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Annual Report and Accounts 2010

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Freshness

InnovationQuality

Uniq produces freshly prepared chilled food for

major retailers and has market-leading positions

in Desserts and Food to Go. Our high-quality and

innovative products aim to delight our customers.

Desserts

312mTotal revenue 2010

Food to Go

Financial statements

Independent Auditors report 38

Group income statement 40

Group statement of comprehensive income 41

Balance sheets 42

Group statement of changes in equity 43

Cash flow statements 44

Notes to the financial statements 45

Other informationFive year record 82

Shareholder information 83

ContentsFinancial highlights 01

Directors report

Chairmans statement 02

Chief Executives statement 04

Market overview 06

Business review 08

Financial review 16

Principal risks 20

Directors responsibilities 21Board of directors 22

Report of the directors 24

Corporate governance 27

Remuneration report 32

155m2010 revenue

We are an innovative, market-leading

manufacturer of premium and everyday

freshly prepared pot desserts, a flexible

and niche supplier of quality, differentiated

yogurt and a state-of-the-art producerof fresh chocolate desserts made

exclusively for Cadbury.

157m2010 revenue

We are the Number One sandwich and

wrap supplier to M&S, the winner ofmultiple sandwich retailer of the year,

and the UKs second largest producer

of dressed salads.

Uniq Annual Report and Accounts 2010

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01

Financial highlights

Revenue up 6.8%*

Trading profit before central costs up 88%

Business performance recognised thorugh

customer awards

Strong momentum continues in Food to Go

Balance sheet transformed on deliveryof innovative pension solution in 2011

Successful admission to AIM

Desserts review identifies profitable

growth opportunity for defined markets

M&S best dessert supplier over Christmas

M&S NPD range of the year (minis)

Highest ever single sandwich production

at Northampton 6.5m units

24% increase in sales at Spalding

58 NPD products launched during the year

99.97% service level in Spalding during the

World Cup

*adjusted for 53rd week in 2010

2010m

2009m

Continuing operations

Revenue 311.9 287.2

Trading operating profit before significant items 8.3 4.4

Group costs before significant items (4.2) (6.3)

Operating profit/(loss) beforesignificant items 4.1 (1.9)

Significant items before tax (2.4) (0.7)

Finance expense (excluding pension-related) (1.4) (4.6)

Income tax (0.4)Net profit/(loss) before pension-relatedfinance expense 0.3 (7.6)

Pension related finance expense (11.5) (11.3)

Loss after tax (11.2) (18.9)

Profit/(loss) from discontinued operations 35.4 (2.0)

Profit/(loss) for the year 24.2 (20.9)

Key performance indicators % %

Revenue growth 6.8% 0.2%

Gross margin 15.3% 14.2%

Operating margin 1.3% (0.7%)

Financial highlights for the year

ended 31 December 2010

Highlights

Key achievements

Financial results

Further information can be found at www.uniq.com

Post period update


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Directors report

I am pleased to report a continued improvement in

the performance of the business, with an operating

profit before significant items of 4.1m in 2010 compared

to a loss of 1.9m in 2009. Turnover showed good

growth, with sales of 312m representing an increase

of nearly 7% on 2009s sales figure of 292m (adjusted

for 53rd week).

Although these figures provide strong evidence that theboards strategy of transforming the company into a

high-quality UK-focused private label business has been

successful, it became increasingly clear during 2010 that

the speed and scale of our efforts could not meet the

growing demands of our pension liabilities. The board

therefore continued to seek a solution to our pension

funding situation and on 9 February 2011, the company

reached agreement with the Trustee of the Uniq Pension

Scheme on the terms of a restructuring of the company.

This released the company from its obligations to the defined

benefit section of the Pension Scheme in exchange for a

90.2% equity stake in the company, with current shareholders

retaining a 9.8% stake in the company.

While the context for this decision is set out in more detail

below, the outcome is that Uniq can now look forward to

a future in which its management can develop the potential

of its businesses without the constraints imposed by our

pension situation. Although the board understands that

this will have caused shareholders considerable concern,

we are confident that our action is in their best interestsand the best long-term interests of all stakeholders.

Uniq has a strong, well-run business delivering the quality,

innovation and consistency that our customers demand,

in markets that offer multiple opportunities. As Chief

Executive Geoff Eaton outlines in his statement on pages

4 and 5, we believe that Uniq is now, finally, in a position

to capitalise on these strengths.

The context for restructuring

Uniq evolved out of the Unigate Group which, at its peak

during the 1980s, was a multinational conglomerate with over

30,000 employees in the UK, Europe and North America.

Unigate had a very large defined benefit pension plan with

over 40,000 members (including active members, deferred

members and pensioners) in the UK. When Unigate sold its

flagship dairy business in 2000, the remaining business

changed its name to Uniq plc. Under the terms of this

transaction Uniq plc retained the responsibility for members

of the dairy business in the Uniq Pension Fund.

In May 2001, Uniq demerged its logistics business,

Wincanton plc. The Uniq Pension Fund was split roughly

in half and Uniq was left with a pension scheme (knownas the Uniq Pension Scheme) of approximately 21,000

members but with a much smaller business, in terms

of assets, with which to support the pension scheme.

Board strategy

In 2006, the board recognised that Uniq was not a pan-

European group but a number of separate businesses

with distinct markets and challenges. The board adopted

a strategy intended to transform the business and address

the pension deficit. Through the sale of the Belgian salads

business in 2006 and the French St Hubert spreads

business in 2007 (total proceeds 288m), the group

was able to set aside 87m in a secure account

to offset substantially the deficit at that time in its main

UK Pension Fund. The remaining cash repaid debt and

provided funds to support the recovery of the retained

businesses, which were at that time incurring

substantial losses.

Alignment of the groups businesses with their customers

and markets was tackled through decentralising theorganisation to allow management to act faster and

more effectively. Major milestones were achieved in

each of the groups divisions, with recovery evident

throughout the business.

Pension funding

However, turbulence in world financial markets during

2008 resulted in a sharp increase in the UK pension

deficit. The need to strengthen the groups businesses

became more urgent. Accordingly, the board decided

to modify its recovery plan and, in particular, pursue

consolidation opportunities in France and Northern

Europe to create value through joint venture or sale

of those businesses and focus its resources on

strengthening its businesses in the UK.

Chairmans statementFoundations for the future

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03

Directors report

Chairmans statement


The businesses were sold in early 2010 and the proceeds

from their sale were used to support the growth of the

UK business and to assist the group in its triennial

funding discussions with the Pension Scheme Trustee.

Pension liabilities

On an IAS 19 accounting valuation basis, the pension deficit

as at 31 December 2010 was 142.1m. On a buy-out basis

(which assumes the liabilities have been bought out by an

insurance company), the net deficit was 430m.

The scale of this deficit negatively impacted the market

value of the company. The board therefore considered all

possible funding options for the Pension Scheme, all of

which would have involved a fundamental impact on thelong-term future of the group and on shareholder value.

As part of triennial scheme-specific funding discussions,

which began in March 2009 between the company and the

Trustee, a long-term funding proposal was developed and

was described in last years annual report and accounts.

It was rejected by the Pensions Regulator on 16 July 2010.

Restructuring solution

On 9 February 2011, the company reached agreement

with the Trustee, the Pensions Regulator and the Pension

Protection Fund on the terms of a restructuring of the

company. This Scheme of Arrangement was approved

by the shareholders on 25 February 2011 and sanctioned

by the Court on 18 March 2011. In exchange for a 90.2%

equity stake in the company, with current shareholders

retaining a 9.8% stake in the company, and a final

payment of 14m to the Pension Fund, the restructuring

released the company from its obligations to the defined

benefit section of the Uniq Pension Fund. Following this

restructuring the company successfully applied for theshares to be relisted on AIM as from 1 April 2011.

Dividend

The board has decided that it is not appropriate to pay

a dividend to shareholders for 2010 (2009: nil). However,

following the pension restructuring the Directors intend

to pay dividends when it is appropriate to do so.

