Greene King Regulatory News (GNK)

GREENE KING plc

TRADING UPDATE

Greene King announces its trading update for the 51 weeks to 26 April 2015. Its preliminary results for the 52 weeks to 03 May 2015 will be announced on 01 July 2015.

HIGHLIGHTS

· Retail like-for-like (LFL) sales up 0.4%

o LFL sales up 0.8% without impact of Scottish drink-driving regulations

o Easter LFL sales up 2.4% and record Valentine's Day sales of £4m

o Metropolitan LFL sales comfortably outperforming sector within M25

· Pub Partners LFL net income up 3.6% after 48 weeks

· Brewing & Brands own-brewed volume up 4.1%

· Strong balance sheet and free cash flow generation

· Competition & Markets Authority decision on Spirit acquisition due 11 May

Rooney Anand, chief executive officer, said:

"We once again traded well over key events, such as Valentine's Day and Easter, as customers celebrated and enjoyed these occasions in our pubs. The second half of this financial year, however, has been tougher than the first half, with more difficult comparatives to last year and the additional impact of new drink driving legislation in Scotland.

Looking ahead, we are moving closer to the acquisition of Spirit and, in particular, to next week's decision by the Competition and Markets Authority. The scheme of arrangement is expected to become effective during the first half of 2015, which will enable us to commence the integration process. The acquisition of Spirit will create the UK's leading managed pub operator, accelerate our retail expansion strategy and deliver significant synergy opportunities and scale benefits for both sets of shareholders."

TRADING

Greene King Retail total sales growth after 51 weeks was 6.3%, with LFL sales growth of 0.4%. LFL sales since week 36 were in line with last year although two-year LFL sales were up 4.9%, a 50 basis points (bps) improvement on the first 36 weeks of the year. Excluding the impact of the new drink driving legislation in Scotland, year-to-date LFL sales were up 0.8% and up 0.7% since week 36.

As anticipated at the interims, we saw a moderation in the decline in Retail margins over the second half of the year and anticipate these to be down 40 bps for the year with the dilutive effect of lower sales growth, investment in labour and the in-year effect of new openings being partly offset by cost savings and a more benign inflation environment.

Although Easter was much earlier than last year, we achieved record sales and LFL sales were up 2.4%. In total, we served over 800,000 diners during the weekend. We also achieved record sales of £4m on Valentine's Day with Prosecco volume up over 150% on last year and 3,600 oysters sold in Loch Fyne Seafood & Grill.

The strongest performing brands or formats in the year were Metropolitan, our premium local format, which strongly outperformed the London market, Farmhouse Inns, our growing carvery brand, and Old English Inns, which delivered strong LFL room sales growth.

Our investment in continually improving customer service has helped to grow our net promoter scores (customer advocacy) across Greene King Retail this year and we have recently won two important food awards, with Flame Grill winning at the National Fish & Chips awards and Premium Locals winning Restaurant magazine's pub menu of the year. In addition, we are seeking further improvement in our customer service by investing the latest 1p cut in beer duty in additional labour across our retail pub estate.

After 48 weeks, LFL net income at Pub Partners was up 3.6%, exhibiting an improving trend through the year as the operational benefits from the disposal of 275 non-core sites to Hawthorn Leisure began to come through. All the key licensee health measures remained strong including average licensee turnover, which has reached five years and seven months.

Brewing & Brands own-brewed volume was up 4.1% after 51 weeks. Growth came from all major channels including take home, export and the free trade in England. In terms of brands, Old Speckled Hen, the UK's leading premium ale brand, achieved volume growth of over 15%.

FOR FURTHER INFORMATION

NOTES FOR EDITORS

· Greene King was founded in 1799 and is headquartered in Bury St. Edmunds, Suffolk. It currently employs 23,000 people across its main trading businesses; Retail, Pub Partners and Brewing & Brands.

· It operates c.1,900 pubs, restaurants and hotels across England, Wales and Scotland, of which over 1,000 are retail pubs, restaurants and hotels, and c. 850 are tenanted, leased and franchised pubs. Its leading retail brands are Hungry Horse, Old English Inns, Eating Inn and Loch Fyne Seafood & Grill. 93% of the estate is either freehold or long leasehold.

· Greene King also brews quality ale brands from its Bury St. Edmunds and Dunbar breweries, and is the UK's leading cask ale brewer and premium ale brewer. Its industry-leading portfolio includes Greene King IPA, Old Speckled Hen, Abbot Ale and Belhaven Best.