Interim Results for the 28 weeks to 1 March 2014

PUNCH TAVERNS PLC

("Punch" or "the Group")

Interim Results for the 28 weeks to 1 March 2014

Underlying financial performance* - in line with management expectations

· EBITDA of £108 million (2013: £117 million)

· Profit before tax of £50 million (including £30 million of profits attributable to bond purchases) (2013: £26 million; no profits attributable to bond purchases)

· £305 million of cash reserves

· On track to meet our full year profit expectations

Operational highlights

· On target to deliver the business plan

· Average profit per pub up 4% across the entire estate of 3,956 pubs

Core estate:

· Like-for-like net income** up 1.4%, continued growth for three quarters

· New Partner enquiries from potential tenants up 40% on 2013

· 95% of the estate let to Partners on substantive agreements (up from 94% at March 2013)

· Investment programme on track with 170 core pub investments completed at an average spend of c.£90,000

· 36% of the 2,961 core pub estate now invested (over £40,000); up from 23% in 2012

· New field teams in place delivering enhanced levels of Partner support

· 90% of Partners registered on the Punch Buying Club

Non-core estate:

· 116 pubs transferred to the core estate, leaving 995 pubs in non-core

· Non-core 'protect' and 'sell-later' pubs in like-for-like net income** growth of 0.4%

Disposal programme:

· Disposal programme on track

· 140 pubs and other assets disposed for £51 million, £6 million ahead of book value and at a multiple of 17 times EBITDA

Capital Restructuring

· Extensive engagement with a wide group of stakeholders is continuing and the Board remains of the view that a consensual restructuring is in the best interests of all stakeholders

· Punch A and Punch B launched covenant waiver requests on 7 April 2014 in order to obtain temporary waivers of their DSCR covenants and certain other provisions of the securitisation documents to provide further time to reach agreement on a consensual restructuring

· The covenant waiver requests require the support of all classes of noteholders and other securitisation creditors, with noteholder meetings convened for 29 April 2014

Stephen Billingham, Executive Chairman of Punch Taverns plc, commented:

"We have delivered profits for the half year in line with our expectations.

Our results reflect the significant operational changes we have made over the last 15 months which are now embedded in the business. We have returned the core estate to growth and delivered a 4% improvement in average profit per pub across our 4,000 pub estate.

We are on track to deliver our full year profit expectations and start the second half of the year backed by the increased level of Partner operational support that will further strengthen the performance of our pubs.

Proactive engagement on the restructuring discussions is continuing and we urge all stakeholders to support the covenant waiver requests to provide the business with stability and time to effect a consensual restructuring of the Group's financing arrangements."

15 April 2014

* before non-underlying items

** net income represents revenue less cost of drink sales (gross profit)

Enquiries:

The interim results presentation will be available on the Punch website www.punchtavernsplc.com from 9.00 BST. An audio cast of the presentation will also be available.

Forward-looking statements

This report contains certain statements about the future outlook for Punch. Although we believe our expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

EXECUTIVE CHAIRMAN'S REVIEW

MARKET POSITIONING

Punch is a leading operator of leased and tenanted pubs in the United Kingdom. As at 1 March 2014, the Punch estate comprised 3,956 pubs located across the UK, 96% of which were held on a freehold or long leasehold basis. In addition, Punch owns 50% of Matthew Clark (Holdings) Limited, the holding company of the Matthew Clark business, a leading drinks wholesaler and distributor.

Punch's aim is to become the UK's highest quality, most trusted and best value leased pub company. The core estate represents a higher quality, geographically well-located portfolio of 2,961 pubs at 1 March 2014 which is suitably positioned to adapt to changing market conditions and support sustainable long-term growth for Punch and our Partners.

The core estate aims to drive sustainable growth by making each pub the best of its type in its marketplace. The focus is on attracting the right Partners through new lease offers, investment to drive sales (including food), an increase in the field support teams and expansion of the Punch Buying Club.

The non-core estate, which comprised 995 pubs at 1 March 2014, aims to maximise short-term returns with a clear focus on costs and cash flow. Approximately 1,300 non-core pubs have been disposed of since the division was created three years ago. The majority of the remaining non-core pubs are expected to be disposed of over the next five years with disposals phased to ensure a balance between the speed of disposal and value achieved. Around half of the non-core estate is let on substantive agreements and all non-core pubs continue to have access to the same operational support infrastructure as our core pubs, to assist in driving operational performance until the decision is made to dispose of them.

