Annual Report and Accounts 2010

Uniq plc 2010 Accounts and Report Annual Uniq No.1 Chalfont Park Gerrards Cross Buckinghamshire SL9 0UN United Kingdom

Telephone +44 (0) 1753 276000 Facsimile: +44 (0) 1753 276019 www.uniq.com Uniq Annual Report and Accounts 2010 Uniq Annual Report and Accounts 2010

Freshness £312m Innovation Total revenue 2010 Quality Desserts

Uniq produces freshly prepared chilled food for £155m major retailers and has market-leading positions 2010 revenue in Desserts and Food to Go. Our high-quality and We are an innovative, market-leading innovative products aim to delight our customers. manufacturer of premium and everyday freshly prepared pot desserts, a flexible and niche supplier of quality, differentiated yogurt and a state-of-the-art producer of fresh chocolate desserts made exclusively for Cadbury.

Food to Go £157m 2010 revenue

We are the Number One sandwich and wrap supplier to M&S, the winner of multiple sandwich retailer of the year, and the UK’s second largest producer of dressed salads.

Contents

Financial highlights 01 Financial statements Designed and produced by Addison www.addison.co.uk Independent Auditors’ report 38 Printed in the UK by Pureprint, Environmental Directors’ report Group income statement 40 Management System ISO 14001 accredited and Forest Stewardship Council (FSC) chain of custody certified. Chairman’s statement 02 Group statement of comprehensive income 41 This report is printed utilising vegetable-based inks Chief Executive’s statement 04 Balance sheets 42 on Revive 50 White Silk which is produced with 50% recycled fibre from both pre- and post-consumer Market overview 06 Group statement of changes in equity 43 sources, together with 50% ECF (Elemental Chlorine Free) fibre from well-managed forests independently Business review 08 Cash flow statements 44 certified according to the rules of the Forest Stewardship Council. Financial review 16 Notes to the financial statements 45 Principal risks 20 Directors’ responsibilities 21 Other information Board of directors 22 Five year record 82 Report of the directors 24 Shareholder information 83 Corporate governance 27 Remuneration report 32 Uniq Annual Report and Accounts 2010 01 Financial highlights

Financial highlights for the year ended 31 December 2010

Highlights Financial results

• Revenue up 6.8%* 2010 2009 £m £m • Trading profit before central costs up 88% • Business performance recognised thorugh Continuing operations customer awards Revenue 311.9 287.2 • Strong momentum continues in Food to Go Trading operating profit before significant items 8.3 4.4 Group costs before significant items (4.2) (6.3) Operating profit/(loss) before significant items 4.1 (1.9) Post period update Significant items before tax (2.4) (0.7) Finance expense (excluding pension-related) (1.4) (4.6) • Balance sheet transformed on delivery Income tax – (0.4) of innovative pension solution in 2011 Net profit/(loss) before pension-related • Successful admission to AIM finance expense 0.3 (7.6) • Desserts review identifies profitable Pension related finance expense (11.5) (11.3) growth opportunity for defined markets Loss after tax (11.2) (18.9) Profit/(loss) from discontinued operations 35.4 (2.0) Profit/(loss) for the year 24.2 (20.9) Key achievements Key performance indicators % % Revenue growth 6.8% 0.2% • M&S best dessert supplier over Christmas Gross margin • M&S NPD range of the year (minis) 15.3% 14.2% • Highest ever single sandwich production Operating margin 1.3% (0.7%) at Northampton – 6.5m units • 24% increase in sales at Spalding • 58 NPD products launched during the year • 99.97% service level in Spalding during the World Cup

*adjusted for 53rd week in 2010

Further information can be found at www.uniq.com 02 Uniq Annual Report and Accounts 2010 Directors’ report

Chairman’s statement Foundations for the future

I am pleased to report a continued improvement in members and pensioners) in the UK. When Unigate sold its the performance of the business, with an operating ‘flagship’ dairy business in 2000, the remaining business profit before significant items of £4.1m in 2010 compared changed its name to Uniq plc. Under the terms of this to a loss of £1.9m in 2009. Turnover showed good transaction Uniq plc retained the responsibility for members growth, with sales of £312m representing an increase of the dairy business in the Uniq Pension Fund. of nearly 7% on 2009’s sales figure of £292m (adjusted for 53rd week). In May 2001, Uniq demerged its logistics business, Wincanton plc. The Uniq Pension Fund was split roughly Although these figures provide strong evidence that the in half and Uniq was left with a pension scheme (known board’s strategy of transforming the company into a as the Uniq Pension Scheme) of approximately 21,000 high-quality UK-focused private label business has been members but with a much smaller business, in terms successful, it became increasingly clear during 2010 that of assets, with which to support the pension scheme. the speed and scale of our efforts could not meet the growing demands of our pension liabilities. The board Board strategy therefore continued to seek a solution to our pension In 2006, the board recognised that Uniq was not a ‘pan- funding situation and on 9 February 2011, the company European group’ but a number of separate businesses reached agreement with the Trustee of the Uniq Pension with distinct markets and challenges. The board adopted Scheme on the terms of a restructuring of the company. a strategy intended to transform the business and address This released the company from its obligations to the defined the pension deficit. Through the sale of the Belgian salads benefit section of the Pension Scheme in exchange for a business in 2006 and the French St Hubert spreads 90.2% equity stake in the company, with current shareholders business in 2007 (total proceeds £288m), the group retaining a 9.8% stake in the company. was able to set aside £87m in a secure account to offset substantially the deficit at that time in its main While the context for this decision is set out in more detail UK Pension Fund. The remaining cash repaid debt and below, the outcome is that Uniq can now look forward to provided funds to support the recovery of the retained a future in which its management can develop the potential businesses, which were at that time incurring of its businesses without the constraints imposed by our substantial losses. pension situation. Although the board understands that this will have caused shareholders considerable concern, Alignment of the group’s businesses with their customers we are confident that our action is in their best interests and markets was tackled through decentralising the and the best long-term interests of all stakeholders. organisation to allow management to act faster and more effectively. Major milestones were achieved in Uniq has a strong, well-run business delivering the quality, each of the group’s divisions, with recovery evident innovation and consistency that our customers demand, throughout the business. in markets that offer multiple opportunities. As Chief Executive Geoff Eaton outlines in his statement on pages Pension funding 4 and 5, we believe that Uniq is now, finally, in a position However, turbulence in world financial markets during to capitalise on these strengths. 2008 resulted in a sharp increase in the UK pension deficit. The need to strengthen the group’s businesses The context for restructuring became more urgent. Accordingly, the board decided Uniq evolved out of the Unigate Group which, at its peak to modify its recovery plan and, in particular, pursue during the 1980s, was a multinational conglomerate with over consolidation opportunities in France and Northern 30,000 employees in the UK, Europe and North America. Europe – to create value through joint venture or sale Unigate had a very large defined benefit pension plan with of those businesses – and focus its resources on over 40,000 members (including active members, deferred strengthening its businesses in the UK. Uniq Annual Report and Accounts 2010 03 Directors’ report Chairman’s statement

The businesses were sold in early 2010 and the proceeds from their sale were used to support the growth of the UK business and to assist the group in its triennial funding discussions with the Pension Scheme Trustee.

Pension liabilities On an IAS 19 accounting valuation basis, the pension deficit as at 31 December 2010 was £142.1m. On a buy-out basis (which assumes the liabilities have been bought out by an insurance company), the net deficit was £430m.

The scale of this deficit negatively impacted the market value of the company. The board therefore considered all possible funding options for the Pension Scheme, all of which would have involved a fundamental impact on the long-term future of the group and on shareholder value.

As part of triennial scheme-specific funding discussions, “We are confident that our which began in March 2009 between the company and the action is in the long-term Trustee, a long-term funding proposal was developed and was described in last year’s annual report and accounts. interests of all stakeholders It was rejected by the Pensions Regulator on 16 July 2010. and will give Uniq the Restructuring solution opportunity to repay On 9 February 2011, the company reached agreement their commitment.” with the Trustee, the Pensions Regulator and the Pension Protection Fund on the terms of a restructuring of the company. This Scheme of Arrangement was approved by the shareholders on 25 February 2011 and sanctioned Profitability has been restored, strong customer relationships by the Court on 18 March 2011. In exchange for a 90.2% established and the flexible, innovative processes that equity stake in the company, with current shareholders our markets demand are in place and already beginning retaining a 9.8% stake in the company, and a final to show results. In spite of this, the new year has thrown payment of £14m to the Pension Fund, the restructuring up further challenges with further raw material price released the company from its obligations to the defined inflation, increasingly intense competition and loss of benefit section of the Uniq Pension Fund. Following this business in Desserts being notified before the implementation restructuring the company successfully applied for the of the pension solution. I would like to congratulate all shares to be relisted on AIM as from 1 April 2011. management and staff at Uniq for their unstinting efforts, which we fully expect to maintain the improved performance Dividend of your company despite the challenging environment. The board has decided that it is not appropriate to pay Furthermore, the comprehensive review of our Desserts a dividend to shareholders for 2010 (2009: £nil). However, business, announced in January, has been completed following the pension restructuring the Directors intend and a plan has been approved that is expected to deliver to pay dividends when it is appropriate to do so. sustainable improvement in profitability.

Outlook John Warren It is a great credit to Chief Executive Geoff Eaton and Chairman his management team that, despite a period of such 26 April 2011 uncertainty and the challenge of creating and implementing the pension solution, they have continued to focus on, and achieve, the transformation of the business. 04 Uniq Annual Report and Accounts 2010 Directors’ report

Chief Executive’s statement Delivering the full potential of your business

Having addressed our legacy issues and completed We service customers who are investing in growth our transformation into a UK-focused, high-quality and we have the potential to increase our share of Desserts and Food to Go producer, I believe we are their business – we are highly focused and we derive now able to deliver the full potential of the business. competitive advantage from understanding and consistently meeting our customers’ needs. Our investment in people, processes and products over the last two years means we are in a strong position to We have an efficient capital structure that will support meet the challenges and opportunities our chosen markets investment. Our return on investment will be enhanced present. This has been demonstrated by our improving by significant tax assets – we will not pay tax on our performance this year, which was driven by our strong profit for the foreseeable future. management teams and their ability to efficiently translate their market insights into attractive and innovative products We have an experienced and capable management that meet the demands of both customers and consumers. team that has come together during five years of With the right foundations now in place, I believe we can restructuring, turnaround and uncertainty and, having consolidate our growth, optimise our return on investments already delivered some success, is appropriately and raise profitability towards industry standard margins. incentivised and committed to drive growth further, unfettered by the legacies of the past. As befits a business that is, in many ways, starting afresh, I would like to take this opportunity to lay out to investors Our product ranges include both premium and value and all stakeholders our vision for the future: the market products and are appropriately tiered. Our flexibility opportunities we face; the strategy that will enable us to and ability to innovate mean that we can quickly address these opportunities; and the targets by which we adapt our product ranges to reflect the economic will measure how successful we are in doing so. circumstances of consumers.

Vision Performance review Our aim is to be the most respected fresh prepared Desserts food company in the UK for innovation, service and Our Desserts strategy began to show real results quality as judged by our customers, suppliers, this year. New and refreshed product ranges at both employees and shareholders. our Minsterley and Evercreech sites, allied with the investments we have made in the business over the Our opportunities and strengths last two years, drove a stronger performance and We serve large and growing markets, within which there established Uniq as the place to go for innovative are multiple opportunities and drivers of demand: for example, high-quality private label products. convenience, eating out of home and on the move, healthy eating, and café culture. By investing in understanding Immediately following this success we were forced to consumers and innovating to create a regular pipeline push through a price increase following the increase of new products we are able to benefit from this growth. in cream costs which have risen by 80% over the last two years. This not only had an adverse impact on Strong market positions give us the scale to ensure we can some customer relationships but also led to a change attract and retain highly capable teams and make efficient in consumer behaviour as higher price points resulted use of assets. We supply over 65% of the sandwiches for in switching to other products. Following the year end our largest customer, we are a market-leading supplier of we were notified of the loss of £10m of Desserts sales premium desserts, we are the exclusive producer of fresh partly as a result of these factors and partly reflecting Cadbury chocolate desserts and we are the number two the uncertainties caused by the pension position. supplier in prepared salads. Uniq Annual Report and Accounts 2010 05 Directors’ report Chief Executive’s statement

Desserts review On the back of the disturbance caused by the price increase and as a result of the decision to discontinue cottage cheese production at Evercreech we conducted a comprehensive review of our Desserts business. Our Desserts business supplies four distinct sub-sectors of the desserts market; premium desserts, Cadbury chocolate desserts, yoghurt and everyday desserts. Three of these sub-sectors are either profitable or on track to achieve profitability, while the losses are concentrated in everyday desserts. As a result of the Desserts review we have approved the following profit improvement plans: • To use the space freed up at Evercreech by the discontinuance of cottage cheese production to Our strategy invest in further growing our premium desserts We will achieve growth by: business – which grew by 21% in 2010. • Empowering our businesses so that they have the speed • To implement ambitious growth plans for Cadbury and flexibility to meet the needs of our customers in a desserts for which we have identified considerable fast-moving and competitive market-place. At the same potential. We need to secure support for these time, we will leverage our combined scale to support our businesses and enhance our growth opportunities plans from our partners. • Creating new opportunities by delivering outstanding • To continue to build our capability and customer service with the highest standards of quality and base for our premium, differentiated yoghurt business efficiency day in day out • Meeting the needs of our customers and consumers at Minsterley, with support from M&S. through innovation that satisfies the demands of • To implement a plan to significantly reduce the overheads growing and ever-changing markets and costs in everyday desserts and work with our • Investing in our people, processes, equipment and facilities and continuously improving everything we do customers to address the market needs while ensuring • Working in partnership with our key suppliers and that we stop the losses in this sub-sector. customers to achieve the most effective supply chain capable of delivering added value to our shared consumers Food to Go Our targets and key performance indicators: At Northampton, we extended our ten-year growth record in 2010, successfully implementing the increased sandwich • We aim to deliver organic growth of over 5% a year volumes won from M&S supplier consolidation. New and • Our trading profit margin should deliver an overall return on sales of over 5% relaunched product ranges helped us to not only take • Our return on investment should deliver double-digit advantage of growing niche markets such as healthy eating returns and exceed our weighted average cost of capital and café culture, but to win prestigious awards and further • We will adopt a progressive dividend policy with a long-term target dividend cover of three times strengthen our relationship with our principal customer, • We will maintain an appropriate capital structure M&S. Northampton continues to set the standard for lean, with total net debt no more than three times EBITDA flexible and creative processes, supported by both strong management and a fully engaged workforce. In Salads, Our key actions to deliver our strategy: our Spalding site increased volumes as we took on last • We will continue to drive growth in our Sandwich business year’s new business wins, helping to drive efficiencies while • We will consolidate our recovery in Salads and then successfully maintaining exceptionally high quality and build our capabilities for long-term growth • We will build on our successful innovation in premium service levels. Although oversupply in the market continued desserts and yoghurt, seek to implement an ambitious to squeeze margin, the Salads business remains well positioned growth strategy for Cadbury chocolate desserts and to benefit strongly from any supplier consolidation. significantly reduce costs and improve efficiency to stop the losses in everyday desserts

Geoff Eaton Chief Executive 26 April 2011 06 Uniq Annual Report and Accounts 2010 Directors’ report

Market overview As the economy recovered in 2010, consumers traded up but continued to demand value.

Our market One reason for chilled convenience food sales outperforming The broad market in which Uniq operates is the UK fresh the wider marketplace is ‘treating’. While households and chilled foods sector. This had a total value of £37bn faced with constrained income growth and higher taxation in 2010, representing an increase of 3.1% on 2009. have cut back on spending, they are still attracted by The majority of Uniq’s output falls, however, within one non-essential treats while carrying out their routine segment of this market: chilled convenience foods. food shopping. This grew more strongly, with sales up 5% in 2010 at £7.5bn. As this segment is dominated by the major Health was also a key trend. The 2010 Datamonitor retailers’ own brands and Uniq is primarily a producer Consumer Survey showed the extent to which consumers of private label/own brand products for the major believe that taste should not come at the expense of retailers, the outperformance of chilled convenience nutrition. Indeed, 62% of consumers attached more foods is highly encouraging. importance to finding products that combined these attributes than they did two years ago. For more specific information about the market sub-sectors in which we operate, see below. Premium v Value Consumer appetite appears not to have been fundamentally Trends changed by the recession, and the demand for premium One of the key trends in 2010 was consumers shopping ranges re-asserted itself, particularly in the second half around to find good-quality products that also met their of the year. Cost-conscious consumers have, however, value requirements. This proved a positive influence for been helped toward these ranges by promotional activity. private label, which can often offer consumers significant savings when compared to branded products. A comparison As the graph illustrates, demand for premium tiers of the 2009 and 2010 Datamonitor Consumer Surveys returned to growth in the final quarter of 2010, while shows that there was a significant increase in the proportion demand for value products continued to slow across of consumers saying that private label was of equal, if not the marketplace. better, quality than branded products. This ability of private label products to meet both the value and quality demands Input prices of consumers drove growth in 2010. Indeed, research A wide variety of factors, ranging from adverse weather published by Nielsen in 2010 shows that private labels conditions and rising global demand to higher energy now account for 47% of all volume sold in the UK prices and market speculation, led to increased input retail channel. prices in 2010. This was particularly noticeable in the second half of the year as the world economic recovery Another trend was the growth of ‘meal deal’ bundles, where accelerated, pushing up demand. shoppers buy a menu of products for a discounted price. This lends itself well to the ‘mix and match’ versatility of Uniq’s input prices rose 3.8% in the year to December chilled convenience food, including desserts and salads. 2010, while in the broader UK economy the Consumer It has particular resonance in the current economic climate, Prices Index (CPI) rose by 3.7%* and the Retail Prices where shoppers can save money by eating at home rather Index (RPI) was up 4.8%* in the same period. than going out to a restaurant. Uniq Annual Report and Accounts 2010 07 Directors’ report Market overview

Although the inflationary trend, driven largely by major global factors, was evident across almost all Uniq’s Top 5 raw materials purchasing categories, individual input prices also Price movement for 2010 behaved according to their own specific drivers. % Dairy Ingredients 15 Cream prices, for example, rose far more sharplyFruit than and Conserves 10 Vegetables average input prices as a number of factors fundamentallyConfectionery 5 altered the balance of demand and supply in the market. 0 -5 High butter prices led to more cream being bought by -10 butter producers, reducing the availability to those, -15 Top 5 raw materials like Uniq, who use it for other dairy-based products. 01 02 03 04Price05 movement06 for07 201008 09 10 11 12 *Source: Office for National Statistics Source: Uniq % Dairy Ingredients 15 Desserts market Fruit and Conserves 10 The total chilled desserts market (which includes yogurts) Vegetables Confectionery 5 grew by 3.0% to £2.4bn during 2010, with volumes 0 remaining flat. However, yoghurts represent less than -5 10% of Uniq’s total desserts production. In chilled pot -10 desserts, which represent the vast majority of Uniq’s Total Grocers Year-on-Year -15 % changes sales, the market grew more strongly, rising 4.8% by 01 02 03 04 05 06 07 08 09 10 11 12 value in 2010. Within the desserts market, trifle sales 50 Source: Uniq Economy remained unchanged in 2010, yoghurt sales edgedPremium 40 up by 2.4% and cheesecake grew strongly by 13.2%. 30 About 75% of Uniq’s desserts output is private label 20 and the majority of this is for M&S, which strengthened 10 0 its position as a destination store for desserts, -10 registering increased sales by both value and volume. -20 Source: Kantar World panel w/e 26/12/10 Total Grocers Year-on-Year Nov Feb % changes Jun Oct Feb 2009 2010 2011 Food to Go market 50 Economy The Food to Go market is worth £16.8bn and grew by Premium 40 12.4% in 2010. Of this, approximately 20% is sold by 30 the major retailers, for whom Uniq provide private label 20 products. The year saw overall Food to Go sales revenue 10 0 growing ahead of volume, as retailers changed their -10 ranges to include more premium lines and consumers -20 traded up, buying fewer lower value products. Nov Feb Jun Oct Feb 2009 2010 2011 Convenience is key in the ‘on the go’ market, and increasing numbers of outlet openings have contributed to the acceleration in sales growth. Sandwiches represent approximately 22.3% of the entire Food to Go market and total sandwich sales grew by 6.6%, with volume up 3.2%. In Salads, which represents approximately 1.5% of the Food to Go market, sales increased by 9.3% of value, on volumes up 5.0%. 08 Uniq Annual Report and Accounts 2010 Directors’ report

Our success has been achieved despite a strong Business review: headwind from raw material inflation, driven in particular by wholesale cream costs which have risen by around Desserts 80% over the last two years as a result of shortage of supply and high demand from the Continent. While we were able to successfully negotiate price increases with our customers to reflect our growing costs, this inevitably had an impact on volumes as customers and consumers Sales up 1.5%* to £155m remain highly sensitive to price.

Losses reduced by 6.9% During the year Arla invested in new cottage cheese capacity to £2.7m at its new dairy and a number of our customers were able to secure lower prices and switched their supply. Consequently, we decided to downscale cottage cheese production and • Investment programme impacted by plan to exit this market in 2011. The growth delivered in our market volatility premium desserts business in 2010 allowed us to transfer • Highly successful new product launches many of the employees from cottage cheese to desserts and • Desserts review establishes clear path we intend to use the vacated space to facilitate further to profitability growth in premium desserts.

As the market leader in chilled pot desserts, Uniq Performance operates from two sites. Minsterley produces Cadbury The restructuring of our Desserts business in 2009 – chocolate desserts, premium differentiated yoghurt through consolidation from three sites to two, the creation and private label premium and everyday desserts; and of a new consumer and innovation-led strategy and the Evercreech produces premium desserts and is exiting reinforcement of our management capability through a cottage cheese. Both sites have a long heritage of number of experienced hires to key positions – started to supplying dairy-based products into a market that show results in 2010. Despite the impact of cold weather in has been challenging for a number of years. the busy Christmas trading period, sales held up well in the fourth quarter and we posted an overall sales increase of Our customers, the major retailers, and the end 1.5%* in 2010, achieving revenue of £155m. Although rising consumer, demand freshly prepared high-quality, raw material costs and a loss of share in the cottage cheese great-tasting products that are attractive and innovative. market had an adverse effect on overall performance, Investment during the year in areas such as new concept we were able to reduce losses over the year by 6.9%. development, new production lines, packing equipment and more convenient pack formats has enabled us to Site review – Minsterley launch more than 58 new products in 2010. These were At our Minsterley site our focus was on restimulating extremely well received by our customers and by growth in our everyday desserts categories such as trifle, consumers, in some cases the initial demand being where we hold a market-leading position. To achieve this more than double our expectation. Our consumer insight we redeveloped all our recipes and packaging formats in and technical expertise enabled us to develop exciting accordance with our consumer research. As a result, we new products for fast-growing niche markets, including invested in new technology to give us greater flexibility breakfast yoghurts for Costa Coffee and mini desserts in the number of pots per pack and the speed at which for M&S Café and Food on the Move. This was recognised they could be packed. This process was successful, but during the year when we received the M&S ‘Innovator of growth was held back by price increases as a result of the Year’ award. higher raw material costs. Uniq Annual Report and Accounts 2010 09 Directors’ report Business review | Desserts

Our co-pack agreement with Müller to produce Cadbury branded desserts saw considerable investment to build capacity, resulting in a state-of-the-art, highly efficient facility. Although the anticipated volumes did not materialise during 2010 we are well positioned to work with our partners on future opportunities.

In yoghurts we successfully developed a new range of products for M&S and won new business to provide Costa with an exciting range of yoghurt products.

Site review – Evercreech Our Evercreech site produces around 70% of its output for M&S (increasing to 100% following the planned New product development withdrawal from cottage cheese supply), and has How minis made their mark benefited both from M&S’s strong performance in In 2010 Uniq helped to develop a totally new concept in desserts desserts and from investing to further match the retailer’s – the mini: a bite-sized dessert that looked and tasted great, but commitment to quality and innovation. As a result, was small enough to eat on the move and ‘guilt free’. a range of new products was developed during 2010 • Market insight team identifies a gap in the market that included ‘minis’ (small-sized desserts designed • Uniq work with customer to develop the concept to be eaten on the move or as excusable indulgence), • A cross-functional team is brought together to deliver the concept confectionery (desserts based on popular sweets) and the • Equipment designed to deliver small ‘shots’ extra special chocolate ‘jingle bell’ Christmas dessert, of dessert delivering growth of 19% in premium desserts. • Production starts • Operators apply lean techniques to achieve required efficiencies Successful innovation was achieved through a • Products reach stores, demand rises rapidly combination of market insight, high-quality in-house • Increase capacity to meet demand • Sales reach £5m chefs, smart and flexible production techniques and a highly engaged and committed workforce. This was Technical excellence demonstrated by our winning both an innovation and a collaboration award from M&S during the year. Meeting demand at Christmas When our Minsterley site was asked to take over the production of M&S’s highly successful inside-out trifle, it meant quickly As detailed above, our strong performance was offset rising to the challenge of a complex and technically demanding by rising input prices and falling demand for cottage process. A product development team was rapidly assembled, cheese as a new entrant came into the market. a new production line was designed and laid out, and trials were carried out to determine the labour team required. As a By working closely with our customers we were able result, all 14,000 units of inside-out trifle were delivered in time to negotiate price increases to reflect rising costs. for Christmas.

*All comparisons to sales growth from prior year are adjusted to reflect the additional 53rd week in 2010. 10 Uniq Annual Report and Accounts 2010 Directors’ report

Site review – Northampton Business review: Following M&S’s decision last year to reduce the number of its sandwich suppliers from three to two, Uniq’s Food to Go Northampton site was able to secure significant new business. During the year, transfer of the remaining new lines and volumes was successfully completed without interruption to production or any negative impact on quality. This helped us to achieve our highest ever M&S Sales up 13%* at £157m sandwich share during the year.

