Friday 10.40pm

SSL International plc International plc Annual Report and Accounts 2008 In brief Governance 51 Consolidated statement 01 Financial highlights 33 Board of Directors of cash flows 02 A world of brands 34 Corporate governance 52 Notes to the consolidated 04 Chairman’s statement 36 Risks and uncertainties financial statements 06 Chief Executive’s review 38 Directors’ report 95 Principal Group undertakings 09 Our strategy 39 Remuneration report 96 Company balance sheet 46 Statement of Directors’ 97 Company accounting policies Business review responsibilities 99 Notes relating to the Company 11 Performance accounts 11 Products Financial statements 15 Platform 47 Independent auditors’ report Shareholder information 18 People 48 Consolidated income statement 104 SSL directory 19 Purchases 49 Consolidated balance sheet 106 Company information 21 Corporate responsibility 50 Consolidated statement of Financial calendar 28 Performance review recognised income and expense

Day and night, all around the world, people trust, rely on and take delight in our products. Our desire to anticipate and satisfy our consumers’ needs — to become an essential part of daily life — is what defines SSL and drives our success. Financial 7% 11% highlights sales growth(1) operating driven by Durex profit growth(2) and Scholl exceeding our double- digit percentage £57.4m growth target profit before tax(3) increase of 22% 20.6p earnings per share(3) £99m increase of 20% net debt(4) after £38m acquisition 5.3p and one-off cash costs final dividend increase of 13%

Sales 2007/08 Adjusted(1) £m growth % Durex 217.7 9.4 Scholl footcare 113.6 10.1 Scholl footwear 76.1 10.0 Locally owned brands 71.4 (2.3) Total branded consumer 478.8 7.7 Other 55.1 0.5 Total sales 533.9 6.9

(1) Adjusted sales growth is calculated after adjusting for currency movements and including 100 per cent of the China Durex business in both years. (2) Adjusted operating profit growth is calculated after adjusting for currency movements, including 100 per cent of the China Durex business in both years and before one-off restructuring charges of £41.3 million. (3) Adjusted figures are shown before one-off restructuring and finance charges of £41.3 million and £5.2 million respectively. (4) Net debt is defined as financial liabilities less cash and cash equivalents. See note 21 of the financial statements.

exceeding targets

In brief • Annual Report and Accounts 2008 01 Durex Scholl footcare Durex has been making condoms of the highest quality Through in-depth consumer insight combined with an for nearly 80 years and continues to strengthen its position innovative approach to foot health and wellbeing, grounded as the global market leader. With an increasing emphasis on in science and knowledge of the mechanics of the foot, the sexual wellbeing, the strategic development of Durex has led Scholl footcare product range addresses five key areas of to an expansion of the product range to include Durex Play foot conditions to help people improve their overall comfort lubricants and vibrators. and wellbeing: — Durex condoms: with over 30 per cent of the global branded — Foot skin conditions: e.g. dry, hard and cracked skin, condom market, making it the number one condom brand corn, callus and blister. The product range includes Scholl in the world, Durex condoms continue to go from strength Cracked Heel Repair Cream, Scholl Deep Moisturising to strength with new product introductions such as Durex Cream and Scholl Clear Gel Blister and Corn Plasters. Tingle and Durex Pleasuremax Warming. — Musculoskeletal conditions: are those caused by inherent — Durex Play lubricants: designed to enhance people’s sex malfunctions in feet and the body, e.g. bunions, arch problems, lives, the range is widened to include lubricants with warming heel pain and ball of foot pain. The product range includes and tingling sensations, fruity flavours and Durex Play Massage Scholl Party Feet, Scholl Spring Action Insoles and Scholl Gel 2 in 1 — a massage gel which doubles as a lubricant. Arch Support. — Durex Play vibrators: a range of personal vibrators, including — Foot environment conditions: are those caused by body the new, improved Durex Play Ultra, the latest vibrating ring functions or activities, e.g. odour, hot/cold feet and tired and Durex Play Touch vibrator, which are designed to help aching feet. The product range includes Scholl Odour Control people have happier, healthier and more fulfilling sex lives. Foot Spray, Scholl Fresh Step Anti-perspirant Foot Spray and Scholl Flight Socks. — Virus and fungus conditions: e.g. warts/verrucas and athletes foot. The product range includes Scholl Freeze Verruca and Wart Remover and Scholl Athletes Foot Cream. — Nail conditions: e.g. discoloured toenails, a problem which is now addressed by the newly launched Scholl Nail Brightening System/Perfect Nail Treatment — a revolutionary new product with a simple three-step approach to reducing discolouration, smoothing and conditioning toenails.

a world of brands

02 In brief •Annual Report and Accounts 2008 Scholl footwear Locally owned brands Scholl footwear continues with its strategy to expand Locally owned brands are those brands which are distribution beyond its traditional heartland of pharmacy into sold only in specific countries, predominantly in Italy high street shoe retail outlets. Three core technologies are and the UK. They play an important part in achieving used within all Scholl footwear which defines the individual operating profit objectives by improving overall sales collections for each distribution channel: and distribution efficiencies. — Gelactiv: all shoes in the Gelactiv range have a pliable, — UK: Over-the-counter (OTC) products are sold in the soothing, supportive gel insole inside the heel to cushion UK to both pharmacies and grocery stores. The range every step. includes oral analgesics such as Paramol and Cuprofen, headlice treatments such as Full Marks and paediatric — Bioprint: a new, improved bio-mechanically designed medicines such as Medised. and proven cork foot-bed which is flexible and comfortable offering the wearer better comfort, improved posture and — Italy: Mister Baby offers a complete range of products easier walking. designed to meet all the most important needs of infancy including products for feeding, hygiene and play for babies — Exercise: the exercise sandal is the original and renowned and children from 0 to 3 years. Scholl shoe. Its classic styling and contoured wooden foot- bed exercises and tones foot and leg muscles while you walk. Also available in Italy is Sauber, a range of wellbeing and healthcare products which includes deodorants, hosiery, anti-cellulite treatments and other body care products.

Sales by geography 1 1. Europe 76% 2. Asia Pacific 18% 3. Americas 6%

2 3

Sales by brand 1 1. Durex 41% 2. Scholl footcare 21% 3. Scholl footwear 14% 2 3 4. Locally owned 4 brands 14% 5 5. Other 10%

03 “We are growing sales, increasing earnings and generating cash” Gerald Corbett Chairman

04 In brief •Annual Report and Accounts 2008 Chairman’s It has been another year of steady progress and good results from SSL. We have total clarity in what we are trying to do and our executive team led by Chief Executive Garry Watts is successfully doing it. statement This year has been strong as our global brands Durex and Scholl have benefited from innovative new products and further investment. We have made solid progress on our European supply chain restructuring projects and our cash flow generation has been good. Since March 2007 we have made two important acquisitions, firstly to further strengthen our Scholl brand with Orthaheel and secondly to expand our geographical footprint to Eastern Europe and the CIS. Underlying sales grew 6.9 per cent, driven by growth in each of the three major categories, Durex, Scholl footcare and Scholl footwear. Durex growth was underpinned by an 8.4 per cent growth in branded condom sales, while sales of the Durex Play range grew 15.4 per cent to £32.2 million. Scholl footcare sales were up 10.1 per cent to £113.6 million thanks in large part to strong performances from Scholl Cracked Heel Repair Cream and our Scholl pharmacy ranges in France and Germany. Scholl footwear sales increased by 10.0 per cent to £76.1 million driven by excellent Autumn/Winter ’07 range sales and a solid sell-in of the Spring/Summer ’08 range. Operating profit for the year, before one-off costs, was £68.1 million, an underlying increase of 11.5 per cent, meeting the target of double-digit operating profit growth in the year. Our operating profit margin has increased to 12.8 per cent (2007: 12.2 per cent). Earnings per share, before one-off costs, increased by 20 per cent to 20.6 pence from 17.1 pence. Dividends The Board is recommending an increased final dividend of 5.3 pence, 13 per cent ahead of last year. The total dividend for the year is 7.6 pence. The final dividend will be paid on 4 September 2008 to shareholders on the register on 1 August 2008. Board of Directors Susan Murray, one of our Non-Executive Directors, will step down from our Board following the Annual General Meeting in July this year. I would like to thank her for the contribution she has made and wish her success with her future endeavours. Outlook The new year has begun satisfactorily. By increasing our investment in innovation to drive new product development, by expanding distribution into new and developing territories and with our focus on cost control, we will continue to deliver strong sales and profit growth. We remain confident of once again achieving our double-digit operating profit growth target. I would like to take this opportunity, on behalf of the Board, to thank our employees throughout all our operations for their individual contributions in helping us achieve such success.

a clear focus on growth

05 innovation, expansion and control

06 In brief •Annual Report and Accounts 2008 Chief Why are you placing high emphasis on the importance of innovation? Innovation is the life-blood of our business and is critical to driving organic sales growth. It is Executive’s important that we understand what our consumers want through in-depth research; by combining the review expertise of our own innovation teams and working in partnership with third parties such as academic institutions, we believe we are strengthening our new product pipeline across all our brands. The Durex brand has continued to perform well over the past few years. How can you continue this expansion? The launch of the Durex Play range in 2003 has been a key factor in developing the brand as we move its positioning from ‘safe sex’ to sexual wellbeing. This year we introduced the Durex Play Touch vibrator and Durex Play Ultra, a vibrating stimulation ring. We are also introducing a range of massage products, building on the success of Durex Play 2 in 1 Gel, with Durex Play 2 in 1 Massage Melts and Mousse and are launching Durex Play O, a clitoral stimulating gel to help women have more satisfying orgasms. What new products have you developed to drive the growth of Scholl footcare? Scholl footcare has continued to perform well as a result of a steady flow of new, innovative products which meet people’s needs, are efficacious and are well communicated to both the trade and consumers. Our most recent successes include Scholl Cracked Heel Repair Cream — a clinically proven solution for repairing dry, cracked skin on heels and, most recently, Perfect Nail Treatment (or Nail Brightening System as it is known in the UK) which treats brittle, discoloured toenails. Perfect Nail has just been launched in a number of our markets and is supported by strong media and point-of-sale advertising campaigns. With a growth rate of 10 per cent you appear to have turned around the Scholl footwear business. How are you doing it? The steps we have taken in defining our distribution-led strategy for Scholl footwear in Europe have reaped rewards. This has given greater clarity and focus as we expand into new high street shoe trade channels whilst maintaining our excellent market share position in the traditional pharmacy sector. We have improved upon our existing foot-bed technology with Bioprint and ensured we have clear range differentiation for each of our distribution channels. What benefits do you expect from the manufacturing restructuring you have undertaken this year? Closure of any operation is always a difficult decision. However, by closing the Durex condom factory in Spain and transferring production to our other facilities in the Asia Pacific region we expect to improve margins from 2008/09 onwards as the result of lower labour costs. By consolidating

Sales 07/08 £533.9m 06/07 £499.3m 05/06 £461.6m At constant exchange rates and including 100% of the China business in all three years

Operating profit 07/08 £68.1m 06/07 £61.1m 05/06 £52.3m At constant exchange rates , including 100% of the China business in all three years and before one-off restructuring charges

07 pharmaceutical manufacture into a single in-house supply point we can eliminate duplicated activities and reduce transport costs. Since you acquired the remaining share of the business in China last year you appear to be investing further. How does this support your growth plans? As we all know, the expanding economy in China represents a huge opportunity, particularly as consumers in the major towns and cities become wealthier and desire premium global brands. We already have a solid base for Durex in China and this year we have seen sales there grow by 35 per cent. Establishing and widening our distribution platform to build upon our successes with Durex and developing our Scholl business is key for growth. In addition, we are investing around £20 million in the construction of a state-of-the-art condom facility which will be an important point of supply for the domestic and global markets. You have started your acquisition trail. What will this bring and what is next? We now have the resources to make acquisitions to grow our business — a strong balance sheet and a talented management team who are well capable of integrating new businesses into our existing infrastructure. The key is to make acquisitions that complement our current distribution channels and sales and marketing structure and also create a diversity to develop our business — whether this is through new geographies or new products and technologies. In November 2007 we acquired Orthaheel, a range of orthotic insoles which alter foot alignment to provide greater cushioning and support for feet — a great fit with our existing Scholl footcare range and which brings new technologies into our business. More recently we have made a small, but important investment in Eastern Europe and the CIS. In May we completed the acquisition of 15.5 per cent of a company which owns and distributes the Contex condom brand and we have options to buy the remaining shares over the next two years. Meanwhile, we continue to review other acquisition opportunities and evaluate these against our stringent criteria to ensure we are making the right investment decisions. How are you looking to provide development opportunities for your employees? Without the enthusiasm, commitment and hard work of our employees across all our operations we would not be seeing the success that we have achieved over the past few years. I would like to take this opportunity to thank them for their contribution to delivering our business growth. It is important that we invest in their continuing professional and personal development by offering a wide range of training courses covering technical and lifestyle skills and enhancing business awareness. Also we seek to provide new experiences such as through our partnership with Students Partnership Worldwide.

“We have the resources to make acquisitions to grow our business — a strong balance sheet and a talented management team” Garry Watts Chief Executive

08 In brief •Annual Report and Accounts 2008 Our SSL’s strategy and values underpin business performance. We aim to exploit the economic strategy potential of both our brand portfolio and our global operating assets by focusing on: — Consumer insight-led innovation: the desire and drive for innovation is central to SSL’s growth strategy and we recognise that the ability to innovate successfully on a long-term basis will drive growth in the future. — Cutting edge advertising: supporting the launch of new products by investing in effective and targeted marketing and advertising is a key part of the success of our brands by raising consumer awareness and helping drive retail distribution. — Efficient business practices: improving business processes throughout all areas of the business will help ensure we are meeting the needs of our customers whilst controlling costs. — Training and development of our people: SSL’s employees are one of our greatest assets and through continued development programmes we aim to strengthen the expertise across our business. Our values We are committed to our vision that SSL should become and remain Successful, Socially responsible and Lively through the application of our ABC operating principles (Attitude — Behaviour — Culture). Our ABC operating principles outline ways of working, adopted throughout our whole organisation, which will help us achieve our business objectives and our vision for SSL. Our financial objective To achieve double-digit operating profit growth by continuing to drive brand contribution* in each of the three years to March 2009 whilst controlling overhead expenditure. We have exceeded this target in the first two years and are confident that we can do so again in 2008/09.

* Brand contribution is defined as sales less cost of sales, market development expenditure and variable selling costs.

09 Saturday 1.23pm

The gel technology in every Scholl Gelactiv sandal improves comfort whilst walking. Every taste is catered for as the collection offers a wide variety of styles and colours.

10 Business review •Annual Report and Accounts 2008 Business — Performance: superior performance is an outcome of the four key pillars that contribute to review building our business. — Products: emphasising the need for innovation — well-managed launches of new products, Performance supported by consumer communication through media and point of sale. —Platform:ensuring that our systems and processes are operating efficiently. — People: investing in our employees to maximise their potential and the contribution they make to the business. — Purchases: acquiring new brands and businesses which are accretive to shareholder value. The performance review on page 28 sets out more information on the key growth drivers of SSL in 2007/08.

Products Innovation is synonymous with global market leadership and strong growth. Our links with external development houses, academic experts and medical partners combined with a strong internal capability allows our innovation teams to develop superior quality products, which in turn lead to sales and operating profit growth and stronger brand loyalty from our customers and consumers. Increasingly, SSL sources innovation from third-party developers and this gives us the advantage of being flexible and agile, enabling rapid delivery of new products to the marketplace. Let’s see what we have achieved this year across our global brands, Durex and Scholl and our portfolio of locally owned brands… Durex The past year has seen Durex build on its position as the world’s leading expert in sexual wellbeing and deliver on its promise to help consumers have more satisfying sex lives. The brand continues to offer a wide product portfolio, including a range of pleasure-enhancing condoms, lubricants and vibrators. The emphasis is on helping consumers to enjoy fulfilling sex lives irrespective of their age, gender or sexual orientation. Durex is spreading these key messages far and wide, and today the brand is known as much for its expertise on sexual wellbeing as it is for being the world’s leading condom manufacturer. One way it continues to do this is through the Durex Sexual Wellbeing Global Survey, the second wave of which, called ‘In the Bedroom’, was released to the world’s media in September 2007, achieving extensive coverage across print, TV, radio and the web.

superior performance

11 The ‘In the Bedroom’ wave found that, while most of us wished we were having more sex, and that our sex lives lacked excitement and variety, people were still having a lot of fun in the bedroom. Sensual massage was highly rated by the majority of consumers, while one in five said they use vibrators. The third wave of information ‘The Big O’ was released in April this year and found that both men and women wanted to achieve more orgasms but recognised that emotions and physical wellbeing both play a part in this. It is findings such as these that help the brand develop products to satisfy key demand areas. This year has seen the introduction of the Durex Play Touch vibrator, Durex Play Ultra, a vibrating stimulation ring, and the Very Cherry lubricant, designed to enhance and add a dash of fruitiness to lovemaking! This year Durex also started to roll out a new generation of significantly thinner latex condoms meeting international quality standards. Fetherlite Ultima, launched in Hong Kong in June last year, and Taiwan and Australia in September, forms part of a new generation of ‘barely there’ condoms, and is 25 per cent thinner than standard Durex condoms. It was developed following market research that showed consumers wanted as sensitive an experience as possible. Scholl footcare The vision of making Scholl footcare the world’s leading foot and wellbeing brand is well on track. Thanks to the brand’s philosophy of identifying and delivering on consumer needs, Scholl footcare continues to enjoy strong and sustained business growth. Innovation has played a major part in this success. What does this involve? The brand has set about really getting to know and understand its consumers — who they are, what they think, and what they want from Scholl footcare products. Armed with this knowledge, new products have been researched and developed to satisfy consumer demand. We have then communicated all of this to our customers to ensure they know we lead the way in identifying and satisfying their needs. As a result, business across the five brand categories — foot skin, musculoskeletal, foot environment, virus and fungus, and toenail — has been strong. In particular, Scholl Cracked Heel Repair Cream, which is clinically proven to soothe and rehydrate cracked heels within seven days — continues to perform strongly, while Scholl Party Feet Starlight gel cushions proved popular when they were launched in September last year. A new jewel in the footcare category crown though, is the recently launched Scholl Nail Brightening System/Perfect Nail Treatment, a revolutionary three-in-one product that covers and treats unsightly and discoloured toenails. Based on consumer insight, this is a genuine first for the market. It has been researched and developed using all of the scientific know-how consumers have come to expect from Scholl. Put simply, it’s a perfect example of how Scholl continues to benefit consumers and help them improve their wellbeing.

Global TV advertising campaigns. Top: Communicating the range of Durex condoms, lubricants and vibrators. Bottom: Scholl Nail Brightening System.

12 Business review •Annual Report and Accounts 2008 We are collaborating with The School of Health Care Professions at the University of Salford to enhance the brand reputation of Scholl, build greater understanding, knowledge and expertise with internal and external stakeholder groups and drive development of innovative new products founded on credible science and research. Scholl footwear Over the past two years our Scholl footwear business in Europe (which represents 83 per cent of total footwear sales) has undergone radical change as it looks to develop its distribution-led strategy by increasing retail distribution beyond its traditional pharmacy channel into new growth opportunities in the mainstream shoe trade. The pharmacy channel is traditionally the heartland for Scholl footwear in Europe, where consumers are typically looking to buy a ‘problem-solving’ product to provide them with relief from discomfort. In this instance, the technology combined with a pleasing style is more important than alignment with the latest fashion trends. In developing new distribution channels, it is essential to ensure that whatever steps are taken do not compromise the growth of the pharmacy channel — the key to achieving this is clear range differentiation. Diversification of distribution outside of the pharmacy channel began last year with the launch of the Scholl by Dolcini range. In partnership with leading designer Diego Dolcini, Scholl presented a premium collection, primarily based around the classic Scholl ‘exercise’ style, available in selected department stores and high street retail outlets worldwide. For the first time, Scholl has been positioned as a luxury footwear brand with a high image and style. This year we have extended our range to include an Autumn/Winter collection and plan to incorporate the Bioprint and Gelactiv technologies in future collections. We are currently in the process of developing a new collection specifically targeted at medium- priced high street shoe retailers. The collection for the shoe trade will be based around the core Scholl foot-bed technology — cork, wood and gel — but there will be a clear differentiation of style, look and feel. Although focused at a younger consumer than the pharmacy range, the shoe trade collection will remain true to the Scholl heritage combining comfort with style. This collection will be available in Autumn/Winter 2009 and will feature in footwear exhibitions in August 2008. Locally owned brands Locally owned brands are important in supplementing the business’s offering in specific countries. Whether Full Marks and Medised in the UK or Mister Baby and Sauber in Italy, these products are important in ensuring SSL’s portfolio has a diverse base and extensive consumer reach. There have been notable achievements by some of these brands over the past 12 months. In Italy, sales of Mister Baby have been transformed with a 30 per cent growth over the period, justifying the move into specialist mother and baby stores and mass market chains as well as sales in Italian pharmacies. In the UK, SSL’s range of over-the-counter products, including oral analgesics such as Paramol, headlice treatments including Full Marks and paediatric medicines such as Medised have all made a significant contribution to sales and profitability.

Poster advertising for Bioprint ‘Giacosta’ — improved foot-bed technology in the Scholl footwear range.

13 Sunday 10.34am

Durex Play range of lubricants are designed to enhance pleasure, giving a more sensual experience for both partners. Available in a range of sensations and flavours — original, tingle, heat and, the latest addition, Very Cherry which tastes sweet and deliciously fruity!

14 Business review •Annual Report and Accounts 2008 Platform By ensuring that we have an infrastructure which supports our business strategy and objectives, we can be confident that we have a robust platform for driving future growth. Over the past year we have undertaken significant changes in our global manufacturing footprint, information systems and in restructuring of Group-wide functions. Manufacturing High levels of customer service driven by efficient supply of high quality product are an essential part of SSL’s success. During 2007/08, we restructured our global manufacturing footprint for Durex and pharmaceutical products thereby allowing further improvements to our supply chain and customer service in these areas. Durex In March of this year we closed the Durex condom factory near Barcelona, Spain to transfer production to SSL’s facilities in the lower cost countries of Thailand and India. The one-off cost associated with this closure was £27.1 million and we expect operating margins to benefit from this transfer from 2008/09 onwards. SSL currently has a Durex condom manufacturing facility in Qingdao, China, which manufactures condoms for the domestic China market — however, reflecting the increasing importance of China in driving both overall global economic growth and Durex sales growth, we have commenced the construction of a new state-of-the-art factory which will be located near to our current factory. The new factory, expected to cost in the region of £20 million, will increase condom manufacturing capacity in China five-fold, enabling the supply of Durex condoms to both the domestic and global markets. As such, it will become the largest single condom factory in the Group and Durex lubricants will also be manufactured there. We expect that the new factory, which will replace our current facility, will become operational by June 2009. Pharmaceutical In February of this year we announced the closure of our factory on Guernsey, Channel Islands, which is expected to close by December 2008. The cost of closure is anticipated to be £9.5 million. Production will transfer to SSL’s pharmaceutical facility in Peterlee, England and to third-party suppliers. This consolidation will allow the elimination of duplicated activities between the two sites and allow a focused and co-ordinated approach to pharmaceutical manufacture at a single in-house supply point.

Factory locations Europe Peterlee, UK, OTC products Guernsey,(1) UK, OTC products Redruth, UK, Compression hosiery products Asia Pacific Bangpakong, Thailand, Condoms Qingdao, China, Condoms Pallavaram,(2) India, Condoms Puducheri,(2) India, Condoms Virudhunagar,(2) India, Condoms Irungattukottai, India, Footcare

(1) expected to close by December 2008 (2) joint venture

An artist’s impression of the new state-of-the-art condom factory in Qingdao, China — currently under construction.

15 Information technology Implementing SAP Further to our report last year, we have continued with the implementation of SAP across the business. The benefits derived from creating a single, stable platform across all commercial, manufacturing and warehousing units are greater efficiency, shorter delivery lead times, increased responsiveness and more accurate information. These benefits will result in faster decision-making, better customer service and improved working capital management — enhancing the platform for growth for SSL. During 2007/08, having implemented SAP in the UK (our largest commercial unit and group functions), Ireland and Spain, we are now live in 11 European countries, in line with our published objectives. In our manufacturing units, SAP is now fully implemented at all four factories in India and implementation is currently under way in China which is a key element of the project for the construction of the new factory. In addition, a SAP procurement module is live at SSL’s Footwear Development Group near Milan, Italy which enables more effective management of the Scholl footwear supply chain. Our aim is to complete the implementation in China and to implement in our remaining European commercial markets by mid-2009. We expect SAP implementation in the Asia Pacific and Americas regions will be completed by the end of 2010. Web strategy With an increasing percentage of the world’s population now connected and billions spent on- line each year, the approach to web strategy and e-commerce is becoming increasingly important for all businesses and SSL is no different. This year we have relaunched SSL’s corporate website www.ssl-international.com and developed for the first time www.durexnetwork.org which provides information on all the activities of the Durex Network in the sexual and reproductive healthcare arena. Most recently we have launched the new Durex website www.durex.com in the UK and a number of other countries. Full roll-out to over 60 countries will be completed during 2008/09. The emphasis is to strengthen brand communication and further develop e-commerce as an additional route to market. A similar development is now planned for Scholl. Functional restructuring Restructuring our Group-wide functions, i.e. those roles which provide support to our operating units worldwide, to ensure that they are aligned to achieving our business objectives is another key factor for building the platform for growth. Innovation driving growth SSL is becoming increasingly focused on innovation to drive sales growth. During the year we restructured our Group Marketing & Innovation function into two separate streams so that we can ensure that not only the design, development and implementation of new products works efficiently,

“SSL is becoming increasingly focused on innovation to drive sales growth”

Home page of the newly- launched www.durex.com website — strengthening brand communication.

16 Business review •Annual Report and Accounts 2008 Monday 8.47pm

Hard, brittle and thick toenails can be unpleasant and uncomfortable. Scholl Nail Brightening System/Perfect Nail Treatment is a fast-acting easy to apply remedy for healthy, conditioned, comfortable nails — and helps them look good too.

17 but also that we can speed up our innovation in marketing as well. Further emphasising the importance of innovation, we have strengthened and consolidated our existing research and development centres, located at our manufacturing facilities in India and Peterlee (meanwhile closing down a small site in Cambridge) and created a new technical centre at the Thailand factory. Global compliance Compliance with global product regulations is a vital element for business growth. To ensure that we are fully supporting our global business we have restructured our Group Regulatory function so that it can become truly customer-focused and proactive in providing support, not only to our current product portfolio but also to our stream of new products. Scholl footwear in Europe As part of developing the European Scholl footwear business, we have devised a new organisational structure to ensure our strategy can be implemented effectively. We aim to deliver our operational objectives through supply chain management, quality control, sales and marketing expertise — focused on the needs of each of the heartland pharmacy sector and the developing mainstream shoe trade channel. People To drive business growth, we must have the right people with the right skills, competencies and potential doing the right jobs. We manage our pool of talent to achieve this. By providing development opportunities, through different work experiences and training programmes, we can help our employees to achieve their maximum potential and contribution to the business. As a brand-led company, developing our marketing talent pool is crucial, for example following an initial European marketing course held in Paris in 2006, a second workshop on ‘Consumer Drive and Innovation’ was held in November 2007. Marketeers from across Europe worked in teams to identify breakthrough solutions to life’s problems with products that are not currently available. The objective was to foster a culture of innovation, to enhance teamworking and to develop core marketing skills across our European team. The programme provided the opportunity for people from different countries and cultures to work together. A similar programme is being rolled out for our marketeers in Asia Pacific commencing in June 2008. Our approach, wherever possible, is to promote employees from within and, to facilitate this, we are in the process of implementing a systematic, Group-wide standard approach to succession planning which not only recognises individual development profiles but also ensures that we have provision in place to maintain business continuity. Standardising the approach on a global basis means that we can gain better understanding of our employees and our current business needs. More information about our training and development programmes, communication and resourcing, is on page 22.

SSL European marketeers during the ‘Consumer Drive and Innovation’ workshop.

18 Business review •Annual Report and Accounts 2008 Purchases SSL’s strategy is now focusing on organic sales growth supplemented by executing well chosen acquisitions. We have very clear criteria against which we measure opportunities to ensure that any acquisition complements our existing business, enables us to use our existing infrastructure more effectively and drives shareholder value in both the short and medium term. Since March 2007 we have made two acquisitions which have wholly met these criteria. Orthaheel In November 2007, we acquired Orthaheel, a range of orthotic insoles which are inserted into shoes to alter foot alignment and provide cushioning and support for the feet. Designed by leading podiatrist, Philip Vasyli, they are proven to reduce heel and knee pain as well as improve posture. Following the acquisition, Scholl has an ongoing relationship with Philip Vasyli which enhances our research and developmentcapabilities and strengthens the foundation for the ongoing brand development for Scholl. Currently, Orthaheel has geographic distribution in Australia, New Zealand, the UK, and Germany and its state-of-the-art orthotic product range provides SSL with immediate turnover and a market leadership position in the orthotics market in Australia and the UK. Combining this with the Scholl brand and our extensive distribution network in Europe and Asia Pacific provides an exciting opportunity for future growth in new geographies. We are planning an initial roll-out of a new co-branded range from the second half of 2008 onwards. Global sales of Orthaheel to the year ended 30 June 2007 were £5.7 million; the acquisition was valued at £14.9 million, a multiple of 2.6 times sales. If sales targets are achieved, consideration could rise to a maximum of £34.3 million payable in cash by June 2010. Eastern Europe and the Commonwealth of Independent States (‘CIS’) Recognising the importance of emerging markets in driving future sales growth we continue to identify opportunities where we are able to strengthen our position in markets in which we already operate, as with the increased investment in China early in 2007, or to enter into markets where we have no or limited presence. In February this year, we entered into contracts to initially acquire up to 18 per cent of businesses which own and distribute condoms, primarily the Contex brand, and disposable medical products through Eastern Europe and the CIS (consisting of 11 former Soviet Republics). These contracts also give SSL the option to acquire, in two further stages, the remaining shares in the businesses. Consideration for each stage is calculated on an earn-out basis calculated at 9x EBITDA. Stage one of the acquisition was completed on 19 May 2008. The initial investment was £24.8 million for a 15.5 per centshare of the businesses. The remaining two stages are expected to take place before 31 May 2010.

“We have very clear criteria against which to measure acquisition opportunities to drive shareholder value”

16

19 Tuesday 2.04am

When children are ill you want to help make them better, quickly. Medised for Children is specially formulated to ease away pain in children from two years old and it also helps clear blocked noses and eases breathing to help a restful night’s sleep.

20 Business review •Annual Report and Accounts 2008 Corporate SSL aims to operate in a way which reflects our values, while understanding and responding to stakeholder views and connecting business decisions to environmental, ethical and social concerns. responsibility We have developed a new framework for our approach to corporate responsibility which is tailored to the needs and development of SSL. This will enhance awareness of our commitment in this area and maximise the benefits being achieved by developing a coherent and co-ordinated approach. The new framework has four core elements: ‘In the Marketplace’, ‘In the Workplace’, ‘In the Environment’ and ‘In the Community’: — In the Marketplace: covers the whole supply chain from selection of raw materials, third-party supplier assessments, in-house manufacture, packaging, delivery to customers and responsible and effective communication with consumers. — In the Workplace: reflects the core areas of the Global HR strategy — resourcing, reward, communication and development — and health and safety for all employees. — In the Environment: refers to SSL’s commitment to continual improvement in its practices in environmental care, review of its environmental performance and use of sustainable resources. — In the Community: relates to work carried out by SSL in the global, national and local communities. It includes areas such as the activities of the Durex Network, relationships with national health authorities, local social responsibility programmes as well as SSL’s responsibilities to shareholders and investors. We have set five objectives for 2008/09 and are in the process of developing a five-year plan to ensure a sustainable approach is achieved in each of these areas. Our objectives for 2008/09 are: — Training and development: continuing the expansion of the three-tier training and development programme into new countries providing more opportunities for our employees to improve their business awareness as well as technical and personal skills. — Health and safety: to build upon a positive, behaviour-led, safety culture with an initial focus on developing new health and safety procedures at manufacturing sites. — Durex Network: to continue to lead and participate in activities to raise awareness of HIV/AIDS, safer sex and consistent condom use. — Environment: increasing awareness of environmental issues by establishing expertise across SSL’s operations and assessment of the full impact of ‘green consumerism’ and how it affects SSL’s commercial operations. — Supply chain: to develop and commence implementation of a standard supplier assessment process and code of conduct across all business categories.

expanding our focus

21 In the marketplace We aim to ensure that we take care of our consumers by providing products for their use that are safe and effective, are sourced from a supply chain that is ethical and delivered through business practices that are legal, ethical and socially responsible. We have robust quality and compliance procedures and management systems across our business which help safeguard our consumers. Due to the complexity and scope of this area we are still in the process of developing and refining the holistic approach. As stated in the objectives above, our aim for 2008/09 is to build a platform to standardise the assessment process for selecting suppliers across all product categories to encompass quality, environment, health and safety, ethics and human rights issues. Protecting our consumers and our brands Counterfeit products erode the prestige, profitability and reputation of premium brands and protection of consumers is at the heart of our approach to dealing with this. Whilst stamping out counterfeit products at source is not easy, we have developed robust procedures and controls which help identify genuine Durex from counterfeits. One such measure is the provision of specially produced information leaflets to customs officers in the European Commission to assist them in identifying the fake products. However, if counterfeit products have entered a country, we work closely with the regulatory agencies to take all the steps necessary to act in the best interests of consumers. In addition, during 2008/09 we will implement a new, advanced anti-counterfeit labelling system for all Scholl footwear sold in Europe. REACH During 2007/08, we began the registration process to comply with REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) as adopted by the European Union. Under the terms of REACH, industry is required to register certain substances that are manufactured, imported or used in Europe. In the workplace By creating a positive and safe working environment for our employees, which supports their professional and personal development; encourages open and honest communication; provides reward packages to drive behaviours that are aligned with business objectives; looks to attract and retain talent; and by encouraging behaviour-led safety, SSL supports motivated, successful people who are passionate about our future. Professional and personal development Training and development is an important part of attracting and motivating talented people. We are continuing the expansion of our three-tier training and development programme which

Employees by geography 1 1. Asia Pacific 3,460(1) 2. Europe 1,840 3. Americas 50 2 Total 5,350(2)

3

Employees by function 1 1. Manufacturing 2,950(1) 2 2. Commercial 2,400 Total 5,350(2)

(1) Includes 2,000 employees at our joint ventures in India (2) Headcount as at 31 March 2008

22 Business review •Annual Report and Accounts 2008 Wednesday 9.32pm

Durex Play Ultra provides 40 minutes of quivering pleasure, and, as it is now waterproof, part of the fun will be experimenting with where and which way to wear it for maximum stimulation.