BUSINESS REVIEW

We have delivered profits for the half year in line with our expectations, returned the core estate to growth and delivered a 4% improvement in average profit per pub across the entire pub estate.

Our results reflect the significant operational changes we have made over the last 15 months which are now embedded in the business. We are on track to deliver our full year profit expectations and start the second half of the year with confidence that the increased level of Partner support being made available will further strengthen the operational performance of our pubs.

In the 28 weeks ended 1 March 2014, Punch generated EBITDA of £108 million (excluding non-underlying items):

Core estate - positioned for growth

The core estate accounted for 88% of Punch outlet EBITDA with an average net income per pub of approximately £74,000 p.a. Trading has been in line with our expectations with like-for-like net income growth of 1.4% for the half year, with like-for-like growth being achieved in each of the last three quarters.

Management expectations remain unchanged with the expectation for the core estate to deliver like-for-like net income growth for the current financial year of up to 1%. The pub investment programme remains on track with full year capital investment across the Group expected to be in the region of £45 million.

Core estate growth is being driven by:

Recruitment: The percentage of core pubs on substantive agreements at the end of the first half was 95%, and has been within our target range of between 93% and 95% throughout the period. The tenanted and leased pub model offers an attractive low cost method of entry into the pub trade for entrepreneurs and new Partner enquiries remain buoyant at over 550 enquiries per month, representing a 40% growth in applicant numbers on the previous year.

Investment: Our strong levels of investment activity continue, with 170 investments completed in the first half of this year at an average spend of £90,000 per pub, transforming the customer offering in these pubs. 36% of pubs in the core estate have now benefitted from a meaningful investment (over £40,000) in the last five years, up from 23% at April 2012. The investment pipeline remains strong with a number of additional investments in progress due for completion in the second half of the year.

Food development: Investments are partly structured to drive increased food sales which represent a significant opportunity to our Partners. We continue to make progress supporting our Partners to diversify their income streams and estimate that food sales mix has increased from 22% in 2011 to 28% of Partner revenue.

Increased field support:At the start of the financial year we launched a dedicated New Business Development team. This specialist team has been put in place to support all new Partners with the initial investment, the launch of their pub and throughout their first six months of trading. This support to new Partners, with a focus on the retail offer, aims to drive sales, improve Partner profitability and reduce the level of new Partner failures.

Punch Buying Club: We continue to build on the success of the Punch Buying Club, through which we are able to offer a range of industry leading exclusive offers to our Partners. The most recent Punch Buying Club roadshows attracted 2,400 Partners (core and non-core) and 2,100 pubs entered Punch's national quiz and darts competitions. 90% of Partners in the core estate are registered on the Punch Buying Club.

Non-core estate - disposal programme on track

The non-core estate, comprising 995 pubs, accounts for around 12% of Punch outlet EBITDA. These pubs have a much lower average net income per pub at approximately £36,000 p.a., are predominantly small, with low turnover and are wet-led. With limited scope for investment these pubs are more likely to be impacted by the long-term decline in drinking out and as a result are expected in time to generate more value through disposal than retention.

Maximising short-term returns: While non-core pubs remain in our portfolio, we are committed to driving operating performance and maximising the profits from these outlets. Pubs in the non-core estate are managed under the three categories of 'protect', 'sell-later' and 'sell-now'. Like-for-like net income returned to growth of 0.4% for the 656 pubs across the 'protect' and 'sell-later' categories, with these pubs having an average profit per pub of £36,000 p.a. At 1 March 2014 a further 339 pubs in the 'sell-now' category were being actively marketed for disposal. These pubs have an average profit per pub of £13,000 p.a. and a book value of £81 million.

At the start of the financial year, 116 pubs were returned to the core estate, following improvement in performance. These pubs had an average net income per pub of c.£59,000 p.a.

Maximising value on disposal:  During the first half of the year we sold 140 pubs (including 29 pubs from the core estate), together with other assets for proceeds of £51 million, ahead of book value, at a disposal multiple of 17 times EBITDA. The pub disposal programme remains on track to realise £100 million of net proceeds for the full year.

Matthew Clark joint venture

Matthew Clark, our 50% joint venture with Accolade, performed strongly, in what continues to be a very competitive market. The post-tax contribution to Punch was £2.7 million for the first half of the year. Punch received a dividend of £5.0 million in the period from Matthew Clark which represented the first dividend since April 2011.