Profits up 51% at £11m Our dedication to service, quality and taste was further recognised by a number of awards. We assisted M&S to win Sandwich Multiple Retailer of the year 2010, • Over 100m sandwiches produced during 2010 The Lunch! Multiple Retailer of the Year Award 2010 • Share of M&S sandwich market rose to over 65% and won the 2010 Best Low Fat Range. These awards • Strong cost management also demonstrated the strength of our relationship with M&S, which stretches back over 30 years. As the leading supplier of sandwiches to M&S and the UK’s number two supplier of prepared dressed Highlights of our work with M&S this year include: salads, Uniq’s Food to Go operations are located at • The relaunch of the Food on the Move sandwich offer Northampton (sandwiches) and Spalding (dressed to make both the individual products and the range salads). Each is run by its own management team more attractive and easier for customers to navigate but they share many ingredients and processes. • The development of a new softer fresher bread for all our sandwiches Food to Go is a fast-moving business in which customers • The continuing success of the new Simply Fuller and consumers expect fresh, enticing products that are Longer range available whenever they want them. Volumes go up or • Successfully launching new products for the down on a daily basis according to the weather, time fast-growing M&S Café range of year or occasion. In order to service this market • Relaunch of the premium Gastropub sandwich successfully Uniq works with its customers, the major in a bag range. retailers, to fully understand what consumers want and to develop products that meet and exceed their We have continued to align our activities with the expectations. To deliver these, the finest and freshest M&S Plan A agenda by developing, for example, an ingredients must be sourced, prepared, packaged and innovative scheme to use cold air from outside to despatched both quickly and to the highest possible cool our production facilities. standard. This challenge requires highly disciplined management, a creative flair for food, technical Of the £15m new business won from M&S, £10m excellence and a fully engaged workforce with the was taken on last year and the remaining £15m was flexibility to deal with differing levels of demand. transferred this year. In addition, we achieved £6m of organic growth, driven by new products and relaunches Performance into growing markets. The loss of the Supplair short-haul Driven by both organic growth and the assimilation of flights business, as reported in last year’s annual report, new business wins, sales grew by 13%* to £157m in had a negative sales impact during 2010 of £5m. Headline 2010. Profits rose by 51% to £11m, supported by the growth from the new business wins was supported by a economies of scale achieved through higher volumes, strong underlying performance, particularly in the second process efficiencies and the success of new product half of the year as consumer confidence and new launches into growing markets. product launches boosted sales. Like many food Uniq Annual Report and Accounts 2010 11 Directors’ report Business review | Food to Go

producers we experienced raw materials price inflation during the year. We were able to meet these increased costs by finding efficiencies in our business and, where possible, agreeing price increases with our customers.

Site review – Spalding Uniq’s Spalding site produces private label prepared dressed salads for major retailers and food service companies. The main product areas are potato salad, coleslaw and pasta and variety salads. Its location in Lincolnshire means it can source over half its fresh salad ingredients from within a 70-mile radius. Its commitment to its customers, long heritage in the region and highly efficient management processes have made it the UK’s second largest supplier in the market.

The Co-operative business win reported in last year’s annual report was successfully serviced during the year. We invested in increased mayonnaise production and storage capacity at Spalding to cope with the increased volume and peak demand. Our reputation for service, quality and innovation helped us to grow our sales with all the major retailers we serve, and post an overall sales increase of 24%* by value for 2010. Successful product innovation, particularly in growing niche markets such as entertaining at home, were achieved through careful Growing markets market research, consumer insight and close working with our customers. – Café culture UK Café sales are worth £5bn, with M&S Café the sixth largest operator in the market. The three largest coffee shops (Costa, However, the market continued to suffer from oversupply Starbucks and Caffe Nero) come from the branded coffee shop in 2010, making it difficult to grow margin alongside sector. The branded coffee shop market grew by 12.9% last year to sales. This also made it more challenging to pass on £1.9bn. M&S operates in the non-specialist sector which is showing the fastest outlet growth. As the supplier of more than 90% of M&S inflationary costs to our customers. Although these were Café chilled savoury products, we are well positioned to benefit. relatively low during the first part of the year, final quarter It is a very discerning and fast-moving market that requires inflation grew more sharply and we expect this trend attractive, great tasting products with high-quality, fresh ingredients. Working closely with M&S, we carried out carefully tailored to continue into 2011. consumer research, and developed new lines in 2010. As a result, Uniq’s sales in this category grew by 12% during 2010. The significant progress we have made during the year in further improving efficiency has helped us to maintain our Flexible production competitive position and achieve profitability in challenging markets. Actions taken such as smarter buying, increased – winning the World Cup labour efficiencies, reduced waste and energy use, and Success in Food to Go means being able to adapt quickly and efficiently to rapidly changing demand. Summer is always the more agile supply chains have all contributed to strongly busiest time for dressed salads, but the World Cup added positioning our business in a highly competitive market. further demand for our large sharing packs of pasta salads and coleslaw, with customer orders spiking by 50%. Not only was *All comparisons to sales growth from prior year are adjusted to reflect the additional our Spalding site able to fully meet this demand, they did so 53rd week in 2010. without any negative impact on their average 99.97% service quality rate. 12 Uniq Annual Report and Accounts 2010 Directors’ report

Corporate Social Responsibility

Our People and Culture

CSR Vision We are committed to the sustained well-being of our Business, our People, our Partners and our Environment. Our honest intent is to be socially, ethically and environmentally responsible in everything we do. We will always seek to understand and comply with the appropriate legal and regulatory requirements and go beyond this to drive sustainability through 5 key pillars delivered through engaged site teams

Our people Our Our health, Our Our and culture community safety and environment business Our aim wellbeing partners We seek to actively engage all employees in our vision and wish Vision Local Health and Safety Water Customers to create a culture where everyone

Employee/ Engagement Charity Waste Suppliers brings all their talent and commitment Wellbeing to drive our success every day.

FareShare Food Safety Energy NGOs Summary of what we are doing: Training/ Healthy Packaging Regulatory • A clear vision and set of values Development which we live every day

Values Refrigeration Experts • Investment in capability and growth through training and Transport development • Cultural surveys to measure engagement and drive action Our governance Guidance is provided by recognised to improve Uniq is a devolved organisation and advisers, endorsed by the CSR forum, • A fair deal and a stake in success the principal accountability for CSR who report annually to the Uniq Board. rests with the Managing Directors We aim to follow the standards of the of each of our operating sites. As an Global Reporting Initiative (GRI) in ethical food producer we recognise our key activities and in future reporting. that the management of social, Progress Long-term promises ethical and environmental issues The group, and all the associated sites, 3 of the 4 sites have Continued requires everyone’s engagement. work within four guiding principles: undertaken baseline improvement and cultural surveys with engagement in a high engagement the process, with • Shared responsibility of 83%. increasing scores, making Uniq a great • Honesty and accountability place to work. • Sustainable progress Continued roll out Talent identification • Demonstrable compliance of the Uniq Learning and succession System. planning.

Employee absence Sustained low reduction across employee absence. the group. Uniq Annual Report and Accounts 2010 13 Directors’ report Business review | CSR

Case Study: Employee Our Community Case Study: Minimising noise cultural surveys impact at Minsterley During 2009 and 2010, the group The site has in the past received a Our aim rolled out a detailed employee cultural significant number of noise complaints Our commitment is to make positive survey, covering topics such as relating to steam valve pressure relief contributions to our local community engagement, great place to work, systems. On investigation, it was found through employment, education, fairness, etc. The aim was to provide that they were venting and creating a good neighbourliness and support objective data, from which we can noise issue. Most of the offending valves of local causes. improve and make Uniq a great place have been replaced, thereby reducing to work and a workplace of choice. complaints by 50% since 2008. Summary of what we are doing: Principle areas of activity are; community Case Study: Uniq Learning Case Study: Local community engagement and charitable giving System (ULS) support at Evercreech to both local and national charities. In order to enhance the skills Evercreech have engaged with their and knowledge of our employees, local community; running fun-days, We attempt to mitigate our noise and Uniq embarked on a learning sponsoring school crossing patrols transport environmental impacts at journey. This involved undertaking and being present at farm shop all times. a skills need analysis, writing open days. The site has also been and rolling out competence based involved at the local Bath & West learning units. These are verified, Agricultural Show. by the departmental and site-based assessors.

The group has also supported FareShare in helping feed the vulnerable in our community. Two sites support their local air ambulances.

A member of Northampton’s staff said: ‘It has helped me develop myself, reduce waste and do a better job… it makes us feel we do worthwhile work.’

Progress Long-term promises

In 2010 the group was The promise is involved in 44 charity/ to increase our community giving involvement for the projects (Financial and good of charities in-kind). This included we support. sending products to FareShare to feed the homeless.

Numbers of local The group aims to resident complaints be good neighbours, were down on reducing our negative previous years. impact on the local community. 14 Uniq Annual Report and Accounts 2010 Directors’ report Business review | CSR

Our Environment

Summary of what we are doing: Case Study: Free Cooling Examples include: at Northampton • Water: We use less and investigate Northampton have managed to ways of using recycled water change their refrigeration equipment and using less water in our to allow them to take advantage of cooling systems. cool winter external temperatures. • Waste: Implementing lean To this end, the refrigeration is manufacturing across the group provided by cool air taken from and diversion of waste away outside the factory. Our aim from landfill. We believe good environmental • Energy: Reduction in consumption Case Study: Investigation of practice is good business practice. using schemes such as; low energy alternative technology We are committed to environmental lighting, free winter cooling, bio-diesel The Spalding site is investigating the sustainability in setting ambitious extraction from effluent, leak use of wind turbines. This is a long goals in six key impact areas: waste, reduction and lagging campaigns. journey which analyses bat and water, energy, packaging, refrigeration • Packaging: We are working towards bird migration patterns over several and transport. We will engage our the use of recycled packaging in our seasons, to decrease the impact on employees in lean manufacturing packaging, target lower weights their numbers. The use of renewable systems to deliver our and our and reduce excessive packaging. energy is seen as a way forward customers environmental goals. • Transport: Implementing green within Uniq. Meanwhile, Minsterley car travel policies. is investigating the use of anaerobic digestion (AD), to make methane and Case Study: Reduction of waste to subsequently electricity from landfill at Spalding and Minsterley it’s waste. Spalding have already reached <1% waste to landfill, with Minsterley going from 80% (January 2009), to 7% waste to landfill in November 2010. At Minsterley, this has been achieved by segregation and diversion of product to animal feed and utilisation of waste to energy facilities.

Progress Long-term promises

The group has reduced water consumption in 20% reduction in water use by 2015 from 2010 to 8.4m3/tonne of finished product, from 2007 baseline. A number of sites have already a 2009 figure of 9.2m3, giving a 9% reduction. achieved this target.

Landfill waste across the group has reduced to Zero Waste to Landfill by 2015, across 29.2% from 38.2% (2009). the group.

Total energy consumption has reduced to 20% Reduction in Energy (KWHrs per tonne) 1136KWhr/Tonne of finished product from in 2015 from 2007 baseline. 1213 KwHrs/Te (2009), giving a 6% reduction. No HCFCs in use in the group by 2015.

Continual packaging weight reduction and recyclability.

Minimise CO2 transport and business miles, by maximising use of video conferencing. Uniq Annual Report and Accounts 2010 15 Directors’ report Business review | CSR

Our Business Our Health, Safety Case Study: The benefits of health surveillance at Spalding Partners and Wellbeing To raise awareness on National Diabetes day occupational health at Our aim Spalding ran a screening programme We are committed to ensuring that for staff and employees. As a result, we provide and maintain a safe place a number of individuals were of work and help our people make identified to be possibly suffering informed health choices. We will from the condition and were advised continue to innovate healthy options to seek further medical advice. and market leading safe products for our customers. Case Study: ROSPA Gold Awards All sites in the group have undergone Our aim Summary of what we are doing: a fantastic transformation in safety Is to engage and collaborate with all Uniq are improving workplace safety performance in recent years. our internal and external stakeholders by decreasing the number and severity Northampton have been awarded to ensure we continually optimise of incidents. We have improved the a ROSPA Gold Award for the past our ethical performance. provision of healthier meals and 6 years. This places them amongst nutritional advice and have promoted the best safety performers within Summary of what we are doing: active lifestyles at home and work. the food industry. • We are working with suppliers and using auditable databases Food safety is embedded in the way (SEDEX) to ensure our critical we work and we continue to achieve suppliers are working to a year on year improvement. recognised ethical standards. • Our sites are SEDEX compliant Uniq is actively supporting our • We are working with key customers, customers’ health agendas by to understand their needs, in order increasing the range of healthy and to build improving internal standards. wholesome options available to • We are working with key external the retailers and end consumer. advisers, and regulators to ensure The aim is to increase the healthier improvement and understanding. food options.

Progress Long-term promises Progress Long-term promises

Critical suppliers 100% of critical Reportable Accident Strive to zero Health SEDEX registered suppliers by end rate down to & Safety Executive 75%. 2011. 713/100,000 reportable accidents. employees from 849 Enhanced external (2009), both are much CSR communications below the food industry (e.g. website, CSR average (1,350). annual report). All sites scored Year on year grade A in the improvement British Retailer in food safety. Consortium Audit. 16 Uniq Annual Report and Accounts 2010 Directors’ report

Financial review 2010

This financial review covers the activities of the group Pension finance charges cover two items: net pension for the 12 months ended 31 December 2010. The group interest that is charged as part of IAS19 and interest completed the disposals of its overseas businesses earned on the secure account. IAS19 pension interest realising funds to settle its outstanding borrowings which is a reflection of the balance of pension assets and liabilities were paid off in full at the end of the year. In March 2011 and is set at the beginning of the year. The net charge for the group completed a debt for equity swap with its 2010 was increased over the prior year due to the pension pension fund, releasing the group from its onerous fund de-risking its asset base to gilts. The pension interest liabilities to the pension fund. As this was not completed charge for 2011 will be significantly smaller due to the removal until 2011, the results for 2010 are not affected by this of the main pension fund from the group in March 2011. restructuring. However, we have included a proforma Interest earned relates to the income on the secure account balance sheet and restated profit before tax statement balance of £97m which was lower year-on-year due to at the end of this section to illustrate the significant lower interest rates. This balance, with accrued interest, impact of the deal. was paid over to the pension fund in October 2010.

Revenue for continuing operations was up 6.8% on the Accounting finance charges are other finance items and prior year (adjusted for 53rd week). The operating result are generally non-cash. In 2010, this was a net income of before significant items for the group moved from £1.9m £0.3m compared to a charge of £1.2m in 2009 and relates loss to £4.1m profit. to foreign exchange differences on cash balances across the group. Group costs Group costs represent the cost of running the parent Significant items company and the head office at Gerrards Cross. As a Significant items are those items of financial performance result of the downsizing of the group, we have reduced which because of size or incidence, require separate the size of the head office reducing costs to £4.2m in disclosure. The net significant item for continuing operations the year, a saving of £2.1m over last year. in 2010 was a charge of £2.4m. This included £1.9m of costs in relation to the closure of our cottage cheese site Finance costs at Evercreech (£1.5m of asset impairment and £0.4m of This is split into three types of costs: operational, pension redundancy costs); £0.3m of redundancy costs and £0.1m related and accounting. of asset impairment incurred due to the downsizing of the group head office; £2.7m of costs in relation to the Operational finance charges include bank interest and pension solution and a credit of £2.6m in relation to amortisation of bank fees and are related to the ongoing the Wincanton settlement. operations of the business. Operations finance charges for 2010 were £1.7m which was £1.7m lower than the We have incurred a significant level of costs in exploring previous year due to the reduction of borrowings on the and implementing an acceptable solution for our pension realisation of overseas operations. During the year, as fund liability. Some of these costs have been incurred in part of our agreement with the pension fund, we were 2010 but we expected to incur further costs of approximately required to hold surplus funds in a separate Disposal £3.1m in 2011 as the solution is completed. We reached a Reinvestment account rather than pay down our outstanding full and final settlement of our litigation with Wincanton in debt with the bank. This caused finance charges to be February 2011 which resulted in us making a final payment higher than they would otherwise have been. of £2.3m. The provision we were holding for this litigation Uniq Annual Report and Accounts 2010 17 Directors’ report Financial review

at £4.9m was in excess of the final payment and therefore Summary results 2010 2009 the balance of the provision has been released. £m £m UK trading operating profit 8.3 4.4 Carrying Value of Minsterley Group costs (4.2) (6.3) At the year end we assessed the balance sheet carrying Operating profit/(loss) before significant items 4.1 (1.9) value of Minsterley (£48.4m) by carrying out an impairment Finance costs (excluding pension related) (1.4) (4.6) review. This review indicated, on the basis of the expected Profit/(loss) before significant items 2.7 (6.5) cashflows in the group’s budgets and strategy plans, that Significant items (2.4) (0.7) assets were adequately supported by the future cash flows Pension finance costs (11.5) (11.3) and no impairment was required. Since the year end, the Loss before tax (11.2) (18.5) group has carried out a detailed review of the Desserts Tax charge – (0.4) operations in the light of recent profit performance and Loss from continuing operations (11.2) (18.9) announced sales losses. The revised plans for Minsterley Discontinued items net of tax 35.4 (2.0) are dependent upon securing support from our customers. Profit/(loss) attributable to shareholders 24.2 (20.9) Basic profit/(loss) per share Should this support not be forthcoming, the carrying 21.3p (18.4)p value may not be supportable. Funds flow 2010 Taxation £m There is no tax charge in the year for continuing operations Operating profit 4.1 Depreciation and amortisation although the group made a profit after discontinued items, 9.9 EBITDA 14.0 as brought forward losses have been used where possible Net capital expenditure (15.0) to mitigate any tax exposures. The group has substantial Increase in working capital (4.0) tax losses (£83m), unclaimed capital allowances (£214m) Continuing operating cash flow (5.0) and future tax relief for pension contributions (£73m) Provisions and significant items (3.1) brought forward. These tax attributes exclude the losses Tax (1.1) that have been created through additional contributions Discontinued operations 26.8 as part of the debt for equity swap with the pension fund Pension contributions (0.9) in 2011. The growth and strategy of the business will Other (1.9) accelerate the use of these losses. Total funds flow 14.8 Opening net debt (4.0) Discontinued operations Closing net cash 10.8 Discontinued operations include businesses which were disposed of during the year. The disposal of the Northern European operations was completed in the first half of 2010: the Netherlands businesses on 9 January and the German/Poland businesses on 21 April. The results of these businesses have been included in the group up to the date of disposal.

Profit after tax and before significant items for the discontinued businesses was £3.2m. Total significant items were a credit of £32.2m which includes a charge of £0.7m for onerous leases on group properties offset by £32.9m of profit on disposal of the businesses. The profit on disposal includes a credit of £30.3m relating to foreign exchange gains previously credited to reserves which have been recycled to the profit and loss account on disposal. 18 Uniq Annual Report and Accounts 2010 Directors’ report

Funds flow account until 31 December 2010 when our bank facility During the year the continuing group had a £5.0m operating expired and all borrowings were repaid in full. Net cash cash outflow. This includes £15.0m spend on capital at the year end after payment of borrowings was £10.8m. expenditure of which £10.6m related to the completion of the Desserts project at the Minsterley site. Working capital We have negotiated a new bank facility with Lloyds outflow for continuing operations in the year was £4.0m TSB which was conditional on completing the debt for which reflects the increased pressure from suppliers. During equity swap with the pension fund. This process was the year the continuing group spent £3.1m on provisions and completed on 22 March 2011 and the new bank facility significant items: £1.3m related to restructuring costs in became available. This new facility provides for a £15m Desserts and £1.8m related to group head office restructuring term loan, amortising at £3m each year for three years and pension legacy costs. The provision balance at the with a lump sum repayment at the end of the facility, year end of £5.8m includes £2.3m which was paid in final and a £10m revolving credit facility to fund working settlement to Wincanton in February 2011, £1.3m in relation capital requirements. to overseas disposals, £1.2m for onerous leases on properties, £0.3m relating to Desserts restructuring costs Pensions and £0.7m of pension legacy fees. Tax payments of £1.1m in The group operates a main UK scheme and a number the year relate to tax assessed on the disposal of St Hubert of other small pension funds including an unfunded which was completed in 2008. Net cash received from overcap scheme, medical benefits provision and small discontinued operations of £26.8m represents the total cash legacy scheme. flow of the discontinued businesses to the date of disposal plus the proceeds from disposals after payment of disposal The IAS19 deficit on the main UK scheme at the beginning costs. Pension contributions relate to payments made to the of the year was £227.8m which was reduced significantly Pension Trustee to fund transfers out and pension costs during the year by the payment of the monies in the secure and interest costs of £1.5m reflect the level of borrowings account of £97.6m. Other movements on the deficit include maintained through the year. Total funds flow for the year £29.4m return on assets and £40.5m relating to the unwinding was £14.8m. of the liabilities. There was no service charge as the scheme was closed to further accrual in 2009. The closing Working capital and credit insurance deficit was £142.1m (excluding a provision of £3.4m for As noted in previous years, the group has experienced scheme expenses). significant pressure from suppliers on payment terms and rates due to the withdrawal of credit insurance on Post balance events the company and the impact of the pension deficit on Pensions – update for 2011 the group’s balance sheet. This has resulted in a further In March 2011, the group completed a deal to swap the worsening of the group’s working capital position and debt owed to its pension fund for equity in the company. a cash outflow. Having completed the pension deal, This deal has removed the main UK pension deficit from the group expects to be able to improve the availability the balance sheet of the group but as this deal was of credit insurance through discussions with relevant completed in 2011, this is not reflected in these financial insurers and therefore return to more normal trading statements. To illustrate the significant impact that this terms with its suppliers. deal will have on the group, a proforma Balance Sheet is shown in the table opposite. The profit before tax (shown Funding opposite) has been restated as if the pension fund had Opening net debt at the beginning of the year was £4.0m not existed throughout the financial year. including £6.1m of net cash in the discontinued businesses. The disposal of these businesses gave rise to cash proceeds Significant VAT recovery which, in accordance with a previous agreement with In March 2011, the group recovered £2.6m from HMRC the pension fund, were placed in a separate Disposal in relation to various claims under the Fleming ruling. Reinvestment account during the period of negotiation This repayment consisted of £1.0m of VAT recovery and with the pension fund to find a final solution. We maintained £1.6m of interest on the claim. The group is continuing our borrowings and the net cash in Disposal Reinvestment to claim further amounts under the Fleming ruling. Uniq Annual Report and Accounts 2010 19 Directors’ report Financial review

Business performance measurement Proforma Balance Sheet – Effect of the Pension Deal The group measures its performance using a series of Adj Pro KPIs, both financial and non-financial. The financial KPIs £m 2010 (note 1) forma are: sales growth; gross margin percentage; operating Assets Non-current assets profit percentage and return on capital. The non-financial Property, plant and equipment 80.4 80.4 KPIs vary according to business unit. Intangible assets 30.5 30.5 Deferred tax assets 13.9 13.9 Senior management are remunerated by bonuses 124.8 124.8 Current assets based on group and divisional financial performance Inventories 13.8 13.8 and in 2010, by delivery of the pension solution Trade and other receivables 33.2 33.2 and by share incentives, more details of which Cash and cash equivalents 10.8 (3.3) 7.5 are included in the remuneration report. 57.8 54.5 Total assets 182.6 179.3 Liabilities Financial risk Non-current liabilities The group is subject to financial risks, but has Borrowings – 11.0 11.0 Retirement benefit obligations procedures and controls in place to mitigate 149.4 (145.6) 3.8 Provisions 0.8 0.8 these risks. The group’s major financial risks 150.2 15.6 can be split as follows: Current liabilities Borrowings – 3.0 3.0 Trade and other payables 41.6 41.6 Market risk – Market risk can be broken down into Provisions 5.0 5.0 currency risk and interest rate risk. The group Income tax liabilities 7.7 7.7 has formal procedures and policies to mitigate 54.3 57.3 these risks. Total liabilities 204.5 72.9 Total assets less liabilities (21.9) 106.4 Equity Credit risk – The majority of the group’s customers Shareholders’ equity are large, established retail organisations with a good Total called up share capital 11.5 (10.3) 1.2 Share premium credit record. As a result the group does not have 0.1 64.5 64.6 Other reserves (330.2) (330.2) significant concentrations of credit risk. Retained earnings 296.7 74.1 370.8 Total equity (21.9) 106.4

Liquidity risk – During 2010 the group operated Note 1 – The adjustments reflect the issue of shares by the parent company at the closing price on 16 March 2011 to the pension fund in exchange for the cancellation of the IAS19 within its banking facility which expired at the end pension deficit and the payment of £14m as a final contribution to the pension fund, funded of December 2010. A new bank facility of £25m has by the new bank facility. been negotiated and was available for use by the Restated Profit before tax – Effect of the Pension Deal group from March 2011. Liquidity risk remains low Adj due for the group due to formal procedures and £m 2010 (note 2) Restated policies to manage cash resources. Continuing operations Revenue 311.9 311.9 Cost of sales (264.3) (264.3) Martin Beer Gross profit 47.6 47.6 Finance Director Distribution expenses (18.3) (18.3) 26 April 2011 Administrative expenses (25.2) (25.2) Operating profit before significant items 4.1 4.1 Significant items (2.4) 2.7 0.3 Operating profit after significant items 1.7 2.7 4.4 Net pension interest (12.1) 12.1 – Finance income 1.2 (0.6) 0.6 Finance expenses (2.0) (2.0) Net finance changes (12.9) 11.5 (1.4) (Loss)/profit before tax (11.2) 14.2 3.0

Note 2 – The adjustments reflect the removal of the significant cost in relation to the management of the group’s pension fund, the pension interest charge and the finance income related to the monies previously held in the secure account for the benefit of the pension fund from 1 January 2010. 20 Uniq Annual Report and Accounts 2010 Directors’ report

This price competition has led the major multiple retailers Principal risks to seek lower prices from their suppliers. Uniq has created a decentralised, entrepreneurial business structure to enable it to get closer to its customers and to mitigate this risk. However, there can be no assurance that Uniq’s customers will continue to purchase its products at This section updates what the board believes are current volumes, at current pricing or on current terms. the most significant risks and uncertainties which are specific to Uniq’s businesses. The credit insurance market and the creditworthiness of the group and its customers Minsterley profitability As is common in the food industry, many suppliers use Minsterley has a history of losses and has not generated a credit insurance to reduce the risk of exposure to the group. profit in any reporting period since the site was acquired in The credit extended by suppliers is an important part of 2005. In 2009, the Paignton site was closed and volume was the group’s funding. Over the last few years, the level of successfully consolidated into the Minsterley site. In the last insurance available to the group’s suppliers has significantly five years, there have been investments in the infrastructure, reduced, owing to a general tightening of credit insurance service and quality at the Minsterley site and financial results and the perceived extent of the group’s UK pension deficit. have improved significantly. The removal of the pension deficit will create the necessary conditions for credit insurance cover to be reinstated and Management recognises the recovery of profitability therefore, in time, this risk will reduce. of the Minsterley site has taken longer than expected. The site serves four sub-sectors of the market: Cadbury Weather and seasonality chocolate desserts, premium differentiated yoghurt, Sales of some products, such as salad products, are premium and everyday desserts. The Cadbury, yoghurt materially affected by unseasonable weather and seasonality. and premium dessert sub-sectors are either profitable or Sales can be materially increased or reduced as a result on track to achieve profitability, while the site losses are of weather fluctuations and seasonality. all concentrated in the everyday desserts sub-sector. The Desserts review has approved a series of steps Innovation to address and stop the losses in everyday desserts. The group operates in competitive markets and in fast moving sectors of the food industry. Its success is dependent on Minsterley produces Cadbury desserts under a co-packing anticipating changes in consumer preferences, including agreement. Additional capacity has been successfully installed dietary and nutritional concerns and on successful new and the Cadbury manufacturing facility at Minsterley is highly product development and product relaunches in response efficient. However, the anticipated growth has not yet to such changes in consumer behaviour. The group’s future materialised and there are ongoing discussions with the results will depend on its ability successfully to identify, customer regarding the terms of the co-packing agreement. develop, manufacture, market and sell new or improved There is a risk that Cadbury volumes could continue to decline, products in these changing markets. or that the co-packing agreement could be amended or terminated. Any of these outcomes could have an adverse Changes in the cost and availability of raw materials impact on the group’s operations and its financial condition. The group purchases its raw materials, many of which are commodities, from numerous suppliers. There are Customers a number of factors affecting the price of these raw The group is heavily dependent on a limited number of materials, such as quality, availability, demand, weather significant grocery retailers in the UK and one major retailer, conditions, currency fluctuations, agricultural policies M&S, represents over half of the group’s sales. In line with and political instability. Many of these raw materials are industry practice, the majority of Uniq’s UK sales are made by subject to potentially significant price fluctuations. means of short-term standard purchase orders rather than The group will generally not be a sufficiently large buyer long-term contracts. In recent years, the major multiple to have any control over these prices and may be unable retailers have increased their share of the UK grocery market to pass on such price increases to its customers in and price competition between those retailers has intensified. whole or part or without a period of delay. Uniq Annual Report and Accounts 2010 21 Directors’ report

Under applicable law and regulations, the directors Directors’ are also responsible for preparing a Directors’ Report and a Directors’ Remuneration Report that complies responsibilities with that law and those regulations.

