UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

|o                                                             | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|OR                                                           
|ý                                                             | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934          
|For the fiscal year ended January 1, 2005.                   
|OR                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934      
|For the transition period
from                             to

Commission file number: 333-14044

UNITED BISCUITS FINANCE PLC

(Additional Registrant)Regentrealm Limited(Exact names of Registrants as specified in their charters)

ENGLAND AND WALES(Jurisdiction of incorporation or organization)

HAYES PARK, HAYES END ROAD, HAYES,
MIDDLESEX UB4 8EE, UNITED KINGDOM(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:

|Title of each class |  | Name of each exchange on which registered
|------------------- |  | -----------------------------------------
|None                |  | None                                     

Securities
registered or to be registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:

103/4% Senior Subordinated Notes due 2011
103/4% Senior Subordinated Notes due 2011
Guarantee of 103/4% Senior Subordinated Notes due 2011
Guarantee of 105/8% Senior Subordinated Notes due 2011(Title of Class)

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary shares, nominal value £1.00 per share: 2,010,002 shares

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

ý Yes    o No

Indicate by check mark which financial statement item the registrants have elected to follow.

o Item
17    ý Item 18



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TABLE OF CONTENTS

|PART I               |  |                                                                             
|-------------------- |  | ----------------------------------------------------------------------------
|ITEM 1.              |  | Identity of Directors, Senior Management and Advisors                       
|ITEM 2.              |  | Offer Statistics and Expected Timetable                                     
|ITEM 3.              |  | Key Information                                                             
|ITEM 4.              |  | Information on the Company                                                  
|ITEM 5.              |  | Operating and Financial Review and Prospects                                
|ITEM 6.              |  | Directors, Senior Management and Employees                                  
|ITEM 7.              |  | Major Shareholders and Related Party Transactions                           
|ITEM 8.              |  | Financial Information                                                       
|ITEM 9.              |  | The Offer and Listing                                                       
|ITEM 10.             |  | Additional Information                                                      
|ITEM 11.             |  | Quantitative and Qualitative Disclosures About Market Risk                  
|ITEM 12.             |  | Description of Securities Other than Equity Securities                      
|PART II              |  |                                                                             
|ITEM 13.             |  | Defaults, Dividend Arrearages and Delinquencies                             
|ITEM 14.             |  | Material Modifications to the Rights of Security Holders and Use of Proceeds
|ITEM 15.             |  | Controls and Procedures                                                     
|ITEM 16.             |  | [RESERVED]                                                                  
|ITEM 16A.            |  | Audit Committee Financial Expert                                            
|ITEM 16B.            |  | Code of Ethics                                                              
|ITEM 16C.            |  | Principal Accountant Fees and Services                                      
|ITEM 16D.            |  | Exemptions from the Listing Standards for Audit Committees                  
|ITEM 16E.            |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers      
|PART III             |  |                                                                             
|ITEM 17.             |  | Financial Statements                                                        
|ITEM 18.             |  | Financial Statements                                                        
|ITEM 19.             |  | Exhibits                                                                    
|Signatures           |  |                                                                             
|FINANCIAL STATEMENTS |  |                                                                             

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BASIS OF PRESENTATION OF INFORMATION

United Biscuits Finance plc and Regentrealm Limited

References in this annual report to "UB Finance" are to United Biscuits Finance plc and references to "Regentrealm" are to Regentrealm Limited, a direct wholly
owned subsidiary of UB Finance. Unless the context otherwise requires, "we," "us," "our" and the "Company" refer collectively to UB Finance and its subsidiaries.

In
April 2000, funds advised or managed by Cinven Limited ("Cinven"), Paribas Affaires Industrielles (now PAI management) ("PAI"), DB Capital Partners ("DB Capital"), whose
interests in the Company were acquired by MidOcean Partners, LLP ("MidOcean") in February 2003, and Nabisco, now controlled by Kraft Foods Inc., (collectively, the "Equity Sponsors")
acquired United Biscuits (Holdings) plc through a public tender offer and subsequently renamed it United Biscuits (Holdings) Limited ("United Biscuits"). In connection with this acquisition, a group
of entities, including UB Finance and Regentrealm, were formed as financing vehicles. UB Finance, through its subsidiaries, holds 100% of the equity of United Biscuits, which acts as the holding
company of our operating subsidiaries.

Accounting Periods and Financial Information

We generally present our financial information based on 13 periods of four calendar weeks. As a result, our fiscal year consists of 52 weeks, our first fiscal
quarter consists of four periods (16 weeks) and our remaining three fiscal quarters each consists of three periods (12 weeks). Every five or six years, we lengthen the final period of our fiscal year
to five weeks, in which event our fourth quarter consists of 13 weeks and our fiscal year consists of 53 weeks. Our current fiscal year consists of 52 weeks and our next fiscal year, covering 2005,
will consist of 52 weeks and will end on December 31, 2005. See Item 5.A. "Operating and Financial Review and ProspectsOperating ResultsSignificant Factors Affecting
Our Results of OperationsSeasonality and Accounting Periods."

Unless
the context otherwise indicates, financial information and data for our business for:



The
financial statements of UB Finance and Regentrealm included in this annual report have been prepared in accordance with the accounting principles generally accepted in the United
Kingdom ("U.K. GAAP"), which differ in some respects from the accounting principles generally accepted in the United States ("U.S. GAAP"). The principal differences between U.K. GAAP and U.S. GAAP
applicable to UB Finance and Regentrealm are summarized in Note 25 of Notes to the Financial Statements included elsewhere in this annual report.

Our
financial statements and other financial information included in this annual report are reported in pounds sterling and all references to "pound(s) sterling" or "£" are
to the lawful currency of the United Kingdom.

Market Information

The market, industry and product segment data contained in this annual report have been taken from industry and other sources available to us and in some cases
adjusted based on our management's industry and other knowledge. All market share information in this annual report is based on the retail value of the referenced entity's share of the total retail
sales of the referenced market for the calendar year 2004. We have not independently verified any third-party market information. Similarly, while we believe our internal estimates are reliable, they
have not been verified by any independent sources and we cannot assure you as to their accuracy.

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Cautionary Statement Regarding Forward-Looking Information

This annual report includes statements that are, or may be deemed to be, "forward-looking statements" within the meaning of U.S. securities laws. The terms
"anticipates," "expects," "may," "will," "should" and other similar expressions identify forward-looking statements. These statements appear in a number of places throughout this annual report and
include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies
and the industries in which we operate.

By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industries in which we operate
may differ materially from those made in or suggested by the forward-looking statements contained in this annual report. Important factors that could cause those differences include, but are not
limited to:



We
urge you to read Item 3.D. "Key InformationRisk Factors," Item 4. "Information on the Company" and Item 5. "Operating and Financial Review and Prospects" for a more
complete discussion of the factors that could affect our future performance and the industries in which we operate.

---



PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following tables set forth selected historical consolidated financial information for:



The
data for the 15-week period ended April 14, 2000 for United Biscuits have been extracted or derived from audited consolidated financial statements of United
Biscuits that are not included in this annual report. The data as of December 30, 2000, for the period from March 10, 2000 (inception) to December 30, 2000, as of and for the
fiscal year ended December 29, 2001 and as of December 28, 2002 for UB Finance, and as of and for the fiscal years ended December 30, 2000 and December 29, 2001 and as of
December 28, 2002 for Regentrealm have been extracted or derived from audited consolidated financial statements of UB Finance and Regentrealm, respectively, that are not included in this annual
report. The data as of January 3, 2004 and January 1, 2005 and for the fiscal years ended December 28, 2002, January 3, 2004 and, January 1, 2005 have been extracted
or derived from the audited consolidated financial statements of UB Finance and Regentrealm, respectively, included elsewhere in this annual report. All of these consolidated financial statements have
been audited by Ernst & Young LLP, our independent registered public accounting firm, or its predecessor firm, Ernst & Young.

We
have revised the definition of turnover to reflect emerging best practice in the United Kingdom provided by Application Note G to Financial Reporting Standard 5 "Reporting the
Substance of Transactions" ("FRS 5"). As a result of this change, certain payments to customers are now reported as a direct deduction from revenue rather than within distribution, selling and
marketing costs.

You
should read the following selected financial information in conjunction with the information contained in Item 5. "Operating and Financial Review and Prospects" and the consolidated
financial statements of UB Finance and Regentrealm and the related notes thereto included elsewhere in this annual report.

---



Selected Financial Data

Amounts in accordance with U.K. GAAP:

|                                                                                  |                         | United Biscuits
(Holdings)
Limited |       | United Biscuits Finance plc |      
|--------------------------------------------------------------------------------- | ----------------------- | ---------------------------------- | ----- | --------------------------- | -----
|
|
|Profit and Loss Account Data:                                                     |                         |                                    |       |                             |      
|Turnover                                                                          |                         |                                    |       |                             |      
|                                                                                  | Continuing operations   |                                    | 272.9 |                             | 858.0
|                                                                                  | Acquisitions            |                                    |      |                             |     
|                                                                                  |                         |                                    |       |                             |      
|                                                                                  |                         | 272.9                              |       | 858.0                       |      
|                                                                                  | Discontinued operations |                                    | 55.6  |                             | 22.7 
|                                                                                  |                         |                                    |       |                             |      
|                                                                                  |                         | 328.5                              |       | 880.7                       |      
|                                                                                  |                         |                                    |       |                             |      
|Group operating profit/(loss) before goodwill amortization and exceptional items: |                         |                                    |       |                             |      
|                                                                                  | Continuing operations   |                                    | 7.3   |                             | 84.6 
|                                                                                  | Acquisitions            |                                    |      |                             |     
|                                                                                  |                         |                                    |       |                             |      
|                                                                                  |                         | 7.3                                |       | 84.6                        |      
|                                                                                  | Discontinued operations |                                    | 1.1   |                             | 0.9  
|                                                                                  |                         |                                    |       |                             |      
|                                                                                  |                         | 8.4                                |       | 85.5                        |      
|Goodwill amortization                                                             |                         | (0.8                               | )     | (21.9                       | )    
|Operating exceptional items                                                       |                         | (10.0                              | )     | (16.8                       | )    
|                                                                                  |                         |                                    |       |                             |      
|Group operating (loss)/profit                                                     |                         | (2.4                               | )     | 46.8                        |      
|Other exceptional income                                                          |                         |                                   |       |                            |      
|Share of operating profit in joint ventures                                       |                         | 1.4                                |       | 2.2                         |      
|                                                                                  |                         |                                    |       |                             |      
|Operating (loss)/profit                                                           |                         | (1.0                               | )     | 49.0                        |      
|Non-operating exceptional items                                                   |                         | (9.2                               | )     | (0.6                        | )    
|                                                                                  |                         |                                    |       |                             |      
|(Loss)/profit before interest                                                     |                         | (10.2                              | )     | 48.4                        |      
|Interest                                                                          |                         | (3.8                               | )     | (103.3                      | )    
|Other finance income/(expense)                                                    |                         |                                   |       |                            |      
|                                                                                  |                         |                                    |       |                             |      
|Loss before taxation                                                              |                         | (14.0                              | )     | (54.9                       | )    
|Taxation                                                                          |                         | (8.3                               | )     | (40.1                       | )    
|                                                                                  |                         |                                    |       |                             |      
|Loss for the period                                                               |                         | (22.3                              | )     | (95.0                       | )    
|                                                                                  |                         |                                    |       |                             |      
|Other Financial Data:                                                             |                         |                                    |       |                             |      
|Business profit(1)                                                                |                         | 21.7                               |       | 116.9                       |      
|Capital expenditure:                                                              |                         |                                    |       |                             |      
|                                                                                  | Continuing operations   |                                    | 11.9  |                             | 42.9 
|                                                                                  | Total operations        |                                    | 12.6  |                             | 43.2 
|Balance Sheet Data (at end of period):                                            |                         |                                    |       |                             |      
|Total assets                                                                      |                         |                                    |       | 1,758.9                     |      
|Long-term debt(2)                                                                 |                         |                                    |       | 718.2                       |      
|Ordinary share capital                                                            |                         |                                    |       | 2.0                         |      
|Shareholder's deficit                                                             |                         |                                    |       | (106.4                      | )    

---

Footnotes appear on following page.

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Selected Financial Data

Amounts in accordance with U.K. GAAP:

|                                                                          |                         | Regentrealm Limited |      
|------------------------------------------------------------------------- | ----------------------- | ------------------- | -----
|
|
|Profit and Loss Account Data:                                             |                         |                     |      
|Turnover                                                                  |                         |                     |      
|                                                                          | Continuing operations   |                     | 858.0
|                                                                          | Acquisitions            |                     |     
|                                                                          |                         |                     |      
|                                                                          |                         | 858.0               |      
|                                                                          | Discontinued operations |                     | 22.7 
|                                                                          |                         |                     |      
|                                                                          |                         | 880.7               |      
|                                                                          |                         |                     |      
|Group operating profit before goodwill amortization and exceptional items |                         |                     |      
|                                                                          | Continuing operations   |                     | 84.6 
|                                                                          | Acquisitions            |                     |     
|                                                                          |                         |                     |      
|                                                                          |                         | 84.6                |      
|                                                                          | Discontinued operations |                     | 0.9  
|                                                                          |                         |                     |      
|                                                                          |                         | 85.5                |      
|Goodwill amortization                                                     |                         | (21.9               | )    
|Operating exceptional items                                               |                         | (16.8               | )    
|                                                                          |                         |                     |      
|Group operating profit                                                    |                         | 46.8                |      
|Other exceptional income                                                  |                         |                    |      
|Share of operating profit in joint ventures                               |                         | 2.2                 |      
|                                                                          |                         |                     |      
|Operating profit                                                          |                         | 49.0                |      
|Non-operating exceptional items                                           |                         | (0.6                | )    
|                                                                          |                         |                     |      
|Profit before interest                                                    |                         | 48.4                |      
|Interest                                                                  |                         | (97.8               | )    
|Other finance income/(expense)                                            |                         |                    |      
|                                                                          |                         |                     |      
|Loss before taxation                                                      |                         | (49.4               | )    
|Taxation                                                                  |                         | (40.1               | )    
|                                                                          |                         |                     |      
|Loss for the period                                                       |                         | (89.5               | )    
|                                                                          |                         |                     |      
|Other Financial Data:                                                     |                         |                     |      
|Business profit(1)                                                        |                         | 116.9               |      
|Capital expenditure:                                                      |                         |                     |      
|                                                                          | Continuing operations   |                     | 42.9 
|                                                                          | Total operations        |                     | 43.2 
|Balance Sheet Data (at end of period):                                    |                         |                     |      
|Total assets                                                              |                         | 1,795.5             |      
|Long-term debt(2)                                                         |                         | 389.8               |      
|Ordinary share capital                                                    |                         | 2.0                 |      
|Shareholder's deficit                                                     |                         | (101.1              | )    

---

---



Selected Financial Data

Amounts in accordance with U.S. GAAP:

|                                                   |  | United Biscuits
(Holdings)
Limited |   | United Biscuits Finance plc |  
|-------------------------------------------------- |  | ---------------------------------- | - | --------------------------- | -
|
|
|Profit and Loss Account Data:                      |  |                                    |   |                             |  
|Sales from continuing operations                   |  | 272.9                              |   | 858.0                       |  
|Total sales                                        |  | 328.5                              |   | 880.7                       |  
|Operating (loss)/income from continuing operations |  | (8.5                               | ) | 38.2                        |  
|Operating (loss)/income                            |  | (8.3                               | ) | 38.6                        |  
|Net loss from continuing operations                |  | (9.6                               | ) | (59.0                       | )
|Net loss for the period                            |  | (10.4                              | ) | (57.6                       | )
|Balance Sheet Data (at end of period):             |  |                                    |   |                             |  
|Total assets                                       |  |                                    |   | 1,808.0                     |  
|Long-term debt                                     |  |                                    |   | 733.5                       |  
|Shareholder's deficit(1)                           |  |                                    |   | (68.9                       | )

|                                            |  | Regentrealm Limited |  
|------------------------------------------- |  | ------------------- | -
|
|
|Profit and Loss Account Data:               |  |                     |  
|Sales from continuing operations            |  | 858.0               |  
|Total sales                                 |  | 880.7               |  
|Operating income from continuing operations |  | 38.2                |  
|Operating income                            |  | 38.6                |  
|Loss from continuing operations             |  | (53.5               | )
|Net loss for the period                     |  | (52.1               | )
|Balance Sheet Data (at end of period):      |  |                     |  
|Total assets                                |  | 1,841.2             |  
|Long-term debt                              |  | 400.4               |  
|Shareholder's deficit(1)                    |  | (63.4               | )

---

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Non-GAAP Financial Data

Business Profit

Business profit from continuing operations is the primary measure by which our management monitors our business performance. Business profit from continuing
operations represents the profit or loss from continuing operations before interest, tax, depreciation, amortization, share of profit of joint ventures and exceptional items. Due to our highly
leveraged status, we believe that business profit also provides useful information to our investors and lenders regarding our ability to meet future debt service requirements, our
cash-generating capability and our ability to comply with financial covenants. Business profit by segment and reconciliations of business profit to profit before interest for 2002, 2003
and 2004 are set out in Note 4 of Notes to the Financial Statements included elsewhere in this annual report.

|                                                                                |  | United Biscuits
(Holdings)
Limited |   | United Biscuits Finance plc |  
|------------------------------------------------------------------------------- |  | ---------------------------------- | - | --------------------------- | -
|
|
|Reconciliation of Business Profit from Continuing Operations to U.K. GAAP Data: |  |                                    |   |                             |  
|(Loss)/profit before interest                                                   |  | (10.2                              | ) | 48.4                        |  
|Share of profit of joint ventures                                               |  | (1.4                               | ) | (2.2                        | )
|Discontinued operations                                                         |  | (0.2                               | ) | (0.4                        | )
|Depreciation, continuing operations                                             |  | 13.5                               |   | 32.3                        |  
|Operating exceptionals, continuing operations                                   |  | 10.0                               |   | 16.3                        |  
|Goodwill amortization                                                           |  | 0.8                                |   | 21.9                        |  
|Non-operating exceptionals                                                      |  | 9.2                                |   | 0.6                         |  
|Other exceptional income                                                        |  |                                   |   |                            |  
|                                                                                |  |                                    |   |                             |  
|Business profit from continuing operations                                      |  | 21.7                               |   | 116.9                       |  
|                                                                                |  |                                    |   |                             |  

Currency and Exchange Rate Data

The following table provides, for the periods indicated, information concerning the exchange rate for pounds sterling expressed in U.S. dollars per
£1.00 based on the noon buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York.

Year Ended December 31,

Period
End

Average
Rate*

High

Low2000

1.50

1.51

1.65

1.402001

1.45

1.44

1.50

1.372002

1.61

1.51

1.61

1.412003

1.78

1.65

1.78

1.552004

1.92

1.84

1.95

1.75


---

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The
following table provides, for the periods indicated, the high and low noon buying rates for pounds sterling expressed in U.S. dollars per £1.00.

Month and Year

High

LowSeptember 2004

1.81

1.77October 2004

1.84

1.78November 2004

1.91

1.83December 2004

1.95

1.91January 2005

1.91

1.86February 2005

1.92

1.86March 2005

1.93

1.87


We
make no representation that any amount translated in this annual report could have been or could be converted at any of the rates indicated above or at any other rates.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Our business, and an investment in us, is subject to a number of significant risks, including those described below. These risks are not
the only ones that we face. Additional risks not presently known to us, or that we currently deem immaterial, may also impair our business operations.

Substantial LeverageOur substantial debt could adversely affect our business and prevent us from fulfilling our obligations under the senior subordinated
notes.

We
have a substantial amount of debt and significant debt service obligations. As of January 1, 2005, our outstanding long-term debt (including current maturities) was
£945.0 million. We anticipate that our substantial leverage will continue for the foreseeable future.

Our
high level of debt may have important negative consequences for you. For example, it could:



---





Ability to Service DebtWe will require a significant amount of cash to service our debt, and our ability to generate cash depends on many factors beyond our
control which may affect our ability to meet our obligations to the senior subordinated noteholders.

Our
ability to make scheduled payments on, and satisfy our obligations under, our indebtedness, including our senior credit facility and the senior subordinated notes, depends upon our
future operating performance. Our future operating performance, in turn, will be affected by the successful implementation of our business strategy as well as general economic, competitive, market,
business and other conditions, many of which are beyond our control. We believe that, based on current levels of operations and anticipated future growth, our expected cash flows from operations,
together with available borrowings under our bank facilities, will be adequate to meet our anticipated working capital, capital expenditure and scheduled principal and interest obligations. If future
cash flow is insufficient to make scheduled payments on our debt, we will need to refinance all or a portion of our debt, including our senior credit facility and the senior subordinated notes, before
maturity, or to obtain additional financing or sell assets. We cannot assure you that we will be able to refinance any of our debt, obtain additional financing or sell assets on commercially
reasonable terms or at all. See Item 5. "Operating and Financial Review and Prospects."

Risks of Business StrategyOur ability to improve our cash flow and profitability depends on a number of factors, including the successful implementation of our
business strategy.

Our
business strategy is to increase our cash flow and profitability by implementing initiatives aimed at achieving cost savings and generating profitable branded growth. If we are
unsuccessful in implementing our business strategy and achieving cost savings, generating profitable branded growth or increasing our cash flow or profitability, we may be unable to fulfill our
obligations according to or to comply with the financial covenants under our senior credit facility. In order to realize expected cost savings, we must successfully reduce our overhead costs, improve
our procurement process, realize operating efficiencies and rationalize our manufacturing capacity. The cost of these plans in 2004 was approximately £64 million and we expect to
spend approximately £50 million in 2005 to achieve overall cost savings. Our ability to generate profitable branded growth will depend on our successful promotion of our products,
our ability to develop new innovations and, ultimately, customer demand for and acceptance of our products. The success of our efforts to implement our strategy to accomplish these goals could be
affected by a number of factors beyond our control, such as operating difficulties, increased operating costs, personnel turnover, competitors and customers, delays in implementing initiatives and
general economic or industry conditions. Implementing our strategy will require significant management resources and may affect our management's ability to focus on our other objectives. We cannot
assure you that we will be successful in achieving cost savings, generating profitable branded growth or in increasing our cash flow or profitability. If we are unsuccessful in implementing our
business strategy we may be unable to fulfill our obligations under the senior subordinated notes and comply with the financial covenants under our senior credit facility.

Significant acquisitions made by us may have an adverse effect on our results of operations.

We
made two strategic acquisitions in 2004. Significant acquisitions may adversely affect our results of operations. Acquisitions require the attention of our management and may require
the diversion of other resources. We cannot assure you that we will be able to manage our current or any future acquisitions profitably, or to integrate such acquisitions successfully, without
substantial costs, delays or other problems. In addition, we cannot assure you that any companies acquired will achieve levels of profitability that will justify the investment we made in them.

Defined Benefit Pension SchemesOur results of operations may be adversely affected by the cost of funding our pension schemes.

We
operate defined benefit pension arrangements in the United Kingdom and the Netherlands that have liabilities to retired employees, to previous employees who have left our service but
who are not yet drawing pension benefits and to current employees who are members of the plans. Both we and

---



current
employees who are members of the plans contribute to funds that are invested in order to meet these liabilities.

Investment
fund trustees determine the investment strategy of the funds. They receive independent advice to enable them to implement the strategy. In order to take advantage of the
higher returns that equity investment has historically generated, a substantial proportion of the funds are invested in equities. This investment strategy, while it has been successful over the long
term, carries the risk that a decline in equity values could increase the current funding deficit, which may require us to increase our contributions. If we are unable or unwilling to increase
contributions to a level agreed to by the trustees and the independent actuary, then the schemes could be wound up, which would crystallize a significant one-off cash liability for us. At
January 1, 2005, the net pension deficit on our UK pension schemes was £229.7 million. As a result of recently implemented or soon to be implemented, legislative and
regulatory changes including those contained in the Finance Act 2004 and the Pensions Act 2004 we may be subject to additional pension liabilities and may have to increase our pension contributions.
The cost of complying with the new pension legislation, the payment of higher contributions or a one-off cash liability could impair our ability to invest in programs to reduce cost or to
drive profitable branded growth, or could restrict our ability to meet our obligations under the senior subordinated notes as they fall due. Closure of the schemes or any changes to the benefits
provided or to the employee contribution rate could also have industrial relations consequences that might impair our ability to service demand and generate cash.

Significant CompetitionWe offer products in highly competitive markets, and our failure to compete effectively might adversely affect our results of
operations.

The
biscuit and snack industries as well as the markets for our products, are highly competitive. We compete primarily on the strength of our brands, the quality of our products, product
innovation and price. Our ability to compete effectively requires continuous efforts in sales and marketing of our existing products, developing new products and cost rationalization. As we cannot
predict the actions of our competitors or their effect on our ability to market and sell our products, we cannot assure you that the competitive environment in our markets will not have a negative
impact on our future business performance. For further information on competition and our competitors in the markets and the market segments in which we compete, see Item 4.B. "Information on
the CompanyBusiness OverviewCompetition."

Consolidation of Grocery Retailers in Our MarketsOur results of operations may be adversely affected by the consolidation of grocery
retailers.

There
is an increasing trend towards consolidation in the retail grocery industry in the United Kingdom and continental Western Europe. These consolidations have concentrated sales
channels, increased the bargaining power of the major grocery retailers and intensified price competition among these retailers. As a result, grocery retailers and manufacturers frequently engage in
pricing campaigns such as "Everyday Low Price" and "Buy One Get One Free" in order to promote their products and gain market share. Although we believe we can leverage our strong brands and leading
market positions to mitigate the impact of these campaigns, historically these campaigns have adversely affected our results of operations. Since 2003, it has become more difficult to recover the full
effect of cost inflation from retailers in the United Kingdom. In addition, price competition between retailers reduced retail prices for certain retailer-brand products, limiting demand for our
branded product offerings. On some "key-value" branded items, retail prices have also been reduced; however, this has reduced the incentive for retailers to support these products with
in-store promotions.

Dependence on Raw MaterialsOur ability to pass price increases of raw materials on to our customers could adversely affect our results of
operations.

The
prices of many of our raw materials are affected by government agricultural policies, the operations of our suppliers, currency movements, political upheavals and acts of God, such
as severe weather conditions. While we source raw materials from a wide range of suppliers or believe that we can source them from alternative suppliers, we cannot assure you that we would be able to
obtain

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sufficient
supplies from our sources or that, in the event of a supply disruption or other adverse event that affects our sources, our raw material costs would not increase. To the extent we are able
to obtain sufficient quantities of raw materials in the event of a supply disruption, our ability to pass through any increase in raw materials costs to our customers would depend upon competitive
conditions and pricing methods employed in the various markets in which we sell our products. Consequently, a material or prolonged supply disruption could adversely affect our results of operations.

Supply and Manufacturing ProcessesProduct quality and safety issues may result in damage to the reputation of our brands and the termination of agreements or
licenses to operate one or more of our brands and may affect our relationship with our customers.

Our
products are subject to a number of supply and manufacturing processes. A failure in our systems and procedures which control the quality of these processes, or the occurrence of
some other, perhaps external, event (for example, a third-party contamination or tampering incident), may result in the need to take remedial action (such as issuing warnings or withdrawing one or
more of our product batches), which might not be covered or fully covered by our insurance policies. Remedial actions may harm our relationships both with end consumers of our goods and with our
customers and may, where the product is branded, damage the reputation of the relevant brand. If such branded product is manufactured under agreement or license, such a quality control failure may
result in the termination of that agreement or license. Any of these circumstances may have an adverse effect on our results of operations.

Currency FluctuationsWe have multinational operations that expose us to currency exchange risks.

Although
a large percentage of our revenues has historically been generated in the United Kingdom, our operations are geographically diverse. We sell our products in approximately 100
countries and currently operate 22 manufacturing facilities located in six countries. Our financial position and results of operations are also, therefore, subject to both currency transaction risk
and currency translation risks.

Due
to our geographically diversified customer base, we generate a portion of our revenues from sales in currencies other than those in which our subsidiaries regularly operate and incur
their expenses. We also have long-term borrowings and related interest payment obligations in euros. We hedge against foreign currency transaction risk by seeking to match cash inflows in
given currencies with our costs and interest payments in the same currency. We enter into forward currency contracts to hedge against our exposure to foreign currency exchange rate fluctuations in the
purchase of raw materials, in connection with our interest payments and in our export business.

The
financial condition and results of operations of our overseas subsidiaries are measured and recorded in the relevant domestic currency of the jurisdiction in which the subsidiaries
are located and then translated into pounds sterling for inclusion in our consolidated financial statements. We borrow in euros as appropriate, to minimize the impact of currency translation risk from
our overseas operations on our balance sheet. See Item 5.A. "Operating and Financial Review and ProspectsOperating ResultsSignificant Factors Affecting Our Results of
OperationsCurrency Fluctuation" and Item 11. "Quantitative and Qualitative Disclosures about Market RiskForeign Exchange Risk Management."

Trade HostilitiesA trade dispute with the North American Free Trade Area could result in tariffs on our exported products.

In
2004, we sold £32.9 million of our European-manufactured products within the North American Free Trade Area, which represented 2.7% of our sales for that year. In
the past, trade disputes between European and North American trading blocks have resulted in the temporary escalation of tariffs. Although these disputes have not had a significant impact on our
trading performance, if future trade disputes resulted in a substantial increase in tariffs on biscuits or crackers, our trade in North America could be significantly damaged and our results of
operations could be adversely affected.

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Brands and Intellectual Property RightsSome of our intellectual property rights could be challenged or lapse.

About
85% of our sales from continuing operations in 2004 were from branded products. Our principal trademarks are registered in the United Kingdom, and we have trademark registrations
for various products in approximately 100 other countries. We use an automated system, which prompts us to initiate trademark renewals. In addition the United Kingdom Patent Office sends out renewal
notices. If our system should fail, particularly in respect of trademarks registered outside of the United Kingdom it is possible that some of our intellectual property rights could lapse. We also
have licensing arrangements under which we sell our products, including our licenses from Nabisco to market specified Nabisco brands and our license from Groupe Danone S.A. ("Danone") to market the TUCbrand. While we will continue to use our best efforts to successfully enforce our trademark and licensing rights against infringement by third
parties, we cannot assure you that our actions to establish and protect our trademark and license rights are adequate to prevent imitation of our products by others or to prevent others from seeking
to block sales of our products that violate their trademarks and proprietary rights. If a competitor were to infringe trademarks or licenses held by us, enforcing our rights would likely be costly and
would divert funds and resources that could otherwise be used to operate our business. In addition, our licensing arrangements are subject to the competition laws of various jurisdictions, and these
might be used, in the event of a successful challenge, to modify or render unenforceable any terms deemed to infringe such laws. We cannot assure you that we would be successful in enforcing our
intellectual property rights. See Item 8.A.7. "Financial InformationLegal Proceedings."

TaxationChanges in fiscal legislation and regulation in the various jurisdictions in which we operate may affect the taxes that we pay.

Our
fiscal presence is predominantly centered in six European countries. We are subject to fiscal legislation and regulation in each of these countries and the framework may be subject
to change from time to time. We cannot assure you that such change will not be adverse.

We
have a high level of debt and substantial associated interest costs consisting of cash (payments and accruals) and non-cash (accruals and discount) interest. In the United
Kingdom we have obtained deductions both for cash interest and for the non-cash interest on debt provided by our Equity Sponsors at the time of the UB acquisition. Recent changes and
proposed changes to the loan relationship rules and the transfer pricing legislation impact the way in which non-cash interest and discount deductions for corporate income tax purposes
will be allowed. This is anticipated to have the result that the non-cash interest on debt provided by our Equity Sponsors will no longer be eligible for a tax deduction. While we expect
to be able to benefit from proposed transitional provisions, which preserve tax deductions until March 31, 2007, there can be no assurance that this will be achieved. We cannot assure you that
the legislative changes and proposed changes will not cause us to incur significant additional tax liabilities in the United Kingdom from 2006 or 2007 onwards depending on the outcome of our review of
the recent and proposed changes.

Restrictions on OperationsOur debt agreements contain significant restrictions limiting our flexibility in operating our business.

Various
covenants, contained in our debt instruments including our senior credit facility and the indenture governing the senior subordinated notes, restrict our ability to:



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These
covenants could materially and adversely affect our ability to finance our future operations or capital needs or to engage in other business activities that may be in our best
interest. These restrictions on our operations may adversely affect our ability to make payments on the senior subordinated notes. See Item 5.B. "Operating and Financial Review and
ProspectsLiquidity and Capital ResourcesDebt Service Obligations."

Government RegulationWe are subject to extensive regulation.

As
a manufacturer of products intended for human consumption, we are subject to extensive United Kingdom and pan-European government regulation over issues such as product
composition, packaging, labeling, advertising and the safety of our products; the health, safety and working conditions of our employees; integrated pollution control; and our competitive and
marketplace conduct.

Our
past and present business operations and ownership and operation of real property are subject to a broad range of environmental laws and regulations in each of the jurisdictions in
which we operate. These laws and regulations impose increasingly more-stringent environmental protection standards on us and affect air emissions, wastewater discharges, the use and
handling of hazardous materials, noise levels, energy efficiency, waste disposal practices and environmental clean-up, among other things. We may, therefore, be exposed to substantial
environmental costs and liabilities, including liabilities associated with divested assets and past activities.

We
are not aware of any existing environmental or product-related liabilities, claims, investigations or proceedings that could reasonably be expected to have a material adverse effect
on our financial position. However, we cannot predict future environmental liabilities or assure you that amounts we have provided and budgeted for will be adequate.

Our
business and commercial arrangements, including acquisitions and commercial contracts, are subject to extensive regulation under the competition laws of the European Union, United
Kingdom, and other EU Member States insofar as they relate to acquisitions and joint ventures, contractual relationships, and various distribution practices. We cannot assure you that all the terms of
our business and commercial arrangements are not currently or will not be made unenforceable under these laws and regulations.

From
time to time, additional legislative initiatives may be introduced that will affect our operations and the conduct of our businesses, and we cannot assure you that in future the
cost of complying with these initiatives, or the effects of these initiatives, will not have a material adverse effect on our results of operations. For further information, see Item 4.B.
"Information on the CompanyBusiness OverviewRegulatory Matters" and Item 4.D. "Information on the CompanyProperty, Plants and
EquipmentEnvironmental Matters."

Effective Control by the Equity SponsorsThe interests of our Equity Sponsors may conflict with your interests.

Funds
controlled by Cinven, PAI and MidOcean beneficially own 97% of the voting equity of United Biscuits Group (Investments) Ltd ("UB Parent"). Messrs. Robert Bradish,
Graham Clempson and Bertrand Meunier, members of the UB Finance board of directors, are also either directors or members of senior management of our Equity Sponsors. Under the shareholders agreement
of UB Parent, Nabisco has significant veto rights over UB Parent and its subsidiaries, including for the sale or merger of UB Parent and its subsidiaries. Under the consortium agreement, the other
Equity Sponsors also have significant veto rights over United Biscuits (Equity) Ltd, a Cayman Islands company which owns UB Parent and its subsidiaries. Therefore, the Equity Sponsors have a
great deal of influence over our management policies and the power to control all matters submitted to a vote of our shareholders. We cannot assure you that the interests of the Equity Sponsors will
not conflict with your interests. See Item 7. "Major Shareholders and Related Party Transactions."

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Holding Company StructureBoth UB Finance and Regentrealm are holding companies with no revenue-generating operations of their own.

UB
Finance relies on payments from its subsidiaries to generate the funds necessary to make payments on the senior subordinated notes. UB Finance is a holding company and does not
directly conduct any business. The principal assets of UB Finance consist of: (1) its equity interest in Regentrealm, its direct, wholly owned subsidiary; (2) intercompany loans made by
UB Finance to Regentrealm with the proceeds of intercompany borrowings from Runecorp Limited, UB Finance's parent; and
(3) intercompany loans made by UB Finance to Regentrealm with the proceeds from the senior subordinated notes offerings. As a result, UB Finance depends wholly on dividends and other
distributions it receives from Regentrealm, including payments under these intercompany loans, to make payments on the senior subordinated notes. Regentrealm, which is also a holding company and
parent of UB Finance's operating subsidiaries, also depends on dividends and other distributions it receives from its subsidiaries. The ability of UB Finance's subsidiaries to make payments to
Regentrealm depends on their cash flow and earnings. In addition, dividends from UB Finance's subsidiaries are limited by local corporate law, which in Europe typically limits dividends to accumulated
earnings of the relevant subsidiary. Because of the holding company structure, UB Finance may not be able to receive sufficient funds from its subsidiaries to pay the principal of and interest on the
senior subordinated notes.

Contractual and Structural SubordinationNoteholders rights to receive payments under the senior subordinated notes and UB Finance's right to receive payments under
the intercompany loans are unsecured and subordinated to the senior debt of UB Finance and Regentrealm and to all debt of our subsidiaries other than Regentrealm.

The
indenture governing the senior subordinated notes contractually subordinates the notes in right of payment to all existing and future senior debt of UB Finance (including UB
Finance's guarantee of our senior credit facility). It also contractually subordinates the Guarantee of Regentrealm to all existing and future senior debt of Regentrealm (including borrowings under
our senior credit facility). Furthermore, before the date of repayment of our senior credit facility, the Guarantee will not become due, and no payment may be made under the Guarantee, until after the
expiration of a period beginning on the date of occurrence of a payment default on the senior subordinated notes and ending on the first to occur of: (1) the 179th day from that event of
default date; (2) the date on which an order is made for the winding-up or dissolution of Regentrealm; and (3) the date on which the shareholders of Regentrealm pass a
resolution for the winding-up or dissolution of Regentrealm.

UB
Finance, its parent companies and most of its subsidiaries are parties to an intercreditor deed, dated as of April 28, 2000, with, among others, the lenders under our senior
credit facility, as the same may be amended to date (the "Intercreditor Deed"). The Intercreditor Deed contractually subordinates UB Finance's right to receive payments under its intercompany loans to
Regentrealm to Regentrealm's obligations under our senior credit facility. In addition, prior to the time our senior credit facility is repaid, the Intercreditor Deed prohibits our subsidiaries from
making payments to UB Finance except to fund interest due on the senior subordinated notes, certain permitted investor payments and administrative expenses. Payments to UB Finance from its
subsidiaries, including payments under UB Finance's intercompany loans to Regentrealm, will be suspended in the case of a default under our senior credit facility until in the case of a payment
default, the default is remedied and, in the case of a non-payment default, 179 days after a payment blockage notice has been served (or if earlier, until the default is remedied or
waived or our senior credit facility is repaid in full). Only one blockage notice can be served in any 365-day period. The Intercreditor Deed also provides that, in addition to the payment
blockage described above, prior to the time our senior credit facility is repaid, enforcement action may be taken by UB Finance in relation to its intercompany loans to Regentrealm only after the
expiration of the period beginning on the date of an occurrence of a payment default on the senior subordinated notes and ending on the first to occur of: (1) the 179th day from that payment
default date; (2) the date on which an order is made for the winding-up or dissolution of Regentrealm; or (3) the date on which the shareholders of Regentrealm pass a
resolution for the winding-up or

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dissolution
of Regentrealm. See Item 5.B."Operating and Financial Review and ProspectsLiquidity and Capital ResourcesDebt Service Obligations."

Because
UB Finance is a holding company, the senior subordinated notes are structurally subordinated to the obligations of our subsidiaries other than Regentrealm, which guarantees the
notes on a senior subordinated basis. In the event of an insolvency, liquidation or other reorganization of any of our subsidiaries (other than Regentrealm), UB Finance's creditors (including the
noteholders) will have no right to proceed at law against their assets. Creditors of these subsidiaries, including trade creditors and lenders under our senior credit facility, will be entitled to
payment in full from the sale or other disposal of these assets in priority to UB Finance, except to the extent that UB Finance may be a distinct creditor with recognized claims against those
subsidiaries.

The
senior subordinated notes and the Guarantee are unsecured obligations of UB Finance and Regentrealm, respectively. Debt under our senior credit facility is secured by liens on the
assets of UB Finance, including its intercompany loans to Regentrealm and payments made under them and the shares of Regentrealm, the assets of Regentrealm and the shares and assets of Regentrealm's
material operating subsidiaries. In the event of a default under our senior credit facility or an insolvency, liquidation, winding-up or similar proceeding relating to Regentrealm or any
of UB Finance's other subsidiaries, UB Finance's and Regentrealm's assets would be available to satisfy obligations under our senior credit facility before any payment would be made on the senior
subordinated notes or under the Guarantee. Any future secured indebtedness, whether of UB Finance or any of its subsidiaries, including Regentrealm, would effectively rank senior to the senior
subordinated notes and the Guarantee.

Rights of Secured Creditors Under Insolvency LawsU.K. insolvency laws are not as favorable to unsecured creditors as U.S. insolvency laws.

The
lenders under our senior credit facility have a first ranking security interest over all of the shares and tangible and intangible assets of most of our material operating
subsidiaries. Both UB Finance and Regentrealm are companies incorporated under the laws of England and Wales and a substantial portion of their assets are located in England. Accordingly, English
insolvency law will most likely govern any insolvency proceedings with respect to UB Finance and Regentrealm. However, under the E.U. Regulation on Insolvency Proceedings (EC 1346/2000) (the
"Regulation"), if UB Finance's or Regentrealm's "center of main interest" is established in a relevant E.U. state other than the state of its incorporation, insolvency proceedings may be governed by
the law of that Member State. Certain rights are excluded from the effect of the Regulation, including certain rights of secured creditors. The procedural and substantive provisions of English
insolvency law generally are more favorable to secured creditors than the comparable provisions of U.S. law. These provisions afford debtors and unsecured creditors only limited protection against the
rights of secured creditors and it will generally not be possible for UB Finance, as an unsecured creditor of Regentrealm under the intercompany loans, or the holders of the senior subordinated notes,
as unsecured creditors of UB Finance under the senior subordinated notes or unsecured creditors of Regentrealm under the Guarantee, to prevent the secured creditors from enforcing their security to
repay the debts. After an event of default occurs, the security agent under our senior credit facility will have the effective right to direct the disposition of any collateral. Therefore, the senior
subordinated noteholders' ability to realize on the claims under the notes against UB Finance as an unsecured creditor may be more limited under English law than under U.S. law.

In
addition, under English insolvency law, UB Finance's debt under the senior subordinated notes and Regentrealm's debt under the Guarantee will rank after the claims of certain
creditors which are entitled to priority under English insolvency law. These preferred debts include:



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English
insolvency law empowers English courts to make an administration order in relation to a company. An administration order can be made if the court is satisfied that the relevant
company is or is likely to become "unable to pay its debts" for the purpose of the relevant statute and that the administration order is reasonably likely to achieve the purpose or objective of
administration. Administrators are required to carry out their functions with the primary objective of rescuing a company as a going concern. If this primary objective is not achievable, the
administrators must carry out their functions with the objective of achieving a better result for a company's creditors as a whole than would be likely if a company was wound up or realizing property
in order to make a distribution to one or more secured or preferential creditors. The administration regime is in some respects similar to the regime under chapter 11 of the U.S. Bankruptcy Code as no
steps may be taken to enforce security over a company's property and no proceedings or other legal process may be commenced or continued against a company in administration except with the consent of
the administrator or the court. It is possible, however, for a secured creditor that has the power to appoint an administrative receiver (which will generally be the case where the secured lender has
security in the form of a floating charge, granted before September 15, 2003, over all or substantially all of a company's property, as is the case of the lenders under our senior credit
facility) to prevent the appointment of an administrator and, as a result, that secured creditor and other secured creditors will be able to enforce their security.

The
Financial Collateral Arrangements (No. 2) Regulations 2003 came into force on December 26, 2003. These enable security holders to enforce their security rights over
shares, other financial instruments and securities or cash, regardless of the usual moratorium imposed by administration and without being affected by the various rights of administrators and
liquidators relating to the disposal of property. The application of these new regulations is, however, still untested.

As
a result of these differences, the protection given to unsecured creditors under English insolvency law will in most cases be less than the protection that would be given to unsecured
creditors under chapter 11 of the U.S. Bankruptcy Code. It is possible that we could be subject to insolvency proceedings in other jurisdictions in which we operate. The insolvency laws of those
jurisdictions may also differ from U.S. insolvency laws.