23 covers three core areas — personal skills development, business awareness and lifestyle — into new geographical areas. A specific initiative aims to foster a culture of innovation for our marketing teams (refer to page 18 for further information). We recognise and value the importance of our employees and how we treat each other in our working environment. Reflecting this, we launched a new programme ‘Dignity at Work’ to build upon awareness of the issues affecting and resulting from our behaviour at work. This approach to ‘Dignity at Work’ is fundamental in defining and developing our organisational culture and is entirely aligned with SSL’s vision to become and remain Successful — Socially responsible — Lively and our ABC operating principles. The objectives of the ‘Dignity at Work’ training programme are to understand clearly what we mean by ‘Dignity at Work’, the impact of behaviours at work, the responsibilities of every employee and to provide practical guidelines in dealing with related issues in the workplace. This programme was initially launched in the UK, but the principles it espouses will form the basis for a global employee code of conduct to be developed during 2008/09. Open and honest communication A culture of open and honest communication is key to a successful business. We have designed our internal strategy to focus on three areas: people, brands and business performance. We recognise that two-way communication is very important and welcome feedback from all our employees. We hold global employee surveys on a biannual basis. Our second will be held in October 2008 which will cover areas such as leadership, communication, satisfaction and motivation. As a brand-led company, we aim to ensure that all employees, whatever their role or wherever they are located, have the opportunity to learn about our brands and latest products through distribution of posters, knowledge-based factfiles, briefing notes and samples. We continue to support all our communication programmes through our toolbox — employee magazine ‘Be Inspired’, intranet ‘Insight’ and poster campaigns supporting SSL’s vision and values. Attracting talent We aim to attract highly talented people with the appropriate balance of competencies, potential and cultural fit with our organisation to help take SSL to the next level of development. We are committed to recognising and encouraging diversity across the organisation and espouse the principle of equality of opportunity for all employees regardless of gender, race, age, religion or sexual orientation. We aim to give people with a disability or who become disabled whilst in our employment the same opportunities for career progression and training as other employees. Creating a safer workplace Providing a safe working environment for our employees has always been a high priority for SSL, and it continues to be so. A new five-year programme has been launched with the objective of ensuring

“We recognise and value the importance of our employees and training and development is an important part of attracting and motivating talented people”

24 Business review •Annual Report and Accounts 2008 a positive safety culture throughout all SSL sites with an initial focus on manufacturingand logistics, then roll-out in subsequent years to commercial offices. With the focus on educating people to behave in the right way to prevent accidents, our target is to achieve a zero accident rate over the longer term. This programme follows recent successes achieved at a number of sites, for example our manufacturing facility at Redruth has recently been accredited with OHSAS 18001 certificate for its occupational health and safety management systems; and our commercial office in Budapest received ‘The Healthy Workplace’ Award presented by The American Chamber of Commerce for creating a working environment which is ergonomically designed and where various initiatives have been introduced to encourage a healthier lifestyle. In the environment In response to the rise in the level of awareness of environmental issues and the importance of these in relation to manufacturing processes, product development and material sourcing, we have redefined our environmental programme. Further information on this new programme and our performance against our environmental targets can be found in the Environment Report on SSL’s website www.ssl-international.com A sustainable future For the first time, SSL participated in World Environment Day in June 2007. Led by the United Nations Environment Programme (‘UNEP’), the theme was climatechange. A range of activities was organised at SSL sites across the world to heighten awareness of how we can contribute to minimising our effects on climate change. Using materials sourced from UNEP together with hints and tips on being more aware of how we use energy, employees at SSL sites developed a wide range of initiatives. These ranged from installing a device to turn off lights automatically at times when the offices are empty in Thailand, to planting trees in India, to competitions with environmental and recycling themes run for employees’ children at Redruth. In the community SSL continues to support global, national and local communities through the ongoing development of the Durex Network, working in partnership with third-party organisations and supporting employees in their own endeavours. Durex Network The Durex Network is a key player in the global sexual health arena. Over the past year, the Network’s social marketing, advocacy and research work have succeeded in firmly positioningit as an expert in the field, and with it, reaffirming that SSL is committed to helping improvesexual health worldwide. The success of Yaari Dosti, a comprehensive behaviour-change initiative based in Mumbai and Gorakhpur

SSL employees at Redruth who took part in World Environment Day activities.

25 in India, has been a major social marketing milestone. The project, designed to improve young men’s attitudes towards gender roles, was led by a partnership between the Durex Network and several non- governmental organisations. The Global Business Coalition on HIV/AIDS, TB and Malaria, of which SSL is a founding member, showcased Program H, one of the Durex Network’s joint initiatives, as global best practice in a report on the feminisation of HIV/AIDS. Research has brought several successes too: the 2007 Face of Global Sex report was presented at several high-profile, global sexual health conferences, and two scientific papers were published in the European Journal of Contraception and Foreign Policy Magazine. Some new tools have also been developed to help further raise the Durex Network profile. Challenges, the new, quarterly, Durex Network e-newsletter, was created to explore key issues in the global sexual health arena. The newsletter, now in its 4th issue, is increasingly being referenced on sexual health websites, proof of its growing success. And the Durex Network is now online at www.durexnetwork.org. This new platform will be crucial in continuing to raise awareness of the work we are doing via the Durex Network. Looking ahead, the Durex Network is set to carry onward and upward with further invitations to present at conferences — including the 2008 Global Health Council Conference — and the publication of the 2008 Face of Global Sex report which will look at sexual confidence. Helping to change lives During 2007, in partnership with youth-led international development agency Students Partnership Worldwide (‘SPW’), five SSL employees each spent two weeks using their professional skills to assist in the development of SPW organisations in Sub-Saharan Africa and South Asia. SPW’s methodology is to place young people at the forefront of change and development to address HIV/AIDS, sexual and reproductive health, environmental and educational issues. Through implementing a new accounting and reporting system; developing communication strategies to help attract additional funding and recruit volunteers; and building techniques and processes to support appraisals, motivation and delegation, SSL employees from the UK, Poland, the Netherlands, Hungary and Germany contributed greatly to the ongoing development of the local SPW organisations in countries as wide-ranging as Zambia, Nepal and Zimbabwe. Through this partnership, our employees benefited from gaining different life experiences and also from the opportunity to provide value-added benefits for communities in remote parts of the world. We plan to continue this partnership with SPW in 2008 by expanding the programme to offer a further 10 placement opportunities to SSL employees globally. Local country initiatives Our commercial and manufacturing units take their responsibility towards aiding their local communities very seriously. During 2007/08, activities have included construction of tsunami/cyclone shelters in India, promoting the importance of mathematics in the workplace for school children in Peterlee, UK and environmental improvement at the public Bangsaen Beach in Thailand.

Experiences of SSL’s employees during their SPW placements.

26 Business review •Annual Report and Accounts 2008 Thursday 7.13am

Scholl Cracked Heel Repair Cream is a clinically proven fast-acting solution for repairing rough, dry and cracked skin which is specially concentrated for the skin on the heel — with visible results in just three days.

27 “We are maximising the efficiency of our capital base through margin growth and operating cash generation” Mark Moran Group Finance Director

28 Business review •Annual Report and Accounts 2008 Performance SSL’s results for the year ended 31 March 2008 are set out on page 48. Total sales were £533.9 million compared with £480.2 million last year generating an operating profit before review financing and one-off restructuring charges but after associates of £68.1 million (2007: £56.1 million). The operating margin was up more than one percentage point to 12.8 per cent (2007: 11.7 per cent). Pre-tax profit, before one-off restructuring charges, was £57.4 million compared to £46.9 million last year and on the same basis, earnings per share increased by 20 per cent to 20.6 pence (2007: 17.1 pence). Operating cash flow before one-off restructuring costs was £74.6 million compared to £60.9 million last year. Net debt at the year end was £99.0 million (2007: £88.7 million). Analysis of results In the commentary on performance below comparatives have been adjusted to constant foreign currency exchange rates and include a full year of the China Durex business, acquired in January 2007. Sales Sales for the year were £533.9 million up 6.9 per cent compared with £499.3 million last year. Sales are analysed in Table 1 on page 30. Durex Durex sales rose 9.4 per cent to £217.7 million, with continued strong growth in the UK, Italy, Eastern Europe and China. Sales of Durex condoms increased by 8.4 per cent to £185.5 million as the premium ranges, such as Pleasuremax and Pleasuremax Warming, performed well. The extensions to our distribution network in China and Eastern Europe are enabling Durex to target an ever wider consumer base. Sales of the Durex Play range, which includes personal lubricants and vibrators, grew 15.4 per cent, or £4.3 million, to £32.2 million. This category benefited from a strong performance of Durex Play 2 in 1 massage gel, in markets such as Italy, Spain and Eastern Europe. Our lubricants range is now a well-established segment within the Durex portfolio with growing consumer demand and enhanced product offerings. The brand development focus is on enhancing people’s sexual wellbeing, with product range extensions in each of the three core areas of condoms, personal lubricants and vibrators, where we have recently launched Ultra, Touch and new Allure. We have also recently launched Durex Play O — a first to market clitoral stimulating gel — in France, with roll-out planned over the current financial year.

continued double-digit operating profit growth

29 Scholl footcare Sales of Scholl footcare were £113.6 million, up by 10.1 per cent. This performance has been driven principally by the success of new products, such as Scholl Cracked Heel Repair Cream, together with strong performance of new Scholl pharmacy ranges in Germany and France. Additional marketing investment and new product developments, such as the revolutionary Perfect Nail Treatment, continue to bring the Scholl brand name to a new generation of consumers and we expect to see continued strong performance within this category. Scholl footwear Scholl footwear sales were £76.1 million, an increase of £6.9 million, or 10.0 per cent. This performance has been achieved thanks to the solid sell-in of the Spring/Summer ’08 range, coupled with the positive consumer response to our revamped Autumn/Winter ’07 range. Footwear enjoyed solid growth in Italy, Greece, France and Iberia and we also benefited from a positive footwear performance in South East Asia. After several difficult years it is encouraging to achieve a turnaround in Scholl footwear sales. We believe that we are now establishing a strong platform to ensure sustained growth in this category. Orthaheel In November 2007 we completed the acquisition of the Orthaheel, Orthastyle, Vas and Vasyli brands and related assets in Europe and Asia Pacific. These ranges of orthotic insoles and shoes are an excellent strategic fit with our existing Scholl business. In the five months to year end these brands have generated sales of £1.8 million (£1 million in Scholl footcare and £0.8 million in Scholl footwear). We expect this performance to improve as we roll-out this brand to our established European markets during the current financial year. Locally owned brands Sales of locally owned brands decreased by 2.3 per cent to £71.4 million. The decline in the UK OTC brand portfolio outweighed the positive performance of Mister Baby and Sauber in Italy. Other sales Other sales, which includes distribution of third-party products and unbranded condoms, increased by 0.5 per cent to £55.1 million. Brand contribution, fixed costs and operating profit (1) Brand contribution, defined as gross margin less market development and variable selling expenditure, increased by £14.2 million, or 7.3 per cent. The growth in brand contribution was driven by higher sales and an improvement in gross margin (60.0 per cent compared with 59.4 per cent for

(1) Before one-off restructuring charges

Table 1 Adjusted (2) Adjusted 31 Mar 2008 31 Mar 2007 growth £m £m % Durex 217.7 199.0 9.4 Scholl footcare 113.6 103.2 10.1 Scholl footwear 76.1 69.2 10.0 Locally owned brands 71.4 73.1 (2.3) Total branded consumer 478.8 444.5 7.7 Other 55.1 54.8 0.5 Total sales 533.9 499.3 6.9

(2) Adjusted to constant foreign currency exchange rates and including 100 per cent of the China Durex business

30 Business review •Annual Report and Accounts 2008 last year), and was achieved despite the planned £7.3 million increase in advertising expenditure in the year. The gross margin improvement reflects the continued effort by the Group to lower the cost of manufacturing, despite increases in raw material and labour costs. Further benefits of the supply chain restructuring will be seen in the next financial year. The gross margin also benefits from near double-digit growth in higher margin Durex and Scholl footcare sales. Operating expenses of £139.5 million continued to reduce as a percentage of sales from 26.5 per centto 26.1 per cent. The increase in absolute terms (of £7.2 million) reflects a strategic investment in additional research and development to support our innovation pipeline and investment in our sales and marketing teams in China, Germany and France. We expect both of these investments to make continuing contributions to organic growth in the next 12 to 18 months. Operating profit increased by £7.0 million (11.5 per cent), representing a 12.8 per cent operating margin (2007: 12.2 per cent). One-off charges We have provided for one-off charges of £46.5 million in the full year. Of this, £41.3 million relates to the restructuring of our European supply chain, notably the closures of our Rubi condom factory near Barcelona, our Cambridge technical facility and our Guernsey pharmaceutical manufacturing facility. Additionally we have incurred one-off finance charges of £5.2 million relating to the early repayment of the private placement bonds. The expected cash payback from these one-off costs is approximately two and a half years. Cash flow and net borrowings Operating cash flow in the period, before one-off restructuring costs, was £74.6 million (2007: £60.9 million) with improvements in working capital generating £4.4 million. Operating cash flow is defined as cash generated from operations of £52.9 million (2007: £49.4 million) before cash paid in respect of restructuring provisions of £21.7 million (2007: £11.5 million). Closing net borrowings were £99.0 million compared to £88.7 million at 31 March 2007. The higher net borrowings reflects the one-off cash costs . These one-off cash costs are made up of £14.4 million relating to European supply chain restructuring, £2.9 million relating mainly to historic restructuring provisions and £4.4 million of one-off finance costs. An additional £16.3 million cash outflow relates to acquisitions during the year. We retain a strong balance sheet and our existing bank facilities (£220 million revolving credit facility expiring in January 2012) were all refinanced in the early part of 2007.

Operating expenses as a percentage of sales 07/08 26.1% 06/07 26.5% 05/06 28.6% At constant exchange rates and before one-off restructuring charges

Earnings per share 07/08 20.6 pence 06/07 17.1 pence 05/06 12.8 pence Before one-off restructuring and finance charges

31 Interest and taxation Net interest and financing costs for the period were £15.9 million (2007: £9.2 million). Of this, £5.2 million related to the one-off early repayment charge on the private placement bonds. Underlying net interest, before one-off finance charges, was £8.8 million (2007: £8.0 million). The IAS 19 net pension finance charge for the period was £1.9 million (2007: £3.0 million). The prior period interest cost benefited from an IAS 39 credit of £1.8 million. The tax charge of £11.8 million (2007: £13.1 million) includes a credit of £4.3 million relating to the one-off charges. The effective tax rate (excluding the one-off charges and associated tax credit) is 28 per cent. Earnings per share Earnings per share (before one-off charges) increased by 20 per cent to 20.6 pence (2007: 17.1 pence). After the one-off charges the net loss per share was 1.5 pence. Shareholders’ funds at 31 March 2008 were £113.8 million (2007: £97.6 million). Litigation This is detailed in note 26. Capital structure and treasury policy IAS 32, IAS 39 and IFRS 7 IAS 32, IAS 39 and IFRS 7 require that certain disclosures relating to financial instruments are given in the financial statements, in order to provide information on the impact of such instruments on the Group’s risk profile, how this may affect the Group’s performance and financial position, and how those risks are managed. The impact of those financial instruments is considered in notes 22 and 23. Foreign exchange risk objective The nature of the Group’s trading activities generates transactional foreign exchange rate risks. These arise from the sourcing of raw materials from different countries, the location of Group production facilities throughout the world and the sale and distribution of finished goods in many locations. The objective of the Group’s foreign exchange policy is to minimise the trade exposure to foreign exchange rate fluctuations for the overseas entities and manage the risk from the centre. This requires that all trading-related exposures should be centralised in accordance with prescribed procedures and timetables under the direction of the Group Treasury Function, which hedges the major exposures using forward contracts and options, usually up to a period of 12 months. Interest rate exposure objective The interest rate risk management policy aims to reduce the impact of interest rate fluctuations on the Group’s net interest expense to acceptable levels. This is achieved through balancing the ratio of fixed or hedged debt to those financial liabilities with floating interest rates. Board approved instruments available to hedge this exposure include interest rate swaps, interest rate options and forward rate agreements. Details of the interest rate analysis are given in note 23. Liquidity risk The primary objective of the Group Treasury Policy is to ensure that the Group is able at all times to meet its financial commitments as they fall due. To facilitate this, the Group Treasury department is responsible for the management of cash and liquid resources for the whole Group, and ensures that the Group has sufficient liquidity to meet any reasonable change in funding requirements. The Group’s liquidity is defined as the aggregate of the Group’s cash, liquid resources and central undrawn committed facilities as at 31 March 2008, amounted to £141.7 million (2007: £256.4 million).

Mark Moran Group Finance Director 19 May 2008

32 Business review •Governance •Annual Report and Accounts 2008 Board of 5. Peter Read, Senior Independent Director (69) Appointed in March 2002, Peter is Chairman of the Directors Nomination and Remuneration Committees. He is a Non-Executive Director of Vernalis plc and an independent Director of Innogenetics NV. Previously, Peter was a senior Executive Directors executive of Hoechst and President of ABPI, a Non-Executive 1. Garry Watts, Chief Executive (51) Director of Celltech Group plc and a member of the Board of Appointed as Chief Executive on 1 April 2004 after joining the South East Development Agency. as Group Finance Director in February 2001. He was previously 6. Richard Adam (50) an Executive Director of Celltech Group plc and Finance Director Appointed as a Non-Executive Director and Chairman of of Medeva plc. Garry is a Non-Executive Director of Protherics the Audit Committee in November 2003, Richard is currently plc and of Stagecoach Group plc. He was, until May 2008, a Group Finance Director of Carillion plc. Prior to this he was Non-Executive Director of the Medicines and Healthcare Group Finance Director of Associated British Ports Holdings Products Regulatory Agency. PLC. Richard is a Fellow of the Institute of Chartered 2. Mark Moran, Group Finance Director (48) Accountants of England and Wales. Appointed as Group Finance Director in June 2004, Mark is 7. Susan Murray (51) a Non-Executive Director and Chairman of the Audit Committee Appointed in January 2005, Susan is currently Chairman of of Brixton plc. He was previously Finance Director of Porvair plc. FB Raphael 1 Limited (the holding company of Farrow and Ball 3. Ian Adamson, paint and wallpaper business) and a Non-Executive Director Managing Director Europe and Americas (49) of Enterprise Inns PLC, Imperial Tobacco PLC, WM Morrisons Appointed as Executive Director in April 2004. In addition Supermarkets plc, Compass Group PLC and The Advertising to his role as Managing Director for Europe and the Americas, Standards Authority. Previously, Susan was Chief Executive of Ian also has responsibility for Group Marketing. He joined Littlewoods Stores Limited. Susan will stand down as a Director Seton Healthcare in 1991 as Director of Marketing and has after this year’s Annual General Meeting. subsequently held a number of senior sales, marketing and 8. Anna Catalano (48) general management positions within the Group. He previously Appointed in November 2004, Anna has held senior global held sales and marketing positions at Johnson and Johnson marketing and sales positions in Amoco including President, and W. L. Gore & Associates. Amoco Orient Oil Company and was Group Vice President, Non-Executive Directors Marketing at BP plc. She is a Non-Executive Director of Willis 4. Gerald Corbett, Chairman (56) Group Limited and the US company, Hercules Incorporated. Chairman since August 2005, Gerald is also Chairman Company Secretary of Britvic plc, Moneysupermarket.com Group plc, the Royal 9. Maria Buxton-Smith (43) National Institute for the Deaf and a Non-Executive Director Appointed Company Secretary in January 2008 after of Greencore Group PLC. Previous executive positions include joining as Assistant Secretary in 2002. Maria has previously Chief Executive of Railtrack PLC and Group Finance Director held company secretarial positions at Whitbread PLC and of both Grand Metropolitan plc and Redland plc, whilst past Heron Corporation PLC. non-executive directorships include Chairman of Woolworths Group plc and Non-Executive Director of MEPC PLC and Burmah Castrol PLC.

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33 are four Non-Executive Directors (one of whom is the Senior Independent Corporate Director (‘SID’)) and two Executive Directors. governance Details of the Chairman’s professional commitments are included in his biography. The Board is satisfied that the other commitments of the Chairman do not interfere with the performance of his duties as Chairman. The Board considers that all of the Non-Executive Directors are independent in character Introduction and judgement and by reference to the Combined Code and that controls are The Board is responsible for delivering value to shareholders and in place to ensure that no single Director has unfettered powers of decision. other stakeholders, by developing strategy and by leading the Group, The management of operational matters within the Group is delegated ensuring that the appropriate resources, processes and controls are to the Executive Committee, which comprises the Executive Directors and in place to execute that strategy. Developing and maintaining high certain other senior executives. The Executive Committee meets monthly. standards of corporate governance is integral to the delivery of value. Board evaluation This report explains SSL’s corporate governance arrangements During the year, the Board reviewed the process for the evaluation of the and how the Group has applied the Combined Code on Corporate performance of the Board, its committees and the individual Directors. Previous Governance (the ‘Code’). evaluations have been conducted internally and led by the Chairman, whilst The Board the SID conducted the evaluation of the Chairman. The Board concluded that There is a written schedule of matters reserved to the Board. this process remained appropriate. This schedule includes: All Directors were required to complete a detailed questionnaire, which each Director then discussed with the Chairman and with the SID, in relation —Approval/development of the Group’s long-term objectives and to responses about the Chairman. commercial strategy; The Board considers the annual evaluation to be a valuable process, which —Approval of annual operating and capital expenditure budgets and any has contributed to fostering an environment within the Board that is challenging material changes to them; but supportive and encourages focus on the main issues facing the Group. In 2006/07, the recommendations included a more detailed half-year review —Review of performance in the light of the Group’s strategy, objectives, on strategy and greater focus on succession planning. These matters are now business plans and budgets and ensuring that any necessary corrective incorporated into the Board’s annual schedule. action is taken; Dialogue with shareholders —Approval of major capital projects, including acquisitions; The Company has a comprehensive investor relations programme —Approval of contracts which are material strategically, or by reason of size; and involving existing and potential investors within the UK and overseas. The Chief Executive, Finance Director and certain senior executives meet —Monitoring the system of internal control and corporate governance. with institutional investors on a regular basis. The Chairman and SID make To ensure proper consideration at the appropriate time, the Board themselves available to meet with institutional investors. The SID attends has a schedule of matters for each meeting. These matters include: the preliminary and interim results presentations with investors and analysts. An investor relations report is presented and considered at each Board meeting. —Reports from the Chief Executive and Finance Director; The Board uses the Annual General Meeting, which all Directors attend, to —Health and safety; communicate with investors and encourage their participation. The Directors are available to speak informally with shareholders after the meeting. —Presentations from the heads of the business units; Board Committees —Investor relations; and The Board has established three committees. Each committee operates —Regulatory reviews. in accordance with formal terms of reference, which are reviewed annually and can be viewed on the Company’s website, www.ssl-international.com. The Board also receives regular updates on relevant legal and Committee chairmen report at the next meeting on the proceedings of the environmental matters. committee which they chair. The table below sets out the number of scheduled Board and The membership and a summary of the principal activities of each Committee meetings held during the year and the attendance by committee is shown in the table on the opposite page. Directors at those meetings. Policy on auditors’ independence Safeguarding the independence of the external auditors is paramount Scheduled Audit Nomination Remuneration and controls are in place to ensure their continued independence. However, Board Committee Committee Committee meetings meetings meetings meetings there are occasions when services can be more efficiently undertaken by the I. Adamson 7(7) external auditor and at no risk of impairment of their independence. The Audit R. Adam 7(7) 4(4) 3(3) 4(4) Committee has put in place a detailed policy on the provision of services by G. Corbett 7(7) 3(3) 4(4) the external auditors, that sets out the services which the external auditors are A. Catalano 7(7) 4(4) 4(4) allowed to carry out on behalf of the Group and those which are prohibited to M. Moran 7(7) them. Under this policy, external auditors cannot be engaged to provide any S. Murray 7(7) 4(4) 4(4) of the following services: P. Read 7(7) 4(4) 3(3) 4(4) —Design or implementation of IT systems; G. Watts 7(7) 3(3) —Valuation; The figures in brackets indicate the maximum number of meetings in the period in which the individual was a Board member. When Directors are unable to attend meetings, they —Internal audit; and receive the relevant papers and are invited to comment in advance of the meeting. One of the Board meetings was devoted solely to strategy. —Litigation support, legal or corporate finance advice, tax advice (if on a wholly or partly contingent fee basis), recruitment, executive compensation advice, accounting and actuarial valuation. During the year under review, the Board continued to be led by the Chairman, Gerald Corbett. Garry Watts, the Chief Executive, is primarily Secondment of senior audit staff to the Company is also prohibited. responsible for the effective running of the Group’s business. There is a clear, written schedule on the division of responsibilities between the Chairman and the Chief Executive. In addition to the Chairman and Chief Executive, there

34 Governance •Annual Report and Accounts 2008 Under this policy, it has been agreed that due to their understanding —Receipt of annual compliance statements from all statutory units within of the Group’s business and therefore ensuring cost efficiency, the external the Group, stating compliance with Group accounting manuals; and auditors may be engaged for the following non-audit services, for which there —An effective Internal Audit function providing independent scrutiny of is a pre-agreed limit for fees (not including VAT) which do not require prior internal control systems and risk management procedures. approval from the Audit Committee: Risk management is embedded within the day-to-day activities of —Audit-related regulatory reporting including interim review, covenant all executives. Management of this area is the responsibility of the Group reporting and other audit certificates (£100,000); Operating Committee. A significant element of this process is the maintenance —Further assurance including advice on accounting matters, non-regulatory of a Group Risk Matrix (the ‘Matrix’). The Matrix contains both financial and reporting on internal controls or corporate governance, due diligence work non-financial risks, identified through regular top-down and bottom-up reviews. and environmental audits (£100,000); and The Board believes that the Company operates an effective embedded system of internal control and is confident that it complies with Internal Control —Tax compliance and tax advisory services (£300,000). Guidance for Directors on the Combined Code (the ‘Turnbull Report’). The Chairman of the Audit Committee may approve urgent engagements Further information about the risk management processes is given on not covered by these categories, subsequently notifying the Audit Committee pages 36 to 37. at its next meeting. A breakdown of fees paid to the external auditors during Combined Code compliance the year is set out on page 56. During the year the Company complied with the Code except in the Internal control following respect: The Board is responsible for the Group’s system of internal control and A4.1The Nomination Committee comprises the Chairman, the Chief Executive, for reviewing its effectiveness, and this is monitored by the Audit Committee. the SID and a Non-Executive Director. Whilst the Board considers the Chairman Key elements of this system include: to be independent, membership of this Committee does not consist of a —Regular Board meetings with a formal schedule of matters reserved for majority of independent Non-Executive Directors, as defined by the Code. Board discussion; Going concern —Clearly defined organisational structures and appropriate delegation After making enquiries, the Directors believe that the Group and the of authority (adherence to which is kept under review); Company have adequate resources to operate for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing —Centralised treasury operations operating within defined limits; the financial statements. —Review of the Group’s accounting manuals and procedures;

Board Committees membership and principal activities Audit Nomination Remuneration Committee Chairman Richard Adam Peter Read Peter Read Members Anna Catalano Richard Adam Richard Adam Susan Murray Gerald Corbett Anna Catalano Peter Read Garry Watts Gerald Corbett Susan Murray Attending by invitation Chairman Group HR Director Chief Executive Chief Executive Company Secretary Group HR Director Finance Director Company Secretary External auditor Head of Business Assurance Financial Controller Company Secretary

Summary of the principal Review of financial statements, Reviewing the size and composition Reviewing the remuneration policy activities of the Committees including half-year and annual reports, of the Board including the mix of skills for the Executive Directors and the during the year interim management statements and and experience Executive Committee considering the comments of the Consideration of succession issues Developing proposals for an external auditor thereon enhancement to the Performance Recommending the re-election Review of risk management and Share Plan of Directors at the Annual General internal control systems Meeting (Further information on the work Review of the Group’s internal audit of this committee can be found in processes, including approval of the the Remuneration Report on annual internal audit plan pages 39 to 45) Monitoring the provision of services by the external auditors and an annual appraisal of their effectiveness as auditors (see the policy on auditors’ independence on the previous page)

35 There are risks and uncertainties connected to the Group’s businesses. Risks and The factors listed opposite are among those that the Group thinks could cause uncertainties the actual results to differ materially from expected and historical results. Risk management is an important element of the system of internal control. This system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material loss. The risk management process involves making all managers within the Group responsible for risk management and for ensuring that a full assessment of risks, both financial and non-financial has been completed. This is achieved by a bottom-up and top-down review of risks throughout the Group, from which, a Group Risk Matrix has been developed. This process has embedded risk management within the operational and executive management throughout the Group. The Group Risk Matrix is reviewed twice a year. Overall responsibility for the risk management process lies with the Global Operating Committee (‘GOC’) which comprises the Executive Directors, the Executive Committee and certain other senior managers. An overview of the process is presented below:

Board of Directors

Audit Committee Business Assurance

External Audit Group Risk Matrix owned by GOC

GOC

Divisional risk register managed by Divisional Management

Divisional Management Team

Unit risk register managed by Unit Management

Operating Unit

36 Governance •Annual Report and Accounts 2008 Risk Description Mitigating action and management Disruption to the Group Supply chain Failure, e.g. at a factory, by a third-party supplier, —Dual sourcing and ability to switch production or a failure at a warehouse —Follow up on recommendations from the annual Business Interruption Review —Development and continuous review of business continuity plans Failure of New Product Development (‘NPD’) Failure in NPD pipeline resulting in loss of sales —Defined methodology for controlling and profits NPD projects —Steering Committees (chaired by the Chief Executive) to monitor NPD activities

Commercial risks —Unforeseen competitor activity —Continuous market surveillance to gather information on competitor activity —Increased margin pressure from large retail groups —NPD process focused on delivering ‘value added’ products to customers —Geographic expansion into emerging markets —Group-wide management of key accounts —Effects on financial performance of economic downturn in a major market —Robust financial and risk analysis of geographic expansion including the use of external advisers —Strong management reporting structures ensure that emerging risks are identified quickly —Continuous effort to spread revenue generation across global operations

Inadequate succession planning Recruiting and retaining key members of staff —Group HR continually reviews the talent pool in the organisation and identifies succession risks —Remuneration and HR policies to ensure that the Group employs highly-motivated, well- remunerated, success-orientated people —Wide-ranging training opportunities to provide continuous development opportunities IT system failure —Failure of IT system to support key business —Continuous testing of back-up procedures and processes/functions resulting in loss of sales disaster recovery plans and profits —Group IT provides system support in key markets Failure to comply with regulatory matters, —Major product liability claims —Product liability insurance including environmental and health and —Inability to supply products resulting from —Strong technical and quality assurance team safety matters failure to comply with regulatory demands —Key principle within the Group to use regulation leading to financial loss and damaged brand as a competitive advantage reputation —Dedicated teams conducting environmental —Impact on reputation resulting from negative and H&S audits in operating facilities environmental or health and safety reports

37 Major shareholders Directors’ As at 19 May 2008, the Company had been notified of the following report material interests in accordance with the Disclosure and Transparency Rules:

Number of Percentage of shares/voting issued share The Directors present their report and financial statements for the year Shareholder rights capital ended 31 March 2008. Blackrock Inc 28,523,862 14.94 Liontrust Investment Services Ltd 10,519,998 5.51 Principal activities and Business Review FMR Corp 9,591,060 5.03 The Company is required under the requirements of the Business Review Amvescap PLC 9,511,193 4.99 to set out in the Annual Report the principal activities of the Group during the FMR LLC 9,481,017 4.96 course of the financial year ended 31 March 2008, the position of the Group at F&C Asset Management PLC 9,437,628 4.95 the end of the financial year and of the principal risks and uncertainties it faces. J P Morgan Chase & Co 9,200,001 4.83 The information required for the Business Review can be found in the L & G Group PLC 7,826,166 4.10 Chairman’s statement on pages 4 to 5, the Chief Executive’s review on pages 6 to 9 and in the Performance review on pages 28 to 33. Articles of Association Results and dividend The Company’s Articles of Association (‘Articles’) give power to the The Group’s profit before tax was £10.9m. An interim dividend of 2.3 pence Board to appoint Directors, but require Directors to submit themselves for per ordinary share was paid on 5 March 2008. The Directors recommend a final election at the first AGM following their appointment and to retire by rotation dividend of 5.3 pence per share, which, subject to shareholder approval at the every three years. The Articles may be amended by special resolution of the Annual General Meeting (‘AGM’) on 24 July 2008, will be paid on 4 September shareholders. 2008 to shareholders on the register on 1 August 2008. This will make a total The Board of Directors is responsible for the management of the dividend of 7.6 pence per share (2007: 6.8 pence). business of the Company and may exercise all the powers of the Company subject to the provision of the relevant statutes and the Company’s Board of Directors Memorandum and Articles of Association. The Articles contain specific The Group Board section on page 33 gives the biographical details of the provision and restrictions regarding the Company’s power to borrow money. current Directors and the Company Secretary. All of the Directors served Powers relating to the issuing and buying back of shares are also included in throughout the year. the Articles. The authority to issue shares and to disapply pre-emption rights The Directors’ interests in the share capital of the Company and share is renewed by the shareholders each year at the Annual General Meeting. options in the Company as at 31 March 2008 are set out in the Remuneration There are no agreements between the Company and its Directors or report on pages 39 to 45. employees providing for compensation for loss of office or employment In accordance with the Articles of Association, Richard Adam, Peter Read (whether through resignation, purported redundancy or otherwise) that and Garry Watts will retire by rotation at the AGM. Following a recommendation occurs because of a takeover bid. by the Nomination Committee and in line with the results of the Board The bank facilities agreement includes a change of control clause, Evaluation, the process for which is described in the Corporate governance whereby negotiations would be entered into with a view to agreeing ongoing report, the Board recommends to shareholders that these Directors be terms of the facility if a change in ownership occurs. reappointed at the AGM. Susan Murray will stand down as a Director after the AGM. Employment policies The Company has the authority under its Memorandum and Articles The Group’s employment policies reflect its commitment to equality of Association to agree individual contracts of indemnity with its Directors and diversity in all aspects of employment. Profit related bonus schemes were and others (also known as qualifying third-party indemnity provisions ‘QTPIP’). in operation during the year for certain employees. Further details of policies To date, no QTPIP has been entered into. and initiatives are given in the Business and Corporate responsibility reviews on pages 11 to 26. Annual General Meeting (‘AGM’) The AGM will be held at the CII Insurance Hall, 20 Aldermanbury, Creditor payment policy London EC2V 7HY beginning at 10.30 a.m. on 24 July 2008. The Group does not follow any specific external code or standard on The notice of the AGM specifies deadlines for exercising voting rights and payments practice. Payments to suppliers are made in accordance with appointing a proxy or proxies to vote in relation to resolutions to be passed at agreed terms. The Company itself had no trade creditors at 31 March 2008 the AGM. All proxy votes are counted and the numbers for, against or withheld or 31 March 2007. in relation to each resolution are announced at the AGM. Charitable and political donations Share capital The Group made charitable donations of £0.2million (2007: £0.1 million). The details of shares issued during the year and outstanding options are No political donations were made in this or the previous year. given in notes 18 and 19 to the consolidated financial statements. Disclosure of information to auditors Authority to purchase shares The Directors who held office at the date of approval of this Directors’ The Directors were authorised at the 2007 AGM to purchase the report confirm that, so far as they are each aware, there is no relevant audit Company’s own shares, within certain limits. Although no such purchases information of which the Company’s auditors are unaware: and each Director were made during the financial year, the Directors will seek approval to renew has taken all steps that they ought to have taken as a Director to make this authority at the 2008 AGM. themselves aware of any relevant audit information and to establish that The Company is not aware of any agreements between shareholders the Company’s auditors are aware of that information. which may result in restrictions on the transfer of securities and/or voting rights. Auditors KPMG Audit plc has expressed its willingness to remain in office as auditor at the 2008 AGM. After proper consideration, the Audit Committee is satisfied that KPMG Audit plc continues to be objective and independent of the Group. By order of the Board Maria Buxton-Smith Company Secretary 19 May 2008

38 Governance •Annual Report and Accounts 2008 The Committee receives advice from independent consultants. During Remuneration the year, the Committee received advice from the following consultants: report Consultant Advice provided to the Committee Hewitt New Bridge Street On the Group’s medium- and long-term Dear Shareholder incentive arrangements I submit the Directors’ Remuneration report for the year ended Ernst & Young LLP On the operation of the Group’s share 31 March 2008. schemes and the calculation of the Group’s The Remuneration Committee’s aim is to establish a remuneration Total Shareholder Return framework which incentivises the senior team to outperform against challenging targets, selected to provide a clear link between the achievement Watson Wyatt Limited Benchmarking data in relation to the total of the Group’s goals and their reward. This approach, established in 2005, reward packages of the Executive Directors continues to contribute to the success of the SSL Group. The performance and the Executive Committee graph on page 45 showing the Company’s Total Shareholder Return performance as compared to the FTSE 350 index illustrates this. With the exception of Hewitt New Bridge Street, these consultants also To build on this success, this year the Group is setting accelerated growth provide advice to the Company on the following matters. Ernst & Young LLP targets, which are designed to build on the outstanding performance to date advises the Company on taxation matters relating to expatriate employees. and be even more challenging than the targets set in the previous three years. Watson Wyatt also provides insurance broking and benefits advisory and Therefore, to incentivise the Executive Directors to outperform against these administrative services in the UK. The Committee is satisfied that the particularly stretching targets, it is proposed that annual and long-term provision of advice to the Company does not result in a conflict of interests. incentives be enhanced. The maximum annual bonus has been increased Activities of the Committee slightly and it is proposed that an exceptional grant be made under the The Committee, which meets at least four times a year, has a schedule Performance Share Plan (‘PSP’). This is subject to a change to the rules of the of the principal items to be discussed each meeting. The purpose of the PSP, which will require the approval of shareholders at the Annual General schedule is to ensure that all material matters are fully considered at the Meeting (‘AGM’). Further detail is contained in this report and in the Notice appropriate time. Such matters include: of Annual General Meeting. A full explanation of the remuneration policy is given below. —A review of remuneration policy and framework; Peter Read —Consideration of benchmarking data in relation to Executives’ remuneration Chairman, Remuneration Committee packages; and This report has been prepared in accordance with the Companies Act —A review of performance measures for the Group’s incentive schemes. 1985 (as amended by the Directors’ Report Regulations 2002). The report The Committee Chairman reports to the Board on the principal matters also explains how the Company has applied the Combined Code in relation discussed at the Committee. Copies of all Committee minutes are available to Directors’ remuneration. to the Directors. The Remuneration Committee (the ‘Committee’) The Committee’s terms of reference, which are reviewed annually, can Composition of the Committee: be viewed on the Company’s website, www.ssl-international.com. Peter Read Remuneration policy Committee Chairman and Senior Independent Director The main objective of the policy is to attract, retain and motivate those people of the highest calibre who have the skills needed to lead the Group to Gerald Corbett achieve its objectives year on year. Group Chairman and Non-Executive Director The principles of the policy are: Richard Adam —Providing a truly motivational incentive scheme which drives individuals to Non-Executive Director work to outperform against challenging targets; Anna Catalano —Establishing that variable pay provides the material element to Executives’ Non-Executive Director total reward; Susan Murray —Ensuring that there is an appropriate and increasing balance between Non-Executive Director short-term and long-term targets, with a significant proportion of the All members of the Committee served throughout the year. Susan Murray remuneration subject to carefully considered long-term performance will stand down as a Non-Executive Director and from the Committee after conditions; the AGM. The Board considers that all members of the Committee are —Aligning the interests of Executives with those of shareholders; independent of the Group. —Effectively using the Company’s equity for the purposes of reward Advisers to the Committee and retention; and The Chief Executive, Company Secretary and Group Human Resources Director, who are generally invited to attend Committee meetings, provide —Encouraging Executives to build and maintain a meaningful shareholding advice and/or services to the Committee. No Executive participates in any in the Company. discussion concerning his or her own remuneration.

