Regulatory Update

PUNCH TAVERNS PLC

("Punch")

Regulatory Update

The House of Commons yesterday voted in favour of a last minute amendment to the Small Business, Enterprise and Employment Bill 2014-15 (the "Bill") to introduce a market rent only option for tenants of pub companies with 500 or more pubs, effectively breaking the beer-tie.

Punch notes that the amendment to the Bill is contrary to the Government's proposals for statutory regulation of the pub sector, which were published on 3 June 2014 following extensive public consultation on earlier BIS proposals and economic analysis provided by Government appointed independent external consultants. The Government's proposals did not include a mandatory free-of-tie option for tenants on the basis that it would have been likely to cause a high degree of uncertainty in the industry and would have unnecessarily risked leading to higher levels of pub closures and job losses.

Punch has been at the forefront of improving the support for pub tenants across the sector and we remain committed to a sustainable future for British pubs. However, the amended Bill (should it proceed through Parliament in its current form to become law) would have significant adverse consequences for Britain's community pubs. The Government's own research indicated that breaking the tie would be expected to result in between 700 and 1,400 more pubs closing with 3,700 to 7,000 job losses. Furthermore, we believe that the amendment would be likely to have the effect of reducing pub investment, reducing consumer choice and exposing tenants to higher fixed rents, reduced levels of support and greater risk of failure.

Punch's view is that the amendment would lead to the creation of an unworkable two tier economic market and would be contrary to existing legal contracts and property rights. It also runs contrary to the OFT's view when it considered a super-complaint from CAMRA in 2010 and concluded that tied tenants were able to compete effectively and that the commercial interests of pub companies and their tenants were aligned.

We are currently considering the potential impact of the amended Bill on Punch, including the implications for our substantial pub investment program and our disposal plans.

19 November 2014

Forward-looking statements

This announcement contains certain statements about the future outlook for Punch. Although Punch believes that the expectations reflected in these statements are based on reasonable assumptions, no assurance can be given that such expectations will prove to have been correct.