14th Dec 2005 07:01
RHM plc14 December 2005 RHM plc Interim Results for the 26 Weeks ended 29 October 2005 Transformation Delivering Benefits Financial Highlights 26 Weeks Ended 29 26 Weeks Ended 30 October 2005 October 2004Turnover from continuing operations £739.3m £736.8mOperating profit before restructuring costs* £70.3m £65.3mOperating profit after restructuring costs £55.6m £113.3mDividend per share 5.3p Nil • Turnover from continuing operations up 0.3 per cent. - Cakes turnover down 13.1 per cent. - Turnover excluding Cakes up 3.0 per cent. • Underlying operating profit up 7.7 per cent. to £70.3m - Underlying operating profit for Bread Bakeries, Culinary Brands and Customer Partnerships up 21.8 per cent., 16.5 per cent. and 25.0 per cent. respectively - Cakes underlying operating profit down 87 per cent. - Firm action plans in place to restore Cakes profitability • Underlying operating margin up from 8.9 to 9.5 per cent. • Cost reduction initiatives delivering in line with expectations • Triennial pension funding valuation completed with next year's cash contributions confirmed at £40m, the best case outcome anticipated at flotation • Maiden interim dividend of 5.3p per share in line with flotation guidance Jan du Plessis, Chairman of RHM plc, said: "For the most part, RHM's transformation has continued according to plan.Underlying operating profit increased by 7.7 per cent. to £70.3m, on turnoverwhich rose marginally to £739.3m. Although the development of our branded cakesbusiness was disappointing, our Bread Bakeries, Culinary Brands and CustomerPartnerships businesses performed well." Ian McMahon, Chief Executive Officer of RHM plc, said: "The overall improvement in our first half results demonstrates our ability togrow profits in challenging market conditions. Our cost savings drive is ontrack, with savings of almost £20m achieved in the first half. We have takenaction to improve the performance of our branded cakes business, with newmanagement in place, major cost reductions taking effect, and a new product andmarketing strategy. We expect to make further progress during the traditionallybusier second half of the year. Overall, the expectations of the Board for thefull year outcome remain unchanged from the time of the Group's trading updatein October." ENQUIRIESRHM +44 (0) 1628 478 484Andrew Allner, Group Finance DirectorJohn McIvor, Director of Investor Relations andIndustry Strategy Financial Dynamics +44 (0)20 7269 7121Andrew LorenzRichard MountainSally Lewis * Operating profit before restructuring costs ('underlying operating profit') isdefined as operating profit from continuing operations before restructuringcosts on the IFRS basis of accounting and is considered and used by managementto be the underlying measure of operating profit within the Group. All references to turnover, underlying operating profit and underlying operatingmargin relate to continuing operations excluding restructuring costs, unlessexplicitly otherwise stated. Chairman's Comments The Board of RHM is pleased to report its first set of interim results since theCompany's flotation. For the most part, RHM's transformation has continuedaccording to plan. Underlying operating profit increased by 7.7 per cent. to£70.3m, on turnover which rose marginally to £739.3m. Although the developmentof our branded cakes business was disappointing, our Bread Bakeries, CulinaryBrands and Customer Partnerships businesses performed well. This progress is atestament to the strength of our segment-leading brands, the quality of our ownlabel business and the success of our cost reduction programmes, which havedelivered almost £20m of savings during the period. Building profitable, sustainable top line momentum is key to RHM's longer termsuccess. This is particularly true in our branded cakes business, where saleshave been disappointing. The Board is committed to improving the performance ofthis business and the measures detailed today represent important steps towardsdoing so. While it will take time to restore the profitability of our brandedcakes business to historic levels, we will, following the closure this month ofour Eastleigh cake bakery, have the benefit of a much more competitive costbase. I am pleased that we are today able to provide clarity on the Group's pensionobligations, following the completion of our triennial pension review.Shareholders will recall that the potential impact of this review wasextensively discussed in our prospectus. As a result of the review, RHM's proforma UK pension deficit under IFRS as at 30 April 2005 has increased by £62m to£197m, net of a deferred tax credit of £84m. More importantly, however, ourpension contributions next year will rise to £40m from £32m this year, the bestcase outcome anticipated at the time of the flotation. The Board has approved the payment of an interim dividend of 5.3p toshareholders on the Company's register on 23 December 2005. It will be paid on24 February 2006. This is consistent with the Board's stated intention at thetime of the flotation to recommend the payment of not less than £55 million individends to shareholders in respect of the year ending 29 April 2006. Since flotation we have welcomed to the Board three new non-executive directors:Michael Baulk, Chairman and Chief Executive of BBDO AMV, Roger Matthews,formerly Group Finance Director of J. Sainsbury PLC and Erhard Schoewel,Executive Vice President of Reckitt Benckiser plc. With their outstandingcomplementary experience, I am confident that our new non-executive directorsare superbly qualified to provide invaluable support to our executive team inthe years ahead. Notwithstanding the progress already made, there remains much to be done toensure that RHM realises its full potential. We look forward to reportingfurther progress following completion of the traditionally busier second half ofthe year. Jan du PlessisChairman Chief Executive's Operating Review Total Group 26 Weeks Ended 29 26 Weeks Ended October 2005 30 October 2004Turnover £739.3m £736.8mUnderlying operating profit £70.3m £65.3mUnderlying operating profit margin 9.5% 8.9% Turnover for the first half of the year of £739.3m was similar to that achievedin the first half of last year. Branded growth was largely driven by a strong performance from Hovis and Bisto,partially offset by a decline in Mr Kipling. Excluding branded Cakes turnover,which declined by £10.8m, branded turnover rose by 4.8 per cent. Own labelturnover was marginally lower, with good growth in chilled ready meals, balancedby lower flour and own label packaged cake sales. RHM's investment in new product development has continued, with Hovis InvisibleCrust, Sharwood's Noodle Boxes, Bisto chilled gravy and McDougall's frozen fruitpies all launched in the first half of the year. The greater than anticipatedearly success of Hovis