1

McColl’s Retail Group plc

22 July 2014

Interim Resultsfor the 26 weeks ending 25 May 2014

2

James Lancaster

CEO

Jonathan Miller

CFO

McColl’s leadership team presenting today

• Joined in 1991;

appointed CFO in

2004

• Trained as a

Chartered Accountant

with Deloitte

• 11% shareholding

• Established the Group

in 1973

• Became CEO in 1990

and then Chairman

and CEO in 1995

• 11% shareholding

Highly experienced management team with a large share in the business

• Joined in 1998;

appointed COO in

2014

• Previously held

operational roles at

Iceland and Southern

Co-Op

• 1% shareholding

David Thomas

COO

3

Agenda

Introduction: strong first half performance

Financial review: continued growth momentum

Business review: delivering our promises

Summary

1

2

3

4

4

1 Like for like sales from stores that have traded throughout the current and prior financial periods, and include VAT but exclude sales of fuel, lottery and mobile phone top up

2 See Appendix A1

3 See Appendix A2

Strong first half performance1.1

Revenue growth driving higher profit and EBITDA

Transforming the portfolio to capture growth

� Total sales up 3.6% to £444m; Like for like sales +2.1%1

� Pre-exceptional operating profit2 +14.6% to £10.0m

� Adjusted EBITDA3 +10.9% to £15.9m

� Net operating cash up 59.2% to £19.7m

� Store conversion and expansion strategy on track

� 23 new Premium convenience stores acquired

� 20 Newsagents converted to Food and Wine stores

� Nisa rollout completed April 2014

� Closing store base 747 Convenience stores and 544 Newsagents

� 40 Post Offices converted to “local” format; on course to deliver 191 this year

Strong market fundamentals4

� IGD Retail analysis 2014 expectations:

� UK grocery market to be worth £203bn by 2019 (16.3% CAGR)

� Sales in online, discount and convenience will provide 110% of market growth

� Convenience will take almost a quarter (24.1%) of the market by 2019

� Market remains competitive and customers’ value conscious

5

3.3 Revenue growth driving higher profit as planned

Headline income statement26 weeks to

25 May 2014

26 weeks to

26 May 2013

Change

%

(£m unless otherwise stated)

Revenue 444.2 428.6 +3.6%

Operating profit before exceptional items

10.0 8.8 +14.6%

Adjusted EBITDA 15.9 14.3 +10.9%

Adjusted EBITDA margin (%) 3.6% 3.3%

Adjusted eps1

4p 3p

2.1

� Growth achieved through store acquisition and

development. Like for like sales +2.1%.

� £1.6m increase in Adjusted EBITDA reflecting improved

operating margins in first half relative to prior year.

1. See Appendix A3

6

Growth in sales and income enhanced by cost controls

Income statement126 weeks to

25 May 2014

26 weeks to

26 May 2013

Change

%

(£m unless otherwise stated)

Revenue 444.2 428.6 +3.6%

Cost of sales (337.8) (325.5)

Gross profit 106.4 103.1 +3.2%

Gross profit margin % 24.0% 24.1%

Administrative expenses (108.7) (106.3) +2.3%

Other operating income 12.3 11.9 +3.5%

Operating profit before exceptional items

10.0 8.8 +14.6%

2.2

� Gross profit growth reflecting sales increases. Percentage

margins close to prior year.

� Costs continue to be well controlled.

� Growth in operating income.

1 Stated before exceptional items. See Appendix A1

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Operational cash generation funding increased investment

Cash flow26 weeks to

25 May 2014

26 weeks to

26 May 2013

(£m unless otherwise stated)

Adjusted EBITDA 15.9 14.3

Exceptional items1 (0.6) 0.0

Tax paid (0.5) (2.8)

Change in working capital 4.9 0.9

Operating cash flow 19.7 12.4

Operating cash flow conversion

(%)123.7% 86.2%

Net capital expenditure (8.1) (3.9)

Operating cash flow after net CAPEX

11.6 8.5

2.3

Analysis:

Acquisitions (net of S&L) 2.7 0.4

Conversions/minor refits 3.0 1.9

Maintenance CAPEX 1.9 1.8

IT 0.6 0.1

Other (net of disposal proceeds) (0.1) (0.3)

Net capital expenditure 8.1 3.9

� 23 new stores acquired in current period

� Increase in cash generation despite higher capital

expenditure.

� Strong conversion of profits to cash.

� Working capital inflow reflects supply chain changes.

1 Exceptional items exclude £5.5m of share based payments as these are a non cash item

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Balance sheet deleveraged for growth and dividend

Cash flow and net debt26 weeks to

25 May 2014

26 weeks to

26 May 2013

(£m)

Operating cash flow after net

CAPEX11.6 8.5

Net interest paid (5.0) (6.6)

Net changes to capital structure (13.2) (30.6)

Net cash flow (6.6) (28.7)

Opening cash 23.5 52.2

Closing cash 16.9 23.5

Loans and borrowings (53.2) (111.0)

Net debt (36.3) (87.5)

2.4

� Primary IPO proceeds utilised to repay mezzanine loan.

Existing senior loan refinanced with new £85m working

capital facility.

� £50m drawn on working capital facility at period end. Net

debt reduced to 1.1 x 2013 adjusted EBITDA of £34.2m.

