Interim Results 31 March 2004

1
Interim Results31 March 2004
VISIT OUR WEBSITE www.enterpriseinns.com
2
Highlights

• Profit before tax and exceptionals up 16 to
  93.7 million
• Average Operating Profit per pub up 9
• Adjusted earnings per share up 15 to 19.5 pence
• Interim dividend up 26 to 3.6 pence per share
• Acquisition of Unique completed at fixed price of
  608.9 million

3
Group profit loss accountAdjusted EPS up 15
6 months to 31 March 6 months to 31 March 6 months to 31 March 6 months to 31 March Year to 30 Sept Year to 30 Sept Year to 30 Sept
m 2004 2003 increase increase 2003
Turnover 240.3 234.0 3 480.6
Operating Profit 149.7 142.6 5 293.2
Interest (56.0) (61.5) (120.0)
PBT and exceptionals 93.7 81.1 16 173.2

Exceptionals (4.3) (0.1) (0.1)
Taxation (27.5) (22.8) (48.6)

Profit after tax 61.9 58.2 6 124.5

Adjusted EPS (p) 19.5 17.0 15 36.2
Dividend per share (p) 3.6 2.85 26 8.55
4
Group profit loss account(highlighting the
contribution from Unique)PBT and exceptionals up
16
6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2003 6 months to 31 March 2003 6 months to 31 March 2003 6 months to 31 March 2003 6 months to 31 March 2003 6 months to 31 March 2003
m Continuing Operations Continuing Operations Unique Total Continuing Operations Continuing Operations Other Total
Turnover 240.3 - 240.3 234.0 - 234.0
Operating Profit 130.7 19.0 149.7 124.5 18.1 142.6
Interest (42.3) (13.7) (56.0) (47.1) (14.4) (61.5)
PBT and exceptionals 88.4 5.3 93.7 77.4 3.7 81.1

Exceptionals (4.4) 0.1 (4.3) (0.2) 0.1 (0.1)
Taxation (25.9) 1.6 (27.5) (21.7) (1.1) (22.8)

Profit after tax 58.1 3.8 61.9 55.5 2.7 58.2
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Profit loss account(excluding the contribution
from Unique)Operating Profit per pub up 9
6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004
m 2004 2003 Increase Increase
Turnover 240.3 234.0 3
Cost of sales (105.8) (106.3)
Gross Profit 134.5 127.7
Gross Margin 56.0 54.6
Other Income (AWPM) 10.0 11.0
Overheads (including 1.2m goodwill) (13.8) (14.2)
Operating Profit 130.7 124.5 5

Operating Profit / Pub (000) 26.0 23.9 9
Weighted average no. of pubs 5,036 5,206
6
Gross Margin AnalysisIncreased margin on beer
sales
m 2003/4 Beer, cider FABs Beer, cider FABs Discounts Non-Core Non-Core Rent Other Total
Turnover 163.4 (5.6) 16.5 65.4 0.6 240.3
Cost of Sales (88.2) (13.1) (4.0) (0.5) (105.8)
Gross Profit 75.2 (5.6) 3.4 61.4 0.1 134.5
Gross Profit 46.0 20.6 93.9 56.0
2002/3
Turnover 159.9 (6.2) 15.9 63.2 1.2 234.0
Cost of Sales (87.4) (13.4) (4.5) (1.0) (106.3)
Gross Profit 72.5 (6.2) 2.5 58.7 0.2 127.7
Gross Profit 45.3 15.7 92.9 54.6
7
Cash FlowFree cash inflow of 35 million
m 6 months to 31 March 6 months to 31 March 6 months to 31 March 6 months to 31 March Year to 30 Sept Year to 30 Sept Year to 30 Sept
2004 2003 2003 2003 2003

Operating Profit 130.7 124.5 254.2

Operating cash inflow 139.0 127.6 269.0
Interest (52.5) (35.9) (83.5)
Tax (16.4) (7.5) (16.5)
70.1 84.2 169.0
Dividends (19.3) (15.9) (25.5)
Capex (15.9) (13.0) (24.5)