Invisible Crust, the UK's first crustless loaf, for whichdemand is currently exceeding supply, was achieved without the need to implementa planned television advertising campaign. This contributed to advertising andmarketing expenditure decreasing marginally in the first half. Promotionalactivity increased significantly as a consequence of the challenging marketenvironment. Underlying operating profit increased by 7.7 per cent. to £70.3m. Cost reductioninitiatives delivered almost £20m of benefit, in line with the level of savingsanticipated at the time of the flotation. This was key to an improvement inunderlying operating profit margin, which rose from 8.9 to 9.5 per cent. Bread Bakeries 26 Weeks Ended 29 26 Weeks Ended October 2005 30 October 2004Turnover £385.8m £374.3mUnderlying operating profit £34.7m £28.5mUnderlying operating profit margin 9.0% 7.6% Turnover increased by 3.1 per cent. to £385.8m. Higher bread turnover wasprincipally driven by increased sales of Hovis, which in October 2005 reached arecord market share of 31.4 per cent.* This followed the "Healthiest Ever Hovis"introduction in May, the latest phase of our programme to add wholewheat andreduce salt across the Hovis range, and the successful launch in August of HovisInvisible Crust. Third party flour turnover increased from £68m to £72m. During the period theimpact of the closure of the Group's Tilbury and Ramsgate mills was more thanoffset by £4.5m of sales contribution from the Wellingborough mill, which wasacquired in July. Bread and flour price increases were achieved within the period, largelyoffsetting higher utility costs. Underlying operating profit increased by 21.8 per cent. to £34.7m, withoperating margin rising by 140 basis points due to better pricing, a benignwheat price environment, the benefit from overrider settlements and successfulcost saving initiatives, offset in part by higher distribution costs associatedwith serving new convenience store customers. * Source: IRI Multiples and Co-Ops, 4 weeks ended 29 October 2005 Culinary Brands 26 Weeks Ended 29 26 Weeks Ended October 2005 30 October 2004Turnover £122.8m £123.2mUnderlying operating profit £ 31.1m £26.7mUnderlying operating profit margin 25.3% 21.7% Culinary Brands' turnover declined by £0.4m to £122.8m, with higher brandedsales, particularly of Bisto products, offset by a planned decline in lowermargin own label sales. Branded turnover accounted for 89.9 per cent. ofdivisional turnover, up from 87.9 per cent. in the first half of last year. Underlying operating profit increased by 16.5 per cent. to £31.1m, in partreflecting the greater branded sales element. Performance was also aided by thedelivery of further procurement savings and other cost saving initiatives,including the outsourcing of the division's central warehousing and transport.These benefits contributed to a significant improvement in the division'sunderlying operating profit margin, which increased by 360 basis points to 25.3per cent. Customer Partnerships 26 Weeks Ended 29 26 Weeks Ended October 2005 30 October 2004Turnover £122.7m £115.0mUnderlying operating profit £10.5m £8.4mUnderlying operating profit margin 8.6% 7.3% Customer Partnerships' turnover from continuing operations increased by 6.7 percent. to £122.7m. The increase primarily reflected higher chilled and frozenready meal sales to key customers. Underlying operating profit increased by 25.0 per cent. Customer Partnershipsbenefited not only from the higher level of activity but also from procurementand other cost saving initiatives. Consequently, underlying operating marginimproved by 130 basis points to 8.6 per cent. Cakes 26 Weeks Ended 29 26 Weeks Ended October 2005 30 October 2004Turnover £108.0m £124.3mUnderlying operating profit £1.0m £7.9mUnderlying operating profit margin 0.9% 6.4% Cakes' turnover declined by 13.1 per cent. to £108.0m. Avana Bakeries, RHM's whole cake business, which represents approximately 20 percent. of Cakes turnover, continues to perform in line with our expectations. Trading at Manor Bakeries, RHM's small cake and slices business, has howeverbeen disappointing, even after taking account of a slow down in the ambient cakemarket, which declined by 4.6 per cent. by value and 4.0 per cent. by volumeduring the 24 weeks ended 29 October 2005.* This decline was particularly acuteduring the unseasonably warm October, and has led to a higher than normal levelof promotional activity in the cakes category. Initial encouraging results from new Mr. Kipling and Cadbury's Cake products andrepackaging towards the end of the last financial year were not sustained, withMr. Kipling sales in particular falling below our previous expectations.Packaging designed to create a more premium feel proved to be less popular withour core customer base at a time when promotional spend was focused onincremental new products rather than core lines. These factors combined to causea significant decline in demand for the most popular Mr. Kipling products. Intotal, Manor Bakeries' turnover decreased by £16m, of which £5m reflected theimpact of planned lower own label activity. The underlying operating profit of Cakes reduced from £7.9m to £1.0m, with theimpact of the lower level of turnover and increased investment in promotionalactivity significantly exceeding the benefit of cost saving initiatives. Our Cakes performance has been disappointing and we have taken robust action todrive improvement. Senior management changes have been made and we will bringhigher quality, more competitive versions of existing products with moreeffective packaging to market in the first quarter of 2006. We will put thenecessary marketing support behind the Mr Kipling brand, and a new Mr Kipling "Delightful" range of lower fat, lower calorie cakes comes on shelf in January.Furthermore, the entire Mr Kipling product range will in future be free ofartificial flavourings and colourings. We have market leading and much loved brands and, following the closure of ourEastleigh bakery this month, a significantly more efficient cost base in thebusiness. These changes are important elements in what will inevitably be alonger process to restore Mr Kipling to full health and are consistent with ourstrategy of driving cost reduction, whilst investing in the long termdevelopment of our market leading brands through product innovation andconsumer-led marketing. * Source: IRI Multiples and Co-Ops, 24 weeks ended 29 October 2005 Outlook With the exception of Cakes, all our businesses have shown the improvement inperformance anticipated at the time of our flotation. We will maintain our focuson generating further profit improvement through cost reduction initiativeswhile driving our leading brands. We anticipate that the higher level ofin-store promotional activity evident across the market place in the first halfof the year