Outlook

It is a great credit to Chief Executive Geoff Eaton and

his management team that, despite a period of such

uncertainty and the challenge of creating and implementing

the pension solution, they have continued to focus on,

and achieve, the transformation of the business.

Profitability has been restored, strong customer relationships

established and the flexible, innovative processes that

our markets demand are in place and already beginning

to show results. In spite of this, the new year has thrown

up further challenges with further raw material price

inflation, increasingly intense competition and loss of

business in Desserts being notified before the implementation

of the pension solution. I would like to congratulate allmanagement and staff at Uniq for their unstinting efforts,

which we fully expect to maintain the improved performance

of your company despite the challenging environment.

Furthermore, the comprehensive review of our Desserts

business, announced in January, has been completed

and a plan has been approved that is expected to deliver

sustainable improvement in profitability.

John Warren

Chairman

26 April 2011

We are confident that ouraction is in the long-terminterests of all stakeholdersand will give Uniq theopportunity to repay

their commitment.

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Directors report

Chief Executives statementDelivering the full potential of your business

Having addressed our legacy issues and completed

our transformation into a UK-focused, high-quality

Desserts and Food to Go producer, I believe we are

now able to deliver the full potential of the business.

Our investment in people, processes and products over

the last two years means we are in a strong position to

meet the challenges and opportunities our chosen markets

present. This has been demonstrated by our improvingperformance this year, which was driven by our strong

management teams and their ability to efficiently translate

their market insights into attractive and innovative products

that meet the demands of both customers and consumers.

With the right foundations now in place, I believe we can

consolidate our growth, optimise our return on investments

and raise profitability towards industry standard margins.

As befits a business that is, in many ways, starting afresh,

I would like to take this opportunity to lay out to investors

and all stakeholders our vision for the future: the market

opportunities we face; the strategy that will enable us to

address these opportunities; and the targets by which we

will measure how successful we are in doing so.

Vision

Our aim is to be the most respected fresh prepared

food company in the UK for innovation, service and

quality as judged by our customers, suppliers,

employees and shareholders.

Our opportunities and strengths

We serve large and growing markets, within which there

are multiple opportunities and drivers of demand: for example,

convenience, eating out of home and on the move, healthy

eating, and caf culture. By investing in understanding

consumers and innovating to create a regular pipeline

of new products we are able to benefit from this growth.

Strong market positions give us the scale to ensure we can

attract and retain highly capable teams and make efficient

use of assets. We supply over 65% of the sandwiches for

our largest customer, we are a market-leading supplier of

premium desserts, we are the exclusive producer of fresh

Cadbury chocolate desserts and we are the number two

supplier in prepared salads.

We service customers who are investing in growth

and we have the potential to increase our share of

their business we are highly focused and we derive

competitive advantage from understanding and

consistently meeting our customers needs.

We have an efficient capital structure that will support

investment. Our return on investment will be enhanced

by significant tax assets we will not pay tax on ourprofit for the foreseeable future.

We have an experienced and capable management

team that has come together during five years of

restructuring, turnaround and uncertainty and, having

already delivered some success, is appropriately

incentivised and committed to drive growth further,

unfettered by the legacies of the past.

Our product ranges include both premium and value

products and are appropriately tiered. Our flexibility

and ability to innovate mean that we can quickly

adapt our product ranges to reflect the economic

circumstances of consumers.

Performance review

Desserts

Our Desserts strategy began to show real results

this year. New and refreshed product ranges at both

our Minsterley and Evercreech sites, allied with the

investments we have made in the business over thelast two years, drove a stronger performance and

established Uniq as the place to go for innovative

high-quality private label products.

Immediately following this success we were forced to

push through a price increase following the increase

in cream costs which have risen by 80% over the last

two years. This not only had an adverse impact on

some customer relationships but also led to a change

in consumer behaviour as higher price points resulted

in switching to other products. Following the year end

we were notified of the loss of 10m of Desserts sales

partly as a result of these factors and partly reflecting

the uncertainties caused by the pension position.

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Uniq Annual Report and Accounts 2010 05

Directors report

Chief Executives statement

Desserts review

On the back of the disturbance caused by the price

increase and as a result of the decision to discontinue

cottage cheese production at Evercreech we conducted

a comprehensive review of our Desserts business.

Our Desserts business supplies four distinct sub-sectors

of the desserts market; premium desserts, Cadbury

chocolate desserts, yoghurt and everyday desserts.

Three of these sub-sectors are either profitable or

on track to achieve profitability, while the losses are

concentrated in everyday desserts. As a result of

the Desserts review we have approved the following

profit improvement plans:

To use the space freed up at Evercreech by the

discontinuance of cottage cheese production toinvest in further growing our premium desserts

business which grew by 21% in 2010.

To implement ambitious growth plans for Cadbury

desserts for which we have identified considerable

potential. We need to secure support for these

plans from our partners.

To continue to build our capability and customer

base for our premium, differentiated yoghurt business

at Minsterley, with support from M&S.

To implement a plan to significantly reduce the overheads

and costs in everyday desserts and work with our

customers to address the market needs while ensuring

that we stop the losses in this sub-sector.

Food to Go

At Northampton, we extended our ten-year growth record

in 2010, successfully implementing the increased sandwich

volumes won from M&S supplier consolidation. New and

relaunched product ranges helped us to not only take

advantage of growing niche markets such as healthy eating

and caf culture, but to win prestigious awards and furtherstrengthen our relationship with our principal customer,

M&S. Northampton continues to set the standard for lean,

flexible and creative processes, supported by both strong

management and a fully engaged workforce. In Salads,

our Spalding site increased volumes as we took on last

years new business wins, helping to drive efficiencies while

successfully maintaining exceptionally high quality and

service levels. Although oversupply in the market continued

to squeeze margin, the Salads business remains well positioned

to benefit strongly from any supplier consolidation.

Geoff Eaton

Chief Executive

26 April 2011

Our strategyWe will achieve growth by:

Empoweringour businesses so that they have the speed

and flexibility to meet the needs of our customers in a

fast-moving and competitive market-place. At the same

time, we will leverage our combined scale to support our

businesses and enhance our growth opportunities

Creating new opportunities by delivering outstanding

servicewith the highest standards of qualityand

efficiency day in day out

Meeting the needs of our customers and consumers

through innovationthat satisfies the demands of

growing and ever-changing markets

Investingin our people, processes, equipment andfacilities and continuously improving everything we do

Working in partnershipwith our key suppliers and

customers to achieve the most effective supply chain

capable of delivering added value to our shared consumers

Our targets and key performance indicators:

We aim to deliver organic growth of over 5% a year

Our trading profit margin should deliver an overall

return on sales of over 5%

Our return on investment should deliver double-digit

returns and exceed our weighted average cost of capital

We will adopt a progressive dividend policy with a

long-term target dividend cover of three times

We will maintain an appropriate capital structure

with total net debt no more than three times EBITDA

Our key actions to deliver our strategy:

We will continue to drive growth in our Sandwich business

We will consolidate our recovery in Salads and then

build our capabilities for long-term growth

We will build on our successful innovation in premium

desserts and yoghurt, seek to implement an ambitious

growth strategy for Cadbury chocolate desserts and

significantly reduce costs and improve efficiency to

stop the losses in everyday desserts

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Directors report

Market overviewAs the economy recovered in 2010, consumerstraded up but continued to demand value.

One reason for chilled convenience food sales outperforming

the wider marketplace is treating. While households

faced with constrained income growth and higher taxation

have cut back on spending, they are still attracted by

non-essential treats while carrying out their routine

food shopping.

Health was also a key trend. The 2010 Datamonitor

Consumer Survey showed the extent to which consumers

believe that taste should not come at the expense of

nutrition. Indeed, 62% of consumers attached more

importance to finding products that combined these

attributes than they did two years ago.

