Preliminary Results

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The Wolverhampton Dudley Breweries, PLC
Preliminary Results December 2004
www.wdb.co.uk www.pathfinderpubs.co.uk www.tupc.co
.uk
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Preliminary results 2004
1. Strong results, developing momentum - good
like-for-like sales in Pathfinder Pubs and UPC -
margins and profit ahead in all three
divisions - operating margin maintained
despite rising costs 2. Earnings per share
10.0 to 75.8 pence per share - profit before
tax up 6.3 - share buy-backs 8.0
million 3. Dividend 10.0 to 35.32 pence per
share - in line with earnings growth -
average annual increase gt 10 over 30 years
Before goodwill and exceptional items
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Preliminary results 2004
Financial Performance Paul Inglett Finance
Director
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Preliminary results 2004 profit and loss account
2004 change
Turnover m 513.7 4.7
Operating profit m 112.9
4.3

Operating margin 22.0
(0.1) Profit before tax m
77.7 6.3 Earnings per share
p 75.8 10.0 Dividend per
share p 35.3 10.0
Before goodwill and exceptional items
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Union Pub Company like-for-like sales growth

• includes all pubs except acquisitions and M to T
  transfers during the last 2 years

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Pathfinder Pubs like-for-like sales growth

• includes all pubs except acquisitions during
  the last two years
• uninvested like-for-like sales 0.1
• Wizard like-for-like sales 3.0

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Preliminary results 2004 consistent margin
performance
Group operating margin 2000 - 2004
22.1
22.0
21.6
20.3
Costs
17.6

2000 2001 2002 2003
2004
Our business model reduces and spreads risk
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Preliminary results 2004 effective acquisition
integration
Integration of Wizard Inns 1. Integration
completed August 2004 - synergies of 2.5m
being realised - all systems transferred -
office closed 2. Conversion opportunities - 9
pubs due to be refurbished during
2005 3. Independently valued at 85.8m -
acquisition goodwill 9.1m - three freeholds
being bought - three sites being sold for
HAUV - profit 2.0m
We see considerable development potential in the
estate
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Preliminary results 2004 free cashflow
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Preliminary results 2004 financing

• 1. Prudent financing ratios relative to the
  sector
• Actual Bank
• 2004 covenants
• - debt EBITDA 3.7x lt4.25x
• - interest cover 3.3x gt2.50x
• - fixed debt 93
• - gearing 86
• 2. Asset quality
• - Freeholds/long leaseholds 96 by value
• - Community gt90 of estate
• - Tangible fixed assets 2.1x net debt

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Preliminary results 2004 estate revaluation
1. 75 of estate re-valued September 2004
Pub
Revaluation gain Nos.
m change 363
Pathfinder Pubs 76.8 22
863 Union Pub Company 78.0
27 - WDB Brands
7.0 29
- Unlicensed properties
7.7 73
1,226 169.5 25 2.
Remaining 25 of pubs to be re-valued in 2005
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Preliminary results 2004
Business Development Ralph Findlay Chief
Executive
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Preliminary results 2004 business development
Organic development plans announced 2003...
1. More resource devoted to new pub site
acquisition 2. Targeted investment
- value for money community locals
(Bostin Local) - growth in informal
eating out market (Service That Suits) -
increasing pressure for new housing ?new pub
building - acquisition of sustainable
tenanted/leased pubs 3. Focus on beer supply
opportunities - Pubco market -
off trade
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UPC development (1) organic
1. Volumes supplied to tenants/lessees 1
like-for-like - sustainable business, average
barrels per pub gt280 per year - wine, cider,
minerals showing strong growth 2. Average rent
per pub 24.2k 9.9 - over 500 Open House
Leases agreed - food sales driving business
for 55 of licensees 3. Greater support for
tenants - 1,215 licensees from 897 pubs
attended skills pool modules - CD based
guide to wines and spirits development
launched - Active Ingredients released a
guide to developing food offer - Group
purchasing power made available to tenants
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UPC development (2) capital investment
2004 Capital Investment 27.6m
20 pubs bought 9.3m
Invested in estate 18.3m
? average investment/pub 465k? average
barrels/pub 300? average ROC 13
? 70 refurbishments? 130 Fastrack capex
investments ? investment in lease
preparation
2005F 10m
2005F 30 pubs 14m
2005 Capital Investment 24m
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UPC development (3) Pubs acquired in 2004
The Lime Kiln, Port y Waen
Rose Crown, Severn Stoke
New Elliston Coalville
New Inn, Ross on Wye
Moon Inn, Stoney Middleton
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Pathfinder development (1) operating formats
1. Bostin Local development Now 2006 -
contemporary pub design - mid-market, value
for money position - 30 food 100 120 2. Se
rvice That Suits - flexible, developed service
style - higher price platform - 60
food 30 40 3. New build programme -
exploits house building demand - monopoly
value of new sites 5 50