Free cash flow 34.9 55.3 119.0
8
Balance SheetIncludes Unique subject to pub
estate valuation
m As at March 2004 As at March 2003 As at Sept 2003
Tangible fixed assets 4816.7 2230.1 2524.8
Investments 0.2 101.9 121.3
Goodwill 89.9 47.6 46.3
4906.8 2379.6 2692.4
Net current liabilities (44.1) (172.8) (258.7)
Creditors gt 1 year (3630.4) (1404.3) (1276.1)
Provisions deferred tax (49.8) (61.2) (76.2)

Net worth 1182.5 741.3 1081.4
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Debt at 31st March 2004Total net debt of 3.4
billion
m Maturity Hedging
Corporate bonds (1185) 2014-2031 Fixed rates
Syndicated debt (538) 2009 Fixed via SWAP
Securitised bonds (1712) 2010-2032 Fixed via SWAPs
Bridge facility (149) 2005 Fixed via SWAP
(3584)
Cash Securitised Non-securitised 118 43
Net Debt (3423)

Weighted Average Interest Rate circa 7 100 hedged Weighted Average Interest Rate circa 7 100 hedged Weighted Average Interest Rate circa 7 100 hedged Weighted Average Interest Rate circa 7 100 hedged
10
Reduction in Debt Pre-refinancing Debt reduced
by 324 million in 18 months
m H1 2003/4 H2 2002/3 H1 2002/3
Enterprise 50.8 66.6 71.4
Unique 38.4 61.1 35.6

Total 89.2 127.7 107.0
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H1 2003/2004

• Six months of quality enhancement, consolidation
  and cash generation
• Steady state 15 eps growth
• Exercise of Unique call option

12
Profits before tax and exceptionals
2003
2001
13
Adjusted earnings per share
Full Year (Actual)
Full Year (Consensus)
Half year (Actual)
14
Growth in dividends
Sep-01
Sep-03
15
Capex and Churn

• 13 high quality individual acquisitions for 7.7m
• 15.7m capital expenditure invested in the estate
• 1.8m repairs and maintenance charged to PL
  account
• 116 underperforming and high AUV outlets sold for
  20.1m

16
Growth in operating profit per pub
17
Cash generation6 months to 31 March
2004(excluding Unique Acquisitions and
Refinancing)

• m
• Operating profit 130.7
• Operating cash inflow 139.0
• Interest and tax (68.9)
• Dividends (19.3)
• Capex (15.9)
• Net churn 12.4
• Cash generation 47.3

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AcquisitionsUnique Pub Company

• Predominantly freehold estate
• High quality pubs
• Average operating profit per pub of 57.3k (March
  2004 annualised)
• Good geographic fit

Enterprise Enterprise Unique Unique Admiral Admiral Total Total
No No No No
North 1680 34 1310 900 32 22 45 (128) 54 2862 33
Midlands 1435 29 1310 900 32 22 45 (43) 18 2292 26
South 1869 38 1844 32 22 45 (68) 28 3645 41
Total 4984 100 4054 100 [phone] 100
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Unique Call Option

• 
  m
• Book value Unique securitised debt 1712
• Unique cash (191)
• Transaction consideration 609
• 16.8 EIP Equity Interest 37
• EIP DDBs 94
• Enterprise value at 31 March 2004 2261
• Pre-Synergies Post Synergies
• (est 25m 2006)
• Projected EBITDA Sept 04 235m 260m
• Implied Exercise Multiple 9.6 8.7

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First 6 months after acquisition April to
September 2004


IntegratedNorth
IntegratedSouth

Unique
21
Integration of Unique administrationOctober 2004



Unique
IntegratedNorth
IntegratedSouth
22
Completed integration of UniqueApril 2005
IntegratedSouth


IntegratedNorth
IntegratedMidlands
23
Financial effect of sale to Admiral Taverns

• Number of outlets 239
• EBITDA 7m
• Net proceeds (at book value) 61m
• Implied Multiple 8.7

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Why leases tenancies?

