UK:The Wolverhampton & Dudley Breweries announce preliminary results for the year ended 1 October 2005

The Wolverhampton & Dudley Breweries announced on December 2 its preliminary results for the year ended 1 October 2005 stating that it is at the heart of thriving local communities across the country with over 2,000 pubs offering a welcoming environment and good value

● Record underlying* earnings per share up 11.3% to 84.4 pence (2004: 75.8 pence) - basic earnings per share of 44.3 pence (2004: 66.7 pence).
● Total dividend for the year up 10.0% to 38.86 pence per share (2004: 35.32 pence).
● Underlying profit before taxation up 16.0% to £90.1 million (2004: £77.7 million). Profit before taxation and after goodwill and exceptionals £47.9 million (2004: £70.2 million).
● The Union Pub Company like-for-like sales up 2.8%. ● Pathfinder Pubs like-for-like sales up 2.8%.
● Turnover and profit growth was achieved in each of the three trading divisions.
● Successful integration of Burtonwood PLC, Jennings Brothers PLC and English Country Inns PLC ahead of schedule with expected synergy benefits exceeded.
● Successful refinancing of the Group’s debt through a £805 million securitisation in August 2005.

*The underlying results reflect the performance of the Group before goodwill and exceptional items. The Directors consider that these figures provide a useful indication of the underlying performance of the Group.

Ralph Findlay, Chief Executive, commented: “Our results were achieved by continuing to manage cost pressures and improve operational efficiency, combined with an absolute focus on delivering quality and value to our customers. As a result, we were able to deliver good organic growth whilst acquiring businesses that met our stringent acquisition criteria. “Although weaker consumer confidence has produced more subdued trading conditions since the year-end, like-for-like sales are marginally positive against strong comparables in both pub divisions and our performance overall is in line with our expectations. Margins remain firm and costs well controlled.”


Chairman’s Statement
We have achieved strong results across the business, building upon the progress of the previous financial year. This performance demonstrates that our model and approach is well suited to the current trading environment, enabling us to manage cost pressures effectively and to meet increasing customer demand for good quality outlets and value for money. Our high quality, predominantly freehold estate of 2,290 pubs across England and Wales is a strong platform for our continued success.

Results: Turnover increased by 16.3% to £597.3 million (2004: £513.7 million) as a consequence of steady increases in like-for-like sales and the acquisitions of Burtonwood PLC, Jennings Brothers PLC and English Country Inns PLC during the financial year, and the acquisition of Wizard Inns Ltd in the prior year. Turnover and profit growth was achieved in each of our three trading divisions. Underlying operating margin increased to 22.7% (2004: 22.0%). Our focus on good quality freehold community pubs and popular beer brands continues to provide us with operational flexibility and has enabled us to increase operating margins despite the continuing legislative and cost pressures faced by the industry.

Underlying profit before taxation increased by 16.0% to £90.1 million (2004: £77.7 million). After goodwill amortisation and exceptional items (including refinancing costs primarily relating to the associated redemption of debentures), profit before tax was £47.9 million (2004: £70.2 million). Underlying earnings per share increased by 11.3% to 84.4 pence per share (2004: 75.8 pence). Basic earnings per share after goodwill amortisation and exceptional items was 44.3 pence per share (2004: 66.7 pence).

These results were achieved through the continuing implementation of our strategies for delivering organic growth and the successful integration of acquisitions. Dividend The Board proposes a final dividend of 25.66 pence per share, which brings the total dividend for the year to 38.86 pence per share (2004: 35.32 pence), an increase of 10.0% on the previous year. The Company has increased dividends by an average of over 10% per annum for a period of more than 30 years and continues to adopt a progressive dividend policy. The final dividend, if approved, will be paid on 31 January 2006 to those shareholders on the register at the close of business on 30 December 2005. 30 November 2005

Refinancing: The Group refinanced its debt in August 2005, replacing existing debentures and bank debt with a £805 million securitisation and a £275 million bank facility. The new financing structure provides greater flexibility for acquisitions, increases the average maturity of the Group's debt and also reduces the cash interest cost of debt by some £5 million per year. A one-off contribution of £29 million was made to The Wolverhampton and Dudley Breweries, PLC final salary pension scheme in September 2005. Legislation The new licensing regime, which has transferred licensing responsibility to local authorities and enabled more flexible opening hours, became effective on 24 November 2005. In over 95% of cases we have asked for, and received consent to, a modest extension of existing hours.

Having implemented the legislation, we are now focused on realising maximum benefit from greater flexibility. The issue of smoking in public places, and therefore in pubs, is now high on the government’s agenda. The government envisages that a partial ban in pubs will be introduced at some stage in 2007. The current proposals are summarised in the Chief Executive’s review. We believe that the impact of a ban will be greater on poorly located, uninvested pubs with limited trading opportunities.

Our strategy in recent years has been to dispose of such pubs and invest in higher quality outlets where food is an important part of the sales mix. As a result, we believe that we are well placed to manage any impact on our business from this proposed legislation. Employees This year we welcomed to the Group employees from Burtonwood, Jennings and English Country Inns. The successful and fast integration of these acquisitions has contributed to our strong performance. I thank all those involved and also those who work in our pubs, breweries and support functions for their efforts during this year. The continuing success of the business is a testament to the talents and commitment of over 11,000 employees across the Group. 30 November 2005

Outlook : The regulatory and cost issues affecting our industry have been challenging and remain so. We aim to continue to offset rising costs by improving productivity, partly facilitated by the flexibility afforded by our business model which allows us to reduce costs by transferring smaller managed pubs to tenancy or lease. Weaker consumer confidence has been widely reported, with rising energy costs, higher taxes and greater economic uncertainty putting pressure on discretionary spend. Against this backdrop, our focus on good community pubs and value for money is an appropriate strategy. We have a strong balance sheet and relatively conservative gearing which enables us to consider acquisition opportunities as they arise in a consolidating sector and are confident about our prospects for the year.

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