39 The potential payment of the annual bonus for both the EVA and EPS Remuneration parts of the bonus will be as shown in the following table: report continued Performance vs target 97.5% 100 105% % of salary for Chief Executive 12.5 50 125 % of salary for Executive Directors 11.5 46 115 The structure of remuneration for Executives is illustrated in the chart below. This shows the proportionate breakdown of the package at target and The threshold of 97.5 per cent of target represents an increase over the maximum remuneration (showing the target levels of the annual bonus and actual 2007/08 EPS (before one-off losses) and an improvement in EVA over Performance Share Plan) as a proportion of the maximum: the prior year. No bonus would be payable on the achievement of results below 97.5 per cent of target. A straight-line sliding scale of payment will operate Proportion of fixed vs performance-related remuneration (%) between the points in the target range. The threshold is raised to 97.5 per cent Chief Executive from 95 per cent in the previous year. Maximum bonus would be paid upon Target achievement of 105 per centof target (2007: 115 per cent). The Committee has changed the scale of performance versus target to Maximum reflect the tougher level of performance required to achieve target performance. Other Directors Achieving target (100 per cent) will be a significant achievement for the Group and in this regard the degree of stretch above budget is considered by the Target Committee to be suitably stretching. Maximum The annual bonus scheme is designed to drive complementary 0 20 40 60 80 100 behaviours across the senior executive population as well as aligning with the Group’s goals and with shareholders’ interests. The table illustrates the Salary Pension Annual bonus Performance share plan cascade of targets for the year ended 31 March 2009 for the ‘Business Driver Group’ (currently approximately 35 employees). Typically, individuals will be bonused on two to three of these targets: Base salary: salaries are reviewed annually and are determined by individual performance and by reference to market salary levels obtained from independent sources. This is the only element of remuneration which is Performance measure Employee level 123 pensionable. Base salary increases during the year ended 31 March 2008 for Earnings Per Share Executive Directors Executive Directors were between 5.7 per cent and 21.0 per cent. The increase (‘EPS’) (including the Chief in Ian Adamson’s salary reflects an extension of his responsibilities as he took Executive) direct responsibility for the SSL Americas business and for Group Marketing. EVA Executive Directors Executive In determining base salary levels for Executive Directors, pay and conditions (including the Committee Chief Executive) in the workforce generally are taken into account. Strategic personal Executive Certain Group Annual bonus plan: This is a cash plan designed to drive complementary performance objectives Committee Management team roles behaviours within the wider executive population. Group Brand Executive Group Management The maximum potential bonus payable to the Executive Directors for Contribution Committee team the 2008/09 financial year has increased to 125 per cent of base salary for the Group: Operating Group Management Chief Executive and to 115 per cent of base salary for the Executive Directors cash flow/ Management team Operating Profit (previously 115 per cent and 100 per cent respectively). The Committee is Regional Operating Regional Commercial satisfied that the restructured bonus will provide an appropriate incentive cash flow team to reward the Executives for continued outstanding annual operational Regional Brand Regional Commercial performance and execution of Group strategy. Each year the target setting Contribution team approach will ensure that any bonus payable above market levels must be Regional sales Regional Commercial team subject to extremely challenging performance criteria. No specific targets Customer service Manufacturing and are set for the Executive Directors relating to environmental, social and Logistics team governance (‘ESG’) performance. The Company’s performance in regard Category Brand Manufacturing and to ESG matters is robustly monitored and the Committee would consider Contribution Logistics team any failure in these areas when determining any payment of a bonus. Personal Executive Certain Group, The performance measures are unchanged from the previous year. Performance Committee commercial and manufacturing roles One-third of the annual bonus will be based on Economic Value Added (‘EVA’) targets, and two-thirds will be based on a range of challenging earnings per Overall, the Committee is satisfied that the annual bonus plan has share (‘EPS’) targets. created an excellent link between reward and company performance. EVA (which is calculated as normalised operating profit after tax less the cost of all capital employed to produce those earnings) captures the three Performance Share Plan (‘PSP’) basic generic strategies for creating value: Executive Directors and certain other Executives are entitled to participate in the PSP, which is the Group’s only long-term incentive plan. —To increase economic return for capital employed; Under the PSP, conditional awards of shares are granted each year. —To grow by investing in new products whose return more than compensates Other than in exceptional circumstances, the value of awards as at the for the risk taken; and date of grant does not normally exceed 100 per cent of an Executive’s base salary. Subject to the satisfaction of performance conditions, determined —To curtail investment and divert capital from uneconomic activities. annually by the Committee, awards vest on the third anniversary of grant. EVA was introduced as a performance measure in the previous financial Performance conditions are determined annually by the Committee. year. The Committee is satisfied that EVA continues to be an effective link Details of awards granted since 2005 are given on page 45. between improved underlying business performance and appropriate reward The Committee has considered carefully the award levels and to the Executive Directors. performance conditions attached to the 2008/09 awards. As set out in recent results presentations, Company performance has been outstanding and, with a number of strategic initiatives ongoing and being contemplated, the Committee considers that it is critical that this highly talented management

40 Governance •Annual Report and Accounts 2008 team is retained and provided with a significant incentive opportunity at the Shares to satisfy awards may be purchased in the market (via the present time. Accordingly, it is proposed that in addition to the normal award, Company’s Employee Benefit Trust) or using newly issued shares (within an exceptional award of 200 per cent of base salary be made to the Executive ABI guideline-compliant dilution limits). Directors and to certain other key senior executives (at lower multiples of Shareholding guidelines base salary). The granting of the exceptional award is dependent upon a Executive Directors will be expected to retain at least 50 per cent of change to the rules of the PSP, which will require the approval of shareholders the shares (net of tax) which vest to them under the PSP until a shareholding at the AGM. equivalent to 100 per cent of base salary is achieved. In order for the exceptional award to vest, the Group must achieve very stretching EPS and EVA growth targets. Accordingly, the expected value of Pension the exceptional award is considered to be significantly lower than for the The Company operates a number of retirement benefit programmes normal award. throughout the world. Such benefits reflect local competitive conditions The vesting of these awards will be subject to the achievement of a and legal requirements. combination of EPS (one-third) and EVA (two-thirds) targets. The Committee In the UK the Company operates three defined benefit schemes and has concluded that the current policy of basing performance conditions on a contracted-in defined contribution scheme, the SSL UK Pension Scheme the Company’s financial performance has created a very effective incentive. (the ‘SSL Scheme’) for UK employees. All UK defined benefit schemes are The Committee will continue to monitor performance targets to ensure closed to new entrants and future pension accrual. that such targets remain sufficiently stretching and aligned to the interests Executive Directors who participate in the SSL Scheme contribute of shareholders. 5 per cent of their base salary. Executive Directors receive 25 per cent of The vesting schedule for the normal and the proposed exceptional base salary in respect of retirement provision. Any contributions that are not awards granted to Executive Directors is set out in the table below: made in respect of retirement provision are paid as a salary supplement. Ian Adamson is also a member of one of the defined benefit schemes. EPS (1/3rd) EVA (2/3rds) Garry Watts is not a member of the SSL Scheme but operates a personal Compound annual growth rate Aggregate generated over pension plan. Garry Watts receives 25 per cent of base salary in respect of (CAGR) over the three financial the three financial years retirement provision. Any contributions that are not made in respect of years ending March 2011 ending March 2011 Normal Award Percentage of Performance Percentage of Performance retirement provision are paid as a salary supplement and are excluded from (100% of salary) salary vesting scale salary vesting scale the calculation of bonus entitlements and PSP awards. Below Threshold Nil <17% Nil <£130m Threshold 5% = 17% 10% =£130m Other benefits Maximum 33.3% >/= 20% 66.7% >/=£140m The Company provides other benefits to the Executive Directors and certain other executives, namely a company car or car allowance, life Exceptional Award Percentage of Performance Percentage of Performance assurance, permanent health insurance and private medical insurance. ( 200% of salary) salary vesting scale salary vesting scale Below Threshold Nil <20% Nil <£140m Service contracts Threshold 10% = 20% 20% =£140m It is Company policy that the notice period in Executive Directors’ Maximum 66.7% >/= 23%133.3% >/=£150m contracts should not exceed one year. However, the Committee retains the discretion to offer a service contract to a new Executive Director that contains A sliding scale of payment will operate between the points in the an initial notice period in excess of one year, in exceptional circumstances target range. where this is considered necessary. Despite EPS and EVA also being used for the annual bonus plan, the The Executive Directors’ contracts have no fixed term but provide that Committee is also satisfied that there is, in reality, relatively little overlap either the Director or the Company may terminate the employment by giving between these two plans. Under the PSP, performance is measured over one year’s notice. three years, compared to a single financial year for the bonus. EPS and EVA will be calculated by the Company and achievement of Director Date of contract targets will be independently verified before the awards vest. The Committee Garry Watts 5 February 2001 is satisfied that the target range for both measures is sufficiently stretching Ian Adamson 17 June 1996 and their achievement would result in significant shareholder value creation. Mark Moran 28 May 2004 In particular, it is recognised that a relatively low (by market standards) proportion of the award vests at the initial vesting threshold. There are no express provisions for compensation payable in the event The normal award will be granted in late May or early June 2008. The of termination except that Garry Watts’ contract provides that, if the Company exceptional award will, subject to shareholder approval, be granted after the terminates Mr Watts’ appointment with immediate effect, in addition to his AGM, which is being held on 24 July 2008. contractual notice period Mr Watts shall be entitled to a payment equivalent Payment of the total PSP award that vests i.e. the normal plus exceptional to the average of any bonus paid within the three-year period prior to the date elements will be phased: normal awards (maximum 100 per cent of salary) will of termination. The Committee is satisfied that the inclusion of an award in vest after three years in 2011, while the exceptional award will vest in two equal respect of average annual bonus paid is appropriate, as this incorporates a parts after four years in 2012 and after five years in 2013. Stretching the vesting performance-related element to any compensation payment. period for the exceptional award to four and five years will provide a stronger If the employment of an Executive Director is terminated, the Committee’s retention element and alignment with shareholders. policy is to apply mitigation to compensation payments at a level determined by Awards will not confer shareholder rights until the awards have vested reference to the individual circumstances of the Executive Director. Appropriate and participants have received their shares. external and human resource advice would be obtained in each case. Participants will be entitled to receive a payment (in cash and/or shares) Non-Executive Directors on, or shortly following, the vesting of their awards, of an amount equivalent Save as disclosed below, none of the Non-Executive Directors has a to the dividends that would have been paid on those shares between the time service contract. when the awards were granted and the time when they vest. Gerald Corbett was appointed a Non-Executive Director and Chairman The Committee considers that this exceptional incentive will provide a of the Company on 1 August 2005 for a term of three years, terminable by focus for executives to deliver outstanding performance and improvement 12 months’ notice by either party. Mr Corbett receives a fee of £180,000 p.a. in shareholder value over the next three-year period and beyond. The PSP and is entitled to a company car. rules (as amended) will allow a similar, more tactical, use of equity in the future, The basic fee for Non-Executive Directors is £40,000 p.a. (increased provided that exceptionally stretching targets are set for awards in excess from £36,000 p.a. with effect from 1 April 2008). An additional fee of of normal market levels. Provision to make grants above market levels will, £10,000 p.a. (increased from £5,000 p.a. with effect from 1 April 2008) is of course, be used sparingly. paid to committee chairmen. In addition, the Senior Independent Director, Peter Read, receives a further £5,000 p.a.

41 Remuneration report continued

Details of the appointments of the other Non-Executive Directors are shown below:

Non-Executive Director Appointment letter Date of appointment Initial term Comments Peter Read 28 February 2002 21 March 2002 One year Renewed annually. Currently expires on 21 March 2009 Richard Adam 21 October 2003 13 November 2003 Three years Renewed for a further three years on 27 March 2006 Anna Catalano 29 October 2004 11 November 2004 Three years Renewed for a further year. Expires 11 November 2008 Susan Murray 10 November 2004 1 January 2005 Three years Susan will stand down as a Non-Executive Director after the AGM on 24 July 2008

External appointments The Company recognises that Executive Directors may be invited to Director Non-executive directorship Fee £’000 become Non-Executive Directors of other companies. These appointments Garry Watts Stagecoach Group plc 44 can be beneficial to both the individual and the Company in providing further Protherics plc 38 experience and knowledge, but the Company’s consent is required before MHRA (until May 2008) 7 an Executive Director can accept such an appointment. Fees are normally Mark Moran Brixton plc 46 retained by the individual Director. Garry Watts and Mark Moran each hold such appointments. The details are given in the table opposite.

Directors’ emoluments (audited information)

Salaries and fees Bonus Benefits 2008 total 2007 total £’000 £’000 £’000 £’000 £’000 Non-Executive Chairman G. Corbett 180 — 6 186 180 Executive G. Watts 560 598 174 1,332 1,302 I. Adamson 300 259 74 633 558 M. Moran 270 233 19 522 514 Non-Executive R. Adam 41 — — 41 35 A. Catalano 36 ——36 30 S. Murray 36 — — 36 30 P. Read 46 — — 46 40 Total 1,469 1,090 273 2,832 2,689

Notes: 4. During the year any contributions in respect of retirement provision that 1. Remuneration shown above relates to the period for which each Director were not made were paid as a salary supplement. The amounts paid in the served during the year. All Directors served throughout the year. year which are included in the above table under benefits were as follows: G. Watts — £140,000 2. For the 2007/08 financial year, the performance targets for the annual I. Adamson — £51,400 bonus were: M. Moran — £nil Target Threshold Stretch Actual Payment to former Director: EPS 19.1p 18.08p 21.85p 20.6p M. Pilkington resigned as an Executive Director on 22 March 2007 and left EVA £28.9m £27.5m £33.2m £32.7m the Company on 30 June 2007. In addition to the terms of his settlement Therefore, the cash bonus payments will be: agreement disclosed last year, M. Pilkington earned £81,250 as an employee G. Watts — £598,489; I. Adamson — £259,365; and M. Moran — £233,429. for the period 1 April 2007 to 30 June 2007. These cash bonuses will be paid in June 2008. 3. Benefits include all taxable benefits arising from employment with the Company.

42 Governance •Annual Report and Accounts 2008 Directors’ pensions (audited information) The following Directors received contributions as detailed below:

2008 2007 Company Company contribution contribution £’000 £’000 G. Watts 20 20 I. Adamson 32 29 M. Moran 67 62 I. Adamson As noted, Mr Adamson is a member of a defined benefit scheme. Details are given below: I Adamson £ Accrued benefit at 1 April 2007 6,335 Accrued benefit at 31 March 2008 6,580 Increase in accrued benefits excluding inflation Nil Increase in accrued benefits including inflation 245 Transfer value of increase in accrued benefits excluding inflation Nil Transfer value of accrued benefits at 31 March 2007 61,822 Transfer value of accrued benefits at 31 March 2008 87,943 Increase in transfer value 26,121

Notes: 3. During the year the Company contributed 10 per cent of any bonus Pension contributions were paid as follows: sacrificed into the Executive Directors’ pension plan. The amounts paid in the year included in the above table were as follows: 1. I. Adamson — into the SSL UK Pension Scheme and a personal G. Watts — £20,455 pension plan. I. Adamson — £9,100 2. M. Moran — into the SSL UK Pension Scheme.

Directors’ interests in shares (audited information) Shareholdings The following table shows the beneficial interests of the Directors who held office at the end of the year in the ordinary shares of the Company:

Shareholdings Shareholdings as at as at 31 March 2008 31 March 2007 Directors as at 31 March 2008 R. Adam 1,506 1,500 I. Adamson 15,626 15,626 A. Catalano 1,500 1,500 G. Corbett 32,500 32,500 M. Moran 1,797 1,797 S. Murray — — P. Read 5,023 5,000 G. Watts 50,000 50,000

Notes: 1. No director held a non-beneficial interest in any shares. 2. With the exception of the exercise of options under the SSL Sharesave Scheme described in note 7 on page 44, there have been no changes in the interests of serving Directors between 31 March 2008 and 19 May 2008.

43 Remuneration report continued

Option schemes Full details of the options over ordinary shares in the Company held by Executive Directors who served during the year and any movements in those options are shown below:

As at Lapsed in As at Exercise Exercisable Exercisable Note 31.03.07 the period 31.03.08 price (p) from to G. Watts 1996 Scheme 1.1, 2 75,698 75,698 — 483.5 19.03.04 19.03.08 1.1, 2 72,260 — 72,260 506.5 17.07.04 17.07.11 1.3, 2 98,305 — 98,305 295.0 18.07.05 18.07.12 1.5, 2 116,232 116,232 — 249.5 28.11.05 28.11.09 SAYE Scheme 3,997 — 3,997 237.0 01.04.08 01.10.08 Total 366,492 191,930 174,562 I. Adamson 1996 Scheme 1.2, 2 20,996 20,996 — 742.5 14.06.03 14.06.07 1.1, 2 30,000 — 30,000 500.0 02.07.04 02.07.08 1.3, 2 54,915 — 54,915 295.0 18.07.05 18.07.12 1.5, 2 48,697 48,697 — 249.5 28.11.05 28.11.09 SAYE Scheme 5,527 — 5,527 208.0 01.04.08 01.10.08 2,091 — 2,091 237.0 01.04.10 01.10.10 Total 162,226 69,693 92,533 M. Moran 1996 Scheme 1.4, 2 72,815 — 72,815 309.0 11.06.07 11.06.14 1.5, 2 72,815 — 72,815 309.0 11.06.07 11.06.11 SAYE Scheme 6,972 — 6,972 237.0 01.04.10 01.10.10 Total 152,602 — 152,602

Notes: 2. Following the disposal of the Group's medical business (and the resultant 1 Exercise is subject to growth in normalised earnings per share during the reduction in earnings), the Committee reviewed the performance performance period exceeding the retail price index (RPI). The targets for conditions attaching to options granted under the SSL 1996 Executive each grant are as follows: Share Option Scheme. It was agreed that the performance criteria should be rebased to fairly compare historical earnings with those in the ongoing 1.1 Exercise is subject to growth in normalised earnings per share for not less business, but the rebased figures should be no less stretching than the than three years commencing on 1 April 2001 exceeding the growth in the previous targets. Given the share price at the times of grants (which was retail price index by at least an average 2 per cent p.a. This condition has in excess of 480 pence), the Committee determined that only earnings been met. since the financial year ended 31 March 2002 would be reviewed. 1.2 Exercise is subject to growth in normalised earnings per share for not less Consequently the earnings per share figures for the financial years ended than three years commencing on 1 April 2000 exceeding the growth in the 2002, 2003 and 2004 were rebased. In light of the rise in the share price retail price index by at least an average 5 per cent p.a. This condition has during the year, the Committee agreed that the earnings per share figures not been met. for the financial year 2001 be rebased. The calculations to determine the new figures have been independently checked by Ernst & Young LLP, 1.3 Exercise is subject to growth in normalised earnings per share for three although Ernst & Young LLP express no opinion on the accuracy of the years commencing on 1 April 2002 exceeding the growth in the retail price base data and the appropriateness of the underlying assumptions. index by no less than 2 per cent p.a. This condition has been met. 3. No options were exercised in the period or the previous period. 1.4 Exercise is subject to growth in normalised earnings per share for three years commencing on 1 April 2004 exceeding the growth in the retail price 4. There are no performance criteria for exercise of options under the index by no less than 3 per cent p.a. This conditon has been met. SAYE scheme. 1.5 Exercise is subject to performance conditions that must be satisfied 5. The market price of the Company’s shares was 453.5 pence on 31 March over initially a three-year period although this may be extended up to five 2008 and ranged from 395.0 pence to 569.5 pence during the year. years. The exercise is subject to growth in normalised earnings per share 6. No options were granted in the period. exceeding the growth in the retail price index by at least an average of 3 per cent p.a. and TSR of the Company when compared to TSR of 7. On 2 April 2008, Ian Adamson exercised options over 5,527 ordinary shares companies of the FTSE 250 reaching sixth decile for 50 per cent of the of 10 pence in the Company, granted at 208.0 pence per share. On 17 April option to become exercisable, between sixth and eighth for a pro rata 2008, Garry Watts exercised options over 3,997 ordinary shares of 10 pence between 50 per cent and 100 per cent of the option to become in the Company, granted at 237.0 pence per share. Both exercises were in exercisable and eighth decile and above for 100 per cent of the option respect of the SSL Sharesave Scheme (an SAYE scheme). to become exercisable. The TSR condition has not been met.

44 Governance •Annual Report and Accounts 2008 Performance Share Plan

As at Awarded in Lapsed in As at Vesting Note 31.03.07 the period the period 31.03.08 date G. Watts 1 171,880 — — 171,880 11.08.08 2 187,876 — — 187,876 09.06.09 3 — 130,627 — 130,627 25.06.10 Total 359,756 130,627 — 490,383 I. Adamson 1 79,279 — — 79,279 2 87,734 — — 87,734 09.06.09 3 — 69,979 — 69,979 25.06.10 Total 167,013 69,979 — 236,992 M. Moran 1 79,279 — — 79,279 11.08.08 2 87,734 — — 87,734 09.06.09 3 — 62,981 — 62,981 25.06.10 Total 167,013 62,981 — 229,994

Notes: 3. The vesting of this award is subject to the following combination of 1. The vesting of this award is subject to the following earnings per share earnings per share growth and economic value added over a period growth over a period of three years commencing on 1 April 2005: of three years commencing on 1 April 2007. Average annual EPS growth: percentage of performance share award Earnings per share growth for one-third of the number of shares subject that vests to the award: < RPI + 15 per cent: None Average annual EPS growth: percentage of performance share award RPI + 15 per cent (i.e. 45 per cent over three years): 15 that vests RPI + 30 per cent or more (i.e. 90 per cent over three years): 100 Below RPI + 7 per cent: None Between the above points: Pro rata between 15 and 100 RPI + 7 per cent (i.e. 21 per cent over three years): 5 This condition has been met in full. RPI + 12 per cent (i.e. 36 per cent over three years: 16.7 The market price on date of award was 291.5 pence. The award price RPI + 17 per cent (i.e. 51 per cent over three years): 33.3 was 290.90 pence being the average of the middle market quotations Between the above points: Pro rata between 5 and 33.3 for an SSL share derived from the Official List of the UKLA for the five Economic Value Added (‘EVA’) for two-thirds of the number of shares consecutive dealing days immediately preceding the date of award. subject to the award: Aggregate EVA: percentage of performance share award that vests 2. The vesting of this award is subject to the following earnings per share Below £90 million: None growth over a period of three years commencing on 1 April 2006: £90 million: 10 Average annual EPS growth: percentage of performance share award £100 million: 33.3 that vests £110 million: 66.7 < RPI + 10 per cent: None Between the above points: Pro rata between 10 and 66.7 RPI + 10 per cent (i.e. 30 per cent over three years): 15 The market price on date of award was 427.25 pence. The award price was RPI + 20 per cent or more (i.e. 60 per cent over three years): 100 428.7 pence being the average of the middle market quotations for an SSL Between the above points: Pro rata between 15 and 100 share derived from the Official List of the UKLA for the five consecutive The market price on date of award was 279.5 pence. The award price was dealing days immediately preceding the date of award. 282.1 pence being the average of the middle market quotations for an SSL share derived from the Official List of the UKLA for the five consecutive dealing days immediately preceding the date of award.

Performance graph Total shareholder return (£) FTSE 350 Index The graph shows the Company’s Total Shareholder Return performance SSL International compared with that of the FTSE 350 Index. This index was selected as an 350 appropriate comparator index because it is a broad equity market index, of which SSL is a constituent. 300 Peter Read 250 Chairman of the Remuneration Committee 19 May 2008 200 150 100 50 0 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 This graph looks at the value, by 31 March 2008, of £100 invested in SSL International on 31 March 2003 compared with the value of £100 invested in the FTSE 350 Index. The other points plotted are the values at intervening financial year-ends. Source: Thompson Financial

45 The Directors are responsible for preparing the Annual Report and the Statement of Directors’ Group and parent company financial statements, in accordance with responsibilities in respect applicable law and regulations. Company law requires the Directors to prepare Group and parent of the Annual Report and company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs the Financial statements as adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice) . The Group financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position and performance of the Group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. The parent company financial statements are required by law to give a true and fair view of the state of affairs of the parent company. In preparing each of the Group and parent company financial statements, the Directors are required to: —select suitable accounting policies and then apply them consistently; —make judgements and estimates that are reasonable and prudent; —for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU; —for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and —prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business. The Directors are responsible for keeping proper accounting records that 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 1985. 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. Under applicable law and regulations, the Directors are also responsible for preparing a Directors’ report, Directors’ Remuneration report and Corporate governance statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Responsibility statement of the Directors in respect of the annual financial report We confirm that to the best of our knowledge: —the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and —the Directors’ report, Chairman’s statement, Chief Executive’s review and Performance review includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

M. Moran Director G. Watts Director 19 May 2008

46 Governance •Financial statements •Annual Report and Accounts 2008 Basis of audit opinion Independent auditors’ We conducted our audit in accordance with International Standards report to the members on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts of SSL International plc and disclosures in the financial statements and the part of the Directors’ remuneration report to be audited. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation We have audited the Group and parent company financial statements of the financial statements, and of whether the accounting policies are (the ‘financial statements’) of SSL International plc for the year ended appropriate to the Group’s and Company’s circumstances, consistently 31 March 2008 which comprise the Consolidated income statement, the applied and adequately disclosed. Consolidated and parent company balance sheets, the Consolidated We planned and performed our audit so as to obtain all the information statement of cash flows, the Consolidated statement of recognised income and explanations which we considered necessary in order to provide us with and expense and the related notes. These financial statements have been sufficient evidence to give reasonable assurance that the financial statements prepared under the accounting policies set out therein. We have also audited and the part of the Directors’ remuneration report to be audited are free the information in the Directors’ remuneration report that is described as from material misstatement, whether caused by fraud or other irregularity having been audited. or error. In forming our opinion we also evaluated the overall adequacy of the This report is made solely to the Company’s members, as a body, in presentation of information in the financial statements and the part of the accordance with section 235 of the Companies Act 1985. Our audit work has Directors’ remuneration report to be audited. been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no Opinion other purpose. To the fullest extent permitted by law, we do not accept or In our opinion: assume responsibility to anyone other than the Company and the Company’s —the Group financial statements give a true and fair view, in accordance members as a body, for our audit work, for this report, or for the opinions we with IFRSs as adopted by the EU, of the state of the Group’s affairs as at have formed. 31 March 2008 and of its loss for the year then ended; Respective responsibilities of Directors and auditors —the Group financial statements have been properly prepared in accordance The Directors’ responsibilities for preparing the Annual Report and with the Companies Act 1985 and Article 4 of the IAS Regulation; the Group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU, —the parent company financial statements give a true and fair view, in and for preparing the parent company financial statements and the Directors’ accordance with UK Generally Accepted Accounting Practice, of the state remuneration report in accordance with applicable law and UK Accounting of the parent company’s affairs as at 31 March 2008; Standards (UK Generally Accepted Accounting Practice) are set out in the —the parent company financial statements and the part of the Directors’ Statement of Directors’ responsibilities on page 46. remuneration report to be audited, have been properly prepared in Our responsibility is to audit the financial statements and the part of the accordance with the Companies Act 1985; and Directors’ remuneration report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing —the information given in the Directors’ report is consistent with the financial (UK and Ireland). statements. We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the KPMG Audit Plc Directors’ remuneration report to be audited have been properly prepared in Chartered Accountants accordance with the Companies Act 1985 and, as regards the Group financial Registered Auditor statements, Article 4 of the IAS Regulation. We also report to you whether in 8 Salisbury Square our opinion, the information given in the Directors’ report is consistent with London EC4Y 8BB the financial statements. The information given in the Directors’ report includes 19 May 2008 that information presented in the Chairman’s statement, Chief Executive’s review and performance review that is cross referenced from the Business review section of the Directors’ report. In addition,we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and other transactions is not disclosed. We review whether the Corporate governance statement reflects the Company’s compliance with the nine provisions of the 2006 FRC Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures. We read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