Premium v Value

Consumer appetite appears not to have been fundamentally

changed by the recession, and the demand for premium

ranges re-asserted itself, particularly in the second half

of the year. Cost-conscious consumers have, however,

been helped toward these ranges by promotional activity.

As the graph illustrates, demand for premium tiers

returned to growth in the final quarter of 2010, while

demand for value products continued to slow across

the marketplace.

Input prices

A wide variety of factors, ranging from adverse weatherconditions and rising global demand to higher energy

prices and market speculation, led to increased input

prices in 2010. This was particularly noticeable in the

second half of the year as the world economic recovery

accelerated, pushing up demand.

Uniqs input prices rose 3.8% in the year to December

2010, while in the broader UK economy the Consumer

Prices Index (CPI) rose by 3.7%* and the Retail Prices

Index (RPI) was up 4.8%* in the same period.

Our market

The broad market in which Uniq operates is the UK fresh

and chilled foods sector. This had a total value of 37bn

in 2010, representing an increase of 3.1% on 2009.

The majority of Uniqs output falls, however, within one

segment of this market: chilled convenience foods.

This grew more strongly, with sales up 5% in 2010 at7.5bn. As this segment is dominated by the major

retailers own brands and Uniq is primarily a producer

of private label/own brand products for the major

retailers, the outperformance of chilled convenience

foods is highly encouraging.

For more specific information about the market sub-sectors

in which we operate, see below.

Trends

One of the key trends in 2010 was consumers shopping

around to find good-quality products that also met their

value requirements. This proved a positive influence for

private label, which can often offer consumers significant

savings when compared to branded products. A comparison

of the 2009 and 2010 Datamonitor Consumer Surveys

shows that there was a significant increase in the proportion

of consumers saying that private label was of equal, if not

better, quality than branded products. This ability of private

label products to meet both the value and quality demands

of consumers drove growth in 2010. Indeed, researchpublished by Nielsen in 2010 shows that private labels

now account for 47% of all volume sold in the UK

retail channel.

Another trend was the growth of meal deal bundles, where

shoppers buy a menu of products for a discounted price.

This lends itself well to the mix and match versatility of

chilled convenience food, including desserts and salads.

It has particular resonance in the current economic climate,

where shoppers can save money by eating at home rather

than going out to a restaurant.

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Total Grocers Year-on-Year

% changes

i

Feb2010

Jun Oct Feb2011

Nov2009

50

40

30

20

10

0

-10

-20

Economy

Premium

Top 5 raw materialsPrice movement for 2010

i

i

i

l

i

%

01 02 03 04 05 06 07 08 09 10 11 12

15

10

5

0

-5

-10

-15

: i

i

Dairy

Ingredients

Fruit and Conserves

VegetablesConfectionery

: i


Directors report

Market overview

Although the inflationary trend, driven largely by major

global factors, was evident across almost all Uniqs

purchasing categories, individual input prices also

behaved according to their own specific drivers.

Cream prices, for example, rose far more sharply than

average input prices as a number of factors fundamentally

altered the balance of demand and supply in the market.

High butter prices led to more cream being bought by

butter producers, reducing the availability to those,

like Uniq, who use it for other dairy-based products.

*Source: Office for National Statistics

Desserts market

The total chilled desserts market (which includes yogurts)grew by 3.0% to 2.4bn during 2010, with volumes

remaining flat. However, yoghurts represent less than

10% of Uniqs total desserts production. In chilled pot

desserts, which represent the vast majority of Uniqs

sales, the market grew more strongly, rising 4.8% by

value in 2010. Within the desserts market, trifle sales

remained unchanged in 2010, yoghurt sales edged

up by 2.4% and cheesecake grew strongly by 13.2%.

About 75% of Uniqs desserts output is private label

and the majority of this is for M&S, which strengthened

its position as a destination store for desserts,

registering increased sales by both value and volume.

Source: Kantar World panel w/e 26/12/10

Food to Go market

The Food to Go market is worth 16.8bn and grew by

12.4% in 2010. Of this, approximately 20% is sold by

the major retailers, for whom Uniq provide private label

products. The year saw overall Food to Go sales revenue

growing ahead of volume, as retailers changed their

ranges to include more premium lines and consumerstraded up, buying fewer lower value products.

Convenience is key in the on the go market, and

increasing numbers of outlet openings have contributed

to the acceleration in sales growth. Sandwiches represent

approximately 22.3% of the entire Food to Go market and

total sandwich sales grew by 6.6%, with volume up 3.2%.

In Salads, which represents approximately 1.5% of the

Food to Go market, sales increased by 9.3% of value,

on volumes up 5.0%.

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Directors report

Investment programme impacted bymarket volatility

Highly successful new product launches

Desserts review establishes clear path

to profitability

As the market leader in chilled pot desserts, Uniq

operates from two sites. Minsterley produces Cadbury

chocolate desserts, premium differentiated yoghurt

and private label premium and everyday desserts; and

Evercreech produces premium desserts and is exiting

cottage cheese. Both sites have a long heritage of

supplying dairy-based products into a market that

has been challenging for a number of years.

Our customers, the major retailers, and the end

consumer, demand freshly prepared high-quality,

great-tasting products that are attractive and innovative.

Investment during the year in areas such as new concept

development, new production lines, packing equipment

and more convenient pack formats has enabled us to

launch more than 58 new products in 2010. These wereextremely well received by our customers and by

consumers, in some cases the initial demand being

more than double our expectation. Our consumer insight

and technical expertise enabled us to develop exciting

new products for fast-growing niche markets, including

breakfast yoghurts for Costa Coffee and mini desserts

for M&S Caf and Food on the Move. This was recognised

during the year when we received the M&S Innovator of

the Year award.

Sales up 1.5%* to 155mLosses reduced by 6.9%to 2.7m

Our success has been achieved despite a strong

headwind from raw material inflation, driven in particular

by wholesale cream costs which have risen by around

80% over the last two years as a result of shortage of

supply and high demand from the Continent. While we

were able to successfully negotiate price increases with

our customers to reflect our growing costs, this inevitably

had an impact on volumes as customers and consumers

remain highly sensitive to price.

During the year Arla invested in new cottage cheese capacity

at its new dairy and a number of our customers were able to

secure lower prices and switched their supply. Consequently,

we decided to downscale cottage cheese production and

plan to exit this market in 2011. The growth delivered in ourpremium desserts business in 2010 allowed us to transfer

many of the employees from cottage cheese to desserts and

we intend to use the vacated space to facilitate further

growth in premium desserts.

Performance

The restructuring of our Desserts business in 2009

through consolidation from three sites to two, the creation

of a new consumer and innovation-led strategy and the

reinforcement of our management capability through a

number of experienced hires to key positions started to

show results in 2010. Despite the impact of cold weather in

the busy Christmas trading period, sales held up well in the

fourth quarter and we posted an overall sales increase of

1.5%* in 2010, achieving revenue of 155m. Although rising

raw material costs and a loss of share in the cottage cheese

market had an adverse effect on overall performance,

we were able to reduce losses over the year by 6.9%.

Site review Minsterley

At our Minsterley site our focus was on restimulatinggrowth in our everyday desserts categories such as trifle,

where we hold a market-leading position. To achieve this

we redeveloped all our recipes and packaging formats in

accordance with our consumer research. As a result, we

invested in new technology to give us greater flexibility

in the number of pots per pack and the speed at which

they could be packed. This process was successful, but

growth was held back by price increases as a result of

higher raw material costs.

Business review:Desserts

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Directors report

Business review | Desserts

Our co-pack agreement with Mller to produce

Cadbury branded desserts saw considerable investment

to build capacity, resulting in a state-of-the-art, highly

efficient facility. Although the anticipated volumes did

not materialise during 2010 we are well positioned to

work with our partners on future opportunities.

In yoghurts we successfully developed a new range

of products for M&S and won new business to provide

Costa with an exciting range of yoghurt products.