will continue to be a feature of the remainder of the year. Thiswill, in part, be offset by a reduction in planned advertising spend. The overall improvement in our first half results demonstrates our ability togrow profits in challenging market conditions. Our cost savings drive is ontrack with savings of almost £20m achieved in the first half. We have takenaction to improve the performance of our branded cakes business, with newmanagement in place, major cost reductions taking effect, and a new product andmarketing strategy. We expect to make further progress during the traditionallybusier second half of the year. Overall, the expectations of the Board for thefull year outcome remain unchanged from the time of the Group's trading updatein October. Ian McMahon Chief Executive Officer Group Finance Director's Financial Review Basis of reporting The results for the six months ended 29 October 2005 have been prepared inaccordance with IFRS. The comparative results provided for the first half oflast year have been adjusted to demonstrate how they would have been reportedhad IFRS been adopted for that period. Pro forma results The comparison of performance year on year has been made more complex by thechange of capital structure during the first half of the current year as aconsequence of the Group's flotation on the London Stock Exchange, together withthe related costs. Accordingly, pro forma numbers are set out below todemonstrate how RHM's performance would have been calculated had RHM's currentcapital structure been in place from the start of both accounting periods. Thechanges principally reduce the interest charge, as the Group pays a lower rateof interest on a lower level of borrowings post flotation, and increase thenumber of shares in issue to reflect the number of shares currently in issuefrom the beginning of both periods. Restructuring, flotation and refinancingcosts have also been excluded. 26 weeks 26 weeks ended 29 ended 30 October 2005 October 2004 £m £mTurnover 739.3 736.8Underlying operating profit 70.3 65.3Pro forma finance costs (23.0) (23.0)Pro forma profit before tax 47.3 42.3Pro forma tax at 31 per cent. (14.7) (13.1)Pro forma profit after tax 32.6 29.2Pro forma number of shares in issue 346.9m 346.9mPro forma EPS 9.4p 8.4p This analysis shows that pro forma earnings per share have increased by 12 percent. from 8.4p to 9.4p for the period. We believe that the pro forma increasein earnings per share provides a more meaningful measure of comparativeperformance than the level of adjusted earnings per share shown in the table ofreported results below. Summary of reported results 26 weeks 26 weeks ended 29 ended 30 October 2005 October 2004 £m £mTurnover 739.3 736.8 Underlying operating profit 70.3 65.3Net restructuring (costs)/income (14.7) 48.0Debt redemption costs (78.1) -Finance costs (35.8) (58.7)(Loss)/profit before tax (58.3) 54.6Taxation 16.6 113.1(Loss)/profit after tax (41.7) 167.7Weighted average number of share in issue 267.5m 173.6mAdjusted EPS 8.9p 3.5p An important contributor to performance in the first half of the current yearhas been the Group's success in delivering further cost savings across all areasof the business. Net procurement savings, excluding wheat but after absorbing all energy andpurchases cost inflation, amounted to £8m in the first half of the year. Savingswere made in all businesses, with significant savings being made in keyingredient purchases, including fruit, eggs and starches. Higher energy costs will inevitably impact reported net procurement savings inthe remainder of the year. Total net procurement savings for the full year arenow expected to be around the level reported for the first half. Although theGroup has hedged over 90 per cent. of its exposure to energy costs in the secondhalf, overall energy costs are expected to be approximately £11m higher than inthe second half of last year. This cost inflation will be largely offset byagreed price increases. £2m of logistics savings have been realised from a Group-wide initiative tosimplify and make more efficient our logistics operations. These logisticssavings exclude the impact on costs from increased deliveries and a greatershare of convenience store business within Bread Bakeries, which havecontributed to an overall net increase in logistics costs of £10m. Our logisticsteam is now fully operational and an increased rate of savings is expected inthe second half. Restructuring and rationalisation initiatives, predominantly in the BreadBakeries and Cakes divisions, generated savings of £7m in the period, in linewith the level anticipated at the time of flotation. Major restructuring initiatives include the Eastleigh bakery closure, headcountreductions and the closure of three mills in Rank Hovis. Full year savings fromrestructuring and rationalisation are expected to be £14m, the amount indicatedat the time of flotation, as we gain benefits from the Eastleigh bakery closure,the mill closures and reduce headcount still further in the second half. RHM's pension service charge declined by £3m compared with the first half of theprevious financial year. This reflects the impact of previously announcedchanges to the RHM UK pension scheme agreed with our employees. The full benefitof changes implemented in September 2005 will be received in the second half ofthe year, and savings are estimated to be £8m for the full year, consistent withprevious guidance. The total cost of the flotation was £37.3m, plus an additional £80.8m for earlyredemption fees on the old financing structure. The cash outflow in the periodfor early redemption fees was £80.8m, of which £5.6m related to the unwinding ofan interest rate financial instrument that was accounted for in the openingbalance sheet under IAS 32/39. Of the £37.3m flotation costs, £25.5m has beencharged to the share premium account, £8.3m relates to the new financing and iscapitalised and amortised over the life of the debt, and £3.5m is taken as anexceptional charge, of which £1.1m was incurred and charged in the previousfinancial year, and £2.4m in the current year. Debt redemption costs of £78.1m in the profit and loss account comprise theearly redemption fees (£75.2m) and accelerated amortisation of debt issuancefees (£2.9m). Restructuring costs included in the profit and loss account of £14.7m comprise£12.3m relating to restructuring and rationalisation and £2.4m referred toabove, relating to the cost of flotation. The £48m credit in the prior yearrelates to the combined gain on the pension curtailment and property disposalsless restructuring costs. The finance costs for the first half of the year was £35.8m, a £22.9m reductionon last year, due to the repayment of the unsecured loan stock through theflotation proceeds, and subsequent new lower cost financing structure part ofthe way through the period. The