47 tttttttttttttttttttttttttttttttttttttttt Consolidated income statement tttttttttttttttttttttttttttttttttttttttfor the year ended 31 March 2008 t tttttttttttttttttttttttttttttttttttttttt 2008 2008 2008 2007 One-off charges Before Total Note 2 one-off charges Total tttttttttttttttttttttttttttttttttttttttNote £m £m £m £m t Revenue 6 533.9 — 533.9 480.2 tttttttttttttttttttttttttttttttttttttttCost of sales (250.9) (37.2) (213.7) (195.7) t Gross profit/(loss) 283.0 (37.2) 320.2 284.5 Distribution expenses (164.7) (1.4) (163.3) (144.9) tttttttttttttttttttttttttttttttttttttttAdministrative expenses (91.5) (2.7) (88.8) (85.3) t Operating profit/(loss) 6,2 26.8 (41.3) 68.1 54.3 Financial income 3 11.4 — 11.4 12.0 tttttttttttttttttttttttttttttttttttttttFinancial expenses 3 (27.3) (5.2) (22.1) (21.2) t Net financing costs 3 (15.9) (5.2) (10.7) (9.2) Share of profit of associates, net of tax 9 — — — 1.8 tttttttttttttttttttttttttttttttttttttttProfit/(loss) before taxation 10.9 (46.5) 57.4 46.9 t Income tax (expense)/income 4 (11.8) 4.3 (16.1) (13.1) (Loss)/profit for the financial year 6 (0.9) (42.2) 41.3 33.8 tttttttttttttttttttttttttttttttttttttttAttributable to: t Equity holders of the parent (2.9) 32.5 Minority interest 19 2.0 1.3 ttttttttttttttttttttttttttttttttttttttt(Loss)/profit for the financial year (0.9) 33.8 t Basic (loss)/earnings per share (pence) 5 (1.5) 17.1 tttttttttttttttttttttttttttttttttttttttDiluted (loss)/earnings per share (pence) 5 (1.5) 17.0 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt48 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Consolidated balance sheet tttttttttttttttttttttttttttttttttttttttas at 31 March 2008 ttttttttttttttttttttttttttttttttttttttt 2008 2007 Note £m £m tttttttttttttttttttttttttttttttttttttttAssets Property, plant and equipment 7 66.4 62.8 Goodwill and intangible assets 8 117.9 99.2 tttttttttttttttttttttttttttttttttttttttDeferred tax assets 4 30.3 31.7 Investments 9 1.0 — Other receivables 11 2.6 2.7 tttttttttttttttttttttttttttttttttttttttTotal non-current assets 218.2 196.4 Inventories 10 91.5 84.5 Trade and other receivables 11 175.9 147.1 tttttttttttttttttttttttttttttttttttttttCurrent tax asset 1.1 1.0 Cash and cash equivalents 12 44.6 40.3 Total current assets 313.1 272.9 tttttttttttttttttttttttttttttttttttttttTotal assets 531.3 469.3 Liabilities tttttttttttttttttttttttttttttttttttttttTrade and other payables 13 (138.0) (117.4) Financial liabilities 15 (142.8) (55.4) Provisions 16 (26.0) (3.0) tttttttttttttttttttttttttttttttttttttttCurrent tax payable 14 (5.0) (5.6) Total current liabilities (311.8) (181.4) Financial liabilities 15 (0.8) (73.9) tttttttttttttttttttttttttttttttttttttttDeferred tax liabilities 4 (9.9) (8.6) Employee benefits 17 (53.7) (69.4) Provisions 16 (10.2) (10.1) tttttttttttttttttttttttttttttttttttttttTax payable 14 (18.8) (18.7) Other payables 13 (0.8) (0.8) Total non-current liabilities (94.2) (181.5) tttttttttttttttttttttttttttttttttttttttTotal liabilities (406.0) (362.9) Net assets 125.3 106.4 Equity tttttttttttttttttttttttttttttttttttttttIssued capital 19 19.1 19.0 Share premium and merger reserve 19 180.8 180.0 Cumulative foreign exchange reserve 19 20.8 (1.0) tttttttttttttttttttttttttttttttttttttttCash flow hedge reserve 19 (0.7) — Retained earnings 19 (106.2) (100.4) Total equity attributable to equity holders of the parent 113.8 97.6 tttttttttttttttttttttttttttttttttttttttMinority interest 19 11.5 8.8 tttttttttttttttttttttttttttttttttttttttTotal equity 125.3 106.4 The financial statements on pages 48 to 95 were approved by the Board of Directors on 19 May 2008 and were signed on its behalf by: M. Moran tttttttttttttttttttttttttttttttttttttttDirector ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt49 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Consolidated statement of recognised income and expense tttttttttttttttttttttttttttttttttttttttfor the year ended 31 March 2008 t tttttttttttttttttttttttttttttttttttttttt 2008 2007 Note £m £m tttttttttttttttttttttttttttttttttttttttActuarial gains on defined benefit plans 17 11.2 17.4 t Restriction of defined benefit plan surplus 17 (2.7) — Effective portion of cash flow hedges transferred to cash flow hedge reserve (0.7) — tttttttttttttttttttttttttttttttttttttttCurrency translation differences on foreign currency net investments 3 21.8 (5.5) t Taxation on gains and losses recognised directly in equity 4 (1.8) (5.9) Income and expense recognised directly in equity 27.8 6.0 ttttttttttttttttttttttttttttttttttttttt(Loss)/profit for the financial year (0.9) 33.8 t Total recognised income and expense for the year 19 26.9 39.8 tttttttttttttttttttttttttttttttttttttttAttributable to: t —Equity holders of the parent 19 24.9 38.5 —Minority interest 19 2.0 1.3 ttttttttttttttttttttttttttttttttttttttt26.9 39.8 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt50 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Consolidated statement of cash flows tttttttttttttttttttttttttttttttttttttttfor the year ended 31 March 2008 ttttttttttttttttttttttttttttttttttttttt 2008 2007 Note £m £m tttttttttttttttttttttttttttttttttttttttCash flows from operating activities: (Loss)/profit for the financial year (0.9) 33.8 Adjustments for: tttttttttttttttttttttttttttttttttttttttDepreciation 7 6.5 10.2 Amortisation of intangibles 8 2.3 0.9 Impairment of goodwill 8 — 2.0 tttttttttttttttttttttttttttttttttttttttShare-based payment charge 18 3.4 2.3 Interest income 3 (11.4) (12.0) Interest expense (before one-off charges) 3 22.1 21.2 tttttttttttttttttttttttttttttttttttttttShare of profit of associate 9 — (1.8) One-off charges 46.5 — Loss on sale of property, plant and equipment 0.2 1.4 tttttttttttttttttttttttttttttttttttttttTotal income tax expense 4 11.8 13.1 Operating profit before changes in working capital and provisions 80.5 71.1 Increase in trade and other receivables (8.8) (8.5) tttttttttttttttttttttttttttttttttttttttDecrease in inventories 1.0 0.5 Increase in trade and other payables 12.2 5.2 Decrease in provisions and employee benefits (32.0) (18.9) tttttttttttttttttttttttttttttttttttttttCash generated from the operations 52.9 49.4 Interest paid (11.8) (8.9) Income taxes paid (10.9) (6.0) tttttttttttttttttttttttttttttttttttttttDividend paid to minority interests 19 — (0.2) Net cash from operating activities 30.2 34.3 tttttttttttttttttttttttttttttttttttttttCash flows from investing activities: Proceeds from sale of plant and equipment 0.2 0.1 Interest received 0.9 0.8 tttttttttttttttttttttttttttttttttttttttAcquisition of property, plant and equipment (7.6) (5.5) Acquisition of investment 9 (1.0) — Acquisition of intangible assets (1.6) (2.9) tttttttttttttttttttttttttttttttttttttttAcquisition of business/subsidiary 8,9 (15.3) (13.6) Payment of deferred consideration — (0.8) Net cash from investing activities (24.4) (21.9) tttttttttttttttttttttttttttttttttttttttCash flows from financing activities: Proceeds from issue of share capital 19 0.9 1.7 New drawdowns on bank loans 80.4 15.0 tttttttttttttttttttttttttttttttttttttttRepayments of loan notes (67.4) (8.3) Payment of finance lease liabilities 21 (0.3) (0.7) Dividends 20 (13.3) (12.4) tttttttttttttttttttttttttttttttttttttttNet cash from financing activities 0.3 (4.7) Net increase in cash and cash equivalents 6.1 7.7 tttttttttttttttttttttttttttttttttttttttCash and cash equivalents, and bank overdraft at start of year 27.1 20.8 Effect of exchange rate fluctuations on cash held 21 0.5 (1.4) tttttttttttttttttttttttttttttttttttttttCash and cash equivalents, and bank overdraft at end of year 12 33.7 27.1 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt51 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttNotes to the consolidated financial statements t tttttttttttttttttttttttttttttttttttttttt 1. Group accounting policies Associates In the financial statements and related notes, the term ‘Company’ An associate is an undertaking in which the Group has a long-term interest, tttttttttttttttttttttttttttttttttttttttrefers to SSL International plc, a company incorporated in the UK; the Group usually from 20 per cent to 50 per cent of the equity voting rights, over t financial statements consolidate those of the Company and its subsidiaries which it has the power to exert significant influence, but not control over the (together referred to as the ‘Group’ or ‘SSL’) and equity account the Group’s financial and operating policy decisions. The Group’s share of results of its tttttttttttttttttttttttttttttttttttttttinterest in associates. associates is included in the consolidated income statement on the equity t accounting basis from the date that significant influence commences until (a) Basis of preparation the date that significant influence ceases. The holding value of associates in The consolidated financial statements are prepared on a going concern tttttttttttttttttttttttttttttttttttttttthe Group’s balance sheet is calculated by reference to the Group’s cost of t basis, in pounds Sterling, rounded to the nearest hundred thousand and investment plus post-acquisition changes in the Group’s share of the net are prepared on a historical cost basis, modified to include revaluation to assets of the entity less any impairment in value. The carrying value of fair value of certain financial instruments as described below. The Group investments in associates includes any acquired goodwill. tttttttttttttttttttttttttttttttttttttttfinancial statements have been prepared and approved by the Directors t Where the reporting date of the associated undertaking differs from in accordance with International Financial Reporting Standards as adopted that of the Group, the Group’s share of results included in the consolidated by the EU (‘Adopted IFRS’). The Company has elected to prepare its parent income statement is based on rolled forward information which coincides tttttttttttttttttttttttttttttttttttttttcompany financial statements in accordance with UK GAAP, these are t with the Group’s reporting date. presented on pages 88 to 94. The accounting policies set out below have been applied consistently in dealing with items which are considered Transactions eliminated on consolidation tttttttttttttttttttttttttttttttttttttttmaterial in relation to the financial statements, except as noted below. Intra-group balances, and any unrealised gains and losses or income t In these financial statements the following new standards have been and expenses arising from intra-group transactions, are eliminated in adopted for the first time. preparing the consolidated financial statements. Unrealised gains arising tttttttttttttttttttttttttttttttttttttttIFRS 7 ‘Financial Instruments: Disclosures’: the disclosure requirements from transactions with associates are eliminated to the extent of the t detailed in this standard have been included in the notes to the consolidated Group’s interest in the entity. Unrealised losses are eliminated in the same financial statements; adoption of this standard has not necessitated any way as unrealised gains, but only to the extent that there is no evidence tttttttttttttttttttttttttttttttttttttttchanges to accounting policy nor had any impact upon the results or net of impairment. t assets of the Group. Further information on financial instruments is provided (c) Use of estimates and judgements in notes 15, 22 and 23. The preparation of the financial statements requires management to IFRIC 8 ‘Scope of IFRS 2 Share-based Payment’: the interpretation tttttttttttttttttttttttttttttttttttttttmake judgements, estimates and assumptions that affect the application t provides guidance on accounting for share-based payment transactions of the accounting policies and the reported amounts of assets, liabilities, when the fair value of the identifiable goods or services received is less than income and expenses. Actual results may differ from these estimates. the fair value of the share-based payment. Adoption of this standard had no Estimates and underlying assumptions are reviewed on an ongoing tttttttttttttttttttttttttttttttttttttttimpact on the results or net assets of the Group. t basis. Revisions to accounting estimates are recognised in the period in IFRIC 9 ‘Reassessment of Embedded Derivatives: the interpretation which the estimate is revised and in any future periods affected. states that reassessment of whether an embedded derivative should be In particular, information about significant areas of estimation tttttttttttttttttttttttttttttttttttttttseparated from the underlying host contract should be made only when t uncertainty and critical judgements in applying accounting policies that there are changes to the contract. Adoption of this standard had no impact have the most significant effect on the amount recognised in the financial on the results or net assets of the Group. statements are described in the following notes: tttttttttttttttttttttttttttttttttttttttIFRIC 11 IFRS 2: ‘Group and Treasury Share Transactions’: the instrument t provides guidance on whether specific transactions should be accounted Note 4 — Income tax expense for as equity-settled or as cash-settled and accounting for share-based Note 8 — Intangible assets tttttttttttttttttttttttttttttttttttttttpayment arrangements involving two or more entities in the same group. Note 15 — Financial liabilities t Adoption of this standard had no impact upon the results or net assets of Note 16 — Provisions for liabilities the Group. Note 17 — Post-retirement benefits Note 18 — Employee costs and share option plans for employees tttttttttttttttttttttttttttttttttttttttSSL’s management considers the following to be the most important t accounting policies in the context of the Group’s operations. (d) Revenue Revenue represents the fair value of consideration receivable, being (b) Basis of consolidation tttttttttttttttttttttttttttttttttttttttthe value of goods provided during the year net of trade discounts, cash t The Group financial statements consist of the financial statements of discounts, retrospective and other rebates, value added and sales taxes. the Company, entities controlled by the Company (its subsidiaries) and the Revenue from the sale of goods is recognised upon transfer to the customer Group’s share of interests in associates. tttttttttttttttttttttttttttttttttttttttof significant risks and rewards of ownership. Generally this will be when t Subsidiaries goods are dispatched to the customer. Credit note reserves are provided at Subsidiaries are entities controlled by the Group. Control exists when each period end to account for management estimates of customer returns tttttttttttttttttttttttttttttttttttttttthe Group has the power, either directly or indirectly, to govern the financial and are deducted from revenue. Any returns in excess of the amount t and operating policies of an entity so as to obtain benefits from its activities. provided would also be deducted from revenue. The financial statements of subsidiaries are included in the consolidated (e) Business combinations and goodwill financial information from the date control commences until the date that tttttttttttttttttttttttttttttttttttttttGoodwill arising on the acquisition of subsidiary undertakings and t control ceases. businesses, representing any excess of the fair value of the consideration given Where the reporting date of the subsidiary undertaking differs from over the fair value of the identifiable assets, liabilities and contingent liabilities that of the Group, the Group’s share of results included in the consolidated tttttttttttttttttttttttttttttttttttttttacquired, is capitalised and is subject to impairment review annually, and when t income statement is based on rolled forward information which coincides there is any indication that the carrying value may not be recoverable. tttttttttttttttttttttttttttttttttttttttwith the Group’s reporting date. t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt52 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt On the subsequent disposal or termination of a business acquired since (h) Property, plant and equipment 1 March 1998, the profit or loss on disposal or termination is calculated after Property, plant and equipment assets are carried at cost less accumulated tttttttttttttttttttttttttttttttttttttttcharging the carrying value of any related goodwill. depreciation and any recognised impairment in value. Depreciation is Prior to transition to IFRS, goodwill was amortised in line with UK GAAP. provided to write property, plant and equipment down to a residual value On transition to IFRS, the goodwill balance was frozen. over their estimated useful economic lives on a straight-line basis at the tttttttttttttttttttttttttttttttttttttttThe Group’s policy up to and including the year ended 28 February 1998 following annual rates: was to write off goodwill arising upon acquisition against reserves. Under IFRS 1 Freehold land — No depreciation is charged on freehold land and IFRS 3 such goodwill will remain eliminated against reserves and will not tttttttttttttttttttttttttttttttttttttttform part of any subsequent profit/loss on disposal. Freehold and leasehold buildings — 2 per cent of cost or over the life of the lease if less than 50 years (f) Other intangible assets Intangible assets that are acquired, which can be separately identified Motor vehicles — 25 per cent of cost tttttttttttttttttttttttttttttttttttttttand the cost of which can be measured reliably, are capitalised and Plant, equipment, fixtures and fittings — 7 per cent to 25 per cent of cost amortised on a straight-line basis over their estimated useful economic lives subject to any recognised impairment in value, usually between 3—20 years. Assets under the course of construction — No depreciation is charged on tttttttttttttttttttttttttttttttttttttttIn determining the useful economic life each asset is reviewed separately assets under the course of construction and consideration given to the period over which the Group expects to derive The residual value and estimated useful economic life for significant economic benefit from the asset. The useful economic life for significant property, plant and equipment is reassessed annually. tttttttttttttttttttttttttttttttttttttttassets is reviewed annually. Where an asset is deemed to have an indefinite useful economic life it is (i) Leases not amortised but is, instead, subject to annual impairment review to ensure Leases in terms of which the Group assumes substantially all the risks tttttttttttttttttttttttttttttttttttttttthe carrying value of the asset is supportable. and rewards of ownership are classified as finance leases. All other leases are accounted for as operating leases. (g) Impairment Assets held under finance leases are capitalised and included within Financial assets property, plant and equipment at the lower of fair value and the present value tttttttttttttttttttttttttttttttttttttttA financial asset is assessed at each reporting date to determine of minimum lease payments. Each asset is depreciated over the shorter of whether there is any objective evidence that it is impaired. A financial asset the lease term or the asset’s useful life. is considered to be impaired if objective evidence indicates that one or more The obligations related to finance leases, net of finance lease charges in tttttttttttttttttttttttttttttttttttttttevents have had a negative effect on the estimated future cash flows of that respect of future periods, are included within financial liabilities. The interest asset. All impairment losses are recognised in profit or loss. element of the rental agreement is charged to the income statement over Non-financial assets the term of the lease to reflect a constant rate of interest on the outstanding tttttttttttttttttttttttttttttttttttttttThe carrying value of the Group’s non-financial assets, other than capital amount payable. inventories and deferred tax assets, are reviewed at each reporting date Costs in respect of operating leases are charged to the income to determine whether there is any indication of impairment. If any such statement on a straight-line basis over the term of the lease. Lease incentives tttttttttttttttttttttttttttttttttttttttindication exists then the asset’s recoverable amount is estimated. For are spread over the term of the lease. goodwill and intangible assets that have indefinite lives, the recoverable ( j) Foreign currency transactions amount is estimated at each reporting date. Transactions in foreign currencies are translated to the respective tttttttttttttttttttttttttttttttttttttttAn impairment loss is recognised if the carrying amount of an asset or functional currencies of Group entities using the rate of exchange ruling at its cash-generating unit exceeds its recoverable amount. A cash-generating the date of the transaction. Monetary assets and liabilities denominated in unit is the smallest identifiable asset group that generates cash flows that foreign currencies are translated using the rate of exchange ruling at the largely are independent from other assets and groups. Impairment losses tttttttttttttttttttttttttttttttttttttttbalance sheet date and the foreign exchange arising is taken to the income are recognised in profit or loss. Impairment losses recognised in respect of statement. cash-generating units are allocated first to reduce the carrying value of any tttttttttttttttttttttttttttttttttttttttgoodwill allocated to the units and then to reduce the carrying amount of Financial statements of foreign operations the other assets in the unit (group of units) on a pro rata basis. Income statements of foreign operations are translated into Sterling The recoverable amount of an asset or cash-generating unit is the at the average rate applicable to the respective accounting period as an tttttttttttttttttttttttttttttttttttttttgreater of its value in use and its fair value less costs to sell. In assessing value approximation of the rate at the date the transactions took place. in use, the estimated future cash flows are discounted to their present value Assets and liabilities, including goodwill, of foreign operations are using a pre-tax discount rate that reflects current market assessments of translated using the rate of exchange ruling at the balance sheet date. Gains the time value of money and the risks specific to the asset. or losses on translations of foreign operations are included as a movement tttttttttttttttttttttttttttttttttttttttAn impairment loss in respect of goodwill is not reversed. In respect of on the cumulative foreign exchange reserve. On a subsequent disposal such other assets, impairment losses recognised in prior periods are assessed at gains or losses will form part of the profit/loss on disposal within the income each reporting date for any indications that the loss has decreased or no statement. Gains and losses prior to adoption of IFRS are deemed to be nil. tttttttttttttttttttttttttttttttttttttttlonger exists. An impairment loss is reversed if there has been a change in Net investment in foreign operations estimates used to determine the recoverable amount. An impairment loss is The portion of the gain or loss on an instrument used to hedge a net reversed only to the extent that the asset’s carrying amount does not exceed investment in a foreign operation, that is determined to be an effective tttttttttttttttttttttttttttttttttttttttthe carrying amount that would have been determined, net of depreciation hedge, is included as a movement in the cumulative foreign exchange or amortisation, if no impairment loss had been recognised. reserve. On a subsequent disposal such gains or losses will form part of tttttttttttttttttttttttttttttttttttttttthe profit/loss on disposal within the income statement. Any ineffective portion is recognised immediately in profit or loss. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt53 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 1. Group accounting policies continued (m) Research and development (k) Post-retirement benefits Research expenditure is charged to income in the year in which it is tttttttttttttttttttttttttttttttttttttttDefined contribution plans incurred. Development expenditure is capitalised only if development t Obligations for defined contribution plans are recognised as an expense costs can be measured reliably, the product is technically and commercially in the income statement when they are due. feasible, future economic benefits are probable, and the Group intends to tttttttttttttttttttttttttttttttttttttttand has sufficient resources to complete development and to sell the asset. t Defined benefit plans Other development expenditure is recognised in profit or loss as incurred. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future (n) Cash equivalents tttttttttttttttttttttttttttttttttttttttbenefits that employees have earned in return for their service in the current Cash equivalents are current asset investments, which are disposable t and prior periods; that benefit is discounted to determine its present value, without curtailing or disrupting the business, and are either readily convertible and any unrecognised past service costs and the fair value of any plan assets into known amounts of cash, at, or close to their carrying values or traded in tttttttttttttttttttttttttttttttttttttttare deducted. The discount rate is the yield at the reporting date on AA an active market. Cash equivalents comprise short-term bank deposits of t credit-rated bonds that have maturity dates approximating the terms of less than three months (other than cash). the Group’s obligations. The calculation is performed by a qualified actuary (o) Inventories tttttttttttttttttttttttttttttttttttttttusing the projected unit credit method. When the calculation results in a t Inventories are stated at the lower of cost and net realisable value. In benefit to the Group, the recognised asset is limited to the net total of any determining the cost of raw materials, consumables and goods for resale, unrecognised past service costs and the present value of any future refunds the FIFO method is used, and includes expenditure incurred in acquiring from the plan or reductions in future contributions to the plan. tttttttttttttttttttttttttttttttttttttttthe inventories and bringing them to their existing location and condition. t When the benefits of a plan are improved, the portion of the increased For work in progress and finished goods, cost is taken as production cost benefit relating to past service by employees is recognised in the income which includes an appropriate proportion of overheads based upon normal statement on a straight-line basis over the average period until the benefits tttttttttttttttttttttttttttttttttttttttoperating capacity. t become vested. To the extent that the benefits vest immediately, the Net realisable value is determined as estimated selling price less all expense is recognised immediately in the income statement. estimated costs of completion and costs to be incurred in marketing, selling ttttttttttttttttttttttttttttttttttttttt(l) Employee benefits and distribution. t Share-based payment transactions (p) Grant income The Group operates a number of employee share schemes. The fair Revenue grants are recognised in the income statement as a reduction value of employee share options granted is recognised as an employee tttttttttttttttttttttttttttttttttttttttin the related expense. t expense with a corresponding increase in equity. The fair value is measured Capital grants are shown in deferred income within the balance sheet at grant date, using an appropriate valuation model, taking into account the and released to match the depreciation charge on the associated asset. tttttttttttttttttttttttttttttttttttttttterms and conditions upon which the share options were granted. These t will include both performance and service conditions. The resulting cost (q) Income tax is charged to the income statement over the vesting period of the options. Income tax comprises current and deferred tax. Income tax is tttttttttttttttttttttttttttttttttttttttAt each balance sheet date the cumulative charge in respect of each option recognised in the income statement except to the extent that it relates to t plan is adjusted to reflect expected and actual levels of options vesting. items recognised directly in equity, in which case it is recognised in equity. The fair value of the amount payable to employees in respect of share Current tax is the expected tax payable on the taxable income for the tttttttttttttttttttttttttttttttttttttttappreciation rights, which are settled in cash, is recognised as an expense, year, using tax rates enacted or substantively enacted at the balance sheet t with a corresponding increase in liabilities, over the period in which the date, and any adjustment to tax payable in respect of previous years. employees become unconditionally entitled to payment. The liability is Deferred tax is provided using the balance sheet liability method, remeasured at each reporting date and at settlement date. Any changes in providing for temporary differences between the carrying amounts of assets tttttttttttttttttttttttttttttttttttttttthe fair value are recognised within the income statement as a personnel and liabilities for financial reporting purposes and the amounts used for t expense. taxation purposes. The amount of deferred tax provided is based upon the For options granted before 7 November 2002 the recognition and expected manner of realisation or settlement of the carrying values of the tttttttttttttttttttttttttttttttttttttttmeasurement principles of IFRS 2 have not been applied in accordance with assets or liabilities, using tax rates enacted or substantively enacted at the t the transitional provisions in IFRS 1. Any cost in relation to these options is balance sheet date. expensed to the income statement as incurred. Deferred tax is not recognised for the following temporary differences: tttttttttttttttttttttttttttttttttttttttthe intitial recognition of assets or liabilities in a transaction that is not a t Overseas termination benefits business combination and that affects neither accounting nor taxable profit, The Group’s net obligation in respect of termination benefits other than and differences relating to investments and subsidiaries to the extent that it pension plans is the amount of future benefit that employees have earned in is probable that they will not reverse in the foreseeable future. In addition, tttttttttttttttttttttttttttttttttttttttreturn for their service in current and prior periods, that benefit is discounted t deferred tax is not recognised for taxable temporary differences arising on to determine the present value, and the fair value of any related asset is the initial recognition of goodwill. deducted. The discount rate is the yield at the reporting date on AA credit- A deferred tax asset is recognised only to the extent that it is probable tttttttttttttttttttttttttttttttttttttttrated bonds that have maturity dates approximating the terms of the Group’s t that future taxable profits will be available against which the asset can be obligations. The calculation is performed by a qualified actuary using the utilised. Deferred tax assets are reduced to the extent that it is no longer projected unit credit method. Any actuarial gains or losses are recognised probable that sufficient taxable profits will be available to allow all or part tttttttttttttttttttttttttttttttttttttttdirectly in equity immediately. t of the asset to be realised. tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt54 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt (r) Provisions (t) Treasury shares A provision is recognised in the balance sheet when the Group has a When share capital recognised as equity is repurchased, the amount of tttttttttttttttttttttttttttttttttttttttpresent legal or constructive obligation as a result of a past event, which can the consideration paid, including directly attributable costs, is recognised as be measured reliably, and it is probable that an outflow of economic benefits a change in equity. Repurchased shares are classified as treasury shares and will be required to settle the obligation. If the effect is material, provisions are presented as a deduction from total equity. tttttttttttttttttttttttttttttttttttttttdetermined by discounting the expected future cash flows at a pre-tax rate (u) Investments that reflects current market assessments of the time value of money and the Investments in equity securities held by the Group are classified as risks specific to the liability. available for sale financial assets and are stated at fair value. Where there is ttttttttttttttttttttttttttttttttttttttt(s) Financial instruments no active market for unlisted shares held, the investment is held at cost and The Group uses derivative financial instruments (derivatives) to hedge subject to annual impairment testing. its exposure to foreign exchange and interest rate risks arising from operational, Accounting standards issued but not adopted tttttttttttttttttttttttttttttttttttttttfinancing and investment activities. The Group does not hold or issue IFRS 8: ‘Operating segments’ is effective for accounting periods derivative financial instruments for trading purposes. beginning on or after 1 January 2009. The standard specifies how an entity Derivative financial instruments are recognised initially at fair value. should report information about its operating segments in annual financial tttttttttttttttttttttttttttttttttttttttSubsequent to initial recognition, derivative financial instruments are stated statements, and sets out requirements for related disclosures about products at fair value. The fair value of derivative financial instruments is determined and services, geographical areas and major customers. Adoption of this by reference to discounted cash flows or option valuation models. Where standard will have no impact upon the results or net assets of the Group. tttttttttttttttttttttttttttttttttttttttderivatives do not qualify for hedge accounting, any gains or losses on remeasurement are immediately recognised in the Income Statement. Where derivatives qualify for hedge accounting, recognition of any resultant tttttttttttttttttttttttttttttttttttttttgain or loss depends on the nature of the hedge relationship and the item being hedged. The effectiveness of hedges is tested at each period end to ensure that the hedge remains effective. tttttttttttttttttttttttttttttttttttttttInterest-bearing borrowings are initially stated at fair value less attributable transaction costs. Subsequent to initial recognition, interest- bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over tttttttttttttttttttttttttttttttttttttttthe period of the borrowings on an effective interest basis. Fair value hedging tttttttttttttttttttttttttttttttttttttttDerivative financial instruments are classified as fair value hedges when they hedge the Group’s exposure to changes in the fair value of a recognised asset or liability. Any gain or loss from remeasuring the hedging instrument tttttttttttttttttttttttttttttttttttttttis recognised immediately in the Income Statement within financing costs. Any change in the fair value of the hedged item, attributable to the hedged risk, is adjusted against the carrying value of the hedged item and recognised tttttttttttttttttttttttttttttttttttttttimmediately in the Income Statement within financing costs. Cash flow hedging Derivative financial instruments are classified as cash flow hedges tttttttttttttttttttttttttttttttttttttttwhen they hedge the Group’s exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability. Changes in the fair value of the derivative hedging instrument designated tttttttttttttttttttttttttttttttttttttttas a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent the hedge is ineffective, changes in fair value are recognised in profit or loss. tttttttttttttttttttttttttttttttttttttttDiscontinuance of hedge accounting If the hedging instrument no longer meets the criteria for hedge accounting, expires, or is sold, terminated or exercised, then hedge accounting tttttttttttttttttttttttttttttttttttttttis discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is ttttttttttttttttttttttttttttttttttttttttransferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to profit or loss in the tttttttttttttttttttttttttttttttttttttttsame period that the hedged item affects profit or loss. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt55 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 2. Operating profit 2008 2007 tttttttttttttttttttttttttttttttttttttttNote £m £m t Operating profit (before one-off charges) 68.1 54.3 One-off charges — European Supply Chain restructuring (see below) (41.3) — tttttttttttttttttttttttttttttttttttttttOperating profit 26.8 54.3 t Charges included above —for depreciation on owned assets 7 6.4 10.1 ttttttttttttttttttttttttttttttttttttttt—for depreciation on leased assets 7 0.1 0.1 t —for amortisation of intangibles 8 2.3 0.9 —for impairment of goodwill 8 — 2.0 tttttttttttttttttttttttttttttttttttttttResearch costs 10.2 8.8 t Loss on sale of property, plant and equipment 0.2 1.4 Foreign exchange (gains)/losses in profit or loss (excluding financial instruments) (5.4) (0.7) tttttttttttttttttttttttttttttttttttttttFees payable to KPMG and its associates t —audit of these financial statements 0.2 0.2 —audit of financial statements of subsidiaries 0.5 0.5 ttttttttttttttttttttttttttttttttttttttt—other services relating to taxation 0.2 0.3 t —all other services 0.1 — Total fees payable to KPMG and its associates 1.0 1.0 tttttttttttttttttttttttttttttttttttttttFees payable to other audit firms 0.2 0.1 t

Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the Company’s financial statements, have not been tttttttttttttttttttttttttttttttttttttttdisclosed as the information is required instead to be disclosed on a consolidated basis. t

One-off charges — European Supply Chain restructuring tttttttttttttttttttttttttttttttttttttttOn 27 September 2007, the Group publicly announced its decision to close the Spain manufacturing plant, and transfer production to India and Thailand, t and to close the Technical Services Centre in Cambridge, with its activities transferred to the technical centres at Peterlee, Thailand and India. The Group also committed to restructuring the Footwear Development Group. Operations in Spain and Cambridge had ceased by 31 March 2008; the key uncertainties in tttttttttttttttttttttttttttttttttttttttrelation to these sites is the timing and final cost of addressing the surplus freehold and leasehold properties on these sites, for which provisions remain at t 31 March 2008 (transferred to the surplus property provision), and the potential transfer of plant at the Rubi site to other manufacturing facilities in China, for which Chinese Government approval is required. The restructuring of the Footwear Development Group has been completed. tttttttttttttttttttttttttttttttttttttttOn 28 February 2008, the Group announced its decision to close the Guernsey manufacturing facility, with production to be transferred to the Peterlee t facility or to third-party suppliers; production at Guernsey is anticipated to cease during the calendar year 2008. Again, the key uncertainty relating to this tttttttttttttttttttttttttttttttttttttttclosure is the timing and final cost of disposing of the surplus freehold and leasehold property on the site. t A total provision of £41.3 million was made with regards to these restructuring projects, relating to redundancies, fixed asset write-offs and other closure and restructuring costs; the remaining provision at the balance sheet date, after transfer of surplus property amounts to the surplus property provision, is ttttttttttttttttttttttttttttttttttttttt£22.4 million. Cash outflows of £14.4 million have occurred as at 31 March 2008, and of the £22.4 million provision remaining, £14.9 million of cash outflows t are anticipated. It is expected that the majority of cash outflows will occur in the forthcoming 12 months, although, as noted above, there is some uncertainty regarding the period of time in which the Group’s obligations in relation to surplus property can be discharged. tttttttttttttttttttttttttttttttttttttttIn addition to the £41.3 million operational restructuring costs, there were one-off financial expenses of £5.2 million as detailed in note 3. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt56 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 3. Financial income and expense Recognised in profit or loss ttttttttttttttttttttttttttttttttttttttt2008 2007 Note £m £m Financial income tttttttttttttttttttttttttttttttttttttttBank and deposit interest 0.9 0.8 Expected return on pension scheme assets 17 10.5 9.4 Change in fair value of financial assets and liabilities designated at fair value through profit or loss — 1.8 ttttttttttttttttttttttttttttttttttttttt11.4 12.0 Financial expense tttttttttttttttttttttttttttttttttttttttBank loans and overdraft (6.3) (2.7) Loan notes (3.4) (6.0) Finance leases — (0.1) tttttttttttttttttttttttttttttttttttttttInterest on pension scheme liabilities 17 (12.4) (12.4) (22.1) (21.2) tttttttttttttttttttttttttttttttttttttttOne-off financial expense * (5.2) — (27.3) (21.2) Net financing costs recognised in profit or loss (15.9) (9.2) ttttttttttttttttttttttttttttttttttttttt* Finance charges of £5.2 million relate to penalties and charges arising on the early repayment of loan notes and early settlement of related derivative balances in October 2007 following the announcement of the European Supply Chain restructuring programme.

Recognised directly in equity ttttttttttttttttttttttttttttttttttttttt2008 2007 £m £m Foreign currency translation differences for foreign operations 21.8 (5.5) tttttttttttttttttttttttttttttttttttttttEffective portion of changes in fair value of cash flow hedges (0.7) — tttttttttttttttttttttttttttttttttttttttNet finance income/(expense) recognised directly in equity 21.1 (5.5)

4. Income tax expense tttttttttttttttttttttttttttttttttttttttTaxation recognised in the income statement is as follows: Before 2008 2007 one-off One-off charges charges Total Total ttttttttttttttttttttttttttttttttttttttt£m £m £m £m Current tax expense tttttttttttttttttttttttttttttttttttttttCurrent year corporation tax (6.1) 2.1 (4.0) (3.9) Overseas taxation (7.8) 1.4 (6.4) (5.5) Adjustments in respect of prior years (0.2) — (0.2) 1.8 ttttttttttttttttttttttttttttttttttttttt(14.1) 3.5 (10.6) (7.6) Deferred tax expense Origination and reversal of temporary differences (1.6) 0.8 (0.8) (6.7) tttttttttttttttttttttttttttttttttttttttAdjustments in respect of prior years (0.4) — (0.4) 1.2 (2.0) 0.8 (1.2) (5.5) tttttttttttttttttttttttttttttttttttttttTotal income tax expense in the income statement (16.1) 4.3 (11.8) (13.1) The effective tax rate for the period is 28 per cent on the profit before one-off charges and tax and income from associates (2007: 29 per cent). The total charge of £11.8 million (2007: £13.1 million) includes a credit of £4.3 million relating to the one-off charges (2007: £nil). Included within the overseas taxation tttttttttttttttttttttttttttttttttttttttis a benefit of £1.2 million arising from previously unrecognised deferred tax assets (2007: £0.5 million). Deferred tax charged to the income statement in the year arises principally in respect of the origination and reversal of temporary differences. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries and associates as the earnings are continually reinvested by the Group and no tax is tttttttttttttttttttttttttttttttttttttttexpected to be payable on earnings in the forseeable future. The UK standard rate of corporation tax is 28 per cent from 1 April 2008. The effect of this is a reduction in the UK deferred tax asset of £0.8 million (the total ttttttttttttttttttttttttttttttttttttttteffect on the Group of changes in tax rates is £0.6 million). The phased abolition of Industrial Building Allowances in the UK is anticipated to be enacted in the 2008 Finance Act. The expected effect of this will be to tttttttttttttttttttttttttttttttttttttttincrease the deferred tax liability provided on accelerated capital allowances as at 31 March 2008 by approximately £1 million. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt57 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 4. Income tax expense continued Amounts taken to the consolidated statement of recognised income and expense are analysed as follows: ttttttttttttttttttttttttttttttttttttttt2008 2007 t £m £m Current tax tttttttttttttttttttttttttttttttttttttttTax on foreign exchange gains and losses 0.7 — t Deferred tax Tax movements in respect of defined benefit pension liability (2.5) (5.9) ttttttttttttttttttttttttttttttttttttttt(1.8) (5.9) t

Amounts recognised directly in equity are analysed as follows: ttttttttttttttttttttttttttttttttttttttt2008 2007 t £m £m tttttttttttttttttttttttttttttttttttttttTax movements in respect of employee costs and share option plans for employees 0.3 0.6 t Factors affecting future tax charges tttttttttttttttttttttttttttttttttttttttThe Group’s future tax charge depends on the levels and mix of profitability in different jurisdictions, and the tax rates applied to those profits. The table t below reconciles the current tax charge that would result from applying the UK rate of corporation tax to the Group’s total profit before tax and associates to the total income tax charge. tttttttttttttttttttttttttttttttttttttttReconciliation of effective tax rate t 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttProfit before tax 10.9 46.9 t Share of profits of associates net of taxation — (1.8) tttttttttttttttttttttttttttttttttttttttTotal profit before tax 10.9 45.1 t Notional taxation charge at UK corporation tax rate of 30% (2007: 30%) 3.3 13.5 Non-deductible expenses and income not taxable 4.7 0.5 tttttttttttttttttttttttttttttttttttttttOverseas losses not deductible 7.3 1.7 t Elimination of intra-Group profit (2.3) 1.0 Adjustments in respect of prior years 0.7 (3.0) tttttttttttttttttttttttttttttttttttttttEffect of tax rates in foreign jurisdictions (0.8) (0.2) t Overseas losses not previously recognised (1.2) (0.5) Current year overseas tax losses utilised in prior periods (0.5) — tttttttttttttttttttttttttttttttttttttttTax effect of change in tax rates 0.6 — t Other — 0.1 ttttttttttttttttttttttttttttttttttttttt11.8 13.1 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt58 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Balance sheet tttttttttttttttttttttttttttttttttttttttDeferred taxation asset/(liability) movement The amounts of deferred taxation accounted for in the Group balance sheet and the movements therein comprised the following deferred tax liabilities and assets: tttttttttttttttttttttttttttttttttttttttBalance at Recognised Recognised Exchange Balance at 1 April 2007 in income in equity differences 31 March 2008 £m £m £m £m £m tttttttttttttttttttttttttttttttttttttttDeferred tax liabilities Accelerated capital allowances 4.8 1.3 — — 6.1 Deferred capital gains 3.8 — — — 3.8 ttttttttttttttttttttttttttttttttttttttt8.6 1.3 — — 9.9 Deferred tax assets Defined benefit pension schemes 19.6 (3.2) (2.5) — 13.9 tttttttttttttttttttttttttttttttttttttttCapital losses carried forward 3.8 — — — 3.8 Share-based payments 2.1 0.6 0.3 — 3.0 Intra-group profits in stock 2.8 2.4 — — 5.2 tttttttttttttttttttttttttttttttttttttttOther short-term timing differences 3.4 0.4 — 0.6 4.4 ttttttttttttttttttttttttttttttttttttttt31.7 0.2 (2.2) 0.6 30.3 Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of unused income tax losses of £176.6 million (2007: £173.6 million), and unused capital losses of £142.0 million (2007: £149.4 million).The increase in income tax losses in the year of £3.0 million is explained by a foreign currency retranslation difference tttttttttttttttttttttttttttttttttttttttof £4.8 million on losses carried forward at 2007, net of a decrease in losses carried forward of £1.8 million. It is probable that future taxable profit will not be available against which the Group can utilise the benefits therefrom. Included in the losses are US income ttttttttttttttttttttttttttttttttttttttttax losses of USD 120 million (2007: USD 103 million) which are unlikely to be available for use due to the change of ownership restrictions. £44.9 million (2007: £43.6 million) of the income tax losses may be carried forward indefinitely. The remaining losses held in overseas entities may expire tttttttttttttttttttttttttttttttttttttttover periods of up to 20 years. ttttttttttttttttttttttttttttttttttttttt5. (Loss)/earnings per £0.10 ordinary share (Loss)/earnings per share has been calculated by dividing the (loss)/profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. tttttttttttttttttttttttttttttttttttttttThe (loss)/profit attributable to ordinary shareholders is as follows: 2008 2007 £m £m ttttttttttttttttttttttttttttttttttttttt(Loss)/profit for the year: (2.9) 32.5 tttttttttttttttttttttttttttttttttttttttFor basic (loss)/earnings per share (2.9) 32.5 The profit before one-off charges for adjusted EPS (disclosed in the Chairman’s statement and the Performance review of the annual report), is as follows: 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m (Loss)/profit for the year as reported (2.9) 32.5 Add back net impact of one-off charges 42.2 — tttttttttttttttttttttttttttttttttttttttProfit before one-off charges for adjusted EPS 39.3 32.5