The directors have also decided to prepare voluntarily The directors are responsible for preparing the a Corporate Governance Statement as if the company Annual Report and the group and parent company were required to comply with the Listing Rules and the financial statements in accordance with applicable Disclosure Rules and Transparency Rules of the Financial law and regulations. Services Authority in relation to those matters.

Company law requires the directors to prepare group and The directors are responsible for the maintenance parent company financial statements for each financial and integrity of the corporate and financial information year. Under that law they are required to prepare the included on the company’s website. Legislation in the group financial statements in accordance with IFRSs as UK governing the preparation and dissemination of adopted by the EU and applicable law and have elected financial statements may differ from legislation in to prepare the parent company financial statements on other jurisdictions. the same basis. We confirm that to the best of our knowledge: Under company law the directors must not approve the • the financial statements, prepared in accordance financial statements unless they are satisfied that they give with the applicable set of accounting standards, a true and fair view of the state of affairs of the group and give a true and fair view of the assets, liabilities, parent company and of their profit or loss for that period. financial position and profit or loss of the company In preparing each of the group and parent company and the undertakings included in the consolidation financial statements, the directors are required to: taken as a whole; and • select suitable accounting policies and then apply • the directors’ report includes a fair review of the them consistently; development and performance of the business • make judgements and estimates that are reasonable and the position of the issuer and the undertakings and prudent; included in the consolidation taken as a whole, • state whether they have been prepared in accordance together with a description of the principal risks with IFRSs as adopted by the EU; and and uncertainties that they face. • prepare the financial statements on the going concern basis unless it is inappropriate to presume Geoff Eaton that the group and the parent company will Chief Executive continue in business. Martin Beer The directors are responsible for keeping adequate Finance Director accounting records that are sufficient to show and 26 April 2011 explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. 22 Uniq Annual Report and Accounts 2010 Directors’ report

Board of directors and senior management

John Warren Geoff Eaton Chairman Chief executive

Martin Beer Finance director

John Warren Geoff Eaton Martin Beer Belinda Gooding

Chairman * † ‡ // Chief executive ‡ // Finance director // Non-executive director * † ‡ Joined the board in 2007, Joined the board as chief Appointed to the board in Joined the board in 2006. served as Interim Chairman executive in 2005. He was 2002 as finance director. She is chief executive of from 25 June 2009 and formerly chief executive of He is a chartered accountant, Roots & Wings, a trustee of appointed Chairman on ISIS Research from 2001 having qualified with Price Chelsea Physic Garden and 14 April 2010. He is also to 2004. Prior to that he Waterhouse. He has been a non-executive director chairman of the audit spent 13 years with Tomkins with the group since 1990 of Strutt & Parker. She was committee and the pension plc where he held a number in various financial roles, formerly chief executive of committee. He was formerly of senior executive roles including finance director of 2 Save Energy Ltd, a non- finance director of United including executive director Unigate Dairies for five years. executive director of Biloxi Biscuits plc and WH Smith plc. at RHM in the UK, executive Southern Foods, Sir Hans He is a fellow of the Institute vice-president at Gates Sloane chocolates and Pet’s of Chartered Accountants in Corporation in the US and Kitchen and chief executive England and Wales and is a head of corporate development of Duchy Originals Ltd from non-executive director of The for the Tomkins Group. He is 2000 to 2007. Prior to that she Rank Group plc, Bovis Homes a chartered accountant, having spent ten years in marketing Group plc and Spectris plc. qualified with Arthur Andersen. roles with Mars (Masterfoods) and was group marketing director of Dairy Crest Group plc. Uniq Annual Report and Accounts 2010 23 Directors’ report Board of directors

Belinda Gooding Dr Matthew Litobarski Non-executive director Non-executive director

Stephen Draisey Andrew McDonald Managing director General counsel and company secretary

Dr Matthew Litobarski Stephen Draisey Andrew McDonald • Non-executive director * † ‡ Managing director General counsel and Appointed to the board in 2005, Appointed in 2008. He has company secretary served as interim senior a wealth of experience in the Joined Uniq in 2005 as general non-executive director from UK food industry having held counsel and appointed company 25 June 2009 and appointed a number of senior positions secretary in February 2009. senior non-executive director during a 17 year career with He is secretary to the board on 14 April 2010. He is chairman Geest/Bakkavor, ultimately and each of the four board of the remuneration committee as managing director of its committees and has and, since 25 June 2009, the desserts, ready meals, soups, responsibility for corporate interim senior non-executive sauces, pasta and chilled affairs, insurance and all director. He is chairman of bread division. Prior to that he legal matters affecting the Devin AD (Bulgarian mineral was with Northern Foods plc group. He qualified as a water company), and chair of and J Marr Seafoods Ltd. solicitor in 1998 and worked the council of Nacro (a leading as a corporate lawyer for UK crime reduction charity). Freshfields Bruckhaus He was previously president, Deringer before moving global supply chain, with into industry. Cadbury Schweppes plc, having spent 19 years with them in various senior management roles. He has a doctorate in physical chemistry from Nottingham University.

* Member of the remuneration committee † Member of the audit committee ‡ Member of the nomination committee // Member of the pension committee* • Not a member of the Uniq Plc board 24 Uniq Annual Report and Accounts 2010 Directors’ report

Report of the directors

Principal activity In March 2011, the company completed a capital Uniq is a convenience food group that is now focused on restructuring of its share capital to facilitate a debt for the UK and operates and manages two divisions: Food to equity swap with its pension scheme. This resulted in the Go and Desserts. During the year the group disposed of reduction of shareholders’ interests to 9.8% of the equity all its remaining European operations in Northern Europe and the issue of 105,704,563 shares to the pension (Germany, the Netherlands and Poland). In the view of scheme, giving the pension scheme a 90.2% equity holding the Directors, the group’s likely future development will in the company. This restructuring was sanctioned by continue to centre on the main product categories in the High Court and on 24 March 2011 and the company which it now operates. and its subsidiaries were discharged from their obligations in relation to the defined benefit section of the company’s Business review, KPIs and risk review pension scheme. A review of activities of the group and divisions, key performance indicators (KPIs), an outline of the principal Following this restructuring the company successfully risks and uncertainties which management believes applied for the shares to be relisted on the Alternative are specific to the group and an indication of future Investment Market (AIM) as from 1 April 2011. developments are set out throughout the directors’ report, but in particular in the Chairman’s statement on Annual general meeting pages 2 and 3, the Chief Executive’s review on pages The company’s annual general meeting will be held at 4 and 5, the market overview on pages 6 and 7, the 10 am on 17 June 2011 at the offices of Investec Bank business review on pages 8 to 15, the financial review plc, 2 Gresham Street, London EC2V 7QP. Details of on pages 16 to 19 and in the principal risks on page 20. the business to be considered at the meeting are contained in the notice of annual general meeting Dividends sent to shareholders. No dividends were paid during 2010 (nor in 2009) and the directors have decided not to recommend In accordance with the Shareholder Rights Directive the payment of a final dividend for the year. (‘the Directive’) which came into force in August 2009, the company obtained shareholder approval at the 2010 Acquisitions and disposals AGM to the calling of meetings, other than the AGM, on During the year the following transactions occurred: 14 days clear notice. Prior to the implementation of the Directive, the company was able to call meetings other On 9 January 2010 the sale of the Netherlands business than the AGM on 14 clear days notice without obtaining (Uniq Convenience Foods Nederland BV) to Gilde Equity shareholder approval and, to preserve this ability, Management Benelux for £16.6m was completed. shareholders will be asked to renew their approval by passing Resolution 6 at the AGM. On 21 April 2010 the sale of the businesses in Germany (Uniq Deutschland GmbH) and Poland (Uniq Lisner sp Substantial interests zoo) for £24.7m to IFR Capital plc was completed. As at 26 April 2011, the company has received the following notice of substantial interests (3% or more) Share capital and reserves of the total voting rights of the company: Details of the authorised and issued share capital and changes in reserves of the company are shown % in notes 28 and 29 to the financial statements. Angel Street Limited 90.2 Uniq Annual Report and Accounts 2010 25 Directors’ report Report of the directors

Implementation and Relationship Agreement The Uniq ESOT (see note 29) held 982,677 ordinary As a consequence of the restructuring, the company shares as at 31 December 2010 on trust for the benefit entered into an Implementation and Relationship of participants in the company’s executive share plans. Agreement on 9 February 2011 which regulates the The voting rights for these shares are held by the trustee relationship between the Pension Scheme Trustee, and the trustee may vote or abstain in any way it thinks Angel Street Limited and the Company. This agreement fit. Historically the trustee has not exercised this right. will continue in force until Angel Street Limited ceases to hold twenty per cent or more of the voting rights Unless the directors decide otherwise, a shareholder of the Company for a period of longer than one month. cannot attend or vote shares at any general meeting of Pursuant to the agreement, Angel Street Limited has the company or upon a poll or exercise any other right appointed an observor to attend meetings of the board. conferred by membership in relation to general meetings or polls if he has not paid all amounts relating to those Powers of the directors shares which are due at the time of the meeting. Subject to the provisions of the Companies Acts, the articles of association and directions given by The company is not aware of any agreements between the company in general meeting, the business of holders of securities that may result in restrictions on the company is managed by the board of directors voting rights. which may exercise all the powers of the company. Restrictions on transfer of shares Appointment and replacement of directors As at 26 April 2011, there are no extant restrictions on Directors may be appointed by the company by ordinary the transfer of shares in the company except as follows: resolution or by the board. Non-executive directors are certain restrictions may be imposed from time to time appointed for a term of three years, subject to shareholder by legislation and regulations (for example insider trading approval. At every AGM any director who has been laws); pursuant to the AIM Rules of the London Stock appointed by the board since the last AGM, or who held Exchange whereby certain employees of the company office at the time of the two preceding AGMs and did not require clearance from the company to deal in the company’s retire at either meeting shall retire from office and offer shares and pursuant to the orderly market provisions of themselves for re-appointment by shareholders. The company the Implementation and Relationship Agreement whereby may by special resolution remove a director from office Angel Street Limited agrees that a sale of its shareholding before expiry of his term of appointment. The articles in the company must be effected through the contain provisions on the vacation of office if a director: company’s broker. resigns, or offers to resign and the resignation is accepted by the directors, or is required to resign by the other The company is not aware of any agreements between directors; suffers from mental or physical ill health problems; shareholders that may result in restrictions in the transfer is absent from meetings for six months without permission; of securities. has a bankruptcy order made against him or makes an arrangement or composition with his creditors; is prohibited Coporate Social Responsibility by law from being a director; or ceases to be a director The board regularly considers and takes account of the under legislation or is removed from office under the articles. significance of CSR matters and their potential risks to the business of the group and the opportunities to enhance Voting and restrictions on voting value that may arise from an appropriate response including Every member and every duly appointed proxy present risks relating to environmental impacts, employees, society at a general meeting or a class meeting has, upon a and communities, as well as reputational risks. show of hands, one vote and upon a poll one vote for every share held by him. In the case of joint holders The board undertakes a formal review of CSR matters at where more than one joint holder votes, the only vote least annually. This includes providing oversight to ensure which will count is the one of the person listed before the group has in place effective policies, systems and the other voters on the register for the share. procedures for managing CSR matters and mitigating 26 Uniq Annual Report and Accounts 2010 Directors’ report

CSR risks. Further information on the group’s CSR Payment policy activities can be found on pages 12 to 15 of this The group does not have a formal code that it follows report and on the group’s website (www.uniq.com). with regard to payments to suppliers. Members of the group generally agree payment terms with their suppliers Employees when they enter into binding contracts for the supply The group is committed to a policy of equal opportunities of goods and services. Suppliers are, in that way, made in employment by which the group continues to ensure aware of these terms. Group companies seek to abide that all aspects of selection and retention are based on by these payment terms when they are satisfied that merit and suitability for the job without considerations the supplier has provided the goods or services in of sex, marital status, nationality, colour, race, ethnicity, accordance with the agreed terms and conditions. sexual orientation or any disability. The group aims to At 31 December 2010 the amount of trade creditors maintain a diverse workforce free from discrimination. shown in the group balance sheet represented Persons who have or develop a disability are, where 44 days (2009: 52 days) of average purchases. possible, given practical assistance and training to seek to overcome their disability in the performance Significant contracts and change of control of their work. Save for the banking agreements and the Implementation and Relationship Agreement the company is not party Directors to any significant agreements which take effect, alter Details of the directors in office at the year end and or terminate upon a change of control of the company. of their contracts are set out in their biographies on Details of how the equity incentive plans would be pages 22 and 23 and in the corporate governance affected by a change of control are set out in the and remuneration reports. The directors’ beneficial remuneration report. interests in the company’s ordinary share capital as at 31 December 2010 are set out in table 4 on Disclosure of information to auditors page 37 of the remuneration report. The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each Directors’ interests aware, having instigated reasonable steps to check the No director had a material interest at any time during same and sought appropriate reassurances from fellow the year in any derivative or financial instrument directors, management and the company’s auditors that relating to the company’s shares. Details of directors’ it is the case, that there is no relevant audit information remuneration, service agreements and interests in shares of which the company’s auditors are unaware. of the company are set out in the remuneration report. Auditors Charitable and political donations In accordance with Section 489 of the Companies Act The group made donations for charitable purposes during 2006, a resolution for the re-appointment of KPMG Audit the year which amounted to £18,000 (2009: £12,000). Plc as auditors of Uniq plc will be proposed at the annual No donations were made to political parties in 2010 general meeting. and 2009. For the board New product development During the year the group was active in the improvement Andrew McDonald of production processes, existing products and the Company Secretary development of new products, to satisfy customer 26 April 2011 requirements and support the long-term profitable Registered No. 3912506 growth of its businesses. Uniq Annual Report and Accounts 2010 27 Directors’ report

Corporate governance

Compliance statement The board has specific powers reserved to it including The company places a great deal of importance on high the approval of: group strategy and annual budgets, standards of corporate governance and has generally half yearly and final results and interim management complied with the Combined Code on Corporate statements, acquisitions and disposals, major agreements, Governance issued by the Financial Reporting Council capital expenditure and unusual transactions. It also has as revised in June 2008 (the ‘Code’) as applicable to responsibility for setting policy and monitoring from time the company for the year to 31 December 2010 and has to time such matters as: financial and risk control, health made these voluntary disclosures. The company normally and safety policy, environmental issues, food safety and expects to comply with current best practice in relation management succession and planning. The board has to corporate governance and that its employees will do delegated to the chief executive and his executive team likewise. This report seeks to explain the position in responsibility for execution of the agreed strategy and detail including any exceptions. budget and the day-to-day management of the group’s operations. The operational management is required to Board of directors manage operations of the company within the management, At the date of this report there are five directors, comprising financial and risk guidelines set down. the chairman, chief executive, finance director and two non-executive directors. All directors served throughout Board and committee members are given appropriate the year. All of the non-executive directors are considered documentation in advance of each board or committee ‘independent’ within the meaning of the Code and the meeting. For regular board meetings these normally chairman was ‘independent’ on appointment. Matthew include a detailed monthly report on current and forecast Litobarski, Belinda Gooding and John Warren have current trading with comparisons against budgets and prior terms of appointment which expire at the end of the annual years. For all meetings explanatory papers are sent out general meetings in 2011, 2012 and 2013 respectively. on matters where the board or committee will be required The non-executive directors occupy, and/or have to give its approval, make a decision or give its response. occupied, senior positions in business. In addition to frequent business presentations, reports are given to the board or its committees at appropriate John Warren, previously the senior non-executive director, intervals on such matters as pensions, insurance, served as interim chairman from 25 June 2009 and was environment, food safety and treasury. appointed chairman on 14 April 2010, following the resignation of Ross Warburton. Matthew Litobarski The board has approved a procedure for directors to take was appointed senior non-executive director on independent professional advice, if necessary, at the 14 April 2010 in place of John Warren. company’s expense. In addition, the directors have direct access to the advice and services of the company secretary The articles provide that all directors must stand for who is charged by the board with ensuring that board election at the first AGM after they are appointed and procedures are followed. Appointment or removal of the all continuing directors must stand for re-election at least company secretary is a matter for the board as a whole. every three years. Matthew Litobarski does not intend to stand for re-election at the AGM and will leave the On joining the board, directors are included in an induction company on 17 June 2011. programme involving meetings with management together with current information and background documents The board is responsible for ensuring the proper describing the company and its activities. Manuals, books management and control of the company. The board and training are available to all directors on their duties as aims to enhance shareholder value by maintaining an directors and individual members attend external courses entrepreneurial leadership of the group whilst ensuring on subjects they wish to improve. Site visits take place that appropriate checks and balances are in place. periodically. Papers are presented to board members on 28 Uniq Annual Report and Accounts 2010 Directors’ report Corporate governance

such subjects as accounting or regulatory changes The pension committee was set up in 2007 to review and where appropriate; specific presentations have been advise the board on pension issues. It normally meets given covering various aspects affecting directors about six times a year. It is chaired by John Warren and under the Companies Act 2006. its other members are Geoff Eaton and Martin Beer. However, during 2010 the board as a whole regularly Normally, the board expects to meet about 12 times considered the group’s pension deficit and other pension a year. Where there are urgent matters to consider, matters, so there was no need for the pension committee additional meetings, generally by telephone conference to hold separate meetings. call, are held. Where directors are not able to attend meetings, opportunity is made for their views to be The nomination committee is responsible for considering conveyed on matters under consideration. The table and recommending to the board persons who are on page 29 sets out the board and committee meeting appropriate for appointment as executive and non- attendance by members (the figures in brackets are the executive directors. Appointment is the responsibility maximum which could have been attended in the year). of the whole board following recommendation from the committee. The committee also reviews succession Throughout the year the company had a separate planning and senior management appointments below chairman and chief executive and their differing roles board level. The Chairman, the Chief Executive and the were acknowledged. The Chairman’s role was part-time remaining independent non-executive directors are also and he was primarily responsible for the workings of the members. It meets as necessary and uses the services board and for ensuring that its strategic and supervisory of outside personnel consultants to assist it when role was achieved. The Chief Executive was responsible appropriate. From time to time a subset of the nomination for the day-to-day running of the business, preparing the committee will be selected for a specific purpose strategy and budgets for board review and then carrying such as selection or re-appointment of the chairman. out the agreed strategy and implementing specific board In carrying out its duties the committee considers what decisions relating to the operation of the company. appointments would be appropriate, decides what attributes or areas of specialisation the candidates On 14 April 2010 John Warren was appointed Chairman should have and selects headhunters to find and select and Matthew Litobarski as the senior non-executive possible candidates. Members of the committee then director. The board carries out a formal evaluation of its interview candidates before the committee puts forward own performance and effectiveness annually. This review its recommendation to the board. is done by the secretary preparing a list of headings under which each director is asked to consider performance The remuneration committee report is set out on pages and make comments. These are received by the chairman, 32 to 37. The remuneration committee was chaired by collated and detailed in a paper setting out the points raised. Matthew Litobarski throughout the year. John Warren Following a review of that paper by the board the points and Belinda Gooding are the other members. It meets agreed are adopted. The board considers that this evaluation when necessary and uses the services of external process is an effective and cost efficient process. remuneration consultants to assist it when appropriate. All members of the committee are independent non- Board committees executive directors. There are audit, remuneration, pension and nomination committees of the board to which relevant matters are The principal responsibilities of the remuneration delegated. The current membership of the committees committee are: is set out on pages 22 and 23. Membership of each • Setting, reviewing and recommending to the board committee is reviewed as necessary as a consequence for approval the group’s overall remuneration policy of any changes in the board. The committees all have and strategy for senior managers’ remuneration; detailed terms of reference. The reports of the audit and • Setting, reviewing and approving individual remuneration committees, including summaries of their remuneration packages for executive directors and terms of reference, are set out below and in the separate the chairman, including terms and conditions of remuneration report which follows. employment and any changes to the packages; Uniq Annual Report and Accounts 2010 29 Directors’ report Corporate governance

Directors’ attendance at board and committee meetings Audit Remuneration Nomination Director Board committee committee committee John Warren 16 (16) 4 (4) 9 (9) 5 (5) Geoff Eaton 16 (16) N/A N/A 5 (5) Martin Beer 16 (16) N/A N/A N/A Belinda Gooding 16 (16) 4 (4) 9 (9) 5 (5) Matthew Litobarski 16 (16) 4 (4) 9 (9) 5 (5)

• Reviewing the salary structure and terms, conditions The committee plays an important role in reviewing the and benefits of employment of other very senior group’s financial controls and reporting. It manages the executives in the group; group’s relationship with internal and external auditors. • Approving the launch and rules of any group share, It also assists in the group risk management procedures share option or cash based long-term incentive and in ensuring that the group meets its regulatory scheme and the grant, award, allocation or issue requirements. The principal activities of the audit of shares, share options or payments under such committee are: schemes; and • To review the half yearly and annual financial statements • The setting of bonus terms and the approval of bonus prior to publication with executive management and payments for directors and certain senior executives. the external auditors. It pays particular attention to the appropriateness of accounting policies used and areas The audit committee is chaired by John Warren who of management judgement. Compliance with material is a chartered accountant and has extensive previous changes to accounting standards is kept under review. experience as a finance director of two large listed It draws to the attention of the board the main points companies. All members of the committee are arising from its review and any matters of concern independent non-executive directors and between them which may arise. they have wide experience of industry and commerce. • To make recommendations concerning the appointment The board believes that for the purposes of the Code, or re-appointment of the company’s external auditors John Warren has appropriate, recent and relevant financial and to consider the auditors’ continuing suitability, experience. The board considers that it is appropriate including when necessary recommending to the board that John Warren continues as chairman of the audit appropriate action to appoint new auditors. It ensures committee while he serves as chairman of the board, that key audit partners are rotated at appropriate intervals. because he is the only non-executive director with the It discusses with the auditors the scope of the audit relevant financial expertise; the board will keep the before it commences, reviews the results and considers leadership of the audit committee under review. the formal reports of the auditors and reports the results of those reviews to the board. It reviews the auditors’ During the year, the committee reviewed the scope and independence, performance, the scope of the audit and results of the work undertaken by the internal auditor. recommends to the board appropriate remuneration The group has appointed an internal compliance controller for the auditors. to monitor compliance with internal controls. The compliance • To receive reports from the internal compliance controller reports to the committee at least twice a year. controller twice a year reviewing internal audits The committee is generally attended by the chief executive, conducted and consider follow up reviews on progress finance director, the internal compliance controller and the in addressing issues arising from prior internal audits. external auditors, all at the invitation of the committee. The • To agree the programme of internal audit reviews to company secretary is secretary. The committee normally be carried out and must approve the appointment meets three times a year and in addition the committee or removal of the internal compliance controller. and/or the chairman hold separate discussion with the The internal compliance controller has the right to external auditors without any members of the executive talk directly to the chairman of the audit committee present. The committee operates within written terms at any time. of reference set down by the board. 30 Uniq Annual Report and Accounts 2010 Directors’ report Corporate governance