forecast effective tax rate for the year ending 29 April 2006, on profitbefore tax (before restructuring) is 31 per cent. This rate has been applied tothe first half profit. The resulting tax charge has then been adjusted for thetax credit at 30 per cent. on deductible restructuring and debt redemptioncosts. This results in an overall tax credit of £16.6m. Basic adjusted earnings per share rose to 8.9p from 3.5p for the same periodlast year, before restructuring costs and debt redemption costs. Cash flow and borrowings Net operating cash flow in the period was £37.1m, reflecting the seasonal buildup of working capital in the run up to the busier winter and Christmas months,an increase in capital expenditure from the purchase of the Wellingborough milland a reduction in the level of accruals and provisions for restructuring costs.Capital expenditure for the full year is expected to be £60m. Over the first half year, the Group's net borrowings reduced by £215.3m from£928.6m to £713.3m, largely unchanged from the pro forma level at the time offlotation, when £475m of new equity and £750m of new term bank facilities wereraised. These funds were utilised to repay outstanding senior and secured debtof £556m, unsecured loan notes of £472m, pay a contribution of £110m into theGroup pension scheme and pay debt redemption and flotation fees of £117m. Pensions At the time of flotation, RHM's pension fund trustees were about to commence atriennial funding valuation of the Group's UK defined benefit pension scheme.The primary purpose of the valuation was to provide a basis for computingcompany contributions for current service and deficit repayment. Followingflotation, RHM made the £110m contribution into the pension scheme referred toabove. A further contribution of £15m will be made before the end of thisfinancial year, as previously agreed. The triennial review has now been completed. After taking account of changesmade as a result of the review (which increases the gross deficit by £89m as at30 April 2005), using the IFRS basis of accounting, and after the additionalcontributions of £125m referred to above, the UK pension scheme pro formadeficit as at 30 April 2005 was £281m, or £197m net of deferred tax (reported UKgross pension scheme deficit at 30 April 2005 was £317m). After reflecting themarket movements in the period and before the additional £15m contributionpayable in April 2006, the UK pension scheme deficit as at 29 October 2005 is£309m, or £216m net of deferred tax. Including the impact of the overseaspension schemes, the RHM Group total pension deficit as at 29th October 2005 is£314m, or £220m net of deferred tax. As a result of the review, the cash contributions made to the RHM pension fundby the Group will increase to £40m in the next full financial year. This is £8mmore than the level of contributions estimated for the current year and is theminimum level anticipated at the time of flotation. The contribution level hasbeen set to ensure that the current pension fund deficit is repaid over the nextnine years. As previously agreed with the scheme's trustees, increasedcontributions as a result of changes to mortality assumptions will be phased inover the next five years, and will rise by approximately £5-7m per annum. Mostof the increase in contributions will be applied to reducing the Group's pensiondeficit. RHM's annual pension service charge will increase by approximately £1mnext year from £11m to £12m. Balance sheet The Group's new financing structure and the impact of the triennial pension fundreview are reflected in the balance sheet as at 29 October 2005. The other majorchange compared to 30 October 2004 balance sheet reflects the impact of the saleof Golden West in April 2005 and the corresponding reduction in assets andliabilities. Andrew Allner Group Finance Director 13 December 2005 Financial Statements Consolidated Income Statement for the 26 weeks ended 29 October 2005 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) Note £m £m £mContinuing operationsRevenue 3 739.3 736.8 1,527.5Cost of sales (474.3) (483.4) (989.3) Gross profit 265.0 253.4 538.2 Distribution costs (146.4) (137.4) (283.8)Administrative expenses (48.2) (51.3) (98.1)Other operating (expense)/income (0.1) 0.6 1.9Operating profit before restructuring costs 70.3 65.3 158.2Gain on pension curtailment 4 - 47.3 47.3Gain on sale of properties 4 - 21.5 21.7Other restructuring costs 4 (12.3) (20.8) (43.9)Flotation costs 4 (2.4) - (1.1) Operating profit 55.6 113.3 182.2 Finance costs 5 (35.8) (58.7) (113.7)Debt redemption costs 5 (78.1) - (4.8)(Loss)/profit on ordinary activities beforetaxation (58.3) 54.6 63.7 Tax credit on profit on ordinary activities 6 16.6 5.7 11.9Tax credit on pension liability 6 - 107.4 95.8 (Loss)/profit for the period from continuingoperations (41.7) 167.7 171.4 Discontinued operations 7Profit attributable to discontinued operations 4.8 9.7 19.5 (Loss)/profit for the period (36.9) 177.4 190.9 Attributable to:Equity holders (36.9) 177.3 191.0Minority interests - 0.1 (0.1) (36.9) 177.4 190.9 Earnings per share (expressed in pence) BasicContinuing operations (15.6) 96.6 99.0Discontinued operations 1.8 5.5 11.3Total 9 (13.8) 102.1 110.3DilutedContinuing operations (15.5) 95.6 97.9Discontinued operations 1.8 5.5 11.2Total 9 (13.7) 101.1 109.1 Proposed dividends 8 18.3 - - Financial Statements (continued) Consolidated Balance Sheet as at 29 October 2005 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) Note £m £m £mNon-current assetsProperty, plant & equipment 433.2 476.8 425.3Goodwill 151.8 166.7 150.2Other intangible assets 326.9 328.0 328.3Investment in associates 0.5 0.5 0.4Other debtors 1.8 1.1 0.9Deferred tax asset 106.4 80.3 61.6 1,020.6 1,053.4 966.7Current assetsInventories 84.6 103.7 69.4Trade and other receivables 236.0 257.7 205.5Deferred tax asset 23.3 3.0 14.8Cash & cash equivalents 10 33.9 61.2 87.8 377.8 425.6 377.5Non-current assets held for sale 4.6 4.1 5.6 382.4 429.7 383.1Current liabilitiesTrade & other payables 297.1 336.5 283.3Corporation tax 3.3 3.7 2.1Obligations under finance leases 10 1.2 1.4 1.2Borrowings 10 0.2 23.6 20.6Provisions 12.1 14.4 22.1 313.9 379.6 329.3 Net current assets 68.5 50.1 53.8 Total assets less current liabilities 1,089.1 1,103.5 1,020.5 Non-current liabilitiesBorrowings 10 742.5 1,039.7 990.8Accruals, deferred income and other creditors 4.9 29.8 8.9Obligations under finance leases 10 3.3 4.5 3.8Pension obligations 11 314.1 357.9 321.1Provisions 11.9 16.4 12.7 1,076.7 1,448.3 1,337.3 Net assets/(liabilities) 12.4 (344.8) (316.8) Financial Statements (continued) Consolidated Balance Sheet as at 29 October 2005 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) Note £m £m £mEquityCalled-up share capital 0.4 0.2 0.2Share premium account 466.7 17.2 17.2Own shares (1.3) - (0.1)Other reserves 0.2 - -Pension reserves (314.1) (357.9) (321.1)Accumulated losses (139.6) (4.8) (13.1)Capital & reserves attributable to the Company's 12 12.3 (345.3) (316.9)equity holdersMinority interests 0.1 0.5 0.1Total equity 12.4 (344.8) (316.8) Approved by the board of directors on 13 December 2005. Financial Statements (continued) Consolidated Cash Flow Statement for the 26 weeks ended 29 October 2005 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) Note £m £m £mCash flows from operating activitiesCash generated from operations 13 37.1 (7.9) 117.2Interest paid (40.5) (35.4) (66.5)Income tax paid - net (0.2) (4.2) (5.9)Net cash from operating activities (3.6) (47.5) 44.8 Cash flows from investing activitiesPurchases of property, plant and equipment (36.8) (29.5) (60.8)Purchase of intangibles (1.9) (0.2) (1.7)Proceeds from sale of property, plant andequipment 0.9 29.0 37.0Proceeds on disposal of subsidiary 1.1 - 78.7Pension contribution on sale of subsidiary (1.0) - (10.6)Cash disposed of with subsidiary - - (6.7)Interest received 0.3 1.3 2.2Net cash generated from investing activities (37.4) 0.6 38.1 Cash flows from financing activitiesIssue of shares 2,12 475.2 - -Share issue costs (23.3) - -Pension contribution (110.0) - -Purchase of treasury shares (1.2) - -Increase in short term borrowings - 0.8 0.8Capital element of finance leases (0.6) (0.7) (0.8)Interest element on finance lease (0.2) (0.2) (0.4)Loan repayments (1,013.7) (100.6) (203.3)Refinancing costs 2 (80.8) - -Proceeds from new loans 741.7 74.5 74.5Dividends paid to minority interests - - (0.2)Net cash used in financing activities (12.9) (26.2) (129.4) Net decrease in cash and cash equivalents (53.9) (73.1) (46.5)Cash and cash equivalents at the beginning of theyear 87.8 134.3 134.3Cash and cash equivalents at the end of the year 33.9 61.2 87.8 Notes to the Financial Statements (continued) 1. Basis of preparation and general accounting policies (a) These interim financial statements have been prepared in accordancewith the accounting policies the Group expects to adopt in its 2006 AnnualReport. The accounting policies are based on the IASs, IFRSs and IFRICinterpretations that the Group expects to be applicable at that time. The IFRSsand IFRIC interpretations that will be applicable at 29 April 2006, includingthose that will be applicable on an optional basis, are not known with certaintyat the time of preparing these interim financial statements. The accountingpolicies that have been followed within the interim report are the same as thosepublished on 22 July 2005 by the Group within the Price Range Prospectusdocument which is available on the Group's website www.rhm.com, except for thetreatment of financial instruments. Financial instruments The Group has adopted IAS 32, 'Financial Instruments: recognition andmeasurement' and IAS 39, 'Financial instruments; presentation and disclosure'from 1 May 2005. In preparing the comparative figures within this report theGroup has utilised the exemption under IFRS 1, 'First time adoption of IFRS'which permits application of the hedge accounting rules of UK GAAP forcomparative figures. As a result the change in accounting policy has no impacton the results of the 26 weeks ending 30 October 2004. The impact on theopening balance sheet at 30 April 2005 is set out in note 14. The Group has utlised hedge accounting from 1 May 2005 only if the hedge meetsthe requirements under IAS 39. Fair value movements of financial instrumentsthat do not meet the criteria of IAS 39 are recognised immediately in the incomestatement. (b) These interim results are unaudited, but have been reviewed byGroup auditors and have been approved by the Board of Directors on 13 December2005. The consolidated interim financial statements do not constitute statutoryaccounts as defined by Section 240 of the Companies Act 1985. For the financial year ending 30 April 2005 RHM prepared its consolidatedfinancial statements under UK Generally Accepted Accounting Principals (UKGAAP). With effect from 1 May 2005, RHM is required to prepare its consolidatedfinancial statements in accordance with International Financial ReportingStandards (IFRS). The comparative figures within this report for the full year ended 30 April 2005are restated for IFRS. Full details of the restatement and reconciliations ofthe UK GAAP financial information for the year ended 30 April 2005 werepublished on 22 July 2005 by the Group within the Price Range Prospectusdocument which is available on the Group's website www.rhm.com. The results for the twelve months ended 30 April 2005 prepared under UK GAAPreceived an unqualified audit report from the auditors. A copy of theseaccounts has been delivered to the Registrar of Companies. 1. Basis of preparation and general accounting policies (continued) (c) Foreign currencies Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement. Principal rate of exchange 26 weeks to 29 26 weeks to 30 52 weeks to 30 EUR/£ October 2005 October 2004 April 2005Period end 1.46660 1.43670 1.47940Average 1.46910 1.48470 1.46376 2. Refinancing On 30 June 2005 each of the ordinary shares of £0.01 were subdivided into 10ordinary shares of £0.001 each. On 22 July 2005 the group issued 172,727,273 new ordinary shares listed on theLondon Stock Exchange at a price of £2.75, giving total proceeds of £475.0m. Inaddition 1,875,000 ordinary shares were issued for 10p, giving total proceeds of£187,500, in order to satisfy the exercise of an option by a former director. On 1 July 2005, the Company and RHM Group Holding Limited entered into amulticurrency term and revolving facilities agreement arranged and underwrittenby Credit Suisse First Boston and The Royal Bank of Scotland plc whereby thelenders have agreed to provide up to £900m in four facilities: - Facility A, a term loan of £250m repayable on 31 July 2008 with an interest charge 70 basis points above LIBOR; - Facility B1, a term loan of £250m repayable by instalments by 30 July 2010 with an interest charge 90 basis points above LIBOR; - Facility B2, a term loan of £250m repayable on 30 July 2010 with an interest charge 90 basis points above LIBOR; - Facility C, a multicurrency revolving credit facility of up to £150m. Facilities A, B1 and B2 were fully drawn down between 22 July 2005 and 30 August2005. The group used the net proceeds from the issue of new shares and funds availableunder the new facilities to: - Purchase the unsecured subordinated loan notes (£457.4m) and repay associated accrued interest (£14.3m) totalling £471.7m on 22 July 2005. - Repay outstanding debt under the senior credit agreement of £98.0m on 22 July 2005. - Redeem all outstanding secured loan notes amounting to £458.3m on 30 August 2005. - Settle prepayment cost of £80.8m on early redemption of certain classes of secured loan notes (£75.1m) and closing out of an interest rate swap (£5.7m) in relation thereto on 30 August 2005. - Make a payment of £110.0m to the trustee of the RHM pension scheme on 19 August 2005. A further payment of £15.0m is due to the trustees by 30 April 2006. 