Site review Evercreech

Our Evercreech site produces around 70% of its output

for M&S (increasing to 100% following the planned

withdrawal from cottage cheese supply), and hasbenefited both from M&Ss strong performance in

desserts and from investing to further match the retailers

commitment to quality and innovation. As a result,

a range of new products was developed during 2010

that included minis (small-sized desserts designed

to be eaten on the move or as excusable indulgence),

confectionery (desserts based on popular sweets) and the

extra special chocolate jingle bell Christmas dessert,

delivering growth of 19% in premium desserts.

Successful innovation was achieved through a

combination of market insight, high-quality in-house

chefs, smart and flexible production techniques and

a highly engaged and committed workforce. This was

demonstrated by our winning both an innovation and

a collaboration award from M&S during the year.

As detailed above, our strong performance was offset

by rising input prices and falling demand for cottage

cheese as a new entrant came into the market.

By working closely with our customers we were ableto negotiate price increases to reflect rising costs.

*All compa risons to sales growth from pr ior year are ad justed to reflect the additional53rd week in 2010.

New product development

How minis made their mark

In 2010 Uniq helped to develop a totally new concept in desserts

the mini: a bite-sized dessert that looked and tasted great, but

was small enough to eat on the move and guilt free.

Market insight team identifies a gap in the market

Uniq work with customer to develop the concept

A cross-functional team is brought together to

deliver the concept

Equipment designed to deliver small shots

of dessert

Production starts

Operators apply lean techniques to achieve

required efficiencies

Products reach stores, demand rises rapidly

Increase capacity to meet demand

Sales reach 5m

Technical excellence

Meeting demand at Christmas

When our Minsterley site was asked to take over the production

of M&Ss highly successful inside-out trifle, it meant quickly

rising to the challenge of a complex and technically demanding

process. A product development team was rapidly assembled,

a new production line was designed and laid out, and trials

were carried out to determine the labour team required. As a

result, all 14,000 units of inside-out trifle were delivered in timefor Christmas.

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Directors report

Business review:Food to Go

Over 100m sandwiches produced during 2010

Share of M&S sandwich market rose to over 65% Strong cost management

As the leading supplier of sandwiches to M&S and

the UKs number two supplier of prepared dressed

salads, Uniqs Food to Go operations are located at

Northampton (sandwiches) and Spalding (dressed

salads). Each is run by its own management team

but they share many ingredients and processes.

Food to Go is a fast-moving business in which customers

and consumers expect fresh, enticing products that are

available whenever they want them. Volumes go up or

down on a daily basis according to the weather, time

of year or occasion. In order to service this market

successfully Uniq works with its customers, the major

retailers, to fully understand what consumers want

and to develop products that meet and exceed their

expectations. To deliver these, the finest and freshest

ingredients must be sourced, prepared, packaged and

despatched both quickly and to the highest possible

standard. This challenge requires highly disciplinedmanagement, a creative flair for food, technical

excellence and a fully engaged workforce with the

flexibility to deal with differing levels of demand.

Performance

Driven by both organic growth and the assimilation of

new business wins, sales grew by 13%* to 157m in

2010. Profits rose by 51% to 11m, supported by the

economies of scale achieved through higher volumes,

process efficiencies and the success of new product

launches into growing markets.

Sales up 13%* at 157mProfits up 51% at 11m

Site review Northampton

Following M&Ss decision last year to reduce the number

of its sandwich suppliers from three to two, Uniqs

Northampton site was able to secure significant new

business. During the year, transfer of the remaining new

lines and volumes was successfully completed without

interruption to production or any negative impact on

quality. This helped us to achieve our highest ever M&S

sandwich share during the year.

Our dedication to service, quality and taste was further

recognised by a number of awards. We assisted M&S

to win Sandwich Multiple Retailer of the year 2010,

The Lunch! Multiple Retailer of the Year Award 2010

and won the 2010 Best Low Fat Range. These awardsalso demonstrated the strength of our relationship

with M&S, which stretches back over 30 years.

Highlights of our work with M&S this year include:

The relaunch of the Food on the Move sandwich offer

to make both the individual products and the range

more attractive and easier for customers to navigate

The development of a new softer fresher bread for

all our sandwiches

The continuing success of the new Simply Fuller

Longer range

Successfully launching new products for the

fast-growing M&S Caf range

Relaunch of the premium Gastropub sandwich

in a bag range.

We have continued to align our activities with the

M&S Plan A agenda by developing, for example, an

innovative scheme to use cold air from outside to

cool our production facilities.

Of the 15m new business won from M&S, 10m

was taken on last year and the remaining 15m was

transferred this year. In addition, we achieved 6m of

organic growth, driven by new products and relaunches

into growing markets. The loss of the Supplair short-haul

flights business, as reported in last years annual report,

had a negative sales impact during 2010 of 5m. Headline

growth from the new business wins was supported by a

strong underlying performance, particularly in the second

half of the year as consumer confidence and new

product launches boosted sales. Like many food

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Business review | Food to Go

producers we experienced raw materials price inflation

during the year. We were able to meet these increased

costs by finding efficiencies in our business and, where

possible, agreeing price increases with our customers.

Site review Spalding

Uniqs Spalding site produces private label prepared

dressed salads for major retailers and food service

companies. The main product areas are potato salad,

coleslaw and pasta and variety salads. Its location in

Lincolnshire means it can source over half its fresh salad

ingredients from within a 70-mile radius. Its commitment

to its customers, long heritage in the region and highly

efficient management processes have made it the UKs

second largest supplier in the market.

The Co-operative business win reported in last years

annual report was successfully serviced during the year.

We invested in increased mayonnaise production and

storage capacity at Spalding to cope with the increased

volume and peak demand. Our reputation for service,

quality and innovation helped us to grow our sales with

all the major retailers we serve, and post an overall sales

increase of 24%* by value for 2010. Successful product

innovation, particularly in growing niche markets such

as entertaining at home, were achieved through careful

market research, consumer insight and close working

with our customers.

However, the market continued to suffer from oversupply

in 2010, making it difficult to grow margin alongside

sales. This also made it more challenging to pass on

inflationary costs to our customers. Although these were

relatively low during the first part of the year, final quarter

inflation grew more sharply and we expect this trend

to continue into 2011.

The significant progress we have made during the year in

further improving efficiency has helped us to maintain our

competitive position and achieve profitability in challenging

markets. Actions taken such as smarter buying, increased

labour efficiencies, reduced waste and energy use, and

more agile supply chains have all contributed to strongly

positioning our business in a highly competitive market.

*All compa risons to sales growth from pr ior year are ad justed to reflect the additional53rd week in 2010.

Growing markets

Caf culture

UK Caf sales are worth 5bn, with M&S Caf the sixth largest

operator in the market. The three largest coffee shops (Costa,

Starbucks and Caffe Nero) come from the branded coffee shop

sector. The branded coffee shop market grew by 12.9% last year to

1.9bn. M&S operates in the non-specialist sector which is showing

the fastest outlet growth. As the supplier of more than 90% of M&S

Caf chilled savoury products, we are well positioned to benefit.

It is a very discerning and fast-moving market that requires

attractive, great tasting products with high-quality, fresh ingredients.

Working closely with M&S, we carried out carefully tailored

consumer research, and developed new lines in 2010. As aresult, Uniqs sales in this category grew by 12% during 2010.

Flexible production

winning the World Cup

Success in Food to Go means being able to adapt quickly and

efficiently to rapidly changing demand. Summer is always the

busiest time for dressed salads, but the World Cup added

further demand for our large sharing packs of pasta salads and

coleslaw, with customer orders spiking by 50%. Not only was

our Spalding site able to fully meet this demand, they did so

without any negative impact on their average 99.97% service

quality rate.