• To set down and monitor the company’s use of the announcements the company’s broker conducts an analysis external auditors for non-audit work. The committee of investor and analysts’ reaction which is reported to the considers that it is sometimes appropriate to use the board. The chairman, chief executive and finance director external auditors for non-audit work especially where would also report to the board on investor contacts and the work is of a regulatory or compliance nature or reaction when appropriate. where the auditors’ experience is likely to give them an advantage over other providers. All appointments During the year the chief executive and finance director gave of the external auditors are subject to audit committee collective general presentations covering the results and guidelines and specific consent is required for other key announcements. The chairman and other directors commissions above £50,000. The committee monitors are available as appropriate for subsequent meetings with non-audit work carried out by the external auditors. institutional investors. The chairman and company secretary • To review the risk review procedure carried out by the generally deal with questions from individual shareholders. executive with the aim of ensuring that, where possible All shareholders have the opportunity to put questions at and appropriate to do so in the context of the business, the company’s annual general meeting when the chairman reasonable steps are taken by the group to mitigate risks. gives a statement on the company’s performance during • To ensure that the group maintains appropriate internal the year, together with a statement on current trading control procedures and monitors their effectiveness. conditions. The chairman of the audit, nomination and remuneration committees normally attend the annual The committee has approved a ‘whistle blowing’ policy general meeting and the chairman advises shareholders under which it is the ultimate point of reference for those on the proxy voting details. All shareholders are invited to raising concerns. attend the annual general meeting when the directors will be available to answer questions concerning the group and its During the period under review the committee carried out activities. The company maintains a website (www.uniq.com) the above functions. which contains further and up-to-date information on the company and its recent changes and announcements. Auditors’ independence The board believes that its auditors are independent and As a result of the restructuring, 90.2% of the equity of the asks the audit committee to monitor this position on a company is held by Angel Street Limited. The company has regular basis. Details of all fees for non-audit work are entered into an Implementation and Relationship Agreement set out in note 5 on page 56 of the financial statements. to govern the relationship with Angel Street Limited. The fees paid for non-audit work were spent on work connected with the group’s disposals of its overseas Independence of directors operations, the restructuring involving the debt for equity The board considers all its non-executive directors and swap with the group’s pension fund and in reviewing the its chairman on appointment to be independent. In addition interim results. The board considers it appropriate that to meeting the criteria for independence below they are this work should be carried out by the group’s auditors independent in character and judgement. The board’s and that it does not inhibit their independence. criteria for independence are: • Has not been an employee of the group within the Other committees are appointed by the board from time last five years; to time to consider specific matters delegated to them • Has not or has not had, within the last three years, such as approval of the detailed terms of acquisitions or a material business relationship with the group; disposals and capital expenditure projects. • Save in exceptional circumstances, has received no remuneration other than a director’s fee; Relations with shareholders • Has no close family ties with any of the group’s The board ensures that there is an active programme of advisers, directors or senior employees; investor relations which was led by the chief executive • Does not have significant links with other executive and finance director during the year. The chairman and directors through mutual involvement in other senior non-executives are also available for consultation with companies or bodies; major shareholders when appropriate. Major brokers’ reports • Does not represent a significant shareholder; and forecasts are circulated to the board as they are • Has not served on the board for more than received. Following the preliminary and half yearly nine years. Uniq Annual Report and Accounts 2010 31 Directors’ report Corporate governance

Directors’ remuneration reports monthly on its performance against its agreed The remuneration report on pages 32 to 37 details budget. The board receives monthly an update on compliance with the Code’s requirements with regard such performance and generally reviews significant to remuneration matters. variances on a monthly or bi-monthly basis. • Procedures have been established for planning, Internal controls, risk management and audit approving and monitoring major capital expenditure The board has overall responsibility for the group’s risk and major projects. The group has a centralised management and internal control systems and for reviewing treasury function, which operates within defined their effectiveness. The systems are designed to provide limits and subject to regular reporting requirements reasonable control over the activities of the company and and audit reviews. the group and to enable the board to comply with the • An embedded risk management process is in place, directors’ responsibilities statement on page 21. This which seeks to identify the most significant risks facing process has remained in place throughout the financial each business and the group and reports on how those period covered by this annual report and to the date of risks are being managed. This process requires the these financial statements. The process is reviewed from business divisions to produce risk registers identifying time to time and updated to ensure that it continues to and evaluating significant risks which may affect their meet the needs of the group’s activities. However, it is business and to consider what action can and should recognised that it is the nature of any business that risk reasonably and cost effectively be taken to reduce is inherent in any enterprise and that business and them to an acceptable level. The process culminates commercial risks must be taken and that for a business in the production of a group risk register including a to succeed, enterprise, initiative and motivation are key review of significant central risks. This register and the elements which must not be unduly stifled. It is not the divisional action plans for addressing risk are reviewed intention of the company to seek to avoid all risks. and maintained on an ongoing basis. Commercial judgements and other decisions will have to • There is an internal audit process led by the compliance be made in the course of management of the business controller which is used to help monitor controls. and will give rise to risk. This programme of internal control reviews is set by the audit committee following review with the finance The board confirms that, in accordance with the director. From time to time ad hoc assignments requirements of the Code, it has reviewed the effectiveness requested by senior executives or the audit committee of the system of internal control. The key elements of the are also undertaken. group’s internal control systems and the review process are as follows: The external auditors, KPMG Audit Plc, audit the year • The group has an organisational structure with end results. Their audit report is on pages 38 and 39 established lines of accountability as well as clearly of this annual report. They also conduct a review of defined levels of authority as to matters which are the half year results. reserved to the board and the delegation of other matters to board committees or the group’s executive Going concern management. Each part of the business is required The directors have prepared trading and cash flow to operate in accordance with established policies forecasts for a period in excess of a year from the date and procedures. An overall ‘Operational Control of approval of these financial statements. The directors Framework’ document, which is regularly reviewed have assumed: trading relationships are maintained to ensure it covers changing business operations unless otherwise notified; sales growth in certain and processes, sets down guidelines or mandatory sectors and planned cost savings. These show that requirements on general and specific issues such as after sensitivities and mitigating factors are taken into treasury and authorisation limits, accounting policies, account, the total bank facility is not exceeded, the directors’ dealings, capital expenditure procedures, covenants are not breached and there are no events expenses, ethical conduct and ‘whistle blowing’. of default. The directors expect that the group will be • Comprehensive business planning and financial reporting able to meet its liabilities as they fall due and therefore procedures are in place, including the annual preparation consider it appropriate to prepare the financial of detailed operational budgets for the year ahead and statements on a going concern basis. projections for subsequent years. Each business area 32 Uniq Annual Report and Accounts 2010 Directors’ report

Remuneration report

Constitution exceptional responsibilities. Fees are reviewed by the The current members of the remuneration committee are board from time to time. Non-executive directors do Matthew Litobarski (chairman), Belinda Gooding and John not participate in any incentive or pension plans. Warren. All of them served throughout the year. The board considers that all members are independent directors, the Directors’ remuneration chairman having been independent on first appointment. The remuneration of executive directors comprises The chief executive and finance director may be invited to five elements: base salary, benefits-in-kind, pension, attend meetings, but no party would attend when specific annual cash bonus and equity incentives. matters concerning the detail of their own personal remuneration are being dealt with. The company secretary Base salaries acts as secretary to the remuneration committee and it Base salaries are reviewed annually, having regard to relevant met 9 times during the year to 31 December 2010. market practice supported by periodic external independent surveys. Details of the directors’ remuneration for the year The committee has written terms of reference which set to 31 December 2010 are set out in table 1 on page 36. down its role and responsibilities. Briefly, it has responsibility for setting the remuneration policy for the group and for Benefits-in-kind deciding certain more detailed matters such as setting very The benefits-in-kind provided to the executive directors senior managers’ remuneration and grants under long-term are: private medical and travel cover for themselves and incentive schemes. their family and life insurance up to a maximum of four times’ salary. Geoff Eaton had a car allowance of £15,000 The remuneration committee takes advice as and when p.a. and Martin Beer had one of £14,000 p.a. Both Geoff required directly from external consultants and has appointed Eaton and Martin Beer can claim a per mile charge to cover Towers Watson as its consultants on remuneration matters. fuel and expenses of business use of their private cars. Towers Watson performs no other services for the company. The non-executive directors receive no benefits-in-kind, although all directors are reimbursed for reasonable Remuneration policy expenses incurred in the performance of their duties. The company’s ongoing policy for executive directors and senior executive management is to provide remuneration in an Annual cash bonus amount and manner appropriate to the recruitment, motivation The company operates an annual cash bonus system for and retention of high quality management, and encourage senior managers and executive directors. The payment and a culture linking reward to overall corporate and individual extent of annual cash bonuses to the executive directors is employees’ performance. The committee has decided that dependent upon the achievement of pre-agreed targets set emphasis should be placed on the performance-related, by the remuneration committee. Each year the remuneration variable elements of the senior management and executive committee will review the system and may set different directors’ pay so that a substantial proportion of their potential targets or performance conditions to seek to keep the total remuneration is linked to corporate and personal conditions appropriate to the current goals and aims of achievement and the short and long-term success of the company and in alignment with shareholder interests the group. This policy gives greater alignment between and company targets. senior management and shareholders’ interests. In respect of performance in the year to 31 December Remuneration policy for non-executive directors is 2010, Geoff Eaton and Martin Beer will receive bonuses determined by the board (excluding the non-executive linked to the delivery of the restructuring by which directors) within the limits set out in the articles of the company was released from its pension deficit. association. A basic fee is paid together with a responsibility The bonuses paid for Geoff Eaton and Martin Beer fee for those chairing a committee or accepting other are £180,090 and £99,360, respectively. Uniq Annual Report and Accounts 2010 33 Directors’ report Remuneration report

For 2011 the remuneration committee has aligned the and on a time-apportioned basis having regard to the bonus plan to support delivery of the profitability of the period between the grant of the award and the change group businesses. The maximum bonus for exceptional of control. performance for this year, unchanged from 2010, is: Geoff Eaton 150% and Martin Beer 120% of base salary. As set out in the circular to shareholders on the 9 February 2011, following the successful restructuring, the Equity incentives remuneration committee intends to grant awards under The Executive Share Option Plan the PIP to approximately 85 of the most senior managers In 2002 shareholders approved an executive share option over shares representing up to 5% of the company’s scheme under which grants were made between 2000 issued share capital. In making a grant of awards under and 2002. the PIP for 2011, the remuneration committee took into account the fact that no awards were issued under the All outstanding executive options granted under this plan PIP during 2010. The awards will vest after three years, have been adjusted to take account of the variation in the if stretching performance targets are achieved in terms capital of the company as a result of the restructuring of absolute TSR and growth in EPS, with the base EPS and have become exercisable but at prices significantly figure being based on the 2010 pro forma accounts and greater than the current market value of the company’s adjusted for the restructuring. The maximum vesting shares. Options that are not exercised within six months of 100% is dependent upon the achievement of three following the restructuring will lapse. years’ annual compound growth for each of these targets of 20%. The Performance Incentive Plan (‘PIP’) At the annual general meeting in 2003 shareholders Value Maximisation Plan approved the introduction of the PIP. Under the PIP the To ensure the group’s senior executives are appropriately remuneration committee may grant selected executives incentivised and aligned with the interests of shareholders, ‘base’ awards consisting of rights to acquire shares the remuneration committee has introduced a short-term (called performance shares) and/or further rights (called Value Maximisation Plan, the details of which were set out matching shares) the latter conditional on the executive to shareholders in the circular dated 9 February. investing his other annual bonus in the purchase of Uniq plc shares which normally must be held for three years. The key features of this scheme are: • participation is limited to nine people, being the For grants made in 2007 the performance conditions executive directors, senior executives at head office were not met and therefore lapsed on the date of maturity. and managing directors of the business units; For grants made in 2008 and 2009, the performance • the participants in the scheme will receive a cash conditions were not met at the time of the restructuring sum, the amount of which is dependent upon the and have therefore lapsed upon the restructuring achievement of pre-determined equity value realisation becoming effective. targets. The remuneration committee believes that these targets are extremely stretching and are in During 2010, the remuneration committee, advised by alignment with shareholders’ interests; Towers Watson, undertook a review of the effectiveness of • each award will have a threshold level of performance, the current long-term incentive arrangements and below which there will be no payment. The maximum decided not to grant any awards under the PIP until a award for exceptional performance under the scheme solution to address the pension scheme deficit was will range from 90% to 150% of base salary depending found. Consequently, no awards under the PIP were upon the seniority of the participants; issued during 2010. • the participants who receive payments pursuant to this scheme will not be entitled to a bonus under the At the general meeting on 25 February 2011 shareholders company’s normal annual bonus scheme for 2011 if approved an increase to the individual award limit of the they cease to be employed within the group for any PIP to an amount equal to double the participant’s annual reason prior to the normal payment date for that basic salary. The remuneration committee also amended bonus (March 2012); the rules of the PIP so that, in the event of a change of • the scheme will have a maximum duration of control, awards may only vest subject to performance 12 months; and 34 Uniq Annual Report and Accounts 2010 Directors’ report Remuneration report

• if there is a change of control of the company within Up to 31 March 2006 Martin Beer also accrued pension 12 months, any payment to a participant under this in relation to his salary above the earnings cap through scheme will be reduced by the value of any shares an unfunded HMRC-unapproved (‘overcap’) pension which the participant receives under the PIP as a scheme. This overcap scheme was terminated and Martin result of such an event. Beer took a transfer of his existing rights into a personal pension arrangement. Following this transfer the company If the maximum award were to be achieved on delivery has no further obligation to him in respect of DB pension of the maximum value realisation target, or higher, the on his salary above the HMRC earnings cap. From 1 April total payment, based on current base salaries, would 2006 he has received a salary supplement of 28% of his be approximately £1.75m. salary above the earnings cap payable to his personal pension arrangement. Note: The independent auditors’ report set out on pages 38 and 39 applies to the information contained in tables The principal terms of Martin Beer’s pension accrual 1 to 4 on pages 36 to 37 and in the following sections of during the period up to 30 September 2009 were: the remuneration report, so far as it relates to its proper pensions in payment increased in line with retail price preparation in accordance with Schedule 8 of the Large inflation subject to a maximum of 5% per year. In the and Medium-sized Companies and Groups (Accounts event of death, the scheme also provided a pension of and Reports) Regulations 2008: directors’ emoluments; two-thirds of the member’s pension for a spouse, and pensions; and defined benefit disclosure. additional pensions for young children, to give a total maximum of up to 100% of the individual’s pension. Pensions In relation to his pension accruing after 1 April 2006 the Executive directors are entitled to be members of the increase in pension in line with retail price inflation was group’s main pension scheme. Those joining since March subject to a maximum of 2.5% per year rather than 2003 may join the DC scheme. Those joining before that 5% per year. date were in the DB scheme up to 30 September 2009. The company ceased accrual for future service for DB In calculating pension scheme transfer values, no members effective from 1 October 2009 and the employees allowance is made for discretionary benefits. A director in concerned transferred to the DC section of the pension the approved pension scheme may take early retirement scheme. Where it is not practical or advantageous to make from age 50 with the company’s consent but in such pension provision, a non-pensionable cash supplement circumstances discount factors set by the scheme actuary is paid in lieu of pension scheme membership. would be applied, unless alternative agreement were reached. Geoff Eaton has elected not to become a Up to 30 September 2009, Martin Beer was accruing member of the group’s pension scheme and is paid a pension which would provide two-thirds of his final instead a non-pensionable salary supplement of 20% pensionable pay up to the HMRC earnings cap, payable of his base salary per annum in lieu of pension benefits. from his normal retirement age of 62. HMRC ceased to define an earnings cap from 1 April 2006, however the No other director is accruing any pension entitlement company continued to apply a cap equivalent to the nor are they receiving a salary supplement in lieu. pre-April 1 2006 cap. At 1 April 2010 the cap was £123,600. Martin Beer contributed 6% of his salary up to the earnings Directors’ contracts cap to the HMRC-approved pension scheme during the The remuneration committee’s policy on directors’ period up to 30 September 2009. From 1 October 2010, contracts is that executive directors should not have Martin Beer took a transfer of his existing accrued rights contracts with a rolling notice period exceeding 12 months. out of the DB scheme into a personal pension arrangement. However, there may be circumstances where to attract the Following this transfer, the company has no further right candidate or in other special circumstances a longer obligation to him in respect of DB pension on his salary initial term or a fixed term contract in excess of one year up to the HMRC earnings cap. Martin Beer has made will be appropriate. It is the committee’s policy that normally contributions of 3% of salary up to the HMRC earnings contracts should not specify any contractual termination cap and the company made contributions of 25% of payments unless commercially this needs to be given in salary up to the earnings cap into the DC scheme. order to secure the director’s appointment. Uniq Annual Report and Accounts 2010 35 Directors’ report Remuneration report

The Chief Executive, Geoff Eaton, has an employment All of them can be terminated at any time by one year’s contract dated 7 July 2005 as amended on 22 March 2007 notice and may be renewed for a further term when they which can be terminated by the company giving one year’s expire. These letters of appointment do not contain any notice or the employee by nine months’ notice. The Finance provisions on termination payments. Director, Martin Beer, has an employment contract dated 8 May 2002, which can be terminated by the company With the approval of the board, executive directors giving one year’s notice or the employee giving six months’ may accept one external appointment as non-executive notice. There are no express provisions in either contract director of any other company and retain any related relating to payments on early termination and they would fees paid to them. None of the executive directors only be entitled to compensation as provided by law, hold an external quoted company appointment at the which would normally be subject to a duty to mitigate. current time. Directors are entitled to be reimbursed for reasonable expenses necessarily incurred in the On 19 October 2010, the Board approved a stay bonus performance of their duties. for Martin Beer. He will receive a cash payment of £148,800 on 30 June 2011 provided he remains in employment on that date, save for earlier termination by the company for a permitted reason (being redundancy, ill-health, injury, disability or death or any other reason (other than misconduct) at the overriding discretion of the remuneration committee) or in the event of a change of control of the company due to a takeover, in which case he will be entitled to the full cash payment.

This stay bonus replaces any entitlement to an annual bonus for 2011. Accordingly, Martin Beer will not be entitled to any annual cash bonus in respect of the year ending 31 December 2011. In addition, he will only be entitled to a bonus under the short-term value maximisation plan described in the equity incentives section above, if, and to the extent that, it exceeds £148,800.

The Chairman, John Warren, currently has a three-year fixed contract of employment with the company which commenced on 16 March 2007, as amended on 6 July 2009; it is subject to one year’s notice by either party. From 25 June 2009 his fee was £75,000 p.a. There are no express provisions regarding compensation on termination. He receives no pension or other benefits.

Non-executive directors receive a fee of £30,000 p.a. and the chairmen of the remuneration committee and the audit committee each receive an additional fee of £7,500 p.a.

The non-executive directors have individual letters of appointment. John Warren was re-elected at the AGM in 2010 for a further three-year term which expires at the AGM in 2013. Matthew Litobarski’s current appointment runs to the AGM in 2011 at which time he will leave the company and Belinda Gooding’s to the AGM in 2012. 36 Uniq Annual Report and Accounts 2010 Directors’ report Remuneration report

Directors’ emoluments Table 1 Year to Year to Salary Taxable 31.12.10 31.12.09 and fees Bonus benefits Pension Total Total Director £000 £000 £000 £000 £000 £000 John Warren* 83 – – – 83 60 Martin Beer 248 99 16 66# 429 555 Geoff Eaton 360 180 88† – 628 825 Belinda Gooding* 30 – – – 30 30 Matthew Litobarski* 38 – – – 38 38 Ross Warburton (resigned 25.6.09)* – – – – – 75 Totals 759 279 104 66 1,208 1,583

Notes: * Non-executive directors. † Includes £72,036 (2009: £72,036) payment in lieu of pension. # Includes £34,933 (2009: £35,364) paid to a self invested personal pension.

As disclosed in 2009, on closure of the defined benefit pension scheme to future accrual at 30 September 2009, Martin Beer transferred out his deferred pension with a transfer value of £566,530 to a personal pension arrangement, which has extinguished the pension scheme’s liability to provide him with a pension of £46,606 per annum.

Share options Table 2 Exercise No. of No. of Normal Date of price options at Options options at excercise Executive director grant (p) 01.01.10 lapsed 31.12.10 dates Martin Beer 06.07.00 251.0 49,800 49,800 – 06.07.03 – 05.07.10 12.06.01 210.0 50,000 – 50,000 12.06.04 – 11.06.11 17.06.02 161.5 110,000 – 110,000 17.06.05 – 16.06.12 Totals 209,800 49,800 160,000

No executive options were awarded to, or exercised by, directors during the year or in the prior year. All outstanding executive options have subsequently been adjusted to take account of the variation in the capital of the company as a result of the restructuring. Uniq Annual Report and Accounts 2010 37 Directors’ report Remuneration report

Performance incentive plan Table 3 Market value Shares Shares Expiry or Class of Date of at date held at Shares held at Normal excercise Executive director award grant of grant (p) 01.01.10 lapsed 31.12.10 dates Martin Beer Matching 02.04.07 191.75 74,252 74,252 – 02.04.10 – 01.04.17 Performance 02.04.07 191.75 35,358 35,358 – 02.04.10 – 01.04.17 Performance 30.04.08 102.75 186,861 – 186,861 30.04.11 – 29.04.18 Performance 19.05.09 21.0 175,000 – 175,000 19.05.12 – 18.05.19 Geoff Eaton Matching 02.04.07 191.75 120,469 120,469 – 02.04.10 – 01.04.17 Performance 02.04.07 191.75 51,630 51,630 – 02.04.10 – 01.04.17 Performance 30.04.08 102.75 338,686 – 338,686 30.04.11 – 29.04.18 Performance 19.05.09 21.0 285,000 – 285,000 19.05.12 – 18.05.19 Totals 1,267,256 281,709 985,547

No PIPs were exercised by directors during the year or in the prior year. No new PIPs were awarded during the year 2010. In March 2011 as a consequence of the restructuring, all outstanding PIP awards of the directors in the above table failed to meet the relevant performance conditions and have lapsed.

Directors’ shareholdings Table 4 Holding at Holding at 01.01.10 31.12.10 ordinary ordinary shares shares Director fully paid fully paid John Warren 58,230 58,230 Martin Beer 67,910 67,910 Geoff Eaton 251,303 251,303 Belinda Gooding 1,502 1,502 Matthew Litobarski 3,000 3,000 Totals 381,945 381,945

There have been no changes in the directors’ shareholdings between the year end and up to the date of this report save for the adjustment to take account of the variation in the capital of the company as a result of the restructuring.

Approved on behalf of the board

Matthew Litobarski Chairman of the remuneration committee 26 April 2011 38 Uniq Annual Report and Accounts 2010 Financial statements

Independent Auditors’ report to the members of Uniq plc

We have audited the financial statements of Uniq plc Opinion on financial statements for the year ended 31 December 2010 set out on pages In our opinion: 40 to 81. The financial reporting framework that has • the financial statements give a true and fair view of been applied in their preparation is applicable law and the state of the group’s and of the parent company’s International Financial Reporting Standards (IFRSs) as affairs as at 31 December 2010 and of the group’s adopted by the EU and, as regards the parent company profit for the year then ended; financial statements, as applied in accordance with the • the group financial statements have been properly provisions of the Companies Act 2006. prepared in accordance with IFRSs as adopted by the EU; This report is made solely to the company’s members, • the parent company financial statements have been as a body, in accordance with Chapter 3 of Part 16 of properly prepared in accordance with IFRSs as the Companies Act 2006. Our audit work has been adopted by the EU and as applied in accordance undertaken so that we might state to the company’s with the provisions of the Companies Act 2006; and members those matters we are required to state to them • the financial statements have been prepared in in an auditor’s report and for no other purpose. To the accordance with the requirements of the Companies fullest extent permitted by law, we do not accept or Act 2006 and, as regards the group financial assume responsibility to anyone other than the company statements, Article 4 of the IAS Regulation. and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Opinion on other matters prescribed by the Companies Act 2006 and under the terms of Respective responsibilities of directors and auditor our engagement As explained more fully in the Directors’ Responsibilities In our opinion: Statement set out on page 21, the directors are responsible • the part of the Directors’ remuneration report to be for the preparation of the financial statements and for audited has been properly prepared in accordance being satisfied that they give a true and fair view. Our with the Companies Act 2006; responsibility is to audit, and express an opinion on, • the information given in the Directors’ report for the financial statements in accordance with applicable the financial year for which the financial statements law and International Standards on Auditing (UK and are prepared is consistent with the financial Ireland). Those standards require us to comply with the statements; and Auditing Practices Board’s (APB’s) Ethical Standards • information given in the Corporate Governance for Auditors. Statement set out on pages 27 to 31 with respect to internal control and risk management systems Scope of the audit of the financial statements in relation to financial reporting processes and A description of the scope of an audit of financial about share capital structures is consistent with statements is provided on the APB’s website at the financial statements. www.frc.org.uk/apb/scope/UKP. Uniq Annual Report and Accounts 2010 39 Financial statements Independent Auditors’ report

Matters on which we are required to report by exception We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit; or • a Corporate Governance Statement has not been prepared by the company

Under the Listing Rules we are required to review: • the directors’ statement, set out on page 31, in relation to going concern; • the part of the Corporate Governance Statement on pages 27 to 31 relating to the company’s compliance with the nine provisions of the June 2008 Combined Code specified for our review; and • certain elements of the report to shareholders by the board on directors’ remuneration.