2. Refinancing (continued) The debt redemption costs give rise to a £75.2m charge to the income statement,as the £80.8m cash costs are offset by the release of a £5.6m liability alreadyrecognised as the fair value of the interest rate swap. This liability arosefrom the recognition of the fair value of the interest rate swap at 30 April2005 as part of the transition adjustment resulting from the adoption of IAS 32and IAS 39 on financial instruments. The early redemption of senior credit debt and secured loan notes gave rise toaccelerated amortisation of associated capitalised debt issuance costs of £2.9min the period (year ended 30 April 2005: £4.8m) The costs of the flotation were £37.3m, of which costs incurred in issuing theshares amounting to £25.5m have been charged against the share premium account.Costs of £8.3m incurred in raising the debt have been capitalised and setagainst the gross value of the debt. A further £3.5m of costs incurred as aresult of the listing exercise, but not eligible to be set against the sharepremium, have been reflected in restructuring costs, of which £1.1m wasrecognised in the year ended 30 April 2005, and £2.4m in the 6 months ended 29October 2005. 3. Segmental analysis For management purposes the group is organised into four operating divisions -Bread Bakeries, Culinary Brands Division, Cakes and Customer Partnerships. Thesefour segments are the basis on which the group reports its primary segmentinformation. 26 weeks to 29 October 2005 (Unaudited) Bread Culinary Customer Bakeries Brands Cakes Partnerships Corporate Continuing Discontinued GroupRevenue £m £m £m £m £m £m £m £mTotal sales 398.0 126.4 111.0 126.9 - 762.3 - 762.3Inter-segment sales (12.2) (3.6) (3.0) (4.2) - (23.0) - (23.0)Sales to third 385.8 122.8 108.0 122.7 - 739.3 - 739.3parties ResultOperating profit / 34.7 31.1 1.0 10.5 (7.0) 70.3 - 70.3(loss) beforerestructuring costsGain on sale of - - - - - - 4.8 4.8subsidiariesOther restructuring (3.1) (2.6) (4.8) (0.1) (4.1) (14.7) - (14.7)costsOperating profit/ 31.6 28.5 (3.8) 10.4 (11.1) 55.6 4.8 60.4(loss)Finance costs (35.8) - (35.8)Refinancing costs (78.1) - (78.1)(Loss)/profit before (58.3) 4.8 (53.5)income taxationTax credit 16.6 - 16.6(Loss)/profit for (41.7) 4.8 (36.9)the year 3. Segmental analysis (continued) 26 weeks to 30 October 2004 (Unaudited) Bread Culinary Customer Bakeries Brands Cakes Partnerships Corporate Continuing Discontinued GroupRevenue £m £m £m £m £m £m £m £mTotal sales 390.8 127.7 127.3 120.1 0.1 766.0 62.8 828.8Inter-segment sales (16.5) (4.5) (3.0) (5.1) (0.1) (29.2) (0.7) (29.9)Sales to third 374.3 123.2 124.3 115.0 - 736.8 62.1 798.9parties ResultOperating profit/ 28.5 26.7 7.9 8.4 (6.2) 65.3 7.6 72.9(loss) beforerestructuring costsGain on pension 25.3 5.7 12.1 5.2 (1.0) 47.3 4.1 51.4curtailmentGain on sale of 5.8 - - - 15.7 21.5 - 21.5propertiesOther restructuring (3.3) (0.8) (14.3) (0.2) (2.2) (20.8) - (20.8)costsOperating profit 56.3 31.6 5.7 13.4 6.3 113.3 11.7 125.0Finance costs (58.7) - (58.7)Profit before 54.6 11.7 66.3income taxationTax credit / 113.1 (2.0) 111.1(charge)Profit for the year 167.7 9.7 177.4 4. Restructuring costs 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £m Gain on pension curtailment - 47.3 47.3Gain on sale of properties - 21.5 21.7Other restructuring costs: Flotation costs (see note 2) (2.4) - (1.1) Redundancy costs (2.5) (16.8) (27.3) Operational restructuring costs (6.1) (3.7) (10.6) Impairment of tangible fixed assets (3.7) (0.3) (6.0) (14.7) 48.0 24.0 Redundancy and operational restructuring costs were incurred as a result of thecontinued implementation of a range of cost reduction initiatives. During the financial year ended 30 April 2005 a gain on pension curtailmentarose due to a change in the level of benefits available through the pensionscheme of £49.9m which was offset by the £2.6m cost of performing the review. Afurther £4.1m gain on curtailment was included within the result fordiscontinued operations. 5. Financing costs 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £mInterest expense:- bank borrowings (11.0) (5.6) (12.9)- secured bond interest (14.6) (27.8) (51.2)- loan note interest (10.4) (20.7) (42.8)- finance lease interest expense (0.2) (0.2) (0.4)- amortisation of debt issuance costs (0.4) (2.1) (4.7)- other financing charge (0.1) (3.5) (3.7)- other - (0.1) (0.1)Interest receivable:- bank interest 0.4 1.3 2.1- fair value gains on financial instruments 0.5 - - (35.8) (58.7) (113.7) Debt redemption costs (see note 2) (75.2) - -Accelerated amortisation of debt issuance costs (2.9) - (4.8) (78.1) - (4.8) (113.9) (58.7) (118.5) Debt redemption costs relate to early redemption of certain classes of securedloan notes and associated closing out of an interest rate swap (see note 2). Accelerated amortisation of debt issuance costs is a one-off charge of £2.9m (52weeks to 30 April 2005: £4.8m) due to the capital restructuring undertaken inthe period (see note 2). 6. Taxation 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £m UK corporation tax - 0.6 1.2Overseas tax 1.4 0.8 1.7Total current tax 1.4 1.4 2.9 Deferred tax (18.0) (112.5) (107.3) Total tax credit (16.6) (111.1) (104.4) Continuing operations (16.6) (5.7) (11.9)Discontinued operations - 2.0 3.3Deferred tax asset on pension scheme deficit - (107.4) (95.8) (16.6) (111.1) (104.4) The tax for the 26 weeks to 29 October 2005 is based on the anticipatedeffective rate for the year of 31% applied to profit on ordinary activitiesbefore restructuring costs. The resulting tax charge is then adjusted for theexpected tax credits on deductible restructuring costs. 7. Discontinued operations 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £m Revenue - 62.1 114.8Expenses - (50.4) (96.2)Operating profit - 11.7 18.6Profit on disposal of discontinued operations 4.8 - 4.2Profit before tax 4.8 11.7 22.8Attributable tax charge - (2.0) (3.3)Net profit attributable to discontinued 4.8 9.7 19.5operations During the year ended 30 April 2005, the Group disposed of TGP 182 Ltd and itssubsidiaries (Golden West Foods Ltd, Golden West Foods NV, STI (UK) Limited,Glassflat Ltd and Heligold SL), known as the Golden West Group, together withRHM Property Company One Ltd, which owned certain assets used by the Golden WestGroup companies. Heligold SL was sold on 10 March 2005 (loss on disposal £0.6m)and the remainder of the companies on 23 April 2005 (profit on disposal £4.8m).Total proceeds amounted to £78.7m, net assets sold including goodwill were£74.5m, resulting in a profit on disposal of £4.2m. The proceeds were based onan estimate of the working capital at completion, and the profit includedprovision for certain unresolved liabilities. During the six months ended 29 October 2005, completion accounts for the GoldenWest Group were finalised, giving rise to an additional £1.1m proceeds, and the unresolved liabilities were settled with a net release of provisions of £3.7m, giving total additional disposal profits of £4.8m 8. Dividends The proposed £18.3m interim dividend for the 52 weeks ended 29 April 2006 of5.3p per share was approved by the board of directors on 13 December 2005 and assuch has not been included as a liability as at 29 October 2005. Theex-dividend date for the interim dividend is 21 December 2005, with payment on24 February 2006. 