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ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

We are the leading manufacturer and marketer of biscuits in the United Kingdom and Iberia and second-largest manufacturer and marketer of biscuits in France, the
Netherlands and Belgium. In the United Kingdom, we are the leading manufacturer and marketer of packaged nuts and the second-largest manufacturer and marketer of savory snacks and crisps. We
manufacture and market a wide range of products in continental Western Europe under well-recognized brand names. Branded products accounted for approximately 85% of our sales from
continuing operations in 2004. Among our popular brands are:McVitie's, Penguin, go ahead!, McVitie's Jaffa Cakes, Jacob's, Jacob's Cream Crackers, Thai Bites, Twiglets, Marbu
Dorada, Chiquilin, Fontaneda, Filipinos, BN, Delacre, Verkade, Hula Hoops, Skips, Mini Cheddars, McCoy's, Phileas FoggandKPnuts.

United Biscuits Finance plc

UB Finance was incorporated in England and Wales on March 10, 2000, to act as a financing company in connection with the acquisition of United Biscuits by
the Equity Sponsors. In April 2000, the Equity Sponsors acquired United Biscuits, the holding company of our operating subsidiaries, through a public tender offer. We refer to this acquisition
as the "UB acquisition." Concurrently with the UB acquisition, we entered into agreements for a series of divestitures and other acquisitions designed to focus our business on our key Western European
markets and our core branded products. The UB acquisition, together with the acquisitions and dispositions of material assets connected with the acquisition of United Biscuits described in
Item 7.B. "Major Shareholders and Related Party TransactionsRelated Party Transactions," are collectively referred to as the "Transactions" in this annual report.

Runecorp
Limited ("Runecorp"), a wholly owned subsidiary of UB Parent, is the beneficial owner and holder of all the ordinary shares of UB Finance. Before United Biscuits was acquired,
UB Finance had not engaged in any business.

Regentrealm Limited

Regentrealm, a direct, wholly owned subsidiary of UB Finance, is the guarantor of the senior subordinated notes. Regentrealm was incorporated in England and Wales
on November 29, 1999. Regentrealm is a holding company that indirectly owns United Biscuits, the holding company of our operating subsidiaries.

Regentrealm
holds no assets other than the shares of its directly and wholly owned subsidiary, Finalrealm Limited, and the intercompany loans to its subsidiaries. Other than its
guarantee of the senior subordinated notes, its obligations to UB Finance under intercompany loans and the senior credit facility, Regentrealm does not have any debt obligations. Before the UB
acquisition, Regentrealm had not engaged in any business.

The
registered offices of UB Finance and Regentrealm are located at Hayes Park, Hayes End Road, Hayes, Middlesex UB4 8EE, United Kingdom, and their telephone number is +44 20 8234 5000.

Agent for Service of Process

Each of UB Finance and Regentrealm has appointed CT Corporation System, 111 Eighth Avenue, New York, New York 10011, United States as its agent for service of
process for the senior subordinated notes, the guarantee of the senior subordinated notes and the related indenture.

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B. Business Overview

Overview

We manufacture and market products for the retail grocery, convenience and impulse and food service markets in three geographic segments: UK, Northern Europe and
Southern Europe. We also export products across the world through our International Sales business.

UK£775.5 million, or 64.1%, of our 2004 sales from continuing operations, of which approximately 80% were
branded.

We
are the leading manufacturer and marketer of biscuits in the United Kingdom. During 2004 we acquired The Jacob's Bakery Limited ("Jacob's") a United Kingdom biscuit manufacturer and
marketer. Jacob's is an important participant in the United Kingdom biscuit market and has a key presence in the segments of the United Kingdom biscuit market in which we previously had only limited
representation. In 2004, following the acquisition of Jacob's, our combined branded and retailer-branded biscuits sales accounted for approximately 33% of the overall market, compared to 26% in 2003.
Our combined branded biscuit sales accounted for approximately 26% of the overall market, representing approximately three times the branded biscuit sales of our closest competitor, compared to 20% in
2003. Our UK biscuits product range is anchored by our primary brand,McVitie's. McVitie'sis among the best-known brands in the United
Kingdom, andMcVitie'sbiscuits were purchased by over 85% of United Kingdom households in 2004. Among our popular core product brands in the United
Kingdom are:McVitie's DigestiveandChocolate Digestive(formerly Homewheat),Penguin, go ahead!andMcVitie's Jaffa
Cakes. Jacob's owns a number of well-known brands and products that are long-established and well-recognized by retailers and consumers.
Some of these, such asJacob's Cream CrackersandClub,have become household names in the United
Kingdom. Other popular Jacob's brands include:Cheddars, Thai Bites, Jacobites, Gem's, Family Circle, Jacob's Fig Rollsand Twiglets. In addition, Jacob's
are licensed to manufacture and market the Nabisco brandRitzin the
United Kingdom and Ireland and the Danone brandTUCin the United Kingdom.

We
are the largest manufacturer and marketer of packaged nuts in the United Kingdom, with a market share of approximately 22% of the packaged nuts market, and the second-largest
manufacturer and marketer of savory snacks and crisps in the United Kingdom, with a market share of approximately 15% of the packaged savory snacks and crisps market. Our leading snack brands include: Hula Hoops, Skips, Mini
Cheddars, McCoy's, Twiglets, Phileas FoggandKPnuts.

Northern Europe£169.6 million, or 14.0%, of our 2004 sales from continuing operations, of which approximately 95% were
branded.

We
are the second-largest manufacturer and marketer of biscuits in France, the Netherlands and Belgium, with market shares of approximately 12%, 19% and 13%, respectively. Our core
Northern
European biscuit brands areBNandDelacrein France; VerkadeandSultanain the Netherlands; andDelacre, BNandSultanain Belgium.

Southern Europe£200.0 million, or 16.5%, of our 2004 sales from continuing operations, of which approximately 95% were
branded.

We
are the largest manufacturer and marketer of biscuits in Spain with a market share of approximately 27%. During 2004 we acquired Triunfo Productos Alimentares S.A. ("Triunfo"), the
leading manufacturer and marketer of biscuits in Portugal, increasing our share of the Portuguese biscuit market from 16% in 2003 to 39% in 2004. Our core Southern European biscuit brands are: Fontaneda, Chiquilin, Filipinos,
Proalimentar, Hookie, ClasicasandWaferland. We also manufacture and
market Iberia's top-selling dry dessert mix and baking powder brand,Royal. We are exclusively licensed to manufacture and market Oreo, Chips Ahoy!and
other key Nabisco brands in parts of Europe and North Africa.

International Sales£65.0 million, or 5.4%, of our 2004 sales from continuing operations, of which approximately 100%
were branded, including a small percentage of co-branded products.

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We
export our branded products to approximately 100 countries around the world. We believe we are the leading manufacturer and marketer of premium European cookies and crackers exporting
to North America, where we have strong positions in the premium savory and premium assortment biscuits segments.McVitie's, Carr's, BNand Delacreare our
key export brands.

Markets

General

The principal markets in which we operate, the United Kingdom biscuit and snack markets and the Iberian, French, Dutch and Belgian biscuit markets, share a number
of characteristics.

The
majority of biscuits and, to a lesser extent, snacks are sold through major grocery retailers. Market leaders with large-scale manufacturing and distribution, as well as brands with
strong media support, are better able to negotiate favorable terms with retailers and leverage their brands. The importance of maintaining strong relationships with retailers has become a critical
success factor for food companies and drives many initiatives such as category management. Food companies with strong market positions and retail relationships have increasingly benefited from these
initiatives through maintaining shelf space, maintaining share of promotional features and maximizing distribution efficiencies.

Consumer
demand for food products has been strongly influenced by the trends towards out-of-home eating and away from the traditional three-
meals-a-day eating pattern. Consumers now demand convenience foods, including biscuit and snack products that offer greater variety, healthier alternatives and more portable
and practical packaging. These trends have also added to the significance of convenience and impulse distribution channels. Retailers in these distribution channels generally seek branded products
with high turnover.

The United Kingdom Biscuit Market

The United Kingdom biscuit market had retail sales of approximately £1.7 billion in 2004 and has had relatively stable, modest growth over the
last five years, with an average annual growth rate of 1% to 2% during the period. The United Kingdom biscuit market is expected to continue to have an annual growth of between 1% and 2% over the next
three years. This stable growth can mainly be attributed to the greater demand for convenience foods. Biscuits represent the largest packaged grocery category for major grocery retailers in the United
Kingdom. It is estimated that over 6 million packets of biscuits are purchased every day and that approximately 99% of all United Kingdom households purchase biscuits annually. Branded biscuit
sales accounted for 78% of the market, with retailer-branded biscuit sales representing the remainder. The retailer-brand component of the market has declined over recent years decreasing from 29% of
total market sales in 1999 to 22% in 2004.

The United Kingdom Snacks Market

The United Kingdom savory snacks, packaged nuts and crisps market had retail sales of approximately £1.8 billion in 2004 and has grown at an
average annual rate of 2% over the last five years. We do not anticipate any growth in the United Kingdom snacks market in the next year and during 2004 the market declined by 2.5% due to reduced
consumer demand. Over 80% of United Kingdom savory snack products sold are branded products.

Continental Western European Biscuit Markets

The continental Western European biscuit markets in which we compete had retail sales of approximately £1.8 billion in 2004 and have grown at
an average annual rate of 3% over the last five years. These markets have a lower per capita biscuit consumption rate than that of the United Kingdom, growth in Iberia is expected to outpace that of
the United Kingdom biscuit market over the next three years, whilst Northern European markets are expected to grow more in line with the United Kingdom biscuit market.

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Products

We manufacture and market biscuits, snacks and other selected grocery products for retail sale through large grocery retailers and convenience and impulse
channels. We offer our products primarily in the United Kingdom and in continental Western Europe. We produce both branded and retailer-branded products, with branded products accounting for
approximately 85% of our sales in 2004.

UK

We are the leading manufacturer and marketer of biscuits in the United Kingdom. In 2004, following the acquisition of Jacob's, our combined branded and
retailer-branded biscuits sales accounted for approximately 33% of the overall market. We compete in all segments of the United Kingdom biscuit market, including: everyday biscuits, everyday treats,
healthier biscuits, chocolate biscuit bars, children's biscuits, savory biscuits, seasonal biscuits, special treats, and crackers and crispbreads. We also manufacture and market snack and family cakes
in the United Kingdom. We produce both branded and retailer-branded biscuits for the United Kingdom and export markets.

We
are the second-largest producer of branded savory snacks and crisps, with a 15% market share, and the largest manufacturer and marketer of packaged nuts in the United Kingdom, with a
market share of approximately 22% of the packaged nuts market. We have a strong product portfolio of branded savory snacks, packaged nuts and crisps, including three of the 10 top-selling
snack brands in the United Kingdom.

Branded Biscuits

We are the market leader in the United Kingdom biscuit market, with our branded biscuits representing approximately 26% of the total biscuit market, approximately
three times the branded share of our nearest competitor. We manufacture and market three of the five top-selling biscuit brands in the United Kingdom. We own a portfolio of leading brands,
including:McVitie's, Penguin, go ahead!, McVitie's Jaffa Cakes, Jacob's, Jacob's Cream Crackers, Thai Bitesand Twiglets.

Our
branded biscuit products accounted for approximately 76% of our total UK biscuit sales in 2004, and 70% of those sales were derived from four brands: McVitie'sincludingDigestiveandChocolate Digestive
(formerlyHomewheat), Penguin, go ahead!andMcVitie's Jaffa Cakes.

Retailer-Branded Biscuits

We operate a successful retailer-branded business for retail grocery customers and are the second-largest supplier of retailer-branded biscuits in the United
Kingdom. By producing a limited portfolio of retailer-branded products, we obtain greater utilization of our factories and spread our manufacturing and distribution costs over a larger production
volume, thus improving profitability. Providing retailer-branded products also enhances our value to retailers as we can offer a broader range of products within the biscuit category. In 2004, 24% of
our total UK biscuit sales were generated by our retailer-branded business.

Cakes

We produce cake products under theMcVitie'sbrand and under selected McVitie'sproduct
brand names, such asgo ahead!andMcVitie's Jaffa
Cakes, and are the market leader in the cake bars segment, with a 41% market share. Our cake sales grew from £45.0 million in 2003 to
£48.0 million in 2004 and represented 6.2% of the sales of our UK business. Our cake bar range has benefited from our relationship with Mars (UK) Limited (Masterfoods), through
which we have introduced jointly branded snack cake products such asMcVitie's Galaxy,McVitie's M&M's, McVitie's
Bounty,McVitie's SnickersandMcVitie's Milky
Way.

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Savory Snacks and Crisps

We are the second-largest producer of branded savory snacks and crisps, with a 14% market share. We compete in all segments of the £1.6 billion
United Kingdom savory snacks and crisps market, including everyday snacks, children's snacks, adult/premium snacks and healthier snacks. We market a portfolio of leading brands, including: Hula Hoops,Skips,Mini Cheddars, McCoy's, TwigletsandPhileas Fogg.

Packaged Nuts

We are the leading manufacturer and marketer in the £0.2 billion United Kingdom packaged nuts market and have a 67% share of the branded
market. Our branded products have a 22% share of the overall packaged nuts market. We also supply retailer-branded nuts. Our branded products are sold under the KPnuts brand name.

Northern Europe

We are a leading manufacturer and marketer of sweet biscuits in Northern Europe with the number two market position in each of the countries in which we operate.

The Netherlands

We are the second-largest manufacturer and marketer in the £0.2 billion Dutch sweet biscuit market, with a branded share of approximately 19%.
We target primarily the in-between-meals and everyday biscuits segments.Verkadeis our umbrella brand in the Netherlands and most of our
products in the Netherlands are marketed under this brand. Our primary product brand,Verkade Sultana,a fruit-filled biscuit, is the largest-selling
biscuit brand in the Netherlands. The brand competes in the in-between-meals segment of the market.

France

We are the second-largest manufacturer and marketer in the £0.9 billion French sweet biscuit market, with a branded share of approximately 12%.
We focus on two segments of this market, children's biscuits under theBNbrand and adult biscuits under the Delacrebrand.BNis the second-largest biscuit brand in the French market, and Delacreis a premium brand focused primarily on the assortment segment.

Belgium

We are the second-largest manufacturer and marketer within the £0.2 billion Belgian sweet biscuit market, with a branded share of approximately
13%. We hold the leading position in the premium assortment biscuits segment, anchored by ourDelacrebrand. We also market fruit-filled biscuits under
theSultanabrand and children's biscuits under theBNbrand.

Southern Europe

We are the leading manufacturer and marketer of biscuits in Iberia with the number one market positions in both of the countries in which we operate.

Spain

We are the leader in the £0.4 billion Spanish biscuit market, with a branded share of approximately 27% of the total market, which is nearly
double the branded share of our nearest competitor. We manufacture and market seven of the top 10 biscuit brands in Spain. Our key biscuit brands in Iberia include:Chiquilin,
Filipinos, Fontanedaas well asOreoandChips Ahoy!produced under license from
Nabisco. We are the leading manufacturer and marketer of dry dessert mixes and baking powder in Iberia. These products are manufactured in Spain and marketed in both Spain and Portugal under the

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Royalbrand. We have a 76% share of the dry dessert mix market. We also market canned meat products, juices and tomato products for the Iberian market, manufacturing these
products in Spain.

Portugal

Following the acquisition of Triunfo in August 2004, we are the largest manufacturer and marketer in the £0.1 billion Portuguese biscuit
market with a branded share of approximately 39%. Triunfo manufactures some of the most well known brands in the Portuguese biscuit sector, including:Proalimentar, Hookie,
Clasicas, Waferland, CorintiaandChipmix.

International Sales

We export our branded products to approximately 100 countries around the world and had export sales of £65.0 million in 2004. We believe we are
the leading manufacturer and marketer of premium European cookies and crackers exporting to North America, where we have strong positions in the premium savory and premium assortment biscuits
segments.McVitie's, Carr's, BNandDelacreare our key export brands.

Sales
in North America were £32.9 million in 2004, primarily from sales ofDelacreassortments to warehouse club
retailers in the United States and sales ofCarr's Table Water Crackersand otherCarr'sbranded
crackers to retailers. We export our products through third-party distributors with whom we mainly enter into short-term distribution contracts, which vary to comply with the laws and
commercial practices of the particular local jurisdiction.

Seasonality

Our sales are generally higher towards the end of the year because consumer demand for our products is typically higher during the Christmas and New Year holiday
season. Our working capital position is also affected by the seasonality of our business because we build up our inventories during our third fiscal quarter. Our average working capital per period was
£80.9 million in 2004, whereas our average working capital during our third fiscal quarter in 2004 was £106.3 million.

Procurement

Our procurement unit is managed centrally, with purchasing specialists operating across our businesses to leverage our purchasing scale. The primary raw materials
we use are ingredients, such as flour, sugar, cocoa and chocolate, dairy products, fats and oils, nuts, fruits, potatoes, flavorings and packaging materials, such as cardboard tubes, films, cardboard
cases and tins. We source our raw materials from a number of different suppliers in the United Kingdom, continental Europe, the United States, Africa and Asia. We believe there are a number of
alternative suppliers for all our primary raw materials.

Distribution

We distribute our products in the United Kingdom through eight distribution points, including one central distribution center. We distribute our products in
continental Western Europe through twelve distribution points in Iberia, two distribution points in France, one distribution point in the Netherlands and one distribution point in Belgium.

Customers and Distribution Channels

We sell our products principally to major grocery retailers and independent grocers and through impulse and convenience channels. We have been appointed to act as
the biscuit and/or snack "category manager" to five of the major grocery retailers in the United Kingdom, as a result of our top-selling brands, our leading market position and our
consumer category knowledge. As a category manager, we have the opportunity to offer creative suggestions to retailers to increase category sales. We are working closely with the leading retailers on
how to manage the biscuit category in the

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Netherlands.
We believe that we are also well regarded in Spain and that Spanish retailers rate us ahead of our competitors in brand strength, new product development and product category knowledge.
We are continuing to build our relationships with retailers in our other continental Western European markets, such as France and Belgium, where we are working with top retailers to introduce a new
approach to market segmentation. By developing and maintaining strong working relationships with retailers, we are able to optimize the presentation of our products and maximize the amount and
prominence of retail shelf space our products are given in these retailers' outlets.

In
recent years, as out-of-home consumption has increased and impulse food purchases have become more important to consumers' lifestyles, we have targeted
convenience and impulse channels. These comprise a variety of outlets, including convenience stores, garage forecourts (i.e., gas station mini-markets), off-licenses (i.e.
outlets that sell liquor for consumption off the premises), bars and pubs, where consumers make spontaneous purchases of snacks. We believe the convenience and impulse channels will continue to
benefit from the trend towards snacking and we intend to continue to target these channels to increase sales.

Sales and Marketing

Our businesses sell products on an order-by-order basis and manage product portfolios aligned to both channel and specific customer
management strategies.

Our
UK business has a sales team of approximately 300 employees and a marketing group of approximately 100 employees, including employees of Jacob's which we acquired in 2004. During
2005 we will be restructuring the sales and marketing functions to support the integration of Jacob's. As a result, we anticipate a headcount reduction to facilitate the creation of an integrated and
focused commercial team.

Our
Southern Europe business has a sales team of approximately 130 employees and a marketing group of approximately 30 employees including employees of Triunfo, which we acquired in
2004. Plans have been put in place to integrate our existing Portuguese sales and marketing teams with the commercial teams in Triunfo. These plans, while principally centered on delivering our sales
strategy, will include some headcount reduction.

Our
Northern Europe business has a commercial team of approximately 140 employees of whom some 90 employees comprise the sales team and 50 employees are involved in marketing activities.

To
create brand awareness, build customer loyalty and stimulate demand for our branded products, we devote substantial resources to selling and marketing our products through a
combination of advertising, consumer promotions and trade promotions. We advertise our products through television, radio and print media. Our consumer promotions feature in-store and
on-package promotions such as collectibles and coupons redeemable for school supplies. Our trade promotions typically include special displays and product value promotions. We tailor our
strategies to our local markets. In addition, resource is allocated to product innovation to meet the changing needs of the consumer, such as "better-for-you" options.

Competition

The biscuit and snack markets are highly competitive. We compete against numerous businesses of varying sizes, both in the United Kingdom and in continental
Western Europe. We compete primarily on the basis of the quality of our products, product innovation, price, the strength of our brands and our relationships with retailers.

Principal
biscuit suppliers in the United Kingdom include Burton's Foods (controlled by Hicks, Muse, Tate & Furst, a U.S. private equity firm), whose key brands include Cadbury Fingers(produced under a
license from Cadbury),Wagon Wheels,Maryland
CookiesandJammie Dodgers; Northern Foods, which marketsFox'sbranded
products; and Nestlé, whose key brands are:KitKat,Blue Ribandand Breakaway.

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The
biggest biscuit supplier in the continental Western European biscuit markets in which we operate is Danone, whose key brands include: Prince,Petit Ecolier,Pims, Pepito,Mikado,Barquette,Belin
Crackersand theTaillefine/Vitalineahealthy biscuit range.

Among
the principal suppliers in the United Kingdom of snacks is PepsiCo Inc.'s United Kingdom subsidiary, Walkers Snackfoods, which is the largest participant in the category.
Walkers' key brands includeWalkers Crisps,Monster Munch, Quavers,Wotsits,
DoritosandFrench Fries. We also
compete in the United Kingdom with Golden Wonder, whose key brands areNik NaksandWheat Crunchies.

The
principal methods of competition in our industry include new product development, advertising and media campaigns, effective management of retailer relationships, consumer and price
promotions and overall pricing strategy. We have sourced our competition information principally from AC Nielsen continuous research retail audit data.

Regulatory Matters

As a manufacturer of products intended for human consumption, we are subject to extensive governmental regulation from both national and pan-European
governmental entities concerning, among other things, product composition, packaging, labeling, advertisement and the safety of our products; the health, safety and working conditions of our
employees; integrated pollution
control; and our competitive and marketplace conduct. These include, in the United Kingdom, the Food Safety Act 1990 and the Food Standards Act 1999 and associated food labeling regulations and, in
the European Union, E.U. Directives on general product safety, control of foodstuffs and regulation of food additives. We are also subject to a broad range of environmental laws and regulations; see
D."Property, Plants and EquipmentEnvironmental Matters."

Our
business and commercial arrangements, including acquisitions and commercial contracts, are subject to extensive regulation under the competition laws of the European Union, United
Kingdom, and other EU Member States insofar as they relate to acquisitions and joint ventures, contractual relationships, and various distribution practices. We cannot assure you that all the terms of
our business and commercial arrangements are not currently or will not be made unenforceable under these laws and regulations.

From
time to time, additional legislative initiatives may be introduced that may affect our operations and the conduct of our businesses, and we cannot assure you that the cost of
complying with these initiatives or that the effects of these initiatives will not have a material adverse effect on our profitability or financial condition in the future. We operate systems and
policies to ensure that we are complying with the statutes and regulations that impact our operations.

Intellectual Property

We own a substantial number of registered and unregistered trademarks in countries throughout the world for use in connection with the sale, marketing and
manufacture of our biscuits and snack products. These trademarks are critical to our operations because brand-name recognition is a key factor in the success of many of our product lines.
The current registrations of these trademarks are effective for varying periods of time and may be renewed periodically provided we comply with all applicable laws. See Item 5.C. "Operating and
Financial Review and ProspectsResearch and Development, Patents, Licenses etc.Trademarks and Licenses."

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C. Organizational Structure

The following chart shows our corporate structure:

GRAPHIC

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The
following table sets forth our significant subsidiaries, their geographic locations and our ownership interest.

|Subsidiary                         |  | Geographic Location |  | Ownership Interest |  
|---------------------------------- |  | ------------------- |  | ------------------ | -
|Regentrealm Limited                |  | United Kingdom      |  | 100                | %
|Finalrealm Limited                 |  | United Kingdom      |  | 100                | %
|United Biscuits (Holdings) Limited |  | United Kingdom      |  | 100                | %
|McVitie & Price Limited            |  | United Kingdom      |  | 100                | %
|United Biscuits (UK) Limited       |  | United Kingdom      |  | 100                | %
|UB Investments plc                 |  | United Kingdom      |  | 100                | %
|UB Overseas Limited                |  | United Kingdom      |  | 100                | %
|UB Group Limited                   |  | United Kingdom      |  | 100                | %
|UB Foods US Limited                |  | United Kingdom      |  | 100                | %
|Ross Young's Holdings Limited      |  | United Kingdom      |  | 100                | %
|The Jacob's Bakery Limited         |  | United Kingdom      |  | 100                | %
|United Biscuits France SAS         |  | France              |  | 100                | %
|United Biscuits Industrie SAS      |  | France              |  | 100                | %
|UB Investments (Netherlands) BV    |  | The Netherlands     |  | 100                | %
|Koninklijke Verkade NV             |  | The Netherlands     |  | 100                | %
|NV Biscuits Delacre SA             |  | Belgium             |  | 100                | %
|United Biscuits Iberia, S.L.       |  | Spain               |  | 100                | %
|Galletas United Biscuits S.A       |  | Spain               |  | 100                | %
|Carnes y Conservas Espanolas S.A.  |  | Spain               |  | 100                | %
|United Biscuits Portugal S.A.(1)   |  | Portugal            |  | 100                | %

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D. Property, Plants and Equipment

Manufacturing Facilities

We owned and operated 24 manufacturing facilities during 2004. Our biscuit facility in Ashby-de-la-Zouch was closed in
November 2004 and production transferred to our other biscuit manufacturing facilities in the United Kingdom. The crisps and snacks facility at Deventer in the Netherlands was sold, together
with the business activity, in August 2004. We acquired a biscuit manufacturing facility in Portugal as a result of the acquisition of Triunfo in August 2004 and two biscuit
manufacturing facilities in the United Kingdom, at Aintree and Wigston, as a result of the acquisition of Jacob's in September 2004. Our manufacturing network is characterized by large,
well-invested facilities in the United Kingdom, which typically operate at relatively high utilization levels, and smaller, more specialized facilities in continental Western Europe. The
following maps and accompanying text set forth the location and principal uses of our 22 current manufacturing facilities, including capacity in thousands of tonnes. Our biscuit factory in Carlisle
was subject to heavy flooding over the weekend of January 8 and 9, 2005 as a result of bad weather conditions in the local area and as a result production capability is currently restricted.
See Item 5.A. "Operating and Financial Review and ProspectsOperating ResultsSubsequent Event."

United Kingdom

GRAPHIC

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Continental Western Europe

GRAPHIC

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Environmental Matters

Our past and present business operations and ownership and operation of real property are subject to a broad range of environmental laws and regulations in each
of the jurisdictions in which we operate, such as the Environmental Protection Act 1990, the Water Resources Act 1991 and the Pollution Prevention and Control Act 1999, among others, in the United
Kingdom. These laws and regulations impose increasingly stringent environmental protection standards on us and affect, among other things, air emissions, wastewater discharges, the use and handling of
hazardous materials, noise levels, energy efficiency, waste disposal practices and environmental clean-up. As a result, we may be exposed to substantial environmental costs and
liabilities, including liabilities associated with divested assets and past activities. We are not aware of any existing environmental liabilities, claims, investigations or proceedings that could
reasonably be expected to have a material adverse impact on our financial position. However, we cannot predict future environmental liabilities nor can we assure you that the amounts we have provided
and budgeted for will be adequate.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results

Overview

Until 2004, our operations were divided into seven segments, reflecting our internal operational management structure. The segments comprised UK Biscuits,
Northern Europe, Southern Europe, UK Snacks, General Export and Central. The seventh segment, Other, comprised our Benelux snacks business which was sold in August 2004 and the results of which
have now been classified as discontinued operations.

During
2003 we reviewed our business operations in the United Kingdom and as a result, from the beginning of 2004, we created a single UK business unit by merging our UK Biscuits and UK
Snacks business units. We believe that this will enable us to meet our growth objectives in the United Kingdom market by working more effectively with key customers and addressing consumer needs in
the broader snacking market. We now manage our business through a region-based organizational structure with five segments comprising UK, Northern Europe, Southern Europe, International Sales
(formerly General Export) and Central.

Triunfo,
which was acquired in August 2004, is managed within the Southern Europe business segment and its results of operations from the date of acquisition have accordingly been
incorporated within that segment. Jacob's, which was acquired in September 2004, is managed within the UK business segment and its results of operations from the date of acquisition have
accordingly been incorporated within that segment.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 2 of Notes to the Financial Statements appearing elsewhere in this annual report and conform with
U.K. GAAP. Our critical accounting policies are those which have a significant impact on the reporting of our financial condition, results of operations and cash flows, and that require significant
management judgment and estimates. Critical accounting policies relate to asset impairments, pensions and turnover, marketing and promotional expenses.

Asset Impairment

In accordance with U.K. GAAP, the carrying values of goodwill, purchased brands and tangible fixed assets are reviewed when events or changes in circumstances
indicate that the balance sheet carrying amount may not be recoverable. Indications of impairment are a matter of judgment and may arise, for example, as a result of changing patterns of customer
behavior or general economic and industry conditions. Where there are indications of impairment, estimates are made of the future cash flows expected to result from the use of the asset and its
eventual disposition. If the carrying value of goodwill, purchased brands and tangible fixed assets is greater than its value in use to us or its net selling price, the carrying value of assets is
written down to their recoverable amount. Actual outcomes could vary significantly from such estimates of discounted future cash flows. Under U.S. GAAP, the carrying value of capitalized goodwill and
purchased brands is subject to an annual impairment review and the carrying value of tangible fixed assets is reviewed where there are indications of impairment.

Pension Costs

The determination of our obligation and expense for pension costs is based on recognized actuarial methods and dependent on our selection of certain assumptions
used by actuaries in calculating such amounts. These assumptions are set out in Note 20 of Notes to the Financial Statements appearing elsewhere in this annual report and include the discount
rate, the expected long-term rate of return on plan assets and rates of increase in compensation. In accordance with both U.K. GAAP and U.S. GAAP, actual results that differ from our
assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense and recorded obligation in such future

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periods.
Our independent actuaries guide us in selecting our assumptions and, while we believe our assumptions are appropriate, significant differences in our actual experience or significant changes
in our assumptions could materially affect our pension obligations and our future expense.

Turnover, Marketing and Promotional Expenses

Accrued liabilities requiring difficult and often subjective judgments include liabilities associated with trade discounts and marketing promotions programs. We
utilize numerous trade promotion and discount programs and these costs are recognized as a deduction from turnover. A corresponding accrued liability is recorded at the time of dispatch of our
products for the amount that will be necessary to meet subsequent claims made by customers in respect of discounts and rebates, based on management's estimates. The accrued liability is determined
through analysis of programs, historical trends, expectations around customer and consumer participation, turnover and payment trends and experiences associated with similar programs we have offered
previously. Provision is made for any anticipated claim and released, to the extent unutilized, once the likelihood of such a claim being made has become remote.

Significant Factors Affecting Our Results of Operations

Our consolidated results of operations have been affected by a number of factors, including acquisitions and dispositions, restructuring programs, our business
strategies, currency fluctuations and industry trends.

Acquisitions and Dispositions

Our strategy is to focus on key United Kingdom and continental Western European markets and on profitable branded growth. As a result of these strategies, we have
made a number of acquisitions and dispositions, which have affected our results of operations. The following is a summary of the material acquisitions and dispositions undertaken since
December 30, 2001, apart from the Transactions, see Item 7. B."Major Shareholders and Related Party TransactionsRelated Party Transactions."



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Restructuring Programs

We have an ongoing comprehensive cost-savings program, focusing on improved manufacturing efficiency and overhead cost control.

During
2002 we closed our Ede biscuit factory in the Netherlands and subsequently sold the site. We also sold Aguilar, one of our three biscuit manufacturing facilities in Spain,
transferred some of the production undertaken at that facility to our other Spanish biscuit facilities and entered into a manufacturing supply agreement. We also sold a small biscuit factory in
Hatton, Scotland. During 2002, cash expenditure on our restructuring programs was £36.1 million.

During
2003, we announced a proposal to close our biscuit factory at Ashby-de-la-Zouch by the end of 2004 to improve our
factory utilization and enable us to effectively support growth in our priority brands. We transferred approximately one-third of production to other sites and completed the first phase of
the redundancy program. We closed our small dry mix facility in Tunisia, transferring production to our dry mix facility at Montornes in Spain, to reduce organizational complexity. During 2003, cash
expenditure on our restructuring programs was £32.3 million.

During
2004, cash expenditure on our restructuring programs was £37.9 million. During the year, we sold our loss-making Benelux snacks business and
incurred restructuring costs in connection with a rationalization program to facilitate the sale. We are in the process of integrating Triunfo into our Southern Europe business segment and in
particular integrating our existing Portuguese marketing activity with Triunfo and we are in the process of integrating Jacob's into our UK business segment. We also completed the closure of our
biscuit facility at Ashby-de-la-Zouch. We transferred the remaining two-thirds of production to other facilities in the United Kingdom and completed the
redundancy program. Approximately 880 employees were made redundant as a result of the closure and approximately 410 new jobs were created at other sites in connection with the transfer of production.
Over the two-year implementation period, we incurred total restructuring and related capital expenditure of approximately £42.9 million in connection with this closure,
as well as a non-cash charge of £10.8 million for fixed asset impairment.

Business Strategy

Our strategy is to deliver profitable branded growth funded by cost release. A key platform for this strategy is to ensure strong growth from our most important
brands. We have prioritized our markets and identified brands that have a strong current consumer image, financial scale, high margins and growth potential. We have continued to prioritize marketing
support and innovation behind these priority brands to drive higher levels of profitable branded growth. The remaining branded and retailer-branded products will continue to be managed to maximize
their profit contribution.

Currency Fluctuation

Although the majority of our sales are generated in the United Kingdom, our operations are geographically diverse, and in 2004, we had sales in approximately 100
countries and 24 manufacturing facilities located in six countries, which had reduced to 22 facilities in six countries by the end of 2004. As a result, our financial position and results of
operations are subject to both currency transaction risk and currency translation risk.

Currency Transaction Risk

Due to our geographically diversified customer base, we generate a portion of our revenues from sales in currencies other than those in which we regularly operate
and incur expenses. We also have long-term borrowings and related interest payment obligations in currencies other than pounds sterling.

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We
hedge against currency transaction risk by matching cash inflows in a particular currency with our costs and interest payments in the same currency. We enter into forward foreign currency contracts
to hedge against our exposure to foreign currency exchange rate fluctuations in, among other things, the purchase of raw materials and in our International Sales business. From time to time, we also
purchase forward foreign currency contracts to hedge against expected net exposure to foreign currency exchange rate fluctuations with particular contractual commitments. As of January 1, 2005,
we had total forward currency contracts equivalent to £67.7 million, with an aggregate unrealized net gain of £0.1 million on those instruments at that date.

Currency Translation Risk

The financial condition and results of operations of our overseas subsidiaries are measured and recorded in the relevant domestic currency of the jurisdiction in
which the subsidiaries are located and then translated into pounds sterling for inclusion in our consolidated financial statements. In 2002 and 2003, the depreciation of the pound sterling against the
euro had a positive impact on our sales and operating profit as reported in pounds sterling. In 2004, the appreciation of the pound sterling against the euro had a negative impact on our sales and
operating profit. We borrow in local currencies, as appropriate, to minimize the impact of currency translation risk from our overseas operations on our balance sheet.

Industry Factors

Our financial condition and results of operation are also influenced by industry trends. In recent years, there has been increased consolidation among the major
grocery retailers in the United Kingdom as well as in continental Western Europe. These consolidations have concentrated sales channels, increased the bargaining power of the major grocery retailers
and intensified price competition among these retailers. As a result, grocery retailers and manufacturers frequently engage in pricing campaigns such as "Everyday Low Price" and "Buy One Get One Free"
in order to promote their products and gain market share. These campaigns have generally lowered our margins by increasing our
short-term promotion costs, but this effect is partially offset by the additional sales made as a result of these campaigns.

Since
2003, it has become more difficult to recover the full effect of cost inflation from retailers in the United Kingdom. Price competition between retailers has also reduced retail
prices for some retailer-branded products, affecting demand for our branded product offering. On some "key-value" branded items, retail prices have been reduced; however, this has reduced
the incentive for retailers to support these products with in-store promotions.

Retailers
focused on offering a reduced choice but lower price range to consumers (discount formats) are continuing to grow at a faster rate in our markets, notably in Northern Europe
and in Ireland. These retailers typically carry few branded goods, with their own-branded products priced at a significant discount to manufacturer-branded products and traditional
supermarket own-label products. This has tended to contribute to the price competition in the grocery retail market.

Consumer
demand for food products has been strongly influenced by the trends toward out-of-home eating and away from the traditional
three-meals-a-day eating pattern. Consumers now demand convenience foods, including biscuit and snack products that offer greater variety, healthier alternatives and more
portable and practical packaging. These trends have added to the significance of convenience and impulse channels. Retailers in these distribution channels generally seek branded products with high
turnover.

Seasonality and Accounting Periods

Due to the nature of our business and the food industry in general, we manage our business and financial accounting on a weekly basis. Our fiscal year consists of
52 calendar weeks and is divided into 13 periods, each consisting of four calendar weeks. Our first fiscal quarter consists of four four-week periods, totaling 16 weeks, and our remaining
three fiscal quarters each consist of three four-week

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periods,
totaling 12 weeks. Every five or six years, we lengthen the final period of our fiscal year to five weeks, so that our fourth quarter consists of 13 weeks and our fiscal year consists of 53
weeks. Our 2003 fiscal year consisted of 53 weeks. Our next fiscal year, covering 2005, will consist of 52 weeks and will end on December 31, 2005.

Southern
Europe presents its financial information based on 12 calendar months and a fiscal year ended December 31. Its results are included in our consolidated results on the
following basis:

Southern Europe
quarter ended

Corresponding
UB fiscal quarterMarch 31

Quarter 1 (16 weeks)June 30

Quarter 2 (12 weeks)September 30

Quarter 3 (12 weeks)December 31

Quarter 4 (12/13 weeks)


The
difference in reporting periods does not have a material effect on reported results.

Jacob's
currently presents its financial information based on 12 calendar months and a fiscal year ended December 31. Until Jacob's accounting systems are fully integrated into
the UK business, its results will be consolidated on the same basis as the Southern Europe business.

As
a result of the seasonality of our sales and our fiscal accounting conventions, our results of operations for any given fiscal quarter will not necessarily indicate our results for
the full year. For a description of the seasonality of our business, see Item 4.B. "Information on the CompanyBusiness OverviewSeasonality."

The
following table shows our sales per quarter and the average sales per four-week accounting period in 2004, by fiscal quarter:

|Continuing Operations     |  | 52-week Period Ended January 1, 2005
|------------------------- |  | ------------------------------------
|
|
|UK                        |  | 211.6                               
|Northern Europe           |  | 51.9                                
|Southern Europe           |  | 45.2                                
|International Sales       |  | 10.6                                
|                          |  |                                     
|Total                     |  | 319.3                               
|                          |  |                                     
|Average per 4-week period |  | 79.8                                
|                          |  |                                     

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Results of Operations

The following table summarizes the results of our continuing operations for 2002, 2003 and 2004. Continuing operations include Triunfo from August 1, 2004
and Jacob's from September 20, 2004, the dates of their respective acquisition, but exclude the results of the Benelux snacks business, which was sold on August 16, 2004, and which are
now disclosed as discontinued operations. The financial data

---



presented
below has been derived from and should be read in conjunction with our consolidated Financial Statements included elsewhere in this annual report.

|                                                                                    |  | 2004    |   | 2003
Restated(2) |   | 2002
Restated(2) |  
|----------------------------------------------------------------------------------- |  | ------- | - | ---------------- | - | ---------------- | -
|
|Sales                                                                               |  | 1,210.1 |   | 100.0            |   | 1,170.7          |  
|Cost of sales                                                                       |  | (760.4  | ) | (62.8            | ) | (709.3           | )
|                                                                                    |  |         |   |                  |   |                  |  
|Gross profit                                                                        |  | 449.7   |   | 37.2             |   | 461.4            |  
|Distribution, selling and marketing expenses                                        |  | (253.2  | ) | (20.9            | ) | (248.9           | )
|Administrative expenses                                                             |  | (101.0  | ) | (8.4             | ) | (96.1            | )
|Other income/(expenses)                                                             |  | 8.2     |   | 0.7              |   | (1.5             | )
|                                                                                    |  |         |   |                  |   |                  |  
|Group operating profit before goodwill amortization and operating exceptional items |  | 103.7   |   | 8.6              |   | 114.9            |  
|                                                                                    |  |         |   |                  |   |                  |  
|Business profit(1)                                                                  |  | 164.0   |   | 13.6             |   | 170.9            |  
|                                                                                    |  |         |   |                  |   |                  |  

---

Until
2004, our operations were divided into seven segments, reflecting our internal operational management structure. The segments comprised UK Biscuits, Northern Europe, Southern
Europe, UK Snacks, General Export and Central. The seventh segment, Other, comprised our Benelux snacks business which was sold in August 2004 and the results of which have now been classified
as discontinued operations. During 2003 we further reviewed our business operations in the United Kingdom and as a result, at the end of 2003, we created a single UK business unit by merging our UK
Biscuits and the UK Snacks business units. This change to the UK business structure will help us meet our strategic objectives and current and future business needs. In particular, we believe that
this will enable us to meet our growth objectives in the United Kingdom market by working more effectively with key customers and addressing consumer needs in the broader snacking market.

---



We
now manage through a region-based organizational structure with five segments. These segments comprise:

|UK                  |  | Markets and manufactures biscuits, cakes, savory snacks, packaged nuts and crisps in the United Kingdom and markets biscuits, cakes, savory snacks, packaged nuts and crisps in the Republic of Ireland. The results of Jacob's have been included in this
segment from the date of acquisition.
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Northern Europe     |  | Markets and manufactures biscuits in France, the Netherlands and Belgium.                                                                                                                                                                                                                       
|Southern Europe     |  | Markets and manufactures biscuits, dry dessert mixes, fruit juice, canned meat and tomato products in Iberia. The results of Triunfo have been included in this segment from the date of acquisition.                                                                                           
|International Sales |  | Exports branded products to approximately 100 countries around the world through third party distributors (formerly General Export).                                                                                                                                                            
|Central             |  | Includes corporate governance costs, including executive costs, and the costs of our legal, company secretarial, pension administration, tax and treasury functions.                                                                                                                            

The
results for 2002 and 2003 have been restated to reflect the current management structure. UK Biscuits and UK Snacks results have been combined and reported as UK and the results of
Benelux snacks have been excluded from continuing operations.

---



The following table summarizes the results of our business segments for 2002, 2003 and 2004:

|Continuing Operations |  | 2004    |  | 2003
Restated(2) |  | 2002
Restated(2)
|--------------------- |  | ------- |  | ---------------- |  | ----------------
|
|UK.                   |  | 775.5   |  | 64.1             |  | 734.4           
|Northern Europe       |  | 169.6   |  | 14.0             |  | 179.8           
|Southern Europe       |  | 200.0   |  | 16.5             |  | 185.6           
|International Sales   |  | 65.0    |  | 5.4              |  | 70.9            
|                      |  |         |  |                  |  |                 
|Total                 |  | 1,210.1 |  | 100.0            |  | 1,170.7         
|                      |  |         |  |                  |  |                 

|                    |  | 2004  |   | 2003 |  | 2002 
|------------------- |  | ----- | - | ---- |  | -----
|
|UK.                 |  | 102.5 |   | 13.2 |  | 114.3
|Northern Europe     |  | 24.0  |   | 14.2 |  | 22.2 
|Southern Europe     |  | 36.6  |   | 18.3 |  | 31.3 
|International Sales |  | 13.0  |   | 20.0 |  | 15.8 
|Central             |  | (12.1 | ) |     |  | (12.7
|                    |  |       |   |      |  |      
|Total               |  | 164.0 |   | 13.6 |  | 170.9
|                    |  |       |   |      |  |      

---

Sales by Geographic Destination

Our sales from continuing operations by geographic destination for 2002, 2003 and 2004 were as follows:

|                   |  | 2004    |  | 2003
Restated(1) |  | 2002
Restated(1)
|------------------ |  | ------- |  | ---------------- |  | ----------------
|
|U.K. and Ireland   |  | 774.5   |  | 64.0             |  | 731.5           
|Continental Europe |  | 380.0   |  | 31.4             |  | 386.1           
|Other              |  | 55.6    |  | 4.6              |  | 53.1            
|                   |  |         |  |                  |  |                 
|Total              |  | 1,210.1 |  | 100.0            |  | 1,170.7         
|                   |  |         |  |                  |  |                 

---

Turnover

We have revised the definition of turnover to reflect emerging best practice in the United Kingdom provided by Application Note G to Financial Reporting
Standard 5 "Reporting the Substance of Transactions" ("FRS 5"). As a result of this change, certain payments to customers are now reported as a direct deduction from revenue rather than within
distribution, selling and marketing costs.