R M Yasue (Senior Statutory Auditor) for and on behalf of KPMG Audit Plc, Statutory Auditor Chartered Accountants Arlington Business Park Theale Reading RG7 4SD

26 April 2011 40 Uniq Annual Report and Accounts 2010 Financial statements

Group income statement

2010 2009

Before Significant Before Significant significant items significant items items (note 7) Total items (note 7) Total Note £m £m £m £m £m £m Continuing operations Revenue 4 311.9 – 311.9 287.2 – 287.2 Cost of sales (264.3) – (264.3) (246.5) – (246.5) Gross profit 47.6 – 47.6 40.7 – 40.7 Distribution expenses (18.3) – (18.3) (16.4) – (16.4) Administrative expenses (25.2) (2.4) (27.6) (26.2) (0.7) (26.9) Operating profit/(loss) 4,5 4.1 (2.4) 1.7 (1.9) (0.7) (2.6) Net pension interest 8 (12.1) – (12.1) (12.7) – (12.7) Finance income 8 1.2 – 1.2 1.5 – 1.5 Finance expenses 8 (2.0) – (2.0) (4.7) – (4.7) Net finance charges (12.9) – (12.9) (15.9) – (15.9) Loss before tax (8.8) (2.4) (11.2) (17.8) (0.7) (18.5) Income tax expense 9 – – – (0.4) – (0.4) Loss from continuing operations (8.8) (2.4) (11.2) (18.2) (0.7) (18.9) Discontinued operations Profit/(loss) from discontinued operations (net of tax) 22 3.2 32.2 35.4 10.0 (12.0) (2.0) Profit/(loss) for the year 4 (5.6) 29.8 24.2 (8.2) (12.7) (20.9)

Profit/(loss) attributable to equity holders of the company (5.6) 29.8 24.2 (8.2) (12.7) (20.9)

Profit/(loss) per ordinary share 10 Basic and diluted 21.3p (18.4p) Continuing operations (9.8p) (16.6p) Discontinued operations 31.1p (1.8p)

Average Euro exchange rate 1.17 1.12

The notes on pages 45 to 81 form part of these financial statements. Uniq Annual Report and Accounts 2010 41 Financial statements

Group statement of comprehensive income

2010 2009 £m £m Profit/(loss) for the year 24.2 (20.9) Other comprehensive income/(expense) Actuarial loss recognised on the pension schemes (1.2) (81.9) Effective portion of changes in fair value of cash flow hedges 0.1 (0.1) Foreign currency translation differences for foreign operations 0.1 (3.1) Cumulative foreign exchange related to disposal of businesses recycled to income statement (note 21) (30.3) (1.7) Net gain on hedge of net investment in foreign operation 0.1 0.8 Other comprehensive expense for the year, net of tax (31.2) (86.0)

Total comprehensive expense for the year (7.0) (106.9)

Total comprehensive expense attributable to equity holders of the company (7.0) (106.9) 42 Uniq Annual Report and Accounts 2010 Financial statements

Balance sheets

Group Company

2010 2009 2010 2009 Note £m £m £m £m Assets Non-current assets Property, plant and equipment 12 80.4 76.3 – – Intangible assets 13 30.5 30.5 – – Other debtors 18 – 5.4 – – Restricted cash 14 – 97.0 – 97.0 Deferred tax assets 15 13.9 13.9 – – Investments 16 – – 89.5 89.5 124.8 223.1 89.5 186.5 Current assets Inventories 17 13.8 11.2 – – Trade and other receivables 18 33.2 34.6 0.1 0.1 Cash and cash equivalents 19 10.8 17.2 8.8 12.9 Assets classified as held for sale 20 – 101.6 – – 57.8 164.6 8.9 13.0 Total assets 182.6 387.7 98.4 199.5 Liabilities Non-current liabilities Retirement benefit obligations 27 149.4 235.1 – – Provisions 25 0.8 0.3 – – 150.2 235.4 – – Current liabilities Borrowings 23 – 27.3 – 27.0 Trade and other payables 24 41.6 44.6 63.4 136.8 Derivative financial liabilities 26 – 0.1 – 0.1 Provisions 25 5.0 13.0 – – Income tax liabilities 7.7 8.7 – – Liabilities associated with assets classified as held for sale 20 – 73.8 – – 54.3 167.5 63.4 163.9 Total liabilities 204.5 402.9 63.4 163.9 Total assets less liabilities (21.9) (15.2) 35.0 35.6 Equity Shareholders’ equity Total called up share capital 28 11.5 11.5 11.5 11.5 Share premium 0.1 0.1 0.1 0.1 Other reserves (330.2) (300.2) – (0.1) Retained earnings 296.7 273.4 23.4 24.1 Total equity attributable to equity holders of the company 29 (21.9) (15.2) 35.0 35.6

Closing Euro exchange rate 1.16 1.11

The notes on pages 45 to 81 form part of these financial statements.

The financial statements were approved by the board of directors on 26 April 2011 and signed on its behalf by:

Geoff Eaton Martin Beer Chief Executive Finance Director Uniq Annual Report and Accounts 2010 43 Financial statements

Group statement of changes in equity

Share Share Merger Hedging Translation Retained capital premium reserve reserve reserve earnings Total Group £m £m £m £m £m £m £m Changes in equity for 2009 At 1 January 2009 11.5 0.1 (330.2) – 34.1 375.4 90.9 Total comprehensive income/(expense) for the year – – – (0.1) (4.0) (102.8) (106.9) Share-based compensation charge – – – – – 0.8 0.8 At 31 December 2009 11.5 0.1 (330.2) (0.1) 30.1 273.4 (15.2) Changes in equity for 2010 Total comprehensive income/(expense) for the year – – – 0.1 (30.1) 23.0 (7.0) Share-based compensation charge – – – – – 0.3 0.3 At 31 December 2010 11.5 0.1 (330.2) – – 296.7 (21.9)

Further details on the statement of changes in equity are disclosed in note 29.

Share Share Hedging Retained capital premium reserve earnings Total Company £m £m £m £m £m Change in equity for 2009 At 1 January 2009 11.5 0.1 – 67.9 79.5 Total comprehensive expense for the year Loss for the year – – – (44.1) (44.1) Effective portion of changes in fair value of cash flow hedges – – (0.1) – (0.1) Share-based compensation charge – – – 0.3 0.3 At 31 December 2009 11.5 0.1 (0.1) 24.1 35.6 Change in equity for 2010 Total comprehensive expense for the year Loss for the year – – – (0.7) (0.7) Effective portion of changes in fair value of cash flow hedges – – 0.1 – 0.1 Share-based compensation charge – – – – – At 31 December 2010 11.5 0.1 – 23.4 35.0 44 Uniq Annual Report and Accounts 2010 Financial statements

Cash flow statements

Group Company

2010 2009 2010 2009 Note £m £m £m £m Cash flows from operating activities Profit/(loss) for the year 24.2 (20.9) (0.7) (44.1) Income tax expense 0.5 1.7 (0.3) 0.6 Net finance expense 13.1 17.9 1.0 2.2 Depreciation and amortisation 9.9 11.2 – – Asset impairment 1.6 7.6 – 41.3 Reversal of asset impairment – (1.7) – – Charge for share-based payments 0.3 0.5 – – Loss on disposal of property, plant and equipment – 0.9 – – Loss on disposal of intangible assets-software – 0.2 – – (Profit)/loss on disposal of businesses (32.9) 2.0 – – Gains on curtailment and settlements on pensions – (5.7) – – Difference between pension charge and cash contribution (98.6) (5.1) – – (Increase)/decrease in inventory (2.0) 3.8 – – (Increase)/decrease in accounts receivable (1.3) 8.9 – 0.8 (Increase)/decrease in accounts payable (6.7) (35.3) (73.0) 6.5 Decrease in working capital (10.0) (22.6) (73.0) 7.3 Decrease in provisions (1.6) (16.4) – – Cash (utilised by)/generated from operations (93.5) (30.4) (73.0) 7.3 Interest paid (1.7) (3.5) (1.7) (2.8) Interest received 0.7 1.6 0.9 1.5 Income tax (paid)/received (1.3) 1.3 – – Net cash (utilised by)/generated from operating activities (95.8) (31.0) (73.8) 6.0 Cash flows from investing activities Disposal of businesses, net of cash disposed of 21 26.8 57.1 – – Purchases of property, plant and equipment (15.7) (18.6) – – Proceeds from sale of property, plant and equipment 2.2 – – – Purchases of intangible assets – (0.3) – – Net cash inflow from investing activities 13.3 38.2 – – Cash flows from financing activities Cash (repayments)/inflow from borrowings (27.5) 4.4 (27.5) 3.2 Payment of transaction costs for related borrowings – (1.2) – – Payment of finance lease (0.2) (1.5) – – Cash inflow/(outflow) included in restricted cash 14 97.0 (1.4) 97.0 (1.4) Net cash inflow from financing activities 69.3 0.3 69.5 1.8 Net (decrease)/increase in cash and cash equivalents (13.2) 7.5 (4.3) 7.8 Cash and cash equivalents at beginning of period 23.9 17.9 12.9 6.2 Effect of foreign exchange rate changes 0.1 (1.5) 0.2 (1.1) Cash and cash equivalents at end of period 10.8 23.9 8.8 12.9 Cash and cash equivalents consist of: Cash at bank and in hand – continuing 19 10.8 17.2 8.8 12.9 Bank overdrafts – continuing 23 – (0.3) – – Cash at bank and in hand – held for sale 20 – 7.0 – – 10.8 23.9 8.8 12.9

The notes on pages 46 to 81 form part of these financial statements. Uniq Annual Report and Accounts 2010 45 Financial statements

Notes to the financial statements

1. Accounting policies and after sensitivities (combined with mitigating factors), the total facility is not exceeded over the duration of Accounting convention and basis of preparation the facility, the covenants are not breached and there are no events of default. The sensitivities mainly relate Basis of preparation – Going concern to changes in sales volume and margin. The mitigating The group’s business activities, together with further factors include reduction in discretionary spend such information on the factors likely to affect its future as capital expenditure and cost reduction programmes. development, performance and position are set out in Should the actual results for 2011 not meet the forecast the Performance review on pages 8 to 15. The financial levels the group’s ability to remain within the facility position of the group, its cashflow, liquidity position and and covenants will depend on the mitigating factors. borrowing facilities are described in the Financial Review on pages 16 to 19. In addition notes 3 to 26 to the The directors of the group have reviewed the forecasts, financial statements include the group’s policies and together with the sensitivities and mitigating factors and processes for managing its capital; its financial risk expect that the group will be able to meet its liabilities management objectives; details of its financial instruments as they fall due and therefore consider it appropriate and its exposure to credit risk and liquidity risk. to prepare the financial statements on a going concern basis. These financial statements do not include any The group has net liabilities of £21.9m as at 31 December adjustments that would result from the basis of preparation 2010 and made a loss from continuing operations of £11.2m, being inappropriate. including £2.4m of significant items, for the year then ended. Statement of compliance During 2010 the company and the group met their day Uniq plc is a company incorporated in the UK. The group to day working capital requirements and medium term financial statements consolidate those of the company funding requirements through a multi-currency revolving and its subsidiaries (together referred to as the group). facility. The loan under the facility was repaid when the The parent company financial statements present facility of £35m expired on 31 December 2010. A new information about the company as a separate entity facility was signed off on 9 February 2011 which became and not about its group. available on the completion of the pension restructuring deal. This new facility provides a three year £15m term Both the parent company financial statements and the loan with a six monthly repayment of £1.5m and a group financial statements have been prepared and revolving credit facility of £10m. approved by the directors in accordance with International Financial Reporting Standards (IFRS), International At the date of authorisation of the financial statements, Accounting Standards (IAS) and related IFRIC interpretations the terms of the facility, including covenants, were met. in issue, that have been endorsed by the European Commission and are effective at 31 December 2010, The directors have prepared trading cash flow forecasts or where the group has chosen to early adopt at based on normal creditor and debtor terms for a period 31 December 2010 (‘adopted IFRS’). in excess of a year from the date of approval of these financial statements. In preparing theses forecasts the In publishing the parent company financial statements directors have assumed: that trading relationships with here together with the group financial statements, the key customers are at levels and terms similar to prior company has taken advantage of the exemption in s408 years, unless otherwise notified; that sales growth is of the Companies Act 2006 not to present its individual secured and delivered and that planned cost savings are income statement and related notes that form a part of achieved. These forecast show that before sensitivities, these approved financial statements. 46 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

The financial statements are prepared on the historical Prior to 1 January 2010, the cost of an acquisition is cost basis except that the following assets and liabilities measured as the fair value of the assets given, equity are stated at their fair value: derivative financial instruments instruments issued and liabilities incurred or assumed and financial instruments classified as fair value through at the date of exchange, plus costs directly attributable the profit or loss. Non-current assets and disposal groups to the acquisition. Post 1 January 2010, costs directly held for sale are stated at the lower of previous carrying attributable to the acquisition are expensed as incurred. amount and fair value less costs to sell. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair New accounting policies and future requirements values at the acquisition date. The excess of the cost of The following standards or interpretations, issued by the acquisition over the fair value of the group’s share of the IASB or the IFRIC that are relevant to the group came into net fair value of the identifiable assets, liabilities and contingent effect during the year and have been adopted by the group: liabilities acquired is recorded as goodwill. If the cost of • Amendments to IFRIC 14 Prepayments of a minimum acquisition is less than the fair value of the group’s share funding requirement – this amendment relates to defined of the net assets of the subsidiary acquired, the difference benefit schemes which fall under IAS 19 ‘Employee is recognised directly in the income statement. Benefits’, however the group and its subsidiaries are not in a contribution prepayment position in this financial year. Accounting policies of subsidiaries have been changed • Amendments to IFRS 2 Group cash-settled share based where necessary to ensure consistency with the policies payment transactions – although the group has share adopted by the group. based payments, the parent company did not settle any share-based arrangements on behalf of the subsidiaries Foreign currency translation during the period. The consolidated financial statements are presented in pounds sterling, which is the group’s and the company’s The standards listed above did not have a significant effect presentation currency. on the consolidated results or financial position of the group or the company. Foreign currency transactions are translated into the respective functional currency of group entities (the New standards and interpretations not yet adopted currency of the primary economic environment in which A number of new standards, amendments to standards an entity operates) using the exchange rates prevailing at and interpretations are not adopted as they are not yet the dates of the transaction. Foreign exchange gains and endorsed by the European Commission for this period. losses resulting from the settlement of such transactions None of these will have an effect on the consolidated and from the translation at year end exchange rates of financial statements of the group apart from possible monetary assets and liabilities denominated in foreign additional disclosures. currencies are recognised in the income statement.

Financial year The results and financial position of all the group entities The financial statements are prepared to reflect trading that have a functional currency different from the presentation up to the Saturday nearest to the accounting reference currency are translated into the presentation currency date. This year’s income statement covers the 53-week as follows: period ended 1 January 2011. Last year’s income statement • assets and liabilities are translated at the closing rate covered the 52 weeks ended 26 December 2009. at the date of that balance sheet; • income and expenses are translated at average exchange Consolidation rates; and Subsidiaries are fully consolidated from the date on which • all resulting exchange differences are recognised as a control is transferred to the group. Control exists when the separate component of equity. Since the group’s date group has the power, directly or indirectly, to govern the of transition to adopted IFRS, exchange differences financial and operating policies of an entity so as to obtain arising on the translation of foreign operations have benefits from its activities. They are deconsolidated from been recognised directly in equity. the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. Uniq Annual Report and Accounts 2010 47 Financial statements Notes to the financial statements

On consolidation, exchange differences arising from the Property, plant and equipment translation of the net investment in foreign entities, and All property, plant and equipment is shown at cost, less of borrowings and other currency instruments designated subsequent depreciation and applicable impairment, except as hedges of such investments, that are effective are taken for land, which is shown at cost less impairment. to shareholders’ equity with the ineffective portion taken to the income statement. When a foreign operation is sold, Assets under construction are included in tangible fixed such exchange differences are recognised in the income assets on the basis of expenditure incurred at the balance statement as part of the gain or loss on sale. sheet date.

Goodwill and fair value adjustments arising on the acquisition Except for Tooling, depreciation is calculated using the of a foreign entity are treated as assets and liabilities of straight-line method to allocate the cost of each asset to the foreign entity and translated at the closing rate. its residual value over its estimated useful life as follows: • Buildings up to 50 years Significant items • Plant and machinery up to 10 years Significant items are those items of financial performance • Equipment and motor vehicles up to 6 years which, because of size or incidence, require separate • Land is not depreciated disclosure to enable underlying trading performance to be assessed. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset’s Revenue recognition useful life and the lease term. Tooling is depreciated over Revenue represents the value of sales to customers outside the expected life of supply either by including a proportion the group net of discounts, allowances, volume and of the cost against each item supplied or allocating the promotional rebates and other payments to customers cost evenly over the anticipated life of supply. Where the and excludes value-added tax. Sales of goods are recognised Tooling ceases to be used, the remaining cost is charged when a group entity has delivered products to the customer; in full to the income statement. the customer has accepted the products and collectability of the related receivable is reasonably assured. Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. Finance income/expense Finance income/expense includes the following: Intangible assets • exchange differences arising on monetary items and Goodwill all fair value gains and losses on derivative financial Goodwill represents the excess of the cost of an acquisition instruments and corresponding adjustments to hedged over the fair value of the group’s share of the net identifiable items (excluding the effective portion of the hedge assets, liabilities and contingent liabilities of the acquired relationship which is taken to equity) under designated subsidiary at the date of acquisition. Goodwill is tested fair value hedging relationships; annually for impairment and carried at cost less accumulated • amortisation of finance arrangement fees; impairment losses. On disposal of a subsidiary the attributable • discounting on long term balance sheet items; amount of goodwill is included in the determination of the • interest payable/receivable on cash and cash equivalents profit or loss on disposal. Goodwill arising on acquisitions and borrowings; and prior to 31 March 2004 has been retained at the previous • IAS 19 pension finance costs comprising the expected UK GAAP amounts subject to being tested for impairment. return on pension fund assets less the interest on pension fund liabilities. Research and development Research expenditure is recognised as an expense as Finance income and expense is recognised in the income incurred. Cost incurred on development projects are statement as it accrues, using the effective interest method. recognised as intangible assets when it meets the recognition criteria of IAS 38 Intangible Assets. Development Investments costs that have a finite useful life that have been capitalised Investments in subsidiary undertakings are shown at are amortised from the commencement of the commercial cost, less impairment. production of the product on a straight-line basis over the period of its expected benefit (not exceeding five years). 48 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

Costs incurred on creating new recipes and products are any indications that the loss has decreased or no longer not recognised as intangible assets as they do not meet exists. An impairment loss is reversed if there has been a the identification and recognition criteria in IAS38 for an change in the estimates used to determine the recoverable intangible asset. Such costs are expensed as incurred. amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the Computer software carrying amount that would have been determined, net Acquired computer software is capitalised on the basis of depreciation or amortisation, if no impairment loss of the costs incurred to acquire and bring to use the had been recognised. specific software and amortised using the straight-line method over their estimated useful lives (three to five Financial assets years). Computer software development costs that are A financial asset is assessed at each reporting date to directly associated with the implementation of major determine whether there is any objective evidence that business systems are recognised as intangible assets it is impaired. A financial asset is considered to be impaired and are amortised using the straight-line method over if objective evidence indicates that one or more events their estimated useful lives. have had a negative effect on the estimated future cash flows of that asset. Impairment of assets Non-financial assets An impairment loss in respect of a financial asset measured The carrying amounts of the group’s non-financial assets, at amortised cost is calculated as the difference between other than inventories and deferred tax assets are reviewed the carrying amount, and the present value of the estimated at each reporting date to determine whether there is an future cash flows discounted at the original effective interest indication of impairment. If any such indication exists, rate. All impairment losses are recognised in the profit or loss. then the asset’s recoverable amount is estimated. An impairment loss is reversed if the reversal can be related For goodwill and intangible assets that have an indefinite objectively to an event occurring after the impairment useful life or are not yet available for use, the recoverable loss was recognised. For financial assets measured at amount is estimated at each reporting date. amortised costs, the reversal is recognised in the profit or loss statement. The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value Leases less costs to sell. In assessing value in use, the estimated Leases are classified as finance leases where substantially future cash flows are discounted to their present value all the risks and rewards of ownership are transferred to using a pre-tax discount rate that reflects current market the group. Finance leases are capitalised at the lease’s assessments of the time value of money and the risks inception at the lower of the fair value of the leased asset specific to the asset. For the purposes of assessing and the present value of the minimum lease payments. impairment, assets are grouped at the lowest levels Each lease payment is allocated between the liability and for which there are separately identifiable CGUs. finance charges so as to achieve a constant rate on the finance balance outstanding. Assets acquired under finance An impairment loss is recognised for the amount by which leases are depreciated over the shorter of the asset’s useful the asset’s carrying amount exceeds its recoverable amount life and the lease term. being the higher of an asset’s fair value less costs to sell and value in use. Impairment losses are recognised in profit Leases other than finance leases are classified as operating and loss. Impairment losses recognised in respect of CGU leases. Payments made under operating leases (net of are allocated first to reduce the carrying amount of any any incentives received from the lessor) are charged to goodwill allocated to the units and then to reduce the the income statement on a straight-line basis over the carrying amount of the other assets in the group (group period of the lease. of units) on a pro rata basis. Inventories An impairment loss in respect of goodwill is not reversed. Inventories are stated at the lower of cost, including In respect of other assets, impairment losses recognised attributable overhead expenditure, and net realisable in prior periods are assessed at each reporting date for value. Cost is determined using the first-in-first-out (FIFO) Uniq Annual Report and Accounts 2010 49 Financial statements Notes to the financial statements

method and includes expenditure incurred in acquiring The group operates an equity-settled share-based the inventories, production or conversion costs and other compensation plan whereby the company grants share costs in bringing them to their existing location and condition. based payments to the employees of its subsidiary companies. In the case of manufactured inventories and work in progress, The fair value of the options granted under this plan are cost includes an appropriate share of overheads based calculated using a Monte Carlo simulation model, which on normal operating capacity. takes into account the probability of meeting the market- based vesting conditions. The total amount to be expensed Taxation over the vesting period is determined by reference to the Current tax is based on taxable profit for the year and any options granted and the estimated number of options adjustment to tax payable in respect of previous years. The expected to vest after adjusting for lapses due to leavers group’s liability for current tax is calculated using rates that during the vesting period and achievement of any non-market have been enacted or substantively enacted at the balance based vesting conditions. At each balance sheet date prior sheet date. Tax is recognised in the income statement except to vesting of the relevant awards the group revises the to the extent that it relates to items recognised directly in estimates of the number of options that are expected to equity in which case it is recognised in equity. vest after adjusting for expected leavers and estimated achievement of non-market based vesting conditions. The Deferred tax is provided, using the liability method, on all grant date fair value of options granted to employees is temporary differences between the carrying amounts of recognised as an employee expense, with a corresponding assets and liabilities for financial reporting purposes and increase in equity, over the period that the employees become the amounts used for taxation purposes. Deferred tax is not unconditionally entitled to the options. It recognises the recognised for the following temporary differences: the initial impact of the revision of original estimates, if any, in the recognition of assets or liabilities in a transaction that is not a income statement, and a corresponding adjustment to business combination and that affects neither accounting equity. When a share-based payment arrangement contains nor taxable profit, and differences relating to investments in a non-vesting condition, the fair value is discounted to subsidiaries to the extent that it is probable that they will not reflect such a condition and there is no true-up for reverse in the foreseeable future. In addition, deferred tax is differences between expected and actual outcomes. not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured In addition, one of the group companies also operated at the tax rates that are expected to apply in the year when a cash-settled share-based compensation plan. For the asset is realised or the liability is settled. cash-settled share-based compensation plans, a liability equal to the portion of the goods or services received is The carrying amount of deferred tax assets is reviewed at recognised at the current fair value determined at each each balance sheet date and reduced to the extent that it balance sheet date. The liability is re-measured at each is no longer probable that sufficient taxable profit will be reporting date and at settlement date. Any change in the available to allow the deferred tax asset to be utilised. fair value of the liability is recognised as payroll costs in the income statement. Deferred tax assets and liabilities are recognised for all deductible temporary differences except in respect of A deferred tax asset is calculated for outstanding share deductible temporary differences associated with investments options based on the current share price at the end of in subsidiaries in which case deferred tax assets are only each year, and the relative exercise price. The deferred recognised to the extent that it is probable that the temporary tax asset is only recognised in the income statement for differences will reverse in the foreseeable future and each share option scheme to the extent that a share-based taxable profit will be available against which the temporary payment expense has been charged in the income difference can be utilised. statement for that scheme. The remaining deferred tax asset calculated is recognised directly in equity. Share-based compensation In terms of IFRS 2 Share-based Payments, an expense is not Dividend distribution recognised in respect of equity-settled share options granted Dividends to shareholders of Uniq plc are recognised before 7 November 2002 and vested before 1 January 2005. as a liability in the period that they are approved by The shares are recognised when the options are exercised the shareholders. and the proceeds received are allocated to reserves. 50 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