9. Earnings per share The reconciliation between Basic and Adjusted EPS, and between the earningsfigures used in calculating them, is as follows: 26 weeks to 29 26 weeks to 30 52 weeks to October 2005 October 2004 30 April 2005 (Unaudited) (Unaudited) £m £m £m (Loss)/profit for the year (36.9) 177.3 191.0Profit on sale of subsidiaries (4.8) - (4.2)Tax credit on sale of subsidiaries - - (5.4)Pre tax profits from discontinued operations - (11.7) (18.6)Tax charge relating to discontinued operations - 2.0 8.7Minority interest on discontinued operations - 0.1 (0.1)(Loss)/profit for the year from continuing operations (41.7) 167.7 171.4Gain on pension curtailment - (47.3) (47.3)Other restructuring costs 14.7 20.8 45.0Gain on sale of properties - (21.5) (21.7)Debt redemption costs 75.2 - -Accelerated amortisation of debt issuance costs 2.9 - 4.8Tax credit on adjusting items (27.3) (6.2) (13.6)Tax credit on pension liability - (107.4) (95.8)Profit for the year from continuing operations - 23.8 6.1 42.8adjusted Basic EPS Profit on sale of subsidiaries 4.8 - 4.2Tax credit on sale of subsidiaries - - 5.4Pre tax profits from discontinued operations - 11.7 18.6Tax charge relating to discontinued operations - (2.0) (8.7)Minority interest on discontinued operations - (0.1) 0.1Profit for the year from discontinued operations 4.8 9.6 19.6 million million million Average shares used in Basic EPS calculation 267.5 173.6 173.2Dilutive share schemes and options 1.8 1.8 1.8Shares used in Diluted EPS calculation 269.3 175.4 175.0 pence pence penceBasic EPS Continuing (15.6) 96.6 99.0 Discontinued 1.8 5.5 11.3 (13.8) 102.1 110.3Basic Adjusted EPS 8.9 3.5 24.7 Diluted EPS Continuing (15.5) 95.6 97.9 Discontinued 1.8 5.5 11.2 (13.7) 101.1 109.1Diluted Adjusted EPS 8.8 3.5 24.4 10. Net borrowings 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £m Cash at bank 33.9 61.2 87.8Unsecured subordinated loan notes - (414.8) (457.4)Senior credit agreement - (154.5) (97.1)Secured loan notes - (482.4) (456.2)Other loans (0.6) (11.6) (0.7)Bank loans (742.1) - -Finance leases (4.5) (5.9) (5.0)Net debt (713.3) (1,008.0) (928.6) Following the listing of the Company on the London Stock Exchange the group'sfinances were restructured resulting in the purchase of all outstandingUnsecured Subordinated Loan Notes and the redemption of all outstanding securedloan notes. Other loans were restructured and a new credit facility was put inplace (see note 2). 11. Pension obligations 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £mChanges in the schemes' net deficit Deficit in schemes at the beginning of the period (321.1) (538.4) (538.4) Movement in the period:Current service cost - continuing operations (7.4) (10.7) (19.3)Current service cost - discontinued operations - (0.9) (1.7)Curtailment due to benefit change - 54.0 54.0Curtailment due to disposal of subsidiaries - - (3.5)Increase in liabilities due to redundancy during the (0.3) - (2.2)yearOther financing income/(charge) 0.1 (3.2) (3.1)Employer contributions 16.4 24.4 48.0Special contribution following issue of shares 110.0 - -Contribution in respect of PPF levy 0.6 - -Contribution in respect of disposal of subsidiaries - - 11.6Contribution in respect of enhanced benefits on - - 1.0redundancyIncrease in liabilities due to revised mortality (96.0) - -assumptionsOther actuarial (loss)/gain (16.4) 116.9 132.5 Deficit in schemes at the end of the period (314.1) (357.9) (321.1) AssumptionsThe major assumptions used by the actuaries were:Long term rate of increase in pensionable salaries 3.3% 3.3% 3.2%Rate of increase in benefits in payment 3.3% 3.3% 3.25%Discount rate 5.1% 5.5% 5.4%Inflation assumption 2.8% 2.8% 2.7%Expected return on assets 6.5% 6.7% 6.5% 11. Pension obligations (continued) On 18 August 2005 a special contribution of £110m was made to the UK schemefollowing the issue of shares and listing of the company on the London StockExchange, in accordance with an agreement with the scheme trustees. Under theterms of this agreement a further payment of £15m is due to be paid by 30 April2006. An actuarial review of the UK scheme was conducted by the actuary to the Trusteeas at 5 April 2005 to determine funding requirements for current service andrepayment of past service deficits. Using similar assumptions for mortality tothose used in this review gives rise to an increase in scheme liabilities of£96.0m. This increase, together with an associated increase in deferred taxassets of £28.8m, has been reflected as an actuarial loss within movements onreserves. 12. Reconciliation of movements in shareholders' equity 26 weeks to 29 October 2005 Share Share Own shares Share based Pension Accumulated Total Capital premium incentive reserve losses account plan £m £m £m £m £m £m £m At 30 April 2005 0.2 17.2 (0.1) - (321.1) (13.1) (316.9)IAS 32/39 restatement - - - - - (4.1) (4.1)(see note 15) 0.2 17.2 (0.1) - (321.1) (17.2) (321.0) Share issue (see note 2)* 0.2 475.0 - - - - 475.2 Share issue costs (see - (25.5) - - - - (25.5)note 2)Profit/(loss) for the - - - - 119.4 (156.3) (36.9)periodExchange differences - - - - - 0.2 0.2Pension mortality - - - - (96.0) 28.8 (67.2)Other actuarial loss - - - - (16.4) 4.9 (11.5)Purchase of own shares - - (1.2) - - - (1.2)Share based incentive - - - 0.2 - - 0.2planAt 29 October 2005 0.4 466.7 (1.3) 0.2 (314.1) (139.6) 12.3 * On 22 July 2005 the group issued 172,727,273 new ordinary shares listed on theLondon Stock Exchange at a price of £2.75, giving total proceeds of £475.0m. Inaddition 1,875,000 ordinary shares were issued for 10p, giving total proceeds of£187,500, in order to satisfy the exercise of an option by a former director. Total shares of 348,227,273 are in issue as at 29 October 2005. 