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CSR Vision

We are committed to the sustainedwell-being of our Business, our People,

our Partners and our Environment. Our honestintent is to be socially, ethically and environmentallyresponsible in everything we do. We will always seekto understand and comply with the appropriate legaland regulatory requirements and go beyond this todrive sustainability through 5 key pillars delivered

through engaged site teams

Our people

and culture

Vision

Engagement

FareShare

Values

Training/

Development

Employee/

WellbeingCharity

Local Health and Safety Water Customers

Waste Suppliers

Energy NGOs

Packaging Regulatory

Refrigeration Experts

Transport

Food Safety

Healthy

Our

community

Our health,

safety and

wellbeing

Our

environment

Our

business

partners


Directors report

Corporate Social Responsibility

Our aim

We seek to actively engage all

employees in our vision and wish

to create a culture where everyone

brings all their talent and commitment

to drive our success every day.

Summary of what we are doing:

A clear vision and set of values

which we live every day

Investment in capability and

growth through training and

development

Cultural surveys to measure

engagement and drive action

to improve

A fair deal and a stake in success

Progress

3 of the 4 sites haveundertaken baselinecultural surveys witha high engagementof 83%.

Continued roll out

of the Uniq Learning

System.

Employee absence

reduction across

the group.

Long-term promises

Continuedimprovement andengagement inthe process, withincreasing scores,making Uniq a greatplace to work.

Talent identification

and succession

planning.

Sustained low

employee absence.

Our governance

Uniq is a devolved organisation andthe principal accountability for CSR

rests with the Managing Directors

of each of our operating sites. As an

ethical food producer we recognise

that the management of social,

ethical and environmental issues

requires everyones engagement.

Our Peopleand Culture

Guidance is provided by recognised

advisers, endorsed by the CSR forum,who report annually to the Uniq Board.

We aim to follow the standards of the

Global Reporting Initiative (GRI) in

our key activities and in future reporting.

The group, and all the associated sites,

work within four guiding principles:

Shared responsibility

Honesty and accountability

Sustainable progress

Demonstrable compliance

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Directors report

Business review | CSR

Progress

In 2010 the group wasinvolved in 44 charity/community givingprojects (Financial andin-kind). This includedsending products toFareShare to feed

the homeless.

Numbers of localresident complaintswere down onprevious years.

Long-term promises

The promise isto increase ourinvolvement for thegood of charitieswe support.

The group aims tobe good neighbours,reducing our negativeimpact on thelocal community.

Our aim

Our commitment is to make positive

contributions to our local community

through employment, education,

good neighbourliness and support

of local causes.


Principle areas of activity are; community

engagement and charitable giving

to both local and national charities.

We attempt to mitigate our noise and

transport environmental impacts at

all times.

Case Study:Employee

cultural surveys

During 2009 and 2010, the group

rolled out a detailed employee cultural

survey, covering topics such as

engagement, great place to work,

fairness, etc. The aim was to provide

objective data, from which we can

improve and make Uniq a great place

to work and a workplace of choice.

Case Study: Uniq Learning

System (ULS)

In order to enhance the skills

and knowledge of our employees,Uniq embarked on a learning

journey. This involved undertaking

a skills need analysis, writing

and rolling out competence based

learning units. These are verified,

by the departmental and

site-based assessors.

A member of Nor thampto ns staff said: It has helpedme develop myself, reduce waste and do a better jobit makes us feel we do worthwhile work.

The group has also supported FareShare in helping feedthe vulnerable in our community. Two sites support theirlocal air ambulances.

Case Study: Minimising noise

impact at Minsterley

The site has in the past received a

significant number of noise complaints

relating to steam valve pressure relief

systems. On investigation, it was found

that they were venting and creating a

noise issue. Most of the offending valves

have been replaced, thereby reducing

complaints by 50% since 2008.

Case Study: Local community

support at Evercreech

Evercreech have engaged with their

local community; running fun-days,sponsoring school crossing patrols

and being present at farm shop

open days. The site has also been

involved at the local Bath & West

Agricultural Show.

Our Community

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Directors report


Our aim

We believe good environmental

practice is good business practice.

We are committed to environmental

sustainability in setting ambitious

goals in six key impact areas: waste,

water, energy, packaging, refrigeration

and transport. We will engage our

employees in lean manufacturing

systems to deliver our and our

customers environmental goals.

Our Environment


Examples include: Water: We use less and investigate

ways of using recycled water

and using less water in our

cooling systems.

Waste: Implementing lean

manufacturing across the group

and diversion of waste away

from landfill.

Energy: Reduction in consumption

using schemes such as; low energy

lighting, free winter cooling, bio-diesel

extraction from effluent, leak

reduction and lagging campaigns.

Packaging: We are working towards

the use of recycled packaging in our

packaging, target lower weights

and reduce excessive packaging.

Transport: Implementing green

car travel policies.

Case Study: Reduction of waste tolandfill at Spalding and Minsterley

Spalding have already reached

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Directors report


Our aim

Is to engage and collaborate with allour internal and external stakeholders

to ensure we continually optimise

our ethical performance.


We are working with suppliers

and using auditable databases

(SEDEX) to ensure our critical

suppliers are working to

recognised ethical standards.

Our sites are SEDEX compliant

We are working with key customers,

to understand their needs, in order

to build improving internal standards.

We are working with key external

advisers, and regulators to ensure

improvement and understanding.

Our BusinessPartners

Our aim

We are committed to ensuring that

we provide and maintain a safe place

of work and help our people make

informed health choices. We will

continue to innovate healthy options

and market leading safe products

for our customers.


Uniq are improving workplace safetyby decreasing the number and severity

of incidents. We have improved the

provision of healthier meals and

nutritional advice and have promoted

active lifestyles at home and work.

Food safety is embedded in the way

we work and we continue to achieve

a year on year improvement.

Uniq is actively supporting our

customers health agendas by

increasing the range of healthy and

wholesome options available to

the retailers and end consumer.

The aim is to increase the healthier

food options.

Our Health, Safetyand Wellbeing

Progress

Critical suppliersSEDEX registered75%.

Progress

Reportable Accidentrate down to713/100,000employees from 849(2009), both are muchbelow the food industryaverage (1,350).

All sites scoredgrade A in theBritish RetailerConsortium Audit.

Long-term promises

100% of criticalsuppliers by end2011.

Long-term promises

Strive to zero Health& Safety Executivereportable accidents.

Enhanced externalCSR communications(e.g. website, CSRannual report).

Year on yearimprovementin food safety.

Case Study: The benefits of

health surveillance at Spalding

To raise awareness on National

Diabetes day occupational health at

Spalding ran a screening programme

for staff and employees. As a result,

a number of individuals were

identified to be possibly suffering

from the condition and were advised

to seek further medical advice.

Case Study:ROSPA Gold Awards

All sites in the group have undergone

a fantastic transformation in safety

performance in recent years.Northampton have been awarded

a ROSPA Gold Award for the past

6 years. This places them amongst

the best safety performers within

the food industry.

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Directors report

Financial review 2010

This financial review covers the activities of the group

for the 12 months ended 31 December 2010. The group

completed the disposals of its overseas businesses

realising funds to settle its outstanding borrowings which

were paid off in full at the end of the year. In March 2011

the group completed a debtfor equity swap with its

pension fund, releasing the group from its onerous

liabilities to the pension fund. As this was not completed

until 2011, the results for 2010 are not affected by thisrestructuring. However, we have included a proforma

balance sheet and restatedprofit before tax statement

at the end of this section to illustratethe significant

impact of the deal.

Revenue for continuing operations was up 6.8% on the

prior year (adjusted for 53rd week). The operating result

before significant items for the group moved from 1.9m

loss to 4.1m profit.

Group costs

Group costs represent the cost of running the parent

company and the head office at Gerrards Cross. As a

result of the downsizing of the group, we have reduced

the size of the head office reducing costs to 4.2m in

the year, a saving of 2.1m over last year.

Finance costs

This is split into three types of costs: operational, pension

related and accounting.

Operational finance charges include bank interest and

amortisation of bank fees and are related to the ongoing

operations of the business. Operations finance charges

for 2010 were 1.7m which was 1.7m lower than the

previous year due to the reduction of borrowings on the

realisation of overseas operations. During the year, as

part of our agreement with the pension fund, we were

required to hold surplus funds in a separate Disposal

Reinvestment account rather than pay down our outstanding

debt with the bank. This caused finance charges to be

higher than they would otherwise have been.

