early evening

Circuit VenuesLate evening

Central London

Rebasing price to generate volume gains

**

* 32 weeks

39

High Street/City Centre Markets

Draught Beer Range in London estate

Goose pubs

40

Estate Development:Site by Site Approach

Development of pipeline

Tactical use of maintenance capex to evolve/refurb

New build site acquisitions

Expansion of Business Franchise model

Extract value from non trading property

Disposal

41

Acquisitions and Conversions

Garden Gate, HampsteadMetropolitan Professionals

Golden Retriever, BracknellVintage Inn

42

Evolution through Maintenance Capex

Routine annual spend

Regular, small investment to maintain fabric of building and offer

Brand / format refresh

To keep offer current & ensure pub trades to full potential

Every 4 – 7 years, in line with maintenance cycle

All within depreciationSnuff Mill, Bristol

Harvester

Royal Oak, Halesowen

Ember

43

Business Franchises

A partnership to maximise the trading potential of mid-sized pubs

52 properties at end of H1

Franchisee benefit:

Accesses managed systems & infrastructure

Favourable supply terms

MAB benefit:

share in trading upside through turnover fee

Retain property appreciation

Plans for c. 50 more over the next 6 months

44

Social and Regulatory Issues

Licensing Act and the Guidelines

Alcohol Harm Reduction Strategy

Smoking in Public Places

Gaming Regulation

Select Committee Inquiry

Well positioned to meet the changes

45

Market Growth TrendsMarket Growth Trends

Lifestyles driving structural acceleration of market growth

Source: Office for National Statistics

Beer

Spirits

Wine & Cider

Eating Out*

*including soft drinks

Consumer expenditure £m

0

10000

20000

30000

40000

50000

60000

70000

1982 1985 1988 1991 1994 1997 2000 2003

Total(Nominal)

7.4%*

CAGR (Actual)1982 to 2003

9.4%

5.8%Drinking

Out

Total(Real)1.8%

3.8%

0.2%

46

Differentiated Strategy for Growth

Quality estate targeting growth segments

Integrated food and drink formats

Scale advantages enable customer value proposition

Power of retail marketing

Focus on sustainable sales growth

Driving earnings, cash returns and freehold appreciation

Operating and financing strategy to reward shareholders

19 May 2004

Questions & AnswersQuestions & Answers