Regulatory

Punch remains committed to a sustainable future for British pubs and the role they play in communities across the UK. Ultimately, we will only be successful if our pubs and our Partners succeed. We are proud that we have led the way in improving the support for pub tenants across the sector and believe that the level of support they receive, including access to PIRRS (which provides Partners with low cost resolution for rent disputes) and PICAS (which provides Partners with low cost resolution for disputes relating to other areas of our Code of Practice), extends significantly beyond that enjoyed by other commercial tenants. We remain committed to working with the Government towards a constructive outcome to the pubco consultation launched last year by the Department of Business, Innovation and Skills.

FINANCIAL REVIEW

Net finance costs:

Net underlying finance costs were down £32 million (38%) at £52 million, largely resulting from a £30 million profit attributable to £35 million (at nominal value) of junior note bond purchases having been made in the first financial quarter for £5 million.

Non-underlying items:

Non-cash items: During the period a £214 million charge was incurred relating to the recycling of the hedge reserve, as no longer effective for accounting purposes, following the announcement of the capital structure proposal in January 2014. Other non-cash items include £9 million of asset impairment, £2 million of attributable goodwill written off relating to core asset disposals, a £3 million credit relating to the provision for share scheme settlements and a £3 million credit for the movement in the fair value of interest rate swaps.

Cash items include £11 million of refinancing expenses and a £6 million credit on the disposal of non-current assets.

Capital investment and disposals:

Total capital expenditure amounted to £29 million, including the completion of 170 core investments in the period and £3 million spend on central assets and the non-core estate. Asset disposals realised £51 million of net proceeds from the sale of 140 pubs together with other assets.

Cash flow:

Cash flow from operating activities amounted to £71 million compared to an EBITDA of £97 million. Due to the timing of the half year date, there is historically a working capital outflow in the first half of the year, with a working capital inflow expected in the second half of the year.

Free Cash Flow before debt service amounted to £93 million, which after £115 million of debt service costs and £2 million of other costs, resulted in a £24 million decrease in the cash balance to £305 million.

Pensions:

Punch maintains a defined contribution scheme which is open to all employees. The Group has one defined benefit scheme (the Pubmaster pension scheme) which is closed to new entrants. Under IAS 19 the net pension liability was £5 million at both March 2014 and August 2013.

Capital structure:

The Group is financed through two whole business securitisations, the Punch A Securitisation (£1,416 million of gross debt secured against 2,272 pubs) and the Punch B Securitisation (£861 million of gross debt secured against 1,619 pubs), as well as certain cash resources held across the Group. As at 1 March 2014 the Group held £305 million of cash resources (of which £67 million was held outside the securitisation structures together with an additional £18 million held within the Group supply company and Employee Benefit Trust).

In 2012 the Board commenced a review of the Group's capital structure which concluded that both securitisations are over-levered, unsustainable in their current form and require a material reduction in debt and changes to financial and operational covenants. As at the balance sheet date (1 March 2014) and at the date of this announcement, no decisions on the restructuring of the Punch A and Punch B securitisations had been made and discussions with stakeholders were continuing.

Extensive engagement between a wide group of stakeholders on a consensual restructuring of the two securitisations has continued throughout the period and remains ongoing. While progress has been made in these discussions and stakeholders have indicated a willingness to consider their positions, a number of proposals, which differ from previously announced restructuring proposals, remain under consideration by stakeholders. The Board remains of the view that a consensual restructuring is in the best interests of all stakeholders.

On 7 April 2014, Punch A and Punch B launched covenant waiver requests in order to obtain temporary waivers of their DSCR covenants and certain other provisions of the securitisation documents to provide further time to reach agreement on a consensual restructuring. The full terms of the covenant waiver requests are available on Punch's website:

www.punchtavernsplc.com/Punch/Corporate/Investor+Centre/Investor+announcements/2014/

The covenant waiver requests require the support of all classes of noteholders and other securitisation creditors, with noteholder meetings convened for 29 April 2014.

The waiver is necessary to avoid a near-term default in both securitisations, which in the case of the Punch A securitisation would occur by 15 May 2014. While the Punch B securitisation remained in compliance with its covenants when most recently tested on 15 April 2014, it is also expected to default in the near-term due to declining DSCR levels, consequently the Punch B securitisation will also require a waiver to be put in place.

If granted, the temporary waivers will expire at the latest on 29 August 2014, as set out in the requests. It is a condition of the waivers that restructuring proposals are launched by 30 June 2014, failing which the waivers are expected to terminate. The Directors currently believe it is achievable to launch revised restructuring proposals prior to this deadline. Failure to achieve a consensual restructuring is expected to result in a default in the relevant securitisation.