• Mature business
• Appreciating freehold assets
• Strong predictable cash flow

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Leases and tenanciesKey objectives for a
successful pub company

• Licensee profitability
• Fair sustainable rents
• No compromise on product range
• Add real value to the licensee

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Licensee profitabilityAverage pub Shadow
profit and loss account
Enterprise Enterprise Enterprise Enterprise Enterprise Enterprise Unique Unique Unique Unique
k k k T/O T/O T/O k k T/O T/O
Turnover 225 251
Gross Margin 119 53 140 56
Overheads Wages Other (27) (36) (12) (16) (30) (46) (12) (18)
Pre rent profit 56 25 64 25
Domestic accommodation 8 8
Rent (27) (32)
Post rent licensee profit 37 16 40 16

Sources 2003 Enterprise Estates Review and 2003
Unique Management Estimate
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Licensee ProfitabilityHow are they really doing?
EIP Unique Combined
Pubs let on substantive agreement 91 95 93
Bad debts of turnover 0.2 0.2 0.2
Value of rent concessions (0.5)m (0.6)m (1.1)m
Rent concession of rent roll 0.4 0.5 0.4
Rent reviews 410 263 673
Rent reviews sent to arbitration 0 5 5
Dilapidation claims Applicants on database Pubs to let All settled in Uniques favour (0.7)m 691 195 (0.1)m 164 99 (0.8)m 855 294
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Fair Sustainable Rents
k Group Group Group
Average pub value 530.4
Gross rent Discounts given by Pubco Discounts foregone (70/bl) Company machine share Repairs paid by Pubco 28.9 (6.0) 16.8 2.6 (0.7)
41.6
Domestic Accommodation (8.0)
Cost to licensee 33.6
6.3 6.3 6.3
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Group Returns
k Group

Average pub value 530.4
Average property yield Average wholesale profit 41.6 16.8 7.8 3.2
Average property yield Average wholesale profit 7.8 3.2
Total 58.4 11.0

Note Current Hiller-Parker retail property gross yield index is 7.8 Note Excluding miscellaneous income and all overheads Note Current Hiller-Parker retail property gross yield index is 7.8 Note Excluding miscellaneous income and all overheads Note Current Hiller-Parker retail property gross yield index is 7.8 Note Excluding miscellaneous income and all overheads Note Current Hiller-Parker retail property gross yield index is 7.8 Note Excluding miscellaneous income and all overheads
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No compromise on brand range
31
Add real value to licensee

• Training
• Business development
• Licensing advice
• Marketing and promotions
• Special buying terms
• Catering support
• Development projects
• One-stop-shop

32
Growth in a tenanted estate

• Quality led market share gain
• Cash and Balance Sheet management

33
Market share gain

• QUALITY PUBS and
• FAIR DEAL attracts and
• retains GREAT LICENSEES and
• leads to MARKET SHARE GAIN

34
Cash and balance sheet managementFor example...

• m
• Operating Profit 500
• Profit before tax 250
• Free cash 150

Debt reduction m Investment m Share Buy Back m
Use free cash of 150m Core Growth inflation plus a bit (3) Repay debt _at_ 7 Capex and Churn _at_ 12 15.0 10.5 - 15.0 - 18.0 15.0 - -
Increase PBT 25.5 33.0 15.0
EPS growth 10 13 15
2.0 bn market cap
35
H1 2004 double digit earnings growth
m
PBT March 2003 77.4
Core growth One day (29th Feb) 5.3 0.6
Capex 1.9
Churn (1.6)
Repay debt 4.8
PBT March 2004 88.4

Growth 14.2
Profit before tax, exceptionals and Unique Equivalent to 4.3 operating profit growth Profit before tax, exceptionals and Unique Equivalent to 4.3 operating profit growth Profit before tax, exceptionals and Unique Equivalent to 4.3 operating profit growth Profit before tax, exceptionals and Unique Equivalent to 4.3 operating profit growth
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Summary

• Six months of quality enhancement and
  consolidation
• Steady state 15 growth in earnings per share
• Strong cash generation
• Solid performance from Unique
• Secure long term funding structure
• 26 increase in interim dividend
• Clear strategy for growth in shareholder value