The calculation of diluted earnings per share uses basic earnings as defined above, and the basic weighted average number of ordinary shares in issueduring tttttttttttttttttttttttttttttttttttttttthe period, adjusted as follows: 2008 2007 tttttttttttttttttttttttttttttttttttttttWeighted average number of shares (millions) : Number of ordinary shares at start of year 190.2 189.9 Effect of shares issued in the year — share options exercised 0.4 0.3 tttttttttttttttttttttttttttttttttttttttFor basic and adjusted earnings per share 190.6 190.2 Dilutive effect of share options 1.8 0.7 tttttttttttttttttttttttttttttttttttttttFor diluted earnings per share 192.4 190.9 The dilutive effect of share options is only considered when a loss is made to the extent that the dilutive effect increases the loss per share. The diluted loss tttttttttttttttttttttttttttttttttttttttper share for the year ended 31 March 2008 is therefore equal to the basic loss per share. ttttttttttttttttttttttttttttttttttttttt59 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt

6. Segment information tttttttttttttttttttttttttttttttttttttttSegment information is presented in the consolidated financial statements in respect of the Group’s geographical segments, which, by location of assets, t are the primary basis for reporting. The geographical segment reporting format reflects the Group’s management and internal reporting structure. tttttttttttttttttttttttttttttttttttttttIntra-segment pricing is determined on an arm’s-length basis. t Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. tttttttttttttttttttttttttttttttttttttttGeographical segments t The Group is comprised of the following main geographical segments: —United Kingdom and Continental Europe ttttttttttttttttttttttttttttttttttttttt—Americas t —Asia Pacific and Rest of the World tttttttttttttttttttttttttttttttttttttttContinental Europe includes sales offices and manufacturing units within any countries within the European continent. t Americas includes sales offices within any countries within the North and South American continents. Asia Pacific and the Rest of the World includes sales offices and manufacturing units within any countries that are not within the European, North American tttttttttttttttttttttttttttttttttttttttand South American continents. t

Geographical segments ttttttttttttttttttttttttttttttttttttttt2008 2008 2007 2007 t By location By location By location By location of assets of customers of assets of customers ttttttttttttttttttttttttttttttttttttttt£m £m £m £m t Segment revenue External ttttttttttttttttttttttttttttttttttttttt—United Kingdom and Continental Europe 407.2 398.2 371.6 357.8 t —Americas 32.6 29.9 29.9 30.5 —Asia Pacific and Rest of the World 94.1 105.8 78.7 91.9 ttttttttttttttttttttttttttttttttttttttt533.9 533.9 480.2 480.2 t Intra-segment —United Kingdom and Continental Europe 168.0 170.9 ttttttttttttttttttttttttttttttttttttttt—Americas — — t —Asia Pacific and Rest of the World 30.2 37.3 — Eliminations (198.2) (208.2) tttttttttttttttttttttttttttttttttttttttTotal revenue 533.9 533.9 480.2 480.2 t Revenue for the year ended 31 March 2008 includes £1.8 million from the Vasyli business acquired in November 2007 (see note 8), £0.5 million in the United tttttttttttttttttttttttttttttttttttttttKingdom and Continental Europe and £1.3 million in Asia Pacific (2007: £2.5 million relating to the acquisition of the former associate in China). The revenue t of the Vasyli business for the period from 1 April 2007 until the date of acquisition is not available as financial information was not regularly compiled by the tttttttttttttttttttttttttttttttttttttttvendors on a consolidated basis pre-acquisition. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt60 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttSegment result — United Kingdom and Continental Europe 46.5 43.9 — Americas 1.1 (1.9) ttttttttttttttttttttttttttttttttttttttt— Asia Pacific and Rest of the World 20.5 12.3 Consolidated segment result (before one-off charges) 68.1 54.3 One-off charges # — charged to operating profit (41.3) — tttttttttttttttttttttttttttttttttttttttConsolidated operating profit 26.8 54.3 Consolidated segment result tttttttttttttttttttttttttttttttttttttttShare of profit of associates* — 1.8 Net financing costs — before one-off charges (10.7) (9.2) Net financing costs — one-off charges (5.2) — tttttttttttttttttttttttttttttttttttttttIncome tax — before one-off charges (16.1) (13.1) Income tax — one-off charges 4.3 — (Loss)/profit for the financial year (0.9) 33.8 ttttttttttttttttttttttttttttttttttttttt# One-off charges relate to the United Kingdom and Continental Europe geographical segment. * Share of profit of associates relates wholly to operations based in the Asia Pacific and Rest of the World geographical segment. tttttttttttttttttttttttttttttttttttttttOperating profit for the year ended 31 March 2008 includes £0.6 million from the Vasyli business acquired in November 2007, £0.2 million in the United Kingdom and Continental Europe and £0.4 million in Asia Pacific (2007: £1.4 million relating to the acquisition of the former associate in China). The operating profit of the Vasyli business for the period from 1 April 2007 until the date of acquisition is not available as financial information was not regularly compiled by tttttttttttttttttttttttttttttttttttttttthe vendors on a consolidated basis pre-acquisition. 2008 2008 2007 2007 £m £m £m £m Property, plant Intangible Property, plant Intangible tttttttttttttttttttttttttttttttttttttttand equipment amortisation and and equipment amortisation and depreciation impairment depreciation impairment Segment non-cash expenditure ttttttttttttttttttttttttttttttttttttttt— United Kingdom and Continental Europe 4.6 2.3 8.9 2.9 — Americas 0.1 — 0.1 — — Asia Pacific and Rest of the World 1.8 — 1.2 — ttttttttttttttttttttttttttttttttttttttt6.5 2.3 10.2 2.9 tttttttttttttttttttttttttttttttttttttttThere was no other significant non-cash expenditure of the Group. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt61 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 6. Segment information continued Geographical segments ttttttttttttttttttttttttttttttttttttttt2008 2008 2007 2007 t £m £m £m £m Property, plant Property, plant and equipment Intangible and equipment Intangible tttttttttttttttttttttttttttttttttttttttadditions additions additions additions t Segment additions — United Kingdom and Continental Europe 2.7 18.5 3.4 3.3 ttttttttttttttttttttttttttttttttttttttt— Americas ———— t — Asia Pacific and Rest of the World 4.9 — 2.6 17.2 ttttttttttttttttttttttttttttttttttttttt7.6 18.5 6.0 20.5 t 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m t Segment assets — United Kingdom and Continental Europe 403.7 355.8 ttttttttttttttttttttttttttttttttttttttt— Americas 11.0 10.8 t — Asia Pacific and Rest of the World 85.2 70.0 — Unallocated assets 31.4 32.7 ttttttttttttttttttttttttttttttttttttttt531.3 469.3 t Segment liabilities — United Kingdom and Continental Europe (343.6) (308.1) ttttttttttttttttttttttttttttttttttttttt— Americas (6.2) (6.6) t — Asia Pacific and Rest of the World (22.5) (15.3) — Unallocated liabilities (33.7) (32.9) ttttttttttttttttttttttttttttttttttttttt(406.0) (362.9) t Consolidated net assets 125.3 106.4 tttttttttttttttttttttttttttttttttttttttBusiness segments t Business segments are the Group’s secondary basis of reporting. The business segments reported reflect the Group’s internal management reporting format. 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m t Segment revenue tttttttttttttttttttttttttttttttttttttttExternal t — Branded condoms, lubricants and devices 217.7 187.1 — Footwear 76.1 66.8 ttttttttttttttttttttttttttttttttttttttt— Footcare 113.6 100.0 t — Locally owned brands 71.4 72.3 — Other consumer 43.5 41.8 ttttttttttttttttttttttttttttttttttttttt— Third-party supply 11.6 12.2 t Total continuing revenue 533.9 480.2

2008 2008 2007 2007 ttttttttttttttttttttttttttttttttttttttt£m £m £m £m t Segment Capital Segment Capital assets expenditure assets expenditure tttttttttttttttttttttttttttttttttttttttExternal t — Branded condoms, lubricants and devices 185.3 3.1 131.7 2.7 — Footwear 46.0 1.1 45.2 0.3 ttttttttttttttttttttttttttttttttttttttt— Footcare 88.3 1.6 80.4 1.4 t — Locally owned brands 80.7 1.0 71.9 1.2 — Other consumer 21.0 0.6 17.9 0.3 ttttttttttttttttttttttttttttttttttttttt— Third-party supply 12.3 0.2 14.9 0.1 t 433.6 7.6 362.0 6.0 — Unallocated, including taxation assets 97.7 — 107.3 — tttttttttttttttttttttttttttttttttttttttTotal 531.3 7.6 469.3 6.0 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt62 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 7. Property, plant and equipment Plant, tttttttttttttttttttttttttttttttttttttttLand and equipment and buildings motor vehicles Total £m £m £m tttttttttttttttttttttttttttttttttttttttCost At 1 April 2006 36.7 136.3 173.0 Additions 0.6 5.4 6.0 tttttttttttttttttttttttttttttttttttttttAcquisition of former associate — 1.1 1.1 Disposals (0.4) (9.7) (10.1) Exchange adjustments (0.6) (2.3) (2.9) tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 and 1 April 2007 36.3 130.8 167.1 Additions 1.4 6.2 7.6 Disposals (0.1) (34.8) (34.9) tttttttttttttttttttttttttttttttttttttttExchange adjustments 1.2 7.6 8.8 At 31 March 2008 38.8 109.8 148.6 Depreciation and impairment tttttttttttttttttttttttttttttttttttttttAt 1 April 2006 5.6 97.5 103.1 Charge for the year 0.9 9.3 10.2 Disposals (0.2) (6.9) (7.1) tttttttttttttttttttttttttttttttttttttttExchange adjustments (0.2) (1.7) (1.9) At 31 March 2007 and 1 April 2007 6.1 98.2 104.3 Charge for the year 0.9 5.6 6.5 tttttttttttttttttttttttttttttttttttttttDisposals — (34.6) (34.6) Exchange adjustments 0.3 5.7 6.0 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 7.3 74.9 82.2 Carrying amounts At 1 April 2006 31.1 38.8 69.9 tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 and 1 April 2007 30.2 32.6 62.8 At 31 March 2008 31.5 34.9 66.4 tttttttttttttttttttttttttttttttttttttttCapital expenditure on plant, equipment and motor vehicles in the year of £6.2 million comprised £0.1 million of capitalised finance leases (2007: £0.2 million). Included within plant, equipment and motor vehicles are assets held under finance lease with a net book value of £0.2 million (2007: £0.2 million). tttttttttttttttttttttttttttttttttttttttThe carrying value of temporarily idle plant at the year end is £nil (2007: £nil). Group assets held under course of construction total £1.6 million (2007: £1.4 million) of which £1.6 million (2007: £1.1 million) is included in plant, equipment tttttttttttttttttttttttttttttttttttttttand motor vehicles. As units are transferred onto SAP, fully written down assets are removed from the system. This is the main driver of the high level of disposals during the year. The remainder of assets held under construction is £nil (2007: £0.3 million). The net book value of land and buildings is analysed as follows: ttttttttttttttttttttttttttttttttttttttt2008 2007 £m £m Freeholds 14.8 13.8 tttttttttttttttttttttttttttttttttttttttLeasehold improvements 16.5 16.2 Long leasehold 0.2 0.2 ttttttttttttttttttttttttttttttttttttttt31.5 30.2 The charge for depreciation for the year is recognised as follows in the income statement: 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m Cost of sales 3.2 4.7 tttttttttttttttttttttttttttttttttttttttDistribution expenses 0.1 0.1 Administrative expenses 3.2 5.4 ttttttttttttttttttttttttttttttttttttttt6.5 10.2 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt63 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 8. Intangible assets Goodwill Scholl brand Other Total ttttttttttttttttttttttttttttttttttttttt£m £m £m £m t Cost At 1 April 2006 22.1 60.3 33.4 115.8 tttttttttttttttttttttttttttttttttttttttAdditions — — 3.3 3.3 t Goodwill arising on acquisition of former associate 17.2 — — 17.2 Exchange adjustments 0.1 (0.1) (0.1) (0.1) tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 and 1 April 2007 39.4 60.2 36.6 136.2 t Additions 12.8 — 5.7 18.5 Exchange adjustments 2.3 0.6 1.2 4.1 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 54.5 60.8 43.5 158.8 t Amortisation and impairment losses tttttttttttttttttttttttttttttttttttttttAt 1 April 2006 9.2 — 24.9 34.1 t Charge for the year — — 0.9 0.9 Impairment charge 2.0 — — 2.0 tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 and 1 April 2007 11.2 — 25.8 37.0 t Charge for the year — — 2.3 2.3 Exchange adjustments 0.8 — 0.8 1.6 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 12.0 — 28.9 40.9 t Carrying amounts At 1 April 2006 12.9 60.3 8.5 81.7 tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 28.2 60.2 10.8 99.2 t tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 42.5 60.8 14.6 117.9 t Amortisation and impairment charges are recognised within administrative expenses within the income statement. The impairment charge in the prior year related to the impairment of goodwill relating to the Remegel locally owned brand, following a review of the recoverable amount, based on discounted future cash flows expected to be generated from continued use of the brand. The key assumptions used in the review were that future revenue would decline by ttttttttttttttttttttttttttttttttttttttt8.8 per cent per annum, and operating margins by 2 per cent per annum. Results were projected forwards for 12 years and discounted to present value using t risk adjusted discount factor of 6.8 per cent. tttttttttttttttttttttttttttttttttttttttFor the purposes of impairment testing of goodwill, the Group is regarded as several cash-generating units, one for each component of goodwill recognised t at the balance sheet date, and one for all other consumer products. The cash-generating units’ recoverable amounts are based on value in use using projections of the Group’s performance over 10—15 years, periods reflecting the Directors’ best estimates of the cash flows. Risk adjusted discount factors tttttttttttttttttttttttttttttttttttttttof 6.8 per cent—7.8 per cent have been applied to the projections. t Material assets Scholl brand tttttttttttttttttttttttttttttttttttttttThe Scholl brand, with a carrying value of £60.8 million at 31 March 2008, is not amortised. The brand has been tested for impairment using the method t described below. No charge for impairment was required in the year. tttttttttttttttttttttttttttttttttttttttFor the purposes of impairment testing of the Scholl brand, the Group is regarded as two cash-generating units, that part relating to Scholl branded products t and that relating to all other consumer products. The Scholl brand’s recoverable amount was determined by discounting future cash flows expected to be generated from continuing use of the brand using the following key assumptions: ttttttttttttttttttttttttttttttttttttttt— cash flows for year one were based upon budgeted operating results t — revenue growth was anticipated at 2 per cent per annum and operating results held at a constant percentage of revenue for a further period of nine years. This is in line with experience in prior years ttttttttttttttttttttttttttttttttttttttt— operating results were then held at the year ten figures into perpetuity reflecting the Directors’ assertion that the brand has an indefinite useful economic t life based upon its proven value over long periods and its position in the market which is considered sustainable for the foreseeable future — a risk adjusted discount factor of 6.8 per cent was applied to the projections tttttttttttttttttttttttttttttttttttttttFor the Scholl brand to be be impaired, with all other assumptions held constant, the risk adjusted discount factor would need to increase to 22 per cent t before the brand’s value in use calculation showed any impairment. Removing the revenue growth from the expected cash flows would decrease the valuation by £25 million, however the brand would still show no impairment. A decrease in the operating margin percentage by one percentage point would tttttttttttttttttttttttttttttttttttttttreduce the valuation by £34 million, however the brand would still show no impairment. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt64 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Goodwill arising on acquisition of Qingdao London Durex Company Limited ‘China Goodwill’ Goodwill of £17.2 million arose on the acquisition of the remaining 50 per cent of the ordinary share capital of Qingdao London Durex Company Limited in tttttttttttttttttttttttttttttttttttttttJanuary 2007 as detailed in note 9. For the purposes of impairment testing of the China Goodwill, Qingdao London Durex Company Limited was identified as a single cash-generating unit. tttttttttttttttttttttttttttttttttttttttThe recoverable amount was determined by discounting future cash flows expected to be generated from continuing use of the goodwill using the following key assumptions: — cash flows for year one were based upon budgeted operating results ttttttttttttttttttttttttttttttttttttttt— revenue growth was anticipated at 3 per cent per annum and operating results held at a constant percentage of revenue for a further period of nine years — operating results were then held at the year ten figures into perpetuity reflecting the expected maintenance of the position in the market — a risk adjusted discount factor of 7.8 per cent was applied to the projections tttttttttttttttttttttttttttttttttttttttFor the China Goodwill to be be impaired, with all other assumptions held constant, the risk adjusted discount factor would need to increase to 60 per cent before the value in use calculation showed any impairment. Removing the revenue growth from the expected cash flows would decrease the valuation by £26 million, however the goodwill would still show no impairment. A decrease in the operating margin percentage by one percentage point would reduce the tttttttttttttttttttttttttttttttttttttttvaluation by £1.7 million, however the goodwill would still show no impairment.

Vasyli goodwill tttttttttttttttttttttttttttttttttttttttAn impairment review has been performed at 31 March 2008 in relation to the goodwill of £12.8 million arising on the acquisition of the Vasyli business in November 2007 (see below). The Vasyli business, encompassing consumer sales of the Orthaheel, Orthastyle, Vasyli and VAS brands across the Group was identified as a single cash-generating unit. The recoverable amount was determined by discounting future cash flows expected to be generated from tttttttttttttttttttttttttttttttttttttttcontinuing use of the goodwill using the following key assumptions: — cash flows for year one were based upon budgeted operating results — revenue growth was anticipated at 3 per cent per annum for the first 10 years, nil thereafter, and operating results held at a constant percentage of revenue ttttttttttttttttttttttttttttttttttttttt— operating results were then held at the year 10 figures for a further 10 years reflecting the current expected useful life of the goodwill and related brands — a risk adjusted discount factor of 7.8 per cent was applied to the projections For the Vasyli goodwill to be be impaired, with all other assumptions held constant, the risk adjusted discount factor would need to increase to 27 per cent tttttttttttttttttttttttttttttttttttttttbefore the value in use calculation showed any impairment. Removing the revenue growth from the expected cash flows would decrease the valuation by £7.4 million, however the goodwill would still show no impairment. A decrease in the operating margin percentage by one percentage point would reduce the tttttttttttttttttttttttttttttttttttttttvaluation by £0.8 million, however the goodwill would still show no impairment. The remaining goodwill is made up of a number of balances, none of which are significant, with a total net book value of £12.5 million. Impairment reviews have been performed in respect of all balances held. tttttttttttttttttttttttttttttttttttttttOther intangible assets comprise a number of non-material cash-generating units.

Business combination tttttttttttttttttttttttttttttttttttttttOn 7 November 2007, the Group acquired the business and certain business assets of Vasyli Australia Pty Ltd, Vasyli (NZ) Limited, and Vasyli UK Limited (together ‘Vasyli’), in Europe and Asia, the main assets being the Orthaheel, Orthastyle, Vasyli and VAS brands. The initial cash consideration was AUS$32.9 million; the total consideration could increase to AUS$74.9 million if certain sales growth targets are attained, with the balance payable in tttttttttttttttttttttttttttttttttttttttJune 2010. Further detail of the contingent consideration recognised is provided in note 16. This transaction has been accounted for by the purchase method of accounting. Book value Fair value ttttttttttttttttttttttttttttttttttttttt£m £m Net assets acquired Brands and related Intellectual Property rights — 2.8 tttttttttttttttttttttttttttttttttttttttCustomer relationships — 0.8 Inventories 0.3 0.3 Goodwill — 12.8 tttttttttttttttttttttttttttttttttttttttTotal consideration 0.3 16.7 Satisfied by: Cash 14.9 tttttttttttttttttttttttttttttttttttttttContingent consideration 1.4 Directly attributable costs 0.4 ttttttttttttttttttttttttttttttttttttttt16.7 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt65 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 8. Intangible assets continued Recognition of intangible assets tttttttttttttttttttttttttttttttttttttttIntangible assets were not separately identified or recorded in the underlying records of the acquired business. On acquisition, the Group identified several t intangible assets, including the brand names acquired and their related Intellectual Property rights, and customer relationships. Two patents were also acquired as part of the business assets, although they relate to only two countries, have relatively short expiry periods and relate to relatively old technology; their fair tttttttttttttttttttttttttttttttttttttttvalue is therefore calculated as £nil. The brand and intellectual property rights are being amortised over 20 years and the customer relationships over a t period of between three and five years. The goodwill arising on the acquisition of the Vasyli business is attributable to the anticipated profitability of the distribution of the Vasyli products in new tttttttttttttttttttttttttttttttttttttttmarkets using the Group’s existing distribution channels, for example, across the rest of Europe and Asia, and the expected future operating synergies arising t from the integration of the Vasyli business with that of Scholl footcare. The goodwill will be subject to annual impairment reviews. tttttttttttttttttttttttttttttttttttttttThe Vasyli businesses contributed £1.8 million revenue and £0.6 million to the Group’s profit before tax for the period between the date of acquisition and the t balance sheet date. It is not practicable to disclose what the contribution to Group revenue and profits would have been had the acquisition been completed ttttttttttttttttttttttttttttttttttttttton 1 April 2007, as the vendors did not prepare consolidated financial information for the aspects of the business acquired by the Group. t

9 . Investments tttttttttttttttttttttttttttttttttttttttInvestment in former associate t Equity accounted shares £m tttttttttttttttttttttttttttttttttttttttCost t At 1 April 2006 2.0 Acquisition of former associate * (2.0) tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 and 31 March 2008 — t Share of post-acquisition reserves less losses tttttttttttttttttttttttttttttttttttttttAt 1 April 2006 0.5 t Retained profits less losses 1.8 Dividends (2.0) tttttttttttttttttttttttttttttttttttttttExchange adjustments (0.2) t Acquisition of former associate* (0.1) At 31 March 2007 and 31 March 2008 — tttttttttttttttttttttttttttttttttttttttBalance sheet value at 31 March 2007 and 31 March 2008 — t Balance sheet value at 1 April 2006 2.5 * In January 2007, the Group acquired the remaining 50 per cent of the ordinary share capital of Qingdao London Durex Company Limited, incorporated in The Peoples’ Republic of China, tttttttttttttttttttttttttttttttttttttttbringing the Group’s total interest in that company to 100 per cent. There are no investments in associates at 31 March 2008. t

The acquisition had the following effect on the Group’s assets and liabilities at the acquisition date: tttttttttttttttttttttttttttttttttttttttRecognised t Pre acquisition Fair value value on carrying amounts adjustments acquisition ttttttttttttttttttttttttttttttttttttttt£m £m £m t Property, plant and equipment 1.1 — 1.1 Inventories 0.9 — 0.9 tttttttttttttttttttttttttttttttttttttttCash and cash equivalents 5.6 — 5.6 t Trade and other payables (3.5) — (3.5) Current tax payable — — tttttttttttttttttttttttttttttttttttttttNet identifiable assets and liabilities 4.1 — 4.1 t Less amounts recognised as share of asssociate prior to acquisition (2.1) Goodwill on acquisition (note 8) 17.2 tttttttttttttttttttttttttttttttttttttttConsideration paid, satisfied in cash* 19.2 t Less cash acquired (5.6) Net cash outflow 13.6 ttttttttttttttttttttttttttttttttttttttt* Includes legal fees of £0.1 million t The excess of fair value of consideration over the fair value of the assets acquired was attributed wholly to goodwill as the Group supplies the brand and tttttttttttttttttttttttttttttttttttttttknow-how to the business and existing customer relationships were terminated as part of the sale and purchase agreement. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt66 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt The goodwill acquired represents the benefits of securing control of the financial and operating policies of the business. This is expected to lead to increased profits as a result of the establishment of new distributor relationships at higher margins to those achieved previously and the opportunity to establish the tttttttttttttttttttttttttttttttttttttttScholl brand alongside Durex in this key market. In time the acquisition will also provide synergies to the Group’s manufacturing cost base by providing additional condom manufacturing capacity to support the Group supply chain. The Group has not recognised as part of the acquisition an asset in relation tttttttttttttttttttttttttttttttttttttttto the Durex brand as the Group already owned the brand worldwide prior to the acquisition. Other investments

Non-current investments ttttttttttttttttttttttttttttttttttttttt2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttAvailable-for-sale financial assets 1.0 — The Group holds a strategic non-controlling interest of 11 per cent in Sirius Global Solutions Limited, which is classified as a financial asset available for sale. tttttttttttttttttttttttttttttttttttttttSirius Global Solutions Limited is an unquoted entity, therefore fair value of the shareholding cannot be readily ascertained; the investment is therefore held at initial cost and subject to annual impairment review. ttttttttttttttttttttttttttttttttttttttt 10. Inventories 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m Raw materials and consumables 9.6 10.7 Stocks and work in progress 6.7 5.5 tttttttttttttttttttttttttttttttttttttttFinished goods and goods for resale 75.2 68.3 At end of year 91.5 84.5 tttttttttttttttttttttttttttttttttttttttTotal gross inventories 101.6 93.5 Inventory provision (10.1) (9.0) 91.5 84.5 tttttttttttttttttttttttttttttttttttttttAnalysis of inventory provision movements in the year: At beginning of year (9.0) (8.1) Income statement charge (4.5) (5.4) tttttttttttttttttttttttttttttttttttttttAmounts utilised 4.2 4.1 Exchange movements (0.8) 0.4 tttttttttttttttttttttttttttttttttttttttAt end of year (10.1) (9.0) tttttttttttttttttttttttttttttttttttttttThe amount of inventories recognised as an expense within cost of sales amounted to £195.6 million (2007: £177.7 million). ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt67 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 11 . Trade and other receivables 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m t Current Gross trade receivables 160.7 137.8 tttttttttttttttttttttttttttttttttttttttLess: allowance for impairment (5.8) (3.9) t 154.9 133.9 tttttttttttttttttttttttttttttttttttttttAmount owed by associated undertakings — 0.1 t Other prepayments and accrued income 9.0 6.2 Other receivables 11.5 6.6 tttttttttttttttttttttttttttttttttttttttDerivative financial assets 0.5 0.3 t 175.9 147.1 Non-current tttttttttttttttttttttttttttttttttttttttOther receivables 2.6 2.7 t 178.5 149.8 Allowance for impairment tttttttttttttttttttttttttttttttttttttttAt beginning of year (3.9) (6.6) t Income statement charge (2.4) (2.1) Amounts released in the year 0.1 0.7 tttttttttttttttttttttttttttttttttttttttAmounts utilised and other movements 0.9 3.6 t Exchange movements (0.5) 0.5 tttttttttttttttttttttttttttttttttttttttAt end of year (5.8) (3.9) t Current trade and other receivables include amounts due to be settled in Sterling , Euros, US Dollars, Chinese Renminbi and other currencies. Non-current tttttttttttttttttttttttttttttttttttttttreceivables relate to Sterling amounts due. t tttttttttttttttttttttttttttttttttttttttThe Group’s exposure to credit and currency risks are disclosed in note 22. t 12 . Cash and cash equivalents 2008 2007 tttttttttttttttttttttttttttttttttttttttNote £m £m t Cash at bank 42.5 37.5 tttttttttttttttttttttttttttttttttttttttShort-term deposits 2.1 2.8 t Cash and cash equivalents per balance sheet 44.6 40.3 Overdrafts 15 (10.9) (13.2) tttttttttttttttttttttttttttttttttttttttCash and cash equivalents per cash flow statement 33.7 27.1 t Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying tttttttttttttttttttttttttttttttttttttttamount of these assets approximates their fair value. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt68 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 13 . Trade and other payables 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m Current Trade payables 71.1 52.5 tttttttttttttttttttttttttttttttttttttttValue added taxes, payroll taxes and social security 5.8 3.7 Other payables and accruals 61.1 61.2 138.0 117.4 tttttttttttttttttttttttttttttttttttttttNon-current Other payables 0.8 0.8 tttttttttttttttttttttttttttttttttttttttCurrent trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 121 days (2007: 98 days). For the majority of suppliers, no interest is charged on the trade payables; the Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame. Current payables include amounts due to be settled in Sterling , Euros, US Dollars, tttttttttttttttttttttttttttttttttttttttThai Baht, Malaysian Ringgit, Chinese Renminbi and other currencies. The Directors consider that the carrying amount of trade payables approximates to their fair value. tttttttttttttttttttttttttttttttttttttttThe Group’s exposure to currency risk related to trade and other payables is disclosed in note 22. ttttttttttttttttttttttttttttttttttttttt14. Tax payable Tax payable represents the amount of income tax payable in respect of current and prior periods. £5.0 million (2007: £ 5.6 million) is expected to be paid tttttttttttttttttttttttttttttttttttttttwithin the next 12 months. £18.8 million (2007: £18.7 million) is expected to be payable after more than 12 months. ttttttttttttttttttttttttttttttttttttttt15. Financial liabilities 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttCurrent liabilities Overdrafts and unsecured facilities 10.9 13.2 Bank loans 131.8 37.3 tttttttttttttttttttttttttttttttttttttttLoan notes — 3.1 Obligations under finance leases 0.1 0.2 Forward contract derivatives — 0.3 tttttttttttttttttttttttttttttttttttttttInterest rate and currency swaps — 1.3 142.8 55.4 Non-current liabilities tttttttttttttttttttttttttttttttttttttttBank loans — 0.2 Loan notes — 64.1 Obligations under finance leases — 0.1 tttttttttttttttttttttttttttttttttttttttInterest rate and currency swaps 0.8 9.5 0.8 73.9 tttttttttttttttttttttttttttttttttttttttTotal financial liabilities 143.6 129.3 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt69 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 15 . Financial liabilities continued Terms and debt repayment schedule ttttttttttttttttttttttttttttttttttttttt31 March 2008 31 March 2007 t Nominal Face Carrying Face Carrying interest Year of value amount value amount tttttttttttttttttttttttttttttttttttttttCurrency rate maturity £m £m £m £m t Overdrafts EUR 0% 2008 0.3 0.3 — — Overdrafts EUR 4.50% On demand 9.5 9.5 10.7 10.7 tttttttttttttttttttttttttttttttttttttttOverdrafts GBP 5.92—6.0% On demand 1.1 1.1 2.1 2.1 t Overdrafts JPY 2.65% On demand — — 0.4 0.4 Current liabilities: overdrafts and unsecured facilities 10.9 10.9 13.2 13.2 tttttttttttttttttttttttttttttttttttttttGroup facility: Sterling drawdown GBP 6.08% 2007 — — 30.0 30.0 t Group facility: Japanese Yen drawdown JPY 1.22% 2007 — — 3.9 3.9 Group facility: Sterling drawdown GBP 6.21—6.29% 2008 99.0 99.0 — — tttttttttttttttttttttttttttttttttttttttGroup facility: Sterling drawdown GBP 6.32% 2009 10.0 10.0 — — t Group facility: Euro drawdown EUR 4.89% 2008 9.4 9.4 — — Group facility: Japanese Yen drawdown JPY 1.53% 2008 4.6 4.6 — — tttttttttttttttttttttttttttttttttttttttItaly loan (unsecured) EUR 4.77% 2008 8.8 8.8 3.4 3.4 t Current liabilities: bank loans 131.8 131.8 37.3 37.3 tttttttttttttttttttttttttttttttttttttttUnsecured non-current loan EUR 0% 2008 — — 0.2 0.2 t Loan notes (unsecured) USD 8.02%—8.19% 2009 — — 61.3 61.3 Loan notes (unsecured) GBP 7.87% 2014 — — 5.9 5.9 tttttttttttttttttttttttttttttttttttttttTotal loan notes — — 67.2 67.2 t Finance lease liabilities THB 2.61—8.75% 2008—2010 0.1 0.1 0.3 0.3 tttttttttttttttttttttttttttttttttttttttTotal interest-bearing liabilities 142.8 142.8 118.2 118.2 t The financial instruments disclosures in note 23 detail the fair value hedge relationships between the Group’s fixed rate loans and interest rate swaps, and tttttttttttttttttttttttttttttttttttttttcash flow hedge relationships between the Group’s variable rate loans and interest rate swaps. t The principal features of the Group’s borrowings are as follows: tttttttttttttttttttttttttttttttttttttttBank overdrafts are repayable on demand. Overdrafts and facilities of £10.9 million (2007: £13.2 millon) are unsecured. The average effective interest rate t on bank overdraft approximates 4.7 per cent (2007: 6 per cent) per annum. The Group has the following bank facilities: ttttttttttttttttttttttttttttttttttttttt— A syndicated Group facility of £220 million available until January 2012, of which £123 million (2007: £33.9 million) had been drawn down at 31 March 2008. t Drawdowns can be made for periods of one, two, three or six months, or any other mutually-agreed term; interest rates are set at the corresponding LIBOR tttttttttttttttttttttttttttttttttttttttplus 50 basis points at the time of the drawdown. t — SSL Healthcare Italia SpA has fixed rate unsecured loans of £8.8 million which are rolled forward every three months . ttttttttttttttttttttttttttttttttttttttt—Various overdraft facilities across the Group, including a UK facility of £7.5 million (net). t Undrawn borrowing facilities At 31 March 2008, the Group had available £97 million (2007: £216.1 million) of undrawn committed borrowing facilities in respect of which all conditions tttttttttttttttttttttttttttttttttttttttprecedent had been met. t Loan notes, interest rate and currency swaps held as a fair value hedge tttttttttttttttttttttttttttttttttttttttThe following table shows the carrying values of loan notes, interest rate and currency swaps forming part of a fair value hedge relationship under IFRS. t 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttLoan notes: US$ 8.02 per cent guaranteed — 8.1 t Currency swap: US$ 8.02 per cent loan notes to Euro 6.09 per cent fixed rate borrowing — 1.8 Interest rate swap: Euro 6.09 per cent fixed rate to Euro variable rate borrowing — (0.2) ttttttttttttttttttttttttttttttttttttttt— 9.7 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt70 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt The loan notes, interest rate and currency swaps held as a fair value hedge are carried at fair value under IFRS. The hedge was in place to reduce exposure to tttttttttttttttttttttttttttttttttttttttexchange rate fluctuations. The notional amount of the US$ 8.02 per cent guaranteed loan notes at 31 March 2007 was US$15.2 million. The US$ 8.02 per cent loan notes were issued in November 1999, were repayable in six further equal instalments maturing in November 2009, and were not secured on any assets of the Group. The loan notes tttttttttttttttttttttttttttttttttttttttwere repaid early in October 2007, and the related swaps cancelled. Finance charges of £5.2 million relating to the change in the carrying amount of all loan notes and related derivative balances on notification of the early repayment of the loan notes have been recognised in the year. The notional amount and payment terms of loan notes and swaps were equal. The hedge effectiveness, tested semi-annually, was effective during the tttttttttttttttttttttttttttttttttttttttperiod up until repayment in providing a hedge against fair value adjustments relating to interest rate changes. The fair value charge in the year arising from movements in interest rates was £nil (2007: £1.8 million credit). tttttttttttttttttttttttttttttttttttttttOther loan notes, interest rate and currency swaps 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttLoan notes: Sterling 7.87 per cent guaranteed — 5.9 Loan notes: US$ 8.19 per cent guaranteed — 53.2 Currency swap: US$ 8.19 per cent loan notes to Sterling 7.69 per cent fixed rate borrowing — 9.2 ttttttttttttttttttttttttttttttttttttttt— 68.3 The Sterling 7.87 per cent and US$ 8.19 per cent guaranteed loan notes were held at amortised cost retranslated at spot rates. The currency swap was held at tttttttttttttttttttttttttttttttttttttttfair value at 31 March 2007. The notional amount of the Sterling 7.87 per cent loan notes at 31 March 2007 was £5.9 million; the notional amount of the US$ 8.19 per cent loan notes at 31 March 2007 was US$104.2 million. The Sterling loan notes were issued in November 1999, and were repayable in full, in November 2014. The US$ loan notes tttttttttttttttttttttttttttttttttttttttwere issued in November 1999, and were repayable in full, in November 2009. The loan notes were not secured on any assets of the Group. As noted above, all loan notes were repaid in October 2007. tttttttttttttttttttttttttttttttttttttttThe fair value of the 7.87 per cent guaranteed loan notes, held at amortised cost, at 31 March 2007 was £6.2 million. The fair value of the 8.19 per cent loan notes also held at cost at 31 March 2007 was £56.1 million. The notional amount and payment terms of loan notes and swaps were equal. The loans and swaps do not constitute a fair value hedge, consequently the tttttttttttttttttttttttttttttttttttttttGroup was exposed to fair value changes from interest rate movements in the US$ and Sterling. These fair value changes resulted in a credit of £1.8 million in the income statement for the year ended 31 March 2007. The Group’s exposure to fair value changes is considered further in note 23. As noted above, tttttttttttttttttttttttttttttttttttttttthe loan notes and related swaps were cancelled in October 2007. Bank loans and interest rate swaps held as a cash flow hedge 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m £60 million Sterling drawdown on Group facility at 1 month LIBOR (6.26—6.29 per cent) 60.0 — Interest rate swaps: three month LIBOR to fixed 5.46 per cent 0.8 — tttttttttttttttttttttttttttttttttttttttInterest rate basis swaps: three month LIBOR to 1 month LIBOR (0.1) — 60.7 — tttttttttttttttttttttttttttttttttttttttThe £60 million drawdowns on the Group facility designated as part of the cash flow hedge relationship are for periods of one month, repayable in April 2008, and therefore are held at notional value which is deemed equivalent to fair value. The interest rate swaps are held at fair value. Changes in fair value totalling ttttttttttttttttttttttttttttttttttttttt£0.7 million have been charged directly to equity in relation to fair value movements in the interest rate swaps during the year ended 31 March 2008. Bank loans held as a net investment hedge The Japanese Yen drawdown on the Group facility of £4.6 million (2007: £3.9 million) is designated as a net investment hedge of the Group’s investment tttttttttttttttttttttttttttttttttttttttin subsidiaries denominated in Japanese Yen. Obligations under finance leases Finance lease liabilities are secured on the assets to which they relate. The average lease term outstanding is one year. For the year ended 31 March 2008, the tttttttttttttttttttttttttttttttttttttttaverage effective borrowing rate was 7.12 per cent (2007: 7.70 per cent). Interest rates are fixed at the contract date. The lease obligations are denominated in tttttttttttttttttttttttttttttttttttttttThai Baht and Sterling, and the fair value of the Group’s lease obligations approximates their carrying value. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt71 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 15. Financial liabilities continued Loan maturities ttttttttttttttttttttttttttttttttttttttt2008 2007 t £m £m Bank loans and overdraft tttttttttttttttttttttttttttttttttttttttBank loans or instalments thereof are repayable: t From 1—2 years — 0.2 Total due after more than one year — 0.2 tttttttttttttttttttttttttttttttttttttttTotal due within one year 142.7 50.5 t 142.7 50.7 tttttttttttttttttttttttttttttttttttttttLoan notes t Loan note or instalments thereof are repayable: After 5 years from the balance sheet date — 5.9 tttttttttttttttttttttttttttttttttttttttFrom 3—4 years — — t From 2—3 years — 55.5 From 1—2 years — 2.7 tttttttttttttttttttttttttttttttttttttttTotal due after more than one year — 64.1 t Total due within one year — 3.1 — 67.2 tttttttttttttttttttttttttttttttttttttttObligations under finance lease (see also note 24) t Obligations under finance lease or instalments thereof are repayable: From 1—2 years — 0.1 tttttttttttttttttttttttttttttttttttttttTotal due after more than one year — 0.1 t Total due within one year 0.1 0.2 ttttttttttttttttttttttttttttttttttttttt0.1 0.3 t Forward contract derivatives Forward contract derivatives are repayable: tttttttttttttttttttttttttttttttttttttttTotal due within one year — 0.3 t — 0.3 Interest rate and currency swaps tttttttttttttttttttttttttttttttttttttttInterest rate and currency swaps or instalments thereof are repayable: t From 2—3 years 0.8 8.4 From 1—2 years — 1.1 tttttttttttttttttttttttttttttttttttttttTotal due after more than one year 0.8 9.5 t Total due within one year — 1.3 ttttttttttttttttttttttttttttttttttttttt0.8 10.8 t Total financial liabilities Balances or instalments thereof are repayable: tttttttttttttttttttttttttttttttttttttttAfter 5 years from the balance sheet date — 5.9 t From 2—3 years 0.8 63.9 From 1—2 years — 4.1 tttttttttttttttttttttttttttttttttttttttTotal due after more than one year 0.8 73.9 t Total due within one year 142.8 55.4 tttttttttttttttttttttttttttttttttttttttTotal financial liabilities 143.6 129.3 t tttttttttttttttttttttttttttttttttttttttThe aggregate amount of debt any instalment of which falls due after 5 years is £nil (2007: £5.9 million). t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt72 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 16. Provisions for liabilities Overseas Group and European ttttttttttttttttttttttttttttttttttttttttermination Manufacturing commercial Supply Chain Contingent benefits Disposals restructuring restructuring restructuring Other consideration Total £m £m £m £m £m £m £m £m tttttttttttttttttttttttttttttttttttttttAt 31 March 2006 2.6 7.6 8.5 2.4 — 4.8 — 25.9 Transferred from creditors due after more than one year* 1.3 — — — — — — 1.3 Provisions made during the year 0.4 — — — — — — 0.4 tttttttttttttttttttttttttttttttttttttttProvisions used during the year (0.3) (6.1) (4.7) (2.0) — (1.2) — (14.3) Provisions transferred during the year — — (3.4) — — 3.4 — — Exchange and other movements (0.1) — — (0.1) — — — (0.2) tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 3.9 1.5 0.4 0.3 — 7.0 — 13.1 Provisions made during the year — — — — 46.5 — 1.4 47.9 Provisions used during the year (0.1) (1.1) (0.3) (0.1) (19.8) (1.4) — (22.8) tttttttttttttttttttttttttttttttttttttttProvisions transferred during the year — (0.4) (0.1) (0.2) (2.6) 3.3 — — Exchange and other movements 0.1 — — — (1.7) (0.5) 0.1 (2.0) tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 3.9 — — — 22.4 8.4 1.5 36.2 Current — — — — 22.4 3.6 — 26.0 Non-current 3.9 — — — — 4.8 1.5 10.2 ttttttttttttttttttttttttttttttttttttttt3.9 — — — 22.4 8.4 1.5 36.2 * Amounts payable to third-party sales agents upon termination of their contract were reclassified during the prior year from payables due after more than one year to provisions to reflect the tttttttttttttttttttttttttttttttttttttttnature of the liability. Overseas termination benefits Included with overseas termination benefits is an amount of £3.0 million (2007: £2.8 million) for termination benefits payable to employees in a number of overseas subsidiaries. Benefits accrue with service and are payable to employees upon departure from the Group regardless of the reason for such tttttttttttttttttttttttttttttttttttttttdeparture. Benefits may be calculated with reference to an average salary over the service life of the employee or the final salary of the employee. Differences arising due to changes in assumptions in calculating the liability for employees are taken through reserves and are included above within exchange and other movements. The main assumptions underlying the calculation (on a weighted average basis across the various schemes) are salary tttttttttttttttttttttttttttttttttttttttincreases of 2.0 per cent, an inflation rate of 2.0 per cent and a discount rate of 3.0 per cent. The calculation of the provision is determined by contractual obligation and therefore can be estimated reliably. No terminations are expected in the forthcoming year. tttttttttttttttttttttttttttttttttttttttProvision is also made for termination payments which may be required for sales agents. At the year end an amount of £1.0 million was provided (2007: £1.1 million). The amount provided is based upon payments which would be required under collective agreements to sales agents upon termination of their contracts by the Group. Increase and decreases in the provision, aside from utilisation, are reflected within the income statement. tttttttttttttttttttttttttttttttttttttttDisposals Following the Group’s disposal of the medical business, in 2004 and 2005, a number of disposal provisions were created for the ongoing commitments of the Group in respect of the disposals. The Group has utilised the majority of these provisions during the current year, with the residual balance transferred tttttttttttttttttttttttttttttttttttttttinto environmental provisions included within the ‘other’ category.