Going concern

In determining the appropriate basis of preparation of the Interim Report, the Directors are required to consider whether the Group can continue as a going concern for the foreseeable future; that is for at least 12 months from the date of signing of this Report. After making enquiries, and considering the matters which are described in note 1 to this announcement, the Directors have concluded that it is appropriate to prepare the Financial Statements on a going concern basis. However, the Directors are making full disclosure, as required by accounting standards, to indicate the existence of a material uncertainty that casts significant doubt on the ability of a significant part or substantially all of the Group to continue as a going concern. Further details are set out in note 1 to this announcement.

CONSOLIDATED CONDENSED INCOME STATEMENT

for the 28 weeks ended 1 March 2014

1 EBITDA represents earnings before depreciation and amortisation, impairment, goodwill charge, profit on sale of property, plant and equipment and non-current assets classified as held for sale, finance income, finance costs, movement in fair value of interest rate swaps and tax of the Group.

CONSOLIDATED CONDENSED INCOME STATEMENT continued

for the 28 weeks ended 1 March 2014

1 EBITDA represents earnings before depreciation and amortisation, impairment, goodwill charge, profit on sale of property, plant and equipment and non-current assets classified as held for sale, finance income, finance costs, movement in fair value of interest rate swaps and tax of the Group.CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

for the 28 weeks ended 1 March 2014

CONSOLIDATED CONDENSED BALANCE SHEET

at 1 March 2014

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY

for the 28 weeks ended 1 March 2014

CONSOLIDATED CONDENSED CASH FLOW STATEMENT

for the 28 weeks ended 1 March 2014

NOTES TO THE FINANCIAL STATEMENTS

for the 28 weeks ended 1 March 2014

1. ACCOUNTING POLICIES

Basis of preparation

This condensed set of interim financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU. The Group's Annual Report and Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure and Transparency rules of the Financial Conduct Authority, this condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's Annual Report and Financial Statements 2013, and which are expected to apply at 23 August 2014.

Going concern

This condensed set of interim financial statements has been prepared on a going concern basis.

The Group is financed through two whole business securitisations, the Punch A Securitisation (£1,416m of gross debt secured against 2,272 pubs) and the Punch B Securitisation (£861m of gross debt secured against 1,619 pubs), as well as certain cash resources held across the Group. As at 1 March 2014 the Group held £305m of cash resources (of which £67m was held outside the securitisation structures together with an additional £18m held within the Group supply company and Employee Benefit Trust).

In 2012 the Board commenced a review of the Group's capital structure which concluded that both securitisations are over-levered, unsustainable in their current form and require a material reduction in debt and changes to financial and operational covenants. As at the balance sheet date (1 March 2014) and at the date of this announcement, no decisions on the restructuring of the Punch A and Punch B securitisations had been made and discussions with stakeholders were continuing.

The securitisations have previously maintained compliance with their Debt Service Cover Ratio ("DSCR") covenants by way of EBITDA support provided by the wider Punch Taverns plc Group through supply arrangements with the securitisations, or by the securitisations purchasing bonds at a discount. As announced on 28 February 2014, the securitisations neither benefitted from EBITDA support from the wider Punch Taverns plc Group nor acquired bonds in the most recent quarter. Whilst it could not be predicted with certainty on 28 February 2014, it was anticipated at that date that one or both securitisations may fail their respective DSCR financial covenants with respect to the covenant testing date of 1 March 2014 when they were next tested and reported.

The covenant compliance reports for both securitisations, in respect of the covenant testing date of 1 March 2014, were subsequently issued on 15 April 2014. For the Punch A securitisation, the two quarter DSCR had fallen below the 1.25x covenant. For the Punch B securitisation, although the minimum covenant level of 1.25x was met, the two quarter DSCR had reduced to 1.25x, from 1.52x in the previous quarter. This means that Punch A was below the default threshold in respect of its DSCR for the relevant period, but Punch B was not.

Extensive engagement between a wide group of stakeholders on a consensual restructuring of the two securitisations has continued throughout the period and remains ongoing. The Board remains of the view that a consensual restructuring is in the best interests of all stakeholders.

