IMS and Acquisition

GREENE KING plc

Continued trading outperformance; retail acquisition accelerates expansion

Interim Management Statement

Greene King announces its Interim Management Statement for the 38 weeks to 23 January 2011.

All businesses continue to trade well with similar or slightly stronger growth trends than those reported at the interim results. Trading in the last eight weeks has been influenced by the poor weather in December, which negatively impacted trading ahead of Christmas, with January seeing a positive impact due to improved conditions over last year.

In our largest business, Retail, we have continued to deliver strong underlying growth. Greene King Retail like-for-like (LFL) sales are now +3.9% with Belhaven retail LFL sales at +3.6%. LFL sales at Hungry Horse, our largest retail brand, are +10.3%. Our repositioning towards food continues with Greene King Retail LFL food sales growth of +8.2%, while we also continue to achieve LFL growth in both drinks and accommodation sales.

We expect margins for the full year in Greene King Retail to be slightly ahead of last year.

In our tenanted business, our focus on improving the retail offer across the Pub Partners estate, backed by investment in customer service through our mystery guest programme, and in estate quality via increased capital investment, continues to drive LFL profit growth. LFL EBITDA per pub is +0.6% and average EBITDA per pub is +1.9%.

Brewing Company own-brewed volume is -3.3% against a UK ale market at -7.6%. We continue to focus investment on our industry-leading core brand portfolio, Greene King IPA, the UK's no.1 cask ale, Old Speckled Hen, the UK's no.1 premium ale and Abbot Ale, the UK's no.2 premium cask ale. Volume for these core brands is -1.0%.

The integration of Belhaven into Greene King is on track, while cash generation and our balance sheet position remain healthy and in line with our expectations.

Acquisition

Over the last 18 months, we have been driving our retail expansion strategy by complementing our strong underlying trading performance with targeted retail acquisitions, utilising our rights issue proceeds and accelerating our repositioning toward food-driven retail outlets.

In line with this strategy, we have completed the acquisition of the entire share capital of Cloverleaf Restaurants for £55.8m. Based on the twelve sites that will be trading at the end of this financial year, this is equivalent to 8.7x annualised outlet EBITDA.

This is an exciting acquisition for Greene King as Cloverleaf operates large, freehold, quality pub restaurants, across the North of England and the Midlands, and is well positioned to capitalise on the growing carvery market. It is growing strongly both organically, with LFL sales growing ahead of our existing Retail business, and through additional sites. There is a strong pipeline of new sites with a minimum of ten additional outlets expected to open within two years.

The acquisition, combined with a planned investment of c. £25m in the first ten pipeline sites, will utilise the remaining balance of our rights issue proceeds.

Summary and outlook

Despite the challenges posed by the inclement weather across December, trading across the business remains strong, and we are confident that we will continue to deliver profitable growth over the rest of the financial year.

We are successfully pursuing our strategy for growth via retail expansion, brand investment and our focus on Value, Service and Quality, which is delivering sector outperformance in all of our businesses.

The short-term outlook for the UK consumer is unclear, but we are confident we will continue to deliver a sector leading performance and meet our expectations for the financial year.

There will be a conference call for analysts at 8.30am this morning. Please contact Jennifer Alves on 020 7269 7176 for the call details.

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