Our
turnover now reflects sales to third parties after trade discounts and excludes sales-related taxes. Trade discounts include sales incentives, up-front payments and other
non-discretionary payments. We derive our sales from manufacturing and marketing biscuits and savory snacks in the United Kingdom, Ireland, France, the Netherlands and Belgium and from our
export business. We also derive revenues from marketing and manufacturing biscuits, dry dessert mixes, fruit juice, canned meat

---



and
tomato products in Iberia. Our principal geographic market is the United Kingdom and Ireland, which accounted for approximately 64% of the sales of our continuing operations in 2004. Sales of our
branded products represented approximately 85% of our 2004 sales, with the remainder representing retailer-branded products.

Cost of Sales

Our cost of sales includes the costs of ingredients, packaging materials, direct labor and manufacturing overhead. The major ingredients we use are flour, sugar,
cocoa and chocolate, dairy products, fats and oils, nuts, fruits, potatoes and flavorings. Our labor costs include salaries, hourly wages and other direct costs of employment. Productivity
improvements and restructuring programs have reduced labor costs. Manufacturing overhead includes the cost of utilities, plant supervision and management costs, technical and engineering support
costs, health and safety compliance costs, maintenance and insurance costs, quality control costs and depreciation expenses relating to manufacturing equipment.

Distribution, Selling and Marketing Expenses

Our distribution expenses represent the cost of warehousing our products and transporting them to our distributors and retail customers. Our selling expenses
represent operating costs associated with our sales force, including employee compensation and commissions. Our marketing expenses consist of advertising expenses and marketing overhead costs. Our
distribution, selling and marketing expenses also include costs associated with new product development.

Administrative Expenses

Our administrative expenses consist primarily of costs associated with our finance, human resource, procurement, information technology and general management
functions.

Business Profit

Business profit from continuing operations for the 52 weeks ended January 1, 2005, which includes currency translation losses of
£1.1 million, decreased by £6.9 million, or 4.0%, from £170.9 million in 2003 to £164.0 million. After deducting the
increase attributable to Jacob's and Triunfo, underlying business profit decreased by £23.7 million, or 13.9%, to £147.2 million. The reduction in business profit
in 2004 is principally due to lower business profit in our UK and International Sales businesses partially offset by continued business profit growth in our Northern Europe and Southern Europe
businesses. The reduction in business profit in our UK business was due to cost inflation, increased promotional costs and a change in product and customer mix resulting in proportionally higher sales
of lower-margin products, partially offset by savings generated by our cost-reduction initiatives.

The
business profits from continuing operations for the 52 weeks ended January 1, 2005 would have been £176.9 million if both Triunfo and Jacob's had been
acquired as of the beginning of the financial year. This pro forma result does not include any anticipated cost savings or other effects of integration of Jacob's or Triunfo. Accordingly this amount
is not necessarily indicative of the results that would have occurred if the acquisitions had occurred on the date indicated, or that may result in the future.

Fiscal 2004 (Year ended January 1, 2005) compared to Fiscal 2003 (Year ended January 3, 2004)

Continuing Operations

The following discussion relates to our continuing operations. Amounts for 2003 have been restated to reflect the reclassification of our Benelux snacks business
as discontinued operations and to reflect the revised definition of turnover, see "Results of OperationsTurnover" above.

---



Turnover

|                                             |  | 2004    |   | 2003    |  | %    |  
|-------------------------------------------- |  | ------- | - | ------- |  | ---- | -
|
|Turnover from continuing operations          |  | 1,210.1 |   | 1,170.7 |  | 3.4  |  
|Less: Triunfo                                |  | (8.6    | ) |        |  |      |  
|Less: Jacob's                                |  | (61.7   | ) |        |  |      |  
|                                             |  |         |   |         |  |      |  
|Adjusted turnover from continuing operations |  | 1,139.8 |   | 1,170.7 |  | (2.6 | )
|                                             |  |         |   |         |  |      |  

Turnover
from continuing operations increased from £1,170.7 million in 2003 to £1,210.1 million in 2004, an increase of
£39.4 million, or 3.4%. After deducting the increase attributable to the inclusion of Triunfo and Jacob's, underlying sales decreased by £30.9 million, or 2.6%,
including currency translation losses of £7.5 million.

Our
strategy in relation to our brands is to drive growth in our priority brand sales by providing increased focus and marketing investment behind our priority brands and to manage
non-strategic brands and retailer brands to maximize profitability. Total priority brand sales, excluding Jacob's and Triunfo, grew by 0.2% across our business in 2004, reflecting an
increasingly competitive Western European market.

Sales
of branded products increased by 4.8% due to sales growth in Southern Europe and to the sales from Jacob's and Triunfo that we acquired in 2004. The growth was offset by decreased
sales in our UK and Northern Europe businesses. The decline in our UK business was due to the particularly challenging biscuit and snacks market environments in 2004. Northern Europe's performance has
been adversely impacted by the retailer price war in the Netherlands in the first quarter of 2004 and the impact of the Sarkozy price directive in France, which has forced retail price reductions on
leading brands in all key fast moving consumer goods sectors.

Sales
of our less profitable, non-branded products declined in 2004 by 3.5%. Additional non-branded business in Jacob's was offset by a reduction in the supply of
products to Danone. While the majority of these contract sales have now ceased, we continue to supply a small number of products. Additional details on our turnover are provided within the analysis of
our segmental performance.

Cost of Sales

|                                                  |  | 2004  |   | 2003  |  | %  
|------------------------------------------------- |  | ----- | - | ----- |  | ---
|
|Cost of sales from continuing operations          |  | 760.4 |   | 709.3 |  | 7.2
|Less: Triunfo                                     |  | (5.2  | ) |      |  |    
|Less: Jacob's                                     |  | (37.1 | ) |      |  |    
|                                                  |  |       |   |       |  |    
|Adjusted cost of sales from continuing operations |  | 718.1 |   | 709.3 |  | 1.2
|                                                  |  |       |   |       |  |    

Cost
of sales from continuing operations increased from £709.3 million in 2003 to £760.4 million in 2004, an increase of
£51.1 million, or 7.2%. After deducting the increase attributable to the inclusion of Triunfo and Jacob's, underlying cost of sales increased by £8.8 million, or
1.2%. This compared to a sales decrease of £30.9 million, or 2.6%, for the year. This is predominantly due to prime-cost inflation in the UK, which we were not able to
recover through price increases to our customers. Cost savings achieved through the implementation of manufacturing-efficiency projects have partially mitigated the inflation increase. We have also
continued to achieve savings through our "eSourcing initiative," which allows suppliers to tender for contracts on-line. We continue to implement changes in ways of working across our UK
and Northern European supply chains. This requires significant organizational changes that, together with our other manufacturing-efficiency programs, are expected to continue to deliver benefits
throughout 2005.

---



Gross Profit

|                                                 |  | 2004  |   | 2003  |  | %    |  
|------------------------------------------------ |  | ----- | - | ----- |  | ---- | -
|
|Gross profit from continuing operations          |  | 449.7 |   | 461.4 |  | (2.5 | )
|Less: Triunfo                                    |  | (3.4  | ) |      |  |      |  
|Less: Jacob's                                    |  | (24.6 | ) |      |  |      |  
|                                                 |  |       |   |       |  |      |  
|Adjusted gross profit from continuing operations |  | 421.7 |   | 461.4 |  | (8.6 | )
|                                                 |  |       |   |       |  |      |  

Gross
profit decreased from £461.4 million in 2003 to £449.7 million in 2004, a decrease of £11.7 million, or 2.5%. This equated
to a gross profit margin of 37.2% in 2004 compared to 39.4% in 2003. After deducting the increase attributable to the inclusion of Triunfo and Jacob's, underlying gross profit decreased by
£39.7 million, or 8.6%, and underlying gross profit margin was 37.0%. This reduction in gross profit margin was the result of a decline in gross profit margin in the UK business due
to increased promotional costs, price realignments on certain key products, pressure on trading terms from major retailers, higher sales of lower margin products and prime cost inflation, which was
partially offset by savings generated from our procurement and manufacturing cost savings initiatives.

Distribution, Selling and Marketing Expenses

|                                                                              |  | 2004  |   | 2003  |  | %    |  
|----------------------------------------------------------------------------- |  | ----- | - | ----- |  | ---- | -
|
|Distribution, selling and marketing costs from continuing operations          |  | 253.2 |   | 248.9 |  | 1.7  |  
|Less: Triunfo                                                                 |  | (1.6  | ) |      |  |      |  
|Less: Jacob's                                                                 |  | (8.4  | ) |      |  |      |  
|                                                                              |  |       |   |       |  |      |  
|Adjusted distribution, selling and marketing costs from continuing operations |  | 243.2 |   | 248.9 |  | (2.3 | )
|                                                                              |  |       |   |       |  |      |  

Distribution,
selling and marketing expenses increased from £248.9 million in 2003 to £253.2 million in 2004, an increase of
£4.3 million, or 1.7%. After deducting the increase attributable to the inclusion of Triunfo and Jacob's, underlying costs decreased by £5.7 million, or 2.3%.
There was a small reduction in expenditure on marketing to support our priority brands. Other distribution, selling and marketing overheads increased in 2004 in our key UK distribution channels,
including food service and van delivery. Savings from cost-reduction initiatives offset these increases.

---



Administrative Expenses

2004

2003

%(£ million)Administrative expenses from continuing operations(1)

101.0

96.1

5.1Less: Triunfo

(0.5
)
Less: Jacob's

(2.6
)
Adjusted administrative expenses from continuing operations(1)

97.9

96.1

1.9


---

Our
administrative expenses increased from £96.1 million for 2003 to £101.0 million in 2004, an increase of £4.9 million, or
5.1%. After deducting the increase attributable to the inclusion of Triunfo and Jacob's, our underlying administrative costs increased by £1.8 million, or 1.9%, due to overhead cost
inflation, partially offset by savings from cost-reduction initiatives. Amounts due under our management incentive schemes for 2003 and 2004 were limited due to performance targets not
being met in the UK. Certain performance targets were met in Northern Europe, Southern Europe and Jacob's.

The
majority of administrative costs are directly related to the operations of our business units and consequently charged to, and reflected in, the segmental operating results. The
balance of administrative costs that are not included within the segmental results are considered to be central costs and represent corporate governance costs, including executive costs, and the costs
of our legal, company secretarial, pension administration, tax and treasury functions. These costs decreased from £12.7 million in 2003, to £12.1 million in 2004.

Other Operating Expense/Income

Our other operating expense/income consists principally of royalties received in connection with long-standing licensing arrangements for some brands
in Japan and the United States, the results of undertaking hedging in connection with foreign currency transactions and any other amounts that arise from time to time that it is appropriate to include
as other expense/income.

Other
operating income for 2004 amounted to £8.2 million compared to a £1.5 million expense for 2003. The income in 2004 was primarily the result of
hedging our foreign currency transactions, which due to fluctuations in the exchange rates during that period, particularly in connection with our U.S. dollar transactions, resulted in gains. The
expense in 2003 was primarily the result of hedging our foreign currency transactions, which due to fluctuations in the exchange rates during that period, particularly in connection with our U.S.
dollar transactions, resulted in losses. Some of the losses were offset by gains arising in North America in our International Sales business.

Amortization of Goodwill and Intangible Fixed Assets

Goodwill amortization was £37.7 million for 2004 compared to £36.5 million for 2003. The charge reflects the amortization of
goodwill arising on the UB acquisition completed in April 2000, the acquisitions of UB Iberia and UB Tunisia completed in July 2000 and April 2001, respectively and the
acquisitions of Triunfo and Jacob's completed in August 2004 and September 2004, respectively. The increase in the charge for 2004 compared to 2003 reflected the additional goodwill
amortization charge in connection with the goodwill and intangible fixed assets associated with the Triunfo and Jacob's acquisitions.

Interest

Interest amounted to £163.2 million in 2004 compared to £158.2 million in 2003, and arose mainly on the debt incurred in
connection with the UB acquisition. After adjusting for the non-cash interest

---



payable
to related companies amounting to £98.0 million in 2004 and to £89.2 million in 2003, the interest charge decreased from £69.0 million
in 2003 to £65.2 million in 2004. This decrease was due to a lower amortization charge on deferred finance costs in 2004, along with a credit in respect of amortization of debt
premium arising on the issue of additional senior subordinated notes on February 16, 2004. The decrease was partly offset by higher interest payable on our senior credit facility following the
refinancing on September 20, 2004, and interest payable on the additional senior subordinated notes.

Taxation

We had a tax charge of £3.7 million for 2004 compared to a tax credit £10.2 million for 2003. The
year-on-year movement of £13.9 million was due to an increase of £16.4 million in the deferred tax charge arising under Financial
Reporting Standard 19 "Deferred Tax," an increase in the current-year current tax charge of £2.6 million and an increase in the prior-year current tax credit
of £5.1 million.

Adoption of International Financial Reporting Standards ("IFRS")

We are adopting IFRS for our 2005 fiscal year. In order to do this, we have implemented a conversion process. This process involves the establishment of a
transition calendar, identification and quantification of the main differences between U.K. GAAP and IFRS, identification of the impacts on reporting systems, and preparation of training programs for
the employees who will be impacted by IFRS adoption.

We
have identified a number of differences between U.K. GAAP and IFRS that will affect us. These differences include, but are not limited to, the presentation of financial instruments
and the accounting for goodwill, pensions, business combinations and asset impairment.

We
intend to present a quantified analysis of the differences resulting from the initial adoption of IFRS in our first quarter report for 2005.

Subsequent Event

Our biscuit factory in Carlisle was subject to heavy flooding over the weekend of January 8 and 9, 2005 as a result of bad weather conditions in the local
area. Carlisle is our second largest facility, in terms of utilization, in the United Kingdom and produces a range of products includingCarr's Table
Water,McVitie's Ginger Nuts,Crawford's Bourbon Creamsand Crawford's Custard Creams. The facility has 12 production lines and manufactures biscuits with a sales value of approximately
£112 million per annum.

Following
the initial response aimed at ensuring the health and safety of our employees, the Carlisle site team focused on cleaning up the facility and restoring mains services, both of
which were substantially achieved in the first four weeks, finalizing the assessment of damage, and re-establishing production activity as quickly as possible. In addition, we took steps
to source lost production at our other facilities and through third-party manufacturers as appropriate. Our Carlisle employees are all now back on site and they continue to support all aspects of the
recovery plan, including production, training, plant start-up preparation and business-in-the-community projects. We currently have two production lines
in operation makingCrawford's Custard CreamsandMcVitie's Fruit Shortcake, and anticipate starting up
another four production lines by around the middle of April. These six production lines account for over three-quarters of the production at the site. In addition, two wrapping lines are operating,
handling product baked elsewhere, and we are able to mouldMcVitie's Gold Barson a further line.

In
accordance with normal practice, and as required under the terms of the Senior Credit Facility, we carry insurance. The material damage insurance we carry covers the costs of the
clean up and the cost of repairs of plant and machinery or replacement where necessary. We are working with loss adjusters to establish which items of plant can be repaired and which will require
replacement. Our insurers have agreed in principle that material damage claims will be reimbursed on a basis that results

---



in
minimal impact on our cash flows. Our first claim for £4.5 million, less a deduction of £1.0 million to cover our insurance excess, has been paid. We also
carry substantial business interruption insurance, which allows us to claim for a period of up to 30 months after an event. Business interruption insurance claims are more complex and we are
working on the methodology with our insurers. It has been accepted, in principle, that periodic payments should apply to these claims as well. We have submitted an interim claim to cover losses up to
the end of the second period of 2005 in the sum of £5.6 million. Our insurers have recommended payment of £5.3 million of this, which we expect to receive
shortly. In addition, we are in discussion with the North West Development Agency concerning a grant that they have offered to assist in the reopening of the site.

Segmental Performance

The following discussion includes references to "constant exchange rates." Constant exchange rates state the results of our previous year presented at the same
internal exchange rate as that used to translate the results of the most recent year. The constant exchange rate numbers are our non-GAAP, internal numbers and are not audited, however, we
believe that they are useful in our Segmental Performance to explain important trends within our business segments.

UK

On September 20, 2004 we acquired a 100% interest in Jacob's from Danone. Jacob's is a biscuit and snacks business with a strong presence in the savory
biscuit and crackers and crispbread segments of the United Kingdom biscuit market. This acquisition has significantly strengthened our brand portfolio, particularly in the savory biscuits and crackers
and crispbreads segment. Jacob's owns a number of well-known brands and products that are long-established and well-recognized by retailers and consumers. Some of
these, such asJacob's Cream CrackersandClubhave become household names in the United Kingdom. Other
popular Jacob's brands include:Cheddars, Thai Bites, Jacobites, Gem's, Family Circle, Jacob's Fig Rollsand Twiglets. In addition, Jacob's are licensed to
manufacture and market the Nabisco brandRitzin the
United Kingdom and Ireland and the Danone brandTUCin the United Kingdom.

Sales
increased from £734.4 million in 2003 to £775.5 million in 2004, an increase of £41.1 million, or 5.6%. After deducting the
increase attributable to Jacob's, sales decreased by £20.6 million, or 2.8%. We continued to experience challenging trading conditions in our UK business.

McVitie'score sales increased by 4.0% in 2004 compared to 2003. This was predominantly due to sales growth in the every day biscuits
segment, partially offset by lower sales in the same period in the every day treats segment.McVitie's Jaffa Cakesales decreased marginally by 0.6% in
2004 compared to 2003. The continued success of the new promotional program and marketing plan was offset by increased in-store support. Sales ofgo
ahead!demonstrated strong growth of 3.6% in the highly competitive healthier market, through the successful launch ofgo ahead! Yogurt
Breaksandgo ahead! Crispy Rice Crackers. Sales ofPenguindeclined by 13.4%
due to competitive pressures in the declining chocolate biscuit bar segment, although sales in the last quarter of 2004 improved.McVitie'scake sales
showed continued strong growth of 6.5% in 2004 compared to 2003 due to the continuing success of existing ranges, supported by the launch ofMcV Slices.
In total, branded biscuit sales declined by 0.7% in 2004 compared to 2003. Non-branded sales increased by 0.8% and contract sales to Danone decreased by 50.0% in the same period. The
Danone contract, a legacy from the UB acquisition, had substantially reduced by the end of 2002, although we continue to supply a small number of lines.

The
United Kingdom savory snacks market remained highly competitive. However,McCoy'ssales increased 15.0% in 2004 compared to 2003 due
to a successful marketing campaign and an increased multi-pack range.KPnuts sales grew by 2.5% in 2004 compared to 2003, due to growth in
sharing formats and increased grocery listings.Mini Cheddarssales have declined by 8.6% due to constraints on capacity as a result of the transfer of
production from the Ashby-de-la-Zouch factory in line with our plan. This transfer has now been successfully completed. The competition for promotional activity
within retail stores in 2004 was significant and contributed to the decline in the sales ofHula Hoops,

---



Mini CheddarsandSkipscompared to 2003. Overall, branded snacks sales decreased by 6.1% in 2004 compared to 2003 and
non-branded sales increased by 0.5% in the same period.

Business
profit decreased from £114.3 million in 2003 to £102.5 million in 2004. The decline in business profit was the result of increased
promotional costs in our snacks business, price realignment on certain key products, pressure on trading terms from major retailers, higher sales of lower-margin products and cost inflation partially
offset by savings generated from our cost-saving initiatives. As a result of this our gross profit margin declined from 38.0% in 2003 to 34.3% in 2004. Excluding the effect of Jacobs, the
gross profit margin declined to 33.8%.

In
2004, we closed our biscuit factory at Ashby-de-la-Zouch. Production has been transferred to our other biscuit factories in the United Kingdom.

In
January 2004, we disposed of our High Wycombe site where our research and development facility is located. We received net proceeds of £3.9 million and as
part of this transaction we leased back one-quarter of the site, retaining sufficient accommodation to continue our research and development activities.

Our
biscuit factory in Carlisle was subject to heavy flooding over the weekend of January 8 and 9, 2005 as a result of bad weather conditions in the local area. Following the
initial response aimed at ensuring the health and safety of our staff, the Carlisle site team focused on cleaning up the facility and restoring mains services, both of which were substantially
achieved in the first four weeks, finalizing the assessment of damage, and re-establishing production activity as quickly as possible. In addition, we took steps to source lost production
at our other facilities and through third-party manufacturers as appropriate. We currently have two production lines in operation makingCrawford's Custard
CreamsandMcVitie's Fruit Shortcake, and anticipate starting up another four production lines by the middle of April. In
addition, two wrapping lines are operating, handling product baked elsewhere, and we are able to mouldMcVitie's Gold Barson a further line. We have
made good progress with our insurers and loss adjusters in connection with our material damage and business interruption claims. Our first material damage claim has been paid and we anticipate a
payment on account of our first business interruption claim shortly, see "Subsequent Event" above.

Northern Europe

Sales decreased from £179.8 million in 2003 to £169.6 million in 2004, a decrease of £10.2 million, or
5.7%. In local currency, sales decreased by 5.8%, from €254.4 million in 2003 to €239.7 million in 2004. The lower sales were due principally to the
impact of the retailer price-war in the Netherlands which involved major brands including our ownVerkadeand Sultanabrands, competitive pressures in
Belgium and the Sarkozy directive in France.

At
constant exchange rates, priority-brand biscuit sales declined by 4.5% and branded biscuit sales declined 6.8% in 2004 compared to 2003. This was due to a slight decline in sales of SultanaandVerkadeproducts in the Netherlands and lower sales of DelacreandBNproducts in France.Sultanasales were
2.2% lower andVerkadesales were 1.0% lower in 2004 compared to 2003. This was due primarily to strong pricing pressures. The impact of pricing
pressures reduced following the first quarter of 2004 due to the success of our recovery plan. The launch ofSultana Yo Fruitis exceeding expectations
and gaining a significant foothold in the healthier segment. The launch ofVerkade Sponge BobandDoraalso exceeded expectations and gained approximately 10% of the children's biscuit market in six months. In France, sales ofDelacreand BNwere down 6.3%
and 5.4%, respectively, reflecting market decline and increased competition from hard discounters and retailers' own-brand
products. TheBNdecline was partially offset by the continued success ofHoubaand Spidermanlaunched at
the end of the first quarter of 2004. In Northern Europe we have focused on higher-margin products and manufacturing efficiencies
to increase gross margins from 43.6% in 2003 to 44.2% in 2004. Other cost-saving initiatives are being implemented to deliver further improvements in manufacturing efficiency. In addition,
we are progressing our project to harmonize and upgrade our enterprise resource planning operating system.

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Notwithstanding
lower sales performance, as a result of the improved gross profit margins and strict cost control, business profit of £22.2 million in 2003 increased
to £24.0 million in 2004, an increase of £1.8 million or 8.1%.

Southern Europe

In August 2004, we acquired Triunfo, the leading manufacturer and marketer of biscuits in Portugal, increasing our share of the Portuguese biscuit market
from 16% in 2003 to 39%. Triunfo is the leading biscuit manufacturer in Portugal and holds some of the most prestigious brand names in the Portuguese biscuit sector, including: Proalimentar, Hookie, Clasicas, Waferland,
CorintiaandChipmix.

Sales
increased from £185.6 million in 2003 to £200.0 million in 2004, an increase of £14.4 million, or 7.8%. After deducting the
increase attributable to Triunfo, sales increased by £5.8 million, or 3.1%. In local currency, sales increased by 10.1%, from €267.2 million in 2003 to
€294.3 million in 2004. After deducting the increase attributable to Triunfo, sales increased by €14.5 million, or 5.4%.

At
constant exchange rates, priority-brand sales increased by 12.1% and branded sales increased by 10.0% in 2004 compared to 2003. Sales of Filipinosincreased by 13.1% in the same period due to the
continued success of new products such asFilipinos
Holes, launched in 2003, and support from a successful marketing and promotional campaign.Oreosales increased by 23.8% due to
a strong
promotional campaign and the launch ofMini Oreoat the end of the second quarter of 2004.Fontanedasales increased by 13.2% in 2004 compared to 2003, supported by an effective media campaign and the successful launch ofFontaneda Sinin
March 2004. Sales ofChiquilindecreased by 2.7% over the same period. We launched Geli-Fruitin March 2004 under ourRoyalbrand, which was well received by retailers
and sales have been encouraging. Marketing expenditure, which increased by 16.3% in 2004 compared to 2003, has supported the sales performance.

Business
profit increased from £31.3 million in 2003 to £36.6 million in 2004, an increase of £5.3 million, or 16.9%. This
reflected profits from Triunfo, which we acquired in August 2004, an increase in sales of higher-margin products and cost-saving initiatives, offset by an increase in marketing
expenditure. Our strategy of focusing on higher-margin products and manufacturing efficiencies has resulted in an increase in gross margins from 42.2% in 2003 to 43.8% in 2004. Excluding the impact of
Triunfo, the gross profit margin was 43.9%.

International Sales

Our strategy for International Sales is to manage the existing portfolio of revenues to improve the overall profitability of our export business by prioritizing
investment and reducing activity in non-profitable areas. Sales decreased from £70.9 million in 2003 to £65.0 million in 2004. This decrease was due
to significant decline in Nigeria, where a trade embargo severely restricted imports, adverse currency movements, particularly in the U.S. dollar, partially offset by volume increases in Central
America, Israel and Australia.

Business
profit decreased from £15.8 million in 2003 to £13.0 million in 2004 due to the reduction in sales and the adverse currency movements.

Discontinued Operations

Other

On August 16, 2004, we completed the sale of our Benelux snacks business to Roger & Roger S.A. The results of this business through the date of
disposal are reflected as discontinued operations. During 2004, through the date of disposal, this business had sales of £13.5 million and incurred a business loss of
£0.8 million. This compared to 2003 sales of £24.1 million and a business loss of £4.7 million for 2003.

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Fiscal 2003 (Year ended January 3, 2004) compared to Fiscal 2002 (Year ended December 28, 2002)

Continuing Operations

The following discussion relates to our continuing operations. Amounts for 2003 have been restated to reflect the reclassification of our Benelux snacks business
as discontinued operations and to reflect the revised definition of turnover (see Note 2 of Notes to the Financial Statements).

Turnover

2003

2002

%(£ million)Turnover from continuing operations

1,170.7

1,154.7

1.4


Turnover
from continuing operations increased from £1,154.7 million in 2002 to £1,170.7 million in 2003, an increase of
£16.0 million, or 1.4%, including currency translation gains of £41.4 million.

Our
strategy in relation to our brands is to drive growth in our priority brand sales by providing increased focus and marketing investment behind our priority brands and to manage
non-strategic brands and retailer brands to maximize profitability. We made progress in achieving this strategy with total priority brand sales growth of 2.1% across our business.

Sales
of branded products decreased by 1.4% due primarily to sales growth in both Northern and Southern Europe. The growth in those businesses was offset by decreased sales in the UK,
due to the United Kingdom biscuits and snacks market environments proving to be particularly challenging in 2003.

Sales
of our less profitable, non-branded products grew in 2003 by 0.8% driven by growth in UK and Southern Europe. Additional details on our turnover are provided within the
analysis of our segmental performance.

Cost of Sales

2003

2002

%(£ million)Cost of sales from continuing operations

709.3

688.3

3.1


Cost
of sales from continuing operations increased from £688.3 million in 2002 to £709.3 million in 2003, an increase of
£21.0 million, or 3.1%. This compared to a sales increase of £16.0 million, or 1.4%, for the year. As a consequence, there has been a reduction in gross profit
margin predominantly due to higher levels of prime-cost inflation in the UK than has been seen historically. Cost savings achieved through the implementation of manufacturing-efficiency
projects has mitigated the inflation increase. We have also continued to achieve savings through our "eSourcing initiative," which allows suppliers to tender for contracts on-line. We
continue to implement changes in ways of working across our UK and Northern European supply chains. This requires significant organizational changes, which, together with our other
manufacturing-efficiency programs, are expected to continue to deliver benefits throughout 2004.

Gross Profit

2003

2002

%(£ million)Gross profit from continuing operations

461.4

466.4

(1.1
)


Gross
profit decreased from £466.4 million in 2002 to £461.4 million in 2003, a decrease of £5.0 million, or 1.1%. This equates
to a gross profit margin of 39.4% in 2003 compared to 40.4% in 2002. This reduction in gross profit margin was the result of prime-cost inflation, principally in the UK,

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partially
offset by price increases on branded products, and by the savings achieved through our manufacturing-efficiency programs.

Distribution, Selling and Marketing Expenses

2003

2002

%(£ million)Distribution, selling & marketing costs from continuing operations

248.9

252.8

(1.5
)


Distribution,
selling and marketing expenses decreased from £252.8 million in 2002 to £248.9 million in 2003, a decrease of
£3.9 million, or 1.5%. The decrease compared to 2002 was the result of a decline in marketing expenditure. We increased expenditure on new product launches, marketing and promotions
to support our priority brands and reduced expenditure on advertising. The other categories of distribution, selling and marketing overheads remained at a similar level over both years. This was due
predominantly to an increase in selling and marketing overheads in connection with our key UK distribution channels, including food service and van delivery. Savings from cost-reduction
initiatives offset these increases. This was in line with our strategy of implementing cost-reduction initiatives to release funds to invest in priority-brand growth.

Administrative Expenses

2003

2002

%(£ million)Administrative expenses from continuing operations

96.1

96.5

(0.4
)


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Our
administrative expenses decreased from £96.5 million for 2002 to £96.1 million in 2003, a decrease of £0.4 million, or 0.4%.
The decrease in administrative expenses was the result of savings from cost-reduction initiatives, such as streamlining management and organizational alignment projects, and no payments
being made under the 2003 Senior Management Incentive Scheme as performance targets were not met, offset by overhead cost inflation.

The
majority of administrative costs are directly related to the operations of our business units and consequently charged to, and reflected in, the segmental operating results. The
balance of administrative costs that are not included within the segmental results are considered to be central costs and represent corporate governance costs, including executive costs, and the costs
of our legal, company secretarial, pension administration, tax and treasury functions. These costs increased from £12.2 million in 2002 to £12.7 million in 2003.

Other Operating Expense/Income

Our other operating expense/income consists principally of royalties received in connection with long-standing licensing arrangements for some brands
in Japan and the United States, the results of undertaking hedging in connection with foreign currency transactions and any other amounts that arise from time to time that it is appropriate to include
as other expense/income. Other operating expense/income for 2003 amounted to £1.5 million expense compared to income of £6.0 million for 2002. The expense in 2003
was primarily the result of hedging our foreign currency transactions, which, due to fluctuations in the exchange rates during that period, particularly in connection with our U.S. dollar
transactions, resulted in losses. Some of the losses were offset by gains arising in North America in our International Sales business. In 2002, our other income included gains from foreign currency
transaction hedges together with royalty income.

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Goodwill Amortization

Goodwill amortization was £36.5 million for 2003 compared to £40.7 million for 2002. The charge reflects the amortization of
the goodwill arising on the UB acquisition completed in April 2000 and the acquisitions of UB Iberia and UB Tunisia completed in July 2000 and April 2001, respectively. The
reduction in the charge for 2003 compared to 2002 reflects the additional goodwill amortization charge of £4.2 million made in 2002 to reflect the impairment of goodwill attributed
to the Benelux snacks business.

Interest

Interest was £158.2 million in 2003 compared to £142.8 million in 2002, and arose mainly on the debt incurred in connection
with the UB acquisition. After adjusting for the non-cash interest payable to related companies amounting to £89.2 million in 2003 and to
£78.1 million in 2002, the interest charge increased from £64.7 million in 2002 to £69.0 million in 2003. This increase was due to accelerated
amortization on deferred finance costs partially offset by lower interest payable on our senior credit facility following our refinancing in April 2003.

Taxation

We had a tax credit of £10.2 million for 2003 compared to a tax credit of £15.6 million for 2002. The movement in the
year-on-year tax credit of £5.4 million was due to a decrease of £3.9 million in the deferred tax credit arising under Financial Reporting
Standard 19 "Deferred Tax," an increase in the current-year current tax charge of £1.1 million and a reduction in the prior-year current tax credit of
£0.4 million.

Segmental Performance

The following discussion includes references to "constant exchange rates." Constant exchange rates state the results of our previous year presented at the same
internal exchange rate as that used to translate the results of the most recent year. The constant exchange rate numbers are our non-GAAP, internal numbers and are not audited, however, we
believe that they are useful in our Segmental Performance to explain important trends within our business segments.

UK

Sales decreased from £756.5 million in 2002 to £734.4 million in 2003, a decrease of £22.1 million, or
2.9%. Sales decreased by 1.8% after excluding the effect of the decline in contracted sales made to Danone.

Sales
ofMcVitie'score increased by 1.8% due to the launch ofMcVitie's a:mand the
success of theMcVitie's Big Packs,both launched in the first quarter of 2003. Sales in 2003 were impacted by the prolonged period of exceptionally
warm weather in the third quarter compared to the third quarter of 2002, which adversely affected sales of chocolate biscuits, and the impact of the substantial relaunch of the McVities'srange in the
second quarter of 2002. Sales ofMcVitie's Jaffa Cakesincreased by 5.3%
supported by a successful promotional campaign and the launch ofJaffa Mini Bagsat the end of the third quarter of 2003. Sales of go ahead!andPenguindecreased in 2003 compared with 2002. Sales ofgo
ahead!were impacted by new entrants in the healthy snacking segment. Sales ofPenguinand other branded biscuits were impacted
by increased competition from new entrants in the chocolate biscuit bars segment and the adverse effect of the exceptionally hot weather in the third quarter of 2003. McVities'scake sales continued to
perform well, with sales increasing by 19.3%. This growth was supported by the launch of Jaffa Mini Roll Bitesat the end of the third quarter in 2003,Hob Nob
Flapjacksin the third quarter of
2003 and the continued success of new products launched in 2002.

In
total, biscuit branded sales were down 3.1% during a challenging period of trade and competitor activity and unusually hot weather. Retailer-branded sales increased by 0.8% excluding
contracted sales to Danone, which decreased by 61.8%. The Danone contract was entered into at the

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time
of the UB acquisition. While the majority of our contract sales ceased in 2002, we continue to supply a small number of products.

The
United Kingdom savory snacks market remained highly competitive with strong competition for promotional opportunities in multiples. Branded sales decreased by 4.8%. However, sales of McCoysincreased
14.5% supported by the limited-edition launch ofMcCoys Steak and Aleflavor variant in
September of 2003, andMini Cheddarssales increased by 5.5% supported by the launch ofMini Cheddars
Peperamiin July 2003. Marketing investment reduced in 2003 due to the substantial investment in 2002 behindHula Hoops Shoks, Skips Buzz
BoltzandSkips Tickle Pickleand the competition in 2003 for promotional activity. In 2003, we continued to invest in our
priority brands to drive growth while at the same time pursuing a longer-term brand-building strategy in a highly competitive market.

Business
profit fell from £134.5 million in 2002 to £114.3 million in 2003, a decrease of £20.2 million, or 15.0%. This reduction
was the result of a number of factors including volume decline on some branded biscuits due to the increased retail price differential between branded and retailer-branded equivalent products, reduced
promotional effectiveness due to intense activity from new entrants to the market, the adverse impact of hot weather on sales and production efficiency, the substantial reduction of sales under the
Danone contract and significantly higher levels of prime-cost inflation. The implementation of branded biscuit price increases and savings resulting from our cost-reduction
initiatives partially mitigated the impact of prime-cost inflation. Overall this reduced our gross margin from 40.6% in 2002 to 38.0% in 2003.

This
reduction was due to a decrease in sales volume and an increase in sales overhead expenditure in connection with our key UK distribution channels including food service and van
delivery with the intention of increasing long-term growth in these areas. Savings achieved in connection with cost-reduction initiatives offset this. We are promoting the sale
of products displaying strong growth potential and profitability and minimizing the impact of lost sales due to intense competition within the market.

Our
2003 performance demonstrated that our actions in managing costs and channeling marketing expenditure behind our priority brands helped us to minimize the effect of the challenging
and competitive market, thereby enabling us to pursue our long-term, brand-building strategy.

In
February 2003, following a detailed review of our UK biscuit manufacturing facilities, we announced our proposal to close our
Ashby-de-la-Zouch biscuit factory by the end of 2004. Following the conclusion of an employee consultation process, we began transferring production to our other UK
manufacturing facilities. During the fourth quarter of 2003, we transferred the production of approximately one-third of the products produced at this site and completed the first phase of
our redundancy program. The remaining phases were completed and the facility was closed at the end of November 2004.

On
April 17, 2003, we signed a put and call option agreement to acquire a company that runs the business of the supply and distribution of crisps and snack products via a van
sales force. The option agreement provides security in relation to this route to market.

Northern Europe

Sales increased from £157.6 million in 2002 to £179.8 million in 2003, an increase of £22.2 million, or
14.1%. In local currency, sales increased by 1.7%, from €250.1 million in 2002 to €254.4 million in 2003. This was the result of our strategy of focusing
on priority brands while simultaneously reducing investment in non-strategic brands.

At
constant exchange rates, priority-branded biscuit sales rose by 2.9% and branded biscuit sales reduced by 0.3% as a result of growth in BNandSultanasales offset by decline inDelacreand Verkadesales.BNsales increased by 11% across Northern Europe,
compared to 2002, as a result of the
continued success ofBN Mini MaxandBN Petit Dejeuner. Sultanasales showed strong growth of 7.7% during
the year due to the continued success ofSultana StartandSultana Fruit and Cerealsand the

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successful
launch ofSultana Fruit XSin a snacking format. Sales ofVerkadedeclined 4.3% due to
increased in-store support behind new products such asVerkade DelichocandVerkade BiskzandChokz.Sales ofDelacreproducts declined in France by 5.0% due to the planned
de-listing of certain branded items and high seasonal temperatures during the second and third quarters of 2003 mitigated, in part, by the launch ofDelacre
Croustillant.

A
key element of our business strategy has been to substantially improve the profitability of Northern Europe. Following the review of our supply chain processes across Northern Europe,
significant changes are being implemented, which are delivering improvements in manufacturing efficiency. Planning for the harmonization and upgrade of our enterprise resource planning operating
system is underway. By focusing on higher-margin products and achieving manufacturing cost savings, the margin improved from 40.9% in 2002 to 43.6% in 2003. As a result of improved margins and strict
cost control
and currency translation gains, business profit increased from £12.0 million in 2002 to £22.2 million in 2003, an increase of £10.2 million, or
85.0%.

Southern Europe

Sales increased from £161.2 million in 2002 to £185.6 million in 2003, an increase of £24.4 million, or
15.1%. In local currency, sales increased by 4.7% from €255.2 million in 2002 to €267.2 million in 2003. At constant exchange rates, sales increased
across the priority-brand portfolio with priority-branded biscuit sales increasing 12.5% and total branded biscuit sales increasing by 3.8%. This was due to successful brand advertising and
promotional campaigns forFilipinos, Chiquilin, Fontaneda CoreandOreo.We also benefited from the
marketing investment supporting new products such asFontaneda Diver, MinifilipinosandChiquilin
Energy,all of which were launched in 2002.

Business
profit increased from £23.6 million in 2002 to £31.3 million in 2003, an improvement of £7.7 million, or 32.6%. The
improvement in business profit was the result of sales growth, improvement in sales mix, implementation of price increases, cost-saving initiatives and currency translation gains, all of
which mitigated high levels of raw materials cost inflation.

International Sales

Our strategy for this business is to manage the existing portfolio of revenues to improve overall profitability by prioritizing investment and reducing activity
in non-profitable areas. Sales decreased from £79.4 million in 2002 to £70.9 million in 2003, a decrease of £8.5 million, or 10.7%.
This decrease in sales was due to a reduction in biscuit sales to the United States, affected by the weaker U.S. dollar, a biscuit import embargo in Nigeria and our exit from marginally profitable
contracts in Germany.

Business
profit decreased by £2.2 million from £18.0 million to £15.8 million due to the reduction in sales and a lower
off-setting gain from foreign exchange hedging contracts than we achieved in 2002. This was offset by savings achieved from cost-reduction initiatives, which continued to drive
improvement in the profitability of this business segment.

We
conducted a number of business reviews of the way in which we manage and conduct our business. As a result we reorganized the way we service our customers in North America in order to
increase our future sales potential and improve the profitability of theDelacresales that we make in this region. We
outsourced marketing activity, which was previously undertaken in-house, to a third-party distributor with whom we already had a relationship. We also decided to cease production at our
dry dessert mix facility in Tunisia, which serviced customers in the Middle East. The facility was closed at the end of 2003 and predicted future volumes for this business are now fully serviced from
our dry dessert mix facility at Montornes in Spain. These activities are in line with our business strategy, to reduce complexity in our organizational structure, and have enabled us to focus our
resources more efficiently.

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Discontinued Operations

Other

Benelux snacks sales decreased from £27.0 million to £24.1 million and the business loss increased from
£1.4 million in 2002 to £4.7 million in 2003. The snacks markets were particularly competitive in the Netherlands and Belgium during 2002 and this resulted in a
decline in our branded sales. The decrease in branded sales was partially compensated for by an increase in retailer-brand sales. This change in the Benelux sales portfolio drove an adverse mix and
hence an increase in business loss.

Exceptional Items (continuing and discontinued operations)

In 2004, we recorded a total of £19.5 million as exceptional items of which £19.8 million was recorded as an expense against
operating profit and £0.3 million was recorded as net non-operating profit. Exceptional items charged against operating profit comprised £4.9 million
in relation to closure of our biscuit factory in Ashby-de-la Zouch, £4.0 million in connection with the acquisition of Jacob's and Triunfo,
£2.3 million relating to the French Government-sponsored early retirement scheme entered into in 2002, £1.9 million relating to our Northern European
overhead-reduction program, £1.2 million in connection with our Southern Europe overhead-reduction program, £1.1 million in connection with the integration of our
UK businesses initiated in 2003, £0.7 million in connection with a provision, relating to anticipated costs in connection with surplus leasehold properties and
£3.7 million on restructuring projects to reduce costs in the UK and facilitate the sale of the Benelux snacks business.

Non-operating
exceptional items consisted of a loss of £3.8 million in connection with the disposal of our Benelux snacks business offset by a
£4.1 million profit on disposal of fixed assets.

In
2003, we recorded a total of £63.6 million as exceptional items, £61.7 million of which was recorded as an expense against operating profit and
£1.9 million as a net non-operating expense. We also recorded £3.5 million of other exceptional income.

Exceptional
items charged against operating profit comprised £18.6 million in relation to the closure of our biscuit factory in Ashby-de-la
Zouch, £17.6 million relating to asset impairment, £2.1 million in connection with a provision, relating to anticipated costs in connection with surplus leasehold
properties, £1.3 million in connection with our Southern European overhead-reduction program, £3.5 million relating to our Northern European overhead-reduction
program, £5.3 million relating to the French Government-sponsored early retirement scheme entered into in 2002, and £13.3 million in connection with other
overhead-reduction initiatives and manufacturing-efficiency programs.

Non-operating
exceptional items consisted of £2.1 million in relation to the costs associated with the closure of our dry mix facility in Tunisia and the
transfer of production to Spain partially offset by £0.2 million profit on disposal of fixed assets in the United Kingdom.

Other
exceptional income comprised £2.8 million which we received from Nabisco following the agreement not to acquire their Middle Eastern operations and
£0.7 million in relation to the release of accruals made in connection with the UB acquisition which were no longer required and the receipt of pre-acquisition amounts
not expected to be realized.

In
respect of 2002, we recorded a total of £12.0 million as exceptional items, £35.4 million of which was recorded as an expense against operating
profit and £23.4 million as a net non-operating credit, of which £12.3 million has been shown as an exceptional taxation refund.

Exceptional
items charged against operating profit comprised £11.9 million in restructuring charges relating to overhead reduction programs across the whole business,
£9.8 million in restructuring charges in connection with manufacturing-efficiency and overhead-reduction programs in the UK and Northern Europe, £3.6 million in
connection with a provision, relating to anticipated costs in connection with surplus leasehold properties, required under U.K. GAAP, £8.0 million in connection with fixed-asset
impairments and £2.1 million relating to factory closures.

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Non-operating
exceptional items consisted of £25.1 million received in connection with an adjustment to the purchase price of Keebler Company, a business
sold by a subsidiary of United Biscuits to Inflo Holdings Corporation in 1996; £12.3 million received in relation to a claim for refund of withholding tax paid in connection with
the reorganization of the U.S. business of United Biscuits in 1992, of which £7.2 million was a refund of withholding tax and £5.1 million was interest
attributable thereto; £1.2 million profit on disposal of fixed assets; £0.8 million loss on disposal of the Hatton manufacturing facility in Scotland, and
£14.4 million loss on the disposal of the Aguilar biscuit manufacturing facility in Spain.