On 7 April 2014, Punch A and Punch B launched covenant waiver requests in order to obtain temporary waivers of their DSCR covenants and certain other provisions of the securitisation documents to provide further time to reach agreement on a consensual restructuring. The full terms of the covenant waiver requests are available on Punch's website:

www.punchtavernsplc.com/Punch/Corporate/Investor+Centre/Investor+announcements/2014/

The covenant waiver requests require the support of all classes of noteholders and other securitisation creditors, with noteholder meetings convened for 29 April 2014.

The waiver is necessary to avoid a near-term default in both securitisations, which in the case of the Punch A securitisation will occur by 15 May 2014 unless the waiver requests are approved by the relevant stakeholders. While the Punch B securitisation remained in compliance with its covenants when most recently tested on 15 April 2014, it is also expected to default in the near-term due to declining DSCR levels unless the waiver requests are approved by the relevant stakeholders.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

If granted, the temporary waivers will expire at the latest on 29 August 2014, as set out in the requests. It is a condition of the waivers that restructuring proposals are launched by 30 June 2014, failing which the waivers are expected to terminate. The Directors currently believe it is achievable to launch revised restructuring proposals prior to this deadline. Failure to achieve a consensual restructuring is expected to result in a default in the relevant securitisation. A default in either securitisation would be expected to result in the appointment of an Administrative Receiver to the Borrower in that securitisation and it ceasing to be a going concern.

The defaults described above would be events of default under the relevant Issuer/Borrower Facility Agreement, and relate to Punch Partnerships (PTL) Limited, the Borrower in respect of the Punch A securitisation, and Punch Partnerships (PML) Limited, the Borrower in respect of the Punch B securitisation, both of which are trading companies. The occurrence of an event of default with respect to the Borrower of the relevant securitisation will not necessarily lead to the occurrence of an event of default with respect to the secured notes issued by the Issuer in that securitisation (which is Punch Taverns Finance plc in respect of the Punch A securitisation, and Punch Taverns Finance B Limited in respect of the Punch B securitisation). Accordingly, the occurrence of an event of default with respect to a Borrower will not necessarily lead to the secured notes issued by the Issuers becoming immediately repayable.

These circumstances represent a material uncertainty that casts significant doubt on the ability of a significant part or substantially all of the Group to continue as a going concern and, in such circumstances those parts of the Group may be unable to realise their assets and discharge their liabilities in the normal course of business, albeit that the remaining group (and Punch Taverns plc) could continue as a going concern. The Directors have prepared detailed operating and cash flow forecasts which cover a period of more than 12 months from the date of approval of these financial statements which show that there are adequate funds for the foreseeable future for this remaining group to meet its liabilities as they fall due. However, as stated above, the period of review for the securitisations, up to the noteholder meetings needed to approve the covenant waiver agreements and subsequently the restructuring proposals, will be shorter than 12 months.

The Directors cannot currently reliably estimate the financial effects on the Punch Taverns plc Group financial statements in the event that an Administrative Receiver is appointed to one or both of the Borrowers within the securitisations. Selected income statement and balance sheet line items for each of the Group's two securitisations, prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as adopted by the EU, are set out in note 13. Approximately 56% and 33% of the value of the Group's property, plant and equipment relates to pubs in the core estate in the Punch A and Punch B securitisations respectively. Any financial or operational linkages within the Group have been considered by the Directors in forming the conclusion on going concern.

The Directors of Punch Taverns plc are of the opinion that it is in the best interests of stakeholders to approve the covenant waiver agreement and subsequent restructuring proposals for both of the securitisations and believe that a consensual restructuring can be successfully implemented.

The comparative figures for the 52 weeks to 17 August 2013 presented in these interim financial statements are not the Group's statutory accounts for that financial period. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was not modified, and did not contain statements under section 498(2) or (3) Companies Act 2006 or equivalent preceding legislation. However in the Group's Annual Report and Financial Statements 2013, the auditor included an emphasis of matter paragraph in its audit report relating to the uncertain outcome of the Directors' intention to restructure the securitisation facilities.