Interim

Dividend

declared

� Stated policy of 60% payout ratio (of profit before exceptional gains and after tax), interim and final to be split

approximately 1/3 and 2/3 of full year dividend.

� Interim dividend declared of 1.7p per share in line with expected policy.

� Interim dividend adjusted pro-rata to reflect only approximately half of 26 week period being post IPO.

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Premium Convenience

Standard Convenience

Food & Wine

Newsagents

Continued momentum on store development3.1

333454 555

284

90

566

182

111

544

184

356

255

November 20131,273 stores

May 20141,291 stores

November 20161

1,350 stores

(1) 2016 store numbers are targets as at financial year end (November). These are illustrative only and should not be seen as an indication of expected or actual store numbers.

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Conversion of Newsagents to Food & Wine

� Grocery and alcohol ranges added to converted Newsagents

� Trading hours extended

� Significant uplift in profitability and positive return on

investment in just over two years demonstrated by conversions to date

2.2 Good progress on food and wine programme3.2

2014 first half developments

� 20 newsagents converted during the period

� Remaining stores for second half conversion identified

� Developing the offer

� Tailoring the range and trading hours to the locality

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2.2 Premium Convenience conversion strategy completed

Source: CTP 2013 and 2014.

3.3

Conversion of Standard to Premium Convenience stores

� Conversion from Standard to Premium Convenience format introduces better Nisa product ranges and

improves utilisation of store space

2014 first half developments

� Conversion of remaining Standard Convenience stores to Premium completed April 2014

� Like for like sales differential of 2.4%

� 2014 CTP survey shows McColl’s basket improved

� McColl’s average £ 6.22

� CTP average £ 6.13

� Nisa average £ 6.69

Potential to increase

basket size by 20%

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� Large number of sites available across the country

� Stringent location criteria to focus on opportunities with significant uplift potential

� Experienced execution team with strong track record of successfully closing deals

� Good investment criteria with positive return on investment in just over 2 years

Significant focus on Premium Convenience store

acquisitions

Store acquisition strategy

Jaywick

New Hedges

Recently acquired stores

3.4

2014 first half developments

� 23 new store acquisitions completed

� 750th store opened June 2014

� Target returns unchanged

� Team motivated and strong pipeline of opportunities

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Neighbourhood services

1.5 Wider services driving footfall

Note: Store numbers as at 25 May 2014.

� Over 80% of stores deliver newspapers and magazines to c.130,000 customer

homes and businesses

� 887 stores operate cash machines (ATMs)

� All stores sell National Lottery products

� All stores operate mobile phone top-up and PayPoint payment services

� 276 stores operate Western Union money

transfer

3.5

2014 first half developments

� McColl’s receives “ Best for Services Convenience Retailer“ as voted by shoppers

� Funding received under conversion

agreement

� 40 local conversions completed in the

period, remainder on track

� 59 Mains conversions identified for 2nd

half

� 17 new post offices opened

� > 2.5m transactions now completed

� McColl’s launching new loyalty card July

2014

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� Total sales growth +3.6%, like for like +2.1%

� Pre-exceptional operating profit up 14.6% to £10.0m

� Store development on track with good progress in first half

� Implementation of Post Office deal well advanced

� Second half normally stronger reflecting summer season

� Positive market outlook

4Summary

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AAppendix: Further financial information

Statutory Profit and loss accountA1

A2 Adjusted EBITDA

A3 Adjusted earnings per share

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Statutory Profit and loss account

Income statement26 weeks to

25 May 2014

26 weeks to

26 May 2013

(£m)

Revenue 444.2 428.6

Cost of sales (337.8) (325.5)

Gross profit 106.4 103.1

Gross profit margin % 24.0% 24.1%

Administrative expenses (116.2) (106.2)

Exceptional costs1 7.4 -

Total administrative expenses (108.8) (106.2)

Other operating income 13.6 11.9

Exceptional income2 (1.2) -

Total other operating income 12.4 11.9

Operating profit before exceptional items 10.0 8.8

Exceptional items (6.2) -

Total operating profit 3.8 8.8

Net finance costs (7.8) (11.3)

Loss before tax (4.0) (2.5)

Taxation 0.4 0.5

Loss after tax (3.6) (2.0)

A1

1 Exceptional costs include £1.7m incurred in correction with the IPO, £5.5m of share based payments and £0.2m in relation to Post Office conversions

2 Exceptional income includes £1.2m in relation to Post Office conversions

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Adjusted EBITDA

Adjusted EBITDA26 weeks to

25 May 2014

26 weeks to

26 May 2013

(£m)

Operating profit 3.8 8.8

Exceptional items 6.2 -

Depreciation and amortisation 6.1 5.8

Profit on disposal of fixed assets (0.1) -

Negative goodwill on acquisitions (0.1) (0.3)

15.9 14.3

A2

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Adjusted earnings per shareA3

Adjusted eps26 weeks to

25 May 2014

26 weeks to

26 May 2013

(£m unless otherwise stated)

Loss after tax (3.6) (2.0)

Exceptional items 6.2 -

Unamortised finance costs 3.1 1.2

Additional interest - 4.4

Tax effect of adjustments (1.9) (1.3)

Adjusted profit after tax 3.8 2.3

Weighted average no. of shares (m) 90.6 75.7

Adjusted earnings per share(£) 0.04 0.03