B. Liquidity and Capital Resources

Overview

During the past three years, our principal sources of funds have been cash generated from our operating activities, dispositions of assets and
long-term borrowings. Our principal uses of cash are to fund capital expenditures, the non-capital restructuring costs associated with implementing our cost-saving
initiatives, working capital and debt service and repayment obligations. During 2004, we raised additional funds to finance the acquisitions of Jacob's and Triunfo, see "Debt Service
ObligationsSenior Credit Facility andSenior Subordinated Notes."

Historical Cash Flows

Cash Flow from Operating Activities

We had a net cash inflow of £122.9 million from operating activities during 2004. This net inflow consisted of
£161.7 million generated from operations, an increase in working capital of £0.9 million and £37.9 million expended on rationalization and
other exceptional items.

We
had a net cash inflow of £145.2 million from operating activities during 2003. This net inflow consisted of £173.8 million generated from
operations, £31.0 million expended on rationalization and other exceptional items and a decrease in working capital of £2.4 million. The decrease in working
capital is principally due to the 53-week fiscal year and the timing of payments to suppliers and receipts from customers in December.

We
had a net cash inflow of £105.1 million from operating activities during 2002. This net inflow consisted of £182.2 million generated from
operations, £31.0 million expended on rationalization and other exceptional items and an increase in working capital of £46.1 million. The increase in working
capital included £38.2 million of accruals and deferred income which related to an advance received from Nabisco in anticipation of its acquisition of our operations in China. The
disposal was completed in the first quarter of 2002 and the advance was reclassified as sale proceeds. The compensating inflow, in the first quarter of 2002, is reflected in cash flow from
acquisitions and disposals for 2002. The underlying increase in working capital was therefore £7.9 million. This increase was due to lower creditors as a result of the timing of
payments to our suppliers in December and higher debtors due to higher sales.

Cash Flow from Returns on Investments and Servicing of Finance

During 2004, we had a net cash outflow of £54.1 million in connection with servicing our debt compared to a net cash outflow of
£56.5 million in 2003. The decrease reflects a change in the pattern of our interest payments following the refinancing of our senior credit facility in September 2004 offset
by increased interest payments in connection with the additional senior subordinated notes issued in February 2004 and higher interest margins following the refinancing of our senior credit
facility.

In
2003, we had net cash outflows from returns on investments and servicing of finance of £56.5 million compared to a net cash outflow of
£63.2 million in 2002. The reduction in interest payable was due to the lower interest margins applicable to our senior credit facility loans following the refinancing that took
place in April 2003, partially offset by higher interest paid on our senior subordinated euro notes due to adverse exchange rate movements in the year.

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In
2002, we had a cash outflow of £65.6 million in connection with servicing our debts and a cash inflow of £2.4 million from monies placed on
short-term deposits. The net outflow of £63.2 million was a decrease of £7.0 million compared with 2001. The decrease reflects the
full-year effect of the reduced interest
cost of our senior subordinated notes, issued in April 2001, compared to the original bridging finance that they replaced, and the effect of repayments made under the senior facilities
agreement.

Cash Flow from Capital Expenditure and Financial Investment

During 2004, we had a net cash outflow of £40.6 million in connection with capital expenditure compared to a net cash outflow of
£58.8 million in 2003. We incurred capital expenditure of £54.1 million and received £13.5 million in connection with the disposal of fixed
assets. We also received £0.7 million in connection with a loan made to us by our joint venture, KP Ireland Limited.

In
2003, we had a net cash outflow of £58.8 million in connection with capital expenditure, an increase of £4.2 million compared to 2002. We
incurred capital expenditure of £59.0 million and received £0.2 million in connection with the disposal of fixed assets. We also had a cash inflow of
£0.3 million in connection with a loan made to us by our joint venture, KP Ireland Limited.

In
2002, we had a net cash outflow of £54.6 million in connection with capital expenditure, an increase of £6.9 million compared to 2001. We
incurred capital expenditure of £59.2 million and received £4.6 million in connection with the disposal of fixed assets. We also had a cash inflow of
£0.5 million in connection with a loan made to us by KP Ireland Limited.

Cash Flow from Acquisitions and Disposals

During 2004, we had a net cash outflow of £237.8 million from acquisitions and disposals compared to a net cash inflow of
£2.9 million in 2003. The net cash outflow consisted of a £239.9 million outflow in connection with the acquisitions of Jacob's and Triunfo offset by a net inflow
of £2.8 million, being cash acquired as part of the acquisitions and £0.7 million outflow in connection with the disposal of our Benelux snacks business.

During
2003, we had a net cash inflow of £2.9 million from acquisitions and disposals. We received £3.6 million from Nabisco following the agreement
not to acquire their Middle Eastern business and £0.4 million in respect of a VAT refund in connection with acquisition costs and we incurred £1.1 million in
relation to the closure of our operations in Tunisia.

In
2002, we had a net cash inflow of £53.5 million from acquisitions and disposals. We received £38.2 million relating to the completion of the
disposal of our operations in China to Nabisco during the first quarter of 2002, a disposal associated with the UB acquisition. The compensating outflow of £38.2 million was
reflected in cash flow from operating activities for 2002. In the second quarter of 2002, we received £25.1 million relating to an adjustment to the sale price of Keebler Company
sold by United Biscuits (Holdings) Limited in 1996.

Capital Expenditure Requirements and Restructuring Costs

In 2003, we incurred capital expenditure of £59.0 million, of which £33.4 million was incurred in connection with the
delivery of cost-saving initiatives and the balance was incurred to support new product-development initiatives and essential health, safety and maintenance projects. We also incurred
restructuring costs of £31.0 million relating to cost-saving initiatives. Capital expenditure and restructuring costs were funded from cash flow from operations.

During
2004, we incurred capital expenditure of £54.1 million, of which £20.4 million was incurred in connection with the delivery of
cost-saving initiatives and the balance was incurred to support new product-development initiatives and essential health, safety and maintenance projects. We also incurred restructuring
costs of £37.9 million relating to cost-saving initiatives. Capital expenditure and restructuring costs were funded from cash flow from operations.

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As
at January 1, 2005, plans to integrate Jacob's into our existing UK business were at an early stage of implementation. Full integration is highly dependent on a common
Enterprise and Resource Planning system and is not anticipated to occur until early 2006. For the interim period, we have implemented temporary processes to enable the two operations to be managed as
one business. We are in the process of designing our organizational structure to support a single business and, as a result of this, there will be some redundancies. At January 1, 2005 an
employee consultation process had commenced and it was not possible to reliably estimate the full costs associated therewith. In the period from acquisition until January 1, 2005 costs of
£1.4 million were charged to operating exceptional items in respect of the integration project, of which £0.6 million was incurred in the period. This principally
related to project management costs.

Over
the next two years we expect to incur costs of between £20 to £25 million in connection with the integration of Jacob's into our existing UK business
and delivering the benefits expected from a combined business. On the basis that we incur these costs,
we anticipate that our plans could deliver ongoing annual cost-savings of approximately £15 to £20 million, achieving at least one third of the savings in
2005, a further one third in 2006, making two thirds in the year, and full benefits in 2007 following completion of the planned systems integration. We continue to closely monitor and control our
overhead costs and, in addition to the savings identified in connection with Jacob's, we are in the process of implementing a program to restructure our UK and corporate head office costs. We
anticipate that this program will deliver additional annual cost savings of approximately £10 million by 2006 and we expect to incur approximately £10 million to
achieve those savings.

As
at January 1, 2005, significant progress had been made towards integrating Triunfo into our Southern Europe business. It is anticipated that full integration will be completed
during the first half of 2005. In the period from acquisition until January 1, 2005 operating exceptional items of £2.6 million were charged in the profit and loss account.
Of this £2.0 million was incurred in the period, principally in relation to severance costs following organizational changes. It is anticipated that a further
£0.6 million will be incurred during 2005 in completing the integration, principally on systems' integration and severance costs.

In
2005, we expect our total capital expenditure for the year to be less than the £54.1 million incurred in 2004 and we expect our total restructuring costs to be
comparable to those incurred in 2004. We plan to fund our capital expenditure and restructuring costs from cash flow from operations.

We
may also, from time to time, consider acquisitions or investments in other businesses, which may require additional funding.

Debt Service Obligations

As a result of the debt we incurred in connection with the UB acquisition and the offering of the senior subordinated notes, we had significant debt service and
repayment obligations under our senior credit facility and the senior subordinated notes. In 2004 we increased our debt obligations under both the senior subordinated notes and the senior credit
facility in connection with financing the acquisitions of Triunfo and Jacob's respectively, see Item 5. "Operating and Financial Review and ProspectsSignificant Factors Affecting our
Results of OperationsAcquisitions and Dispositions." In 2004, we incurred interest charges totaling £64.0 million from our borrowings under our senior credit facility,
senior subordinated notes and other bank facilities.

Senior Credit Facility

Our senior credit facility was entered into in connection with the UB acquisition and initially consisted of four facilities (Term Loans A, B, C and D) and
a revolving facility of £90.0 million, which was reduced to £60.0 million in May 2002. The loan facilities were used to finance the UB acquisition, support
the refinancing of our senior subordinated bridge facilities and the repayment, on May 1, 2001, of $125.0 million aggregate principal amount of 9% Notes due 2001. As of
December 28, 2002, we had borrowed the full £535.0 million under the term loan facilities, £453.7 million of which remained

---



outstanding.
£7.5 million had also been drawn down as ancillary facilities under the revolving facility to cover day-to-day banking requirements.

On
April 9, 2003, we amended the terms of our senior credit facility agreement. The amount outstanding for our Term Loans A, B, C and D and our revolving credit facility on that
date was £438.9 million. We merged these loans into one fully drawn Term Loan A in the amount of £250.0 million and a revolving credit facility of
£225.0 million, of which £184.0 million was drawn down at that time together with £7.0 million of ancillary facilities.

On
February 13, 2004, after a presentation to the senior bank agent and the syndicate participants, we received a letter of consent from the senior bank agent to waive or amend
some of the provisions of the senior facility to reflect, among other things:



On
February 18, 2004, we repaid a further £40.0 million of our term loan A after we issued the new senior subordinated notes, see "Senior
Subordinated Notes." The repayment, in accordance with the letter of consent, was allocated against the scheduled term loan A repayments due in 2004 and the balance thereafter was allocated against
the term loan A scheduled repayment due in April 2005, leaving a balance of approximately £10 million repayable in April 2005.

On
September 20, 2004, our senior credit facility, then comprising a term loan A of £204.9 million and a revolving facility of £225.0 million
of which £184.0 million was drawn down as a loan and £9.5 million was provided as ancillary facilities and a letter of credit, was refinanced. We raised new funds
of £252.5 million to finance the acquisition of Jacob's. An amount of £243.5 million of the new funds was drawn down and utilized to finance the acquisition
totaling approximately £207.7 million, fund the related costs of acquisition and costs of financing totaling an estimated £15 million and the remainder was made
available to fund the working capital requirements of the group.

At
January 1, 2005, the senior credit facility comprised £632.4 million term loans A, B and C which had been drawn down, and which had been increased by an
unfavorable foreign exchange movement of £4.6 million since inception, and a revolving facility of £50.0 million.

Details
of the loans are set out below:

|Senior Debt               |  | Amount |  | Margin              |  | Type       |  | Maturity          
|------------------------- |  | ------ |  | ------------------- |  | ---------- |  | ------------------
|
|Term loan A               |  | 267.4  |  | 2.25% over Libor    |  | Amortizing |  | April 28, 2010    
|Term loan B (£)           |  | 100.0  |  | 2.75% over Libor    |  | Bullet     |  | September 20, 2010
|Term loan B (€)           |  | 67.6   |  | 2.625% over Euribor |  | Bullet     |  | September 20, 2010
|Term loan C (£)           |  | 150.0  |  | 4.50% over Libor    |  | Bullet     |  | January 15, 2011  
|Term loan C (€)           |  | 52.0   |  | 4.375% over Euribor |  | Bullet     |  | January 15, 2011  
|                          |  |        |  |                     |  |            |  |                   
|                          |  | 637.0  |  |                     |  |            |  |                   
|Revolving credit facility |  | 50.0   |  | 2.25% over Libor    |  | Bullet     |  | March 20, 2010    
|                          |  |        |  |                     |  |            |  |                   
|Total                     |  | 687.0  |  |                     |  |            |  |                   
|                          |  |        |  |                     |  |            |  |                   

---



As
of January 1, 2005 we were scheduled to make the following principal repayments on term loan A under the senior facility:

Year

Total payment
amount(£ million)2005

8.02006

38.52007

52.52008

62.52009

72.52010

33.4Total

267.4


On
April 5, 2005, we made a voluntary prepayment of £20.0 million against our senior debt obligations. We elected that the prepayment be offset against term
loan B. Under the voluntary prepayment provisions, term loan B lenders may elect to receive term loan A prepayments instead. A number of term B lenders made an election and therefore
£8.9 million of the prepayment has been allocated against term loan A, reducing principal repayments proportionately, and £11.1 million has been allocated against
term loan B.

The
revolving facility is available for general corporate purposes and allows for revolving advances, the provision of up to £35.0 million of ancillary facilities to
cover the day-to-day banking requirements of subsidiary companies, and the issuance of letters of credit and bank guarantees up to an aggregate amount of
£50.0 million outstanding at any time. Each advance made under the revolving facility must be repaid on the last day of each interest period relating to it, although amounts are
available to be re-borrowed, subject to the maximum limit available under the facility.

An
amount of £9.4 million has been drawn down as ancillary facilities under the revolving facility. A total of £8.4 million is to cover
day-to-day
requirements of the UK business, £7.2 million of this being for the provision of two overdraft facilities and £1.2 million covers contingent liabilities, such as
bank guarantees. The balance of £1.0 million is in respect of a letter of credit issued to one of our banks. The letter of credit covers an overdraft facility for the Group's
subsidiaries in the Netherlands. There were no drawings under any of the overdraft facilities as of January 1, 2005. In addition to the ancillary facilities, a letter of credit was issued on
June 18, 2004 for €0.2 million (approximately £0.1 million), to cover a flour commodity hedging arrangement with one of our banks. The hedging
arrangement had not been utilized as of January 1, 2005. As of January 1, 2005, £40.5 million was available to be drawn down under the revolving facility.

Advances
under the facilities bear interest at rates per annum equal to LIBOR (EURIBOR on the euro tranche) plus a margin as set out above, plus, where appropriate, any applicable
mandatory liquid asset costs. There is a margin adjustment mechanism in place in respect of term loans A and B and the margin may be reduced based on the ratio of total net debt to EBITDA (as defined
in the senior facility) reflected in the financial statements delivered for the previous accounting quarter, but not before delivery of the financial statements for the fiscal quarter ending
April 23, 2005.

The
senior credit facilities are secured by fixed and floating charges from each of the United Kingdom charging subsidiaries, including Jacob's post acquisition in 2004, and share
pledges over two Dutch subsidiaries. In April 2001 security was also provided in the form of share pledges over three Spanish subsidiaries and fixed charges were taken over three Spanish
properties and certain intellectual property. In November 2001 security was provided in the form of a share pledge over a further Dutch subsidiary. In June 2002 security was provided in
the form of share pledges over two French subsidiaries. In November 2004 security was provided in the form of a share pledge over the shares of the newly acquired Portuguese subsidiary Triunfo.

We
are required to comply with financial covenants under the senior facility and these were revised as part of the refinancing. The specified consolidated financial ratios for EBITDA to
net cash

---



interest
and total net debt to EBITDA were amended and we are now required to maintain a cash flow to total debt service ratio. We must now maintain:



The
senior credit facility places annual limits on our maximum capital expenditure and restructuring costs. These limits decrease from year to year, from £80.0 million
in 2005 down to £60.0 million in 2008 and each fiscal year thereafter. There is the ability to carry forward for one year any unspent capital expenditure and restructuring costs, in
any given year, of £20.0 million and the right to pull forward into the current fiscal year an amount not exceeding £10.0 million from the capital expenditure and
restructuring costs limit for the following fiscal year.

Our
forecasts for 2005 indicate that we will be in compliance with all of our financial covenants under the senior credit facility. However, the flooding of our Carlisle factory could
have an impact on our financial covenants. Under IFRS we cannot credit our EBITDA with the amount of business interruption insurance claims that we have made unless we have certainty that those claims
will be paid. We do not expect that this will ultimately be an issue and we expect an interim payment to be received shortly. However, there is a possibility that our EBITDA for the first quarter will
not reflect full credit for the business interruption claims that we have already made and will be making for that period. We have reviewed the potential impact and tested this against our financial
covenants. As a result, we do not expect that we will breach our financial covenants, which will be tested at the end of the first quarter of 2005, "Subsequent Event" above.

In
addition we are required to make mandatory prepayments in some circumstances out of the net proceeds we receive from asset disposals, insurance claims and surplus cash. We are also
permitted to make voluntary prepayments on the term loans A and B under the senior credit facility and on the term loan C when the term loans A and B and the revolving facility have been repaid.

An
annual issuing bank fee of 0.125% is payable quarterly in arrears on the issuing bank's exposure under any letters of credit in addition to the margin applicable to our revolving
credit facility. Commitment commissions are payable quarterly in arrears at an annual rate of 0.75% on the undrawn and uncanceled portion of our revolving credit facility.

Hedging Arrangements

Regentrealm is required by the terms of our senior credit facility to enter into hedging arrangements to provide protection from interest rate risk exposure
arising because the financing under the senior credit facility is at floating interest rates. The hedging arrangements are required to cover at least 50% of the total borrowings as at
September 20, 2004 for a period of at least two years. Hedging banks are entitled to security, guarantees and subordination rights which rank at least equal to those granted to the lenders
under our senior credit facility.

---



Regentrealm
currently has five interest rate swaps in place to hedge its interest rate exposure under our senior credit facility:

Amount

Start Date

Maturity Date

Rate(£ million)

(€ million)





(%)150.0



Pre 2004

October 28, 2005

5.68562.5



Pre 2004

October 28, 2006

4.780134.0



January 28, 2005

January 30, 2006

4.91080.0

January 28, 2005

January 30, 2006

2.360110.0



October 28, 2005

October 28, 2006

5.020


Senior Subordinated Notes

In April 2001, pursuant to an indenture dated April 17, 2001 (the "indenture"), UB Finance issued £120.0 million aggregate
principal amount of Senior Subordinated Notes due 2011 bearing interest at a rate of 103/4% each year and €160.0 million aggregate principal amount of Senior
Subordinated Notes due 2011 bearing interest at a rate of 105/8% each year (the "outstanding notes"), all of which were guaranteed by Regentrealm on an unsecured senior subordinated
basis. Interest on the notes is due on April 15 and October 15 of each year. The outstanding notes are listed on the Luxembourg Stock Exchange.

On
February 16, 2004, UB Finance issued additional notes under the same indenture as the outstanding notes, along with a supplemental indenture. We offered
£45.0 million aggregate principal amount of 103/4% Sterling denominated Senior Subordinated Notes due 2011 (the "new Sterling notes") and
€32.5 million aggregate principal amount of 105/8% euro denominated Senior Subordinated Notes due 2011 (the "new euro notes") (together, the "new notes"). The
price of the new Sterling notes was 111% plus accrued interest from October 15, 2003, and the price of the new euro notes was 113% plus accrued interest from October 15, 2003. Interest
on the new notes accrued from the issue date of the new notes. Interest payments on the new notes commenced on April 15, 2004 and the initial interest payment was calculated as if interest
accrued on the new notes from October 15, 2003. The new notes were listed on the Luxembourg Stock Exchange on April 15, 2004.

The
gross proceeds from the sale of the new notes were approximately £75.0 million before deducting the estimated fees and expenses for the offering of approximately
£2.2 million, including the initial purchaser's commissions. We have used £40.0 million of these proceeds to prepay a portion of term loan A under the senior
credit facility and to pay the transaction fees from the offering and €39.2 million to finance the acquisition of Triunfo from Nutrinveste SGPS, S.A. on August 2, 2004.

On
May 13, 2004 we made an offer to exchange the new notes for registered, publicly tradable notes (the "exchange notes") that have substantially identical terms as the notes. The
offer closed on June 10, 2004. The exchange notes have been registered under the U.S. Securities Act of 1933, as amended, and listed on the Luxembourg Stock Exchange.

The
new notes, the exchange notes and the outstanding notes, together referred to as the "notes", are treated as a single class of securities for all purposes under the indenture.

The
notes are unsecured and subordinated to all senior debt of UB Finance and rank equal with existing and future senior subordinated debt of UB Finance. Excluding subordinated debt owed
to its parent company, UB Finance has no existing debt other than the notes issued under the indenture and a guarantee issued in connection with the senior credit facility of Regentrealm, our direct,
wholly owned subsidiary. Regentrealm guarantees the notes and the guarantee will only become due 179 days after an event of default relating to payment on the notes has occurred, or earlier
under certain circumstances. The guarantee is contractually subordinated to Regentrealm's obligations under the senior credit facility.

The
notes are scheduled to be repaid in one installment on April 15, 2011. We may redeem the notes at any time, in whole or in part, on or after April 15, 2006. In
addition, until April 15, 2004, we

---



were
able to redeem up to 35% of the notes issued under the indenture with the net proceeds of a public equity offering. If we undergo a change of control or sell certain of our assets, the
noteholders may require us to repurchase the notes at 101% or 100% (as the case may be) of the face amount, plus accrued interest and other amounts due thereon, if any.

The
indenture governing the notes contains covenants limiting our ability to:



These
covenants are subject to a number of important limitations and exceptions.

6.375% Sterling Bonds due 2009

As well as our senior credit facility and the outstanding notes, as of January 1, 2005, we had outstanding £40,000 aggregate principal amount
of 6.375% Bonds due 2009.

Intercompany Loans

UB Finance loaned the proceeds from the notes offerings to Regentrealm. UB Finance also loaned to Regentrealm the proceeds of the intercompany loans in the
aggregate principal amount of £545.0 million made to UB Finance by its parent, Runecorp. The payment terms of the intercompany loans made with the proceeds of the notes offering
mirror the payment terms of the notes to enable Regentrealm to pay amounts to UB Finance equal to the amounts due from time to time under the notes. These intercompany loans are subordinated in right
of payment to Regentrealm's obligations under our senior credit facility.

Intercreditor Deed

UB Finance, its parent companies and most of its subsidiaries are parties to an intercreditor deed. Until the date all obligations under our senior credit
facility have been repaid in full, the intercreditor deed will, among other things:



---





General Considerations

UB Finance is a holding company and does not have operations of its own. It relies on dividends and payments on its intercompany loans to Regentrealm to make
payments on the principal and interest of the notes. Regentrealm is also a holding company and does not directly conduct any business operations. Regentrealm relies on dividends and other payments
from our operating subsidiaries to generate funds to fulfill its obligations under the intercompany loans. For more information regarding these limitations and other restrictions that apply to UB
Finance and Regentrealm, see Item 3.D. "Key InformationRisk FactorsAbility to Service Debt," and "Holding Company Structure."

We
believe that the cash flow generated from our operating activities, together with borrowings under our senior credit facility, should be sufficient to fund our debt service
requirements, working capital needs, anticipated capital expenditures and restructuring costs and other operating needs for the foreseeable future. Our future operating performance and ability to
service our existing and future debt, including the notes, will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

---



C. Research and Development, Patents, Licenses, etc.

Research and Development

Our research and development unit is responsible for working to improve the taste, nutrition and convenience of our existing products and developing new products.
The unit also develops and implements plans for improving the efficiency of our manufacturing process and packaging development activities. Among the innovations and improvements developed by our
research and development unit are our low-fatgo ahead!products and our tube packaging technology.

We
spent £6.7 million, £5.7 million and £6.2 million on research and development in 2002, 2003 and 2004, respectively. Research
and development expenditures principally comprise costs associated with our central technical facility, which is located in the United Kingdom at High Wycombe, and other research and development
resources located throughout our organization. The High Wycombe facility employs 56 professionals and has extensive pilot plant facilities and scientific laboratories, as well as an engineering
facility. Increased research and development expenditure in 2004 compared to 2003 is due to increased activity in connection with new product development.

Trademarks and Licenses

We own a substantial number of registered and unregistered trademarks in countries throughout the world for use in connection with the sale, marketing and
manufacture of our biscuits and snack products. These trademarks are critical to our operations because brand-name recognition is a key factor in the success of many of our product lines.
The current registrations of these trademarks are effective for varying periods of time and may be renewed periodically provided we comply with all applicable laws.

We
have an agreement with Nabisco relating to the manufacture, marketing, sale and distribution of products under a number of material trademarks. The agreement provides for an exclusive
sublicense with Merola Finance B.V. ("Merola"), a licensee of Nabisco, for the manufacture, sale and distribution ofOreo, Chips Ahoy!, Air Crisps,
Nabisco(House Mark),Nabisco(with Corner Triangle),Ritzand Teddy Grahamsin
parts of Europe, North Africa and the Middle East. Under the terms of the agreement each of these licenses expires upon the earlier of;
(1) five years following a change of control of United
Biscuits; or (2) a material breach by us of any of the license agreements. Under the sublicense agreement with Merola, we are required to pay a royalty for net sales equal to 1.5% of the net
sales price of (x) all licensed products sold or distributed in the licensed territory and (y) all products sold or distributed in Iberia, whether or not these products bear the licensed
trademarks, but excluding those products bearing United Biscuits trademarks, up to a maximum amount equal to the net royalty paid by Merola to Nabisco for calendar year 1999. As a consequence of the
agreement with Nabisco, effective from February 18, 2003, not to complete the acquisition of Nabisco's business in the Middle East, the agreement with Merola has been amended to exclude
territories associated with the Middle Eastern business. Nabisco paid $959,000 (approximately £0.6 million) as consideration for exclusion of those territories.

As
a result of the acquisition of Jacob's, we acquired a license for the exclusive right to use theRitzbrand in the United Kingdom at a
royalty of 1% of the net sales and a royalty-free license forTUCin the United Kingdom. In addition, Jacob's have the exclusive right to
use theRitzbrand in Ireland at a royalty of 1% of the net sales. However, pre-acquisition supply agreements of Jacob's with Irish Biscuits
Limited, formerly also a subsidiary of Danone, are preserved until August 2006 and therefore additional use of theRitzbrand in Ireland in
limited to supplying Irish Biscuits Limited until the arrangements terminate.

We
acquired Nabisco'sRoyaltrademark in most of the countries in Europe, the Middle East and Africa. Nabisco remains the owner of the Royaltrademark in the
rest of the world. We have agreed with Nabisco that until July 2005, neither of us will actively marketRoyal-branded products or establish any branch or maintain any distribution depot for products under the Royaltrademark in the territories of the other
party.

---



As
part of our acquisition of theRoyaltrademarks, Nabisco assigned to us license agreements with Del Monte Foods Italia S.r.l., in
relation to grocery products produced by it under theRoyaltrademark in Italy, and with Agna Ludvigsson, in relation to its manufacture and sale of
baking powder and puddings in Iceland under theRoyaltrademark.

We
have entered into a know-how cross license with Nabisco. Under this agreement, each party grants to the other a non-exclusive, perpetual, irrevocable,
royalty-free license to use and exploit its know-how regarding the manufacture and use of dairy-based, dry dessert mixes marketed and sold under the Royaltrademark.

We
have granted an exclusive and royalty-free license to Nabisco to use someMarbutrademarks in connection with the
production and marketing of baked goods in Argentina, Chile, China and Indonesia and theFilistrademark in Mexico. The license is perpetual, but can be
terminated by either party in the event of a material breach by the other party.

We
have an ongoing, non-exclusive license with Mars (UK) Limited (Masterfoods) for the manufacture and distribution ofGalaxy, M&M's, Bounty,
SnickersandMilky Waysnack cakes in the United Kingdom. This license commenced on April 4, 1998 and may be terminated
by either party upon giving 12-months written notice to expire on or after May 1, 2009. The agreement may also be terminated subject to certain specific provisions, for example in
the event of a breach.

We
also enter into license agreements in connection with various promotions, usually for a short-term period. These short-term licenses typically run for six
months to one year with varying promotional fees to be paid by us, depending on the agreement. A typical short-term license allows us to use a particular trademark within a specified
territory on our branded products or in connection with in-store promotions or television or print advertising.

We
also own licenses and patents and possess know-how relating to our products and manufacturing processes and product packaging. These licenses, patents and
know-how, along with the trademarks we own and that we are licensed to use, represent one of our major commercial assets.

D. Trend Information

See Items 5.A. "Operating and Financial Review and ProspectsOperating Results" and 5.B. "Operating and Financial Review and
ProspectsLiquidity and Capital Resources" for a discussion of information required by this item.

E. Off-Balance Sheet Arrangements

None

F. Tabular Disclosure of Contractual Obligations

The table below specifies our contractual obligations at January 1, 2005.

|                                    |  | Payments Due by Period
|----------------------------------- |  | ----------------------
|
|
|Long-term debt obligations          |  | 945.0                 
|Capital (finance) lease obligations |  | 1.4                   
|Operating lease obligations         |  | 113.5                 
|Purchase obligations                |  | 246.7                 
|Amounts due to parent company       |  | 922.4                 
|Taxation and other creditors        |  | 11.3                  
|Other provisions                    |  | 26.3                  
|                                    |  |                       
|Total                               |  | 2,266.6               
|                                    |  |                       

---



As
of January 1, 2005, our purchase obligations consisted mainly of commitments to purchase prime ingredients such as flour, fats, oils, cocoa, potatoes and packaging materials.
To manage the volatility in commodity prices, we seek to cover our raw materials requirements by taking out forward contracts to secure supplies at agreed prices. Forward cover is taken in physical
markets for periods of at least three months and typically would not exceed 12 months, although by agreement with our board of directors this may be extended. Apart from those purchase
obligations, all of our other contractual obligations are as disclosed in our financial statements for the 52 weeks ended January 1, 2005.

We
also have a net pension deficit of £229.7 million in relation to our defined benefit schemes in the United Kingdom.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors, Senior Management

The following table sets forth the names and positions of the directors and executive management of UB Finance and Regentrealm.

|Name             |  | Date of Birth |  | Position Held                                
|---------------- |  | ------------- |  | ---------------------------------------------
|David Fish       |  | 05/31/48      |  | Chairman(1)                                  
|Malcolm Ritchie  |  | 06/13/54      |  | Chief Executive(2)                           
|Joan Casaponsa   |  | 08/29/57      |  | Managing DirectorSouthern Europe            
|Mohamed Elsarky  |  | 07/11/57      |  | Managing DirectorNorthern Europe(3)         
|Kevin McGurk     |  | 02/07/64      |  | Operational Services Director                
|Benoit Testard   |  | 04/23/55      |  | Managing DirectorUK                         
|Bill Winthrop    |  | 05/23/50      |  | Management Services and Supply Chain Director
|Robert Bradish   |  | 06/11/52      |  | Director(2)                                  
|Graham Clempson  |  | 08/25/61      |  | Director(2)                                  
|Bertrand Meunier |  | 03/11/56      |  | Director(2)                                  
|Robin Brown      |  | 10/21/63      |  | Director, Financial Control(4)               

---

---



David Fishwas appointed Chairman on February 2, 2004. Before joining United Biscuits, Dr. Fish worked for the Mars
organization for 27 years, until 2001. During his last seven years with Mars he was a member of the Mars Incorporated Operating Board. During his time at Mars he held a number of senior
management positions including President, Snackfoods Europe and Joint President, Masterfoods Europe, the operating company for all of Mars' European activities. He has also held Vice President
positions in marketing, country management and personnel. He is currently non-executive director of Royal Mail Holdings plc and Christian Salvesen plc, where he is also Chairman.

Malcolm Ritchiewas appointed Chief Executive in September 2000 and also held the position of Chairman from September 2000
until February 1, 2004. Before joining United Biscuits, Mr. Ritchie served as President of Heinz Europe, Executive Vice President of Heinz and as a member of the board of Heinz from
1998. From 1994 to 1997, Mr. Ritchie served as Managing Director of Heinz U.K. Before
joining Heinz, Mr. Ritchie was Chief Executive of the European Ambient Foods Group of Hillsdown Holdings and had previously held management positions in the food industry with Premier Brands
and Cadbury Schweppes.

Joan Casaponsawas appointed Managing DirectorSouthern Europe in September 2001. In September 2003,
Mr. Casaponsa was appointed to the Executive Management Board. Before joining United Biscuits in 2001, Mr. Casaponsa served as Managing Director of Lindt Chocolates in Spain and
President and Managing Director of Lindt Chocolates in France from 1995 to 2001 and before, as Managing Director of Del Monte Foods Iberia, S.L. from 1991 to 1995.

Mohamed Elsarkywas appointed Managing DirectorNorthern Europe in February 2005 having served on the Executive
Management Board as Managing DirectorJacob's following our acquisition of Jacob's in September 2004. Mr. Elsarky was appointed Managing DirectorJacob's in
October 2003 when Jacob's was under the ownership of Danone. Previously, Mr. Elsarky served in various senior roles with Kellogg Company during a 13-year period including
Vice-PresidentStrategy, Managing DirectorDay Dawn and Managing DirectorKellogg Australia/New Zealand. Prior to joining Kellogg, Mr. Elsarky
held several senior finance positions in Australia.

Kevin McGurkwas appointed Operational Services Director in February 2001. Before joining United Biscuits, Mr. McGurk served
as European Purchasing Director of Heinz from 1999. He also previously served as Purchasing General Manager of the Heinz European Grocery Division from 1996 to 1999. Before joining Heinz,
Mr. McGurk spent several years with the Ambient Foods Group of Hillsdown Holdings where he served as the European Group Purchasing Manager.

Benoit Testardwas appointed Managing DirectorUK in August 2004 having served on the Executive Management Board since
September 2003 as Managing DirectorNorthern Europe. Mr. Testard was appointed Managing DirectorNorthern Europe in February 1999. Before joining United
Biscuits, Mr. Testard served in various roles including Marketing Director, Sales Director and Business Unit Manager at Fromageries Bel Group from 1985 to 1999. Before joining Fromageries Bel
Group in 1985, Mr. Testard served as Product Manager for Reckitt and Colman for five years.

Bill Winthropwas appointed Management Services and Supply Chain Director in September 2003, having served on the Executive
Management Board as Group Management Services Director since November 2000. Before joining United Biscuits, Mr. Winthrop served as Management Services Director of Heinz Europe from 1994
to 2000. Before joining Heinz in 1993, Mr. Winthrop served as European Information Services Director for Black & Decker.

Robert Bradishis Senior Vice President Strategy for Kraft Foods International. Mr. Bradish has been with Kraft Foods for over
25 years and has held a variety of management positions both in the United States and Europe. Before assuming his current position in 2005, Mr. Bradish was Vice President of Strategy and
Development, Kraft Foods European Union, and from 1995 to 1998 was Vice President of Strategy and Development, Kraft Foods Central and Eastern Europe, Mideast and Africa region. Kraft Foods acquired
Nabisco in 2000 and Mr. Bradish became a member of the boards of UB Finance and Regentrealm on December 21, 2000.

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Graham Clempsonis European Managing Partner of MidOcean Partners, a private equity firm. Mr. Clempson formerly held a number of
senior roles at Deutsche Bank; including European Managing Partner for DB Capital Partners and Co-Head of European Investment Banking. Mr. Clempson became a member of the boards of
UB Finance and Regentrealm on February 28, 2002.

Bertrand Meunieris a member of the Executive Committee of PAI partners. Mr. Meunier became a member of the boards of UB Finance
and Regentrealm on March 22, 2000. Mr. Meunier joined PAI in 1982. From 1985 to 1996, Mr. Meunier was in charge of investment activity in PAI's Information, Technology and
Telecommunications Division. Since 1996, Mr. Meunier has been responsible for investments in the Consumer Products and Services sector. Mr. Meunier is also a director of Evialis,
Financiere Gaillon 3, Giro, Novalis, Novarte, Panzani, Provimi, Saeco, Saur, Sodima, Vivarte and Yoplait.

Robin Brownis Director, Financial Control and our principal financial officer. Mr. Brown has responsibility for overseeing
financial reporting and financial controls for UB Finance and UB Parent. Mr. Brown has been with United Biscuits for six years and previously worked for Williams Holdings and Unilever.

Ian
Cray and Will Carter, who were members of our executive management, left our employment during 2004, and Dominic Murphy, who was a statutory director of UB Finance and Regentrealm,
resigned as director of both companies in 2004.

On
March 21, 2005, we announced that Jeff van der Eems would be appointed Chief Financial Officer. Mr. van der Eems is expected to join United Biscuits and to assume this
role and his position on the Executive Management Board in June 2005. Before joining United Biscuits, and from 1993, Mr. van der Eems served in various finance and strategy roles with
PepsiCo, Inc. and was appointed Chief Financial Officer & VP Finance, PepsiCo United Kingdom and Republic of Ireland in 2003. Prior to 1993, Mr. van der Eems was Vice President,
Mergers and Acquisitions with Sakura Bank (Mitsui Taiyo Kobe), and between 1986 and 1990, Mr van der Eems was Director of Mergers and Acquisitions at Geneva Corporation (Chemical Bank).

The
address of the directors and executive management of United Biscuits is c/o United Biscuits, Hayes Park, Hayes End Road, Hayes, Middlesex UB4 8EE, United Kingdom.

B. Compensation

Compensation Arrangements

The aggregate compensation paid to all of our directors and executive management in 2004 was approximately £2.1 million. Of this aggregate
compensation, approximately £1.7 million was paid in salaries (including bonuses and severance payments), approximately £0.1 million was paid as
benefits-in-kind and approximately £0.3 million was accrued in pension benefits. For 2004, the highest-paid director or executive received
£0.4 million including benefits-in-kind and accrued pension benefits. Details of our annual incentive bonus plans are provided below. Two members of our
executive management were entitled to payments under the 2004 Management Incentive Schemes.

Under
the shareholders agreement between UB Parent and the Equity Sponsors, UB Parent makes annual payments of £25,000 in directors' fees to the Equity Sponsors for each of
their nominated directors ("Equity Sponsor directors") in addition to payment of all reasonable out-of-pocket expenses incurred by the directors in connection with their
participation in board meetings. The shareholders agreement is described in Item 7.B. "Major Shareholders and Related Party TransactionsFinancing of UB
AcquisitionShareholders Agreement."

2004 Management Incentive Schemes

The 2004 Management Incentive Scheme was established to provide cash bonuses to approximately 1,000 managers in the UK, International Sales, Central and Northern
Europe based on pre-set

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performance
targets. Certain performance targets were met in 2004 in Northern Europe and payment will be made to the relevant participants who achieved target, in 2005.

A
separate annual incentive award plan was established for the Southern European senior management. Certain financial targets were met in respect of 2004 and the plan was implemented.
Individual participants were entitled to receive scaled payments depending on the targets achieved and the individual's personal performance under the appraisal system.

A
separate annual incentive scheme existed for Jacob's employees for 2004, established by Danone. Certain financial targets were met in respect of 2004 and the plan was implemented.
Jacob's employees will be incorporated into the Management Incentive Scheme in future.

Senior Management Equity Purchase Scheme

Under the articles of association of UB Parent, members of our executive management are entitled to purchase shares in UB Parent representing 3% of the equity of
UB Parent ("M Shares"). M Shares were purchased by members of our executive management at the price of £4.70 per share in May 2001 and totaled approximately £300,000.
Other lower tier members of our senior management were given the opportunity to purchase shares in a separate class of shares representing 2% of the equity of UB Parent ("E Shares"). E Shares were
purchased by lower tier members of our senior management during 2001 and 2002 at a price of £4.70 per share and totaled approximately £200,000.

Individuals
who leave our employment are required to sell the shares that they have purchased to the United Biscuits Employee Benefit Trust (the "EBT"). They receive either cost or
market value in accordance with the provisions contained in the articles of UB Parent and the reason for their leaving our employment. Shares held in the EBT are offered for purchase to new or
existing employees at the direction of the board of UB Parent.

The
M Shares and E Shares, together with the ordinary shares of UB Parent, rankpari passufor any dividends and on a return of capital,
including the liquidation of UB Parent. The holders of M Shares are entitled to one vote per share at a shareholders' meeting, while the E Shares do not carry any votes. These shares in UB Parent may
be transferred subject to restrictions set forth in its articles of association.

C. Board Practices

Term of Office

The directors are subject to retirement by rotation and do not hold a fixed term of office. One-third of the directors retire at each annual general
meeting. Retiring directors may offer themselves for re-appointment. The current directors have been in office for the full fiscal year ended January 1, 2005.

Directors' Service Contracts

There are no service contracts in relation to the directors who represent the Equity Sponsors. As described above, the shareholders agreement provides that the
Equity Sponsor directors of our parent are entitled to receive directors fees of £25,000 (plus VAT) each year for each director which shall accrue from day to day and shall be payable
quarterly in arrears each year. Three of the four directors of UB Finance are Equity Sponsor directors of UB Parent.

The
executive directors have contracts of employment with United Biscuits (UK) Limited, the principal operating subsidiary of United Biscuits, some of which are subject to final
negotiation. Except for variances in remuneration and bonus levels and pension entitlement, the contracts are uniform and all provide that the directors are entitled to a notice period of
12 months. The contracts also provide in their respective schedules a mechanism for a genuine pre-estimate of loss, based upon the overall contractual package. Accordingly, in the
event of a termination, the executive director would be entitled to 12 months' compensation for loss of the following benefits: salary, car, health insurance, life cover

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and
pension. The Senior Management Incentive Scheme bonus is expressly excluded from the notice period compensation.

Audit and Remuneration Committee

We do not have an Audit Committee, however UB Parent has an Audit and Remuneration Committee (the "Audit Committee"). The Audit Committee is composed of Equity
Sponsor appointees, consisting of nominees from each of Cinven, PAI and Nabisco, certain of whom are also our directors. The Chairmanship of the Audit Committee is allotted equally between Cinven and
PAI. Any Equity Sponsor member of the board of UB Parent can attend meetings of the Audit Committee as a member.

Bertrand
Meunier (PAI) and Bob Bradish (Nabisco), who are our directors, are Equity Sponsor appointees on the Audit Committee. Bertrand Meunier is joint Chairman of the Audit Committee.

Also
in attendance, although not members of the Audit Committee, are the Chairman, David Fish and the Chief Executive Officer, Malcolm Ritchie, who are members of the executive
management of UB Finance, and, for the purposes of the audit aspect of the Audit Committee, the Director, Financial Control, Robin Brown.

The
UB Parent shareholders agreement sets out the purpose of the Audit Committee, which is to:



The
Audit Committee meets two to three times each year and invites other relevant persons such as representatives of the Internal Audit, External Audit, Risk Management and Disclosure
Committees to its meetings as deemed necessary. Their responsibilities include evaluating the appropriate risk framework and communicating the importance of internal control and the management of risk
through the Risk Management committee, reviewing the activities and organizational structure of the Internal Audit function taking account of U.S. Securities and Exchange Commission (the "SEC")
guidelines, including their work plan and considering the major findings from their work together with our management responses, reviewing the annual financial statements, including this annual
report, before the submission to the board of UB Parent and determining whether they are complete and consistent with information known to Audit Committee members and reviewing the performance of the
external auditors and making recommendations to the Board as to their re-appointment. The chairman of the Audit Committee makes a brief report of the findings and recommendations of the
Audit Committee to the board of UB Parent at each board meeting.

D. Employees

As of January 1, 2005, we had approximately 11,200 employees, equivalent to approximately 10,500 full-time employees. Approximately 88% of our
full-time employees, both in the United Kingdom and continental Western Europe, are represented by collective agreement/unions. We have historically enjoyed good working relationships with
our unions and have not recently experienced any significant work stoppages, slowdowns or other collective employee actions that have materially disrupted our business.

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E. Share Ownership

See the discussion of our Senior Management Equity Purchase Scheme included in "CompensationSenior Management Equity Purchase Scheme."
As of January 1, 2005, Malcolm Ritchie beneficially owned 1.25% of the equity shares of UB Parent. No other members of the boards of UB Finance and Regentrealm beneficially owned more than 1%
of the outstanding shares of UB Parent.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

All of the ordinary shares of Regentrealm are held and beneficially owned by UB Finance. All the ordinary shares of UB Finance are held and beneficially owned by
Runecorp, a wholly owned subsidiary of UB Parent. United Biscuits (Equity) Limited ("UB Equity Cayman") holds and beneficially owns 95% of the shares of UB Parent, the remaining 5% are owned by senior
management. PAI, Cinven and MidOcean own 39.8%, 39.8% and 20.4% of the voting shares of UB Equity Cayman, respectively.