Grants Past-service cost is recognised immediately in income, Grants relating to assets are initially set up as deferred unless the changes to the pension plan are conditional income. It is then recognised as income on a systematic on the employees remaining in service for a specified basis over the useful life of the related depreciable assets. period of time (the vesting period). In this case, the A government grant is not recognised until there is a past-service cost is amortised on a straight-line basis reasonable assurance that it will be received and that over the vesting period. the group will comply with the conditions associated with the grant. When the actuarial calculation results in a benefit to the group the recognised asset is limited to the total of any Provisions unrecognised past service costs and the present value A provision is recognised in the balance sheet when the of economic benefits available in the form of any future group has a present legal or constructive obligation as refunds from the plan or reductions in future contributions a result of a past event, and it is probable that an outflow to the plan. In order to calculate the present value of of economic benefits would be required to settle the economic benefits, consideration is given to any minimum obligation. A provision for restructuring is recognised funding requirements that apply to any plan within the when the group has approved a detailed and formal group. An economic benefit is available to the group if it restructuring plan and announced its main provisions. is realisable during the life of the plan or on settlement of the plan liabilities. If the effect of the time value of money is material, provisions are determined by discounting the expected future Any curtailment gain/(loss) is measured using actuarial cash flows at a pre-tax rate that reflects current market assumptions appropriate at the time when the terms assessments of the time value of money and the risks of the scheme were amended. specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is For defined contribution plans, the group pays contributions recognised as a borrowing cost. to company administered or third party pension plans on a contractual basis. The group has no further payment Retirement benefit obligations obligations once the contributions have been paid. The The group’s companies operate or contribute to various contributions are recognised as an employee benefit different types of pension schemes. These include both expense when they are due. Prepaid contributions are defined benefit and defined contribution plans. recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. A defined benefit plan is a pension plan that defines the amount of pension benefit that an employee will receive Discontinued operations on retirement, usually dependent on one or more factors A discontinued operation is a component of the group’s such as age, years of service and pay at or close to the business that represents a separate major line of business time of retirement. or geographical area that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view Actuarial gains and losses are recognised in full in the to resale. Classification as a discontinued operation occurs period in which they occur. As permitted by the standard, upon disposal or when the operation meets the criteria to actuarial gains and losses are recognised outside profit be classified as held for sale, if earlier. When an operation or loss and presented in the statement of comprehensive is classified as a discontinued operation, the comparative income. The liability recognised in the balance sheet income statement is re-presented as if the operation had represents the present value of the defined benefit obligation, been discontinued from the start of the comparative period. as reduced by the fair value of plan assets. The discount rate is set by reference to yields on high quality sterling Segment reporting corporate bonds, which is taken to be AA-rated for IAS19 The group determines and presents operating segments purposes, taking into account the duration of the Scheme’s based on the information internally provided to the CEO, liabilities. The cost of providing benefits is determined the chief operating decision maker for the purposes of using the Projected Unit Credit Method. making strategic decisions and monitoring of segment Uniq Annual Report and Accounts 2010 51 Financial statements Notes to the financial statements

performance, which conforms to the requirements of Derivatives are initially accounted for and measured at fair IFRS8, Operating Segments. The group’s primary format value on the date a derivative contract is entered into for segment reporting is its business products, namely and subsequently measured at fair value. The accounting Desserts and Food to Go. treatment of derivatives classified as hedging instruments depends on their designation, which occurs on the date Inter-segment pricing is determined on an arm’s length that the derivative contract is committed to. The group basis. Segment results, assets and liabilities include designates derivatives as: items directly attributable to a segment as well as those • a hedge of the exposure to variability in cash flows that can be allocated on a reasonable basis. Unallocated that are attributable to a particular risk associated with items comprise mainly corporate assets (primarily the a recognised asset or liability or of a highly probable group’s headquarters), the UK retirement benefit obligation, forecasted transaction or the foreign exchange risk head office expenses, cash, borrowings and income tax of a firm commitment which could affect the profit assets and liabilities. or loss (‘cash flow hedge’); and • a hedge of a net investment in a foreign entity or Segment capital expenditure is the total costs incurred operation (‘Net investment hedge’). during the period to acquire property, plant and equipment, and intangible assets other than goodwill. Cash flow hedge Where a derivative financial instrument is designated as Financial instruments a cash flow hedge of a recognised asset or liability, or a Non-derivative financial instruments highly probable forecasted transaction, any gain or loss Non-derivative financial instruments comprise trade and on the derivative financial instrument is recognised directly other receivables, cash and cash equivalents, restricted in equity to the extent it is effective. The cumulative gain cash, loans and borrowings and trade and other payables. or loss is removed from equity and recognised in the income statement in the same period or periods during which the Non-derivative financial instruments are recognised initially hedged forecast transaction affects the income statement. at fair value plus any directly attributable transaction costs. When the forecasted transaction subsequently results in Subsequent to initial recognition non-derivative financial the recognition of a non-financial asset or non-financial instruments are carried at amortised cost using the effective liability, the associated cumulative gain or loss is removed interest rate method, less any impairment losses. from equity and included in the initial cost or other carrying amount of the non-financial asset or liability. Cash and cash equivalents comprise cash balances and call deposits excluding bank overdrafts. Bank overdrafts Net investment hedge that are repayable on demand and form an integral part Where the group hedges net investments in foreign entities of the group’s cash management are included as a through currency borrowing, the gains or losses on the component of cash and cash equivalents for the purposes retranslation of the borrowings (up to the opening net of the cash flow statements. investment) are recognised in equity. If the group uses derivatives as the hedging instrument, the effective portion Restricted cash comprises an amount which was placed of the hedge is recognised in equity with any ineffective into a secure account in favour of the UK pension fund. portion being recognised in the income statement. Gains and losses accumulated in equity are recycled through Derivative financial instruments the income statement on disposal of the foreign entity. The group uses various derivative financial instruments to manage exposure to foreign exchange risks. These include Discontinued hedge accounting forward currency contracts and currency swaps. The group Hedge accounting is discontinued when the hedging also uses interest rate swaps to manage interest rate instrument expires or is sold, terminated, exercised, or no exposures. The group does not use derivative financial longer qualifies for hedge accounting or the group revokes instruments for speculative trading purposes. designation of the hedging relationship. At that time, any cumulative gain or loss on the hedging instrument 52 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

recognised in equity is retained in equity until the highly Contingent Liabilities probable forecasted transaction occurs. If a hedged Note 32 – Contingent liabilities. transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is Taxation transferred to the income statement for the period. There are many transactions and calculations for which the ultimate tax determination is uncertain. Significant Forward exchange contracts judgement is required in determining the group’s tax assets Forward exchange contracts (‘FX contracts’) which hedge and liabilities. Deferred tax assets have been recognised currency assets and liabilities are recognised in the financial to the extent they are recoverable based on profit projections statements together with the assets and liabilities that they for future years approved by senior management. Income hedge. Both realised and unrealised gains and losses on tax liabilities for anticipated issues have been recognised FX contracts which hedge future sales and purchases are based on estimates on whether additional tax will be due. recognised in the income statement. Gains and losses on Notwithstanding the above, the group believes that it will financial instruments that are not related to the group’s fully recover all tax assets and has adequate tax provisions hedging activities are recognised as finance income or expense. to cover all risks across all business operations.

Share capital 3. Financial risk management Ordinary shares are classified as equity. Incremental costs Overview directly attributable to the issue of ordinary shares and The group has exposure to the following risks from its share options are recognised as a deduction from equity, use of financial instruments: net of any tax effect. • credit risk; • liquidity risk; and 2. Critical accounting estimates and assumptions • market risk Estimates and judgements are continually evaluated and are based on historical experience and other factors, This note presents information about the group’s exposure including expectations of future events that are believed to each of the above risks and the group’s policies and to be reasonable under the circumstances. The estimates processes for measuring and managing these risks. The and assumptions that could have a significant risk of risks are managed centrally following board approved causing a material adjustment to the carrying amounts policies. The group operates a centralised treasury function of assets and liabilities within the next financial year in accordance with board approved policies and guidelines are discussed below. covering funding and management of foreign exchange exposure and interest rate risk. Transactions entered into Retirement benefit obligations by the treasury function are required to be in support of, A number of accounting estimates and judgements are or as a consequence of, underlying commercial transactions. incorporated within the provision for post retirement obligations. These are described in more detail in note 27. Exposure to interest rate fluctuations are partly managed through the use of interest rate swaps and forward rate Share-based payments agreements. Objectives for the mix between fixed and Note 29 – measurement of share-based payments. floating rate borrowings are established by the board so as to seek to reduce the impact of adverse variations in Goodwill interest rates on the group’s profit and cash flow. Note 13 – measurement of the recoverable amounts of the cash generating units (CGUs) containing goodwill. The group does not engage in holding speculative financial The recoverable amounts of CGUs were measured based instruments or their derivatives. Further quantitative on the higher of value in use and fair value less costs to disclosures are included throughout these consolidated sell. The assessment of the value in use involves a degree financial statements. of judgement based on management estimate of future potential revenue and profit. The board of directors has overall responsibility for the establishment and oversight of the group’s risk management Provisions framework. An embedded risk management process is in Note 25 – provisions. place, which seeks to identify the most significant risks Uniq Annual Report and Accounts 2010 53 Financial statements Notes to the financial statements

facing each business and the group, and reports on how basis to ensure that it has sufficient liquidity to meet its those risks are being managed. This process requires the liabilities when they become due. business units to produce risk registers identifying and evaluating significant risks which may affect their business Market risk and to consider what action can and should reasonably Market risk is the risk that changes in market prices, such and cost effectively be taken to reduce them to an acceptable as foreign exchange rates, interest rates and equity prices level. The process culminates in the production of a group will affect the group’s income or the value of its holdings risk register including a review of significant central risks. of financial instruments. The objective of market risk This register is reviewed and maintained on an ongoing management is to manage and control market risk exposures basis. The group audit committee reviews the risk review within acceptable parameters, while optimising return. procedure carried out by the group with the aim of ensuring that, where possible and appropriate to do so in the context Currency risk of the business, reasonable steps are taken by the group The group’s exposure to foreign currency is primarily on to mitigate such risks. purchases in Euro, following the disposal of the European operations. Contracted transactional exposures are fully Credit Risk hedged at the point in time when they become contracted. Credit risk is the risk of financial loss to the group if a customer Forecast transactional exposures are reviewed and or counterparty to a financial instrument fails to meet its hedged on a case by case basis. Hedging is achieved contractual obligations and arises principally from the group’s using forward foreign exchange contracts. receivables from customers and investment securities. Interest rate risk Trade and other receivables The group’s objective is to minimise the impact of interest The group’s exposure to credit risk is influenced mainly rate volatility on interest cost to protect earnings. This is by the individual characteristics of each customer. The achieved by reviewing both the amount of floating rate majority of the group’s customers are large, established indebtedness over a certain period of time and its sensitivity retail organisations with good credit records and thus have to interest rate fluctuations. From time to time, the group a lower risk of default. Most of them have been transacting may take out interest rate swaps in order to mitigate with the group for a number of years. The group assigns the group’s exposure to interest rates on floating debt. credit limits to its customers based on a review of external However, during the year, as part of the group’s strategy, credit ratings. The group’s policy is to provide for bad some of the net proceeds from various disposals of debts based on the specific circumstances of each debtor. businesses transactions were used to repay part of its Approximately 57% (2009: 54%) of the group’s revenue is facility loans. Therefore, the group believes that the exposure attributable to sales transactions with a single customer. to interest rate risk was minimal. This customer pays between 14 and 21 days thus the group has a reduced concentration of credit risk. Other market price risk The group’s Pension Trustees are responsible for setting Cash and cash equivalents investment principles in place. The funds are predominantly The group limits its exposure to credit risk by only using held in equity investments, bonds and/or gilts in such banks with a credit rating of at least Aa3 from Moody’s proportions as the Trustees, guided by the investment and A+ from Standard and Poor’s. Given these high credit advisors, consider appropriate from time to time. ratings, management does not expect any counterparty to fail to meet its obligations. Capital management The board’s policy is to maintain a strong capital base so as Guarantees to maintain investor, creditor and market confidence and The group’s policy is to provide financial guarantees only to sustain future development of the business. The board to wholly owned subsidiaries. of directors monitors the return on trading capital employed (‘ROTCE’) for each operating division as well as for Liquidity risk the group. ROTCE represents operating profit before Liquidity risk is the risk that the group will not be able to significant items as a percentage of trading capital meet its financial obligations as they fall due. The group’s employed (as adjusted for the effect of the timing of approach is to monitor cash flow forecasts on a weekly major acquisitions and disposals). 54 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

4. Segment analysis The group’s reportable segments under IFRS 8 ‘Reporting Segments’ are Desserts and Food To Go. These product segments are regularly reported to the group’s management for the purposes of making strategic decisions and monitoring of its segment performance.

Desserts segment operates from two sites – Minsterley and Evercreech producing trifles, desserts, yoghurts and cottage cheese. Although these are two operating segments, they have been aggregated under the Desserts segment as they met the same aggregation criteria under IFRS 8.

Food to Go segment operates from two sites – Northampton and Spalding producing sandwiches, wraps, café hot food, sandwich fillers and dressed salads. Although these are two operating segments, they have been aggregated under Food to Go segment as they met the same aggregation criteria under IFRS 8.

The discontinued businesses in the year were the German and Polish businesses, part of the discontinued Northern Europe reportable segment. The segment information reported below does not include any amounts for these discontinued operations, which are described in more detail in note 22.

4.1. Segment revenue and results Segment result before Segment revenue significant items

2010 2009 2010 2009 £m £m £m £m Desserts 154.9 150.3 (2.7) (2.9) Food to Go 157.0 136.9 11.0 7.3 Reportable segments 311.9 287.2 8.3 4.4 Corporate expenses (unallocated) (4.2) (6.3) Operating Profit/(loss) before significant items 4.1 (1.9) Significant items (2.4) (0.7) Operating Profit/(loss) after significant items 1.7 (2.6) Net finance expense (12.9) (15.9) Loss before tax (11.2) (18.5) Income tax expense – (0.4) Loss from continuing operations (11.2) (18.9) Profit/(loss) from discontinued operations (net of tax) (note 22) 35.4 (2.0) Profit/(loss) for the year 24.2 (20.9)

Revenue reported above represents revenue generated from external customers. There was no inter-segment revenue in the year (2009: £nil). The total of the reportable segments’ revenue equates to the group’s revenue of its continuing operations.

The accounting policies of the reportable segments are the same as the group’s accounting policies described in note 1. Segment results represent the results earned by each segment without allocation of significant items, corporate costs, finance costs and income tax expense. This is the measure reported to management as they believe that it is the most relevant in evaluating the performance of the above segments and for the purpose of resource allocation. Uniq Annual Report and Accounts 2010 55 Financial statements Notes to the financial statements

4.2. Other segment information Depreciation and Capital expenditure Assets Liabilities amortisation (including software)

2010 2009 2010 2009 2010 2009 2010 2009 £m £m £m £m £m £m £m £m Desserts 82.8 76.6 17.8 20.7 5.7 5.1 11.9 9.2 Food to Go 68.5 67.7 19.8 17.2 4.2 3.6 3.7 2.6 Reportable segments 151.3 144.3 37.6 37.9 9.9 8.7 15.6 11.8 Corporate (unallocated) 31.3 141.8 166.9 291.2 – 0.3 – 0.1 Amounts related to discontinued operations (note 22) – 101.6 – 73.8 – 2.2 0.7 6.4

Consolidated 182.6 387.7 204.5 402.9 9.9 11.2 16.3 18.3

For the purposes of monitoring segment performance and allocating resources between segments: • All assets and liabilities are allocated to reportable segments other than those included in corporate (unallocated) and classified as discontinued operations. Goodwill is allocated to the Food to Go reportable segment as described in note 13. • Assets in corporate (unallocated) include cash, restricted cash and tax assets. Liabilities in corporate (unallocated) include borrowings, tax liabilities and the UK pension liability. The majority of the UK pension scheme’s members are past employees and not related to the reportable segments.

In addition to the depreciation and amortisation reported above, asset impairment charges and reversals attributable to the following reportable segments and discontinued operations are shown below: 2010 2009 £m £m Desserts 1.6 (1.7) Amounts related to discontinued operations – 7.6 1.6 5.9

4.3. Revenue from major business products Revenues from external customers for each business product are the same as those reported under the above reportable segments.

4.4. Geographical information During the year, the group operated in two principal geographical areas – United Kingdom (country of domicile) and Northern Europe. Northern Europe comprised of Germany and Poland.

The group’s continuing operations revenue from external customers and its assets and liabilities are all based in United Kingdom as in 2009. The group’s discontinued operations revenue from external customers are in Northern Europe and its assets and liabilities are reported in note 21 as businesses disposed. In 2009, the group’s discontinued operations revenue from external customers were in United Kingdom (Pinneys), Northern Europe and France; whilst the assets and liabilities of United Kingdom (Pinneys) and France were reported as businesses disposed in note 21 and Northern Europe was reported as held for sale in note 20.

Revenue from one customer of both the Food to Go and Desserts segments represents approximately £178.0m (2009: £153.8m) of the group’s total continuing revenues. In 2009 revenues from another customer within the Desserts business represented approximately £29.0m of the group’s total continuing revenues, however in the current year no other customer represents greater than 10% of the group’s total continuing revenues. 56 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

5. Expenses and auditors’ remuneration 2010 2009

Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m The group’s results include charges for: Depreciation and amortisation 9.9 – 9.9 9.0 2.2 11.2 Asset impairment 1.6 – 1.6 – – – Asset impairment related to assets held for sale – – – – 7.6 7.6 Reversal of asset impairment – – – (1.7) – (1.7)

Operating lease rental payments: – plant and machinery 1.1 0.8 1.9 0.7 2.8 3.5 – other 0.9 0.1 1.0 0.9 1.1 2.0 Research and development 2.3 – 2.3 1.4 – 1.4 Inventory written down to net realisable value 0.7 – 0.7 1.2 1.4 2.6 Reversal of inventory written down to net realisable value – (0.1) (0.1) (0.2) (0.2) (0.4)

2010 2009

Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Auditors’ remuneration Audit of these financial statements 0.3 – 0.3 0.3 – 0.3 Audit of the financial statements of subsidiaries pursuant to legislation 0.1 – 0.1 0.1 0.3 0.4 Other 0.2 – 0.2 0.5 – 0.5 0.6 – 0.6 0.9 0.3 1.2

6. Directors and employees Directors’ emoluments and share interests are given in the remuneration report on pages 32 to 37.

2010 2009

Continuing Discontinued Total Continuing Discontinued Total £m £m £m £m £m £m Aggregate payroll costs Wages and Salaries 53.3 6.7 60.0 54.8 76.5 131.3 Social security costs 5.2 1.2 6.4 4.9 17.2 22.1 Pension costs – defined benefit schemes – – – 1.1 0.3 1.4 Pension costs – defined contribution schemes 1.1 – 1.1 0.6 1.2 1.8 Share-based payments charge 0.3 – 0.3 0.5 – 0.5 59.9 7.9 67.8 61.9 95.2 157.1

2010 2009

Continuing Discontinued Total Continuing Discontinued Total Employee numbers Average: Full time 1,895 370 2,265 2,257 3,729 5,986 Part time 65 – 65 68 141 209 1,960 370 2,330 2,325 3,870 6,195

At period end 1,953 – 1,953 2,202 3,741 5,943 Uniq Annual Report and Accounts 2010 57 Financial statements Notes to the financial statements

7. Significant items 2010 2009 Note £m £m Restructuring costs – UK operations (0.4) (6.3) – Group (3.0) (0.8) Asset impairment (1.6) – Reversal of asset impairment – 1.7 Onerous contract 2.6 – Curtailment gain – pensions – 4.7 Continuing operations (2.4) (0.7) Discontinued operations (net of tax) 22 32.2 (12.0) 29.8 (12.7)

Restructuring costs – UK Operations In 2010 this relates to the closure of our cottage cheese operation in the Desserts segment and covers expected redundancy costs. In 2009 this relates to the closure of Paignton site and the transfer of operations from Paignton to Minsterley.

Restructuring costs – Group This relates to the restructuring of group operations and costs of a significant nature in relation to the management of the group’s pension fund.

Asset impairment This relates to the impairment of tangible fixed assets of our cottage cheese operation in the Desserts segment.

Reversal of asset impairment In 2009 this relates to assets from Paignton which had been impaired in 2008, but which were subsequently transferred and used in operations at the Minsterley site and also a reversal of the impairment of the land and buildings at Paignton which were previously held for sale at year end.

Onerous contracts On 11 February 2011, the group agreed a settlement with Wincanton in relation to its onerous contract, resulting in a release of the excess provision no longer required.

Curtailment gain – Pensions From October 2009 the defined benefit pension fund was closed to further accrual resulting in a curtailment gain for the group.

8. Finance income and expenses 2010 2009 £m £m Finance income Interest on bank balances 0.3 0.1 Interest on restricted cash 0.6 1.4 Net foreign exchange gains 0.3 – 1.2 1.5 Finance expense Interest on bank loans (1.4) (2.5) Net foreign exchange losses – (1.2) Amortisation of finance arrangement costs (0.6) (1.0) (2.0) (4.7) Net finance expense – continuing operations (0.8) (3.2) Net pension interest (12.1) (12.7) Net finance charges (12.9) (15.9) 58 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

9. Income tax The tax charge on the loss before significant items for continuing operations is £nil (2009: £0.4m charge).

2010 2009 £m £m Overseas tax – (0.4) Deferred tax – – Tax on continuing operations – (0.4) Tax on significant items – – Continuing operations – (0.4) Tax expense on discontinued operations (note 22) (0.5) (1.3) (0.5) (1.7)

The group has used tax losses to reduce tax payments in respect of the current and prior years.

A reconciliation of the current tax charge to the 28% (2009: 28%) standard rate in the UK

2010 2009 £m £m Loss before tax on continuing operations (11.2) (18.5) Tax credit at UK corporation tax rate of 28% (2009: 28%) 3.1 5.2 Actual tax charge – (0.4) Difference 3.1 5.6 Explained by: Reversal of asset impairment – (0.5) Recognised tax losses 3.7 6.0 Permanent items (0.6) 0.1 Total 3.1 5.6

10. Earnings per share (‘EPS’) Basic and diluted EPS Basic EPS on continuing operations is calculated on the basis of the weighted average of 113.9m (2009: 113.9m) ordinary shares in issue and profit for the year on continuing operations of £24.2m (2009: loss of £20.9m). Basic earnings/(loss) per share for discontinued operations is calculated on profit for the year of £35.7m (2009: loss £2.0m). At year end there are no potential ordinary shares that have a dilutive effect on continuing operations.

Potential ordinary shares which may dilute EPS in the future include share options, warrants and performance incentive plan shares granted by the company. They have not been included in the calculation of dilutive EPS as they were anti-dilutive for the current period.

Adjusted EPS Adjusted loss per share is shown by reference to the group loss before significant items and related tax. Adjusted loss per share is presented as the directors consider that this gives valuable additional information about the earnings performance of the group’s operations and is calculated as follows: Uniq Annual Report and Accounts 2010 59 Financial statements Notes to the financial statements

2010 2009 £m £m Adjusted basic and diluted EPS of the group Profit/(loss) for the year 24.2 (20.9) Significant items on continuing operations 2.4 0.7 Significant items on discontinued operations (32.2) 9.7 Adjusted loss before tax (5.6) (10.5) Related tax – 2.3 Adjusted loss (5.6) (8.2)

Pence per Pence per share share Adjusted basic and diluted EPS on total group (4.9) (7.2)

11. Dividends No dividends were paid nor declared during 2010 (2009: £nil).

12. Property, plant and equipment

2010 2009

Land and Plant and Assets under Land and Plant and Assets under buildings equipment construction Total buildings equipment construction Total £m £m £m £m £m £m £m £m Cost Opening balance 37.9 106.0 3.4 147.3 121.5 348.6 9.6 479.7 Additions – – 15.6 15.6 0.5 5.9 11.6 18.0 Transfers from assets under construction 0.6 11.1 (11.7) – 4.4 13.4 (17.8) – Disposals – (3.5) – (3.5) (0.6) (17.8) – (18.4) Disposal of businesses (note 21) – – – – (76.0) (142.6) – (218.6) Transfer to assets held for sale (note 20) – – – – (54.1) (45.4) – (99.5) Reclassification – – – – 46.0 (51.3) – (5.3) Exchange – – – – (3.8) (4.8) – (8.6) Closing balance 38.5 113.6 7.3 159.4 37.9 106.0 3.4 147.3

Depreciation and impairment losses Opening balance 10.2 60.8 – 71.0 50.3 258.5 – 308.8 Provided in the period 1.4 8.5 – 9.9 1.8 9.4 – 11.2 Disposals – (3.5) – (3.5) (0.6) (17.8) – (18.4) Disposal of businesses (note 21) – – – – (51.6) (103.5) – (155.1) Reclassification – – – – 46.8 (48.8) – (2.0) Impairment – 1.6 – 1.6 4.2 2.9 – 7.1 Reversal of impairment (note 7) – – – – (1.2) (0.5) – (1.7) Transfer to assets held for sale (note 20) – – – – (38.6) (35.7) – (74.3) Exchange – – – – (0.9) (3.7) – (4.6) Closing Balance 11.6 67.4 – 79.0 10.2 60.8 – 71.0

Opening net book value 27.7 45.2 3.4 76.3 71.2 90.1 9.6 170.9

Closing net book value 26.9 46.2 7.3 80.4 27.7 45.2 3.4 76.3 60 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

Leased plant and equipment The group leases equipment under a number of finance lease agreements or quasi finance leases (see note 23). In 2009 the net carrying amount of leased plant and equipment was £0.9m in Northern Europe which had been reclassified as held for sale. There was no depreciation recognised on leased assets for current and prior year in the continuing operations.

Impairment of assets Refer to notes 7 and 22 for details relating to the impairment of assets and the reversal of the impairment of assets.

Reclassification In 2009 the property, plant and equipment (‘PPE’) has been reclassified between categories and also with the intangible assets – software to reflect the true cost and depreciation of the assets. The net book value as a result of this reclassification in the PPE in 2009 has also resulted in £3.3m being re-classed to intangible assets – software. Overall, there is no change in net book value for both PPE and Intangible assets – software.