Manufacturing restructuring tttttttttttttttttttttttttttttttttttttttDuring 2005 the Group announced its decision to close the Derby manufacturing plant and transfer production to India. This process has been completed during the current financial year. £3.4 million, which relates to a provision for a non-cancellable lease for the Derby site, was reclassified into surplus property tttttttttttttttttttttttttttttttttttttttwithin ‘other’ during the prior year. Group and commercial restructuring tttttttttttttttttttttttttttttttttttttttThe Group has completed its previous rationalisation and restructuring of commercial operations during the current financial year. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt73 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 16. Provisions for liabilities continued European Supply Chain restructuring tttttttttttttttttttttttttttttttttttttttDuring the current financial year, as part of the European Supply Chain restructuring detailed in note 2, provisions of £41.3 million were made in relation to the t closure of the manufacturing facilities at Rubi (Spain) and Guernsey, the closure of the Technical Services Centre in Cambridge, and the restructuring of the Footwear Development Group. Following the announcement of phase 1 of this restructuring programme in September 2007, a provision of £5.2 million was tttttttttttttttttttttttttttttttttttttttrecorded in relation to the early repayment of loan notes and settlement of related derivatives, giving a total provision created in the year of £46.5 million. t Surplus property provisions in relation to the closure of these sites of £2.6 million have been transferred to the surplus property provision within the ‘other’ provision. It is anticipated that all of the remaining European Supply Chain restructuring provision will be utilised within the financial year 2008/09. The key tttttttttttttttttttttttttttttttttttttttuncertainties regarding the provision are in relation to the potential transfer of plant at the Rubi site to other manufacturing facilities in China, for which t Chinese Government approval is required. tttttttttttttttttttttttttttttttttttttttOther t Other provisions relate to a number of pre-merger environmental provisions of £1.2 million and surplus property provisions of £7.2 million. tttttttttttttttttttttttttttttttttttttttEnvironmental provisions are provided for to the extent that a present obligation exists, it is probable such costs will be incurred and they can be estimated t reliably. No provision is made for possible additional costs that are not currently probable. The surplus property provision relates to Group commitments under non-cancellable leases which, following historical restructuring exercises, are no longer tttttttttttttttttttttttttttttttttttttttused by the Group. The obligation, net of expected rental income, has been provided for. t Surplus property and environmental costs of £4.8 million have been included as non-current. It is expected that all other provisions will be utilised during the tttttttttttttttttttttttttttttttttttttttnext financial year. t Contingent consideration Contingent consideration of £1.5 million releates to the acquisition of the Vasyli business as detailed in note 8, which is payable in June 2010. The tttttttttttttttttttttttttttttttttttttttconsideration is contingent upon the level of Orthaheel-branded sales achieved across the Group in the year ended 31 March 2010, and is capped at t £19.4 million. The amount recognised within provisions at 31 March 2008 is the amount which is considered probable to be paid, based on detailed budgets for 2008/09 and forecast growth for 2009/10. There are inherent uncertainties in deriving sales forecasts, as the Group has limited data and experience ttttttttttttttttttttttttttttttttttttttton which to estimate growth in existing Orthaheel markets, and Orthaheel products are to be launched in new markets in 2008/09. The level of contingent t tttttttttttttttttttttttttttttttttttttttconsideration will be reassessed at each reporting date to reflect revisions to forecasts or differences betweeen budget and actual sales performance. t 17. Post-retirement benefits tttttttttttttttttttttttttttttttttttttttThe Group continues to operate both defined benefit and defined contribution pension plans in the UK and overseas. All UK defined benefit schemes are t closed to new entrants. tttttttttttttttttttttttttttttttttttttttUK Pensions t (a) Defined contribution schemes Since 1995, the Group has operated a contracted-in defined contribution scheme which is open to UK employees. It also operates defined contribution tttttttttttttttttttttttttttttttttttttttexecutive pension plans for senior executives. Employer contributions are charged to the income statement in the period in which they are incurred. t The total pension cost for the Group in respect of UK defined contribution schemes was £1.3 million (2007: £1.4 million). ttttttttttttttttttttttttttttttttttttttt(b) Defined benefit schemes t The Group continues to operate a number of defined benefit schemes following the mergers of Seton Healthcare Group plc and Scholl PLC to form Seton Scholl in 1998, and the subsequent merger of Seton Scholl and London International Group Limited (LIG) in 1999. All UK schemes have been closed to new tttttttttttttttttttttttttttttttttttttttentrants. The finances of all schemes are assessed regularly by independent actuaries and all assets of the schemes are held in separate trustee administered t funds. The schemes have provided benefits for employees as outlined below: (i) Seton tttttttttttttttttttttttttttttttttttttttPrior to 1995, the Group operated a defined benefit scheme for employees. Accrual of further service-related benefits under this scheme ceased in t August 1995, but existing benefits at that date are being maintained. The latest valuation of the scheme was at 5 April 2006. The Group expects to make tttttttttttttttttttttttttttttttttttttttcontributions of £0.5 million into the scheme during the next financial year. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt74 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt (ii) Scholl Accrual of further service related benefits under this defined benefit scheme ceased in August 2000, but benefits accrued to 31 August 2000 continue tttttttttttttttttttttttttttttttttttttttto be provided from the scheme. The most recent valuation by independent actuaries was at 5 April 2006. The Group expects to make contributions of £0.6 million into the scheme during the next financial year. ttttttttttttttttttttttttttttttttttttttt(iii) LIG Accrual of further service-related benefits under this defined benefit scheme ceased in January 2001, but benefits accrued to 31 January 2001 continue to be provided from the scheme. The latest actuarial valuation of the scheme was at 31 March 2006. The Group expects to make contributions of £8.2 million tttttttttttttttttttttttttttttttttttttttinto the scheme during the next financial year. Overseas pensions and similar obligations The Group has a number of pension schemes in different countries, both defined benefit and defined contribution. Defined benefit schemes are set up tttttttttttttttttttttttttttttttttttttttunder separate trust funds and liabilities are generally assessed annually in accordance with the advice of independent actuaries. The total pension cost for the Group in respect of overseas defined contribution schemes was £2.2 million (2007: £1.9 million). Details of the material overseas defined benefit schemes are given below. The most recent valuation for each scheme, as at the dates disclosed above, were updated for IAS 19 purposes to 31 March 2008 tttttttttttttttttttttttttttttttttttttttby independent qualified actuaries. The principal assumptions used by the actuaries in determining the present value of the liabilities were: 2008 tttttttttttttttttttttttttttttttttttttttSeton Scholl LIG Overseas Rate of increase in salaries 4.50% 4.50% 4.50% 3.60% Pensions increases per annum 3.40% — — 2.00% ttttttttttttttttttttttttttttttttttttttt— Pensions accrued to 6 April 1997 Closed section — 3.00% — — Open section — 2.60% — — — Pensions accrued from 6 April 1997 Closed section — 3.70% — — tttttttttttttttttttttttttttttttttttttttOpen section — 3.40% — — — Pre April 1997 — — 2.40% — — Post April 1997 — — 3.40% — tttttttttttttttttttttttttttttttttttttttDiscount rate applied to scheme liabilities 6.50% 6.50% 6.50% 6.00% Inflation assumption 3.50% 3.50% 3.50% 2.90% ttttttttttttttttttttttttttttttttttttttt2007 Seton Scholl LIG Overseas Rate of increase in salaries 4.00% 4.00% 4.00% 4.00% tttttttttttttttttttttttttttttttttttttttPensions increases per annum 3.00% — — 3.00% — Pensions accrued to 6 April 1997 Closed section — 3.00% — — Open section — 2.25% — — ttttttttttttttttttttttttttttttttttttttt— Pensions accrued from 6 April 1997 Closed section — 3.25% — — Open section — 3.00% — — — Pre April 1997 — — 2.10% — ttttttttttttttttttttttttttttttttttttttt— Post April 1997 — — 3.00% — Discount rate applied to scheme liabilities 5.40% 5.40% 5.40% 4.75% tttttttttttttttttttttttttttttttttttttttInflation assumption 3.00% 3.00% 3.00% 3.00% For the UK schemes, the mortality assumption was updated in 2007 to reflect the experience analysis conducted as part of the most recent UK scheme valuations as at 5 April 2006. The post-retirement mortality assumptions allow for future improvements in mortality. The assumed life expectancy for ttttttttttttttttttttttttttttttttttttttta 65-year-old male retiring in the current period is 20.1 years (2007: 20.0 years) and for a male retiring in 20 years at age 65 life expectancy is 21.2 years (2007: 21.1 years). The rate of return on government and corporate bonds is the yield rate at each year end date for long-dated bonds. The rate for cash is the same as that for government bonds. The equity rate of return is derived by adding a risk adjustment factor to the government bond rate. tttttttttttttttttttttttttttttttttttttttThe rate for insurance contracts reflects the yield rate at the balance sheet date. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt75 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 17. Post-retirement benefits continued The assets in the schemes as at 31 March 2008, 2007, 2006 and 2005 were: ttttttttttttttttttttttttttttttttttttttt2008 t Long-term rate of return Seton Scholl LIG Overseas Total tttttttttttttttttttttttttttttttttttttttfor forthcoming year £m £m £m £m £m t Equities 7.70% 7.8 11.8 62.9 0.4 82.9 Corporate bonds 5.50% 1.5 1.1 15.5 0.3 18.4 tttttttttttttttttttttttttttttttttttttttInsurance contracts 5.60% — — — 8.2 8.2 t Government bonds 4.50% 6.1 12.1 36.6 — 54.8 Cash and other 4.50% — 1.0 0.8 — 1.8 tttttttttttttttttttttttttttttttttttttttTotal market value 15.4 26.0 115.8 8.9 166.1 t Present value of scheme liabilities (16.6) (23.3) (164.5) (12.7) (217.1) (Deficit)/surplus in the scheme (1.2) 2.7 (48.7) (3.8) (51.0) tttttttttttttttttttttttttttttttttttttttWrite down of surplus to recoverable amount — (2.7) — — (2.7) t Deficit recognised in the balance sheet (1.2) — (48.7) (3.8) (53.7)

2007 tttttttttttttttttttttttttttttttttttttttLong-term t rate of return Seton Scholl LIG Overseas Total for forthcoming year £m £m £m £m £m tttttttttttttttttttttttttttttttttttttttEquities 7.80% 8.1 16.1 62.8 0.4 87.4 t Corporate bonds 5.00% 1.5 1.0 11.2 0.2 13.9 Insurance contracts 4.75% — — — 6.8 6.8 tttttttttttttttttttttttttttttttttttttttGovernment bonds 4.50% 5.9 8.0 43.1 — 57.0 t Cash and other 4.50% — 1.0 1.2 — 2.2 Total market value 15.5 26.1 118.3 7.4 167.3 tttttttttttttttttttttttttttttttttttttttPresent value of scheme liabilities (18.4) (26.2) (181.0) (11.1) (236.7) t Deficit in the scheme (2.9) (0.1) (62.7) (3.7) (69.4) ttttttttttttttttttttttttttttttttttttttt2006 t Seton Scholl LIG Overseas Total £m £m £m £m £m tttttttttttttttttttttttttttttttttttttttTotal market value of scheme assets 15.4 25.4 114.4 6.8 162.0 t Present value of scheme liabilities (19.7) (29.5) (194.8) (9.5) (253.5) tttttttttttttttttttttttttttttttttttttttDeficit in the scheme (4.3) (4.1) (80.4) (2.7) (91.5) t 2005 Seton Scholl LIG Overseas Total ttttttttttttttttttttttttttttttttttttttt£m £m £m £m £m t Total market value of scheme assets 14.1 21.8 95.8 6.2 137.9 Present value of scheme liabilities (17.7) (25.8) (167.8) (9.0) (220.3) tttttttttttttttttttttttttttttttttttttttDeficit in the scheme (3.6) (4.0) (72.0) (2.8) (82.4) t tttttttttttttttttttttttttttttttttttttttOf the closing deficit in 2008, £2.5 million (2007: £2.2 million) is in relation to unfunded schemes. The remaining deficit is in relation to funded schemes. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt76 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Movement in post-retirement scheme obligations 2008 2007 tttttttttttttttttttttttttttttttttttttttSeton Scholl LIG Overseas Seton Scholl LIG Overseas £m £m £m £m £m £m £m £m Present value of obligation at beginning of year (18.4) (26.2) (181.0) (11.1) (19.7) (29.5) (194.8) (9.5) tttttttttttttttttttttttttttttttttttttttCurrent service cost — — — (0.4) — — — (0.1) Benefits paid 0.8 1.5 7.7 0.2 0.8 1.2 7.8 0.4 Other finance income/(expense) (1.0) (1.4) (9.6) (0.4) (1.0) (1.4) (9.5) (0.5) tttttttttttttttttttttttttttttttttttttttActuarial gain/(loss) 2.0 2.8 18.4 0.5 1.5 3.5 15.5 (1.7) Foreign exchange — — — (1.5) — — — 0.3 tttttttttttttttttttttttttttttttttttttttPresent value of obligation at end of year (16.6) (23.3) (164.5) (12.7) (18.4) (26.2) (181.0) (11.1) Current service costs are recognised within the income statement within administrative expenses. tttttttttttttttttttttttttttttttttttttttFair value of scheme assets 2008 2007 Seton Scholl LIG Overseas Seton Scholl LIG Overseas ttttttttttttttttttttttttttttttttttttttt£m £m £m £m £m £m £m £m At beginning of year 15.5 26.1 118.3 7.4 15.4 25.4 114.4 6.8 Contributions paid by the employer 0.5 0.6 8.2 0.5 0.2 0.5 6.6 0.3 tttttttttttttttttttttttttttttttttttttttExpected return on scheme assets 1.0 1.7 7.4 0.4 0.9 1.5 6.7 0.3 Benefits paid (0.8) (1.5) (7.7) (0.2) (0.8) (1.2) (7.8) (0.2) Actuarial (loss)/gain (0.8) (0.9) (10.4) (0.4) (0.2) (0.1) (1.6) 0.5 tttttttttttttttttttttttttttttttttttttttForeign exchange — — — 1.2 — — — (0.3) At end of year 15.4 26.0 115.8 8.9 15.5 26.1 118.3 7.4 tttttttttttttttttttttttttttttttttttttttAnalysis of amounts included in financing costs 2008 2007 Seton Scholl LIG Overseas Seton Scholl LIG Overseas ttttttttttttttttttttttttttttttttttttttt£m £m £m £m £m £m £m £m Expected return on pension scheme assets 1.0 1.7 7.4 0.4 0.9 1.5 6.7 0.3 Interest on pension scheme liabilities (1.0) (1.4) (9.6) (0.4) (1.0) (1.4) (9.5) (0.5) ttttttttttttttttttttttttttttttttttttttt— 0.3 (2.2) — (0.1) 0.1 (2.8) (0.2) Analysis of amount recognised in the statement of recognised income and expense 2008 2007 tttttttttttttttttttttttttttttttttttttttSeton Scholl LIG Overseas Seton Scholl LIG Overseas £m £m £m £m £m £m £m £m Actual return less expected return on scheme assets (0.8) (0.9) (10.4) (0.4) (0.2) (0.1) (1.6) 0.5 tttttttttttttttttttttttttttttttttttttttExperience gain/(loss) arising on scheme liabilities — — (1.8) — (0.3) (0.2) 1.1 — Changes in assumptions underlying the present value of scheme liabilities 2.0 2.8 20.2 0.5 1.8 3.7 14.4 (1.7) tttttttttttttttttttttttttttttttttttttttActuarial gain/(loss) recognised in the SORIE 1.2 1.9 8.0 0.1 1.3 3.4 13.9 (1.2) Restriction of defined benefit plan surplus — (2.7) — — — — — — tttttttttttttttttttttttttttttttttttttttTotal amounts recognised in the SORIE 1.2 (0.8) 8.0 0.1 1.3 3.4 13.9 (1.2) Cumulative actuarial gains and losses recognised in equity are as follows: 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m As at 1 April (17.7) (35.1) tttttttttttttttttttttttttttttttttttttttNet actuarial gains recognised in the year 11.2 17.4 As at 31 March (6.5) (17.7) tttttttttttttttttttttttttttttttttttttttThe actual return on scheme assets is as follows: 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttActual return on scheme assets (2.0) 8.0 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt77 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 17. Post-retirement benefits continued History of experience gains and losses ttttttttttttttttttttttttttttttttttttttt2008 t Seton Scholl LIG Overseas £m £m £m £m tttttttttttttttttttttttttttttttttttttttDifference between expected return and actual return on scheme assets t — Amount (£m) (0.8) (0.9) (10.4) (0.4) — Percentage of year end scheme assets (5)% (3)% (9)% (4)% tttttttttttttttttttttttttttttttttttttttExperience gains and losses on scheme liabilities t — Amount (£m) — — (1.8) — ttttttttttttttttttttttttttttttttttttttt— Percentage of year end scheme present value of scheme liabilities 0% 0% 1% 0% t 2007 Seton Scholl LIG Overseas ttttttttttttttttttttttttttttttttttttttt£m £m £m £m t Difference between expected return and actual return on scheme assets — Amount (£m) (0.2) (0.1) (1.6) 0.5 ttttttttttttttttttttttttttttttttttttttt— Percentage of year end scheme assets (1)% 0% (1)% 7% t Experience gains and losses on scheme liabilities ttttttttttttttttttttttttttttttttttttttt— Amount (£m) 1.8 3.7 15.5 (1.7) t — Percentage of year end scheme present value of scheme liabilities (10)% (14)% (9)% 15% ttttttttttttttttttttttttttttttttttttttt2006 t Seton Scholl LIG Overseas £m £m £m £m tttttttttttttttttttttttttttttttttttttttDifference between expected return and actual return on scheme assets t — Amount (£m) 1.8 2.7 12.4 — — Percentage of year end scheme assets 13% 12% 13% 0% tttttttttttttttttttttttttttttttttttttttExperience gains and losses on scheme liabilities t — Amount (£m) (2.6) (3.3) (24.2) (0.5) ttttttttttttttttttttttttttttttttttttttt— Percentage of year end scheme present value of scheme liabilities 15% 13% 14% 6% t 2005 Seton Scholl LIG Overseas ttttttttttttttttttttttttttttttttttttttt£m £m £m £m t Difference between expected return and actual return on scheme assets — Amount (£m) 0.6 1.0 1.9 0.1 ttttttttttttttttttttttttttttttttttttttt— Percentage of year end scheme assets 4% 5% 2% 2% t

Experience gains and losses on scheme liabilities ttttttttttttttttttttttttttttttttttttttt— Amount (£m) (1.7) (1.7) (15.8) (1.0) t ttttttttttttttttttttttttttttttttttttttt— Percentage of year end scheme present value of scheme liabilities 10% 7% 9% 11% t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt78 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 18. Employee costs and share option plans for employees Employee costs tttttttttttttttttttttttttttttttttttttttThe average number of people employed by the Group is set out in the table below. In accordance with Companies Act 1985, this includes part-time employees. 2008 2007 tttttttttttttttttttttttttttttttttttttttno. no. Employees Average number of people employed by the Group in: ttttttttttttttttttttttttttttttttttttttt— United Kingdom and Continental Europe 1,948 1,963 — Americas 50 48 — Asia Pacific and Rest of the World 3,352 3,087 ttttttttttttttttttttttttttttttttttttttt5,350 5,098 tttttttttttttttttttttttttttttttttttttttThe total number of people employed by the Group at the end of the year was 5,350 (2007: 5,286). The costs incurred during the year in respect of the continuing business employees were: 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m Wages and salaries 80.4 75.3 Social security costs 11.9 10.7 tttttttttttttttttttttttttttttttttttttttOther pension and health insurance costs 5.7 5.2 98.0 91.2 tttttttttttttttttttttttttttttttttttttttSeverance costs of £17.3 million (2007: £1 million) are not included in the above. Full details of Directors’ remuneration, shares and options are set out in the Directors’ remuneration report on pages 39 to 45. tttttttttttttttttttttttttttttttttttttttThe Directors believe that, together with the basic salary system, the Group’s employee incentive schemes provide competitive market-related packages to motivate employees. They should also align the interests of employees with those of shareholders, as a whole, through long-term share ownership of the Company. tttttttttttttttttttttttttttttttttttttttGroup annual bonus scheme This scheme is a performance bonus scheme for Directors and senior employees within the UK and overseas. Annual bonuses are paid in cash and reflect both corporate and individual performance measures. Maximum bonuses are paid upon achievement of 105.0 per cent of the target for Directors and senior employees. This reduces on a straight-line basis to 40 per cent of the maximum for the achievement of the target for senior employees. The bonus further tttttttttttttttttttttttttttttttttttttttreduces in a straight-line to 10 per cent of the maximum for reaching 97.5 per cent of the target. No bonus is payable for achieving less than 97.5 per cent of the target. tttttttttttttttttttttttttttttttttttttttLocal bonus schemes Individual countries run local bonus schemes for senior employees who fall outside the Group annual bonus scheme. Performance targets are set locally and tttttttttttttttttttttttttttttttttttttttpayment of bonuses is at the discretion of local management. Executive share option schemes tttttttttttttttttttttttttttttttttttttttThe Group has a number of executive share option schemes: London International Group 1991 scheme This scheme was open to senior executives of London International Group prior to the merger with Seton Scholl Healthcare plc in 1999. No further grants may tttttttttttttttttttttttttttttttttttttttbe made under this scheme. All outstanding options have performance targets attached to them which have been met. The outstanding options expired on 3 December 2007. tttttttttttttttttttttttttttttttttttttttSSL 1990 share option scheme This was a senior executive scheme approved in June 1990 for a period of 10 years. As the scheme has now expired, no further grants may be made. All outstanding options in the scheme will expire in June 2010. Exercise of any grants made since June 1999 is subject to performance targets being met. tttttttttttttttttttttttttttttttttttttttSSL 1996 share option scheme This is a senior executive scheme approved in July 1996 for a period of 10 years. No further grants may be made after July 2006. Prior to March 2005, annual grants were made under this scheme following announcement of final results. Since the development of the new Performance Share Plan, as detailed below, tttttttttttttttttttttttttttttttttttttttno grants have been made during the current or prior year. Exercise of all grants is subject to performance targets being met. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt79 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 18. Employee costs and share option plans for employees continued Long Term Incentive Plan tttttttttttttttttttttttttttttttttttttttThis is a scheme approved in July 1999 for senior executives. No further awards may be made under the plan after awards in respect of the financial year t commencing in 2009. Awards may be made of deferred shares, funded by the sacrifice of up to 50 per cent of the executive’s annual bonus. These deferred shares are matched by performance shares, the transfer of which is conditional upon certain performance targets being met. Dividends are payable to the tttttttttttttttttttttttttttttttttttttttexecutives on the deferred shares. Awards were made under this scheme in July 2000, 2001 and 2002. No subsequent awards have been made. The t performance targets were not met for the 2000 and 2001 awards, but were met for the 2002 award. tttttttttttttttttttttttttttttttttttttttSSL International Stock Purchase Plan t This is a scheme operating within the US business which was approved by the Board in August 2001 and launched in September 2001. No further offering may be made after August 2011. Employees may choose to save each month during a one-year offering period. At the end of the offering period, employees may tttttttttttttttttttttttttttttttttttttttpurchase shares at a discount of 15 per cent on the lower of the first day or last day market price. No offers have been made since January 2005. t SSL Sharesave Scheme tttttttttttttttttttttttttttttttttttttttThis is an HM Revenue & Customs approved savings-related scheme approved by shareholders at the Company’s AGM in July 1996. No further grants may be t made under the scheme after July 2006. The last grants made under the scheme were in January 2005.

Options were only granted to employees who entered into HM Revenue & Customs approved savings contracts, with the savings body nominated by the tttttttttttttttttttttttttttttttttttttttCompany. Savings of a fixed amount (not less than £5 nor more than £250) are made over a period of three or five years. The number of ordinary shares t over which an option is granted will be such that the total amount payable on its exercise will be the proceeds on maturity of the related savings contract. No payment was required for the grant of an option. Options are not transferable. Employees may choose to withdraw from the scheme, at which point they tttttttttttttttttttttttttttttttttttttttwill receive their cash savings plus interest. t

Acquisition price tttttttttttttttttttttttttttttttttttttttThe price per ordinary share payable upon the exercise of an option was 80 per cent of the average of the middle market quotations for an ordinary share t on the London Stock Exchange on the dealing date prior to the date on which invitations to apply for options were issued. tttttttttttttttttttttttttttttttttttttttExercise of options t An option will normally be exercisable for six months commencing on the third or fifth anniversary of the start of the related savings contract. Options may be satisfied by the issue of new shares or through the Seton Healthcare Group Qualifying Employee Share Ownership Trust either by newly issued shares tttttttttttttttttttttttttttttttttttttttor market purchases by the Trust. Options will normally lapse upon cessation of employment. t SSL International plc Global Share Savings Plan tttttttttttttttttttttttttttttttttttttttThis scheme was approved at the Company’s AGM in July 2001 and launched in September 2001. No grants may be made under the plan after July 2011. t Eligibility tttttttttttttttttttttttttttttttttttttttThe scheme has been launched to date in Australia, Austria, Canada, Denmark, France, Germany, Greece, Hong Kong, Hungary, Indonesia, Ireland, Italy, t Japan, Malaysia, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand and Turkey.

Grant of options tttttttttttttttttttttttttttttttttttttttThe scheme operates in a similar way to the SSL UK sharesave scheme, however, savings are made with local banks in local currencies. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt80 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Acquisition price The price per ordinary share payable upon the exercise of an option will be 80 per cent of the average of the middle market quotations for an ordinary share ttttttttttttttttttttttttttttttttttttttton the London Stock Exchange on the dealing date prior to the date on which invitations to apply for options are issued.

Exercise of options tttttttttttttttttttttttttttttttttttttttAn option will normally be exercisable for six months commencing on the third anniversary of the start of the related savings contract. Options are satisfied by the issue of new shares. tttttttttttttttttttttttttttttttttttttttDeferred Share Bonus Plan This plan was in operation for the 2005/06 financial year only, and was intended to provide a focused incentive upon achievement of short-term financial objectives. Under the scheme, executives were awarded a bonus upon achievement of EPS targets, capped at 100 per cent of salary for the Chief Executive tttttttttttttttttttttttttttttttttttttttand 75 per cent of salary for Executive Directors. The bonus earned was converted into an equivalent notional number of shares at a price of 321.75 pence and deferred until 30 March 2007. Payment was subject to the employee remaining in service at that point in time. The amount paid, in cash, in April 2007 tttttttttttttttttttttttttttttttttttttttwas the value of the notional number of shares awarded multiplied by the average share price during March 2007. Performance Share Plan This plan, approved at the Company’s AGM in July 2005, is intended to be the Company’s only active long-term incentive plan. Eligibility is restricted to the Chief Executive and senior executives (currently the top 35 employees). Annual grants do not exceed 100 per cent of base salary. Shares are awarded and tttttttttttttttttttttttttttttttttttttttwill vest after three years subject to performance conditions being met.