Nabisco
holds UB Parent warrants that are exercisable upon the earlier of a listing of UB Parent's shares, a sale of UB Parent or the 49th anniversary of the warrant deed on
July 25, 2049. The number of ordinary shares issuable upon exercise of the warrants is based on a formula which, if calculated at the time of the UB acquisition, would have been for
approximately 26.51% of the equity of UB Parent. Nabisco may exercise its warrants by the tender of its £145.0 million dual convertible discounted preferred securities of Deluxestar
Limited ("Deluxestar"), a direct wholly owned subsidiary of UB Parent.

The
Equity Sponsors are parties to a shareholders agreement which provides for certain rights and obligations regarding their share ownership. See "Financing of UB
AcquisitionShareholders Agreement."

B. Related Party Transactions

Below is a description of transactions we entered into with our shareholders or affiliates during the three-year period ended January 1, 2005.
Some of these relationships continue to be in effect and may result in conflicts of interest between us and these shareholders or affiliates.

In
connection with the UB acquisition, we agreed to undertake certain acquisitions and dispositions, including the EMENA acquisition and the sale of the Asian assets discussed below in
order to focus our business on our key Western European markets.

Nabisco Transactions

EMENA Acquisition

In March 2000, Deluxestar, an affiliate of our parent, UB Parent, entered into an agreement to acquire from Nabisco the beneficial interests in some of its
European, Middle Eastern and North African assets (together, the "EMENA Assets") located in Iberia, Saudi Arabia and Tunisia, respectively. The transfers of the Iberian and Tunisian businesses were
completed on July 11, 2000 and April 20, 2001, respectively. The EMENA Assets were valued at £167.0 million, including assumed debt and as adjusted to the 2000 fiscal
year end. On November 29, 2001, a further adjustment of £10.2 million was agreed with Nabisco, reducing the total transactional value to £156.8 million.
Following further discussions between Nabisco and United Biscuits, Nabisco confirmed, by agreement effective from February 18, 2003, that it did not intend to withdraw from the Saudi Arabian
joint venture arrangement. In accordance with the July 2000 agreement, Nabisco paid $4.8 million (approximately £3.0 million) to United Biscuits as an adjustment to
the purchase price. The adjusted total transactional value is £153.8 million. In connection with the EMENA acquisition, Deluxestar issued to Nabisco dual convertible discounted
preferred securities and the formula used to calculate the

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number
of ordinary shares issuable under warrants previously issued to Nabisco by UB Parent was adjusted.

Sale of Asian Assets

On July 11, 2000, we entered into an agreement to sell our operations in mainland China, Hong Kong and Taiwan and the related intellectual property rights
to Nabisco.Our assets were valued at £75.0 million and Nabisco paid cash of £63.1 million and assumed
£11.9 million of external debt. On November 29, 2001, an adjustment of £1.2 million was agreed with Nabisco and the transactional value was thereby reduced
to £73.8 million.We completed the sale of our assets in Hong Kong and Taiwan on September 29, 2000. We completed the sale of
our operations in China on March 25, 2002.

Nabisco License Agreements

As part of the Transactions, in July 2000, we entered into a series of trademark license agreements with Nabisco under which Nabisco granted us an
exclusive license for the manufacture, marketing, sale and distribution of products under a number of material trademarks Effective from February 18, 2003 and in connection with the decision
not to complete the acquisition of Nabisco's business in the Middle East, the agreement with Merola was amended to exclude territories associated with the Middle Eastern business. Nabisco paid
$959,000 (approximately £0.6 million) as consideration for excluding these territories. The Nabisco license agreements are discussed in Item 5.C. "Operating and Financial Review and
ProspectsResearch and Development, Patents, Licenses, etc.Trademarks and Licenses."

Financing of UB Acquisition

The UB acquisition was funded by loans under our senior credit facility, a senior subordinated bridge facility, deep discounted bonds, dual convertible preferred
discounted securities and equity contributions.The senior subordinated bridge facility was repaid, in part with the net proceeds from the notes
offering. As of January 1, 2005, our total outstanding long-term debt, including current maturities but excluding intercompany loans and unamortized debt issuance costs, was
£945.0 million. Deutsche Bank AG London, an affiliate of MidOcean, is a joint arranger and lender under our senior credit facility, was a facility agent and lender under our senior
subordinated bridge facility, a co-manager of the old notes offering and sole manager of the new notes offering, for which they received the customary fees.

Shareholders Agreement

On March 17, 2000, the Equity Sponsors entered into a shareholders agreement with UB Parent, which was supplemented on April 17, 2000. The
shareholders agreement was supplemented again on March 13, 2003. Among other things, the shareholders agreement provides that each of the Equity Sponsors, subject to maintaining specified
ownership thresholds, has the right to appoint an equal number of directors (currently three) to the board of directors of UB Parent, except for MidOcean, which has the right to appoint two directors.
The quorum for the transaction of business at any board meeting is one director from each of the Equity Sponsors, including the MidOcean director. No resolution of the directors will be effective
unless approved by a majority of the directors present.

Under
the shareholders agreement, each of the Equity Sponsors is entitled to receive an annual monitoring fee for their financial oversight and investment monitoring services. Subject to
the discretion of the board of directors of UB Parent, the amount of the monitoring fee may be increased from time to time. PAI and Cinven were initially entitled to receive £266,667 each,
Nabisco was initially entitled to receive £200,000 and DB Capital was initially entitled to receive £141,666. The fees payable for each of the three years ended
April 14, 2004 were agreed at £984,375, of which PAI and Cinven were entitled to £300,000 each, Nabisco was entitled to £225,000 and MidOcean (2002: DB
Capital) was entitled to £159,375.

Each
of the directors of UB Finance and Regentrealm is also a director of UB Parent. PAI and Nabisco each have an additional two directors on the board of UB Parent and Cinven and
MidOcean

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each
have one additional director on the board of UB Parent. Under the shareholders agreement, UB Parent makes annual payments of £25,000 in directors' fees to the Equity Sponsors for each
of their nominated directors, and pays all reasonable out-of-pocket expenses incurred by the directors in connection with their participation in board meetings. The
shareholders agreement provides that UB Parent may not take particular actions without the prior written consent of Nabisco, including:



The
shareholders agreement provides, however, that the prior written consent of Nabisco will not be required for the sale, lease, license or other disposition of all or any part of the BNand/orDelacrebrands on or after January 1, 2003.

95%
of the shares and share equivalents of UB Parent are held by UB Equity Cayman, and Nabisco. The shareholders agreement provides that none of UB Equity Cayman, Nabisco nor any other
holder of UB Parent's or UB Equity Cayman's shares may transfer its shares to a person other than its respective affiliates for a period of three years after the execution date of the shareholders
agreement (the "restricted period"). The restricted period expired on March 16, 2003, and each of Nabisco and UB Equity Cayman are subject to a right of refusal in the event that a third party
makes a bona fide offer to purchase all or substantially all of its shares in UB Parent. If the other shareholder does not exercise its rights, then the selling shareholder may sell its shares to the
third party and require the other shareholder to sell all of its shares to the third-party purchaser. If the selling shareholder is selling more than 5% of the outstanding ordinary shares of UB
Parent, the other shareholder can require the third party to purchase a proportionate number of its shares. The shareholders agreement also requires that if Cinven, PAI or MidOcean receives an offer
from a bona fide third party to purchase all or substantially all of their shares in UB Equity Cayman, Nabisco has the right to purchase those shares on the same terms that would apply to an offer for
the shares of UB Parent.

If
UB Equity Cayman desires to sell most or all of its shares in UB Parent after the restricted period ends, it must give Nabisco the right to make an offer to purchase those securities
at a price set by Nabisco. If Nabisco does not make an offer, UB Equity Cayman is free to sell its shares. If Nabisco makes an offer, UB Equity Cayman may then provide a counter-offer price. If
Nabisco does not elect to buy the shares at the counter-offer price, then UB Equity Cayman may proceed within 90 days with a private sale of all the shares to a bona fide third party if the
sale price is at least 105% of Nabisco's initial offer price. If UB Equity Cayman sells its shares to a third party, it has the right to require Nabisco to sell its shares to the third party. If the
shares being sold by UB Equity Cayman amount to more than 5% of the outstanding shares of UB Parent, Nabisco can sell a proportionate number of its shares to the third party. The shareholders
agreement also requires that if PAI, Cinven or MidOcean desires to sell most or all of their shares in UB Equity Cayman, Nabisco has a right of first offer to purchase those shares under the same
terms that apply to a sale of the UB Equity Cayman securities.

The
shareholders agreement also provides for a Nabisco right of first offer to purchase all of the securities of UB Equity Cayman after the restricted period expired. If UB Equity Cayman
elects not to sell to Nabisco under any of the right of first-offer provisions of the shareholders agreement, UB Equity Cayman has the right to sell all or some of its securities in a public sale,
subject to procedures requiring notice to Nabisco. Nabisco has the right to then purchase those securities before the public sale. UB Equity Cayman may only exercise the rights contemplated under the
right of first offer and public sale provisions of the shareholders agreement twice in aggregate in any calendar year.

The
exercise of these sale and purchase rights may under certain circumstances result in a change of control under the indenture which would require us to make an offer for the notes.

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The
shareholders agreement also gives the holders of these ordinary shares pre-emptive rights on future sales of securities by UB Parent.

The
shareholders agreement also provides that for the duration of the shareholders agreement and for one year from its termination date, none of the Equity Sponsors are permitted
directly or indirectly to carry on the business of United Biscuits in a territory defined to include most nations within the European Union and the European Free Trade Association and a number of
nations in Eastern and Central Europe and North Africa, other than through UB Parent and/or its subsidiaries. Non-compete provisions are subject to extensive regulation under competition
laws and we are in ongoing discussions with Kraft, the parent of Nabisco, as to the scope of the enforceability of this clause. Nothing in the shareholders agreement otherwise limits the current or
future business activities of the shareholders of UB Parent, whether or not those activities compete with those of UB Parent and its subsidiaries.

In
connection with the UB acquisition, Cinven, PAI and DB Capital entered into a consortium agreement with each other and with UB Equity Cayman and its subsidiaries. The consortium
agreement was supplemented on March 13, 2003. Under the consortium agreement, PAI, Cinven and MidOcean have the right to appoint up to four, four and two directors of UB Equity Cayman,
respectively, and each of these directors shall be entitled but not obligated to be a director of each of UB Parent and its subsidiaries. The quorum for the transaction of business at any board
meeting is one director from each of Cinven, PAI and MidOcean. The consortium agreement provides that particular actions relating to UB Equity Cayman and its subsidiaries, including, among other
things, changes in the nature of their business, dissolution, transactions outside the ordinary course of business, remuneration of directors, establishment of incentive schemes giving rise to
payments outside the budget and share option schemes, require the prior written consent of PAI, Cinven and MidOcean. The board may not take other significant actions without the prior written consent
of a majority of the shareholders. The consortium agreement also contains restrictions, similar to those in the shareholders agreement, on the ability of the shareholders to transfer their shares.

Transaction Fees

As part of the Transactions, we and our affiliates entered into an agreement with the Equity Sponsors regarding financing fees payable to Cinven, PAI, Nabisco and
DB Capital for their services in connection with the Transactions. Under the agreement, we agreed to pay £6.0 million
each to PAI and Cinven, £3.1 million to DB Capital and £4.9 million and $5.0 million to Nabisco. We believe that these fees, which were negotiated among
the Equity Sponsors on an arm's-length basis, are comparable to fees paid to private equity sponsors in comparable transactions. Payment of the transaction fees was completed during 2001. Also, in
2001, we paid $10.0 million to Nabisco in full and final settlement of outstanding third party expenses relating to the UB acquisition.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See Item 18 "Financial Statements."

A.7. Legal Proceedings

We were involved in multiple lawsuits in France over the "smiley face" trademark we use in the miniBNproducts we
market in France. Franklin Loufrani, a French citizen, claims to have been the registered owner of the trademark since September 27, 1991, the date of his filing with the French trademark
office. In November 1999, we requested theTribunal de Grande Instanceof Paris to cancel the trademark filed by Mr. Loufrani for
non-use under the French trademark law. Although the Tribunal rejected this request on procedural grounds, we have appealed the case to theCour
d'Appelof

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Paris
and filed another request for cancellation of the trademark with theTribunal de Grande Instance. In July 2000, Mr. Loufrani brought
a suit against us in theTribunal de Grande Instanceof Nantes for trademark violation and requested the court to seize packages of mini BNproducts with
the smiley-face trademark and issue an injunction prohibiting us from using the trademark. The final hearing for pleadings
in theTribunal de Grande Instanceof Paris took place on October 19, 2001 and a decision was made in our favor on January 22, 2002. The
court awarded us a "provisional execution" which allows us to continue to use the trademark as Mr. Loufrani's registration was deemed to be null as far as the biscuit category is concerned.
However, Mr. Loufrani filed an appeal and we filed a counter-statement closure of written proceedings for February 10, 2003. Oral proceedings were scheduled for April 1, 2003. In
March 2003 Mr. Loufrani offered to enter into a Settlement Agreement if both parties would withdraw their claims before theCour
d'Appelof Paris and theTribunal de Grande Instanceof Nantes. On
April 1, 2003, our lawyers attended a hearing and asked for the matter to be removed from the list of outstanding cases in view of the settlement agreement proposal. This was agreed to. There
was then a two-year timescale in which the case could be reinstated. Mr. Loufrani had the case reinstated with effect from March 31, 2005. The action in the Tribunal de Grande Instancein
Nantes has been suspended pending the outcome of the Paris adjournment. If the result is in our favor, the action in
Nantes will be irrelevant. Our annual sales of miniBNproducts in 2004 were €15.6 million (approximately
£11.0 million).

In
1997, our operating subsidiary in the Netherlands, Koninklijke Verkade N.V. ("Verkade") initiated negotiations with property developers Dura Vermeer Bouw Amsterdam B.V. ("Dura") to
sell our entire factory site located at Zaandam, the Netherlands. No agreement was reached and negotiations ceased. A dispute has arisen whereby Dura claim an agreement was reached, which under local
law was legally binding. Our legal advice is that Dura do not have grounds to support their claim that there was a legally binding contract, although there is a risk that we may be liable for certain
costs incurred. We have provided €300,000 (approximately £0.2 million) in respect of the costs of defending the claim and any costs for which there may be a valid
claim. Based on legal advice, Verkade sold its chocolate factory, which is a part of the Zaandam site, to a third party in 2004. Subsequently Dura served a summons on Verkade in November 2004
for €14 million (approximately £9.9 million). Verkade has filed a defense to the summons and is strongly contesting the claim.

We
are from time to time also involved in various routine legal proceedings incidental to the ordinary course of our business. We believe that the outcome of all pending legal
proceedings, either individually or in the aggregate, will not have a material adverse effect on our consolidated financial condition or results of operations.

B. Significant Changes

We are in the process of determining the impact of a recent flood at our Carlisle manufacturing facility in the United Kingdom, see Item 5.A. "Operating
and Financial Review and ProspectsOperating ResultsSubsequent Event."

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Not applicable.

B. Plan of Distribution

Not applicable.

C. Markets

The notes are listed on the Luxembourg Stock Exchange.

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D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

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ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

The objectives of UB Finance include: (1) acting as the holding and coordinating company for all of our direct and indirect subsidiaries, including our
operating subsidiaries; (2) subscribing for, purchasing or otherwise acquiring, taking, holding or selling on such terms and conditions as may be thought fit, any shares or stocks, bonds,
debentures or other securities or obligations of any company; (3) undertaking and executing agency and commission work; (4) carrying on any other trade or business in connection with any
of the businesses of UB Finance; (5) purchasing, leasing, acquiring or holding any interest in property, plant and equipment necessary or convenient for the purposes of or in connection with UB
Finance's business; (6) erecting, constructing, altering and maintaining any roads, railways or other means of transport, plant and equipment necessary or convenient for UB Finance's business,
and contributing to or subsidizing the erection, construction and maintenance of any of the above; (7) borrowing, raising or securing the payment of money for the purposes of or in connection
with UB Finance's business; (8) mortgaging and charging the undertaking of all or any of the real and personal property and assets, and all or any of the uncalled capital of UB Finance and to
issue debentures and collaterally or further to secure any securities of UB Finance by a trust deed or similar assurances; (9) the issuance and deposit of any securities that UB Finance has
power to issue; (10) receiving money on deposit or loan and the guaranteeing of the obligations and contracts of customers and others; (11) lending money, giving indemnities and
guaranteeing the liabilities and obligations of and the payment of any monies whatsoever (including but not limited to capital, principal, premiums, interest, dividends, costs and expenses on any
stocks, shares or securities) by any person, firm or company including but not limited to the holding company or a subsidiary; (12) procuring, establishing and maintaining a pension or
superannuation fund for the benefit of employees who meet the specified criteria; (13) investing and dealing with the monies of UB Finance; (14) paying or accepting payment for any
property or right acquired or sold, as the case may be, by UB Finance; (15) entering into any partnership or joint-purse arrangement or amalgamating with any company proposing to carry on
business within the objects of UB Finance; (16) establishing or promoting any other company whose objectives shall include the acquisition and taking over of all or any of the assets and
liabilities of UB Finance; (17) purchasing or acquiring and undertaking all or any part of the business of any company carrying on business similar to that of UB Finance; (18) selling,
improving, managing or developing any of the property of UB Finance; (19) distributing among the shareholders any property of UB Finance,
or any proceeds of sale or disposal of any property of UB Finance; and (20) giving financial assistance for the purpose of acquisition of the shares in UB Finance or UB Finance's holding
company.

Unless
and until otherwise determined by UB Finance by ordinary resolution, UB Finance shall have no more than 12 but no less than two directors. The board of directors of UB Finance
(the "Board") shall have the power to appoint directors and the directors shall not be required to hold any shares of UB Finance. UB Finance may by ordinary resolution remove any director before the
expiration of his or her period of office.

UB
Finance's share capital was increased from £1,000 to £600,002 by the creation of 599,002 ordinary shares of £1 each by an ordinary resolution
passed on March 22, 2000. It then increased from £600,002 to £2,010,002 by the creation of an additional 1,410,000 ordinary shares of £1 each by an ordinary
resolution passed on April 25, 2000. Unissued shares and any shares created after adoption of UB Finance's articles of association (the "Articles") are at the disposal of the Board, which may
allot grant options over, offer or otherwise deal with such shares and the disposal thereof. UB Finance may also issue a warrant for any fully paid shares. UB Finance may by ordinary resolution
increase, consolidate, cancel any shares and subdivide its share capital. UB Finance may by special resolution reduce its share capital in any way.

---



Subject
to restrictions set forth in the Articles, each holder of the shares (each, a "holder") may transfer all or any of his or her shares by instrument of transfer in writing in any
usual form or in any form approved by the Board. Subject to the terms of allotment of shares, the Board may by means of a resolution from time to time make calls on the holders in respect of any
monies unpaid on the shares, of any class, held by them and not payable on a date fixed by or in accordance with the terms of issue. If any holder fails to pay and does not comply with a subsequent
notice sent by the Board, the shares in respect of which such call was made will be forfeited.

Annual
general meetings shall be held at such time and place as the Board may determine. In addition, the Board may convene an extraordinary general meeting whenever it thinks fit. At
any such meeting, no business shall be transacted except that stated by the requisition or proposed by the Board. All meetings convened for the passing of a special resolution shall require not less
than 20 working days' notice in writing. All other extraordinary general meetings shall be convened by not less than 14 clear days' notice in writing. A quorum at these general meetings shall be two
persons entitled to attend and vote on the business to be transacted.

C. Material Contracts

The following material contracts are described within Item 5.A. "Operating and Financial Review and ProspectsOperating
ResultsSignificant Factors Affecting Our Results of OperationsAcquisitions and Dispositions" and Item 5.B. "Liquidity and Capital
ResourcesDebt Service Obligations."



The
following material contracts are described in more detail in Item 7.B. "Major Shareholders and Related Party TransactionsRelated Party TransactionsNabisco
TransactionsEMENA Acquisition" and Item 5.C. "Operating and Financial Review and ProspectsResearch and Development, Patents, Licenses, etc.Trademarks and
Licenses."



---





D. Exchange Controls

None.

E. Taxation

U.S. Federal Income Tax Considerations

The following discussion is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), the applicable U.S. Treasury regulations
promulgated or proposed thereunder, judicial authority and current administrative rulings and practice, all as in effect on the date hereof.
Legislative, judicial or administrative changes or interpretations may be forthcoming that may be retroactive and that could alter or modify the continued validity of the following statements and
conclusions.

Except
as specifically noted, this discussion is limited to the U.S. federal income tax considerations that apply to a beneficial owner of a note who or which is:



Certain
aspects of U.S. federal income taxation relevant to a beneficial owner of a note that is an individual, a corporation, an estate or a trust other than a U.S. Holder (a
"Non-U.S. Holder") are also discussed below. The discussion below assumes that the notes will be treated as debt for U.S. federal income tax purposes. The discussion does not address all
aspects of U.S. federal income taxation that might be relevant to particular holders in light of their personal investment circumstances or status, nor does it discuss the consequences to investors
subject to special treatment under the U.S. federal income tax laws, such as dealers in securities or foreign currency, brokers, taxpayers that have elected mark-to-market
accounting, financial institutions or "financial services entities," insurance companies, tax-exempt organizations or private foundations, taxpayers holding notes as part of a "straddle,"
"hedge," "conversion transaction," "constructive sale" or other integrated investment, U.S. holders that have a "functional currency" other than the U.S. dollar, U.S. expatriates or former
long-term residents of the United States and persons subject to the alternative minimum tax. This discussion does not address any special rules that may apply if the holder receives
principal in installment payments or if a note is called before the maturity date. This discussion also does not take into consideration any U.S. federal income tax implications if:



The
discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold the notes through a partnership or other
pass-through entity. Moreover, the effect

---



of
any applicable state, local or foreign tax laws or the applicability of U.S. federal gift or estate taxation is not discussed. Holders are urged to consult their own tax advisors regarding the U.S.
federal, state, local and other tax considerations of the acquisition, ownership and disposition of the notes.

Except
as otherwise indicated below, this discussion is generally limited to the tax consequences to beneficial owners of the notes that are initial holders of the notes, that hold the
notes as capital assets (within the meaning of Section 1221 of the Code) and that purchased the outstanding notes for an amount equal to the stated principal amount of the outstanding notes
plus accrued interest, or purchased the new notes for an amount at or above the stated principal amount of the new notes plus accrued interest.

Each Holder should consult its own tax advisor concerning the application of United States federal income tax laws, as well as the laws of any state, local or
foreign taxing jurisdiction to its particular situation.

U.S. Holders

Pre-Issuance Accrued Interest

A portion of the purchase price of the new notes is attributable to the amount of interest accrued prior to the date the new notes were issued. However, for U.S.
federal income tax purposes, the new notes should be treated as having been sold for an amount that excludes any pre-issuance accrued interest. If the new notes are so treated, a portion
of the first stated interest payment equal to the excluded pre-issuance accrued interest will be treated as a return of the portion of the purchase price attributable to such
pre-issuance accrued interest and will not be taxable as interest on the new notes.

Stated Interest on notes

Stated interest on a note will be taxable to a U.S. Holder as ordinary income either at the time it accrues or is received in accordance with the U.S. Holder's
method of accounting. Stated interest paid on a note will be includible in income by a U.S. Holder in an amount equal to the U.S. dollar value of the interest, regardless of whether a payment is in
fact converted to dollars at that time. If the U.S. Holder uses the cash method of accounting for tax purposes, the U.S. dollar value of the interest is determined using the spot rate at the time
payment is received. If a U.S. Holder uses the accrual method of accounting for tax purposes, the U.S. dollar value of the interest is determined using the average exchange rate during the relevant
accrual period (or partial accrual period for interest paid in a subsequent taxable year) or, if elected, the spot rate (a) on the last day of the relevant accrual period (or partial accrual
period) or (b) on the payment date, if that date is within five business days of the last day of the accrual period or taxable year. Any such election will apply to all debt instruments held by
the U.S. Holder at the beginning of the first taxable year to which the election applies or afterwards acquired and will be irrevocable without the consent of the U.S. Internal Revenue Service. Any
differences in the exchange rate between the rate at which interest on a note is included in income and the spot rate on the payment (or disposition) date for interest will result in exchange gain or
loss on the related amount of interest, and will generally be treated as ordinary income or loss for U.S. federal income tax purposes. The U.S. dollar value of interest accrued or received, adjusted
for any exchange gain or loss as to the amount accrued, generally will be a U.S. Holder's tax basis in the foreign currency received as interest on a note.

Additional Amounts and Additional Interest

We intend to treat the possibility that we will pay "Additional Amounts" (i.e., the amount of interest provided in
the notes to prevent any net reduction for withholding taxes, determined using the withholding tax rate applicable to the U.S. Holder) or "Additional Interest"
(i.e., the additional payments made under the new notes if the new notes are not registered under the U.S. Securities Act within a prescribed period) as
a remote or incidental contingency, within the meaning of applicable U.S. Treasury regulations. Accordingly, the gross amount of any Additional Amounts or Additional

---



Interest
should be includible in gross income by a U.S. Holder as ordinary interest income at the time that amount is received or accrued in accordance with the U.S. Holder's method of accounting for
tax purposes in the same manner as discussed above under "Stated Interest on notes." Consequently, the amount a U.S. Holder will include in gross income with respect to a note could
exceed the amount received by the U.S. Holder as stated interest should Additional Amounts or Additional Interest be due under the notes.

Amortizable Bond Premium

In general, if a U.S. Holder purchases a new note for an amount (net of accrued interest) in excess of the stated principal amount of the new note, the excess
will constitute bond premium. Bond premium is computed in units of foreign currency. A U.S. Holder of a new note generally may elect to amortize the premium over the remaining term of the new note on
a constant yield method as an offset to interest in units of foreign currency, in an amount not to exceed the stated interest, when includible in income under its regular method of accounting. At the
time amortized bond premium offsets interest income, exchange gain or loss with respect to amortized bond premium is recognized, measured by the difference between exchange rates at that time and at
the time of the acquisition of the new note.

Because
the new notes are subject to call provisions at UB Finance's option at various times, a U.S. Holder will calculate the amount of amortizable bond premium based on the amount
payable at the applicable call date and will determine the remaining term of the new note using the corresponding applicable call date (in lieu of the stated maturity date), but only if the use of
such amount payable at the applicable call date and the use of such corresponding applicable call date results in a smaller amortizable bond premium for the period ending on such corresponding
applicable call date.

If
the U.S. Holder does not elect to amortize bond premium, that premium will decrease the gain or increase the loss it would otherwise recognize on disposition of the new note. An
election to amortize premium on a constant yield method also will apply to all debt obligations held or subsequently acquired by the U.S. Holder on or after the first day of the first taxable year to
which the election
applies. The election may not be revoked without the consent of the U.S. Internal Revenue Service. U.S. Holders should consult their tax advisors before making this election.

Withholding Taxes

Any U.K. taxes withheld and not refunded to a U.S. Holder will be treated as foreign taxes eligible for credit against that Holder's U.S. federal income tax
liability, at the election of the U.S. Holder, subject to generally applicable limitations and conditions, including that the U.S. Holder claim any applicable treaty benefits. Alternatively, those
taxes are eligible for deduction in computing the U.S. Holder's taxable income. Stated interest, Additional Amounts and Additional Interest will constitute foreign source income for U.S. foreign tax
credit purposes. The income will generally constitute "passive income" for U.S. foreign tax credit purposes, unless the rate that applies to the U.S. Holder is 5% or more, in which case the income
generally will constitute "high withholding tax interest." Recently enacted legislation eliminates the "high withholding tax interest" category for taxable years beginning after December 31,
2006. For such years, the foreign tax credit limitation categories are limited to "passive income" and "general income". A U.S. Holder will not be allowed to claim foreign tax credits (but would
instead be allowed a deduction) for foreign taxes imposed on income with respect to the notes unless the U.S. Holder (i) holds such notes for more than 15 days during the
31-day period beginning on the date that is 15 days before the right to receive payment arises (disregarding any period during which the U.S. Holder has a diminished risk of loss
with respect to such notes) and (ii) is not under an obligation to make related payments with respect to positions in substantially similar or related property. The calculation of foreign tax
credits involves the application of complex rules that depend on a U.S. Holder's particular circumstances. Accordingly, investors are urged to consult their tax advisors regarding their ability to
claim a credit for any foreign withholding taxes paid under the notes.

---



Sale, Exchange or Redemption

Unless a non-recognition provision applies, the sale, exchange, redemption (including under an offer by us) or other disposition of a note will be a
taxable event for U.S. federal income tax purposes. In that event, a U.S. Holder will recognize gain or loss equal to the difference between:



A
U.S. Holder's adjusted tax basis in a note generally will equal the cost of the note to the U.S. Holder, which is the U.S. dollar value of the foreign currency purchase price of the
note translated at the spot rate for the date of purchase, or, in some cases, the settlement date, and in the case of a new note, decreased by any amortizable bond premium previously amortized by the
U.S. Holder with respect to the new note. A U.S. Holder will have a tax basis in any foreign currency received on the sale, exchange or retirement of a note equal to the U.S. dollar value of that
foreign currency on the date of receipt.

Except
to the extent of exchange gain or loss discussed below, gain or loss recognized by a U.S. Holder of a note should be capital gain or loss and will be long-term capital
gain or loss if the note has been held, or treated as held, by the U.S. Holder for more than one year at the time of sale, exchange, redemption or other disposition. Upon the sale, exchange,
retirement or repayment of a note, a U.S. Holder will recognize exchange gain or loss to the extent that the rate of exchange on the date of retirement or disposition differs from the rate of exchange
on the date the note was acquired or deemed acquired. Exchange gain or loss is recognized, however, only to the extent of total gain or loss on the transaction. For purposes of determining the total
gain or loss on the transaction, a U.S. Holder's tax basis in a note will generally equal the U.S. dollar cost of the note. Exchange gain or loss recognized by a U.S. Holder will generally be treated
as ordinary income or loss.

Any
gain realized by a U.S. Holder on the sale, exchange or redemption of a note generally will be treated as U.S. source income for U.S. foreign tax credit purposes. Any loss realized
upon a sale, exchange, redemption or other disposition of a note generally will be allocated against U.S. source income for U.S. foreign tax credit purposes.

Registration Rights Agreement and Exchange for Registered, Publicly Tradable Notes

An exchange of new notes for registered, publicly tradable notes under the Exchange Offer will not be a taxable event for U.S. federal income tax purposes.
Consequently, a U.S. Holder will not recognize taxable gain or loss as a result of exchanging new notes for registered, publicly tradable notes, and the U.S. Holder's holding period and adjusted tax
basis for a new note will not be affected. The U.S. Holder would continue to take into account income in respect of a new note in the same manner as before the exchange. If UB Finance fails to comply
with its obligations to exchange the new notes for registered, publicly tradable notes under the Registration Rights Agreement, Additional Interest may become payable on the new notes. See discussion
above under "Additional Amounts and Additional Interest."

Non-U.S. Holders

Subject to the discussion below under "Information Reporting and Back-up Withholding," a Non-U.S. Holder of a note generally
will not be subject to U.S. federal income or withholding tax on payments, including stated interest, Additional Amounts or Additional Interest in respect of a note and gain realized on the sale,
exchange, redemption or other disposition of a note unless:



---





Information Reporting and Back-up Withholding

Payments of interest and principal on a note and the proceeds from the sale or redemption or other disposition of a note paid to a U.S. Holder, other than a
corporation or other exempt recipient, will be reported to the U.S. Internal Revenue Service. A U.S. Holder may be subject to U.S. back-up withholding on interest and principal paid on a
note and proceeds from the sale or redemption or other disposition of a note unless the U.S. Holder:



Interest
on a note paid outside the United States to a Non-U.S. Holder through a U.S. person, or a person with certain enumerated U.S. relationships (a "U.S.-related
person"), is subject to information reporting and possible back-up withholding unless documentation and other requirements are satisfied. The payment of principal on a note and the
proceeds from the sale or redemption or other disposition of a note by a Non-U.S. Holder to or through the U.S. office of any broker, U.S. or foreign, or the non-U.S. office of
a U.S. person or a U.S. related person, will be subject to information reporting and possible back-up withholding unless:



The
back-up withholding tax rate is currently 28%. Any amount withheld under the back-up withholding rules will be creditable against the Holder's U.S. federal
income tax liability, subject to satisfaction of procedural requirements. Holders of notes are urged to consult their tax advisors to determine whether they qualify for exemption from U.S. withholding
and the procedure for obtaining an exemption, if applicable.

THE PRECEDING DISCUSSION OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER SHOULD CONSULT ITS
OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY
PROPOSED CHANGES IN APPLICABLE LAW.

U.K. Tax Considerations

The following summary describes some limited U.K. tax consequences of the ownership of the notes but does not purport to be comprehensive. Except where expressly
stated, the summary relates only to the position of those persons who are the absolute beneficial owners of their notes and the interest on those notes and may not apply to special situations, such as
those of dealers in securities. Furthermore, the discussion below is generally based upon provisions of U.K tax law and U.K. Inland Revenue practice as of the date of this annual report. We recommend that holders of notes
should consult their own tax advisors concerning the U.K. tax consequences of holding notes in the light of their particular situations as
well as any consequences arising under the law of any other relevant tax

---



jurisdiction. No representations as to the tax consequences to any particular holder of the notes are made hereby.

Interest on the notes

The notes constitute "quoted Eurobonds" within the meaning of section 349 of the U.K. Income and Corporation Taxes Act 1988 ("ICTA") as they are listed on
a "recognized stock exchange" within the meaning of section 841 of ICTA. The Luxembourg Stock Exchange is currently a recognized stock exchange for these purposes. Accordingly, as the notes are
listed on the Luxembourg Stock Exchange, and as long as they remain so listed, payments of interest on the notes may be made without withholding on account of U.K. income tax.

Interest
on the notes constitutes U.K. source income for U.K. tax purposes and, as such, may be subject to income tax by direct assessment even where paid without withholding, except in
the hands of a holder who is exempt from U.K. income tax under the terms of an applicable double taxation treaty or otherwise. However, interest on a U.K. source received without deduction or
withholding on account of U.K. tax will not be chargeable to U.K. tax in the hands of a holder of a note who is not resident for tax purposes in the United Kingdom unless that holder carries on a
trade, profession or vocation in the United Kingdom through a U.K. permanent establishment, branch or agency in connection with which the interest is received or to which the note is attributable.
There are exemptions for interest received by certain categories of agents, such as brokers and investment managers.

U.K. Corporation Taxpayers

For holders of notes within the charge to U.K. corporation tax any profits and gains, including interest (and also including profits or gains arising from
currency fluctuations), arising from the notes in the hands of those holders will generally be charged to tax as income in each accounting period on a basis reflecting the treatment in the statutory
accounts of the holders, calculated in accordance with the holder's authorized accounting methods.

Individual Noteholders

Notes denominated in pounds sterling are expected to be treated as "qualifying corporate bonds" for the purposes of the U.K. legislation relating to capital
gains. Accordingly, no chargeable gain or allowable loss will be realized on the disposal of a pound sterling denominated note.

Notes
denominated in euro will not be "qualifying corporate bonds" for the purposes of the U.K. legislation relating to capital gains. Accordingly a chargeable gain or allowable loss may
be realized on the disposal of a euro-denominated note by an individual subject to U.K. capital gains tax in respect of his holding of notes. Such a gain or loss may include a gain or loss
from currency fluctuations.

Under
the provisions known as the "accrued income scheme" the transfer of a note by an individual holder who is subject to U.K. income tax in respect of his or her holding of notes may
give rise to a charge to tax on income. Individual holders who are within the accrued income scheme should seek their own advice as to its application in relation to any particular transfer.

E.U. Directive on the Taxation of Savings Income

The European Union has adopted a Directive regarding the taxation of savings income. Subject to a number of important conditions being met, it is proposed that
Member States will be required from a date not earlier that January 1, 2005 to provide to the tax authorities of Member States details of payments of interest and other similar income paid by a
person to an individual in another Member State, except that Austria, Belgium and Luxembourg will instead impose a withholding system for a transitional period unless during such period they elect
otherwise. In the U.K., this Directive has been implemented by the Reporting of Savings Income Information Regulation 2003 (SI 2003/3297)

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Stamp Duty and Stamp Duty Reserve Tax

No stamp duty or stamp duty reserve tax is payable on the issuance or transfer of the notes.

We recommend that persons who are in any doubt as to their tax position or who may be subject to tax in other jurisdictions consult their own tax
advisors.

F. Dividends and Paying Agents

Not applicable.

G. Statements by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), applicable to foreign private issuers
and fulfill the obligation by filing with or furnishing reports to the SEC. You may read and copy any document we file with or furnish to the SEC without charge at the SEC's public reference room at
450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this material may be obtained by mail from the Public Reference Branch of the SEC at such address, at prescribed rates. Please call the SEC at
l-800-SEC-0330 for further information on the public reference room.

As
a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal
shareholders are exempt from the reporting and "short-swing" profit-recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to
file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. A copy of each report submitted in
accordance with applicable U.S. securities laws is available for public review at our principal executive offices.

I. Subsidiary Information

Not applicable.

---



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

In the ordinary course of our business, we are exposed to a variety of market risks arising from fluctuations in foreign currency exchange rates, interest rates
and commodity prices. To manage these risks effectively, we enter into hedging transactions and use derivative financial instruments, under established internal guidelines and policies, to mitigate
the adverse effects of these market risks. We do not enter into financial instruments for trading or speculative purposes.

Interest Rate Exposure

The following table provides information as of January 1, 2005 about our financial instruments that were sensitive to changes in interest rates. The
information is presented in pounds sterling, which is our reporting currency. Actual cash flows of the various instruments are denominated in euro, pounds sterling and dollars.

|                                           |              | Expected to Mature Before December 31, |     |      |      |      |      |     
|------------------------------------------ | ------------ | -------------------------------------- | --- | ---- | ---- | ---- | ---- | ----
|
|
|
|Long-term debt                             |              |                                        |     |      |      |      |      |     
|Floating-rate debt                         |              |                                        |     |      |      |      |      |     
|Senior credit facility                     |              |                                        |     |      |      |      |      |     
|                                           | Term loan A  |                                        | 8.0 |      | 38.5 |      | 52.5 |     
|                                           | Term loan B1 |                                        |    |      |     |      |     |     
|                                           | Term loan B2 |                                        |    |      |     |      |     |     
|                                           | Term loan C  |                                        |    |      |     |      |     |     
|                                           |              |                                        |     |      |      |      |      |     
|Total floating-rate                        |              | 8.0                                    |     | 38.5 |      | 52.5 |      | 62.5
|                                           |              |                                        |     |      |      |      |      |     
|Fixed-rate debt                            |              |                                        |     |      |      |      |      |     
|10.750% senior subordinated sterling notes |              |                                       |     |     |      |     |      |    
|10.625% senior subordinated euro notes     |              |                                       |     |     |      |     |      |    
|                                           |              |                                        |     |      |      |      |      |     
|Total fixed-rate                           |              |                                       |     |     |      |     |      |    
|                                           |              |                                        |     |      |      |      |      |     
|Debt premium                               |              | 1.1                                    |     | 1.1  |      | 1.1  |      | 1.1 
|                                           |              |                                        |     |      |      |      |      |     
|Total                                      |              | 9.1                                    |     | 39.6 |      | 53.6 |      | 63.6
|                                           |              |                                        |     |      |      |      |      |     
|Interest rate derivatives                  |              |                                        |     |      |      |      |      |     
|Interest rate swapsnet liability          |              |                                        |     |      |      |      |      |     
|                                           |              |                                        |     |      |      |      |      |     

In order to ensure that there was an appropriate balance between fixed and floating rate debt, interest rate swaps were put in place so that as of
January 1, 2005, approximately 81% of our total floating rate debt had been converted into fixed rate debt:

|Notional Amount                   |  | Fixed Rate |  | Fair Value |  
|--------------------------------- |  | ---------- |  | ---------- | -
|
|150.0                             |  | 5.685      |  | 1.2        |  
|62.5                              |  | 4.780      |  | (0.1       | )
|134.0                             |  | 4.910      |  | 0.1        |  
|110.0                             |  | 5.020      |  | 0.2        |  
|(€ million)                       |  |            |  |            |  
|80.0                              |  | 2.360      |  |           |  
|                                  |  |            |  |            |  
|Interest rate swapsnet liability |  |            |  | 1.4        |  
|                                  |  |            |  |            |  

Foreign Exchange Risk Management

We have entered into forward foreign exchange contracts in order to swap liquid assets and liabilities into currencies required for our purposes.

---



As
at January 1, 2005 the following contracts were outstanding:

|                |  | Receive for £ |  | Pay for £ |  | Receive for € |  | Pay for €
|--------------- |  | ------------- |  | --------- |  | ------------- |  | ---------
|
|
|Currency:       |  |               |  |           |  |               |  |          
|U.S. dollar     |  | 16.0          |  | 1.7686    |  | 4.4           |  | 1.7802   
|Euro            |  | 36.8          |  | 1.4418    |  | 2.2           |  | 1.4380   
|Canadian dollar |  |              |  |          |  | 0.7           |  | 2.3806   
|                |  |               |  |           |  |               |  |          
|Total.          |  | 52.8          |  |           |  | 7.3           |  |          
|                |  |               |  |           |  |               |  |          

Hedges

Profits and losses on financial instruments used for hedging interest rate exposure and foreign exchange risk and commodity risk are recognized when the exposure
that is being hedged is recognized. Unrecognized and deferred profits and losses on financial instruments used for hedging are as follows:

|                                                                                 |  | Gains |   | Losses |   | Net  |  
|-------------------------------------------------------------------------------- |  | ----- | - | ------ | - | ---- | -
|
|Unrecognized gains and losses on hedges at January 3, 2004                       |  | 1.4   |   | (5.4   | ) | (4.0 | )
|Gains and losses arising in previous years that were recognized in 2004          |  | (1.3  | ) | 2.4    |   | 1.1  |  
|                                                                                 |  |       |   |        |   |      |  
|Gains and losses arising before January 3, 2004 that were not recognized in 2004 |  | 0.1   |   | (3.0   | ) | (2.9 | )
|Gains and losses arising in 2004 that were not recognized in 2004                |  | 2.3   |   | (0.1   | ) | 2.2  |  
|                                                                                 |  |       |   |        |   |      |  
|Unrecognized gains and losses on hedges at January 1, 2005                       |  | 2.4   |   | (3.1   | ) | (0.7 | )
|                                                                                 |  |       |   |        |   |      |  
|Of which:                                                                        |  |       |   |        |   |      |  
|Gains and losses expected to be recognized in 2005                               |  | 2.3   |   | (2.8   | ) | (0.5 | )
|Gains and losses expected to be recognized in 2006 or later                      |  | 0.1   |   | (0.3   | ) | (0.2 | )
|                                                                                 |  |       |   |        |   |      |  
|                                                                                 |  | 2.4   |   | (3.1   | ) | (0.7 | )
|                                                                                 |  |       |   |        |   |      |  

Commodity Price Exposure

To manage the volatility in commodity prices, we seek to cover our raw materials requirements by taking out forward contracts to secure supplies at agreed prices.
Forward cover is taken in physical markets for periods of at least three months and typically would not exceed 12 months, although by agreement with our board of directors this may be extended.
In one of the most volatile of our commodity markets, cocoa, we hedge against fluctuating prices through the use of cocoa futures. Gains or losses at the year-end may not materialize
depending upon market movements between the year-end and the maturity dates of outstanding contracts. Gains or losses that do materialize are charged to our operating results when the raw
ingredients which these contracts hedge are used. From time to time we also use financial derivatives to protect future raw materials prices by taking out options. The option premium is charged to our
operating results as incurred.

Inflation

We do not believe that our businesses are affected by inflation to any greater extent than any other business in our industry.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

---



PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their review on the date of this annual report of our disclosure controls and procedures, the Chief Executive Officer and the Director, Financial Control
who is our principal accounting officer have concluded that our current disclosure controls and procedures (as defined in U.S. Exchange Act Rules 13a-15(e) and
15d-15(e)) are effective to ensure that material information is recorded, processed, summarized and reported by us in a timely manner and that the information is accumulated and
communicated to management to allow timely decisions regarding required disclosure.