Pension finance charges cover two items: net pension

interest that is charged as part of IAS19 and interest

earned on the secure account. IAS19 pension interest

is a reflection of the balance of pension assets and liabilities

and is set at the beginning of the year. The net charge for

2010 was increased over the prior year due to the pension

fund de-risking its asset base to gilts. The pension interest

charge for 2011 will be significantly smaller due to the removal

of the main pension fund from the group in March 2011.Interest earned relates to the income on the secure account

balance of 97m which was lower year-on-year due to

lower interest rates. This balance, with accrued interest,

was paid over to the pension fund in October 2010.

Accounting finance charges are other finance items and

are generally non-cash. In 2010, this was a net income of

0.3m compared to a charge of 1.2m in 2009 and relates

to foreign exchange differences on cash balances across

the group.

Significant items

Significant items are those items of financial performance

which because of size or incidence, require separate

disclosure. The net significant item for continuing operations

in 2010 was a charge of 2.4m. This included 1.9m of

costs in relation to the closure of our cottage cheese site

at Evercreech (1.5m of asset impairment and 0.4m of

redundancy costs); 0.3m of redundancy costs and 0.1m

of asset impairment incurred due to the downsizing of

the group head office; 2.7m of costs in relation to thepension solution and a credit of 2.6m in relation to

the Wincanton settlement.

We have incurred a significant level of costs in exploring

and implementing an acceptable solution for our pension

fund liability. Some of these costs have been incurred in

2010 but we expected to incur further costs of approximately

3.1m in 2011 as the solution is completed. We reached a

full and final settlement of our litigation with Wincanton in

February 2011 which resulted in us making a final payment

of 2.3m. The provision we were holding for this litigation

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Directors report

Financial review

at 4.9m was in excess of the final payment and therefore

the balance of the provision has been released.

Carrying Value of Minsterley

At the year end we assessed the balance sheet carrying

value of Minsterley (48.4m) by carrying out an impairment

review. This review indicated, on the basis of the expected

cashflows in the groups budgets and strategy plans, that

assets were adequately supported by the future cash flows

and no impairment was required. Since the year end, the

group has carried out a detailed review of the Desserts

operations in the light of recent profit performance and

announced sales losses. The revised plans for Minsterley

are dependent upon securing support from our customers.

Should this support not be forthcoming, the carryingvalue may not be supportable.

Taxation

There is no tax charge in the year for continuing operations

although the group made a profit after discontinued items,

as brought forward losses have been used where possible

to mitigate any tax exposures. The group has substantial

tax losses (83m), unclaimed capital allowances (214m)

and future tax relief for pension contributions (73m)

brought forward. These tax attributes exclude the losses

that have been created through additional contributions

as part of the debt for equity swap with the pension fund

in 2011. The growth and strategy of the business will

accelerate the use of these losses.

Discontinued operations

Discontinued operations include businesses which were

disposed of during the year. The disposal of the Northern

European operations was completed in the first half of

2010: the Netherlands businesses on 9 January and the

German/Poland businesses on 21 April. The results ofthese businesses have been included in the group up to

the date of disposal.

Profit after tax and before significant items for the discontinued

businesses was 3.2m. Total significant items were a credit of

32.2m which includes a charge of 0.7m for onerous leases

on group properties offset by 32.9m of profit on disposal of

the businesses. The profit on disposal includes a credit of

30.3m relating to foreign exchange gains previously credited

to reserves which have been recycled to the profit and loss

account on disposal.

Summary results2010

m2009

m

UK trading operating profit 8.3 4.4

Group costs (4.2) (6.3)

Operating profit/(loss) beforesignificant items 4.1 (1.9)

Finance costs (excluding pension related) (1.4) (4.6)

Profit/(loss) before significant items 2.7 (6.5)

Significant items (2.4) (0.7)

Pension finance costs (11.5) (11.3)

Loss before tax (11.2) (18.5)

Tax charge (0.4)

Loss from continuing operations (11.2) (18.9)

Discontinued items net of tax 35.4 (2.0)

Profit/(loss) attributable to shareholders 24.2 (20.9)

Basic profit/(loss) per share 21.3p (18.4)p

Funds flow2010

m

Operating profit 4.1

Depreciation and amortisation 9.9

EBITDA 14.0

Net capital expenditure (15.0)

Increase in working capital (4.0)

Continuingoperating cash flow (5.0)

Provisions and significant items (3.1)

Tax (1.1)

Discontinued operations 26.8

Pension contributions (0.9)

Other (1.9)

Total funds flow 14.8

Opening net debt (4.0)

Closing net cash 10.8

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Directors report

Funds flow

During the year the continuing group had a 5.0m operating

cash outflow. This includes 15.0m spend on capital

expenditure of which 10.6m related to the completion of

the Desserts project at the Minsterley site. Working capital

outflow for continuing operations in the year was 4.0m

which reflects the increased pressure from suppliers. During

the year the continuing group spent 3.1m on provisions and

significant items: 1.3m related to restructuring costs in

Desserts and 1.8m related to group head office restructuring

and pension legacy costs. The provision balance at the

year end of 5.8m includes 2.3m which was paid in final

settlement to Wincanton in February 2011, 1.3m in relation

to overseas disposals, 1.2m for onerous leases on

properties, 0.3m relating to Desserts restructuring costsand 0.7m of pension legacy fees. Tax payments of 1.1m in

the year relate to tax assessed on the disposal of St Hubert

which was completed in 2008. Net cash received from

discontinued operations of 26.8m represents the total cash

flow of the discontinued businesses to the date of disposal

plus the proceeds from disposals after payment of disposal

costs. Pension contributions relate to payments made to the

Pension Trustee to fund transfers out and pension costs

and interest costs of 1.5m reflect the level of borrowings

maintained through the year. Total funds flow for the year

was 14.8m.

Working capital and credit insurance

As noted in previous years, the group has experienced

significant pressure from suppliers on payment terms

and rates due to the withdrawal of credit insurance on

the company and the impact of the pension deficit on

the groups balance sheet. This has resulted in a further

worsening of the groups working capital position and

a cash outflow. Having completed the pension deal,

the group expects to be able to improve the availabilityof credit insurance through discussions with relevant

insurers and therefore return to more normal trading

terms with its suppliers.

Funding

Opening net debt at the beginning of the year was 4.0m

including 6.1m of net cash in the discontinued businesses.

The disposal of these businesses gave rise to cash proceeds

which, in accordance with a previous agreement with

the pension fund, were placed in a separate Disposal

Reinvestment account during the period of negotiation

with the pension fund to find a final solution. We maintained

our borrowings and the net cash in Disposal Reinvestment

account until 31 December 2010 when our bank facility

expired and all borrowings were repaid in full. Net cash

at the year end after payment of borrowings was 10.8m.

We have negotiated a new bank facility with Lloyds

TSB which was conditional on completing the debt for

equity swap with the pension fund. This process was

completed on 22 March 2011 and the new bank facility

became available. This new facility provides for a 15m

term loan, amortising at 3m each year for three years

with a lump sum repayment at the end of the facility,

and a 10m revolving credit facility to fund working

capital requirements.

PensionsThe group operates a main UK scheme and a number

of other small pension funds including an unfunded

overcap scheme, medical benefits provision and small

legacy scheme.

The IAS19 deficit on the main UK scheme at the beginning

of the year was 227.8m which was reduced significantly

during the year by the payment of the monies in the secure

account of 97.6m. Other movements on the deficit include

29.4m return on assets and 40.5m relating to the unwinding

of the liabilities. There was no service charge as the

scheme was closed to further accrual in 2009. The closing

deficit was 142.1m (excluding a provision of 3.4m for

scheme expenses).

Post balance events

Pensions update for 2011

In March 2011, the group completed a deal to swap the

debt owed to its pension fund for equity in the company.