12. Reconciliation of movements in shareholders' equity (continued) 26 weeks to 30 October 2004 Share Share Own shares Pension Accumulated Total Capital premium reserve losses account £m £m £m £m £m £m At 1 May 2004 0.2 17.2 - (538.4) (119.4) (640.4)Profit for the period - - - 63.6 113.7 177.3Exchange differences - - - - 0.9 0.9Actuarial gain - - - 116.9 - 116.9 At 30 October 2004 0.2 17.2 - (357.9) (4.8) (345.3) 13. Reconciliation of cash flow from operating activities 26 weeks to 29 26 weeks to 30 52 weeks to 30 October 2005 October 2004 April 2005 (Unaudited) (Unaudited) £m £m £m (Loss)/profit for the year (36.9) 177.4 190.9 Adjustments for:Tax credit (16.6) (111.1) (104.4)Depreciation and impairment of property, plant and 29.1 29.9 61.2equipmentAmortisation of intangibles 0.7 0.8 2.4Loss/(profit) on disposal of property, plant and 0.5 (21.6) (21.0)equipmentProfit on disposal of subsidiaries (4.8) - (4.2)Net pension charge less contributions (8.4) (66.8) (80.8)Share based incentive plan 0.2 - -Finance costs 35.8 58.7 113.7Debt redemption costs 78.1 - 4.8Operating cash flow before working capital movements 77.7 67.3 162.6 (Increase)/decrease in inventories (15.2) (13.0) 8.5Increase in trade and other receivables (30.6) (60.9) (24.4)Increase/(decrease) in trade and other payables 16.1 (9.3) (41.9)(Decrease)/increase in provisions for liabilities and (10.9) 8.0 12.4charges Cash generated from operations 37.1 (7.9) 117.2 14. IAS 39 transition balance sheet The Group adopted IAS 32 "Financial Instruments: presentation and disclosure"and IAS 39 "Financial Instruments: recognition and measurement" from 1 May2005. In the preparation of the comparative figures within this report underIFRS, the Group applied the hedge accounting rules of UK GAAP, taking advantageof the exemption under IFRS 1 "First time adoption of IFRS". Under thisexemption interest rate swaps, commodity and foreign exchange contracts thatwere previously accounted for as fair value hedges under UK GAAP were notmeasured at fair value within the financial statements. On adoption of IAS 39the difference between the financial instruments previously reported carryingvalue and their fair value has been reflected within opening retained earnings. IAS 39 requires the Group to recognise transitional adjustments in accountingfor its financial instruments. This affects the treatment of the Group'scommodity contracts, foreign exchange contracts and interest rate swaps, whichwere previously treated as cash flow hedges of forecasted transactions and werenot recognised prior to their date of settlement. These instruments areconsidered to be non-qualifying hedging instruments at the date of transition,and have been recognised at fair value. The effect is to increase the Group'sliabilities by £5.8m, with an associated deferred tax asset of £1.7m, giving anet increase in net liabilities at 1 May 2005 of £4.1m. 14. IAS 39 transition balance sheet (continued) Restatement of Consolidated Balance Sheet to 52 weeks to 30 IAS 39 Restatedinclude IAS 32 and IAS 39 April 2005 transition including IAS adjustment 39 £m £m £m Non-current assets 966.7 966.7 Current assetsInventories 69.4 69.4Trade and other receivables 179.9 179.9Other taxes receivable 12.0 12.0Deferred tax asset 14.8 1.7 16.5Other debtors, prepayments & accrued income 13.6 13.6Cash & cash equivalents 87.8 87.8 377.5 1.7 379.2Non-current assets held for sale 5.6 5.6 383.1 1.7 384.8Current liabilitiesTrade & other payables 283.3 5.8 289.1Corporation tax 2.1 2.1Obligations under finance leases 1.2 1.2Borrowings 20.6 20.6Short-term provisions 22.1 22.1 329.3 5.8 335.1 Net current assets 53.8 (4.1) 49.7 Total assets less current liabilities 1,020.5 (4.1) 1,016.4 Non-current liabilities 1,337.3 1,337.3 Net liabilities (316.8) (4.1) (320.9) EquityCalled-up share capital 0.2 0.2Share premium account 17.2 17.2Own shares (0.1) (0.1)Pension reserves (321.1) (321.1)Accumulated losses (13.1) (4.1) (17.2)Capital & reserves attributable to the Company's (316.9) (4.1) (321.0)equity holdersMinority interests 0.1 0.1Total equity (316.8) (4.1) (320.9) PricewaterhouseCoopers Independent review report to RHM plc Introduction We have been instructed by the company to review the financial information forthe 26 weeks ended 29 October 2005 which comprises the Group income statement,the Group balance sheet, the Group cash flow statement and related notes. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As disclosed in the accounting policies note, the next annual financialstatements of the group will be prepared in accordance with accounting standardsadopted for use in the European Union. This interim report has been prepared inaccordance with the basis of presentation and accounting policies stated in theinterim report. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in the basis ofpreparation, there is, however, a possibility that the directors may determinethat some changes are necessary when preparing the full annual financialstatements for the first time in accordance with accounting standards adoptedfor use in the European Union. The IFRS standards and IFRIC interpretations thatwill be applicable and adopted for use in the European Union at 29 April 2006are not known with certainty at the time of preparing this interim financialinformation. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 26 weeks ended29 October 2005. PricewaterhouseCoopers LLPChartered AccountantsLondon13 December 2005 Shareholders' Information Financial Calendar 200521 December Ex-div date for the interim dividend23 December Record date for the interim dividend 200624 February Payment date for the interim dividend29 April Year end29 June Announcement of the full year results for the yearto 29 April 200629 June Final dividend proposed5 July Ex-div date for final dividend7 July Record date for final dividend26 September 2006 Annual General Meeting29 September Payment of final dividend Corporate Website - Investor Relations RHM's corporate website provides access to a wide range of informationincluding: current and historic share price information, recent announcements,financial reports and investor presentations. This can be accessed via theInvestor Relations section of the corporate website: www.rhm.com Shareholder Services and Helpline The Company has appointed Lloyds TSB Registrars as its Registrar to manage andmaintain the shareholder register and to pay dividends. A range of shareholderinformation is available on line at www.shareview.co.uk, including practicalhelp on transferring shares or updating personal details. Shareholders can alsocheck their shareholding and register to receive information and documentselectronically. Alternatively if you have any queries concerning yourshareholding you can contact the Registrar by telephone or by post at thefollowing address: Lloyds TSB RegistrarThe CausewayWorthingWest SussexBN99 6DA Shareholder helpline: 0870 600 3970 (available business days between 8:30am and 5:30pm) Overseas callers: +44 121 415 7047 Website: www.shareview.co.uk Registered OfficeRHM plcChapel HouseListon RoadMarlowBuckinghamshire SL7 1TJ Telephone: +44 (0)1628 478484Facsimile: +44 (0)1628 478404Website: www.rhm.com -------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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