Change in Internal Controls

As of the date of this annual report, based on the assessment of the Board, there were no changes in our internal controls or in other factors that have
materially affected or are reasonably likely to affect these internal controls over financial reporting subsequent to the date of their evaluation, including any corrective actions regarding
significant deficiencies and material weaknesses.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

We do not have an audit committee financial expert as defined in Item 16A. of Form 20-F on our Board of Directors. We are, however, controlled
by UB Parent and believe the membership of their Audit Committee collectively has sufficient recent and relevant experience to discharge the functions of an audit committee financial expert. Members
of the Audit Committee are appointees of the Equity Sponsors. See Item 6. C. "Directors, Senior Management and EmployeesBoard PracticesAudit and Remuneration Committee." We
therefore do not have an audit committee financial expert as defined, as we believe that the cost of searching for and maintaining an independent audit committee financial expert would not be
justified given the oversight already provided by the Audit Committee.

ITEM 16B. CODE OF ETHICS

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer and persons performing
similar functions. Our finance code of ethics was filed as Exhibit 12.5 to our Annual Report on Form 20-F for our 2003 fiscal year.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant is Ernst & Young LLP.

---



Independent Auditor Fees

Aggregate fees billed by Ernst & Young LLP for professional services during 2004 and 2003 were as follows:

2004

2003(£ thousand)Audit services

1,249

732Audit-related services

795

102Tax services

104

146Other services



19Aggregate fees for professional services

2,148

999


Audit Servicesrepresent standard audit work required each year in order to issue an audit opinion on the consolidated financial
statements of UB Parent, UB Finance and Regentrealm and to issue reports on local statutory financial statements. It also includes services that may only be provided by our independent auditor such as
auditing non-recurring transactions and the application of new accounting policies, pre-issuance reviews of quarterly financial results, consents, comfort letters and covenant
compliance statements and any audit services required for U.S. SEC or other regulatory filings. Audit service costs increased in 2004, largely due to work required for the issue of the additional
notes and increased scope in connection with the acquisition of Jacob's.

Audit-Related Servicesrepresent other assurance services provided by auditors but not restricted to those that can only be provided by
the auditor signing the audit report. They comprise amounts for services such as acquisition due diligence, audits of pension and benefit plans, contractual audits of third-party arrangements and
consultation regarding new accounting pronouncements. Audit-related services increased in 2004 largely due to the due diligence work undertaken in connection with the acquisition of Jacob's and
Triunfo.

Tax Servicesrepresent tax compliance and other tax services, and expatriate tax return services.

Other Servicesin 2002 related to internal audit services and in 2003 consisted of data protection compliance reviews. Following the
issuance of revised SEC guidelines on independence and in accordance with the requirements of the U.S. Sarbanes-Oxley Act of 2002, Ernst and Young LLP ceased to perform internal audit services during
2002.

Pre-Approval Policy of Audit and Non-Audit Services of Independent Auditors

The Audit Committee is responsible for the oversight of our independent auditor's work. The Audit Committee's policy is to pre-approve all audit and
non-audit services provided by Ernst & Young LLP. These services may include audit services, audit-related services, tax services and other services as described above. On an annual
basis the Audit Committee details the particular services or categories of services that are pre-approved and sets a specific budget for each service. At the Audit Committee meetings,
management and Ernst & Young LLP report on the extent of services actually provided in relation to pre-approved services and request pre-approval of additional services,
as appropriate.

ITEM 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

---



PART III

ITEM 17. FINANCIAL STATEMENTS

We have responded to Item 18. "Financial Statements" in lieu of this item.

ITEM 18. FINANCIAL STATEMENTS

The following consolidated financial statements and schedules together with the reports thereon of Ernst & Young LLP, are filed as part of this annual
report:

|Reports of Independent Registered Public Accounting Firm                                                                                                                                                                    |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Financial Statements                                                                                                                                                                                                        |  | 
|Consolidated Profit and Loss Accounts of United Biscuits Finance plc for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004, and the 52 weeks ended December 28, 2002                                   |  | 
|Consolidated Statements of Total Recognized Gains and Losses of United Biscuits Finance plc for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004, and the 52 weeks ended December 28, 2002            |  | 
|Consolidated Balance Sheets of United Biscuits Finance plc at January 1, 2005 and at January 3, 2004                                                                                                                        |  | 
|Consolidated Cash Flow Statements of United Biscuits Finance plc for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004, and the 52 weeks ended December 28, 2002                                       |  | 
|Consolidated Statement of Changes in Shareholder's Funds of United Biscuits Finance plc for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004, and the 52 weeks ended December 28, 2002                |  | 
|Consolidated Profit and Loss Account of Regentrealm Limited for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004, and the 52 weeks ended December 28, 2002                                            |  | 
|Consolidated Statements of Total Recognized Gains and Losses of Regentrealm Limited for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004, and the 52 weeks ended December 28, 2002                    |  | 
|Consolidated Balance Sheets of Regentrealm Limited at January 1, 2005 and at January 3, 2004                                                                                                                                |  | 
|Consolidated Cash Flow Statements of Regentrealm Limited for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004 and the 52 weeks ended December 28, 2002                                                |  | 
|Consolidated Statement of Changes in Shareholder's Funds of Regentrealm Limited for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004 and the 52 weeks ended December 28, 2002                         |  | 
|Notes to the Financial Statements of United Biscuits Finance plc and Regentrealm Limited                                                                                                                                    |  | 
|Schedules                                                                                                                                                                                                                   |  | 
|Schedule IIValuation and Qualifying Accounts of United Biscuits Finance plc and of Regentrealm Limited for the 52 weeks ended January 1, 2005, the 53 weeks ended January 3, 2004 and the 52 weeks ended December 28,
2002 |  | 

ITEM 19. EXHIBITS

The exhibits filed with or incorporated by reference into this annual report are listed below.

---



---





---

---



SIGNATURES

Each registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | UNITED BISCUITS FINANCE PLC
| |  | ---------------------------
| |  | By:                        
| |  |                            
| |  | REGENTREALM LIMITED        
| |  | By:                        
| |  |                            

Date:
April 6, 2005

---



UNITED BISCUITS FINANCE plc  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We
have audited the accompanying consolidated balance sheets of United Biscuits Finance plc as at January 1, 2005 and January 3, 2004 and the related consolidated profit
and loss accounts and consolidated statements of total recognized gains and losses, cash flows and changes in shareholder's funds for the years ended January 1, 2005, January 3, 2004 and
December 28, 2002. Our audits also included the financial statement schedule listed in the Index at Item 18. These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We
conducted our audits in accordance with United Kingdom auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's
internal control over financial reporting. Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management
and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Biscuits Finance plc at
January 1, 2005 and January 3, 2004, and the consolidated results of its operations and its consolidated cash flows for the years ended January 1, 2005, January 3, 2004 and
December 28, 2002 in conformity with accounting principles generally accepted in the United Kingdom which differ in certain respects from those generally accepted in the United States (see
Note 25 of Notes to the Financial Statements). Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.



London,
England
April 6, 2005

---



REGENTREALM LIMITED  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We
have audited the accompanying consolidated balance sheets of Regentrealm Limited as at January 1, 2005 and January 3, 2004, and the related consolidated profit and loss
accounts and consolidated statements of total recognized gains and losses, cash flows and changes in shareholder's funds for the years ended January 1, 2005, January 3, 2004 and
December 28, 2002. Our audits also included the financial statement schedule listed in the Index at Item 18. These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We
conducted our audits in accordance with United Kingdom auditing standards and standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal
control over financial reporting. Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Regentrealm Limited at
January 1, 2005 and January 3, 2004, and the consolidated results of its operations and its consolidated cash flows for the years ended January 1, 2005, January 3, 2004 and
December 28, 2002 in conformity with accounting principles generally accepted in the United Kingdom which differ in certain respects from those generally accepted in the United States (see
Note 25 of Notes to the Financial Statements). Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.



London,
England
April 6, 2005

---



UNITED BISCUITS FINANCE plc    CONSOLIDATED PROFIT AND LOSS ACCOUNTS

|                                                                                        |                         | Notes  |   | 52 weeks
ended
January 1,
2005 |         | 53 weeks
ended
January 3,
2004
Restated(1) |         | 52 weeks
ended
December 28,
2002
Restated(1) |        
|--------------------------------------------------------------------------------------- | ----------------------- | ------ | - | ------------------------------ | ------- | ------------------------------------------ | ------- | -------------------------------------------- | -------
|
|Turnover: Group and share of joint venture                                              |                         |        |   | 1,225.4                        |         | 1,196.8                                    |         | 1,183.4                                      |        
|Less: share of joint venture's turnover                                                 |                         |        |   | (1.8                           | )       | (2.0                                       | )       | (1.7                                         | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Group turnover                                                                          |                         | 4      |   |                                |         |                                            |         |                                              |        
|                                                                                        | Continuing operations   |        |   |                                | 1,140.3 |                                            | 1,170.7 |                                              | 1,154.7
|                                                                                        | Acquisitions            |        |   |                                | 69.8    |                                            |        |                                              |       
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 1,210.1                        |         | 1,170.7                                    |         | 1,154.7                                      |        
|                                                                                        | Discontinued operations |        | 1 |                                | 13.5    |                                            | 24.1    |                                              | 27.0   
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 1,223.6                        |         | 1,194.8                                    |         | 1,181.7                                      |        
|Cost of sales                                                                           |                         |        |   | (770.3                         | )       | (729.5                                     | )       | (709.8                                       | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Gross profit                                                                            |                         |        |   | 453.3                          |         | 465.3                                      |         | 471.9                                        |        
|Net operating expenses, including goodwill amortization and operating exceptional items |                         | 5 & 10 |   | (408.1                         | )       | (454.7                                     | )       | (427.7                                       | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Group operating profit/(loss)                                                           |                         | 4      |   |                                |         |                                            |         |                                              |        
|                                                                                        | Continuing operations   |        |   |                                | 33.6    |                                            | 22.2    |                                              | 47.2   
|                                                                                        | Acquisitions            |        |   |                                | 13.2    |                                            |        |                                              |       
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 46.8                           |         | 22.2                                       |         | 47.2                                         |        
|                                                                                        | Discontinued operations |        |   |                                | (1.6    | )                                          | (11.6   | )                                            | (3.0   
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 45.2                           |         | 10.6                                       |         | 44.2                                         |        
|Other exceptional income                                                                |                         | 5      |   |                               |         | 3.5                                        |         |                                             |        
|Share of operating profit in joint ventures                                             |                         |        |   | 0.6                            |         | 0.6                                        |         | 0.6                                          |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Operating profit                                                                        |                         |        |   | 45.8                           |         | 14.7                                       |         | 44.8                                         |        
|(Loss)/profit on disposal or termination of businesses                                  |                         | 6      |   | (3.8                           | )       | (2.1                                       | )       | 9.9                                          |        
|Profit on disposal of fixed assets                                                      |                         |        |   | 4.1                            |         | 0.2                                        |         | 1.2                                          |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Profit before interest                                                                  |                         | 5      |   | 46.1                           |         | 12.8                                       |         | 55.9                                         |        
|Interest                                                                                |                         | 7      |   | (163.2                         | )       | (158.2                                     | )       | (142.8                                       | )      
|Other finance (expense)/income                                                          |                         | 20     |   | (5.7                           | )       | (6.0                                       | )       | 9.0                                          |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Loss on ordinary activities before tax                                                  |                         |        |   | (122.8                         | )       | (151.4                                     | )       | (77.9                                        | )      
|Taxation (charge)/credit                                                                |                         | 8      |   | (3.7                           | )       | 10.2                                       |         | 15.6                                         |        
|Exceptional taxation refund                                                             |                         | 9      |   |                               |         |                                           |         | 12.3                                         |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Loss attributable to shareholder(2)                                                     |                         |        |   | (126.5                         | )       | (141.2                                     | )       | (50.0                                        | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        

---

The Notes to the Financial Statements are an integral part of these Financial Statements.

---



UNITED BISCUITS FINANCE plc    CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES

|                                                            |  | 52 weeks
ended
January 3,
2005 |   | 53 weeks
ended
January 3,
2004 |   | 52 weeks
ended
December 28,
2002 |  
|----------------------------------------------------------- |  | ------------------------------ | - | ------------------------------ | - | -------------------------------- | -
|
|Loss attributable to shareholder                            |  | (126.5                         | ) | (141.2                         | ) | (50.0                            | )
|Translation differences on foreign currency net investments |  | (3.5                           | ) | 1.8                            |   | 0.8                              |  
|Actuarial gains/(losses) recognized in pension schemes      |  | 32.8                           |   | (42.4                          | ) | (227.0                           | )
|Deferred tax thereon                                        |  | (9.8                           | ) | 12.7                           |   | 68.0                             |  
|                                                            |  |                                |   |                                |   |                                  |  
|Total recognized gains and losses relating to the period    |  | (107.0                         | ) | (169.1                         | ) | (208.2                           | )
|                                                            |  |                                |   |                                |   |                                  |  

---

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



UNITED BISCUITS FINANCE plc    CONSOLIDATED BALANCE SHEETS

|                                                        |                            | Notes |  | At January 1,
2005 |      | At January 3,
2004 |     
|------------------------------------------------------- | -------------------------- | ----- |  | ------------------ | ---- | ------------------ | ----
|
|Fixed assets                                            |                            |       |  |                    |      |                    |     
|Intangible assets                                       |                            | 10    |  | 768.6              |      | 598.6              |     
|Tangible assets                                         |                            | 11    |  | 449.2              |      | 433.5              |     
|Investments in joint ventures                           |                            | 12    |  |                    |      |                    |     
|                                                        | Share of gross assets      |       |  |                    | 5.5  |                    | 5.0 
|                                                        | Share of gross liabilities |       |  |                    | (0.3 | )                  | (0.4
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 5.2                |      | 4.6                |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 1,223.0            |      | 1,036.7            |     
|                                                        |                            |       |  |                    |      |                    |     
|Current assets                                          |                            |       |  |                    |      |                    |     
|Stocks                                                  |                            | 13    |  | 84.5               |      | 81.0               |     
|Debtors                                                 |                            | 14    |  | 290.0              |      | 250.8              |     
|Cash and short-term deposits                            |                            | 16    |  | 77.6               |      | 31.4               |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 452.1              |      | 363.2              |     
|                                                        |                            |       |  |                    |      |                    |     
|Creditors: amounts falling due within one year          |                            |       |  |                    |      |                    |     
|Trade and other creditors                               |                            | 15    |  | 302.5              |      | 260.2              |     
|Loans, overdrafts and finance lease obligations         |                            | 16    |  | 7.2                |      | 40.3               |     
|Taxation                                                |                            |       |  | 0.5                |      | 1.1                |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 310.2              |      | 301.6              |     
|                                                        |                            |       |  |                    |      |                    |     
|Net current assets                                      |                            |       |  | 141.9              |      | 61.6               |     
|                                                        |                            |       |  |                    |      |                    |     
|Total assets less current liabilities                   |                            |       |  | 1,364.9            |      | 1,098.3            |     
|Creditors: amounts falling due after more than one year |                            |       |  |                    |      |                    |     
|Loans and finance lease obligations                     |                            | 16    |  | 920.7              |      | 624.8              |     
|Amount due to parent company                            |                            | 22    |  | 922.4              |      | 824.4              |     
|Other creditors                                         |                            |       |  | 1.1                |      | 1.9                |     
|Taxation                                                |                            |       |  | 9.7                |      | 12.0               |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 1,853.9            |      | 1,463.1            |     
|                                                        |                            |       |  |                    |      |                    |     
|Net pension liability                                   |                            | 20    |  | 229.7              |      | 235.1              |     
|Provisions for liabilities and charges                  |                            | 17    |  | 29.5               |      | 41.3               |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 259.2              |      | 276.4              |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | (748.2             | )    | (641.2             | )   
|                                                        |                            |       |  |                    |      |                    |     
|Capital and reserves                                    |                            |       |  |                    |      |                    |     
|Called-up share capital                                 |                            |       |  | 2.0                |      | 2.0                |     
|Profit and loss account                                 |                            |       |  | (750.2             | )    | (643.2             | )   
|                                                        |                            |       |  |                    |      |                    |     
|Shareholder's deficit(1)                                |                            |       |  | (748.2             | )    | (641.2             | )   
|                                                        |                            |       |  |                    |      |                    |     

---

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



UNITED BISCUITS FINANCE plc    CONSOLIDATED CASH FLOW STATEMENTS(1)

|                                                                                |  | Notes |  | 52 weeks
ended
January 1,
2005 |   | 53 weeks
ended
January 3,
2004 |   | 52 weeks
ended
December 28,
2002 |  
|------------------------------------------------------------------------------- |  | ----- |  | ------------------------------ | - | ------------------------------ | - | -------------------------------- | -
|
|Reconciliation of operating profit to net cash inflow from operating activities |  |       |  |                                |   |                                |   |                                  |  
|Operating profit before share of operating profit in joint venture              |  |       |  | 45.2                           |   | 14.1                           |   | 44.2                             |  
|Exceptional charges and income to operating profit                              |  |       |  | 19.8                           |   | 58.2                           |   | 35.4                             |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Operating profit before exceptionals                                            |  |       |  | 65.0                           |   | 72.3                           |   | 79.6                             |  
|Depreciation and goodwill amortization                                          |  |       |  | 98.2                           |   | 93.9                           |   | 94.9                             |  
|Decrease/(increase) in stocks                                                   |  |       |  | 12.1                           |   | (2.6                           | ) | (0.9                             | )
|(Increase)/decrease in debtors                                                  |  |       |  | (9.9                           | ) | 30.9                           |   | 1.2                              |  
|Decrease in creditors                                                           |  |       |  | (3.1                           | ) | (25.9                          | ) | (46.4                            | )
|Expenditure against rationalization provisions and operating exceptionals       |  |       |  | (37.9                          | ) | (31.0                          | ) | (31.0                            | )
|Other                                                                           |  |       |  | (1.5                           | ) | 7.6                            |   | 7.7                              |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Net cash inflow from operating activities                                       |  | 19    |  | 122.9                          |   | 145.2                          |   | 105.1                            |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Cash flow statement                                                             |  |       |  |                                |   |                                |   |                                  |  
|Net cash inflow from operating activities                                       |  |       |  | 122.9                          |   | 145.2                          |   | 105.1                            |  
|Net cash outflow from returns on investments and servicing of finance           |  | 19    |  | (54.1                          | ) | (56.5                          | ) | (63.2                            | )
|Tax (paid)/received                                                             |  | 19    |  | (1.9                           | ) | (1.6                           | ) | 12.5                             |  
|Net cash outflow from capital expenditure and financial investment              |  | 19    |  | (39.9                          | ) | (58.5                          | ) | (54.1                            | )
|Net cash (outflow)/inflow from acquisitions and disposals                       |  | 19    |  | (237.8                         | ) | 2.9                            |   | 53.5                             |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Cash (outflow)/inflow before use of liquid resources and financing              |  |       |  | (210.8                         | ) | 31.5                           |   | 53.8                             |  
|Net cash (outflow)/inflow from management of liquid resources                   |  | 19    |  | (7.8                           | ) | 1.7                            |   | (0.6                             | )
|Net cash inflow/(outflow) from financing                                        |  | 19    |  | 256.1                          |   | (19.2                          | ) | (69.7                            | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Increase/(decrease) in cash in the period                                       |  |       |  | 37.5                           |   | 14.0                           |   | (16.5                            | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Reconciliation of net cash flow to movement in net borrowings                   |  |       |  |                                |   |                                |   |                                  |  
|Net borrowings at beginning of period                                           |  | 16    |  | (633.7                         | ) | (642.3                         | ) | (689.0                           | )
|Increase/(decrease) in cash for period(2)                                       |  |       |  | 37.5                           |   | 14.0                           |   | (16.5                            | )
|(Increase in)/repayment of debt(2)                                              |  |       |  | (269.2                         | ) | 15.9                           |   | 69.7                             |  
|Management of liquid resources(2)                                               |  |       |  | 7.8                            |   | (1.7                           | ) | 0.6                              |  
|Costs of raising finance(2)                                                     |  |       |  | 13.1                           |   | 3.3                            |   |                                 |  
|Exceptional amortization of finance costs                                       |  |       |  | (2.3                           | ) | (11.9                          | ) |                                 |  
|Other non-cash movements                                                        |  |       |  | 1.0                            |   |                               |   |                                 |  
|New finance leases                                                              |  |       |  | (0.1                           | ) | (2.2                           | ) | (0.7                             | )
|Foreign exchange translation difference                                         |  | 16    |  | (4.4                           | ) | (8.8                           | ) | (6.4                             | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Movement in net borrowings in the period                                        |  |       |  | (216.6                         | ) | 8.6                            |   | 46.7                             |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Net borrowings at end of period                                                 |  | 16    |  | (850.3                         | ) | (633.7                         | ) | (642.3                           | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  

---

The Notes to the Financial Statements are an integral part of these Financial Statements.

---



UNITED BISCUITS FINANCE plc    CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIT

|                             |  | Share Capital |  |     |  |        |  
|---------------------------- |  | ------------- |  | --- |  | ------ | -
|
|
|
|At December 30, 2001         |  | 2.0           |  | 2.0 |  | (265.9 | )
|Pension reserve              |  |              |  |    |  | (159.0 | )
|Retained loss for the period |  |              |  |    |  | (50.0  | )
|Exchange differences         |  |              |  |    |  | 0.8    |  
|                             |  |               |  |     |  |        |  
|At December 28, 2002         |  | 2.0           |  | 2.0 |  | (474.1 | )
|Pension reserve              |  |              |  |    |  | (29.7  | )
|Retained loss for the period |  |              |  |    |  | (141.2 | )
|Exchange differences         |  |              |  |    |  | 1.8    |  
|                             |  |               |  |     |  |        |  
|At January 3, 2004           |  | 2.0           |  | 2.0 |  | (643.2 | )
|Pension reserve              |  |              |  |    |  | 23.0   |  
|Retained loss for the period |  |              |  |    |  | (126.5 | )
|Exchange differences         |  |              |  |    |  | (3.5   | )
|                             |  |               |  |     |  |        |  
|At January 1, 2005           |  | 2.0           |  | 2.0 |  | (750.2 | )
|                             |  |               |  |     |  |        |  

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



REGENTREALM LIMITED    CONSOLIDATED PROFIT AND LOSS ACCOUNTS

|                                                                                        |                         | Notes  |   | 52 weeks
ended
January 1,
2005 |         | 53 weeks
ended
January 3,
2004
Restated(1) |         | 52 weeks
ended
December 28,
2002
Restated(1) |        
|--------------------------------------------------------------------------------------- | ----------------------- | ------ | - | ------------------------------ | ------- | ------------------------------------------ | ------- | -------------------------------------------- | -------
|
|Turnover: Group and share of joint venture                                              |                         |        |   | 1,225.4                        |         | 1,196.8                                    |         | 1,183.4                                      |        
|Less: share of joint venture's turnover                                                 |                         |        |   | (1.8                           | )       | (2.0                                       | )       | (1.7                                         | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Group turnover                                                                          |                         | 4      |   |                                |         |                                            |         |                                              |        
|                                                                                        | Continuing operations   |        |   |                                | 1,140.3 |                                            | 1,170.7 |                                              | 1,154.7
|                                                                                        | Acquisitions            |        |   |                                | 69.8    |                                            |        |                                              |       
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 1,210.1                        |         | 1,170.7                                    |         | 1,154.7                                      |        
|                                                                                        | Discontinued operations |        | 1 |                                | 13.5    |                                            | 24.1    |                                              | 27.0   
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 1,223.6                        |         | 1,194.8                                    |         | 1,181.7                                      |        
|Cost of sales                                                                           |                         |        |   | (770.3                         | )       | (729.5                                     | )       | (709.8                                       | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Gross profit                                                                            |                         |        |   | 453.3                          |         | 465.3                                      |         | 471.9                                        |        
|Net operating expenses, including goodwill amortization and operating exceptional items |                         | 5 & 10 |   | (408.1                         | )       | (454.7                                     | )       | (427.7                                       | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Group operating profit/(loss)                                                           |                         | 4      |   |                                |         |                                            |         |                                              |        
|                                                                                        | Continuing operations   |        |   |                                | 33.6    |                                            | 22.2    |                                              | 47.2   
|                                                                                        | Acquisitions            |        |   |                                | 13.2    |                                            |        |                                              |       
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 46.8                           |         | 22.2                                       |         | 47.2                                         |        
|Discontinued operations                                                                 |                         |        |   | (1.6                           | )       | (11.6                                      | )       | (3.0                                         | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|                                                                                        |                         |        |   | 45.2                           |         | 10.6                                       |         | 44.2                                         |        
|Other exceptional income                                                                |                         | 5      |   |                               |         | 3.5                                        |         |                                             |        
|Share of operating profit in joint ventures                                             |                         |        |   | 0.6                            |         | 0.6                                        |         | 0.6                                          |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Operating profit                                                                        |                         |        |   | 45.8                           |         | 14.7                                       |         | 44.8                                         |        
|(Loss)/profit on disposal or termination of businesses                                  |                         | 6      |   | (3.8                           | )       | (2.1                                       | )       | 9.9                                          |        
|Profit on disposal of fixed assets                                                      |                         |        |   | 4.1                            |         | 0.2                                        |         | 1.2                                          |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Profit before interest                                                                  |                         | 5      |   | 46.1                           |         | 12.8                                       |         | 55.9                                         |        
|Interest                                                                                |                         | 7      |   | (162.9                         | )       | (157.2                                     | )       | (141.8                                       | )      
|Other finance (expense)/income                                                          |                         | 20     |   | (5.7                           | )       | (6.0                                       | )       | 9.0                                          |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Loss on ordinary activities before tax                                                  |                         |        |   | (122.5                         | )       | (150.4                                     | )       | (76.9                                        | )      
|Taxation                                                                                |                         | 8      |   | (3.7                           | )       | 10.2                                       |         | 15.6                                         |        
|Exceptional taxation refund                                                             |                         | 9      |   |                               |         |                                           |         | 12.3                                         |        
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        
|Loss attributable to shareholder(2)                                                     |                         |        |   | (126.2                         | )       | (140.2                                     | )       | (49.0                                        | )      
|                                                                                        |                         |        |   |                                |         |                                            |         |                                              |        

---

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



REGENTREALM LIMITED    CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES

|                                                            |  | 52 weeks
ended
January 1,
2005 |   | 53 weeks
ended
January 3,
2004 |   | 52 weeks
ended
December 28,
2002 |  
|----------------------------------------------------------- |  | ------------------------------ | - | ------------------------------ | - | -------------------------------- | -
|
|Loss attributable to shareholder                            |  | (126.2                         | ) | (140.2                         | ) | (49.0                            | )
|Translation differences on foreign currency net investments |  | (3.5                           | ) | 1.8                            |   | 0.8                              |  
|Actuarial gains/(losses) recognized in pension schemes      |  | 32.8                           |   | (42.4                          | ) | (227.0                           | )
|Deferred tax thereon                                        |  | (9.8                           | ) | 12.7                           |   | 68.0                             |  
|                                                            |  |                                |   |                                |   |                                  |  
|Total recognized gains and losses relating to the period    |  | (106.7                         | ) | (168.1                         | ) | (207.2                           | )
|                                                            |  |                                |   |                                |   |                                  |  

---

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



REGENTREALM LIMITED    CONSOLIDATED BALANCE SHEETS

|                                                        |                            | Notes |  | At January 1,
2005 |      | At January 3,
2004 |     
|------------------------------------------------------- | -------------------------- | ----- |  | ------------------ | ---- | ------------------ | ----
|
|Fixed Assets                                            |                            |       |  |                    |      |                    |     
|Intangible assets                                       |                            | 10    |  | 768.6              |      | 598.6              |     
|Tangible assets                                         |                            | 11    |  | 449.2              |      | 433.5              |     
|Investments in joint ventures                           |                            | 12    |  |                    |      |                    |     
|                                                        | Share of gross assets      |       |  |                    | 5.5  |                    | 5.0 
|                                                        | Share of gross liabilities |       |  |                    | (0.3 | )                  | (0.4
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 5.2                |      | 4.6                |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 1,223.0            |      | 1,036.7            |     
|                                                        |                            |       |  |                    |      |                    |     
|Current assets                                          |                            |       |  |                    |      |                    |     
|Stocks                                                  |                            | 13    |  | 84.5               |      | 81.0               |     
|Debtors                                                 |                            | 14    |  | 313.6              |      | 272.1              |     
|Cash and short-term deposits                            |                            | 16    |  | 77.6               |      | 31.4               |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 475.7              |      | 384.5              |     
|                                                        |                            |       |  |                    |      |                    |     
|Creditors: amounts falling due within one year          |                            |       |  |                    |      |                    |     
|Trade and other creditors                               |                            | 15    |  | 303.3              |      | 261.2              |     
|Loans, overdrafts and finance lease obligations         |                            | 16    |  | 7.4                |      | 41.3               |     
|Taxation                                                |                            |       |  | 0.5                |      | 1.1                |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 311.2              |      | 303.6              |     
|                                                        |                            |       |  |                    |      |                    |     
|Net current assets                                      |                            |       |  | 164.5              |      | 80.9               |     
|                                                        |                            |       |  |                    |      |                    |     
|Total assets less current liabilities                   |                            |       |  | 1,387.5            |      | 1,117.6            |     
|                                                        |                            |       |  |                    |      |                    |     
|Creditors: amounts falling due after more than one year |                            |       |  |                    |      |                    |     
|Loans and finance lease obligations                     |                            | 16    |  | 620.8              |      | 398.3              |     
|Amount due to United Biscuits Finance plc               |                            | 22    |  | 1,231.5            |      | 1,057.1            |     
|Other creditors                                         |                            |       |  | 1.1                |      | 1.9                |     
|Taxation                                                |                            |       |  | 9.7                |      | 12.0               |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 1,863.1            |      | 1,469.3            |     
|                                                        |                            |       |  |                    |      |                    |     
|Net pension liability                                   |                            | 20    |  | 229.7              |      | 235.1              |     
|Provisions for liabilities and charges                  |                            | 17    |  | 29.5               |      | 41.3               |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | 259.2              |      | 276.4              |     
|                                                        |                            |       |  |                    |      |                    |     
|                                                        |                            |       |  | (734.8             | )    | (628.1             | )   
|                                                        |                            |       |  |                    |      |                    |     
|Capital and reserves                                    |                            |       |  |                    |      |                    |     
|Called-up share capital                                 |                            |       |  | 2.0                |      | 2.0                |     
|Profit and loss account                                 |                            |       |  | (736.8             | )    | (630.1             | )   
|                                                        |                            |       |  |                    |      |                    |     
|Shareholder's deficit(1)                                |                            |       |  | (734.8             | )    | (628.1             | )   
|                                                        |                            |       |  |                    |      |                    |     

---

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



REGENTREALM LIMITED    CONSOLIDATED CASH FLOW STATEMENTS(1)

|                                                                                |  | Notes |  | 52 weeks
ended
January 1,
2005 |   | 53 weeks
ended
January 3,
2004 |   | 52 weeks
ended
December 28,
2002 |  
|------------------------------------------------------------------------------- |  | ----- |  | ------------------------------ | - | ------------------------------ | - | -------------------------------- | -
|
|Reconciliation of operating profit to net cash inflow from operating activities |  |       |  |                                |   |                                |   |                                  |  
|Operating profit before share of profit in joint venture                        |  |       |  | 45.2                           |   | 14.1                           |   | 44.2                             |  
|Net exceptional charges to operating profit                                     |  |       |  | 19.8                           |   | 58.2                           |   | 35.4                             |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Operating profit before exceptionals                                            |  |       |  | 65.0                           |   | 72.3                           |   | 79.6                             |  
|Depreciation and goodwill amortization                                          |  |       |  | 98.2                           |   | 93.9                           |   | 94.9                             |  
|Decrease/(increase) in stocks                                                   |  |       |  | 12.1                           |   | (2.6                           | ) | (0.9                             | )
|(Increase)/decrease in debtors                                                  |  |       |  | (9.9                           | ) | 30.9                           |   | 1.2                              |  
|Decrease in creditors                                                           |  |       |  | (3.1                           | ) | (24.9                          | ) | (45.4                            | )
|Expenditure against rationalization provisions and operating exceptionals       |  |       |  | (37.9                          | ) | (31.0                          | ) | (31.0                            | )
|Other                                                                           |  |       |  | (1.5                           | ) | 7.6                            |   | 7.7                              |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Net cash inflow from operating activities                                       |  | 19    |  | 122.9                          |   | 146.2                          |   | 106.1                            |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Cash flow statement                                                             |  |       |  |                                |   |                                |   |                                  |  
|Net cash inflow from operating activities                                       |  |       |  | 122.9                          |   | 146.2                          |   | 106.1                            |  
|Net cash outflow from returns on investments and servicing of finance           |  | 19    |  | (54.1                          | ) | (56.5                          | ) | (63.2                            | )
|Tax (paid)/received                                                             |  | 19    |  | (1.9                           | ) | (1.6                           | ) | 12.5                             |  
|Net cash inflow/(outflow) from capital expenditure and financial investment     |  | 19    |  | 35.1                           |   | (58.5                          | ) | (54.1                            | )
|Net cash (outflow)/inflow from acquisitions and disposals                       |  | 19    |  | (237.8                         | ) | 2.9                            |   | 53.5                             |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Cash (outflow)/inflow before use of liquid resources and financing              |  |       |  | (135.8                         | ) | 32.5                           |   | 54.8                             |  
|Net cash (outflow)/inflow from management of liquid resources                   |  | 19    |  | (7.8                           | ) | 1.7                            |   | (0.6                             | )
|Net cash inflow/(outflow) from financing                                        |  | 19    |  | 181.1                          |   | (19.2                          | ) | (69.7                            | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Increase/(decrease) in cash in the period                                       |  |       |  | 37.5                           |   | 15.0                           |   | (15.5                            | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Reconciliation of net cash flow to movement in net borrowings                   |  |       |  |                                |   |                                |   |                                  |  
|Net borrowings at beginning of period                                           |  | 16    |  | (408.2                         | ) | (426.6                         | ) | (481.0                           | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Increase/(decrease) in cash for the period(2)                                   |  |       |  | 37.5                           |   | 15.0                           |   | (15.5                            | )
|(Increase in)/repayment of debt(2)                                              |  |       |  | (194.2                         | ) | 15.9                           |   | 69.7                             |  
|Management of liquid resources(2)                                               |  |       |  | 7.8                            |   | (1.7                           | ) | 0.6                              |  
|Costs of raising finance(2)                                                     |  |       |  | 12.1                           |   | 3.3                            |   |                                 |  
|Exceptional amortization of finance costs                                       |  |       |  | (2.3                           | ) | (11.9                          | ) |                                 |  
|New finance leases                                                              |  |       |  | (0.1                           | ) | (2.2                           | ) | (0.7                             | )
|Foreign exchange translation difference                                         |  | 16    |  | (3.2                           | ) |                               |   | 0.3                              |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Movement in net borrowings in the period                                        |  |       |  | (142.4                         | ) | 18.4                           |   | 54.4                             |  
|                                                                                |  |       |  |                                |   |                                |   |                                  |  
|Net borrowings at end of period                                                 |  | 16    |  | (550.6                         | ) | (408.2                         | ) | (426.6                           | )
|                                                                                |  |       |  |                                |   |                                |   |                                  |  

---

The Notes to the Financial Statements are an integral part of these Financial Statements.

---



REGENTREALM LIMITED    CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIT

|                             |  | Share Capital |  |     |  |        |  
|---------------------------- |  | ------------- |  | --- |  | ------ | -
|
|
|
|At December 30, 2001         |  | 2.0           |  | 2.0 |  | (254.8 | )
|Pension reserve              |  |              |  |    |  | (159.0 | )
|Retained loss for the period |  |              |  |    |  | (49.0  | )
|Exchange differences         |  |              |  |    |  | 0.8    |  
|                             |  |               |  |     |  |        |  
|At December 28, 2002         |  | 2.0           |  | 2.0 |  | (462.0 | )
|Pension reserve              |  |              |  |    |  | (29.7  | )
|Retained loss for the period |  |              |  |    |  | (140.2 | )
|Exchange differences         |  |              |  |    |  | 1.8    |  
|                             |  |               |  |     |  |        |  
|At January 3, 2004           |  | 2.0           |  | 2.0 |  | (630.1 | )
|Pension reserve              |  |              |  |    |  | 23.0   |  
|Retained loss for the period |  |              |  |    |  | (126.2 | )
|Exchange differences         |  |              |  |    |  | (3.5   | )
|                             |  |               |  |     |  |        |  
|At January 1, 2005           |  | 2.0           |  | 2.0 |  | (736.8 | )
|                             |  |               |  |     |  |        |  

The
Notes to the Financial Statements are an integral part of these Financial Statements.

---



UNITED BISCUITS FINANCE plc        and REGENTREALM LIMITED        NOTES TO THE FINANCIAL STATEMENTS

1    Basis of preparation and description of business

United Biscuits Finance plc (the "Company") was incorporated on March 10, 2000 as a private limited company under the name Dreadstar Limited. On
November 28, 2000 it was re-registered as a public limited company and its name changed to United Biscuits Finance plc.

Regentrealm
Limited ("Regentrealm") was incorporated on November 29, 1999 as a private limited company. Regentrealm acts as guarantor under the terms of the Indenture relating to
the issue of the Senior Subordinated Notes by the Company.

The
Company is the immediate parent company of Regentrealm which is wholly owned. The Company and Regentrealm are subsidiaries of Runecorp Limited ("Runecorp").

The
Company and Regentrealm were formed, together with a number of other entities, by a consortium of financial investors which ultimately consisted of funds advised or managed by
Paribas Affaires Industrielles (now PAI management) ("PAI"), Cinven Limited, DB Capital Partners, whose interests in the Company and Regentrealm were acquired by MidOcean Partners, LP ("MidOcean") in
February 2003, and Nabisco (collectively, the "Equity Sponsors") in connection with the acquisition of United Biscuits (Holdings) plc (the "UB acquisition"), a company then listed on the London
Stock Exchange. Subsequent to its acquisition, United Biscuits (Holdings) plc was re-registered as a private limited company and re-named United Biscuits (Holdings) Limited
(the "Predecessor"). In these financial statements, the term "Group" is used to refer both to the Company, together with its subsidiaries subsequent to the UB acquisition, and the Predecessor,
together with its subsidiaries prior to the UB acquisition. The term "Group" also refers to Regentrealm together with its subsidiaries where the context so requires.

The
purchase of the Predecessor by the Company has been reflected in the consolidated financial statements using the acquisition method of accounting.

In
connection with the UB acquisition, it was agreed that the Group would sell its operations in Scandinavia, Malaysia, Singapore, Finland, Poland and Hungary, its snack interests in
Germany and Italy and certain savory biscuit brands in the United Kingdom to Group Danone S.A. and its operations in China, Hong Kong and Taiwan to Nabisco. At the time of the UB acquisition, the
Company recorded the net assets of these operations as assets held for disposal within current assets at their anticipated net disposal proceeds and the results of operations were not consolidated
subsequent to April 14, 2000. During 2000, the Group sold all its investments in these businesses with the exception of the investments in China, Finland and Poland. The operations in Poland,
Finland and China were sold in February 2001, May 2001 and March 2002, respectively.

In
connection with the UB acquisition, it was also agreed that the Group would acquire from Nabisco, through an affiliated company, its European, Middle Eastern and North African biscuit
and dessert mix operations and certain other food businesses. The European and North African businesses were acquired on July 11, 2000 and April 20, 2001, respectively, and have been
reflected in the consolidated financial statements using the acquisition method of accounting. On February 18, 2003, the Group agreed with Nabisco that the acquisition of the Middle Eastern
business would not proceed. As a consequence, the Group received $4.8 million from Nabisco.

The
Group is a leading manufacturer and marketer of biscuits and snacks in the United Kingdom and biscuits in continental Western Europe. Following the UB acquisition, the Group's
continuing operations were divided into seven segments, reflecting the internal operational management structure. The segments comprised UK Biscuits, Northern Europe, Southern Europe, UK Snacks,
General Export, Other and Central. The segment Other comprised our Benelux snacks business which was sold in August 2004 and the results of which have now been classified as a discontinued
operation. During

---



2003
the Group reviewed the business operations in the United Kingdom and as a result, at the end of 2003, created a single UK business unit by merging the UK Biscuits and the UK Snacks business
units. The Group is now managed through a region-based organizational structure with five segments comprising UK, Northern Europe, Southern Europe, International Sales (formerly, General Export) and
Central. Central includes corporate governance costs, including executive costs, and costs of the Group's legal, company secretarial, pension administration, tax and treasury functions.

These
financial statements have been prepared to show the performance of the Company and Regentrealm and their respective subsidiaries for the 52 weeks ended January 1, 2005, 53
weeks ended January 3, 2004 and the 52 weeks ended December 28, 2002. The Group generally presents its financial information based on 13 periods of four calendar weeks. As a result, the
fiscal year consists of 52 weeks, a first fiscal quarter of four periods (16 weeks) and three fiscal quarters each consisting of three periods (12 weeks). Every five or six years, the final period is
lengthened to five weeks, in which case, the fourth quarter consists of 13 weeks and the fiscal year consists of 53 weeks.

The
Southern Europe business presents its financial information based on 12 calendar months and a fiscal year ended December 31. Its results are included in the Group's
consolidated results on the following basis:

Southern Europe
quarter ended

Corresponding
UB fiscal quarterMarch 31,

Quarter 1 (16 weeks)June 30,

Quarter 2 (12 weeks)September 30,

Quarter 3 (12 weeks)December 31,

Quarter 4 (12/13 weeks)


The
difference in reporting periods does not have a material effect on reported results.

On
August 2, 2004 the Group acquired a 100% interest in Triunfo Productos Alimentares S.A. ("Triunfo") from Nutrinveste SGPS, S.A.. As a result of the acquisition of Triunfo,
which was effective from August 1, 2004, we are the leading manufacturer and marketer of biscuits in Portugal. The post-acquisition results of the business have been reported in the
Southern Europe segment of our business.

On
September 20, 2004 the Group acquired a 100% interest in The Jacob's Bakery Limited ("Jacob's") from Groupe Danone S.A. ("Danone"). Jacob's is a United Kingdom biscuits and
snacks business with a strong presence in the savory biscuit and crackers and crispbread segments of the United Kingdom biscuit market. The post-acquisition results of the business have
been reported in the UK segment of our business. Jacob's currently presents its financial information based on 12 calendar months and a fiscal year ended December 31. Until Jacob's accounting
systems are fully integrated into
the Group's UK business, its results will be consolidated on the same basis as the Southern Europe business.

On
August 16, 2004 the Group completed the disposal of its Benelux snacks business, which comprised the Other segment, to Roger and Roger S.A.. The results of this business up to
the date of disposal have been reflected as discontinued operations.

---



2    Accounting policies

Basis of accounting

The financial statements have been prepared on the historical cost basis of accounting and in accordance with applicable United Kingdom accounting standards. A
summary of the most important Group policies is set out below.

In
preparing these financial statements, certain items have been included in order to comply with accounting presentation and disclosure requirements applicable in the United States in
respect of foreign registrants with the U.S. Securities and Exchange Commission. A reconciliation to United States generally accepted accounting principles ("U.S. GAAP") is set out in Note 25
of Notes to the Financial Statements.

Accounting
policies are unchanged from 2003, except that the definition of turnover has been revised to reflect emerging best practice in the United Kingdom provided by Application
Note G to Financial Reporting Standard 5 "Reporting the Substance of Transactions." ("FRS 5"). As a result of this change, certain payments to customers are now reported as a direct deduction
from revenue rather than within distribution, selling and marketing costs.

The
impact of this change on the reported results for the 53 weeks ended January 3, 2004 and the 52 weeks ended December 28, 2002 is as follows:

Company and Regentrealm53 weeks
ended
January 3,
2004

52 weeks
ended
December 28,
2002(£ million)TurnoverAs reported

1,331.6

1,308.3As restated

1,194.8

1,181.7Distribution, selling and marketing costsAs reported

393.2

385.8As restated

256.4

259.2


Basis of consolidation

The financial statements of the Company and Regentrealm consolidate, respectively, the accounts of the Company and Regentrealm and their respective subsidiaries,
together with the Group's share of net assets and results of joint ventures. The results of subsidiaries acquired during the financial year are included in the Group's results from the effective date
of control and the results of undertakings disposed of up to the effective date of disposal. The separable net assets, intangible and tangible, of newly acquired subsidiary undertakings are
incorporated in the financial statements on the basis of the fair value to the Group as at the effective date of control. The Group's share of the results of joint ventures is included for the periods
from their effective date of acquisition or to their effective date of sale.

Turnover

Turnover consists of sales to third parties after trade discounts and excludes sales related taxes. Trade discounts include sales incentives, up-front
payments and other non-discretionary payments.

---



Revenue recognition

Sales are recognized based on confirmed deliveries to customers.