The following standards, interpretations and amendments are effective for the Group for the financial year beginning 18 August 2013:

· IFRS 13 'Fair value measurement' - effective from 1 January 2013

· Amendment to IAS 19 'Defined benefit plans' - effective from 1 January 2013

The above amendments to the published standards have had no material impact on the results or the financial position of the Group for the 28 weeks to 1 March 2014.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

The following standards and interpretations which are not yet effective and have not been early adopted by the Group will be adopted in future accounting periods:

· IFRS 10 'Consolidated financial statements' - effective from 1 January 2014

· IFRS 11 'Joint arrangements' - effective from 1 January 2014

· IFRS 12 'Disclosure of interests in other entities' - effective from 1 January 2014

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

2. SEGMENTAL ANALYSIS

1 Unallocated underlying operating costs represent corporate overheads that are not allocated down to the divisional performance.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

There are no sales between the segments. Segment assets include property, plant and equipment, operating leases, non-current assets held for sale and goodwill and exclude other intangible assets, receivables, cash, taxation, investments in joint venture and other investments, whilst all liabilities are unallocated.

At the start of the financial year 116 pubs with a book value of £43.9m were transferred from the non-core estate to the core estate.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

3. NON-UNDERLYING ITEMS

In order to provide a trend measure of underlying performance, profit is presented excluding items which management consider will distort comparability, either due to their significant non-recurring nature or as a result of specific accounting treatments. Included in the income statement are the following non-underlying items:

1 Represents the goodwill relating to those core pubs disposed of in the period.

2 Represents movement in fair value of shares held to settle future share schemes and release of provision for share schemes.

3 Represents movement in fair value of shares held as an investment.

4 Represents the recycling of the hedge reserve relating to the Punch A B3, D1 and M2(N) loan notes following the reclassification of the associated interest rate swap as ineffective during the financial period.

5 Represents the movement in the fair value of interest rate swaps which do not qualify for hedge accounting.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

4. IMPAIRMENT LOSSES

Property, plant and equipment and operating leases

When any indicators of impairment are identified, property, plant and equipment and operating leases are reviewed for impairment based on each cash generating unit (CGU). The cash generating units are individual pubs. The carrying values of these individual pubs are compared to the recoverable amount of the CGUs, which is the higher of value-in-use (VIU) and fair value less costs to sell (FVLCS).

In the 28 week period to 1 March 2014, the FVLCS of those assets now classified as held for sale were reviewed and an impairment of £9.1m was identified. During the 52 week period to 17 August 2013, the FVLCS of the non-current assets classified as held for sale were reviewed, and an impairment of £10.2m was identified, of which £2.1m had been recognised during the 28 week period to 2 March 2013.

The impairments recognised in the current and prior periods are as follows:

Goodwill

Goodwill represents the synergistic benefits of operating a large pub estate and is allocated to groups of CGUs. The estate is organised in separate core and non-core property structures. No goodwill is allocated to the non-core estate due to the low value of the properties in the estate and the low level of synergistic benefits.

During the year ended 17 August 2013, a review for impairment was carried out on the remaining goodwill allocated to pubs in the core estate. This review compared the carrying amount of the goodwill to the net realisable value, being the higher of the FVLCS and VIU, of the core pubs. Cash flows used in the VIU calculation were based on earnings before interest and taxation, and used the forecasted cash flows included within the Group business plan for the first five years, and then the cash flows were extrapolated for a further 45 years, applying a multiple of ten as the terminal value. The pre-tax risk adjusted discount rate applied to cash flow projections was 8.0%. The growth rate applied to cash flows over the 45 year period was 2%. Based on this review, no impairment of goodwill on the core estate was identified.

During the current period, a review completed using the same criteria as the previous period on the remaining goodwill allocated to pubs in the core estate also concluded that no impairment was required.

Whilst considered unlikely neither a 2% decrease in the growth rate assumption, nor a 1% increase in the discount rate assumption would have led to an impairment in either the current or prior period.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

5. FINANCE INCOME AND COSTS

6. TAXATION

The effective taxation charge before non-underlying items and share of post-tax profit from the joint venture is 9.4% (reflecting the impact of the profits attributable to bond purchases). The effective rate of taxation for the comparative period was 25.2%.

The total tax credit of £55.2m (March 2013: credit of £3.4m; August 2013: credit of £4.0m) includes a non-underlying tax credit of £59.6m (March 2013: credit of £9.4m; August 2013: credit of £14.9m).

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

7. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held in the employee share trust, which are treated as cancelled.

Diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options).

Reconciliations of the earnings used in the calculations are set out below:

The impact of dilutive ordinary shares is to increase weighted average shares by nil (March 2013: nil; August 2013: nil) for employee share options.

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

8. PROPERTY, PLANT AND EQUIPMENT

9. NET DEBT

(a) Analysis of net debt

NOTES TO THE FINANCIAL STATEMENTS continued

for the 28 weeks ended 1 March 2014

(b) Analysis of changes in net debt