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Pathfinder development (2) capital investment

• More emphasis on new-build activity 30 sites
  under negotiation

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Pathfinder development (3) investment returns
1. Average sales per week

2. Return on capital - incremental cash return
on refurbishments consistently gt20 -
refurbishment cost falling (0.3m per pub)
Organic development creates internal goodwill
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Pathfinder development (4) value creation
Organic development creates internal goodwill
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Pathfinder development (5) refurbishments, new
pubs
Cobblers Hall, Newton Aycliffe
Hilton Brook, Derby
Voyager Guisborough
Hilly House, Dudley
Ye Olde White Hart, Kinver
Prime locations, high quality amenities, outside
trading areas
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WDB Brands development (1)
1. New distribution agreements - J D
Wetherspoon - Mitchells Butlers
- significant market opportunity for the
Marstons brands 2. Bass contract - UK supply
of Draught Bass - will also brew packaged Bass
for UK market 3. Capacity utilisation -
Burton brewing 90, bottling 90 -
Wolverhampton 80 - 2.3m brewhouse
development complete January 2005 4. Marstons
Pedigree - new TV campaign launched October
2004
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WDB Brands development (2)
Fresh ideas generate interest in a stale
category. 1. Marstons Old Empire -
authentic IPA 2. Marstons FC - smooth beer
with genuine taste 3. Red Brick Brewery beer -
short shelf life fresh beer - fresh is
best 4. Resolution - lowest carbohydrate
beer on the market - re-launch of Low C
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Pub performance
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WDB Brands brand performance
1. Turnover 120.3m vs 122.3m last year - H2
growth 1.9 2. Operating margin 0.4 to
17.8 3. Operating profit 0.5 to
21.4m 4. Return on capital 2.0 to
27.5 5. Brand performance - premium ale UK
market share 0.6 to 10.2 - standard ale UK
market share remains 5.5 - off trade volume
3.4, Pedigree 5.6
excluding revaluation
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Regulations key issues
1. White paper (smoking ban timetable end
2008) - eating out remains a driver
of growth - exclusion of wet-led pubs
is positive - WDB is well positioned
to weather the changes 2. TISC (report
expected December 2004) - UPC is at
the forefront of best practice 3.
Responsible retailing - BBPA
initiatives, Crime and Disorder Partnerships,
Portman Group - UPC Most Responsible
Pub Company 4. Licensing reform (in place by
end 2005) - First to support tenants,
free trade operators - Opportunity for
business development
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Preliminary results 2004 summary
1. Strong results reflecting high quality pub
estate - organic performance
consistently amongst the best in sector 2.
Business development has momentum - pub
and site acquisition - beer brand
distribution 3. Conservatively financed
- reduces financing risk in uncertain market
- provides flexibility for
acquisitions 4. Current trading is strong
- Pathfinder Pubs like-for-like sales
3.2 - Union Pub Company like-for-like
sales 4.2 - own brewed beer volumes
4.7 figures for 8 weeks ended 27 November
2004
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The Wolverhampton Dudley Breweries, PLC
Preliminary Results December 2004
www.wdb.co.uk www.pathfinderpubs.co.uk www.tupc.co
.uk
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