Research and development

Expenditure on research and development is written off as incurred.

Foreign currency translation

The profit and loss accounts of overseas subsidiaries are translated at weighted average rates of exchange. The balance sheets of overseas subsidiaries are
translated at the rates of exchange ruling at the year-end. Exchange differences arising on the re-translation of opening net assets are shown as a movement in shareholder's
funds and in the movement in the consolidated statement of total recognized gains or losses. All other translation differences are taken to the profit and loss account with the exception of
differences arising on the translation of foreign currency borrowings to the extent that they are used to finance, or provide a hedge against, Group equity investments in foreign subsidiaries, which
are taken directly to shareholder's funds together with the exchange difference on the net investment in these subsidiaries.

Taxation

Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have
occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:



Deferred
tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or
substantively enacted at the balance sheet date.

Exceptional items

Items which are of an exceptional nature by virtue of their size or incidence are included within operating profit unless they represent profits or losses on the
sale or termination of a business, costs of fundamental reorganization or restructuring having a material effect on the nature and focus of the Group, or profits or losses on the disposal of fixed
assets. In these cases, separate disclosure is provided in the profit and loss account after operating profit.

---



Pensions and other post-retirement benefits

Full actuarial valuations of the Group's main defined benefit schemes are carried out every three years with interim reviews in the intervening years; qualified
independent actuaries update these valuations to the Group's financial year-end, each year. For the purposes of these annual updates, scheme assets are included at market value and scheme
liabilities are measured on an actuarial basis using the projected unit method; these liabilities are discounted at the current rate of return on a high quality corporate bond of equivalent currency
and term.

The
pension surplus or deficit is included on the Group's balance sheet net of the related amount of deferred tax.

The
current service cost and any past service costs are included in the profit and loss account within operating expenses and the expected return on the schemes' net assets, net of the
impact of the unwinding of the discount on scheme liabilities, is included within other finance income or cost.

Actuarial
gains and losses, including differences between the expected and actual return on scheme assets, are recognized, net of related deferred tax, in the statement of recognized
gains and losses.

The
costs of the Group's defined contribution schemes are charged to the profit and loss account in the period in which they fall due.

Financial instruments

Derivative financial instruments are used by the Group to manage foreign currency and interest rate exposures. Amounts payable or receivable in respect of
interest rate swap agreements are recognized as adjustments to the interest charge over the period of the contracts. Gains or losses on forward and option contracts for foreign currency are recognized
in the profit and loss account when the hedged transaction occurs. Payments made to secure a hedge, or unrealized profits and losses generated prior to maturity, are included in the balance sheet as
prepayments or accruals, respectively.

Certain
commodities are purchased on the futures market in order to reduce the exposure to changes in the cost of ingredients. When contracts are closed, the realized surpluses and
deficits are applied against the cost of the related ingredients in the year of delivery.

Option
premiums paid are recognized in the profit and loss account as incurred. Premiums and discounts arising on financial liabilities are amortized over the remaining life of the
instrument concerned.

Debt

Debt is initially stated at the amount of net proceeds, including any premium on issue and after deduction of issue costs. Any premium on issue and issue costs
are amortized over the period of the related borrowings. If it becomes clear that any debt is to be redeemed early, the amortization of issue costs and any premium on issue is accelerated.

Goodwill and other intangible fixed assets

On the acquisition of a subsidiary business, joint venture or associate, fair values are attributed to the net assets acquired where they can be measured reliably
and separately identified at the time of acquisition. Where the fair value of the consideration exceeds the aggregate value of the net assets, the difference is treated as goodwill and capitalized on
the consolidated balance sheet. Goodwill is amortized in equal installments over its useful economic life of up to 20 years. Goodwill is reviewed for

---



impairment
at the end of the first full year following the year of acquisition and subsequently if there are indications of impairment.

Purchased
intangible assets are also capitalized and amortized over their estimated useful economic lives on a straight-line basis. Where purchased brand intangible assets
are considered by the Board of Directors to have an indefinite life given the proven longevity of the brand and the continued level of marketing support, they are not amortized but are subject to
annual impairment reviews.

Tangible fixed assets

Tangible fixed assets are held at cost. The Group has a policy of not revaluing tangible fixed assets.

Depreciation
is calculated to write off the cost of tangible fixed assets over their expected useful lives by equal annual installments, principally at the following rates:

Buildings

1.5% unless short leaseholdShort leaseholds

over the life of the leasePlant and machinery

3% to 15% p.a.Vehicles

20% to 30% p.a.Fixtures and fittings

10% to 33% p.a.


Assets
under construction are capitalized as part of fixed assets but are not depreciated until such time as construction is complete when they are transferred into the appropriate
category of fixed assets and depreciated accordingly.

The
carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Impairment

In accordance with Financial Reporting Statement 11 "Impairment of Fixed Assets and Goodwill" ("FRS 11"), fixed assets and goodwill are subject to an
impairment review if circumstances or events change to indicate that the carrying value may not be fully recoverable. The review is performed by comparing the carrying value of the fixed asset or
goodwill with its recoverable amount, being the higher of net realizable value and value in use. The net realizable value is the amount that could be obtained on the disposal of the asset. The value
in use is determined by discounting, at a market-based, pre-tax discount rate, the expected future cash flows resulting from its continued use, including those on final disposal.

When
the carrying values of fixed assets or goodwill are written down by an impairment charge, the loss is recognized in the profit and loss account in the period in which it is
incurred.

For
the purpose of conducting impairment reviews, income-producing units are considered to be groups of assets and liabilities that generate income, and are largely independent of other
income streams.
They also include those assets and liabilities directly involved in generating that income and a suitable proportion of those used to produce more than one income stream.

Government grants

Capital grants received in respect of any fixed assets are credited to deferred income and amortized to the profit and loss account over the expected useful
economic lives of the assets to which they relate.

---



Stocks

Stocks are valued at the lower of cost and net realizable value. Cost of raw materials and goods for resale is determined on a first-in,
first-out basis. Cost of products manufactured by Group companies comprises direct material and labor costs together with appropriate factory overheads. Net realizable value is based on
estimated selling price less further costs expected to be incurred to completion and disposal.

In
accordance with FRS 5, stock held as consignment stock is recognized as an asset in the balance sheet at cost. An associated liability is also recognized as the risks and rewards have
been transferred to the Group.

Cash and short-term deposits (cash equivalents)

Cash and short-term deposits includes cash in hand and deposits repayable on demand with any qualifying financial institutions, less overdrafts from
any qualifying institution repayable on demand.

Leasing and hire purchase commitments

Assets obtained under finance leases and hire purchase contracts are capitalized and depreciated over their useful lives. The interest element of the rental
obligations is charged to the profit and loss account over the period of the primary lease and represents a constant proportion of the balance of capital repayments outstanding. Rentals paid under
operating leases are charged to income on a straight-line basis over the term of the lease.

Advertising costs

Advertising costs are charged against the profit or loss of the year in which the associated advertisement is first used. If an advertisement has not been used,
media service prepayments, promotional materials and production costs of future media advertising may be deferred until the year the advertisement is first used. Within a fiscal year, costs may be
deferred if the benefit of those costs clearly extends beyond the interim period in which the expenditure is incurred.

Software development costs

Direct costs incurred in developing software for internal use are capitalized when the software reaches the application development stage and are amortized over
the expected useful economic life of the software.

Use of estimates

The preparation of financial statements requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates.

3    Acquisitions

52 weeks ended January 1, 2005

The Jacob's Bakery Limited

On September 20, 2004 the Group acquired a 100% interest in Jacob's, which strengthened the Group's leading position in the United Kingdom biscuit market.
The transaction has been treated as an

---



acquisition
for accounting purposes. The purchase consideration paid to Danone in respect of the acquisition was £207.7 million. Under the terms of the sale and purchase agreement,
the purchase price may be adjusted in the event actual working capital and net debt varied from pre-agreed levels. Final agreement as to whether or not such an adjustment is required may
need to be determined by independent arbitration, however this is not expected to result in an adjustment of more than 2% of the purchase price.

The
preliminary allocation of the purchase price to the fair values of the identifiable assets and liabilities acquired and goodwill arising on the acquisition as set out below, is based
on the current best estimates of management and is subject to revision based on final determination of fair values. The total purchase consideration was settled in cash.

|                                                                           |  | Book
Value |   | Accounting
policy
alignment |      | Adjustments |     | Fair value |  
|-------------------------------------------------------------------------- |  | ---------- | - | --------------------------- | ---- | ----------- | --- | ---------- | -
|
|Intangible assets                                                          |  | 43.2       |   |                            |      | 57.8        | (1) | 101.0      |  
|Tangible fixed assets                                                      |  | 19.0       |   |                            |      | 2.7         |     | 21.7       |  
|Stocks                                                                     |  | 16.4       |   | (1.3                        | )    | (0.2        | )   | 14.9       |  
|Debtors                                                                    |  | 23.9       |   |                            |      | 0.2         |     | 24.1       |  
|Creditors                                                                  |  | (59.2      | ) | 0.2                         |      | 31.0        | (2) | (28.0      | )
|Provisions(3)                                                              |  | (1.4       | ) | 0.3                         |      | (0.4        | )   | (1.5       | )
|Pension deficit                                                            |  |           |   | (14.1                       | )(4) |            |     | (14.1      | )
|Cash acquired                                                              |  | 2.7        |   |                            |      |            |     | 2.7        |  
|                                                                           |  |            |   |                             |      |             |     |            |  
|                                                                           |  | 44.6       |   | (14.9                       | )    | 91.1        |     | 120.8      |  
|                                                                           |  |            |   |                             |      |             |     |            |  
|Goodwill arising                                                           |  |            |   |                             |      |             |     | 91.1       |  
|                                                                           |  |            |   |                             |      |             |     |            |  
|Total purchase consideration (including transaction costs of £4.2 million) |  |            |   |                             |      |             |     | 211.9      |  
|                                                                           |  |            |   |                             |      |             |     |            |  

---

The
Jacob's acquisition resulted in £91.1 million in goodwill, all of which was allocated to the UK segment, and £101.0 million of intangible
assets, all of which were purchased brands deemed to have indefinite economic lives.

From
the date of acquisition to January 1, 2005, Jacob's contributed £61.7 million to turnover, £14.6 million to business profit and
£20.5 million to the Group's cash flow from operating activities.

---



Jacob's
summarized profit and loss account for the period from January 1, 2004 to the date of acquisition was as follows:

(£ million)Turnover

89.9Operating profit

7.7Profit before tax

6.5Tax

2.0Profit after tax

4.5


Jacob's
statement of total recognized gains and losses for the period from January 1, 2004 to the date of acquisition was as follows:

(£ million)Profit for the period

4.5Net currency translation differences

Total recognized gains and losses relating to the period

4.5


Jacob's
profit after tax for its previous financial year ended December 31, 2003 was £13.0 million.

Triunfo Productos Alimentares S.A.

On August 2, 2004 the Group acquired a 100% interest in Triunfo, with effect from August 1, 2004, which resulted in the Group becoming the leading
biscuit manufacturer and marketer in Portugal. The transaction has been treated as an acquisition for accounting purposes.

The
preliminary allocation of the purchase price to the fair values of the identifiable assets and liabilities acquired and goodwill arising on the acquisition as set out below, is based
on the current best estimates of management and is subject to revision based on final determination of fair values. The total purchase consideration was settled in cash.

|                                                                           |  | Book
Value |   | Accounting
policy
alignment |  | Adjustments |     | Fair value |  
|-------------------------------------------------------------------------- |  | ---------- | - | --------------------------- |  | ----------- | --- | ---------- | -
|
|Intangible assets                                                          |  |           |   |                            |  | 9.3         | (1) | 9.3        |  
|Tangible fixed assets                                                      |  | 10.9       |   |                            |  | (1.1        | )   | 9.8        |  
|Stocks                                                                     |  | 1.8        |   |                            |  |            |     | 1.8        |  
|Debtors                                                                    |  | 5.9        |   |                            |  | (0.1        | )   | 5.8        |  
|Creditors                                                                  |  | (4.9       | ) |                            |  | (0.3        | )   | (5.2       | )
|Finance leases                                                             |  | (0.3       | ) |                            |  |            |     | (0.3       | )
|Cash acquired                                                              |  | 0.1        |   |                            |  |            |     | 0.1        |  
|                                                                           |  |            |   |                             |  |             |     |            |  
|                                                                           |  | 13.5       |   |                            |  | 7.8         |     | 21.3       |  
|                                                                           |  |            |   |                             |  |             |     |            |  
|Goodwill arising                                                           |  |            |   |                             |  |             |     | 5.6        |  
|                                                                           |  |            |   |                             |  |             |     |            |  
|Total purchase consideration (including transaction costs of £0.4 million) |  |            |   |                             |  |             |     | 26.9       |  
|                                                                           |  |            |   |                             |  |             |     |            |  

---

---



The
Triunfo acquisition resulted in £5.6 million in goodwill, all of which was allocated to the Southern Europe segment and £9.3 million of
intangible assets, all of which were purchased brands deemed to have indefinite economic lives.

Triunfo's
profit after tax for the period from the beginning of its financial year on January 1, 2004 until the date of acquisition was £0.2 million. Its profit
after tax for the preceding year ended December 31, 2003 was £0.5 million.

The
Group is in the process of finalizing appraisals for certain assets which may result in adjustments to the carrying values of Jacob's and Triunfo's recorded assets and liabilities,
including the amount of any residual value allocated to goodwill. The Group anticipates that valuations will be finalized prior to the respective anniversary dates of the Jacob's and Triunfo
acquisitions.

The
following tables provide unaudited pro forma results of operations for the Company and Regentrealm, respectively, for the 52 weeks ended January 1, 2005 and the 53 weeks ended
January 3, 2004, as if Jacob's and Triunfo had been acquired as of the beginning of each financial year presented. The pro forma results include certain adjustments including estimated interest
impacts from funding the acquisitions and amortization of goodwill. The pro forma results do not include any anticipated costs savings or other effects of the integration of Jacob's and Triunfo.
Accordingly such amounts are not necessarily indicative of the results that would have occurred if the acquisitions had occurred on the dates indicated, or that may result in the future.

|         |  | Company |   | Regentrealm |  
|-------- |  | ------- | - | ----------- | -
|
|
|Jacob's  |  |         |   |             |  
|Sales    |  | 1,313.5 |   | 1,335.3     |  
|         |  |         |   |             |  
|Net loss |  | (142.9  | ) | (154.6      | )
|         |  |         |   |             |  
|Triunfo  |  |         |   |             |  
|Sales    |  | 1,234.6 |   | 1,215.6     |  
|         |  |         |   |             |  
|Net loss |  | (127.0  | ) | (144.0      | )
|         |  |         |   |             |  

As
at January 1, 2005 plans to integrate the Jacob's business into the Group's existing UK business were at an early stage of development. Full integration is dependent on a
common Enterprise and Resource
Planning system and is not anticipated to occur until early 2006. For the interim period, the Group has implemented temporary processes to enable the two operations to be managed as one business. The
Group is in the process of designing its management structure and organization to support a single business and, as a result of this, it is likely that there will be some redundancies. At
January 1, 2005 an employee consultation process had commenced, but it was not possible to reliably estimate the full costs of implementing the plan.

In
the period from acquisition until January 1, 2005 costs of £1.4 million were charged to operating exceptional items in respect of the integration project, of
which £0.6 million was incurred in the period. This principally related to project management costs.

As
at January 1, 2005 significant progress had been made towards integrating Triunfo into the Group's Southern Europe business. It is anticipated that full integration will be
completed during the first half of 2005. In the period from acquisition until January 1, 2005 operating exceptional items of £

---



2.6 million
were charged in the profit and loss account. Of this, £2.0 million was incurred in the period, principally in relation to severance costs following organizational
changes. It is anticipated that a further £0.6 million will be incurred during 2005 in completing the integration, principally on systems' integration and severance costs.

52 weeks ended December 28, 2002 and 53 weeks ended January 3, 2004

Neither the Company nor Regentrealm made any acquisitions in the 52 weeks ended December 28, 2002 and the 53 weeks ended January 3, 2004.

4    Segmental Analysis

The Group's continuing operations are divided into five segments, reflecting the internal region-based operational management structure of the Group. The segments
comprise UK, Northern Europe, Southern Europe, International Sales and Central.

UK
covers manufacturing and marketing of biscuits, cakes, savory snacks, packaged nuts and crisps in the United Kingdom and marketing of biscuits, cakes, savory snacks, packaged nuts and
crisps in the
Republic of Ireland. This segment includes the results of operations of Jacob's since acquisition on September 20, 2004. Northern Europe covers the manufacturing and marketing of biscuits in
France, Belgium and the Netherlands. Southern Europe covers the manufacturing and marketing of biscuits, dry dessert mixes, fruit juice, canned meat and tomato products in Iberia and the Middle East.
This segment includes the results of operations of Triunfo since acquisition, which was effective from August 1, 2004. International Sales represents exports of branded products around the
world through third party distributors. Additionally, there are central costs which represent corporate governance costs, including executive costs, and costs of the Group's legal, company
secretarial, pension administration, tax and treasury functions.

The
results of the Benelux snacks business, which comprised the segment Other, have been reflected as discontinued operations as a consequence of the sale of that business on
August 16, 2004.

The
key performance measure used by senior management for the purpose of business decision-making and resource allocation is "business profit." Business profit represents the profit or
loss from continuing operations before interest, tax, depreciation, amortization, share of profit of joint ventures and exceptional items.

---



Segmental results by source

|                                                           |  | Company and Regentrealm |  
|---------------------------------------------------------- |  | ----------------------- | -
|
|
|52 weeks ended January 1, 2005                             |  |                         |  
|Total turnover                                             |  | 782.4                   |  
|Inter-segment turnover(2)                                  |  | (6.9                    | )
|                                                           |  |                         |  
|Group Turnover                                             |  | 775.5                   |  
|                                                           |  |                         |  
|Business profit/(loss)                                     |  | 102.5                   |  
|Depreciation, amortization and operating exceptional items |  | (47.2                   | )
|                                                           |  |                         |  
|Group operating profit/(loss)                              |  | 55.3                    |  
|                                                           |  |                         |  
|Other exceptional income                                   |  |                         |  
|Share of operating profit in joint ventures                |  |                         |  
|                                                           |  |                         |  
|Operating profit                                           |  |                         |  
|Loss on disposal or termination of businesses              |  |                         |  
|Profit on disposal of fixed assets                         |  |                         |  
|                                                           |  |                         |  
|Profit before interest                                     |  |                         |  
|                                                           |  |                         |  
|Depreciation                                               |  | 42.1                    |  
|Gross capital expenditure                                  |  | 30.4                    |  
|Total assets (at year end)Company                         |  | 514.9                   |  
|Total assets (at year end)Regentrealm                     |  | 514.9                   |  
|Net assets (at year end)Company                           |  | 716.3                   |  
|Net assets (at year end)Regentrealm                       |  | 716.3                   |  
|Long-lived assets (at year end)                            |  | 296.5                   |  
|Average number of employees                                |  | 7,711                   |  
|53 weeks ended January 3, 2004                             |  |                         |  
|Total turnover(1)                                          |  | 743.5                   |  
|Inter-segment turnover(2)                                  |  | (9.1                    | )
|                                                           |  |                         |  
|Group Turnover                                             |  | 734.4                   |  
|                                                           |  |                         |  
|Business profit/(loss)                                     |  | 114.3                   |  
|Depreciation, amortization and operating exceptional items |  | (75.7                   | )
|                                                           |  |                         |  
|Group operating profit/(loss)                              |  | 38.6                    |  
|                                                           |  |                         |  
|Other exceptional income                                   |  |                         |  
|Share of operating profit in joint ventures                |  |                         |  
|                                                           |  |                         |  
|Operating profit                                           |  |                         |  
|Loss on disposal or termination of businesses              |  |                         |  
|Profit on disposal of fixed assets                         |  |                         |  
|                                                           |  |                         |  
|Profit before interest                                     |  |                         |  
|                                                           |  |                         |  
|Depreciation                                               |  | 39.0                    |  
|Gross capital expenditure                                  |  | 30.8                    |  
|Total assets (at year end)Company                         |  | 424.9                   |  
|Total assets (at year end)Regentrealm                     |  | 424.9                   |  
|Net assets (at year end)Company                           |  | 602.4                   |  
|Net assets (at year end)Regentrealm                       |  | 602.4                   |  
|Long-lived assets (at year end)                            |  | 260.2                   |  
|Average number of employees                                |  | 6,832                   |  

---

Footnotes appear on page F-27

---



|                                                           |  | Company and Regentrealm |  
|---------------------------------------------------------- |  | ----------------------- | -
|
|
|52 weeks ended December 28, 2002                           |  |                         |  
|Total turnover(1)                                          |  | 768.0                   |  
|Inter-segment turnover(2)                                  |  | (11.5                   | )
|                                                           |  |                         |  
|Group Turnover                                             |  | 756.5                   |  
|                                                           |  |                         |  
|Business profit/(loss)                                     |  | 134.5                   |  
|Depreciation, amortization and operating exceptional items |  | (46.1                   | )
|                                                           |  |                         |  
|Group operating profit/(loss)                              |  | 88.4                    |  
|                                                           |  |                         |  
|Share of operating profit in joint ventures                |  |                         |  
|                                                           |  |                         |  
|Operating profit                                           |  |                         |  
|Profit on disposal of businesses                           |  |                         |  
|Profit on disposal of fixed assets                         |  |                         |  
|                                                           |  |                         |  
|Profit before interest                                     |  |                         |  
|                                                           |  |                         |  
|Depreciation                                               |  | 38.0                    |  
|Gross capital expenditure                                  |  | 27.3                    |  
|Total assets (at year end)Company                         |  | 455.4                   |  
|Total assets (at year end)Regentrealm                     |  | 455.4                   |  
|Net assets (at year end)Company                           |  | 493.6                   |  
|Net assets (at year end)Regentrealm                       |  | 493.6                   |  
|Long-lived assets (at year end)                            |  | 271.0                   |  
|Average number of employees                                |  | 6,999                   |  

Segmental results by destination

|                                 |                   | United Kingdom
& Ireland |       | Continental
Europe |       | Asia |     | Rest of
World |      | Total  
|-------------------------------- | ----------------- | ------------------------ | ----- | ------------------ | ----- | ---- | --- | ------------- | ---- | -------
|
|Company and Regentrealm          |                   |                          |       |                    |       |      |     |               |      |        
|52 weeks ended January 1, 2005   |                   |                          |       |                    |       |      |     |               |      |        
|Group turnover                   |                   |                          |       |                    |       |      |     |               |      |        
|                                 | By source         |                          | 775.5 |                    | 448.1 |      |    |               |     |        
|                                 | By destination    |                          | 774.5 |                    | 393.5 |      | 4.1 |               | 51.5 |        
|Long-lived assets (at year end)  |                   | 1,068.4                  |       | 154.6              |       |     |     |              |      | 1,223.0
|53 weeks ended January 3, 2004   |                   |                          |       |                    |       |      |     |               |      |        
|Group turnover                   |                   |                          |       |                    |       |      |     |               |      |        
|                                 | By source(1)      |                          | 734.4 |                    | 460.4 |      |    |               |     |        
|                                 | By destination(1) |                          | 731.5 |                    | 410.2 |      | 4.8 |               | 48.3 |        
|Long-lived assets (at year end)  |                   | 911.8                    |       | 124.9              |       |     |     |              |      | 1,036.7
|52 weeks ended December 28, 2002 |                   |                          |       |                    |       |      |     |               |      |        
|Group turnover                   |                   |                          |       |                    |       |      |     |               |      |        
|                                 | By source(1)      |                          | 756.5 |                    | 425.2 |      |    |               |     |        
|                                 | By destination(1) |                          | 749.3 |                    | 371.7 |      | 3.7 |               | 57.0 |        
|Long-lived assets (at year end)  |                   | 960.3                    |       | 117.4              |       |     |     |              |      | 1,077.7

---

---



5    Profit before interest

Profit before interest is after charging:

|                                                                       |                                              | Company and Regentrealm |      
|---------------------------------------------------------------------- | -------------------------------------------- | ----------------------- | -----
|
|
|Operating exceptional items (included with administrative expenses)(1) |                                              |                         |      
|                                                                       | Acquisition-related restructuring costs      |                         | 4.0  
|                                                                       | Onerous leasehold contracts                  |                         | 0.7  
|                                                                       | Factory closures and reorganization costs(2) |                         | 15.1 
|                                                                       | Fixed asset impairments(3)                   |                         |     
|                                                                       |                                              |                         |      
|                                                                       |                                              | 19.8                    |      
|                                                                       |                                              |                         |      
|Depreciation of tangible fixed assets                                  |                                              | 60.5                    |      
|Amortization of goodwill                                               |                                              | 37.7                    |      
|Operating lease rentals                                                |                                              |                         |      
|                                                                       | Plant and machinery                          |                         | 9.6  
|                                                                       | Land and buildings                           |                         | 6.6  
|Research and development                                               |                                              | 6.2                     |      
|Advertising costs                                                      |                                              | 32.6                    |      
|                                                                       |                                              | (£'000)                 |      
|Directors' emoluments                                                  |                                              | 527                     |      
|Emoluments of the highest paid director(4)                             |                                              | 427                     |      
|Fees payable to auditors                                               |                                              | (£'000)                 |      
|                                                                       | Audit services                               |                         | 1,249
|                                                                       | Audit related services                       |                         | 795  
|                                                                       | Tax services                                 |                         | 104  
|                                                                       | All other services                           |                         |     
|                                                                       |                                              |                         |      
|                                                                       |                                              | 2,148                   |      
|                                                                       |                                              |                         |      
|Non-audit services comprise:                                           |                                              |                         |      
|                                                                       | United Kingdom                               |                         | 801  
|                                                                       | Overseas                                     |                         | 98   
|                                                                       |                                              |                         |      
|                                                                       |                                              | 899                     |      
|                                                                       |                                              |                         |      

---

---



|                                             |  | Company and Regentrealm |  
|-------------------------------------------- |  | ----------------------- | -
|
|
|
|Turnover                                     |  | 1,210.1                 |  
|Cost of sales                                |  | (760.4                  | )
|                                             |  |                         |  
|Gross profit                                 |  | 449.7                   |  
|Distribution, selling and marketing expenses |  | (253.2                  | )
|Administrative expenses                      |  | (101.0                  | )
|Operating exceptional items                  |  | (19.2                   | )
|Goodwill amortization                        |  | (37.7                   | )
|Other (expenses)/income                      |  | 8.2                     |  
|                                             |  |                         |  
|Group operating profit                       |  | 46.8                    |  
|Other exceptional income(3)                  |  |                        |  
|Share of joint ventures                      |  | 0.6                     |  
|                                             |  |                         |  
|                                             |  | 47.4                    |  
|Non-operating exceptional items(4)           |  | 4.1                     |  
|                                             |  |                         |  
|Profit before interest                       |  | 51.5                    |  
|                                             |  |                         |  

Company and Regentrealm52 weeks ended
December 28, 2002(1)Continuing
operations

Discontinued
operations

Total(£ million)Turnover

1,154.7

27.0

1,181.7Cost of sales

(688.3
)
(21.5
)
(709.8
)Gross profit

466.4

5.5

471.9Distribution, selling and marketing expenses

(252.8
)
(6.4
)
(259.2
)Administrative expenses

(96.5
)
(2.0
)
(98.5
)Operating exceptional items

(35.2
)
(0.2
)
(35.4
)Goodwill amortization

(40.7
)


(40.7
)Other (expenses)/income

6.0

0.1

6.1Group operating profit

47.2

(3.0
)
44.2Share of joint ventures

0.6



0.647.8

(3.0
)
44.8Non-operating exceptional items(4)

11.1



11.1Profit before interest

58.9

(3.0
)
55.9


---

---



6    Exceptional (loss)/profit on disposal of businesses

Company and Regentrealm

52 weeks ended January 1, 2005

Loss on disposal

On August 16, 2004 the Group completed the disposal of its Benelux snacks business to Roger and Roger S.A., resulting in a net loss on sale of the business
of £3.8 million. Following the disposal of this business, its results for the 52 weeks ended December 28, 2002, the 53 weeks ended January 3, 2004 and for the period
from January 4, 2004 to August 16, 2004, its date of disposal, have been reflected in the Group's financial statements as discontinued operations.

The
net loss on disposal comprised:

(£ million)Net assets disposed of

(2.1
)Costs of closure

(3.2
)Consideration received

1.5Net loss on disposal

(3.8
)Satisfied by:Cash consideration received

1.5Cash cost of closure

(2.2
)Net cash outflow from sale of business(1)

(0.7
)


---

---



53 weeks ended January 3, 2004

Loss on termination of business

On October 1, 2003 the Group announced the closure of its operations in Tunisia, resulting in an exceptional loss of £2.1 million. The
closure of the factory and transfer of production to our facilities in Spain had been completed by the year end.

52 weeks ended December 28, 2002

Profit on disposal

In April 2002, £25.1 million was received in connection with an adjustment to the purchase price of Keebler Company, a business sold by
a subsidiary of the Predecessor to Inflo Holdings Corporation in 1996.

Loss on disposal

In September 2002, the Group sold its production operation at Hatton, Scotland to Murdoch and Allen giving rise to an exceptional loss of
£0.8 million. In December 2002, the Group sold its biscuit manufacturing plant at Aguilar in Southern Europe to Groupo Siro, resulting in an exceptional loss of
£14.4 million.

7    Interest

|                                               |  | Company |   | Regentrealm |  
|---------------------------------------------- |  | ------- | - | ----------- | -
|
|
|Interest payable                               |  |         |   |             |  
|Senior credit facility                         |  | (29.5   | ) | (24.2       | )
|Senior subordinated notes                      |  | (30.5   | ) | (25.1       | )
|Interest rate swaps                            |  | (2.0    | ) | (4.5        | )
|Bank loans and overdrafts                      |  | (1.8    | ) | (1.6        | )
|Other interest                                 |  | (0.2    | ) | (0.9        | )
|Interest payable to related companies          |  | (98.0   | ) | (89.2       | )
|Amortization of finance charges                |  | (2.5    | ) | (2.0        | )
|Exceptional amortization of finance charges(1) |  | (2.3    | ) | (11.9       | )
|                                               |  |         |   |             |  
|                                               |  | (166.8  | ) | (159.4      | )
|Interest receivable                            |  |         |   |             |  
|Short-term deposits                            |  | 1.7     |   | 1.2         |  
|Other interest                                 |  | 0.9     |   |            |  
|Amortization of debt premium(2)                |  | 1.0     |   |            |  
|                                               |  |         |   |             |  
|                                               |  | 3.6     |   | 1.2         |  
|                                               |  |         |   |             |  
|Net interest payable                           |  | (163.2  | ) | (158.2      | )
|                                               |  |         |   |             |  

---

---



8    Tax on loss on ordinary activities

The tax (charge)/credit comprises:

Company and Regentrealm52 weeks
ended
January 1,
2005

53 weeks
ended
January 3,
2004

52 weeks
ended
December 28,
2002(£ million)Current tax:U.K. corporation tax at 30%

(2.4
)
(0.1
)
(0.1
)Tax over/(under) provided in previous years

5.5

0.4

(0.1
)3.1

0.3

(0.2
)Foreign tax

(1.7
)
(1.4
)
(0.3
)Tax over provided in previous years





0.9(1.7
)
(1.4
)
0.6Total current tax credit/(charge)

1.4

(1.1
)
0.4Deferred tax:Origination and reversal of timing differences

(5.5
)
11.4

15.0Effect of decreased tax rate on opening liability

0.5



0.3Total deferred tax (charge)/credit

(5.0
)
11.4

15.3Group tax (charge)/credit on loss on ordinary activities

(3.6
)
10.3

15.7Share of tax of joint venture

(0.1
)
(0.1
)
(0.1
)Tax (charge)/credit on loss on ordinary activities

(3.7
)
10.2

15.6


The
deferred tax charge for the year ended January 1, 2005 includes a credit of £1.7 million (2003: £4.2 million; 2002:
£1.5 million), which relates to the adoption of FRS 17 and is included within the net pension liability on the balance sheet.

The
key factors, which may affect future tax charges, include the availability of accelerated tax depreciation, utilization of unrecognized losses (see below), changes in tax legislation
and the proportion of profits subject to different overseas tax rates.

Deferred
tax has not been provided on tax losses carried forward at January 1, 2005 of approximately £125 million. Approximately £85 million
of the losses are non-trading losses in the United Kingdom. These losses can only be offset against future non-trading profits. The balance of £40 million
arises in France, Belgium, Spain and the United States. It is not anticipated that these will be able to be offset against profits arising within the next year.

---



The
statutory rate of corporation tax is reconciled to the effective current and overall rates of tax as follows:

Company and Regentrealm52 weeks
ended
January 1,
2005

53 weeks
ended
January 3,
2004

52 weeks
ended
December 28,
2002(percentage)Reconciliation of current tax rate:U.K. corporation tax standard rate

(30.0
)
(30.0
)
(30.0
)Rate differential

0.9

0.3

0.1Accelerated capital allowances

9.2

11.7

18.7Short-term timing differences

(3.0
)
3.7

(2.3
)Release of over-provisions in prior year

(4.5
)
(0.3
)
(1.0
)Losses on which no tax credit provided

6.2

7.3

5.2Goodwill amortization

9.0

7.1

15.5Interest not eligible for tax relief

11.7Other items

(0.6
)
0.9

(6.6
)Effective current tax rateCompany

(1.1
)
0.7

(0.4
)Losses on which no tax credit provided





Effective current tax rateRegentrealm

(1.1
)
0.7

(0.4
)Reconciliation of overall tax rate:U.K. corporation tax standard rate

(30.0
)
(30.0
)
(30.0
)Rate differential

0.9

0.3

0.1Accelerated capital allowances

11.0

5.5

(0.4
)Short-term timing differences

(5.4
)
1.3

0.4Release of over-provisions in prior year

(6.0
)
(2.9
)
(12.4
)Losses on which no tax credit is provided

12.5

11.0

13.8Goodwill amortization

9.0

7.1

15.5Interest not eligible for tax relief

11.7Other items

(0.7
)
1.0

(7.0
)Effective overall tax rateCompany

3.0

(6.7
)
(20.0
)Losses on which no tax credit provided





(0.3
)Effective overall tax rateRegentrealm

3.0

(6.7
)
(20.3
)


---



Loss
on ordinary activities before tax is analyzed as follows:

Company52 weeks
ended
January 1,
2005

53 weeks
ended
January 3,
2004

52 weeks
ended
December 28,
2002(£ million)United Kingdom

(151.6
)
(166.3
)
(78.9
)Overseas

28.8

14.9

1.0(122.8
)
(151.4
)
(77.9
)


Regentrealm52 weeks
ended
January 1,
2005

53 weeks
ended
January 3,
2004

52 weeks
ended
December 28,
2002(£ million)United Kingdom

(151.3
)
(165.3
)
(77.9
)Overseas

28.8

14.9

1.0(122.5
)
(150.4
)
(76.9
)


9    Exceptional taxation refund

During the 52 weeks ended December 28, 2002 the Group received £12.3 million in relation to a claim for refund of withholding tax paid
in connection with the reorganization of the U.S. business of the Predecessor in 1992. The amount received comprised a £7.2 million refund of withholding tax and
£5.1 million of interest attributable thereto.

10    Intangible assets

Company and RegentrealmGoodwill

Purchased
brands

Total(£ million)CostAt December 29, 2002 and January 3, 2004

734.1



734.1Arising on current year acquisitions

96.7

110.3

207.0Exchange adjustment

0.3

0.4

0.7At January 1, 2005

831.1

110.7

941.8AmortizationAt December 29, 2002

99.0



99.0Charge for period

36.5



36.5At January 3, 2004

135.5



135.5Charge for period

37.7



37.7At January 1, 2005

173.2



173.2Net book value at January 1, 2005

657.9

110.7

768.6Net book value at January 3, 2004

598.6



598.6


All
goodwill is being amortized over an estimated useful life of 20 years. All purchased brands have been deemed to have indefinite useful lives and are therefore not being
amortized.

---



11    Tangible fixed assets

|                                  |  | Company and Regentrealm |  
|--------------------------------- |  | ----------------------- | -
|
|
|
|
|Cost                              |  |                         |  
|At December 29, 2002              |  | 109.6                   |  
|Exchange adjustment               |  | 4.5                     |  
|Additions                         |  | 0.9                     |  
|Reclassifications                 |  | 2.6                     |  
|Disposals                         |  | (0.5                    | )
|                                  |  |                         |  
|At January 3, 2004                |  | 117.1                   |  
|Exchange adjustment               |  |                        |  
|Businesses acquired               |  | 11.4                    |  
|Additions                         |  | 1.1                     |  
|Reclassifications                 |  | 2.8                     |  
|Disposals                         |  | (13.3                   | )
|                                  |  |                         |  
|At January 1, 2005                |  | 119.1                   |  
|                                  |  |                         |  
|Depreciation                      |  |                         |  
|At December 29, 2002              |  | 10.7                    |  
|Exchange adjustment               |  | 2.0                     |  
|Charge for period                 |  | 4.3                     |  
|Impairment                        |  | 4.0                     |  
|Reclassification                  |  |                        |  
|Disposals                         |  | (0.4                    | )
|                                  |  |                         |  
|At January 3, 2004                |  | 20.6                    |  
|Exchange adjustment               |  | (0.1                    | )
|Charge for period                 |  | 4.2                     |  
|Reclassification                  |  | 0.1                     |  
|Disposals                         |  | (3.4                    | )
|                                  |  |                         |  
|At January 1, 2005                |  | 21.4                    |  
|                                  |  |                         |  
|Net book value at January 1, 2005 |  | 97.7                    |  
|                                  |  |                         |  
|Net book value at January 3, 2004 |  | 96.5                    |  
|                                  |  |                         |  

The net book value of leasehold properties represents £8.7 million (2003: £7.5 million) in respect of leases
with under 50 years to run at January 1, 2005.

The
net book value of tangible fixed assets acquired under finance lease arrangements, all of which are plant, machinery and vehicles, is set out below:

Company and RegentrealmAt January 1,
2005

At January 3,
2004(£ million)Cost

3.8

4.5Accumulated depreciation

(1.3
)
(1.1
)Net book value

2.5

3.4


---



12    Investment in joint venture

Company and
Regentrealm(£ million)CostAt December 29, 2002, January 3, 2004 and January 1, 2005

1.5Post acquisition reservesAt December 29, 2002

2.2Exchange adjustment

0.4Share of profit for the period

0.5At January 3, 2004

3.1Exchange adjustment

0.1Share of profit for the period

0.5At January 1, 2005

3.7Net book value at January 1, 2005

5.2Net book value at January 3, 2004

4.6


The
Group holds a 50% interest in the ordinary shares of KP Ireland Limited, which is incorporated and operates in the Republic of Ireland. Its principal activity is the manufacture of
snack products.

13    Stocks

Company and RegentrealmAt January 1,
2005

At January 3,
2004(£ million)Raw materials and consumables

29.3

28.5Work in progress

9.6

8.6Finished goods

45.6

43.984.5

81.0


There
is no material difference between the replacement cost and historical cost of stocks.

Raw
materials and consumables at January 1, 2005 included £5.0 million in respect of consignment stocks. At January 3, 2004 consignment stocks totaled
£4.3 million.

---



14    Debtors

|                                               |  | Company |  | Regentrealm
|---------------------------------------------- |  | ------- |  | -----------
|
|
|Trade debtors                                  |  | 262.1   |  | 222.7      
|Due from group undertakings                    |  | 2.9     |  | 1.7        
|Due from United Biscuits Finance plc           |  |        |  |           
|Other debtors                                  |  | 11.6    |  | 13.4       
|Prepayments and accrued income                 |  | 13.0    |  | 11.5       
|Pension asset net of deferred tax(1)           |  | 0.4     |  | 1.5        
|                                               |  |         |  |            
|                                               |  | 290.0   |  | 250.8      
|                                               |  |         |  |            
|Of which falling due after more than one year: |  |         |  |            
|Other debtors                                  |  | 0.3     |  | 0.2        
|Pension asset net of deferred tax(1)           |  | 0.4     |  | 1.5        
|                                               |  |         |  |            
|                                               |  | 0.7     |  | 1.7        
|                                               |  |         |  |            

---

Trade
debtors are stated net of provisions for bad and doubtful debts of £1.5 million (2003: £2.3 million).

15    Trade and other creditors

Company

RegentrealmAt January 1,
2005

At January 3,
2004

At January 1,
2005

At January 3,
2004(£ million)Trade creditors

103.2

101.4

103.2

101.4Due to United Biscuits Finance plc





7.7

6.4Other creditors

21.0

20.6

21.0

20.6Due to joint ventures

2.4

3.8

2.4

3.8Other taxes and social security costs

8.0

4.0

8.0

4.0Accruals and deferred income

167.9

130.4

161.0

125.0302.5

260.2

303.3

261.2


---



16    Loans, overdrafts and finance lease obligations

|                                                                 |                           | Company |      | Regentrealm |      
|---------------------------------------------------------------- | ------------------------- | ------- | ---- | ----------- | -----
|
|
|Bank loans                                                       |                           |         |      |             |      
|Senior Credit Facility                                           |                           | 637.0   |      | 439.4       |      
|                                                                 |                           |         |      |             |      
|Debenture and other loans                                        |                           |         |      |             |      
|10.75% Senior Subordinated Notes due 2011                        |                           | 169.3   |      | 120.0       |      
|10.625% Senior Subordinated Notes due 2011                       |                           | 138.7   |      | 112.8       |      
|                                                                 |                           |         |      |             |      
|                                                                 |                           | 308.0   |      | 232.8       |      
|                                                                 |                           |         |      |             |      
|Finance lease obligations                                        |                           | 1.4     |      | 3.1         |      
|                                                                 |                           |         |      |             |      
|Total gross borrowings                                           |                           | 946.4   |      | 675.3       |      
|                                                                 |                           |         |      |             |      
|Analysis by maturity                                             |                           |         |      |             |      
|Repayable as follows:                                            |                           |         |      |             |      
|After more than five years                                       |                           | 704.2   |      | 232.8       |      
|Between four and five years                                      |                           | 72.5    |      | 226.6       |      
|Between three and four years                                     |                           | 62.5    |      | 72.6        |      
|Between two and three years                                      |                           | 52.5    |      | 55.1        |      
|Between one and two years                                        |                           | 38.7    |      | 46.2        |      
|                                                                 |                           |         |      |             |      
|                                                                 |                           | 930.4   |      | 633.3       |      
|Under one year                                                   |                           | 9.2     |      | 42.0        |      
|                                                                 |                           |         |      |             |      
|                                                                 |                           | 939.6   |      | 675.3       |      
|Add: Debt premium on senior subordinated notes(1)                |                           | 6.8     |      |            |      
|                                                                 |                           |         |      |             |      
|Total gross borrowings                                           |                           | 946.4   |      | 675.3       |      
|Less: Issuance costs                                             |                           | (18.5   | )    | (10.2       | )    
|                                                                 |                           |         |      |             |      
|                                                                 |                           | 927.9   |      | 665.1       |      
|Less: Included in creditors: amounts falling due within one year |                           |         |      |             |      
|                                                                 | Bank loans and overdrafts |         | (8.0 | )           | (39.9
|                                                                 | Finance leases            |         | (1.2 | )           | (2.1 
|                                                                 | Debt premium              |         | (1.1 | )           |     
|                                                                 | Less: Issuance costs      |         | 3.1  |             | 1.7  
|                                                                 |                           |         |      |             |      
|                                                                 |                           | (7.2    | )    | (40.3       | )    
|                                                                 |                           |         |      |             |      
|Amounts falling due after more than one year                     |                           | 920.7   |      | 624.8       |      
|                                                                 |                           |         |      |             |      

---

In connection with the UB acquisition, the Group, through Regentrealm, entered into a Senior Credit Facility Agreement ("Senior Facility"). On
April 9, 2003, the terms of the Senior Facility were amended. The amount outstanding in respect of Term Loans A, B, C and D on that date was £438.9 million. These loans were
merged into one fully drawn Term Loan A in the amount of £250.0 million and a revolving credit facility of £225.0 million, of which
£184.0 million was drawn down at that time. At January 3, 2004, £245.4 million was outstanding under Term Loan A and £194.0 million of
the revolving credit facility was drawn down.