13. Intangible assets

2010 2009

Goodwill Software Total Goodwill Software Total £m £m £m £m £m £m Additions – – – – 0.3 0.3 Disposals – – – – (0.7) (0.7) Disposal of businesses (note 21) – – – – (10.3) (10.3) Transfer to assets held for sale (note 20) – – – – (3.0) (3.0) Reclassification – – – – (8.2) (8.2) Exchange – – – – (1.2) (1.2) Closing balance 51.0 – 51.0 51.0 – 51.0

Amortisation and impairment losses Opening balance 20.5 – 20.5 20.5 23.1 43.6 Disposals – – – – (0.5) (0.5) Disposal of businesses (note 21) – – – – (7.4) (7.4) Reclassification – – – – (11.5) (11.5) Impairment – – – – 0.5 0.5 Transfer to assets held for sale (note 20) – – – – (3.0) (3.0) Exchange – – – – (1.2) (1.2) Closing Balance 20.5 – 20.5 20.5 – 20.5

Opening net book value 30.5 – 30.5 30.5 – 30.5

Closing net book value 30.5 – 30.5 30.5 – 30.5

Goodwill Impairment As required by IAS 36 an annual impairment review was carried out to assess whether the carrying amount of the goodwill exceeds the recoverable amount. Goodwill is allocated to the group’s cash generating units (CGUs) or groups of CGUs as set out below:

2010 2009 £m £m Food to Go 30.5 30.5 Uniq Annual Report and Accounts 2010 61 Financial statements Notes to the financial statements

The recoverable amounts of CGUs were measured based on the higher of value in use and fair value less costs to sell. Value in use was determined to be higher, thus this was used as the recoverable amount. The key assumptions in the value in use calculation for sales and margin were based on historical trends adjusted for management estimate of future performance of each business unit which involves a degree of judgement. These future trends and cash flow projections in the form of the financial budget for 2011 and the strategic plans for 2012 and 2013 have been approved by the board. Cash flows beyond the three year period for the United Kingdom were extrapolated using a growth rate of 0% and included a terminal value. A pre tax discount rate of 11.2% (2009: 11.7%) was used for this CGU based on the group’s weighted average cost of capital.

Cash flows beyond the three year period for the United Kingdom were extrapolated using a growth rate of 0% and include a terminal value. A pre tax discount rate of 11.2% (2009: 11.7%) was used for all CGUs based on the group’s weighted average cost of capital.

In 2010, the recoverable amount of goodwill exceeded the carrying value and no impairment was required.

14. Restricted cash This related to cash held in a secure account in favour of the Pension Fund. In October 2010, the balance of £97.6m was paid to the pension fund.

15. Deferred tax assets

Assets Liabilities Net

2010 2009 2010 2009 2010 2009 £m £m £m £m £m £m Retirement benefit obligations 13.9 13.9 – – 13.9 13.9 Tax assets/(liabilities) 13.9 13.9 – – 13.9 13.9

Net deferred tax assets 2010 2009 £m £m Opening balance 13.9 10.2 Income statement charge – continuing 0.5 – – change in rate of tax (0.5) – Income statement – discontinued – (2.3) Disposal of businesses (note 21) – 5.3 Held for sale (note 20) – 0.7 Closing balance 13.9 13.9

Unrecognised deferred tax assets 2010 2009 £m £m Retirement benefit obligations 26.4 52.0 Capital allowances in excess of depreciation 43.1 35.1 Provisions 2.4 2.1 Tax losses 22.8 13.8 94.7 103.0

Deferred tax assets have not been recognised in respect of these items because the availability of suitable taxable profits is uncertain. There are no unrecognised deferred tax liabilities in respect of temporary differences associated with investments in subsidiaries. 62 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

On 22 June 2010 the Chancellor announced that the main rate of UK corporation tax will reduce from 28% to 27% with effect from 1 April 2011. This tax change became substantively enacted in July 2010 and therefore the effect of the rate reduction on the deferred tax balances as at 31 December 2010 has been included in the figures above.

On 23 March 2011 the Chancellor announced a further reduction in the main rate of UK corporation tax to 26% with effect from 1 April 2011. This change became substantively enacted on 29 March 2011 and therefore the effect of the rate would create an additional reduction in the deferred tax asset of approximately £0.5m. This has not been reflected in the figures above as it was not substantively enacted at the balance sheet date.

The Chancellor also proposed changes to further reduce the main rate of corporation tax by 1% per annum to 23% by 1 April 2014, but these changes have not yet been substantively enacted and therefore are not included in the figures above. The overall effect of the further reductions from 27% to 23%, if these applied to the deferred tax balance at 26 April 2010, would be to further reduce the deferred tax asset by approximately £2.1m.

16. Investments Company 2010 2009 £m £m Cost Opening balance 225.2 225.2 Closing balance 225.2 225.2

Provisions for impairment Opening balance 135.7 94.4 Impairment – 41.3 Closing balance 135.7 135.7

Net book value 89.5 89.5

Investments in the company are stated at cost less provision for any impairment.

Investments in the company balance sheet of £89.5m (2009: £89.5m) represent shares in subsidiary undertakings. Further details of these subsidiaries are given in note 35.

An impairment test was carried out on the investments held by the company to review the carrying value. No impairment was required in 2010 as the value in use was in excess of the carrying value. In 2009, the value of the investments was impaired to value in use, resulting in a £41.3m impairment charge. The pre-tax discount rate used in the calculation of value in use was 11.2% ( 2009: 11.7%).

17. Inventory 2010 2009 £m £m Raw materials and consumables 12.0 10.5 Work in progress 1.1 0.1 Finished goods and goods for resale 0.7 0.6 13.8 11.2

In 2010, inventory recognised as cost of sales for the continuing operations amounted to £165.5m (2009: £151.3m). Uniq Annual Report and Accounts 2010 63 Financial statements Notes to the financial statements

18. Trade and other receivables Group Company

2010 2009 2010 2009 £m £m £m £m Current assets Trade debtors 20.8 22.5 – – Derivatives not used for hedging 0.1 – 0.1 – Other debtors 10.0 8.8 – 0.1 Prepayments and accrued income 2.3 3.3 – – 33.2 34.6 0.1 0.1 Non-current assets Other debtors – 5.4 – –

Included in trade debtors is £nil (2009: £0.1m) of allowances for doubtful debts (refer to note 26).

The other debtors in non-current assets of £nil (2009: £5.4m) represent deferred consideration of €6m for the sale of Marie SAS in 2009, being held in escrow for 18 months from date of disposal. This amount was received in April 2011. This amount revalued at year end to £5.3m has been reclassified to other debtors in current assets above.

Included in other debtors in 2009 was an amount of £5.6m deferred disposal costs of Northern Europe which was subsequently recognised in 2010, when the disposal took place.

19. Cash and cash equivalents Group Company

2010 2009 2010 2009 £m £m £m £m Cash at bank 7.1 11.4 7.0 10.6 Short-term deposits 3.7 5.8 1.8 2.3 Cash and cash equivalents 10.8 17.2 8.8 12.9 Bank overdrafts used for cash management purposes (note 23) – (0.3) – – Cash and cash equivalents in the statement of cash flows 10.8 16.9 8.8 12.9

In 2009, the cash at bank included an amount of £11.0m which was held in a separate account in accordance with an agreement with the Pension Fund until 30 June 2010.

Since then, the balance was transferred to the group’s normal bank account and has been used for its business, with no restriction imposed on it.

The short-term deposit includes an amount of £3.5m (2009: £5.5m) which is secured against several letters of credit. 64 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

20. Assets held for sale As at 31 December 2009, Northern Europe (Netherlands, Germany and Poland) and the Paignton factory in the UK, were classified as held for sale. Both were sold in the current year (see note 21). 2010 2009 Total Total £m £m Assets classified as held for sale Property, plant and equipment – 25.2 Deferred tax – 0.4 Inventory – 12.1 Trade and other receivables – 56.9 Cash – 7.0 – 101.6 Liabilities classified as held for sale Retirement benefit obligations – 14.7 Provisions – 0.3 Deferred tax – 1.1 Corporation tax – 0.4 Borrowings – 0.9 Trade and other payables – 56.4 – 73.8

Cumulative income or expense recognised directly in equity relating to Northern Europe segment classified as held for sale:

2010 2009 £m £m Actuarial loss recognised on the pension schemes – (8.1) Deferred tax relating to the pension schemes – 3.4 Foreign currency translation differences for foreign operations – 30.2 – 25.5 Uniq Annual Report and Accounts 2010 65 Financial statements Notes to the financial statements

21. Business disposals During the year, the group sold 100% of its interest in the share capital of the following businesses for gross consideration as set out below:

Nature of Date of Gross Business Segments business disposal consideration Uniq Convenience Foods Chilled and frozen Nederland BV Northern Europe convenience foods 9 January 2010 £16.6m Uniq Deutschland GmbH Chilled and frozen and Uniq Lisner Sp.zo.o Northern Europe convenience foods 21 April 2010 £24.7m

The profit/(loss) on disposal of these businesses as set out below is included in the significant items of the discontinued operations (see note 22). For 2009, the group disposed of Pinneys, a chilled fish business in UK, Brandly, a field sales force business in Germany and Marie SAS, a chilled and frozen convenience foods business in France.

2010 2009

Germany/ Pinneys, Poland Netherlands Other Total Brandly and £m £m £m £m France Property, plant and equipment 12.8 12.5 – 25.3 63.5 Intangible assets – – – – 2.9 Inventories 7.9 2.9 – 10.8 28.0 Cash and cash equivalents and overdrafts 3.8 1.9 – 5.7 (10.4) Finance leases (0.5) (0.2) – (0.7) Trade and other receivables 47.8 9.3 – 57.1 40.3 Trade and other payables (33.7) (16.6) – (50.3) (61.5) Retirement benefit obligation (14.3) – – (14.3) (5.0) Provisions (0.2) (0.1) – (0.3) (0.9) Tax (0.5) (1.1) – (1.6) (5.3) Net assets disposed 23.1 8.6 – 31.7 51.6 Cumulative foreign exchange recycled from translation reserve (30.7) 0.4 – (30.3) (1.7) Gain/(loss) on disposal 1 28.8 5.0 (0.9) 32.9 (2.0) Net consideration 21.2 14.0 (0.9) 34.3 47.9 Relating to: Cash consideration 24.8 13.6 – 38.4 50.9 Cash consideration – working capital adjustment (0.1) 3.0 – 2.9 (0.2) Deferred consideration – – – – 5.5 Disposal costs (3.5) (2.6) (0.9) (7.0) (8.3) 21.2 14.0 (0.9) 34.3 47.9 Net cash inflow/(outflow) on disposal of businesses: Consideration received/(paid) (net of disposal costs paid) 21.3 13.6 (2.4) 32.5 46.7 Plus/(Less): cash and cash equivalents and overdrafts sold (3.8) (1.9) – (5.7) 10.4 17.5 11.7 (2.4) 26.8 57.1

1 In 2010, gain on disposal of Germany/Poland and Netherland includes foreign exchange gain of £30.3m recycled from translation reserve.

22. Discontinued operations The results for 2010 relate to the Germany and Poland businesses, part of the Northern Europe segment. Further information with regard to business disposals can be found in note 21. In 2009 the results included Fish (Pinneys), France and Northern Europe (Germany, Poland and Netherlands) segments. 66 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

Profits/(losses) attributable to the discontinued operations were as follows: 2010 2009

Pinneys, France and Northern Northern Europe Europe £m £m Results of discontinued operations Revenue 54.0 430.8 Expenses (50.1) (419.8) Operating profit 3.9 11.0 Finance charge (0.2) (2.0) Profit before tax and significant items 3.7 9.0 Income tax (expense)/credit (0.5) 1.0 Profit after tax before significant items 3.2 10.0 Significant items after tax (note A) 32.2 (12.0) Significant items before tax 32.2 (9.7) Tax on significant items – (2.3) Profit/(loss) for the year 35.4 (2.0)

Note A: Significant items after tax 2010 2009

Pinneys, France and Northern Northern Europe Europe £m £m Restructuring costs – (0.2) Pension – curtailment gain – 1.0 Assets impairment – (7.2) Loss on disposal of assets – (1.0) Profit/(loss) on disposal of businesses 32.9 (2.0) Other significant costs (0.7) (0.3) Significant items before tax 32.2 (9.7) Tax on significant items – (2.3) Significant items after tax 32.2 (12.0)

Restructuring costs Restructuring costs in 2009 related to costs incurred to reduce the costs of the business units and improve profitability. The 2009 costs included a release of prior year’s provision of £0.6m in Northern Europe.

Pension curtailment gain In 2009, this related to the closure of the defined benefit scheme for employees who were members of the pension fund and who worked in the disposed business.

Assets impairment In 2009, the assets impairment relates to the Northern European operations which were impaired to the recoverable value, being fair value less costs to sell.

Loss on disposal of assets In 2009, this relates to the disposal of the Bremerhaven factory in Germany. Uniq Annual Report and Accounts 2010 67 Financial statements Notes to the financial statements

Profit/(loss) on disposal of businesses This is disclosed in note 21 and includes foreign exchange recycled from the translation reserve.

Other significant costs In 2010 this refers to one-off costs for discontinued businesses and in 2009 this related to additional pension costs in Germany.

2010 2009 £m £m Cash flow from/(used in) discontinued operations Net cash used in operating activities (2.9) (6.0) Net cash (used in)/from investing activities (6.4) 2.4 Net cash used in financing activities (0.2) (1.3) Net cashflow used in discontinued operation (9.5) (4.9)

23. Borrowings

Group Company

2010 2009 2010 2009 £m £m £m £m Current liabilities Loan drawings under revolving facility – 27.0 – 27.0 Bank overdraft – 0.3 – – – 27.3 – 27.0

The loan under the group bank facility was repaid during the year when the facility of £35m expired on 31 December 2010. In 2009 the loan drawn under this facility was £27.6m less £0.6m of unamortised arrangement fees. The remaining fees were fully amortised in 2010.

On 9 February 2011 the group agreed a new banking facility of £25m which became available on the completion of the pension restructuring deal. The new facility provides a three year £15m term loan, with a six-month repayment term of £1.5m and a £10m revolving credit facility.

2010

Borrowings due within one year Borrowings Cash and (excluding due after Net overdrafts overdrafts) one year Borrowings cash/(debt) £m £m £m £m £m Analysis of net cash/(debt) Opening balance (including discontinued businesses) 23.9 (27.5) (0.4) (27.9) (4.0) Effect of foreign exchange rate changes 0.1 0.1 – 0.1 0.2 Cash flow – continuing businesses (3.7) 27.7 – 27.7 24.0 Cashflow – discontinued businesses (9.5) – – – (9.5) Disposed finance leases – 0.3 0.4 0.7 0.7 Non cash movements – (0.6) – (0.6) (0.6) Closing balance – continuing operations 10.8 – – – 10.8 68 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

2009

Borrowings due within one year Borrowings Cash and (excluding due after Net overdrafts overdrafts) one year Borrowings cash/(debt) £m £m £m £m £m Analysis of net cash/(debt) Opening balance (including discontinued businesses) 17.9 (0.6) (25.7) (26.3) (8.4) Effect of foreign exchange rate changes (1.5) – 0.8 0.8 (0.7) Cash flow – continuing businesses 12.4 (26.9) 25.2 (1.7) 10.7 Cash flow – discontinuing business (4.9) – – – (4.9) Non cash movements – – (0.7) (0.7) (0.7) Closing balance – continuing businesses 23.9 (27.5) (0.4) (27.9) (4.0)

24. Trade and other payables

Group Company

2010 2009 2010 2009 £m £m £m £m Trade payables 23.4 25.5 – – Other payables, including social security 4.9 7.2 – 0.2 Accruals and deferred income 13.3 11.9 – – Amounts owed to subsidiary undertakings – – 63.4 136.6 41.6 44.6 63.4 136.8

25. Provisions 2010

Onerous Contract Other Total £m £m £m Opening balance 4.7 8.6 13.3 Income statement charge (2.6) 3.2 0.6 (Recovered)/utilised during the year – continuing operations 0.2 (0.9) (0.7) Utilised during the year – disposal costs – (7.3) (7.3) Foreign exchange – (0.1) (0.1) Closing balance 2.3 3.5 5.8

Current liabilities 2.3 2.7 5.0 Non-current liabilities – 0.8 0.8 2.3 3.5 5.8

Onerous contract provision In 2009 this related to the discounted value of a commitment in respect of an onerous contract relating to the Wincanton demerger. This was settled on 11 February 2011 for £2.3m resulting in the release of £2.6m of the provision that is no longer required.

Other provisions Included in other provisions are costs totalling £1.3m (2009: £7.1m) relating to the disposals of Marie £1.2m (2009: £2.8m), Northern Europe £nil (2009: £3.3m) and Brandly £0.1m (2009: £1.0m). The disposal costs of Marie, Northern Europe and Brandly are expected to be utilised in the next financial year. Part of these provisions are based on the expected outcome of the claims, taking into account of the group’s interpretation of the facts and judgement, supported by legal advice. The remainder of the other provision relates to £1.2m (2009: £0.6m) for two vacant properties and £1.0m (2009: £0.9m) for the restructuring programmes, as discussed in note 7. The vacant properties provision is expected to be utilised in 1 to 18 years and the restructuring provision is expected to be utilised in the next financial period. Uniq Annual Report and Accounts 2010 69 Financial statements Notes to the financial statements

26. Derivatives and other financial instruments A discussion of the group’s objectives, policies and strategies with regard to derivatives and other financial instruments are set out in note 3.

Credit risk Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Group Company

2010 2009 2010 2009 Category £m £m £m £m Trade and other receivables Loans and receivables 33.1 34.6 0.1 0.1 Other debtors – non current Loans and receivables – 5.4 – – Forward exchange contracts: assets Fair value through profit and loss 0.1 – – – Cash and cash equivalents Cash and bank balances 10.8 17.2 8.8 12.9 Restricted cash Cash and bank balances – 97.0 – 97.0 44.0 154.2 8.9 110.0

Impairment losses The ageing of trade receivables at the reporting date was: Group

2010 2009 £m £m Not past due 18.9 20.1 Past due 0-30 days – not yet impaired 1.3 2.0 Past due 30-60 days – not yet impaired 0.4 0.2 Past due 60-90 days – 0.1 Past due 90-120 days 0.2 0.2 20.8 22.6 Allowance for doubtful debts – (0.1) 20.8 22.5

Allowance for doubtful debts The movement in allowance for doubtful debts in respect of trade receivables during the year was as follows:

Group 2010 2009 £m £m Opening balance (0.1) (0.9) Impairment loss for the year – (0.1) Impairment loss reversed 0.1 0.9 Closing balance – (0.1)

The group’s policy is to provide for bad debts based on the specific circumstances of each receivable. Refer to note 3 for details of the group’s policies in respect of trade and other receivables. Based on historical default rates, the group believes no impairment allowance is necessary on the receivables that are past due in 0-30 and 30-60 days respectively.

There were no trade receivables for the company in respect of the current year (2009: £nil). 70 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

Liquidity risk The following tables are the contractual maturity profile of the group’s and company’s cashflows of the financial liabilities, excluding estimated interest payments and netting arrangements. These tables have been drawn up based on the earliest date that the group and company can be required to pay on these financial liabilities. These amounts also approximate to their carrying values in the balance sheet.

Group Group 2010 2009

6-12 months 1-5 years Total 6-12 months 1-5 years Total Category £m £m £m £m £m £m Unsecured bank loans Amortised cost – – – 27.0 – 27.0 Bank overdraft Amortised cost – – – 0.3 – 0.3 Trade and other payables Amortised cost 41.6 – 41.6 44.6 – 44.6 Forward exchange Fair value through contracts: liabilities profit and loss – – – 0.1 – 0.1 41.6 – 41.6 72.0 – 72.0

Company Company 2010 2009

6-12 months 1-5 years Total 6-12 months 1-5 years Total Category £m £m £m £m £m £m Unsecured bank loans Amortised cost – – – 27.0 – 27.0 Trade and other payables Amortised cost – – – 0.2 – 0.2 Amounts owed to group undertakings Amortised cost 63.4 – 63.4 136.6 – 136.6 Forward exchange Fair value through contracts: liabilities profit and loss – – – 0.1 – 0.1 63.4 – 63.4 163.9 – 163.9

Market risk Interest rate risk and currency risk The effective currency and interest rate exposures of the group’s and company’s net cash/(debt) position were as follows:

Group Group 2010 2009

Sterling Euro Total Sterling Euro Total £m £m £m £m £m £m Floating rate borrowings – – – (7.0) (20.3) (27.3) Fixed rate borrowings – – – – – – – – – (7.0) (20.3) (27.3) Cash and liquid resources (including restricted cash) 10.7 0.1 10.8 115.5 (1.3) 114.2 Net cash/(debt) 10.7 0.1 10.8 108.5 (21.6) 86.9

Company Company 2010 2009

Sterling Euro Total Sterling Euro Total £m £m £m £m £m £m Floating rate borrowings – – – (6.7) (20.3) (27.0) Cash and liquid resources (including restricted cash) 8.8 – 8.8 111.2 (1.3) 109.9 Net cash/(debt) 8.8 – 8.8 104.5 (21.6) 82.9

The restricted cash included in the cash and liquid resources for the group and company was £nil (2009: £97.0m). Uniq Annual Report and Accounts 2010 71 Financial statements Notes to the financial statements

The following significant exchange rates applied during the year:

2010 2009

Polish Polish GBP Euro Zloty Euro Zloty Average rate 1.17 – 1.12 4.85 Reporting date spot rate 1.16 – 1.11 4.49

Sensitivity analysis (a) Foreign currency sensitivity analysis A 10% strengthening of sterling against the following currencies at year end 2010, would have increased/(decreased) equity and profit/(loss) by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2009. The impact of sterling against those businesses that were held for sale has been excluded below for 2009.

Group Group 2010 2009

Euro Euro £m £m Equity – 0.7

Company Company 2010 2009

Euro Euro £m £m Operating profit before significant items Profit/(loss) – (2.4) Equity – (2.4)

A 10% weakening of sterling against the above currencies at year end would have had the equal and opposite effect to the amounts shown above, on the basis that all other variables remain constant.

(b) Interest rate sensitivity analysis The financial assets and liabilities that are interest bearing and expose the group to interest rate risks are its cash and cash equivalents, overdrafts and bank borrowings.

If interest rates applied to the major currencies of net variable rate assets/liabilities at this year end had been 1% higher/lower and all other variables were held constant, the group’s profit for the year ended 2010 would increase/ (decrease) by £0.1m (2009: increase/(decrease) by £0.8m). This is mainly attributable to the group’s exposure to interest rates on its variable rate restricted cash balance and cash deposits (included in cash and cash equivalents).

Currency analysis of net assets/(liabilities) The group’s and company’s net assets/(liabilities) by currency were as follows:

Group Group 2010 2009

Sterling Euro Total Sterling Euro 2010 £m £m £m £m £m £m Net cash/(debt) 10.7 0.1 10.8 108.5 (21.6) 86.9 Other net (liabilities)/assets (excluding goodwill) (66.9) 3.7 (63.2) (163.3) 2.9 (160.4) Goodwill 30.5 – 30.5 30.5 – 30.5 (25.7) 3.8 (21.9) (24.3) (18.7) (43.0) 72 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

Where the group has liabilities, it operates a policy of maintaining the liability split between the two currencies in which the group operates i.e. the UK and European operations. The ratio of sterling:euro liabilities reflects the sterling:euro split of trading capital employed.

Company Company 2010 2009

Sterling Euro Total Sterling Euro Total £m £m £m £m £m £m Net cash/(debt) 8.8 – 8.8 104.5 (21.6) 82.9 Other net assets/(liabilities) 26.2 – 26.2 (47.3) – (47.3) 35.0 – 35.0 57.2 (21.6) 35.6

The sterling other net (liabilities)/assets figure for 2009 had been adjusted to reflect the investment write off amounting to £41.3m and other liabilities adjustment of £0.6m.

Fair values of financial instruments The table below sets out the fair values of financial assets and liabilities, which approximate to their carrying values in the balance sheet.

Group Company

2010 2009 2010 2009 £m £m £m £m Financial assets Non-current Restricted cash – 97.0 – 97.0 Other debtors – 5.4 – – Current Cash and cash equivalents 10.8 17.2 8.8 12.9 Forward exchange contracts – assets 0.1 – – – Trade and other receivables (including amounts due from group undertakings) 33.1 34.6 0.1 0.1 44.0 154.2 8.9 110.0 Financial liabilities

Current Bank overdraft – 0.3 – – Borrowings – 27.0 – 27.0 Forward exchange contracts – liabilities – 0.1 – 0.1 Trade and other payables (including amounts due to group undertakings) 41.6 44.6 63.4 136.8 41.6 72.0 63.4 163.9

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Uniq Annual Report and Accounts 2010 73 Financial statements Notes to the financial statements

Level 2 Level 2

Group Company

2010 2009 2010 2009 £m £m £m £m Financial assets Forward exchange contracts – current assets 0.1 – – – Financial liabilities Forward exchange contracts – current liabilities – (0.1) – (0.1) 0.1 (0.1) – (0.1)

Cash flow hedge During the year, the group has used forward foreign contracts to hedge future sales and purchases but these specific contracts have not been designated as cash flow hedges.

2010

Fixed Contract Fair Fair rate value value value £m €m £m Forward contract to sell € and receive sterling 6 April 2010 0.876 3.9 4.5 4.0

At 31 December 2010, the profit for the above forward foreign exchange contract deferred in the hedging reserve was £0.1m (2009: loss £0.1m). On the date of maturity, this amount deferred in equity will be reclassified to profit or loss.