Executive share option plans and share savings plans tttttttttttttttttttttttttttttttttttttttThe executive share option plans include executive options that have a TSR performance condition attached. These options have been valued using the Monte-Carlo simulation model. All other options have been valued using the Black Scholes formula. There have been no share options granted in the current or preceeding financial year. The fair value of the services received for share options granted in earlier years was calculated at the date of grant and disclosure tttttttttttttttttttttttttttttttttttttttof the assumptions applied in valuing those options was provided in the annual report in the applicable year. Global share savings plan Executive share option plans and UK sharesave scheme Options WAEP* Options WAEP* ttttttttttttttttttttttttttttttttttttttt000 pence 000 pence Options outstanding at 1 April 2006 2,961 407 1,125 232 tttttttttttttttttttttttttttttttttttttttOptions exercised (295) 290 (335) 208 Options lapsed (663) 554 (117) 262 tttttttttttttttttttttttttttttttttttttttOptions outstanding at 31 March 2007 2,003 361 673 233 Options exercised (159) 296 (204) 236 Options lapsed (434) 428 (37) 289 tttttttttttttttttttttttttttttttttttttttOptions outstanding at 31 March 2008 1,410 361 432 233 Range of exercise prices 250p to 784p 208p to 444p tttttttttttttttttttttttttttttttttttttttWeighted average remaining contractual life (days) 1,649 247 Options exercisable 1,410 348 18 237 ttttttttttttttttttttttttttttttttttttttt* Weighted average exercise price. The weighted average share price at the date of exercise for share options exercised during the year was 467p (2007: 332p). The charge for share-based tttttttttttttttttttttttttttttttttttttttpayments in respect of share options is £0.2 million (2007: £0.4 million) which is comprised entirely of equity-settled transactions. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt81 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 18. Employee costs and share option plans for employees continued Long Term Incentive Plan tttttttttttttttttttttttttttttttttttttttAt the start of the year no performance shares were still to be awarded subject to performance criteria being met. t

Performance share plan tttttttttttttttttttttttttttttttttttttttNo. shares WAFV* t 000 pence At 1 April 2006 1,044 291 tttttttttttttttttttttttttttttttttttttttShares awarded in August 2006 1,095 282 t At 31 March 2007 2,139 286 Shares awarded 764 429 tttttttttttttttttttttttttttttttttttttttShare award lapses (168) 467 t As at 31 March 2008 2,735 286 ttttttttttttttttttttttttttttttttttttttt* Weighted Average Fair Value t The fair value is based upon the share price at the date of grant of the notional share award. The charge for the performance share plan during the current tttttttttttttttttttttttttttttttttttttttyear is £3.2 million (2007: £1.9 million). t ttttttttttttttttttttttttttttttttttttttt19. Reserves t Cumulative Cash flow Equity Share Share Merger foreign hedge Retained holders of Minority Total Capital premium reserve exchange reserve earnings the parent interests equity tttttttttttttttttttttttttttttttttttttttNote£m£m£m£m£m£m£m £m £m t At 1 April 2006 19.0 41.5 136.8 4.5 — (134.8) 67.0 8.5 75.5 Total recognised income and expense — — — (5.5) — 44.0 38.5 1.3 39.8 tttttttttttttttttttttttttttttttttttttttShares issued in the period — 1.7 — — — (0.3) 1.4 — 1.4 t Own shares held issued for cash consideration — — — — — 0.2 0.2 — 0.2 Equity dividends 20 — — — — — (12.4) (12.4) — (12.4) tttttttttttttttttttttttttttttttttttttttExchange adjustments — — — — — — — (0.8) (0.8) t Share-based payments — — — — — 2.3 2.3 — 2.3 Taxation taken to reserves in respect of share-based payments — — — — — 0.6 0.6 — 0.6 tttttttttttttttttttttttttttttttttttttttDividends paid to minority interests — — — — — — — (0.2) (0.2) t At 31 March 2007 and 1 April 2007 19.0 43.2 136.8 (1.0) — (100.4) 97.6 8.8 106.4 tttttttttttttttttttttttttttttttttttttttTotal recognised income and expense — — — 21.8 (0.7) 3.8 24.9 2.0 26.9 t Shares issued in the period 0.1 0.8 — — — — 0.9 — 0.9 Equity dividends 20 — — — — — (13.3) (13.3) — (13.3) tttttttttttttttttttttttttttttttttttttttExchange adjustments — — — — — — — 0.7 0.7 t Share-based payments — — — — — 3.4 3.4 — 3.4 Taxation taken to reserves in respect of share-based payments — — — — — 0.3 0.3 — 0.3 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 19.1 44.0 136.8 20.8 (0.7) (106.2) 113.8 11.5 125.3 t

Translation reserve tttttttttttttttttttttttttttttttttttttttThe translation reserve comprises all foreign exchange differences arising from the translation of foreign operations as well as from the translation of liabilities t that hedge the Group’s net investment in foreign subsidiaries. During the year, foreign exchange losses of £0.5 million (2007: gains of £0.5 million) on foreign currency borrowings were offset by gains of £0.5 million (2007: losses of £0.5 million) arising from retranslation of foreign assets, designated as the hedging tttttttttttttttttttttttttttttttttttttttinstrument. The net investment hedge was 100 per cent effective in the current and prior year. t Cash flow hedge reserve tttttttttttttttttttttttttttttttttttttttThe cash flow hedge reserve comprises the effective portion of interest rate swaps designated as cash flow hedges of variable rate borrowings transferred t to the reserve during the current financial year. tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt82 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Equity holders of the parent The Group previously had an investment in own shares which represented shares acquired by the Seton Healthcare Group Qualifying Employee Share tttttttttttttttttttttttttttttttttttttttOwnership Trust (QUEST) and Seton Healthcare Group Employee Ownership Plan (ESOP). The shares were purchased on the open market and were held for employees participating in various share schemes. The shares held at the start of the prior year were issued to employees for cash consideration of £0.2 million following option exercises under the sharesave and executive option schemes. During the year ended 31 March 2007 further shares were issued into the ttttttttttttttttttttttttttttttttttttttttrusts and issued to employees to satisfy option exercises under the sharesave and executive option schemes. This resulted in a reduction in retained earnings of £0.3 million at 31 March 2007. The Group had no investment in its own shares at 31 March 2008 or 31 March 2007. tttttttttttttttttttttttttttttttttttttttCalled up £0.10 Ordinary share capital of the parent company Allotted, Allotted, called-up and called-up and Authorised fully paid Authorised fully paid tttttttttttttttttttttttttttttttttttttttno. no. £m £m At 1 April 2006 250,000,000 189,918,233 25.0 19.0 Employee share options schemes — options exercised — 546,691 — — tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 250,000,000 190,464,924 25.0 19.0 Employee share options schemes — options exercised — 362,571 — 0.1 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 250,000,000 190,827,495 25.0 19.1 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 tttttttttttttttttttttttttttttttttttttttCompany. Details of the share option schemes in place are included in note 18. Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns whilst maximising the return to stakeholders tttttttttttttttttttttttttttttttttttttttthrough the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 15, cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as tttttttttttttttttttttttttttttttttttttttdisclosed above. The Group has the authority to purchase its own shares on the market for the purpose of issuing shares under the Group’s share option and performance share plans. No such purchases were made during the current or previous financial year. Decisions to purchase shares are made on a specific transaction tttttttttttttttttttttttttttttttttttttttbasis by the Board; there is no defined share buy-back plan. There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to tttttttttttttttttttttttttttttttttttttttexternally imposed capital requirements.

20. Dividends ttttttttttttttttttttttttttttttttttttttt2008 2007 2008 2007 Pence per £0.10 Pence per £0.10 ordinary share ordinary share £m £m ttttttttttttttttttttttttttttttttttttttt2007 final paid 6 September 2007 (2006: final paid 7 September 2006) 4.7 4.4 8.9 8.4 2008 interim paid 5 March 2008 (2007 interim paid 1 March 2007) 2.3 2.1 4.4 4.0 tttttttttttttttttttttttttttttttttttttttAmounts recognised as distributions to equity holders in the year 7.0 6.5 13.3 12.4 The proposed final dividend for 2008 is 5.3 pence per ordinary share and £10.1 million in total. The proposed 2008 final dividend will be submitted to the shareholders for approval at the Annual General Meeting and has not been recognised as a distribution to equity holders in these financial statements. tttttttttttttttttttttttttttttttttttttttThis will be payable, subject to approval, on 4 September 2008 to shareholders on the register on 1 August 2008. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt83 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 21. Analysis of net debt Cash and cash tttttttttttttttttttttttttttttttttttttttBank loans and loan notes Interest rate swap derivatives Total equivalents t Due after Due within Due after Due within Finance financial per balance one year one year one year one year leases Overdrafts liabilities sheet Net debt £m £m £m £m £m £m £m £m £m tttttttttttttttttttttttttttttttttttttttAt 1 April 2006 (74.8) (31.2) (5.0) (0.4) (0.9) (14.7) (127.0) 35.5 (91.5) t Cash flow — (7.3) — 0.6 0.7 1.0 (5.0) 6.7 1.7 Other non-cash changes 2.7 (2.7) 1.3 (1.3) (0.1) — (0.1) — (0.1) tttttttttttttttttttttttttttttttttttttttExchange adjustments 8.0 0.8 (7.8) (0.2) — 0.5 1.3 (1.9) (0.6) t Fair value changes arising from interest rates movements (0.2) — 2.0 — — — 1.8 — 1.8 tttttttttttttttttttttttttttttttttttttttAt 31 March 2007 (64.3) (40.4) (9.5) (1.3) (0.3) (13.2) (129.0) 40.3 (88.7) t Cash flow 64.6 (88.4) 9.5 1.3 0.3 4.2 (8.5) 1.9 (6.6) tttttttttttttttttttttttttttttttttttttttOther non-cash changes — — (0.8) — (0.1) — (0.9) — (0.9) t Exchange adjustments (0.3) (3.0) — — — (1.9) (5.2) 2.4 (2.8) Fair value changes arising from interest tttttttttttttttttttttttttttttttttttttttrates movements — — — — — — — — — t At 31 March 2008 — (131.8) (0.8) — (0.1) (10.9) (143.6) 44.6 (99.0) tttttttttttttttttttttttttttttttttttttttNet debt is defined as financial liabilities less cash and cash equivalents. t tttttttttttttttttttttttttttttttttttttttt 22. Financial risk management The Group has exposure to the following risks from its use of financial instruments: credit; liquidity; interest rate; and currency. Further information on the tttttttttttttttttttttttttttttttttttttttGroup’s exposure to these risks is presented below, with an explanation of the Group’s policies and processes for measuring and managing these risks. t The Board of Directors has overall responsibility for the establishment and review of the Group’s risk management policies and procedures; these guidelines are designed to identify and analyse the risks faced by the Group, including setting and monitoring compliance with appropriate limits and controls. The policies tttttttttttttttttttttttttttttttttttttttare reviewed regularly and amended where appropriate to reflect changes in the Group’s operations, risk exposure and market conditions. The Board is t assisted by the Group’s Business Assurance function, which undertakes regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. tttttttttttttttttttttttttttttttttttttttThe Group’s Treasury function provides services to the business, co-ordinates acess to domestic and international financial markets and monitors and t manages the financial risks relating to the operations of the Group. tttttttttttttttttttttttttttttttttttttttCredit risk t Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises tttttttttttttttttttttttttttttttttttttttprincipally from the the Group’s trade receivables and investment securities. t Trade and other receivables The Group’s exposure to credit risk is influenced by the individual characteristics of each customer; the default risk of the industry and country in which tttttttttttttttttttttttttttttttttttttttcustomers operate has less of an influence on credit risk. Geographically, approximately 75—80 per cent of the Group’s debtors are in Europe. t Group exposure to credit risk is controlled by setting a policy, which is reviewed annually, for limiting credit exposure to counterparties, reviewing credit ratings, and limiting individual aggregate credit exposures accordingly. The Group considers the possibility of material loss in the event of non-performance tttttttttttttttttttttttttttttttttttttttby a financial counterparty to be unlikely. Customer credit risk is monitored at a subsidiary level by divisional management, and is reviewed at Group level t by country. tttttttttttttttttttttttttttttttttttttttGoods are sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. The Group does not require t collateral in respect of trade and other receivables. tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt84 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component tttttttttttttttttttttttttttttttttttttttestablished for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payments statistics for similar financial assets. tttttttttttttttttttttttttttttttttttttttInvestment securities Surplus funds are invested in high quality liquid marketable investments. Investments are of a plain vanilla nature with no embedded derivatives. The Group deposits central funds, when available, with highly rated banks, in line with Group policy. The central funds on deposit at the balance sheet tttttttttttttttttttttttttttttttttttttttdate were £15 million (2007: £9.5 million). Guarantees tttttttttttttttttttttttttttttttttttttttThe Group’s policy is to provide financial guarantees only to wholly-owned subsidiaries. At 31 March 2008, no guarantees were outstanding (2007: none). Liquidity risk tttttttttttttttttttttttttttttttttttttttLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. tttttttttttttttttttttttttttttttttttttttThe Group manages liquidity risks by ensuring that any anticipated funding requirements, based on detailed cash flow forecasts at subsidiary and Group level, will be met by access to different sources of funding. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 30—60 days, including the servicing of financial obligations. In addition, the Group maintains the credit facilities detailed in note 15. tttttttttttttttttttttttttttttttttttttttCommitted undrawn facilities available to the Group in respect of which all conditions precedent had been met at the balance sheet date were as follows: 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m Expiring in one year or less — 70.0 Expiring in more than one year and less than two years — — tttttttttttttttttttttttttttttttttttttttExpiring in more than two years 97.0 146.1 Total 97.0 216.1 tttttttttttttttttttttttttttttttttttttttMarket risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, would affect the Group’s income, the tttttttttttttttttttttttttttttttttttttttvalue of its holdings of financial instruments, or its obligations in respect of retirement benefits. Foreign currency risk The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of the tttttttttttttttttttttttttttttttttttttttGroup’s entities. Where practicable, the Group uses forward foreign exchange contracts to hedge major transactional exposures on working capital balances. At the start of each financial year, the Group hedges approximately 50 to 70 per cent of its estimated foreign currency exposure in respect of forecast sales and purchases over the forthcoming financial year. tttttttttttttttttttttttttttttttttttttttInterest on borrowings is primarily denominated in Sterling, such that no related foreign currency derivatives are required. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level tttttttttttttttttttttttttttttttttttttttby buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. The Group’s investment in its Japanese subsidiary is hedged by a Japanese Yen-denominated secured bank loan which mitiages the currency risk arising tttttttttttttttttttttttttttttttttttttttfrom the subsidiary’s net assets. Interest rate risk The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. tttttttttttttttttttttttttttttttttttttttThe Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates; the Group has reduced its exposure to tttttttttttttttttttttttttttttttttttttttthis by entering into interest rate swaps. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt85 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 22. Financial risk management continued Other market price risk tttttttttttttttttttttttttttttttttttttttThe Group does not speculate in equity securities, nor does the Group enter into commodity contracts other than to meet the Group’s expected usage t requirements. The Group holds a strategic investment of £1 million in the equity securities of an unlisted company as detailed in note 9, this is not deemed tttttttttttttttttttttttttttttttttttttttto expose the Group to market price risk, although the investment is subject to annual impairment reviews. t 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: tttttttttttttttttttttttttttttttttttttttCarrying amount Carrying amount t 2008 2007 £m £m tttttttttttttttttttttttttttttttttttttttTrade and other receivables (excluding prepayments and derivative financial assets) 169.0 143.2 t Available for sale financial assets 1.0 — Cash and cash equivalents 44.6 40.3 tttttttttttttttttttttttttttttttttttttttInterest rate swaps used for hedging 0.1 — t Other forward exchange contracts 0.4 0.3 tttttttttttttttttttttttttttttttttttttttThe maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: t Carrying amount Carrying amount 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m t United Kingdon 23.9 22.7 Europe 104.9 89.3 tttttttttttttttttttttttttttttttttttttttAsia Pacific 4.0 3.9 t United States 22.1 18.0 ttttttttttttttttttttttttttttttttttttttt154.9 133.9 t The ageing of trade receivables at the reporting date was: Allowance Allowance Gross for impairment Gross for impairment ttttttttttttttttttttttttttttttttttttttt2008 2008 2007 2007 t £m £m £m £m Trade receivables due within terms 155.2 — 126.8 — tttttttttttttttttttttttttttttttttttttttPast due by less than 30 days 7.7 — 4.8 — t Past due 31—120 days 8.4 — 8.7 — Past due 120—365 days 3.8 (2.0) 3.3 (0.6) tttttttttttttttttttttttttttttttttttttttMore than one year 3.8 (3.8) 3.3 (3.3) t 178.9 (5.8) 146.9 (3.9) Provision for rebates (18.2) (9.1) tttttttttttttttttttttttttttttttttttttttGross trade receivables (note 11) 160.7 137.8 t Allowance for impairment (5.8) (3.9) tttttttttttttttttttttttttttttttttttttttNet credit exposure 154.9 133.9 t There are no customers representing more than 2 per cent of the total balance of trade receivables. In determining the recoverability of a trade tttttttttttttttttttttttttttttttttttttttreceivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. t The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for impairment. Movement on the allowance for impairment in respect of trade receivables is disclosed in note 11. Based on previous experience, the Group believes that no impairment allowance is necessary in respect of trade receivables not past due. tttttttttttttttttttttttttttttttttttttttAll receivables classified as non-current are within the respective payment/contractual terms. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt86 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Liquidity risk

The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting arrangements: 0 2008 tttttttttttttttttttttttttttttttttttttttCarrying Contractual 6 months More than amount cash flows or less 6—12 months 1—2 years 2—5 years 5 years tttttttttttttttttttttttttttttttttttttttNon-derivative financial liabilities Secured bank loans (123.0) (124.5) (113.9) (10.6) — — — Finance lease liabilities (0.1) (0.1) (0.1) — — — — tttttttttttttttttttttttttttttttttttttttUnsecured bank facility (8.8) (8.9) (8.9) — — — — Trade and other payables (138.8) (138.8) (138.0) — (0.8) — — Bank overdrafts (10.9) (10.9) (10.9) — — — — tttttttttttttttttttttttttttttttttttttttDerivative financial liabilities Interest rate swaps used for hedging* (0.8) (0.8) (0.8) ———— ttttttttttttttttttttttttttttttttttttttt2007 Carrying Contractual 6 months More than amount cash flows or less 6—12 months 1—2 years 2—5 years 5 years tttttttttttttttttttttttttttttttttttttttNon-derivative financial liabilities Secured bank loans (33.9) (34.3) (34.3) — — — — Loan notes (67.2) (85.8) (2.7) (5.8) (8.1) (61.9) (7.3) tttttttttttttttttttttttttttttttttttttttFinance lease liabilities (0.3) (0.3) (0.1) (0.1) (0.1) — — Unsecured bank facility (3.6) (3.6) (3.4) — (0.2) — — Trade and other payables (118.2) (118.2) (118.2) — — — — tttttttttttttttttttttttttttttttttttttttBank overdrafts (13.2) (13.2) (12.4) — (0.8) — — Derivative financial liabilities Interest rate swaps used for hedging* (10.8) (10.8) (10.8) — — — — tttttttttttttttttttttttttttttttttttttttForward exchange conracts used for hedging (0.3) (0.3) (0.3) — — — — ttttttttttttttttttttttttttttttttttttttt* Derivative financial liabilities are accounted for at fair value and it is not deemed appropriate to allocate the cash flows across the maturity categories. The loan notes at 31 March 2007 were repaid in full in October 2007 following the announcement of the European Supply Chain restructuring programme; the related interest rate swaps used for hedging were also settled at that time. The early repayment of the loan notes and related swaps led to a one-off tttttttttttttttttttttttttttttttttttttttfinance charge of £5.2 million as disclosed in note 3. The interest rate swaps used for hedging at 31 March 2008 are designated in a cash flow hedge relationship against £60 million of the secured bank loans, and ttttttttttttttttttttttttttttttttttttttttherefore the related cash flows will not impact upon profit or loss until the hedge relationship ceases. Currency risk Exposure to currency risk The Group’s main exposure to foreign currency risk was in respect of the Euro, based on notional amounts: 2008 2007 tttttttttttttttttttttttttttttttttttttttExposure to Exposure to Euro risk Euro risk £m £m tttttttttttttttttttttttttttttttttttttttTrade receivables 95.3 77.8 Trade payables (31.7) (22.1) Other payables (23.8) (19.3) tttttttttttttttttttttttttttttttttttttttGross balance sheet exposure 39.8 36.4 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt87 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 22. Financial risk management continued tttttttttttttttttttttttttttttttttttttttNet exposure to currency risk with regards to other foreign currencies was not significant at 31 March 2008 or 31 March 2007. t The following significant exchange rates applied during the year: Average rate for the year Balance sheet date 2008 2007 2008 2007 tttttttttttttttttttttttttttttttttttttttEuro 1.4187 1.4756 1.2543 1.4735 t tttttttttttttttttttttttttttttttttttttttSensitivity analysis t A 10 per cent strengthening of Sterling against the Euro at 31 March 2008 and 31 March 2007 would have increased/decreased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, including interest rates, remain constant. 2008 2007 Profit Profit tttttttttttttttttttttttttttttttttttttttEquity or loss Equity or loss t tttttttttttttttttttttttttttttttttttttttEuro 1.6 (1.1) (1.5) (3.5) t A 10 per cent weakening of Sterling against the Euro at 31 March 2008 and 31 March 2007 would have had the equal but opposite effect to the amounts shown tttttttttttttttttttttttttttttttttttttttabove, on the basis that all other variables remain constant. t Interest rate risk At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was: 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m t Fixed rate instruments tttttttttttttttttttttttttttttttttttttttFinancial assets 2.1 2.8 t Financial liabilities (9.2) (68.6) Variable rate instruments tttttttttttttttttttttttttttttttttttttttFinancial assets 42.5 37.5 t Financial liabilities (133.6) (60.4) tttttttttttttttttttttttttttttttttttttttFair value sensitivity analysis for fixed rate instruments t At 31 March 2008, the Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group has not designated tttttttttttttttttttttttttttttttttttttttinterest rate swaps under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss. t Cash flow sensitivity analysis for variable rate instruments Due to the short maturity dates of the drawdowns on the Group facility at 31 March 2008 (average maturity 51 days) and 31 March 2007 (average maturity ttttttttttttttttttttttttttttttttttttttt83 days), a change of 100 basis points in interest rates at either reporting date would have negligible impact on the carrying value of variable rate financial t instruments, and similarly upon profit or loss. The interest rate swap at 31 March 2008 is included as part of a cash flow hedge relationship, therefore any change in interest rates at the reporting date would have no impact upon profit or loss for the year, only upon the amount recognised in equity within the cash flow ttttttttttttttttttttttttttttttttttttttthedge reserve. There were no variable rate interest rate swaps at 31 March 2007. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt88 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Fair values Fair values versus carrying amounts tttttttttttttttttttttttttttttttttttttttThe fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows: 2008 2007 £m £m £m £m tttttttttttttttttttttttttttttttttttttttCarrying amount Fair value Carrying amount Fair value Available for sale financial assets 1.0 1.0 — — Trade and other receivables (excluding prepayments and derivative financial assets) 169.0 169.0 143.2 143.2 tttttttttttttttttttttttttttttttttttttttCash and cash equivalents 44.6 44.6 40.3 40.3 Interest rate swaps used for hedging liabilities (net) (0.7) (0.7) (10.8) (10.8) Forward exchange contracts used for hedging 0.4 0.4 (0.3) (0.3) tttttttttttttttttttttttttttttttttttttttSecured bank loans (123.0) (123.0) (33.9) (33.9) Finance lease liabilities (0.1) (0.1) (0.3) (0.3) Unsecured bank facilities (8.8) (8.8) (3.6) (3.6) tttttttttttttttttttttttttttttttttttttttTrade and other payables (138.8) (138.8) (118.2) (118.2) Bank overdrafts (10.9) (10.9) (13.2) (13.2) (67.3) (67.3) 3.2 3.2 tttttttttttttttttttttttttttttttttttttttUnrecognised gain (loss) — — tttttttttttttttttttttttttttttttttttttttBasis for determining fair values The following summarises the significant methods and assumptions used in estimating the fair values of financial insrtuments reflected in the table above.

Available for sale financial assets tttttttttttttttttttttttttttttttttttttttThe available for sale financial assets at 31 March 2008 is an unquoted entity, therefore fair value of the shareholding cannot be readily ascertained; the investment is therefore held at initial cost which is deemed to be comparable to fair value, although the investment is subject to annual impairment review. tttttttttttttttttttttttttttttttttttttttDerivatives The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for ther residual maturity of the contract using a risk-free tttttttttttttttttttttttttttttttttttttttinterest rate (based on government bonds). The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows tttttttttttttttttttttttttttttttttttttttbased on the terms and maturity of each contract and using market interest rates for a similar instrument at the reporting date. Non-derivative financial liabilities Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. tttttttttttttttttttttttttttttttttttttttIn respect of finance leases, the market rate of interest is determined by reference to similar lease agreements.

Trade and other receivables tttttttttttttttttttttttttttttttttttttttThe fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt89 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 22. Financial risk management continued Interest rates used for determining fair value tttttttttttttttttttttttttttttttttttttttThe interest rates used to discount estimated cash flows, where applicable, are based on the government yield curve at the reporting date plus an adequate t constant credit spread, and were as follows: 2008 2007 tttttttttttttttttttttttttttttttttttttttDerivatives N/a 7.08% t tttttttttttttttttttttttttttttttttttttttLoans and borrowing N/a 7.58% t

23. Financial instruments ttttttttttttttttttttttttttttttttttttttt(a) Interest rate risk profile of financial assets and liabilities t Financial assets 2008 2007 At floating At fixed At floating At fixed interest rates interest rates Total interest rates interest rates Total ttttttttttttttttttttttttttttttttttttttt£m £m £m £m £m £m t Cash and cash equivalents tttttttttttttttttttttttttttttttttttttttSterling 16.2 — 16.2 14.7 — 14.7 t US Dollar 1.6 — 1.6 2.0 — 2.0 Euro 2.6 1.9 4.5 5.3 1.5 6.8 tttttttttttttttttttttttttttttttttttttttOther 22.1 0.2 22.3 15.5 1.3 16.8 t Total 42.5 2.1 44.6 37.5 2.8 40.3 tttttttttttttttttttttttttttttttttttttttCash and cash equivalents at floating interest rates comprise cash at bank and short-term deposits. These are held at call and accrue interest at effective t interest rates of less than 4.7 per cent. Cash and cash equivalents at fixed interest rates comprise short-term bank deposits. These are placed on terms not tttttttttttttttttttttttttttttttttttttttexceeding three months. The deposits accrue effective rates of interest of between 2.0 per cent and 3.6 per cent. t Financial liabilities The Group’s fixed rate financial derivatives and fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. tttttttttttttttttttttttttttttttttttttttThe Group’s variable rate financial derivatives and variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. t Hedging Interest rate and currency swaps, denominated in US Dollars, Euros and Sterling, were in place at 31 March 2007 to hedge the Group’s exposure to risks in tttttttttttttttttttttttttttttttttttttttaccordance with its interest rate policy. These swaps were matched in maturity to the underlying debt. At 31 March 2008, the Group had interest rate and t currency swaps with a notional amount of £133.0 million (2007: £11.9 million). Interest rate swaps (including those in effective fair value hedging relationships) tttttttttttttttttttttttttttttttttttttttare measured at fair value under IAS 39. t The fair value of interest and currency swaps recognised as hedges at 31 March 2008 is a net liability of £0.7 million comprising assets of £0.1 million and liabilities of £0.8 million (2007: net liabilty of £1.6 million comprising assets of £17.8 million and liabilities of £19.4 million). tttttttttttttttttttttttttttttttttttttttUp to the repayment of the loan notes and settlement of related swaps in November 2007, interest rate swaps designated as fair value hedges were fair t valued through the income statement as part of net finance costs. Underlying loans that form part of fair value hedge relationships were adjusted for fair value attributable to hedged risk through the income statement to offset any mark-to-market arising on the interest rate swaps. Hedge documentation was tttttttttttttttttttttttttttttttttttttttprepared for all fair value hedges at inception and effectiveness testing was carried out semi-annually. All designated hedges remained effective throughout t the current financial year to the point of settlement. tttttttttttttttttttttttttttttttttttttttThe maturity dates of all financial liabilities, together with details of their fair values and carrying values are disclosed in note 15. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt90 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Effects of interest rate and currency swaps The following reflects the effects of financial derivatives on the Group’s borrowings: At 31 March 2008 At 31 March 2007 tttttttttttttttttttttttttttttttttttttttBefore After Before After financial financial financial financial derivatives derivatives derivatives derivatives ttttttttttttttttttttttttttttttttttttttt£m £m £m £m Sterling 110.1 110.1 42.1 106.9 US dollar — — 60.9 (2.5) tttttttttttttttttttttttttttttttttttttttEuro 28.0 28.0 14.3 23.9 Japanese Yen 4.6 4.6 0.5 0.5 Other currencies 0.1 0.1 0.2 0.2 ttttttttttttttttttttttttttttttttttttttt142.8 142.8 118.0 129.0 Floating rate borrowings 133.6 133.6 50.7 60.4 Fixed rate borrowings 9.2 9.2 67.3 68.6 ttttttttttttttttttttttttttttttttttttttt142.8 142.8 118.0 129.0 tttttttttttttttttttttttttttttttttttttttThe analysis above does not include the marking-to-market liabilities arising on forward contract derivatives. The following tables show the profile of the Group’s fixed and floating rate borrowings after the effect of swaps for both the current and prior year: 2008 2007 tttttttttttttttttttttttttttttttttttttttAt floating At fixed At floating At fixed interest rates interest rates Total interest rates interest rates Total £m £m £m £m £m £m tttttttttttttttttttttttttttttttttttttttInterest bearing loans and overdrafts Sterling 110.1 — 110.1 36.0 70.9 106.9 US Dollar — — — — (2.5) (2.5) tttttttttttttttttttttttttttttttttttttttEuro 18.9 9.1 28.0 23.9 — 23.9 Other 4.6 0.1 4.7 0.5 0.2 0.7 tttttttttttttttttttttttttttttttttttttttTotal 133.6 9.2 142.8 60.4 68.6 129.0 Interest rates of the Group’s borrowings Floating rate financial liabilities in material currencies are based upon LIBOR. tttttttttttttttttttttttttttttttttttttttThe following table shows the notional and effective rates of interest of the Group’s fixed rate borrowings after the effect of swaps: Total 2008 Total 2007 fixed rate Effective Notional fixed rate Effective Notional tttttttttttttttttttttttttttttttttttttttborrowing interest interest borrowing interest interest £m rates rates £m rates rates Sterling guaranteed loans notes — — — 5.9 8.02% 7.87% tttttttttttttttttttttttttttttttttttttttCurrency swap: US$ loan notes to Sterling fixed rate borrowing — — — 62.4 7.83% 7.69% Euro bank loans 9.1 4.77% 4.77% — — — Obligations under finance leases 0.1 7.12% 7.12% 0.3 7.70% 7.70% tttttttttttttttttttttttttttttttttttttttTotal/weighted average rate 9.2 4.80% 4.80% 68.6 7.85% 7.71% ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt91 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 23. Financial instruments continued tttttttttttttttttttttttttttttttttttttttThe following table shows the average effective rates of interest of the Group’s variable rate borrowings after the effect of swaps: t 2008 2007 Total Average Total Average variable rate effective variable rate effective borrowing interest borrowing interest ttttttttttttttttttttttttttttttttttttttt£m rates £m rates t Sterling bank loans and overdrafts 110.1 6.26% 36.0 5.53% tttttttttttttttttttttttttttttttttttttttCurrency swap: Euro fixed rate receivable to Euro floating rate payable — — 9.6 5.12% t Euro bank loans and overdrafts 18.9 4.69% 14.3 4.39% Japanese Yen bank loans and overdrafts 4.6 1.53% 0.5 2.63% tttttttttttttttttttttttttttttttttttttttTotal/ Weighted average rate 133.6 5.12% 60.4 5.17% t

(b) Foreign currency risk tttttttttttttttttttttttttttttttttttttttThe table below shows the Group’s transactional currency exposures that give rise to the net currency gains and losses recognised in the income statement. t Such exposures comprise the monetary assets and liabilities of the Group that are not denominated in the functional currency of the relevant local operating company involved, other than the non-Sterling borrowings treated as hedges of net assets in overseas operations. tttttttttttttttttttttttttttttttttttttttNet foreign currency financial assets/(liabilities) in £m t Sterling US Dollar Euro Other Total At 31 March 2008 tttttttttttttttttttttttttttttttttttttttFunctional currency of Group operations: t Sterling — 0.1 0.4 0.1 0.6 Other 0.4 — 0.1 — 0.5 tttttttttttttttttttttttttttttttttttttttTotal 0.4 0.1 0.5 0.1 1.1 t At 31 March 2007 tttttttttttttttttttttttttttttttttttttttFunctional currency of Group operations: t Sterling — — 0.1 — 0.1 Other 0.7 — 0.7 — 1.4 tttttttttttttttttttttttttttttttttttttttTotal 0.7 — 0.8 — 1.5 t

The amounts shown in the table above take into account the effect of any forward contracts and other derivatives entered into to manage these tttttttttttttttttttttttttttttttttttttttcurrency exposures. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt92 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt 24. Leases 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m Total commitments to pay rentals under operating leases Minimum lease payments made during the year ttttttttttttttttttttttttttttttttttttttt— Land and buildings 4.1 4.2 — Plant, equipment and motor vehicles 1.5 1.5 5.6 5.7 tttttttttttttttttttttttttttttttttttttttUtilisation of surplus property provision (2.6) (1.3) Lease payments charged to income statement 3.0 4.4 tttttttttttttttttttttttttttttttttttttttThe future minimum lease commitments under leases are as follows: Operating leases Finance leases 2008 2007 2008 2007 £m £m £m £m tttttttttttttttttttttttttttttttttttttttRentals due within one year 3.2 2.2 0.1 0.2 From 1—2 years 2.8 2.1 — 0.1 From 2—3 years 1.9 2.9 — — tttttttttttttttttttttttttttttttttttttttFrom 3—4 years 1.3 1.2 — — From 4—5 years 1.0 0.9 — — After 5 years from balance sheet date 1.0 0.8 — — ttttttttttttttttttttttttttttttttttttttt11.2 10.1 0.1 0.3 Less amounts representing interest — — Present value of net minimum lease payments 0.1 0.3 tttttttttttttttttttttttttttttttttttttttLess current lease obligations (0.1) (0.2) tttttttttttttttttttttttttttttttttttttttNon-current lease obligations — 0.1 ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt93 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes to the consolidated financial statements tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt 25. Statutory and other information Related party transactions tttttttttttttttttttttttttttttttttttttttSSL-TTK and TTK-LIG minority interest t In accordance with IAS 24 ‘Related Party Disclosures’ are reported only with parties outside the consolidated Group. tttttttttttttttttttttttttttttttttttttttDuring the year the Group has transacted with the minority interest holding Groups of SSL-TTK Limited and TTK-LIG Limited. Specific transactions which t are considered material are as follows: The Group has made sales of £5.7 million to the minority group (2007: £18.5 million), and has paid packing charges of £0.8 million (2007: £0.5 million) and tttttttttttttttttttttttttttttttttttttttlogo charges of £0.5 million (2007: £0.4 million) to the minority group. t At the year end the Group was owed £1.1 million (2007: £3.3 million) from the minority interest holding Group of SSL-TTK Limited and TTK-LIG Limited. tttttttttttttttttttttttttttttttttttttttQingdao London Durex Company Limited t Prior to the acquisition of the remaining 50 per cent of Qingdao London Durex Company Limited in January 2007, the Group received royalties from this company of £0.9 million during the prior financial year. Dividends of £2.0 million were also due to the Group at 31 March 2007 in relation to profits earned tttttttttttttttttttttttttttttttttttttttby this company prior to the Group acquiring the remaining 50 per cent of this company. t Key management personnel compensation tttttttttttttttttttttttttttttttttttttttKey management personnel, being the Executive Directors and those persons discharging managerial responsibilities, received the following compensation t during the period: 31 March 2008 ttttttttttttttttttttttttttttttttttttttt£m t Short-term employee benefits 4.7 Share-based payments 2.2 tttttttttttttttttttttttttttttttttttttttPost employment benefits 0.2 t Total 7.1 tttttttttttttttttttttttttttttttttttttttSubsequent events t Proposed dividends are disclosed in note 20 . tttttttttttttttttttttttttttttttttttttttOn 19 May 2008 the Group completed the first stage of its investment in Beleggingsmaatschappij Lemore BV, acquiring a 15.5 per cent stake for £24.8 million, t with further options to purchase the remainder exercisable over the next two years. tttttttttttttttttttttttttttttttttttttttThere are no other events after the balance sheet date disclosable under IAS 10 ‘Events after the balance sheet date’. t