This deal has removed the main UK pension deficit from

the balance sheet of the group but as this deal wascompleted in 2011, this is not reflected in these financial

statements. To illustrate the significant impact that this

deal will have on the group, a proforma Balance Sheet is

shown in the table opposite.The profit before tax (shown

opposite) has been restated as if the pension fund had

not existedthroughout the financial year.

Significant VAT recovery

In March 2011, the group recovered 2.6m from HMRC

in relation to various claims under the Fleming ruling.

This repayment consisted of 1.0m of VAT recovery and

1.6m of interest on the claim. The group is continuing

to claim further amounts under the Fleming ruling.

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Financial review

Proforma Balance Sheet Effect of the Pension Deal

m 2010Adj

(note 1)Pro

forma

Assets

Non-current assetsProperty, plant and equipment 80.4 80.4Intangible assets 30.5 30.5Deferred tax assets 13.9 13.9

124.8 124.8Current assets

Inventories 13.8 13.8Trade and other receivables 33.2 33.2Cash and cash equivalents 10.8 (3.3) 7.5

57.8 54.5Total assets 182.6 179.3Liabilities

Non-current liabilities

Borrowings 11.0 11.0Retirement benefit obligations 149.4 (145.6) 3.8Provisions 0.8 0.8

150.2 15.6

Current liabilities

Borrowings 3.0 3.0Trade and other payables 41.6 41.6Provisions 5.0 5.0Income tax liabilities 7.7 7.7

54.3 57.3

Total liabilities 204.5 72.9Total assets less liabilities (21.9) 106.4Equity

Shareholders equity

Total called up share capital 11.5 (10.3) 1.2Share premium 0.1 64.5 64.6Other reserves (330.2) (330.2)Retained earnings 296.7 74.1 370.8Total equity (21.9) 106.4

Note 1 The adjustments reflect the issue of shares by the parent company at the closing

price on 16 March 2011 to the pension fund in exchange for the cancellation of the IAS19pension deficit and the payment of 14m as a final contribution to the pension fund, fundedby the new bank facility.

RestatedProfit beforetax Effect of the Pension Deal

m 2010Adj

(note 2) Restated

Continuing operations

Revenue 311.9 311.9Cost of sales (264.3) (264.3)

Gross profit 47.6 47.6Distribution expenses (18.3) (18.3)

Administrative expenses (25.2) (25.2)

Operating profit beforesignificant items 4.1 4.1Significant items (2.4) 2.7 0.3

Operating profit aftersignificant items 1.7 2.7 4.4Net pension interest (12.1) 12.1 Finance income 1.2 (0.6) 0.6Finance expenses (2.0) (2.0)Net finance changes

(12.9) 11.5 (1.4)(Loss)/profit before tax (11.2) 14.2 3.0

Note 2 The adjustments reflect the removal of the significant cost in relation to themanagement of the groups pension fund, the pension interest charge and the financeincome related to the monies previously held in the secure account for the benefit ofthe pension fund from 1 January 2010.

Business performance measurement

The group measures its performance using a series of

KPIs, both financial and non-financial. The financial KPIs

are: sales growth; gross margin percentage; operating

profit percentage and return on capital. The non-financial

KPIs vary according to business unit.

Senior management are remunerated by bonuses

based on group and divisional financial performance

and in 2010, by delivery of the pension solution

and by share incentives, more details of which

are included in the remuneration report.

Financial risk

The group is subject to financial risks, but hasprocedures and controls in place to mitigate

these risks. The groups major financial risks

can be split as follows:

Market risk Market risk can be broken down into

currency risk and interest rate risk. The group

has formal procedures and policies to mitigate

these risks.

Credit risk The majority of the groups customers

are large, established retail organisations with a good

credit record. As a result the group does not have

significant concentrations of credit risk.

Liquidity risk During 2010 the group operated

within its banking facility which expired at the end

of December 2010. A new bank facility of 25m has

been negotiated and was available for use by the

group from March 2011. Liquidity risk remains low

due for the group due to formal procedures and

policies to manage cash resources.

Martin Beer

Finance Director

26 April 2011

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Directors report

Principal risks

This section updates what the board believes are

the most significant risks and uncertainties which

are specific to Uniqs businesses.

Minsterley profitability

Minsterley has a history of losses and has not generated a

profit in any reporting period since the site was acquired in

2005. In 2009, the Paignton site was closed and volume was

successfully consolidated into the Minsterley site. In the lastfive years, there have been investments in the infrastructure,

service and quality at the Minsterley site and financial results

have improved significantly.

Management recognises the recovery of profitability

of the Minsterley site has taken longer than expected.

The site serves four sub-sectors of the market: Cadbury

chocolate desserts, premium differentiated yoghurt,

premium and everyday desserts. The Cadbury, yoghurt

and premium dessert sub-sectors are either profitable or

on track to achieve profitability, while the site losses are

all concentrated in the everyday desserts sub-sector.

The Desserts review has approved a series of steps

to address and stop the losses in everyday desserts.

Minsterley produces Cadbury desserts under a co-packing

agreement. Additional capacity has been successfully installed

and the Cadbury manufacturing facility at Minsterley is highly

efficient. However, the anticipated growth has not yet

materialised and there are ongoing discussions with the

customer regarding the terms of the co-packing agreement.There is a risk that Cadbury volumes could continue to decline,

or that the co-packing agreement could be amended or

terminated. Any of these outcomes could have an adverse

impact on the groups operations and its financial condition.

Customers

The group is heavily dependent on a limited number of

significant grocery retailers in the UK and one major retailer,

M&S, represents over half of the groups sales. In line with

industry practice, the majority of Uniqs UK sales are made by

means of short-term standard purchase orders rather than

long-term contracts. In recent years, the major multiple

retailers have increased their share of the UK grocery market

and price competition between those retailers has intensified.

This price competition has led the major multiple retailers

to seek lower prices from their suppliers. Uniq has created

a decentralised, entrepreneurial business structure to

enable it to get closer to its customers and to mitigate

this risk. However, there can be no assurance that Uniqs

customers will continue to purchase its products at

current volumes, at current pricing or on current terms.

The credit insurance market and the creditworthiness

of the group and its customers

As is common in the food industry, many suppliers use

credit insurance to reduce the risk of exposure to the group.

The credit extended by suppliers is an important part of

the groups funding. Over the last few years, the level of

insurance available to the groups suppliers has significantlyreduced, owing to a general tightening of credit insurance

and the perceived extent of the groups UK pension deficit.

The removal of the pension deficit will create the necessary

conditions for credit insurance cover to be reinstated and

therefore, in time, this risk will reduce.

Weather and seasonality

Sales of some products, such as salad products, are

materially affected by unseasonable weather and seasonality.

Sales can be materially increased or reduced as a result

of weather fluctuations and seasonality.

Innovation

The group operates in competitive markets and in fast moving

sectors of the food industry. Its success is dependent on

anticipating changes in consumer preferences, including

dietary and nutritional concerns and on successful new

product development and product relaunches in response

to such changes in consumer behaviour. The groups future

results will depend on its ability successfully to identify,

develop, manufacture, market and sell new or improvedproducts in these changing markets.

Changes in the cost and availability of raw materials

The group purchases its raw materials, many of which

are commodities, from numerous suppliers. There are

a number of factors affecting the price of these raw

materials, such as quality, availability, demand, weather

conditions, currency fluctuations, agricultural policies

and political instability. Many of these raw materials are

subject to potentially significant price fluctuations.

The group will generally not be a sufficiently large buyer

to have any control over these prices and may be unable

to pass on such price increases to its customers in

whole or part or without a period of delay.

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21Uniq Annual Report and Accounts 2010

Directors report

Directorsresponsibilities

The directors are responsible for preparing the

Annual Report and the group and parent company

financial statements in accordance with applicable

law and regulations.