Net investment hedge During the year, the group has designated certain euro-denominated currency borrowings to hedge its net investment in Northern Europe, up to the point of disposal of business.

The remaining euro-denominated borrowings designated to hedge the net investment of Northern Europe at year end 2010 was £nil (€22.3m).

The expected gain or loss on this currency borrowings was 100% offset by the amount of foreign exchange difference arising on both the translation of these euro-denominated net investments of these hedged entities at the date of disposal.

As a result, the gains on the retranslation of the borrowings of £0.1m (2009: £0.8m) were recognised in the group statement of comprehensive income.

27. Retirement benefit obligations The group operates pension schemes in the UK and operated schemes in Europe during the period.

The main UK scheme is contributory for members and has two sections: the defined benefit section and the defined contribution section. The defined benefit section closed to new members in 2002 and was closed to existing members at 30 September 2009 but provides benefits for existing and past employees based on final pensionable emoluments. The assets of the plan are held in a separate trustee administered fund. As well as the main fund, the UK operates a small unfunded defined benefit pension scheme for overcap benefits and provides post-retirement medical benefits to certain former employees.

The results of an actuarial valuation as at 31 March 2009 were updated to the accounting date by independent qualified actuaries in accordance with IAS19. As required by IAS19, the value of the defined benefit obligation and current service costs has been measured using the projected unit credit method. 74 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

In April 2010, the Trustee began a programme to de-risk the scheme’s assets. Over 2010, the Trustee has reduced the scheme’s holdings in return-seeking assets, with a view to being invested 100% in gilts by early 2011.

The expected rate of return on assets for 2010 was 4.1% p.a. (2009: 6.7% p.a.). This rate is derived by taking the weighted average of the long term expected rate of return on gilts in which the scheme was invested at year end 2010.

Total contributions made to defined contribution schemes in the year were £1.1m (2009: £0.6m) for the continuing businesses in UK. In 2009, the company and Trustee agreed to close the UK main pension scheme to future accrual, resulting in a curtailment gain of £4.7m. The group made a final contribution of £14.0m to its defined benefit scheme in March 2011.

The following table sets out the key IAS 19 assumptions used for the schemes. Overseas plans are quoted as a weighted average based on liabilities. The expected rate of return on assets is derived by taking the weighted average of the long term expected rate of return on each of the asset classes that the plan was invested in at 31 December 2010. The assumptions used by the actuaries have been chosen from a range of possible actuarial assumptions about the future, which may not necessarily be borne out in practice. Management has considered the legislative changes with regard to inflation assumptions (RPI change to CPI) and has concluded that there is no material effect on the year end position.

Assumptions UK Overseas

2010 2009 2008 2010 2009 2008 % % % % % % Inflation 3.5 3.6 2.9 1.5 1.5 1.5 Pension increases in payment – – – 1.5 1.5 1.5 Pension increases in payment (LPI 5%) 3.4 3.5 2.7 – – – Pension increases in payment (LPI 2.5%) 2.3 2.3 2.2 – – – Salary growth – Standard – – 4.4 2.5 2.5 2.6 – Senior Management – – 5.9 2.5 2.5 2.6 Discount rate 5.4 5.7 6.4 5.1 5.1 5.9 Expected return for: – equities – 8.0 7.5 – – – – bonds – 5.3 5.0 – – – – other 4.1 4.3 3.8 4.5 4.5 5.0

For 2010 and 2009, the mortality assumptions have not been changed. The assumptions allow for future improvements according to the medium cohort projections, based on each individual’s year of birth, with an adjustment to the underlying rates of mortality of +10% for those who left before 2000. The longevity assumptions are therefore:

2010 2009 Years Years Life expectancy of a male aged 65 in 2010 (pre 2000 leaver) 21.4 21.2 Life expectancy of a male aged 65 in 2010 (post 2000 leaver) 22.1 22.0 Life expectancy of a male aged 65 in 2028 (pre 2000 leaver) 22.4 22.4 Life expectancy of a male aged 65 in 2028 (post 2000 leaver) 23.1 23.1 Uniq Annual Report and Accounts 2010 75 Financial statements Notes to the financial statements

Sensitivity analysis of the main UK pension fund

Approximate change in defined benefit obligation

2010 2009 £m £m Life expectancy – 1 year longer/(shorter) 22.0 21.0 Discount rate – increase/(decrease) of 0.1% 13.0 12.0 Inflation – increase/(decrease) of 0.1% 10.0 10.0 Mortality – change from PA92MC to PA92LC 40.0 37.0

Medical cost trends There is strong evidence that healthcare costs increase faster than general price inflation. The group has adopted 2.5% pa (2009: 2.5% pa) for the rate at which medical costs increase over and above retail price inflation.

The following tables set out the fair value of assets, the present value of the IAS 19 liabilities and the deficit of assets below the IAS 19 liabilities (which equals the net pension deficit). The fair value of the schemes’ assets is not intended to be realised in the short term and may be subject to significant changes before realisation. The present value of the schemes’ liabilities is derived from cash flow projections over long periods and is thus inherently uncertain.

2010 2009

UK Overseas Total UK Overseas Total £m £m £m £m £m £m Fair value of assets: – Equities 14.1 – 14.1 308.7 – 308.7 – Bonds and gilts 600.1 – 600.1 188.2 – 188.2 – Other 6.6 – 6.6 4.4 – 4.4

Fair value of plan assets 620.8 – 620.8 501.3 – 501.3

Defined benefit obligation: Funded (763.7) – (763.7) (729.7) – (729.7) Wholly unfunded (6.5) – (6.5) (6.7) – (6.7)

Present value of defined benefit obligation (770.2) – (770.2) (736.4) – (736.4)

Net liability in balance sheet (149.4) – (149.4) (235.1) – (235.1) 76 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

2010 2009

UK Overseas Total UK Overseas Total £m £m £m £m £m £m Movement in deficit during the year: Opening balance (235.1) – (235.1) (152.3) (18.6) (170.9) Current service cost – – – (1.1) (0.3) (1.4) Past service cost – – – – (0.4) (0.4) Curtailments and settlements – – – 5.7 – 5.7 Contributions by the employer 98.4 – 98.4 5.1 0.5 5.6 Net finance charge (11.6) – (11.6) (12.3) (0.9) (13.2) Benefits paid 0.1 – 0.1 – 0.8 0.8 Actuarial losses (1.2) – (1.2) (80.2) (1.7) (81.9) Disposal of businesses – – – – 4.8 4.8 Transferred to held for sale – – – – 14.7 14.7 Exchange – – – – 1.1 1.1 Closing balance (149.4) – (149.4) (235.1) – (235.1)

2010 2009

UK Overseas Total UK Overseas Total £m £m £m £m £m £m Amounts recognised in the income statement: Current service cost – – – (1.1) (0.3) (1.4) Past service cost – – – – (0.4) (0.4) Gains on curtailments and settlements – – – 5.7 – 5.7 Recognised in operating profit/(loss) – – – 4.6 (0.7) 3.9

Interest costs (41.0) – (41.0) (38.3) (0.9) (39.2) Expected return on plan assets 29.4 – 29.4 26.0 – 26.0 Expected return on plan assets – others (0.5) – (0.5) (0.4) – (0.4) Recognised in net pension interest (12.1) – (12.1) (12.7) (0.9) (13.6)

Total expense recognised in the income statement (12.1) – (12.1) (8.1) (1.6) (9.7)

Cumulative actuarial gains and losses recognised directly in equity: Opening balance (152.6) (2.4) (155.0) (72.4) (0.7) (73.1) Actuarial (losses)/gains (1.2) – (1.2) (80.2) (1.7) (81.9) Closing balance (153.8) (2.4) (156.2) (152.6) (2.4) (155.0)

Actual return on plan assets 57.7 – 57.7 74.0 – 74.0 Uniq Annual Report and Accounts 2010 77 Financial statements Notes to the financial statements

The cumulative amount represents all actuarial gains and losses recognised directly in equity since transition date of 1 April 2004.

2010 2009

UK Overseas Total UK Overseas Total £m £m £m £m £m £m Reconciliation of present value of defined benefit obligation: Opening balance (736.4) – (736.4) (614.3) (18.6) (632.9) Current service cost – – – (1.1) (0.3) (1.4) Past service cost – – – – (0.4) (0.4) Interest cost (41.0) – (41.0) (38.3) (0.9) (39.2) Contributions by plan participants – – – (0.4) – (0.4) Actuarial losses (29.5) – (29.5) (128.2) (1.7) (129.9) Benefits paid 36.7 – 36.7 40.2 0.8 41.0 Curtailments and settlements – – – 5.7 – 5.7 Disposal of businesses – – – – 4.8 4.8 Transferred to held for sale – – – – 15.2 15.2 Exchange – – – – 1.1 1.1 Closing balance (770.2) – (770.2) (736.4) – (736.4)

Reconciliation of fair value of plan assets: Opening balance 501.3 – 501.3 462.0 – 462.0 Expected return on plan assets 29.4 – 29.4 26.0 – 26.0 Actuarial gains/(losses) 28.3 – 28.3 48.0 – 48.0 Contributions by the employer 98.4 – 98.4 5.1 0.5 5.6 Contributions by plan participants – – – 0.4 – 0.4 Benefits paid (36.6) – (36.6) (40.2) – (40.2) Transferred to held for sale – – – – (0.5) (0.5) Closing balance 620.8 – 620.8 501.3 – 501.3

Historical information 2010 2009 2008 2007 2006 £m £m £m £m £m Fair value of plan assets 620.8 501.3 462.0 615.8 624.5 Present value of defined benefit obligation (770.2) (736.4) (632.9) (691.8) (732.3) Net pension deficit in the balance sheet (149.4) (235.1) (170.9) (76.0) (107.8)

Experience adjustments arising on plan assets – gain/(loss) 28.3 48.0 (164.8) (5.0) 2.6 Experience adjustments arising on plan liabilities – gain/(loss) (3.6) 3.4 4.6 (16.8) 4.3

Refer to note 33 ‘Events after balance sheet’ regarding the compromise of the pension debt in 2011. 78 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

28. Share Capital Group Company

2010 2009 2010 2009 £m £m £m £m Authorised 995,906,427 ordinary shares of 10p each 99.6 99.6 99.6 99.6

Called up and allotted 114,833,817 ordinary shares of 10p each 11.5 11.5 11.5 11.5

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company.

Refer to note 33 ‘Events after balance sheet’ regarding the capital restructuring of the company in 2011.

29. Shareholders’ equity Merger reserve The merger reserve arose as a result of a group reconstruction carried out in 2000. Under a Scheme of Arrangement approved by the High Court and shareholders at the time, all shares in the then quoted group company were cancelled and new shares were issued to shareholders in Uniq plc, the new quoted company. The merger reserve is the difference arising on consolidation between the nominal value of the new shares and the nominal value of the shares previously held, together with the associated share premium. The merger reserve arises only on consolidation and therefore does not impact the individual Uniq plc company accounts or distributable reserves.

Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.

Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. Gains and losses on hedging instruments that are designated as hedges of net investments in foreign operations are included in the translation reserve.

Employee Share Ownership Trust Retained earnings includes the Employee Share Ownership Trust (‘ESOT’) which was established in June 1997. It is empowered to purchase and hold shares in Uniq plc (the company) in order to meet certain future obligations of the group in respect of options or shares awarded under share option schemes and long-term incentive plans operated by the group from time to time. Dividends receivable on the shares owned by the ESOT have been waived. In 2010 the ESOT held 982,677 (2009: 982,677) shares in the company which had a market value of £80,088 (2009: £245,669)

Refer to pages 32 to 37 in the remuneration report for the general terms and conditions that relate to share option schemes. Uniq Annual Report and Accounts 2010 79 Financial statements Notes to the financial statements

Share option schemes The number of outstanding share options are as follows:

2010 2009

Weighted Weighted Number of average Number of average options exercise price options exercise price Opening balance 284,800 203.2p 687,142 223.8p Lapsed during the year (124,800) 251.0p (402,342) 238.4p Closing balance 160,000 176.7p 284,800 203.2p

Weighted average Exercise Dates of Average contractual life price range grant exercise price Executive option scheme 1 year 161p – 210p 2001 – 2002 176.7p

All options are settled by physical delivery of shares. The total consideration receivable if all options outstanding were exercised would be £0.3m (2009: £0.6m). The weighted average share price at the date of exercise of share options exercised during the year were nil (2009: nil) as no options were exercised. In line with IFRS 2, no expense had been recognised for these options as they were granted before 7 November 2002.

Uniq Performance Incentive Plan Equity settled share-based payment scheme Equity settled share-based payment scheme Remaining Contractual Outstanding Equity settled awards granted in: life years shares Year ended 31 December 2008 7.3 1,238,989 Year ended 31 December 2009 8.4 1,223,000 2,461,989

The exercise price for the above shares is £nil.

The fair value of services received in return for Performance Incentive Plan shares (PIPs) granted are measured by reference to the fair value of PIPs granted. The estimate of the fair value of services received is measured based on a Monte Carlo model. Assumptions used in the Monte Carlo model for PIPs granted during the period are as follows:

2010 2009 Expected volatility – 96.0% Risk free interest rate – 2.1% Dividend yield – 0.0% Correlation coefficient – 9.1%

The expected volatility is wholly based on the historic volatility, calculated based on the weighted average remaining life of the PIPs. We assess the number of leavers on a grant by grant basis, taking into account historical trends as well as the level of employees included in each grant. The total expenses recognised during the period from share- based payments are as follows:

Group Company

2010 2009 2010 2009 £m £m £m £m Equity settled share-based payment charge 0.3 0.8 – 0.3

There is no carrying amount of liability associated with the cash settled share based payments in both years. 80 Uniq Annual Report and Accounts 2010 Financial statements Notes to the financial statements

30. Commitments 2010 2009 £m £m Capital commitments contracted, but not provided 0.8 2.2

31. Operating leases Future minimum lease payments

2010 2009

Land & Other Land & Other buildings leases Total buildings leases Total £m £m £m £m £m £m Operating lease commitments falling due: Within one year 1.3 0.2 1.5 1.3 0.7 2.0 Between one and five years 4.7 0.4 5.1 4.7 0.7 5.4 After five years 6.8 – 6.8 7.8 – 7.8 12.8 0.6 13.4 13.8 1.4 15.2

The group leases a number of warehouses, factory facilities and office buildings under operating leases. The leases typically run for a period of 1 to 18 years.

A number of the property leases were entered into some time ago and as such are not used for current operations. Companies within the group entered into sub-leases for these properties in order to recover the lease payments. During the year, £0.3m (2009: £0.5m) of rental expenses were recovered through these subleases. The subleases expire in 2014.

Future minimum sublease receivable expected:

2010 2009 Land & Land & buildings buildings £m £m Operating lease commitments falling due: Within one year 0.2 0.4 Between one and five years 0.6 1.3 After five years – 0.3 0.8 2.0

32. Contingent liabilities There are contingent liabilities that arise in the normal course of business in respect of indemnities, warranties, guarantees and legal claims. Certain guarantees are performance related. The directors have considered that none of these claims is expected to result in a material loss to the group.

The group and company currently hold two letters of credit in relation to purchase commitments from one of its suppliers for £1.8m. It is however not likely that the company will default on payment and there is no previous history of this occurring.

The group enters into certain fixed price purchasing contracts in the ordinary course of business. At year-end these amounted to £2.4m (2009: £5.0m). Uniq Annual Report and Accounts 2010 81 Financial statements Notes to the financial statements

33. Events after balance sheet On 9 February 2011, the company reached agreement with the Trustee, the Pensions Regulator and the Pension Protection Fund on the terms of a restructuring of the company. This Scheme of Arrangement was approved by the shareholders on 25 February 2011 and sanctioned by the Court on 18 March 2011. In exchange for a 90.2% equity stake in the company, with current shareholders retaining a 9.8% stake, and a final payment of £14.0m to the Pension Fund, the restructuring released the company from its obligations to the defined benefit section of the Uniq Pension Scheme which at the year end was £145.5m. Following this restructuring the company successfully applied for the shares to be relisted on AIM as from 1 April 2011.

In March 2011, the group recovered £2.6m from HMRC in relation to various claims under the Fleming ruling.

On 1st April, the board of Uniq was informed that the 90.2% shareholder had appointed Spayne Lindsay & Co LLP as its corporate finance advisor and that it intends to undertake a process to realise all or part of its shareholdings in the company.

34. Related party transactions Group The board is not aware of any related party transactions that should be disclosed. Details of key management remuneration are disclosed in the remuneration report and also no guarantees have been provided to any related parties. Transactions between Uniq plc and its subsidiaries, which are related parties, have been eliminated on consolidation.

Company (a) Subsidiaries The company has a related party relationship with its subsidiaries (these are listed in note 35). Material balances that the company has with its subsidiaries are as follows: • Uniq (Holdings) Limited: (£63.0m) (2009: £117.2m); and • Uniq Prepared Foods Limited: (£0.4m) (2009: £25.2m).

(b) Key management personnel There are no employees in the company.

35. Principal subsidiaries at 31 December 2010

Country of incorporation Subsidiary undertakings Principal activity and principal operation Uniq (Holdings) Limited Investment holding company United Kingdom Uniq Prepared Foods Limited Principal trading company for the UK chilled convenience food manufacture business United Kingdom

Notes: All subsidiary undertakings are 100% owned by the group. Uniq (Holdings) Limited is owned by Uniq plc and the remainder are held through subsidiary undertakings. Companies incorporated in the United Kingdom are registered in England and Wales. 82 Uniq Annual Report and Accounts 2010 Other information

Five year record

Year ended Year ended Year ended Year ended NIne months 31 Dec 31 Dec 31 Dec 2008 31 Dec ended 31 Dec 2010 2009 (restated) 2007 2006 Note £m £m £m £m £m Income statement Revenue 365.9 718.0 797.2 738.6 619.6 Operating (loss)/profit before significant items 9 Continuing operations 4.1 (1.9) (7.1) (3.6) (12.4) Discontinued operations 3.9 11.0 (1.3) 0.6 21.1 8.0 9.1 (8.4) (3.0) 8.7 Net finance income/(costs) (1.0) (5.2) 4.4 0.8 (9.9) Other finance( costs)/income (12.1) (12.7) (1.4) 0.7 0.4 (Loss)/Profit before tax and significant items (5.1) (8.8) (5.4) (1.5) (0.8) Significant items( excluding tax) 29.8 (10.4) (49.4) 193.3 (32.5) Taxation (0.5) (1.7) (1.4) (6.8) 1.0 (Loss)/Profit after taxation 24.2 (20.9) (56.2) 185.0 (32.3)

Capital structure Trading capital employed 1 116.7 133.0 174.6 188.7 221.0 Net (debt)/cash 2 10.8 (10.1) (8.4) 31.6 (83.1) Restricted cash – 97.0 95.6 90.4 – Retirement benefit obligations (149.4) (235.1) (170.9) (76.0) (108.5) Shareholders’ funds 3 (21.9) (15.2) 90.9 234.7 29.4 Cash flow from operating activities (93.5) (30.4) (8.8) (3.2) (10.7) Capital expenditure 16.3 18.3 27.5 25.4 16.1 Depreciation 9.9 11.2 21.5 21.7 17.9

Per ordinary share pence pence pence pence pence Basic (loss)/earnings 21.3 (18.4) (49.4) 162.5 (28.4) Adjusted (loss)/earnings 4 (4.9) (7.2) (6.6) 3.5 (1.2) Dividends – – – 2.5 5.25 Net assets/(liabilities) 5 (19) (13) 80 206 26

Interest and dividend cover (times) 6 Interest cover 8.0 1.8 – – 0.9 Dividend cover – – – 1.4 –

Ratios % % % % % Return on trading capital employed 7 6.9 6.7 (4.8) (1.6) 2.4 Operating profit/turnover 2.2 1.3 (1.1) (0.4) 1.4 Net debt gearing 2 – – 9.2 – 282.7

Notes: 1 Trading capital employed is defined as net assets plus net debt and IAS 19 retirement benefit obligations. 2 Net (debt)/cash includes total loans and obligations under finance leases less cash at bank and short-term deposits. Net debt gearing represents net debt as a percentage of shareholders’ funds. 3 Shareholders’ funds represent share capital and reserves. 4 Adjusted (loss)/earnings per share is calculated in accordance with note 10 to the financial statements. 5 Net assets per share have been calculated by dividing shareholders’ funds by the number of ordinary shares in issue at the year end. 6 Interest cover is based on finance costs excluding net retirement benefit funding finance costs or income relating to IAS 19; dividend cover is calculated on adjusted (loss)/earnings. 7 Return on trading capital employed represents operating profit as a percentage of trading capital employed (as adjusted for the effect of the timing of major acquisitions and disposals). 8 IAS 39 was adopted with effect from 1 April 2005 for which prior year comparatives have not been restated. 9 The operating profit/(loss) before significant items for continuing and discontinued operations for the first two years to year ended 2007 have not been restated and therefore are not on a consistenct basis with subsequent years. Uniq Annual Report and Accounts 2010 83 Other information

Shareholder information

Annual general meeting Electronic communications and voting To be held at 10.00 am on Friday 17 June 2011 at: Shareholders can elect to obtain shareholder documents Investec Bank plc such as annual and interim reports and notice of general 2 Gresham Street meetings electronically from Uniq’s website rather than London by post. To take advantage of this free service, connect EC2V 7QP to Equiniti’s secure website ‘www.shareview.co.uk’ and follow the on-screen instructions to register. You will New Share Certificates need your shareholder reference number (printed on your Following completion of the restructuring on 24 March share certificate, dividend vouchers or proxy cards) and 2011, Uniq plc shareholders were provided with new share you will be allocated a password and access number. certificates in the company representing their revised Once registered, shareholders will receive an email holding adjusted to take account of the restructing. All notification as soon as Uniq publishes new shareholder other certificates representing shares in the company are documents and also be able to view a wide range of no longer valid and should be destroyed. information regarding their shareholding. Shareholders can also send in votes for general meetings electronically Share registrar – Equiniti via the shareview website. Again, connect to If you have any questions about your holding or wish ‘www.shareview.co.uk’ and click the link ‘Vote online’ to notify any change in your details please contact the on the shareview homepage and then follow the share registrar Equiniti. Whenever you contact the on-screen instructions to submit your vote. registrar, please quote the full names in which your shares are held. Please advise the registrar promptly of any change of address.

Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone: 0871 384 2125

There is also a disability helpline for shareholders with hearing difficulties: 0871 384 2255

Please note calls to these numbers are charged at 8p per minute from a BT landline. Other telephone provider costs may vary. 84 Uniq Annual Report and Accounts 2010 Other information Shareholder information

Analysis of ordinary shareholders % of issued shares Uniq Pension Trustee/Pension Protection Fund* 90.2 Corporate holders 8.87 Individuals 0.93

Size of shareholdings % of Holders Shares shares Up to 1,000 10,929 674,009 0.57% 1,001 – 10,000 195 650,838 0.56% 10,001 – 100,000 52 1,805,877 1.54% 100,001 – 250,000 10 1,625,818 1.39% Above 250,000 13 112,431,407 95.94% 11,199 117,187,949 100.00%

*The 90.2% of issued shares are held by Angel Street Limited

You will need the reference numbers printed on your Secretary and registered office proxy card to register. You do not have to be registered AJ McDonald to receive shareholder communications electronically Uniq plc in order to be able to vote electronically. No. 1 Chalfont Park Gerrards Cross Share-dealing service Buckinghamshire Shareholders can take advantage of a dealing SL9 0UN service operated by Equiniti by logging on to Telephone: 01753 276000 ‘www.shareview.co.uk/dealing’ for internet dealing Fax: 01753 276019 or by calling 08456 037 037 for telephone dealing. Registered in England and Wales No. 3912506

Shareholders’ enquiries If you have an enquiry about the company’s business or about something affecting you as a shareholder that cannot be dealt with by Equiniti you are invited to contact the company secretary at the company’s address. Uniq Annual Report and Accounts 2010 Uniq Annual Report and Accounts 2010

Freshness £312m Innovation Total revenue 2010 Quality Desserts

Uniq produces freshly prepared chilled food for £155m major retailers and has market-leading positions 2010 revenue in Desserts and Food to Go. Our high-quality and We are an innovative, market-leading innovative products aim to delight our customers. manufacturer of premium and everyday freshly prepared pot desserts, a flexible and niche supplier of quality, differentiated yogurt and a state-of-the-art producer of fresh chocolate desserts made exclusively for Cadbury.

Food to Go £157m 2010 revenue

We are the Number One sandwich and wrap supplier to M&S, the winner of multiple sandwich retailer of the year, and the UK’s second largest producer of dressed salads.

Contents

Financial highlights 01 Financial statements Designed and produced by Addison www.addison.co.uk Independent Auditors’ report 38 Printed in the UK by Pureprint, Environmental Directors’ report Group income statement 40 Management System ISO 14001 accredited and Forest Stewardship Council (FSC) chain of custody certified. Chairman’s statement 02 Group statement of comprehensive income 41 This report is printed utilising vegetable-based inks Chief Executive’s statement 04 Balance sheets 42 on Revive 50 White Silk which is produced with 50% recycled fibre from both pre- and post-consumer Market overview 06 Group statement of changes in equity 43 sources, together with 50% ECF (Elemental Chlorine Free) fibre from well-managed forests independently Business review 08 Cash flow statements 44 certified according to the rules of the Forest Stewardship Council. Financial review 16 Notes to the financial statements 45 Principal risks 20 Directors’ responsibilities 21 Other information Board of directors 22 Five year record 82 Report of the directors 24 Shareholder information 83 Corporate governance 27 Remuneration report 32 Annual Report and Accounts 2010

Uniq plc 2010 Accounts and Report Annual Uniq No.1 Chalfont Park Gerrards Cross Buckinghamshire SL9 0UN United Kingdom

Telephone +44 (0) 1753 276000 Facsimile: +44 (0) 1753 276019 www.uniq.com