37
Questions
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Appendices

• Analysis of Uniques Results H1 2003/4
• 1.1 Profit and Loss Account
• 1.2 Gross Margin Analysis
• 1.3 Balance Sheet
• Financial Covenants
• 2.1 Corporate Bonds
• 2.2 Syndicated debt (Enterprise)
• 2.3 Securitisation (Unique)

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Unique Pub CompanyProfit Loss Account
m 6 months to March 2004 6 months to March 2004 6 months to March 2004 6 months to March 2004 6 months to March 2004 6 months to March 2004
2004 2003 Increase Increase
Turnover 214.8 212.0 1
Cost of sales (94.2) (96.3)
Gross Profit 120.6 115.7 4
Gross Margin 56.1 54.6
Other Income 7.2 7.8
Overheads (14.9) (15.7)
Operating Profit 112.9 107.8 5

Weighted average no. of pubs 4062 4104
Operating Profit / pub (000) 27.8 26.3 6
40
Unique Pub CompanyGross Margin Analysis
6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004 6 months to 31 March 2004
m 2003/4 Beer, cider FABs1 Beer, cider FABs1 Discounts2 Non-Core Non-Core Rent Other Total
Turnover 160.4 (16.1) 5.0 64.9 0.6 214.8
Cost of Sales (Note 1) (88.7) 1.7 (4.3) (2.9) 0.0 (94.2)
Gross Profit 71.7 (14.4) 0.7 62.0 0.6 120.6
Gross Profit 44.7 89.4 14.0 95.5 100.0 56.1
2002/3
Turnover 159.1 (16.4) 5.7 62.8 0.8 212.0
Cost of Sales (Note 1) (90.6) 1.8 (5.0) (2.5) 0.0 (96.3)
Gross Profit 68.5 (14.6) 0.7 60.3 0.8 115.7
Gross Profit 43.1 89.0 12.3 96.0 100.0 54.6
Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros. Notes 1 Turnover is net of notional discounts of 6.2m in 2003/4 (5.9m in 2002/3) 2 Discounts in cost of sales represents supplier retros.
41
Unique Pub CompanyBalance Sheet
k As at March 2004 As at March 2003 As at Sept 2003 As at Sept 2003
Tangible fixed assets 2,297.2 2,193.5 2,271.6
Negative goodwill (78.9) (106.6) (78.9)
2,218.3 2,086.9 2,192.7
Bonds (1,712.2) (1,762.4) (1,738.7)
FVA (Bonds and Swaps) (65.5) - (67.5)
Refinancing costs 56.7 58.2 55.4
Bridge Loan (149.0) - -
Enterprise Loan (270.7) - -
Deep Discount Bonds - (406.9) (430.6)
Cash Securitised Non Securitised 117.6 37.7 106.3 35.4 125.8 54.1

Other assets/liabilities (14.5) 10.5 21.0
Net Assets 218.4 128.0 212.2
42
Financial CovenantsCorporate Bonds (issued 1999
to 2003)

• Annual tests
• Ring fenced portfolio of freehold pubs
• Covenants
• - Interest cover 2.0 times
• - Asset cover 1.5 / 1.67 times
• Pubs withdrawn if values increase (added if
  values fall)
• September 2003 (pre-withdrawals)
• Weighted average
• - Interest cover 2.7 times
• - Asset cover
• Covenant 1.5 times 1.7 times
• Covenant 1.67 times 1.8 times

43
Financial CovenantsSyndicated Debt (Enterprise)
Debt EBITDA Debt EBITDA Debt EBITDA Interest Cover Interest Cover Interest Cover Fixed Asset Cover Fixed Asset Cover Fixed Asset Cover
Actual Covenant Actual Covenant Actual Covenant
March 2004 6.1 N/A 3.0 N/A 1.38 1.05

September 2004 N/A 2.1 1.10

March 2005 6.6 2.1 1.30

September 2005 6.3 2.15 1.40
44
Financial CovenantsSecuritisation (Unique)

• Reported quarterly
• Covenants
• - DSCR - 1.1 times
• - Net worth 150 million
• Actuals DSCR - times Net Worth m
• March 2004 1.87 918
• December 2003 1.84 897
• September 2003 1.77 878
• June 2003 1.72 769