Company law requires the directors to prepare group and

parent company financial statements for each financial

year. Under that law they are required to prepare the

group financial statements in accordance with IFRSs asadopted by the EU and applicable law and have elected

to prepare the parent company financial statements on

the same basis.

Under company law the directors must not approve the

financial statements unless they are satisfied that they give

a true and fair view of the state of affairs of the group and

parent company and of their profit or loss for that period.

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;

state whether they have been prepared in accordance

with IFRSs as adopted by the EU; 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 adequate

accounting records that are sufficient to show and

explain the parent companys transactions and disclose

with reasonable accuracy at any time the financial

position of the parent company and enable them to

ensure that its financial statements comply with the

Companies Act 2006. They have general responsibility

for taking such steps as are reasonably open to them

to safeguard the assets of the group and to prevent

and detect fraud and other irregularities.

Under applicable law and regulations, the directors

are also responsible for preparing a Directors Report

and a Directors Remuneration Report that complies

with that law and those regulations.

The directors have also decided to prepare voluntarily

a Corporate Governance Statement as if the company

were required to comply with the Listing Rules and the

Disclosure Rules and Transparency Rules of the Financial

Services Authority in relation to those matters.

The directors are responsible for the maintenance

and integrity of the corporate and financial information

included on the companys website. Legislation in the

UK governing the preparation and dissemination offinancial statements may differ from legislation in

other jurisdictions.

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 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.

Geoff Eaton

Chief Executive

Martin BeerFinance Director

26 April 2011

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Martin Beer

Finance director

John Warren

Chairman

Geoff Eaton

Chief executive


Directors report

John Warren

Chairman * //

Joined the board in 2007,

served as Interim Chairman

from 25 June 2009 and

appointed Chairman on

14 April 2010. He is also

chairman of the audit

committee and the pension

committee. He was formerly

finance director of United

Biscuits plc and WH Smith plc.

He is a fellow of the Institute

of Chartered Accountants in

England and Wales and is a

non-executive director of The

Rank Group plc, Bovis Homes

Group plc and Spectris plc.

Geoff Eaton

Chief executive //

Joined the board as chief

executive in 2005. He was

formerly chief executive of

ISIS Research from 2001

to 2004. Prior to that he

spent 13 years with Tomkins

plc where he held a number

of senior executive roles

including executive director

at RHM in the UK, executive

vice-president at Gates

Corporation in the US and

head of corporate development

for the Tomkins Group. He is

a chartered accountant, having

qualified with Arthur Andersen.

Martin Beer

Finance director //

Appointed to the board in

2002 as finance director.

He is a chartered accountant,

having qualified with Price

Waterhouse. He has been

with the group since 1990

in various financial roles,

including finance director of

Unigate Dairies for five years.

Belinda Gooding

Non-executive director *

Joined the board in 2006.

She is chief executive of

Roots & Wings, a trustee of

Chelsea Physic Garden and

a non-executive director

of Strutt & Parker. She was

formerly chief executive of

2 Save Energy Ltd, a non-

executive director of Biloxi

Southern Foods, Sir Hans

Sloane chocolates and Pets

Kitchen and chief executive

of Duchy Originals Ltd from

2000 to 2007. Prior to that she

spent ten years in marketing

roles with Mars (Masterfoods)

and was group marketing

director of Dairy Crest

Group plc.

Board of directors

and seniormanagement

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Dr Matthew Litobarski

Non-executive director

Belinda Gooding

Non-executive director

Stephen Draisey

Managing director

Andrew McDonald

General counsel and

company secretary

23Uniq Annual Report and Accounts 2010

Directors report

Board of directors

Dr Matthew Litobarski

Non-executive director *

Appointed to the board in 2005,

served as interim senior

non-executive director from

25 June 2009 and appointed

senior non-executive director

on 14 April 2010. He is chairman

of the remuneration committee

and, since 25 June 2009, the

interim senior non-executive

director. He is chairman of

Devin AD (Bulgarian mineral

water company), and chair of

the council of Nacro (a leading

UK crime reduction charity).

He was previously president,

global supply chain, with

Cadbury Schweppes plc, having

spent 19 years with them in

various senior management

roles. He has a doctorate

in physical chemistry from

Nottingham University.

Stephen Draisey

Managing director

Appointed in 2008. He has

a wealth of experience in the

UK food industry having held

a number of senior positions

during a 17 year career with

Geest/Bakkavor, ultimately

as managing director of its

desserts, ready meals, soups,

sauces, pasta and chilled

bread division. Prior to that he

was with Northern Foods plc

and J Marr Seafoods Ltd.

Andrew McDonald

General counsel and

company secretary

Joined Uniq in 2005 as general

counsel and appointed company

secretary in February 2009.

He is secretary to the board

and each of the four board

committees and has

responsibility for corporate

affairs, insurance and all

legal matters affecting the

group. He qualified as a

solicitor in 1998 and worked

as a corporate lawyer for

Freshfields Bruckhaus

Deringer before moving

into industry.

* Member of the remuneration committee Memb er of the audit committee Member of the nomination committee

// Member of the pension commi ttee* Not a member of the Uniq Plc board

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Directors report

Report of the directors

Principal activity

Uniq is a convenience food group that is now focused on

the UK and operates and manages two divisions: Food to

Go and Desserts. During the year the group disposed of

all its remaining European operations in Northern Europe

(Germany, the Netherlands and Poland). In the view of

the Directors, the groups likely future development will

continue to centre on the main product categories in

which it now operates.

Business review, KPIs and risk review

A review of activities of the group and divisions, key

performance indicators (KPIs), an outline of the principal

risks and uncertainties which management believes

are specific to the group and an indication of future

developments are set out throughout the directors

report, but in particular in the Chairmans statement on

pages 2 and 3, the Chief Executives review on pages

4 and 5, the market overview on pages 6 and 7, the

business review on pages 8 to 15, the financial review

on pages 16 to 19 and in the principal risks on page 20.

Dividends

No dividends were paid during 2010 (nor in 2009)

and the directors have decided not to recommend

the payment of a final dividend for the year.

Acquisitions and disposals

During the year the following transactions occurred:

On 9 January 2010 the sale of the Netherlands business

(Uniq Convenience Foods Nederland BV) to Gilde Equity

Management Benelux for 16.6m was completed.

On 21 April 2010 the sale of the businesses in Germany

(Uniq Deutschland GmbH) and Poland (Uniq Lisner sp

zoo) for 24.7m to IFR Capital plc was completed.

Share capital and reserves

Details of the authorised and issued share capital

and changes in reserves of the company are shown

in notes 28 and 29 to the financial statements.

In March 2011, the company completed a capital

restructuring of its share capital to facilitate a debt for

equity swap with its pension scheme. This resulted in the

reduction of shareholders interests to 9.8% of the equity

and the issue of 105,704,563 shares to the pension

scheme, giving the pension scheme a 90.2% equity holding

in the company. This restructuring was sanctioned by

the High Court and on 24 March 2011 and the company

and its subsidiaries were discharged from their obligationsin relation to the defined benefit section of the companys

pension scheme.

Following this restructuring the company successfully

applied for the shares to be relisted on the Alternative

Investment Market (AIM) as from 1 April 2011.

Annual general meeting

The companys annual general meeting will be held at

10 am on 17 June 2011 at the offices of Investec Bank

plc, 2 Gresham Street, London EC2V 7QP. Details of

the business to be considered at the meeting are

contained in the notice of annual general meeting

sent to shareholders.

In accordance with the Shareholder Rights Directive

(the Directive) which came into force in August 2009,

the company obtained shareholder approval at the 2010

AGM to the calling of meetings, other than the AGM, on

14 days clear notice. Prior to the implementation of the

Directive, the company was able to call meetings otherthan the AGM on 14 clear days notice without obtaining

shareholder approval and, to preserve this ability,

shareholders will be asked to renew their approval by

passing Resolution 6 at the AGM.

Substantial interests

As at 26 April 2011, the company has received the

following notice of substantial interests (3% or more)

of the tota

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