26. Commitments and contingent liabilities ttttttttttttttttttttttttttttttttttttttt2008 2007 t £m £m tttttttttttttttttttttttttttttttttttttttCommitments for capital expenditure not provided for in these accounts t Contracts placed for future expenditure — 1.1 tttttttttttttttttttttttttttttttttttttttContingent liabilities t Litigation The Group is a defendant in a small number of lawsuits incidental to its operations which, in aggregate, are not expected to have a material adverse effect ttttttttttttttttttttttttttttttttttttttton the Group. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt94 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttttPrincipal Group undertakings tttttttttttttttttttttttttttttttttttttttt Trading subsidiary undertakings Country of registration, incorporation and operation ttttttttttttttttttttttttttttttttttttttttSSL Australia Pty. Limited Australia SSL Healthcare Oesterreich GmbH Austria NV SSL Healthcare Belgium S.A. Belgium ttttttttttttttttttttttttttttttttttttttttSSL Canada Inc Canada SSL Czeska Republika s.r.o. Czech Republic SSL Healthcare Danmark A/S Denmark ttttttttttttttttttttttttttttttttttttttttSSL Products Limited England London International Group Limited England LRC Products Limited England ttttttttttttttttttttttttttttttttttttttttScholl Limited England Scholl Consumer Products Limited England Scholl (Investments) Limited England ttttttttttttttttttttttttttttttttttttttttScholl (UK) Limited England Sonet Scholl Overseas Investments Limited England Sonet Scholl UK Limited England ttttttttttttttttttttttttttttttttttttttttSonet Prebbles Limited * England Sonet Investments Limited * England Tubifoam Limited England ttttttttttttttttttttttttttttttttttttttttSSL Healthcare France SA France SSL Healthcare Deutschland GmbH & Co. KG Germany SSL Healthcare GmbH Germany ttttttttttttttttttttttttttttttttttttttttLondon International GmbH Germany SSL Hellas SA Greece Simco Limited Guernsey ttttttttttttttttttttttttttttttttttttttttSSL Healthcare (Hong Kong) Limited Hong Kong SSL Magyarorszag Kereskedelmi Kft Hungary SSL-TTK Limited India ttttttttttttttttttttttttttttttttttttttttTTK-LIG Limited India Seton Scholl Ireland Holdings Limited Ireland Seton Scholl International Ireland Ireland ttttttttttttttttttttttttttttttttttttttttSSL Healthcare Ireland Limited Ireland SSL Healthcare Italia SpA Italy SSL Healthcare Japan Limited Japan ttttttttttttttttttttttttttttttttttttttttLIG China BV Netherlands SSL Healthcare Nederland BV Netherlands New Bridge Holdings BV Netherlands ttttttttttttttttttttttttttttttttttttttttSeton Scholl European Holdings BV Netherlands SSL New Zealand Limited New Zealand SSL Healthcare (Norge)A/S Norway ttttttttttttttttttttttttttttttttttttttttLondon International Norway A/S Norway Qingdao London Durex Company Limited People’s Republic of China SSL Healthcare (Polska) Sp zoo Poland ttttttttttttttttttttttttttttttttttttttttSSL Romania SRL Romania SSL Healthcare Singapore Pte Limited Singapore SSL Slovensko spol sro Slovakia ttttttttttttttttttttttttttttttttttttttttSSL Healthcare Brands S.A. Spain SSL Sverige AB Sweden SSL Healthcare Suisse SA Switzerland ttttttttttttttttttttttttttttttttttttttttSSL Manufacturing (Thailand) Limited Thailand SSL Healthcare (Thailand) Limited Thailand LRC Products Ticaret ve Pazarlama Limited Sirketi Turkey ttttttttttttttttttttttttttttttttttttttttSSL Americas, Inc USA SSL Holdings, Inc USA LRC North America, Inc USA ttttttttttttttttttttttttttttttttttttttttThe Group holds 100 per cent of the equity capital of the above companies with the exception of: SSL-TTK Limited, in which the Group effectively holds 75.4 per cent; and TTK-LIG Limited, in which the Group holds 49.87 per cent. TTK-LIG Limited is consolidated as the Group exerts a dominant influence over the company. ttttttttttttttttttttttttttttttttttttttttIn January 2007, the Group completed the purchase of the remaining 50 per cent of the shares it did not already own in its joint venture, Qingdao London Durex Company Limited, for the purchase price of US$37.5 million. Prior to this date, the entity was accounted for as an associated undertaking of the Group. Qingdao London Durex Company Limited has a year end of 31 December, as required by local law. Figures included in the consolidation are based upon ttttttttttttttttttttttttttttttttttttttttaudited results for the 12-month period ended 31 March 2008. * Shares are held directly by SSL International plc. tttttttttttttttttttttttttttttttttttttttt95 tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Company balance sheet tttttttttttttttttttttttttttttttttttttttat 31 March 2008 t tttttttttttttttttttttttttttttttttttttttt 2008 2007 Note £m £m tttttttttttttttttttttttttttttttttttttttFixed assets t Intangible assets (i) 6.3 5.9 Tangible assets (ii) 0.1 0.2 tttttttttttttttttttttttttttttttttttttttInvestments (iii) 591.8 590.8 t 598.2 596.9 tttttttttttttttttttttttttttttttttttttttCurrent assets t Debtors (iv) 159.1 73.4 Cash 15.7 13.0 ttttttttttttttttttttttttttttttttttttttt174.8 86.4 t Creditors due within one year: Financial liabilities (v) (123.1) (40.5) tttttttttttttttttttttttttttttttttttttttOther creditors (vi) (527.8) (415.2) t (650.9) (455.7) Net current liabilities (476.1) (369.3) tttttttttttttttttttttttttttttttttttttttTotal assets less current liabilities 122.1 227.6 t Creditors due after more than one year tttttttttttttttttttttttttttttttttttttttFinancial liabilities (v) (0.8) (73.6) t Provisions for liabilities (vii) (0.1) (0.2) tttttttttttttttttttttttttttttttttttttttNet assets 121.2 153.8 t Capital and reserves Called up share capital (ix) 19.1 19.0 tttttttttttttttttttttttttttttttttttttttShare premium account (x) 44.0 43.2 t Other reserves (x) 46.5 45.5 Cash flow hedge reserve (x) (0.7) — tttttttttttttttttttttttttttttttttttttttProfit and loss account (x) 12.3 46.1 t Equity shareholders’ funds (x) 121.2 153.8 tttttttttttttttttttttttttttttttttttttttSee accompanying notes to the Company financial statements. t The financial statements on pages 96 to 103 were approved by the Board of Directors on 19 May 2008 and were signed on its behalf by: tttttttttttttttttttttttttttttttttttttttM. Moran t tttttttttttttttttttttttttttttttttttttttDirector t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt96 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttttCompany accounting policies tttttttttttttttttttttttttttttttttttttttt As used in the financial statements and related notes, the term (d) Taxation ‘Company’ refers to SSL International plc. The separate financial statements The charge for taxation is based on the loss/profit for the year and takes ttttttttttttttttttttttttttttttttttttttttof the Company are presented as required by the Companies Act 1985 and into account taxation deferred because of timing differences between the under UK Generally Accepted Accounting Practices. treatment of certain items for taxation and accounting purposes. A list of principal subsidiary undertakings is presented on page 87. Credit is taken for advance corporation tax written off in previous years ttttttttttttttttttttttttttttttttttttttttwhen it is recovered against corporation tax liabilities. Basis of preparation In accordance with FRS 19, deferred tax is provided where a taxation The separate financial statements of the Company are presented as liability will arise as a result of transactions or events which have occurred by required by the Companies Act 1985. As permitted by the Act, the separate the balance sheet date. Deferred tax assets are recognised to the extent that ttttttttttttttttttttttttttttttttttttttttfinancial statements have been prepared in accordance with UK Generally it is regarded that they will be recovered. Provision is made at rates expected Accepted Accounting Practices (‘UK GAAP’). The accounting policies under to be applicable when the liabilities or assets are likely to crystallise. UK GAAP are presented below. ttttttttttttttttttttttttttttttttttttttttThe financial statements have been prepared on the historical cost (e) Foreign currencies basis, with the exception of financial instruments as described below. The Transactions in foreign currencies are recorded using the rate of principal accounting policies adopted are set out below. In accordance with exchange ruling at the date of the transaction. Monetary assets and liabilities ttttttttttttttttttttttttttttttttttttttttSection 230(4) of the Companies Act 1985 the Company has elected not to denominated in foreign currencies are translated using the rate of exchange present its own profit and loss account. The profit for the financial year dealt ruling at the balance sheet date. Gains or losses on transactions are included with in the financial statements of the parent company, SSL International plc, in the profit and loss account. is disclosed in note (x). The Company has taken the exemption from the tttttttttttttttttttttttttttttttttttttttt(f) Derivative financial instruments requirement to prepare a cash flow statement under the terms of FRS 1 In accordance with exemptions under FRS 29: ‘Financial Instruments: (revised 1996) ‘Cash flow statements’. Disclosures’, the Company has not presented the financial instruments The following paragraphs describe the main accounting policies. ttttttttttttttttttttttttttttttttttttttttdisclosures required by the standard, as disclosures which comply with the These policies have been consistently applied to all the years presented. standard are included in the consolidated financial statements. (a) Tangible fixed assets The Company uses derivative financial instruments to reduce exposure ttttttttttttttttttttttttttttttttttttttttTangible fixed assets are stated at cost less accumulated depreciation. to foreign exchange risk and interest rate movements. The Company does Depreciation is provided to write tangible fixed assets down to a residual value not hold or issue derivative financial instruments for speculative purposes. over their estimated useful economic lives at the following annual rates: With the exception of derivative financial instruments, and those hedged ttttttttttttttttttttttttttttttttttttttttPlant and equipment is depreciated on a straight-line basis over a period items forming part of a fair value hedge, financial instruments are held at of between 4—15 years. amortised cost. (b) Intangible assets Hedge accounting ttttttttttttttttttttttttttttttttttttttttSoftware developments and licences capitalised are stated at cost less The accounting for the Company’s various hedging activities is accumulated amortisation and are amortised on a straight-line basis over detailed below: their estimated useful economic lives as follows: tttttttttttttttttttttttttttttttttttttttt(i) Transaction exposure hedging —software development: 5—10 years Forward currency contracts hedging transaction exposures are fair —software licences: over the length of the licence valued through the profit and loss account. tttttttttttttttttttttttttttttttttttttttt(c) Investments Investments in subsidiaries are stated at cost less provisions for ttttttttttttttttttttttttttttttttttttttttany impairment. tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt97 tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Company accounting policies tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt (f) Derivative financial instruments continued (g) Share-based payments (ii) Fair value hedges The Company operates a number of employee share schemes. The cost tttttttttttttttttttttttttttttttttttttttDerivative financial instruments are classified as fair value hedges to the Company of making awards in the form of shares or rights to shares t when they hedge the Company’s exposure to changes in the fair value of a under these schemes is charged to the profit and loss account as an recognised asset or liability. Any gain or loss from remeasuring the hedging employee expense over the period to which the employees’ performance tttttttttttttttttttttttttttttttttttttttinstrument is recognised immediately in the profit and loss account. Any relates. The Company issues equity settled share-based payments to t change in the fair value of the hedged item, attributable to the hedged risk, certain employees of the Company and its subsidiary undertakings. Equity is adjusted against the carrying value of the hedged item and recognised settled share-based payments are measured at fair value at the grant date tttttttttttttttttttttttttttttttttttttttimmediately in the profit and loss account. using an appropriate valuation model, taking into account the terms and t Derivative financial instruments qualifying for fair value hedge conditions precedent at the time of grant. The impact of any non-market accounting are principally foreign currency and interest rate swaps. vesting conditions is excluded. The total amount to be expensed over the vesting period is determined ttttttttttttttttttttttttttttttttttttttt(iii) Cash flow hedges t by reference to the fair value of the equity instruments granted and the Derivative financial instruments are classified as cash flow hedges number of equity instruments which eventually vest. At each balance sheet when they hedge the Company’s exposure to variability in cash flows that is date, the Company revises its estimate of the number of instruments that tttttttttttttttttttttttttttttttttttttttattributable to a particular risk associated with a recognised asset or liability. t are expected to vest. It recognises the impact of the revision of original Changes in the fair value of the derivative hedging instrument designated estimates, if any, in the profit and loss account, and a corresponding as a cash flow hedge are recognised directly in equity to the extent that the adjustment to equity over the remaining period. When awards are made to hedge is effective. To the extent the hedge is ineffective, changes in fair value tttttttttttttttttttttttttttttttttttttttemployees of subsidiary undertakings and the fair value of the award is not t are recognised in profit or loss. recharged to the subsidiary, the award is treated as a capital contribution Discontinuance of hedge accounting to the subsidiary, with a corresponding increase in the cost of investment. tttttttttttttttttttttttttttttttttttttttHedge accounting is discontinued prospectively when the hedging t (h) Dividend income instrument expires or is sold, terminated or exercised, or no longer qualifies Dividend income from subsidiary undertakings is recognised within for hedge accounting. tttttttttttttttttttttttttttttttttttttttother income at the point the dividend has been declared. Dividends t declared after the balance sheet date are not recognised in the profit and loss account. ttttttttttttttttttttttttttttttttttttttt(i) Related party transactions t The Company has taken advantage of the exemption available in FRS 8: ‘Related Party Disclosures’ and has not disclosed transactions or balances tttttttttttttttttttttttttttttttttttttttwith entities which form part of the Group. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt98 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttttNotes relating to the Company accounts tttttttttttttttttttttttttttttttttttttttt (i) Intangible assets Software ttttttttttttttttttttttttttttttttttttttttdevelopment and licences £m ttttttttttttttttttttttttttttttttttttttttCost At 1 April 2007 6.0 Additions 1.9 ttttttttttttttttttttttttttttttttttttttttAt 31 March 2008 7.9 Amortisation and impairment amounts At 1 April 2007 0.1 ttttttttttttttttttttttttttttttttttttttttCharge for the year 1.5 At 31 March 2008 1.6 ttttttttttttttttttttttttttttttttttttttttCarrying amounts At 31 March 2007 5.9 ttttttttttttttttttttttttttttttttttttttttAt 31 March 2008 6.3

(ii) Tangible assets ttttttttttttttttttttttttttttttttttttttttPlant, equipment and motor vehicles tttttttttttttttttttttttttttttttttttttttt£m Cost At 1 April 2007 26.8 ttttttttttttttttttttttttttttttttttttttttDisposals (25.8) At 31 March 2008 1.0 Depreciation and impairment ttttttttttttttttttttttttttttttttttttttttAt 1 April 2007 26.6 Charge for the year 0.1 Disposals (25.8) ttttttttttttttttttttttttttttttttttttttttAt 31 March 2008 0.9 Net book value ttttttttttttttttttttttttttttttttttttttttAt 31 March 2007 0.2 At 31 March 2008 0.1 tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt99 tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes relating to the Company accounts tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt (iii) Investments in subsidiary undertakings The Company’s investments are as follows: tttttttttttttttttttttttttttttttttttttttCost of shares t in subsidiary undertakings ttttttttttttttttttttttttttttttttttttttt£m t Cost at 31 March 2007 590.8 Additions 1.0 tttttttttttttttttttttttttttttttttttttttCost at 31 March 2008 591.8 t Net book value At 31 March 2007 590.8 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 591.8 t

The Company’s investments are listed on page 95. The addition of £1 million during the year represents an increased investment in the subsidiary company tttttttttttttttttttttttttttttttttttttttLRC Products Limited, in relation to the fair value of share-based payments awarded to employees of the subsidiary undertaking. A corresponding credit is t tttttttttttttttttttttttttttttttttttttttrecorded in non-distributable reserves. t

(iv) Debtors ttttttttttttttttttttttttttttttttttttttt2008 2007 t Note £m £m Amounts due within one year tttttttttttttttttttttttttttttttttttttttAmounts owed by subsidiary undertakings 153.0 68.7 t Other debtors 0.5 — Prepayments and accrued income 1.3 0.5 ttttttttttttttttttttttttttttttttttttttt154.8 69.2 t Amounts due after more than one year Deferred tax (viii) 4.3 4.2 ttttttttttttttttttttttttttttttttttttttt159.1 73.4 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt100 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt (v) Financial liabilities 2008 2007 tttttttttttttttttttttttttttttttttttttttt£m £m Amounts due within one year Bank loans and overdrafts 123.1 35.6 ttttttttttttttttttttttttttttttttttttttttLoan notes — 3.1 Obligations under finance leases — 0.2 Forward contract derivatives — 0.3 ttttttttttttttttttttttttttttttttttttttttInterest rate and currency swaps — 1.3 123.1 40.5 ttttttttttttttttttttttttttttttttttttttttAmounts due after more than one year Loan notes — 64.1 Interest rate and currency swaps 0.8 9.5 tttttttttttttttttttttttttttttttttttttttt0.8 73.6 Total financial liabilities 123.9 114.1 ttttttttttttttttttttttttttttttttttttttttDetails of banking facilities available are provided in note 15 to the consolidated financial statements. Loan maturities 2008 2007 tttttttttttttttttttttttttttttttttttttttt£m £m Loan notes ttttttttttttttttttttttttttttttttttttttttLoan note or instalments thereof are repayable: After 5 years from the balance sheet date — 5.9 From 3—4 years — — ttttttttttttttttttttttttttttttttttttttttFrom 2—3 years — 55.5 From 1—2 years — 2.7 Total due after more than one year — 64.1 ttttttttttttttttttttttttttttttttttttttttTotal due within one year — 3.1 — 67.2 Obligations under finance lease ttttttttttttttttttttttttttttttttttttttttObligations under finance lease or instalments thereof are repayable: Total due within one year — 0.2 tttttttttttttttttttttttttttttttttttttttt— 0.2 Interest rate and currency swaps Interest rate and currency swaps or instalments thereof are repayable: ttttttttttttttttttttttttttttttttttttttttFrom 2—3 years 0.8 8.4 From 1—2 years — 1.1 Total due after more than one year 0.8 9.5 ttttttttttttttttttttttttttttttttttttttttTotal due within one year — 1.3 0.8 10.8 ttttttttttttttttttttttttttttttttttttttttThe aggregate amount of loans, any instalment of which falls due after 5 years, is £nil (2007: £5.9 million). The loan notes were repaid in November 2007, and the related swaps settled at that time, following the announcement of the European Supply Chain ttttttttttttttttttttttttttttttttttttttttrestructuring programme, as explained in note 2 to the consolidated financial statements. tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt101 tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Notes relating to the Company accounts tttttttttttttttttttttttttttttttttttttttcontinued t tttttttttttttttttttttttttttttttttttttttt (vi) Creditors 2008 2007 ttttttttttttttttttttttttttttttttttttttt£m £m t Amounts due within one year Amounts owed to subsidiary undertakings 519.5 405.1 tttttttttttttttttttttttttttttttttttttttCorporate taxation 2.1 2.2 t Accruals 6.2 7.9 ttttttttttttttttttttttttttttttttttttttt527.8 415.2 t ttttttttttttttttttttttttttttttttttttttt(vii) Provisions for liabilities t Surplus property £m tttttttttttttttttttttttttttttttttttttttAt 1 April 2007 0.2 t Provisions used during the year (0.1) At 31 March 2008 0.1 tttttttttttttttttttttttttttttttttttttttCurrent 0.1 t Non-current — ttttttttttttttttttttttttttttttttttttttt0.1 t tttttttttttttttttttttttttttttttttttttttThe provisions are expected to be utilised within seven years from the balance sheet date. t

(viii) Deferred tax tttttttttttttttttttttttttttttttttttttttDeferred t taxation £m tttttttttttttttttttttttttttttttttttttttAt 1 April 2007 4.2 t Charged to the profit and loss account (0.2) Credited to reserves in respect of share-based payments 0.3 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 4.3 t 2008 2007 tttttttttttttttttttttttttttttttttttttttThe net deferred tax asset is analysed as follows: £m £m t Accelerated capital allowances 1.6 2.4 Short-term timing differences (0.2) (0.3) tttttttttttttttttttttttttttttttttttttttShare-based payments 2.9 2.1 t 4.3 4.2 tttttttttttttttttttttttttttttttttttttttt (ix) Called-up share capital Called up £0.10 ordinary share capital of the parent company tttttttttttttttttttttttttttttttttttttttAllotted, Allotted, t called-up called-up Authorised and fully paid Authorised and fully paid tttttttttttttttttttttttttttttttttttttttno no £m £m t At 1 April 2007 250,000,000 190,464,924 25.0 19.0 Employee share options schemes — options exercised — 362,571 — 0.1 tttttttttttttttttttttttttttttttttttttttAt 31 March 2008 250,000,000 190,827,495 25.0 19.1 t Details of share options exercised in the year and contingently issuable shares awarded in the year are given in the Group financial statements in note 18. tttttttttttttttttttttttttttttttttttttttDetails of rights attached to shares are included in the Group financial statements in note 19. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt102 Financial statements •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt (x) Share capital and reserves Share Non- Cash flow ttttttttttttttttttttttttttttttttttttttttShare premium distributable hedge Profit and loss Total capital account reserve reserve account equity £m £m £m £m £m £m ttttttttttttttttttttttttttttttttttttttttAt 1 April 2007 19.0 43.2 45.5 — 46.1 153.8 Loss for the year — — — — (24.2) (24.2) Dividends — — — — (13.3) (13.3) ttttttttttttttttttttttttttttttttttttttttShare-based payments — — 1.0 — 3.4 4.4 Taxation taken to reserves in respect of share-based payments — — — — 0.3 0.3 Fair values arising from cash flow hedge taken to reserves — — — (0.7) — (0.7) ttttttttttttttttttttttttttttttttttttttttShares issued in the year 0.1 0.8 — — — 0.9 At 31 March 2008 19.1 44.0 46.5 (0.7) 12.3 121.2 ttttttttttttttttttttttttttttttttttttttttOf the reserves of the Company, £ 12.3 million (2007: 46.1 million) is regarded as distributable. The £1.0 million increase in the non-distributable reserve during the year relates to the share-based payments awarded to employees of the subsidiary ttttttttttttttttttttttttttttttttttttttttundertaking LRC Products Limited, which has been treated as a capital contribution to the subsidiary undertaking. By virtue of section 230 of the Companies Act 1985, the Company is exempt from presenting a profit and loss account. ttttttttttttttttttttttttttttttttttttttttThe shares issued during the year were issued to satisfy exercise of options under the various share schemes outlined in note 18 to the Group accounts. tttttttttttttttttttttttttttttttttttttttt(xi) Commitments and contingent liabilities The Company has no contracts for future expenditure that have not been provided for (2007: none). ttttttttttttttttttttttttttttttttttttttttGuarantee contracts Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until ttttttttttttttttttttttttttttttttttttttttsuch time as it becomes probable that the Company will be required to make a payment under the guarantee. At the balance sheet date, there were no contingent liabilities arising as a result of these guarantees (2007: none). tttttttttttttttttttttttttttttttttttttttt (xii) Directors’ remuneration and share-based payments The Company has no employees other than the Directors; information covering Directors’ remuneration, interests in shares, share options and pension ttttttttttttttttttttttttttttttttttttttttbenefits is included in the Remuneration report on pages 39 to 45. The information as disclosed in the Group accounts under IFRS 2: ‘Share-based payment’ is comparable with the UK GAAP information under FRS 20: tttttttttttttttttttttttttttttttttttttttt‘Share-based payment’. The following Directors were remunerated by the parent company: tttttttttttttttttttttttttttttttttttttttt— G. Watts — A. Catalano — G. Corbett tttttttttttttttttttttttttttttttttttttttt— R. Adam — P. Read — S. Murray tttttttttttttttttttttttttttttttttttttttt— M. Moran tttttttttttttttttttttttttttttttttttttttt— I. Adamson tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt103 tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttSSL directory t tttttttttttttttttttttttttttttttttttttttt Commercial Spain UK and Eire SSL Healthcare Brands SA, C/ de la Marina, 16-18, Torre Mapfre, planta 28, tttttttttttttttttttttttttttttttttttttttHead Office 08005 Barcelona, Spain t SSL International plc Sweden 35 New Bridge Street, London EC4V 6BW tttttttttttttttttttttttttttttttttttttttSSL Healthcare Sverige ABx, Box 1326, SE-171 26 Solna, Sweden t SSL International plc Switzerland Venus, 1 Old Park Lane, Trafford Park, Urmston, Manchester M41 7HA SSL Healthcare Schweiz AG, Rheinstrasse 81, 4133 Pratteln, tttttttttttttttttttttttttttttttttttttttSSL Healthcare Ireland Limited Switzerland t Monarch Industrial Estate, Belgard Road, Dublin 24 Turkey Continental Europe LRC Products Ticaret ve Pazarlama Ltd. sti, Oztopus cadessi demirel Apt, tttttttttttttttttttttttttttttttttttttttAustria 8D.5 Ulus 34340 Besiktas, Istanbul, Turkey t SSL Healthcare Osterreich GmbH, Kuefsteingasse 15-19/2/20A, Americas A-1140 Vienna, Austria tttttttttttttttttttttttttttttttttttttttSSL Canada Inc t Belgium 100 Courtland Avenue, Concord, Ontario, L4K 3T6, Canada NV SSL Healthcare SA, Koning Albert 1 Laan 64, 1780, Wemmel, Belgium SSL Americas Inc tttttttttttttttttttttttttttttttttttttttCzech Republic 3585 Engineering Drive, Suite 200, Norcross, Georgia, 30092-9214, USA t SSL Czeska Republica s.r.o., Karlovo nam 7, 120 00 Prague 2, Czech Republic Asia Pacific and Rest of the World Denmark Australia tttttttttttttttttttttttttttttttttttttttSSL Healthcare Denmark A/S, Ringager 4 D, DK-2605 Brøndby, Denmark SSL Australia Pty Ltd, 225 Beach Road, Mordialloc, Victoria 3195, Australia t Finland China tttttttttttttttttttttttttttttttttttttttSSL Healthcare Suomi OY, Harmaaparrankuja1, Fin-02200 Espoo, Finland SSL Healthcare Shanghai Ltd., Room 1905, t ZhongRong HengRui International Building, 620 Zhang Yang Road, Pu Dong, France Shanghai, 200122, People’s Republic of China SSL Healthcare France SA, SSL Healthcare France, 23 allees de l'Europe, ttttttttttttttttttttttttttttttttttttttt92588 Clichy Cedex, France Hong Kong t SSL Healthcare (Hong Kong) Ltd, Rm 1201A, Admiralty Centre, Tower One, Germany 18 Harcourt Road, Hong Kong SSL Healthcare Deutschland GmbH & Co. KG, Edisonstrasse 5, ttttttttttttttttttttttttttttttttttttttt63477 Maintal, Germany India t SSL-TTK Limited, 6 Cathedral Road, Chennai 600 086, India Greece tttttttttttttttttttttttttttttttttttttttSSL Hellas SA , 17 Kim Spata Avenue, PO Box 17, 19004 Spata Attikis, Indonesia t Athens, Greece SSL Healthcare Indonesia, Graha Atrium Building 6Fl, Suite 602C, Jl. Senen Raya No.135, Jakarta Pusat - 10410, Indonesia Hungary tttttttttttttttttttttttttttttttttttttttSSL Magyarorszag Kft, IP West Office Building, 1117 Budapest, Japan t Budafoki út 91-93. 1st Floor, Hungary SSL Healthcare Japan Ltd, URD Building, 4th & 5th Floor, 2-7-5 Shibuya, Shibuya-Ku, Tokyo 150-0002, Japan Italy tttttttttttttttttttttttttttttttttttttttSSL Healthcare Italia Spa, Via Marco Emilio Lepido 178/5, Malaysia t 40132 Bologna, Italy SSL Healthcare Malaysia Sdn Bhd, Level 5, Wisma Samudra, 1 Jalan Kontraktor U1/14, Seksyen U1, HICOM-Glenmarie Industrial Park, Italy ttttttttttttttttttttttttttttttttttttttt40150 Shah Alam, Selangor Darul Ehsan, Malaysia t ( Footwear Development Group) SSL Healthcare Italia Spa New Zealand tttttttttttttttttttttttttttttttttttttttFDG-Footwear Development Group SSL New Zealand Ltd, c/-54 Carbine Road, Mt Wellington, Auckland, t Strada Statale, 234/km 38,5 26867, Somaglia, Lodi, Italy New Zealand Netherlands Singapore tttttttttttttttttttttttttttttttttttttttSSL Healthcare Nedeland NV, De Weegschaal 14, SSL Healthcare Singapore Pte Ltd, 34 Boon Leat Terrace, Singapore, 119866 t 5215 MNS Hertogenbosch, Netherlands Taiwan Norway SSL Healthcare Taiwan Ltd, 14, F No 102, Songlong Road, Sinyi District, tttttttttttttttttttttttttttttttttttttttSSL Healthcare Norway AS, Strandveien 35, NO-1366 Lysaker, Norway Taipei City 110, Taiwan t Poland Thailand tttttttttttttttttttttttttttttttttttttttSSL Healthcare Polska Sp.z 0.0., UBC ll Ul.Szturmowa 2A, SSL Healthcare (Thailand) Limited, 14th Floor, Ocean Tower 1, t 02-678 Warsaw, Poland 170-42 New Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Romania tttttttttttttttttttttttttttttttttttttttSSL Romania Srl t blvd. Decebal nr1. bl.H2/sc.5/et.6/ap 141-143 tttttttttttttttttttttttttttttttttttttttSector 3, Bucharest, Romania t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt104 Shareholder information •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt Manufacturing and Distribution UK and Guernsey tttttttttttttttttttttttttttttttttttttttSimco Limited Charwell House, Braye Road industrial Estate, Vale, Guernsey, tttttttttttttttttttttttttttttttttttttttChannel Islands GY3 5XA SSL International plc Barncoose Industrial Estate, Wilson Way, Redruth, Cornwall, TR15 3RQ tttttttttttttttttttttttttttttttttttttttSSL International plc Group Distribution Centre, Finlan Road, Stakehill Industrial Estate, Middleton M24 2SJ tttttttttttttttttttttttttttttttttttttttSSL International plc Whitehouse Business Park, Traynor Way, Off Shotton Lane, Peterlee, tttttttttttttttttttttttttttttttttttttttCounty Durham SR8 2RU Americas SSL Americas Logistics Operations Center ttttttttttttttttttttttttttttttttttttttt1306 George Albert Lake Road, Anderson, South Carolina, 29624, USA Asia Pacific and Rest of the World China tttttttttttttttttttttttttttttttttttttttQingdao London Durex Company Limited 103 Taidong 1st Road, Qingdao, 266022, People’s Republic of China India tttttttttttttttttttttttttttttttttttttttTTK-LIG Limited 35 Old Trunk Road Pallavaram, Chennai-600 043, India TTK-LIG Limited ttttttttttttttttttttttttttttttttttttttt20 Perali Road, Virudhunagar - 626 001, Tamilnadu State, India TTK-LIG Limited ttttttttttttttttttttttttttttttttttttttt65/2, 65/3, 63/2 K P Natham Road, Thiruvandar Koil Village, Mannadipet Commune, Puducheri, India SSL-TTK Limited tttttttttttttttttttttttttttttttttttttttPlot 73, Sipcot Industrial Park, Irungattukottai 602105, Sriperumbudur, India tttttttttttttttttttttttttttttttttttttttThailand SSL Manufacturing (Thailand) Limited Wellgrow Industrial Estate, 100 Moo 5, Bangna-Trad Rd KM#36, Bangsamak, tttttttttttttttttttttttttttttttttttttttBangpakong, Chachoengsao 24180, Thailand ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt105 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttCompany information Financial calendar t tttttttttttttttttttttttttttttttttttttttt Secretary and Registered Office Month / Year Event Maria Buxton-Smith 2008 ttttttttttttttttttttttttttttttttttttttt35 New Bridge Street, London EC4V 6BW t 24 July Annual General Meeting 4 September Dividend payment (subject to approval) Stockbrokers tttttttttttttttttttttttttttttttttttttttJPMorgan Cazenove Limited November* Interim results t 20 Moorgate, London EC2R 6DA 2009 tttttttttttttttttttttttttttttttttttttttCredit Suisse March* Interim dividend payment t One Cabot Square, London E14 4OJ May* Preliminary results July* Annual General Meeting tttttttttttttttttttttttttttttttttttttttAuditors * Exact dates to be confirmed. t KPMG Audit Plc ttttttttttttttttttttttttttttttttttttttt8 Salisbury Square, London EC4Y 8BB t Solicitors Allen & Overy tttttttttttttttttttttttttttttttttttttttOne Bishop Square, London E1 6AO t Hammonds tttttttttttttttttttttttttttttttttttttttTrinity Court, 16 John Dalton Street, Manchester M60 8HS t Principal Bankers Barclays Bank Plc ttttttttttttttttttttttttttttttttttttttt7th Floor, 1 Marsden Street, Manchester M2 1HW t

Registrars tttttttttttttttttttttttttttttttttttttttCapita Registrars t The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU tttttttttttttttttttttttttttttttttttttttPublic Affairs Advisers t The Maitland Consultancy ttttttttttttttttttttttttttttttttttttttt12th Floor, Orion House, 5 Upper St Martin’s Lane, London WC2H 9EA t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt106 Shareholder information •Annual Report and Accounts 2008 t tttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttTrade marks ttttttttttttttttttttttttttttttttttttttt The following is a non-exhaustive list of the trade marks of the SSL Group: tttttttttttttttttttttttttttttttttttttttAdapta Paramol Allure Party Feet Avanti Perfect Nail tttttttttttttttttttttttttttttttttttttttBioprint Performa Cuprofen Pescura Derbac Play tttttttttttttttttttttttttttttttttttttttDiana Play O Diocalm Pleasuremax Dr Scholl ProSport tttttttttttttttttttttttttttttttttttttttDue In Uno Ralgex Durex Realcheck Eulactol Remegel tttttttttttttttttttttttttttttttttttttttFetherlite Resolve Fresh Step Sauber Full Marks Scholl Gelactiv Scholl Flight Socks tttttttttttttttttttttttttttttttttttttttHydra-Gel Spring Action Massage Melts Syndol Medised Ultima tttttttttttttttttttttttttttttttttttttttMeltus Very Cherry Mister Baby Vibrations Natruclear Woodward’s tttttttttttttttttttttttttttttttttttttttOrthaheel ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt ttttttttttttttttttttttttttttttttttttttt107 ttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt Designed by Pauffley tttttttttttttttttttttttttttttttttttttttPrinted in the UK by Beacon Press using their and t environmental print technology. The electricity used in the printing of this report was generated from renewable sources and vegetable inks were tttttttttttttttttttttttttttttttttttttttused throughout. Beacon Press is a CarbonNeutral® company. t Both printer and the paper mill are registered to the Environmental Management System, ISO 14001 and are Forest Stewardship Council (FSC) tttttttttttttttttttttttttttttttttttttttchain-of-custody certified. t tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt tttttttttttttttttttttttttttttttttttttttt

SSL International plc 35 New Bridge Street London EC4V 6BW Tel +44 (0)20 7367 5760 Fax +44 (0)20 7367 5790 www.ssl-international.com Registration number 388828