---



On
September 20, 2004 the Group refinanced its existing senior credit facility, comprising a Term loan A of £204.9 million and a revolving facility of
£225.0 million of which £184.0 million was drawn down as a loan and £9.5 million was provided as ancillary facilities and a letter of credit,
and raised new funds of £252.5 million. £243.5 million of the new funds was drawn down and utilized to finance the acquisition totaling approximately
£207.7 million, fund the related costs of acquisition and costs of financing totaling an estimated £15 million and the remainder was made available to fund the
working capital requirements of the group.

At
January 1, 2005, the senior credit facility comprised £632.4 million Term loans A, B and C which had been drawn down, and which had been increased by an
adverse foreign exchange movement of £4.6 million since draw down, and a revolving facility of £50.0 million of which £9.5 million has been
provided as ancillary facilities and a letter of credit, and the remainder was available to be drawn down as at January 1, 2005. Details of the loans are set out below:

|Senior Debt               |  | Amount |  | Margin              |  | Type       |  | Maturity          
|------------------------- |  | ------ |  | ------------------- |  | ---------- |  | ------------------
|
|Term loan A               |  | 267.4  |  | 2.25% over Libor    |  | Amortizing |  | April 28, 2010    
|Term loan B (£)           |  | 100.0  |  | 2.75% over Libor    |  | Bullet     |  | September 20, 2010
|Term loan B (€)           |  | 67.6   |  | 2.625% over Euribor |  | Bullet     |  | September 20, 2010
|Term loan C (£)           |  | 150.0  |  | 4.50% over Libor    |  | Bullet     |  | January 15, 2011  
|Term loan C (€)           |  | 52.0   |  | 4.375% over Euribor |  | Bullet     |  | January 15, 2011  
|                          |  |        |  |                     |  |            |  |                   
|Total term loans          |  | 637.0  |  |                     |  |            |  |                   
|Revolving credit facility |  | 50.0   |  | 2.25% over Libor    |  | Bullet     |  | March 20, 2010    
|                          |  |        |  |                     |  |            |  |                   
|Total facility            |  | 687.0  |  |                     |  |            |  |                   
|                          |  |        |  |                     |  |            |  |                   

On
April 5, 2005, we made a voluntary prepayment of £20.0 million against our senior debt obligations. We elected that the prepayment be offset against term
loan B. Under the voluntary prepayment provisions, term loan B lenders may elect to receive term loan A prepayments instead. A number of term B lenders made an election and therefore
£8.9 million of the prepayment has been allocated against term loan A, reducing principal repayments proportionately, and £11.1 million has been allocated against
term loan B.

The
Senior Credit Facility borrowings ("senior debt") are secured by fixed and floating charges from each of the U.K. charging subsidiaries, including Jacob's since its acquisition in
2004, and share pledges over two Dutch subsidiaries. In April 2001 security was also provided in the form of share pledges over three Spanish subsidiaries and fixed charges were taken over
three Spanish properties and certain intellectual property. In November 2001 security was provided in the form of a share pledge over a further Dutch subsidiary. In June 2002 security
was provided in the form of share pledges over two French subsidiaries. In November 2004 security was provided in the form of a share pledge over the shares of the newly acquired Portuguese
subsidiary Triunfo.

The
application of proceeds of enforcement of this security above a certain level is subject to the provisions of an intercreditor deed (the "Intercreditor Deed") dated
December 16, 1999, as amended and re-stated from time to time. The Intercreditor Deed sets out the respective rights of certain creditors of the Group as regards ranking of debt and
security.

The
Intercreditor Deed provides that senior debt and hedging liabilities, as defined therein, rank (to the extent provided therein) in priority to, first, the Senior Subordinated Notes
and second, the Intercompany Debt.

As
an integral part of these borrowing arrangements, certain restrictive financial covenants are in place. The covenants do not detract from the normal course of the business.

The
Company, together with other subsidiary undertakings in the Group, has cross-guaranteed Regentrealm's senior debt.

---



On
April 17, 2001, the Company issued £120.0 million 103/4% Senior Subordinated Notes and €160.0 million 10?% Senior
Subordinated Notes. The notes are due in 2011 when they will be redeemable at par. Interest is payable on April 15 and October 15 of each year. Regentrealm guarantees the Senior
Subordinated Notes. The proceeds of the issue were used together with other cash resources of the Company to repay the Senior Subordinated Bridge Facility. On February 16, 2004 the Company
issued £45.0 million additional 10.75% Senior Subordinated Sterling Notes due 2011 at a premium of 11% and €32.5 million additional 10.625% Senior
Subordinated Euro Notes due 2011 at a premium of 13%, receiving total proceeds of £75.0 million. The additional Notes were issued on the same terms and under the same indenture as
the existing Notes. Of the proceeds, £1.0 million was used to finance the issuance costs, £40.0 million to prepay a portion of the Group's Senior Credit Facility
and the remainder to finance the acquisition of Triunfo.

Amounts
repayable after five years refer to:

Company

RegentrealmAmount

Amount(£ million)Senior debt:Term loan A

33.4

33.4Term loan B (£)

100.0

100.0Term loan B (€)

67.6

67.6Term loan C (£)

150.0

150.0Term loan C (€)

52.0

52.0Total senior debt

403.0

403.010.75% Senior Subordinated Notes due 2011

165.0

10.625% Senior Subordinated Notes due 2011

136.2

704.2

403.0


Interest rate agreements

Regentrealm is required by the terms of the Senior Facility to enter into hedging arrangements to provide protection in respect of interest rate risk exposure
arising because the financing under the senior credit facility is at floating interest rates. The hedging arrangements are required to cover at least 50% of the amount of the Company's total
borrowings as at September 20, 2004 for a period of at least two years. Hedging banks are entitled to security, guarantees and subordination rights, which rank at least equal to those granted
to lenders under the Senior Facility.

Regentrealm
currently has five interest rate swaps in place to hedge its interest rate exposure under the Senior Facility:

Amount

Start Date

Maturity Date

Rate(£ million)

(€ million)





(%)150.0



Pre 2004

October 28, 2005

5.68562.5



Pre 2004

October 28, 2006

4.780134.0



January 28, 2005

January 30, 2006

4.91080.0

January 28, 2005

January 30, 2006

2.360110.0



October 28, 2005

October 28, 2006

5.020


---



Analysis by currency

Company

RegentrealmAt January 1,
2005

At January 3,
2004

At January 1,
2005

At January 3,
2004(£ million)Sterling

687.9

548.2

518.6

428.2Euro

258.5

127.1

119.8

14.3Total gross borrowings

946.4

675.3

638.4

442.5


Analysis of changes in net borrowings

|                                  |  | Cash  |   | Liquid
resources(1) |   | Overdrafts |   | Debts
due
within
1 year |   | Debts
due
after
1 year |   | Finance
lease
obligations |   | Total  |  
|--------------------------------- |  | ----- | - | ------------------- | - | ---------- | - | ----------------------- | - | ---------------------- | - | ------------------------- | - | ------ | -
|
|Company                           |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At December 30, 2001              |  | 30.9  |   | 5.9                 |   | (8.5       | ) | (29.9                   | ) | (686.4                 | ) | (1.0                      | ) | (689.0 | )
|Cash flow                         |  | (16.8 | ) | 0.6                 |   | 3.6        |   | 14.9                    |   | 54.5                   |   | 0.3                       |   | 57.1   |  
|Other non-cash changes            |  |      |   |                    |   |           |   | (10.1                   | ) | 6.8                    |   | (0.7                      | ) | (4.0   | )
|Effect of exchange rate movements |  | 1.1   |   | (0.5                | ) | (0.2       | ) |                        |   | (6.8                   | ) |                          |   | (6.4   | )
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At December 28, 2002              |  | 15.2  |   | 6.0                 |   | (5.1       | ) | (25.1                   | ) | (631.9                 | ) | (1.4                      | ) | (642.3 | )
|Cash flow                         |  | 10.9  |   | (1.7                | ) | 3.1        |   | (9.4                    | ) | 28.0                   |   | 0.6                       |   | 31.5   |  
|Other non-cash changes            |  |      |   |                    |   | 2.0        |   | (3.7                    | ) | (10.2                  | ) | (2.2                      | ) | (14.1  | )
|Effect of exchange rate movements |  | 1.1   |   | (0.1                | ) |           |   |                        |   | (9.7                   | ) | (0.1                      | ) | (8.8   | )
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At January 3, 2004                |  | 27.2  |   | 4.2                 |   |           |   | (38.2                   | ) | (623.8                 | ) | (3.1                      | ) | (633.7 | )
|Cash flow                         |  | 37.5  |   | 7.8                 |   |           |   | 38.9                    |   | (296.8                 | ) | 1.8                       |   | (210.8 | )
|Other non-cash changes            |  |      |   |                    |   |           |   | (6.6                    | ) | 5.3                    |   | (0.1                      | ) | (1.4   | )
|Effect of exchange rate movements |  | 0.5   |   | 0.4                 |   |           |   | (0.1                    | ) | (5.2                   | ) |                          |   | (4.4   | )
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At January 1, 2005                |  | 65.2  |   | 12.4                |   |           |   | (6.0                    | ) | (920.5                 | ) | (1.4                      | ) | (850.3 | )
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|Regentrealm                       |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At December 30, 2001              |  | 30.9  |   | 5.9                 |   | (8.5       | ) | (29.9                   | ) | (478.4                 | ) | (1.0                      | ) | (481.0 | )
|Cash flow                         |  | (16.8 | ) | 0.6                 |   | 3.6        |   | 14.9                    |   | 54.5                   |   | 0.3                       |   | 57.1   |  
|Other non-cash changes            |  |      |   |                    |   |           |   | (11.1                   | ) | 8.8                    |   | (0.7                      | ) | (3.0   | )
|Effect of exchange rate movements |  | 1.1   |   | (0.5                | ) | (0.2       | ) |                        |   | (0.1                   | ) |                          |   | 0.3    |  
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At December 28, 2002              |  | 15.2  |   | 6.0                 |   | (5.1       | ) | (26.1                   | ) | (415.2                 | ) | (1.4                      | ) | (426.6 | )
|Cash flow                         |  | 10.9  |   | (1.7                | ) | 4.1        |   | (10.4                   | ) | 29.0                   |   | 0.6                       |   | 32.5   |  
|Other non-cash changes            |  |      |   |                    |   | 1.0        |   | (2.7                    | ) | (10.2                  | ) | (2.2                      | ) | (14.1  | )
|Effect of exchange rate movements |  | 1.1   |   | (0.1                | ) |           |   |                        |   | (0.9                   | ) | (0.1                      | ) |       |  
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At January 3, 2004                |  | 27.2  |   | 4.2                 |   |           |   | (39.2                   | ) | (397.3                 | ) | (3.1                      | ) | (408.2 | )
|Cash flow                         |  | 37.5  |   | 7.8                 |   |           |   | 40.0                    |   | (223.9                 | ) | 1.8                       |   | (136.8 | )
|Other non-cash changes            |  |      |   |                    |   |           |   | (6.9                    | ) | 4.6                    |   | (0.1                      | ) | (2.4   | )
|Effect of exchange rate movements |  | 0.5   |   | 0.4                 |   |           |   | (0.1                    | ) | (4.0                   | ) |                          |   | (3.2   | )
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  
|At January 1, 2005                |  | 65.2  |   | 12.4                |   |           |   | (6.2                    | ) | (620.6                 | ) | (1.4                      | ) | (550.6 | )
|                                  |  |       |   |                     |   |            |   |                         |   |                        |   |                           |   |        |  

---

---



Financial Instruments

|                   |  | Net debt |   | Cash and
short term
deposits |   | Gross
borrowings |  | Gross
borrowings
at floating
rates |  | Gross
borrowings
at fixed
rates |  | Weighted
average
interest rates
on fixed rate
debt |   | Weighted
average
period for
which rates
are fixed
|------------------ |  | -------- | - | ---------------------------- | - | ---------------- |  | ---------------------------------- |  | ------------------------------- |  | -------------------------------------------------- | - | -------------------------------------------------
|
|Company            |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Sterling           |  | 658.8    |   | (29.1                        | ) | 687.9            |  | 306.1                              |  | 381.8                           |  | 7.7                                                | % | 4.2 years                                        
|US dollar          |  | (2.6     | ) | (2.6                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|Euro               |  | 213.8    |   | (44.7                        | ) | 258.5            |  | 119.8                              |  | 138.7                           |  | 10.6                                               | % | 6.3 years                                        
|Canadian dollar    |  | (1.2     | ) | (1.2                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  | 868.8    |   | (77.6                        | ) | 946.4            |  | 425.9                              |  | 520.5                           |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Less: Issue costs  |  | (18.5    | ) |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|At January 1, 2005 |  | 850.3    |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Sterling           |  | 540.7    |   | (7.5                         | ) | 548.2            |  | 215.7                              |  | 332.5                           |  | 7.8                                                | % | 5.1 years                                        
|US dollar          |  | (1.2     | ) | (1.2                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|Euro               |  | 106.2    |   | (20.9                        | ) | 127.1            |  | 14.3                               |  | 112.8                           |  | 10.6                                               | % | 7.3 years                                        
|Canadian dollar    |  | (1.8     | ) | (1.8                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  | 643.9    |   | (31.4                        | ) | 675.3            |  | 230.0                              |  | 445.3                           |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Less: Issue costs  |  | (10.2    | ) |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|At January 3, 2004 |  | 633.7    |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Regentrealm        |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Sterling           |  | 489.5    |   | (29.1                        | ) | 518.6            |  | 306.1                              |  | 212.5                           |  | 5.4                                                | % | 1.1 years                                        
|US dollar          |  | (2.6     | ) | (2.6                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|Euro               |  | 75.1     |   | (44.7                        | ) | 119.8            |  | 119.8                              |  |                                |  |                                                   |   |                                                 
|Canadian dollar    |  | (1.2     | ) | (1.2                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  | 560.8    |   | (77.6                        | ) | 638.4            |  | 425.9                              |  | 212.5                           |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Less: Issue costs  |  | (10.2    | ) |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|At January 1, 2005 |  | 550.6    |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Sterling           |  | 420.7    |   | (7.5                         | ) | 428.2            |  | 215.7                              |  | 212.5                           |  | 5.6                                                | % | 1.9 years                                        
|US dollar          |  | (1.2     | ) | (1.2                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|Euro               |  | (6.6     | ) | (20.9                        | ) | 14.3             |  | 14.3                               |  |                                |  |                                                   |   |                                                 
|Canadian dollar    |  | (1.8     | ) | (1.8                         | ) |                 |  |                                   |  |                                |  |                                                   |   |                                                 
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  | 411.1    |   | (31.4                        | ) | 442.5            |  | 230.0                              |  | 212.5                           |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|Less: Issue costs  |  | (2.9     | ) |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|At January 3, 2004 |  | 408.2    |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  
|                   |  |          |   |                              |   |                  |  |                                    |  |                                 |  |                                                    |   |                                                  

Interest on cash and short-term deposits is based on floating rates linked to LIBOR.

---



Further
analysis of the Group's fixed rate borrowings is as follows:

|         |  | At January 1, 2005 |  | At January 3, 2004
|-------- |  | ------------------ |  | ------------------
|
|
|Sterling |  | 169.3              |  | 212.5             
|Euro     |  | 138.7              |  |                  
|         |  |                    |  |                   
|         |  | 308.0              |  | 212.5             
|         |  |                    |  |                   

At January 1, 2005 and January 3, 2004Regentrealm

Fixed rate
borrowings

Effect of
interest
rate
swaps

Effective
fixed rate
borrowings(£ million)Sterling



212.5

212.5Euro







212.5

212.5


Undrawn committed facilities at the period end

Company and RegentrealmAt January 1,
2005

At January 3,
2004(£ million)Expiring in one year or less

1.6

Expiring in more than two years

50.4

29.852.0

29.8


Fair values of financial instruments

|                                                                      |                                    | Company |   | Regentrealm |     
|--------------------------------------------------------------------- | ---------------------------------- | ------- | - | ----------- | ----
|
|
|Cash and short-term deposits                                          |                                    | 77.6    |   | 77.6        |     
|Current portion of loans, overdrafts and finance lease obligations(1) |                                    | (10.3   | ) | (9.2        | )   
|Long-term loans and finance lease Obligations(1)                      |                                    | (936.1  | ) | (943.4      | )   
|Derivatives relating to loans                                         |                                    |         |   |             |     
|                                                                      | Interest rates swaps               |         |  |             | (1.4
|Other derivatives                                                     |                                    |         |   |             |     
|                                                                      | Forward foreign currency contracts |         |  |             | 0.1 
|                                                                      | Cash-settled commodity contracts   |         |  |             | (0.3
|Other financial liabilities                                           |                                    | (7.9    | ) | (7.9        | )   

---

The fair value of debt and derivative instruments is calculated by discounting all future cash flows by the market yield curve at the balance
sheet date. Currency derivatives are translated into sterling at the rates of exchange prevailing at the balance sheet date. In addition, £0.9 million of gains on commodity
contracts have been realized but not recognized in 2004.

---



Other
financial liabilities relates to the provision for onerous contracts. This relates to the cost of surplus leasehold properties, where unavoidable costs exceed anticipated income.
No interest is paid on these liabilities. The weighted average period until maturity is 5.2 years (2003: 5.6 years).

Functional currencies of Group operations

Monetary assets and liabilities denominated in currencies other than the functional currency of the entity owning them, and excluding currency funding for
overseas net investments which is dealt with in the statement of total recognized gains and losses, are not material.

Foreign exchange risk management

The Group has entered into forward foreign exchange contracts in order to swap liquid assets and liabilities into the currencies required for Group purposes.

As
at January 1, 2005 the following contracts were outstanding:

|                |  | Receive for £ |  | Pay for £ |  | Receive for € |  | Pay for €
|--------------- |  | ------------- |  | --------- |  | ------------- |  | ---------
|
|
|Currency:       |  |               |  |           |  |               |  |          
|U.S. dollar     |  | 16.0          |  | 1.7686    |  | 4.4           |  | 1.7802   
|Euro            |  | 36.8          |  | 1.4418    |  | 2.2           |  | 1.4380   
|Canadian dollar |  |              |  |          |  | 0.7           |  | 2.3806   
|                |  |               |  |           |  |               |  |          
|Total           |  | 52.8          |  |           |  | 7.3           |  |          
|                |  |               |  |           |  |               |  |          

As at January 3, 2004 the following contracts were outstanding:

|                |  | Receive for £ |  | Pay for £ |  | Receive for € |  | Pay for €
|--------------- |  | ------------- |  | --------- |  | ------------- |  | ---------
|
|
|Currency:       |  |               |  |           |  |               |  |          
|U.S. dollar     |  | 18.2          |  | 1.5963    |  | 2.7           |  | 1.6100   
|Euro            |  | 44.6          |  | 1.4115    |  | 2.5           |  | 1.4024   
|Canadian dollar |  |              |  |          |  | 1.4           |  | 2.3841   
|                |  |               |  |           |  |               |  |          
|Total           |  | 62.8          |  |           |  | 6.6           |  |          
|                |  |               |  |           |  |               |  |          

---



Hedges

Profits and losses on financial instruments used for hedging interest rate exposure and foreign exchange risk and commodity risk are recognized when the exposure
that is being hedged is recognized. Unrecognized and deferred profits and losses on financial instruments used for hedging are as follows:

|                                                                                   |  | Gains |   | Losses |   | Net  |  
|---------------------------------------------------------------------------------- |  | ----- | - | ------ | - | ---- | -
|
|Unrecognized gains and losses on hedges at January 3, 2004                         |  | 1.4   |   | (5.4   | ) | (4.0 | )
|Gains and losses arising in previous years that were recognized in 2004            |  | (1.3  | ) | 2.4    |   | 1.1  |  
|                                                                                   |  |       |   |        |   |      |  
|Gains and losses arising before January 3, 2004 that were not recognized in 2004   |  | 0.1   |   | (3.0   | ) | (2.9 | )
|Gains and losses arising in 2004 that were not recognized in 2004                  |  | 2.3   |   | (0.1   | ) | 2.2  |  
|                                                                                   |  |       |   |        |   |      |  
|Unrecognized gains and losses on hedges at January 1, 2005                         |  | 2.4   |   | (3.1   | ) | (0.7 | )
|                                                                                   |  |       |   |        |   |      |  
|Of which:                                                                          |  |       |   |        |   |      |  
|Gains and losses expected to be recognized in 2005                                 |  | 2.3   |   | (2.8   | ) | (0.5 | )
|Gains and losses expected to be recognized in 2006 or later                        |  | 0.1   |   | (0.3   | ) | (0.2 | )
|                                                                                   |  |       |   |        |   |      |  
|                                                                                   |  | 2.4   |   | (3.1   | ) | (0.7 | )
|                                                                                   |  |       |   |        |   |      |  
|Unrecognized gains and losses on hedges at December 28, 2002                       |  | 1.9   |   | (11.3  | ) | (9.4 | )
|Gains and losses arising in previous years that were recognized in 2003            |  | (1.9  | ) | 4.9    |   | 3.0  |  
|                                                                                   |  |       |   |        |   |      |  
|Gains and losses arising before December 28, 2002 that were not recognized in 2003 |  |      |   | (6.4   | ) | (6.4 | )
|Gains and losses arising in 2003 that were not recognized in 2003                  |  | 1.4   |   | 1.0    |   | 2.4  |  
|                                                                                   |  |       |   |        |   |      |  
|Unrecognized gains and losses on hedges at January 3, 2004                         |  | 1.4   |   | (5.4   | ) | (4.0 | )
|                                                                                   |  |       |   |        |   |      |  
|Of which:                                                                          |  |       |   |        |   |      |  
|Gains and losses expected to be recognized in 2004                                 |  | 1.3   |   | (2.4   | ) | (1.1 | )
|Gains and losses expected to be recognized in 2005 or later                        |  | 0.1   |   | (3.0   | ) | (2.9 | )
|                                                                                   |  |       |   |        |   |      |  
|                                                                                   |  | 1.4   |   | (5.4   | ) | (4.0 | )
|                                                                                   |  |       |   |        |   |      |  

Counterparty risk

The counterparties to the above agreements expose the Group to loss in the event of non-performance but such non-performance is not
expected to occur. Credit risk is managed by acquiring derivatives with high credit quality institutions in accordance with the Group's Treasury Policy.

---



17    Provision for liabilities and charges

|                                |  | Company and Regentrealm |  
|------------------------------- |  | ----------------------- | -
|
|
|At December 29, 2002            |  | 6.4                     |  
|Exchange adjustment             |  | 0.4                     |  
|Profit and loss charge/(credit) |  | 0.1                     |  
|Other movements                 |  |                        |  
|Amounts utilized                |  | (0.7                    | )
|                                |  |                         |  
|At January 3, 2004              |  | 6.2                     |  
|Acquisition of subsidiaries     |  |                        |  
|Exchange adjustment             |  |                        |  
|Profit and loss charge/(credit) |  | 0.5                     |  
|Other movements                 |  | (1.3                    | )
|Amounts utilized                |  | (0.7                    | )
|                                |  |                         |  
|At January 1, 2005              |  | 4.7                     |  
|                                |  |                         |  

Rationalization provisions are recorded only where there is a legal or constructive obligation. Rationalization provisions at January 1,
2005 principally comprised obligations in relation to our overhead-reduction and manufacturing-efficiency programs across the Group, which we expect to utilize during the next year, and our commitment
to the government-sponsored early retirement scheme in France entered into in 2002, to which we are committed until 2010.

Retirement
benefits principally comprise long-term retirement indemnities given to employees in Northern Europe.

The
provision for onerous contracts relates to the cost of surplus leasehold properties where unavoidable costs exceed anticipated income. The associated lease commitments are of varying
duration and it is anticipated that expenditure will continue to be charged against this provision for a number of years.

Provision for deferred taxation

|                                |  | Company and Regentrealm |  
|------------------------------- |  | ----------------------- | -
|
|
|At December 29, 2002            |  | 17.2                    |  
|Exchange adjustment             |  | 0.3                     |  
|Profit and loss (credit)/charge |  | (8.7                    | )
|                                |  |                         |  
|At January 3, 2004              |  | 8.8                     |  
|Acquisition of subsidiaries     |  | 0.6                     |  
|Exchange adjustment             |  | (0.2                    | )
|Profit and loss (credit)/charge |  | 0.6                     |  
|                                |  |                         |  
|At January 1, 2005              |  | 9.8                     |  
|                                |  |                         |  

The deferred tax balance at January 1, 2005 does not include any amounts in respect of the Group's pension schemes, which are shown in the
balance sheet after deduction of a net deferred tax asset of £98.3 million (2003: £100.2 million).

No
provision has been made for taxation that would arise in the event of certain overseas subsidiaries and associates distributing their reserves, because it is the Group's policy to
reinvest profits generated by overseas operations.

---



18    Employee share schemes

Company and Regentrealm

Following the UB acquisition, the ultimate U.K. parent company, United Biscuits Group (Investments) Ltd ("UBGI"), commenced a share scheme whereby certain
executives and employees of the Group were given the entitlement to acquire certain classes of shares in UBGI. Any purchase of newly-issued shares by an executive or employee is recorded in the
accounts of UBGI.

19    Cash flow

The reconciliation of operating profit to net cash inflow/(outflow) from operating activities is shown within the consolidated cash flow statements for the
Company on page F-6 and for Regentrealm on page F-11.

A
reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities analyzed between continuing operations, acquisitions and discontinued operations is set
out below:

Reconciliation of operating profit to net cash inflow from operating activities

|                                                                          |  | 52 weeks ended January 1, 2005 |  
|------------------------------------------------------------------------- |  | ------------------------------ | -
|
|
|Operating profit/(loss) before share of profit in joint ventures          |  | 33.4                           |  
|Exceptional charges to operating profit                                   |  | 19.0                           |  
|                                                                          |  |                                |  
|Operating profit/(loss) before exceptionals                               |  | 52.4                           |  
|Depreciation and goodwill amortization                                    |  | 97.0                           |  
|Decrease in stocks                                                        |  | 3.8                            |  
|(Increase)/decrease in debtors                                            |  | (9.5                           | )
|Increase/(decrease) in creditors                                          |  | 0.5                            |  
|Expenditure against rationalization provisions and operating exceptionals |  | (37.3                          | )
|Other movements(1)                                                        |  | (1.5                           | )
|                                                                          |  |                                |  
|Net cash inflow/(outflow) from operating activities                       |  | 105.4                          |  
|                                                                          |  |                                |  

---

---



|                                                                          |  | Company |  
|------------------------------------------------------------------------- |  | ------- | -
|
|
|
|Operating profit/(loss) before share of profit in joint ventures          |  | 25.7    |  
|Exceptional charges to operating profit                                   |  | 52.7    |  
|                                                                          |  |         |  
|Operating profit/(loss) before exceptionals                               |  | 78.4    |  
|Depreciation and goodwill amortization                                    |  | 92.5    |  
|Increase in stocks                                                        |  | (2.5    | )
|Decrease in debtors                                                       |  | 30.3    |  
|Decrease in creditors                                                     |  | (25.1   | )
|Expenditure against rationalization provisions and operating exceptionals |  | (30.6   | )
|Other movements(1)                                                        |  | 7.6     |  
|                                                                          |  |         |  
|Net cash inflow/(outflow) from operating activities                       |  | 150.6   |  
|                                                                          |  |         |  

|                                                                          |  | Company |  
|------------------------------------------------------------------------- |  | ------- | -
|
|
|
|Operating profit/(loss) before share of profit in joint ventures          |  | 47.2    |  
|Exceptional charges to operating profit                                   |  | 35.2    |  
|                                                                          |  |         |  
|Operating profit/(loss) before exceptionals                               |  | 82.4    |  
|Depreciation and goodwill amortization                                    |  | 93.5    |  
|(Increase)/decrease in stocks                                             |  | (1.1    | )
|Decrease in debtors                                                       |  | 1.0     |  
|(Decrease)/increase in creditors                                          |  | (46.6   | )
|Expenditure against rationalization provisions and operating exceptionals |  | (30.8   | )
|Other movements(1)                                                        |  | 7.7     |  
|                                                                          |  |         |  
|Net cash inflow/(outflow) from operating activities                       |  | 106.1   |  
|                                                                          |  |         |  

---

---



|                                                                          |  | Regentrealm |  
|------------------------------------------------------------------------- |  | ----------- | -
|
|
|
|Operating profit/(loss) before share of profit in joint ventures          |  | 25.7        |  
|Exceptional charges to operating profit                                   |  | 52.7        |  
|                                                                          |  |             |  
|Operating profit/(loss) before exceptionals                               |  | 78.4        |  
|Depreciation and goodwill amortization                                    |  | 92.5        |  
|Increase in stocks                                                        |  | (2.5        | )
|Decrease in debtors                                                       |  | 30.3        |  
|Decrease in creditors                                                     |  | (24.1       | )
|Expenditure against rationalization provisions and operating exceptionals |  | (30.6       | )
|Other movements(1)                                                        |  | 7.6         |  
|                                                                          |  |             |  
|Net cash inflow/(outflow) from operating activities                       |  | 151.6       |  
|                                                                          |  |             |  

|                                                                          |  | Regentrealm |  
|------------------------------------------------------------------------- |  | ----------- | -
|
|
|
|Operating profit/(loss) before share of profit in joint ventures          |  | 47.2        |  
|Exceptional charges to operating profit                                   |  | 35.2        |  
|                                                                          |  |             |  
|Operating profit/(loss) before exceptionals                               |  | 82.4        |  
|Depreciation and goodwill amortization                                    |  | 93.5        |  
|(Increase)/decrease in stocks                                             |  | (1.1        | )
|Decrease in debtors                                                       |  | 1.0         |  
|(Decrease)/increase in creditors                                          |  | (45.6       | )
|Expenditure against rationalization provisions and operating exceptionals |  | (30.8       | )
|Other movements(1)                                                        |  | 7.7         |  
|                                                                          |  |             |  
|Net cash inflow/(outflow) from operating activities                       |  | 107.1       |  
|                                                                          |  |             |  

---

---



|                                                                      |  | Company |  
|--------------------------------------------------------------------- |  | ------- | -
|
|
|Returns on investments and servicing of finance                       |  |         |  
|Interest paid                                                         |  | (56.0   | )
|Interest received                                                     |  | 1.9     |  
|                                                                      |  |         |  
|Net cash outflow from returns on investments and servicing of finance |  | (54.1   | )
|                                                                      |  |         |  
|Taxation                                                              |  |         |  
|U.K. corporation tax (paid)/received                                  |  | (1.7    | )
|Overseas tax (paid)/received                                          |  | (0.2    | )
|                                                                      |  |         |  
|Tax (paid)/received                                                   |  | (1.9    | )
|                                                                      |  |         |  
|Capital expenditure and financial investment                          |  |         |  
|Purchase of fixed assets                                              |  | (54.1   | )
|Sale of fixed assets                                                  |  | 13.5    |  
|Payments from joint ventures                                          |  | 0.7     |  
|                                                                      |  |         |  
|Net cash outflow from capital expenditure and financial investment    |  | (39.9   | )
|                                                                      |  |         |  
|Acquisitions and disposals                                            |  |         |  
|Purchase of businesses(1)                                             |  | (239.9  | )
|Net cash acquired with subsidiary                                     |  | 2.8     |  
|Net cash (outflow)/inflow from sale or termination of businesses      |  | (0.7    | )
|                                                                      |  |         |  
|Net cash (outflow)/inflow from acquisitions and disposals             |  | (237.8  | )
|                                                                      |  |         |  
|Management of liquid resources                                        |  |         |  
|Cash (placed on)/withdrawn from deposit                               |  | (7.8    | )
|                                                                      |  |         |  
|Net cash (outflow)/inflow from management of liquid resources         |  | (7.8    | )
|                                                                      |  |         |  
|Financing                                                             |  |         |  
|Proceeds from new borrowings                                          |  | 318.5   |  
|Cost of financing                                                     |  | (13.1   | )
|Repayment of borrowings                                               |  | (49.3   | )
|                                                                      |  |         |  
|Net cash inflow/(outflow) from financing                              |  | 256.1   |  
|                                                                      |  |         |  

---

---



|                                                                            |  | Regentrealm |  
|--------------------------------------------------------------------------- |  | ----------- | -
|
|
|Returns on investments and servicing of finance                             |  |             |  
|Interest paid                                                               |  | (56.0       | )
|Interest received                                                           |  | 1.9         |  
|                                                                            |  |             |  
|Net cash outflow from returns on investments and servicing of finance       |  | (54.1       | )
|                                                                            |  |             |  
|Taxation                                                                    |  |             |  
|U.K. corporation tax (paid)/received                                        |  | (1.7        | )
|Overseas tax (paid)/received                                                |  | (0.2        | )
|                                                                            |  |             |  
|Tax (paid)/received                                                         |  | (1.9        | )
|                                                                            |  |             |  
|Capital expenditure and financial investment                                |  |             |  
|Purchase of fixed assets                                                    |  | (54.1       | )
|Sale of fixed assets                                                        |  | 13.5        |  
|Payments from joint ventures                                                |  | 0.7         |  
|                                                                            |  |             |  
|Loan from UB Finance                                                        |  | 75.0        |  
|                                                                            |  |             |  
|Net cash inflow/(outflow) from capital expenditure and financial investment |  | 35.1        |  
|                                                                            |  |             |  
|Acquisitions and disposals                                                  |  |             |  
|Purchase of businesses(1)                                                   |  | (239.9      | )
|Net cash acquired with subsidiary                                           |  | 2.8         |  
|Net cash (outflow)/inflow from sale or termination of businesses            |  | (0.7        | )
|                                                                            |  |             |  
|Net cash (outflow)/inflow from acquisitions and disposals                   |  | (237.8      | )
|                                                                            |  |             |  
|Management of liquid resources                                              |  |             |  
|Cash (placed on)/withdrawn from deposit                                     |  | (7.8        | )
|                                                                            |  |             |  
|Net cash (outflow)/inflow from management of liquid resources               |  | (7.8        | )
|                                                                            |  |             |  
|Financing                                                                   |  |             |  
|Proceeds from new borrowings                                                |  | 242.5       |  
|Cost of financing                                                           |  | (12.1       | )
|Repayment of borrowings                                                     |  | (49.3       | )
|                                                                            |  |             |  
|Net cash inflow/(outflow) from financing                                    |  | 181.1       |  
|                                                                            |  |             |  

---

---



20    Pay and benefits to employees (including directors' remuneration)

|                                               |  | Company and Regentrealm
|---------------------------------------------- |  | -----------------------
|
|
|Gross wages and salaries, holiday and sick pay |  | 208.1                  
|Social security costs                          |  | 31.5                   
|Other pension costs                            |  | 19.7                   
|                                               |  |                        
|                                               |  | 259.3                  
|                                               |  |                        

Pension schemes

The Group's principal pension schemes are in the United Kingdom. The UK Schemes are of the defined benefit type funded by payments to separate, trustee
administered funds. The Group also has a small defined benefit scheme in the Netherlands.

The
total pension service cost for the Group for the 52 weeks ended January 1, 2005 was £19.7 million (2003: £17.9 million, 2002:
£16.6 million) substantially all of which related to defined benefit schemes.

At
January 1, 2005 a net pension deficit of £229.7 million on the UK Schemes, including a net unfunded pension liability of £4.1 million, and
a net pension surplus of
£0.4 million on the Netherlands Scheme were recognized in the balance sheet (2003: £235.1 million deficit and £1.5 million surplus,
respectively).

Acting
on the advice of the Group's actuaries, future contributions payable are set at levels that take account of surpluses and deficits.

UK Schemes

UK schemes comprise defined benefit schemes related to United Biscuits (UK) Limited (UBUK) and Jacob's, which was acquired by the Group on September 20,
2004. In addition, the Group provides for unfunded retirement benefits where employees' earnings exceed Inland Revenue qualifying limits.

The
UBUK Schemes are subject to full actuarial valuations at least every three years. A qualified independent actuary last carried out a full actuarial valuation in April 2003. At
April 2003, the levels of funding as a percentage of accrued benefit liabilities were 66% (2000: 112%). The total market value of the UBUK Schemes' assets at the valuation date was
£597.8 million.

The
Jacob's schemes are subject to full actuarial valuation at least every three years. The last full actuarial valuation of the main scheme was carried out at September 1, 2002.
The level of funding as a percentage of accrued benefit liabilities was 83% and the market value of the schemes' assets was £75.1 million at the valuation date. The Jacob's
supplementary scheme's last full actuarial valuation was carried out at March 31, 2003. The level of funding as a percentage of accrued benefit liabilities was 94% and the market value of the
scheme's assets at the valuation date was £4.1 million.

The
stability of the age profile of scheme membership dictates the most appropriate actuarial method to be used in valuing a scheme. The independent actuaries have advised that the
projected unit method is the most appropriate method for valuing the main UBUK pension plan and the main and supplementary Jacob's schemes. The attained age method has been retained for the UBUK
supplementary scheme, for triennial valuation purposes only.

Netherlands Scheme

The Netherlands Scheme is subject to full actuarial valuation every one to two years. A qualified independent actuary last carried out a full actuarial valuation
at December 31, 2003. At December 31,

---



2003,
the level of funding as a percentage of accrued benefit liabilities was 105% (2002: 104.1%). The total market value of the Netherlands Scheme assets at the last valuation date was
€63.0 million (approximately £44.4 million).

The
Netherlands Scheme was valued using the projected unit method.

Actuarial Assumptions

The principal actuarial assumptions used in the valuations were:

|                                        |  | UBUK Schemes(1) |   | Netherlands Scheme(2) |  
|--------------------------------------- |  | --------------- | - | --------------------- | -
|
|Rate of increase in salaries            |  | 4.3             | % | 4.3                   | %
|Rate of increase in pensions in payment |  | 2.7             | % | 2.8                   | %

---

For the purposes of the requirements of FRS 17, actuarial valuations have been updated to January 1, 2005 for all schemes and also at the
date of acquisition for the Jacob's scheme using the projected unit method. The principal assumptions used by the actuary were:

|                                        |  | Company and Regentrealm |  
|--------------------------------------- |  | ----------------------- | -
|
|UK Schemes                              |  |                         |  
|Rate of increase in salaries            |  | 3.6                     | %
|Rate of increase in pensions in payment |  | 2.4                     | %
|Discount rate                           |  | 5.4                     | %
|Inflation assumption                    |  | 2.6                     | %
|Netherlands Scheme                      |  |                         |  
|Rate of increase in salaries            |  | 3.5                     | %
|Rate of increase in pensions in payment |  | 0.75                    | %
|Discount rate                           |  | 4.5                     | %
|Inflation assumption                    |  | 2.0                     | %

---



The assets in the schemes, the expected rate of return and the net pension deficit and net pension surplus were:

|                                       |  | Company and Regentrealm | 
|-------------------------------------- |  | ----------------------- | 
|
|
|
|Equities                               |  | 8.0%                    | 
|Bonds                                  |  | 4.8%                    | 
|Other assets                           |  | 4.75%                   | 
|                                       |  |                         | 
|Total market value of assets           |  | 7.1%                    | 
|                                       |  |                         | 
|Present value of scheme liabilities    |  |                         | 
|                                       |  |                         | 
|(Deficit)/surplus in the scheme        |  |                         | 
|Related deferred tax asset/(liability) |  |                         | 
|                                       |  |                         | 
|Net pension (deficit)/surplus          |  |                         | 
|                                       |  |                         | 

Company and RegentrealmAt December 28, 2002Long
term rate
of return
expected

UK
Schemes

Netherlands
Scheme(£ million)Equities

7.5%

459.1

20.2Bonds

4.5-5.2%

152.9

20.1Other assets

4.0%

9.0

Total market value of assets

6.9%

621.0

40.3Present value of scheme liabilities



(898.7
)
(40.2
)(Deficit)/surplus in the scheme



(277.7
)
0.1Related deferred tax asset/(liability)



83.3

Net pension (deficit)/surplus



(194.4
)
0.1


---



|                                                                                     |                                                                                  | Company and Regentrealm |      
|------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ----------------------- | -----
|
|
|
|Current service cost                                                                 |                                                                                  | (19.5                   | )    
|Curtailment gain                                                                     |                                                                                  | 0.2                     |      
|Past service cost                                                                    |                                                                                  |                        |      
|                                                                                     |                                                                                  |                         |      
|Total operating charge                                                               |                                                                                  | (19.3                   | )    
|                                                                                     |                                                                                  |                         |      
|Expected return on pension scheme assets                                             |                                                                                  | 49.8                    |      
|Interest on pension scheme liabilities                                               |                                                                                  | (55.8                   | )    
|                                                                                     |                                                                                  |                         |      
|Net (expense)/return                                                                 |                                                                                  | (6.0                    | )    
|                                                                                     |                                                                                  |                         |      
|Actual return less expected return on pension scheme assets                          |                                                                                  | 20.1                    |      
|Experience gains and losses arising on the scheme liabilities                        |                                                                                  | (11.0                   | )    
|                                                                                     | Changes in assumptions underlying in the present value of the scheme liabilities |                         | 25.5 
|                                                                                     |                                                                                  |                         |      
|Actuarial gain/(loss) realized in the statement of total recognized gains and losses |                                                                                  | 34.6                    |      
|                                                                                     |                                                                                  |                         |      
|(Deficit)/surplus in scheme at the beginning of the year                             |                                                                                  | (335.9                  | )    
|Movement in year:                                                                    |                                                                                  |                         |      
|                                                                                     | Deficit in Jacob's schemes at acquisition                                        |                         | (20.1
|                                                                                     | Current service cost                                                             |                         | (19.5
|                                                                                     | Contributions                                                                    |                         | 20.4 
|                                                                                     | Curtailment gain                                                                 |                         | 0.2  
|                                                                                     | Unfunded retirement benefits                                                     |                         | (1.9 
|                                                                                     | Other financial (expense)/income                                                 |                         | (6.0 
|                                                                                     | Actuarial gain/(loss)                                                            |                         | 34.6 
|                                                                                     |                                                                                  |                         |      
|(Deficit)/surplus in scheme at the end of the year                                   |                                                                                  | (328.2                  | )    
|                                                                                     |                                                                                  |                         |      

---



|                                                                               |                                                           | Company and Regentrealm |      
|------------------------------------------------------------------------------ | --------------------------------------------------------- | ----------------------- | -----
|
|
|UK Schemes                                                                     |                                                           |                         |      
|Difference between the actual and expected return on scheme assets:            |                                                           |                         |      
|                                                                               | Amount (£ million)                                        |                         | 20.1 
|                                                                               |                                                           |                         |      
|                                                                               | Percentage of scheme assets                               |                         | 2.4  
|                                                                               |                                                           |                         |      
|Experience gains and losses on scheme liabilities:                             |                                                           |                         |      
|                                                                               | Amount (£ million)                                        |                         | (11.0
|                                                                               |                                                           |                         |      
|                                                                               | Percentage of the present value of the scheme liabilities |                         | 1.0  
|                                                                               |                                                           |                         |      
|Total amount recognized in the statement of total recognized gains and losses: |                                                           |                         |      
|                                                                               | Amount (£ million)                                        |                         | 34.6 
|                                                                               |                                                           |                         |      
|                                                                               | Percentage of the present value of the scheme liabilities |                         | (3.0 
|                                                                               |                                                           |                         |      
|Netherlands Scheme                                                             |                                                           |                         |      
|Difference between the actual and expected return on scheme assets:            |                                                           |                         |      
|                                                                               | Amount (£ million)                                        |                         | (0.8 
|                                                                               |                                                           |                         |      
|                                                                               | Percentage of scheme assets                               |                         | (1.8 
|                                                                               |                                                           |                         |      
|Experience gains and losses on scheme liabilities:                             |                                                           |                         |      
|                                                                               | Amount (£ million)                                        |                         | (0.8 
|                                                                               |                                                           |                         |      
|                                                                               | Percentage of the present value of the scheme liabilities |                         | (1.8 
|                                                                               |                                                           |                         |      
|Total amount recognized in the statement of total recognized gains and losses: |                                                           |                         |      
|                                                                               | Amount (£ million)                                        |                         | (1.8 
|                                                                               |                                                           |                         |      
|                                                                               | Percentage of the present value of the scheme liabilities |                         | (4.1 
|                                                                               |                                                           |                         |      

21    Financial commitments

The Group's financial commitments in respect of finance lease and hire purchase obligations and in respect of retirement benefits are set out in Notes 16 and 17,
respectively, of Notes to the Financial Statements. The Group's financial commitments in respect of capital expenditure and rentals are summarized below:

Company and RegentrealmAt January 1,
2005

At January 3,
2004(£ million)Contracted capital expenditure

2.4

8.3


Annual
rental commitments in respect of operating leases:

|                                    |  | Company and Regentrealm
|----------------------------------- |  | -----------------------
|
|
|
|Expiringwithin one year            |  | 0.6                    
|over one year and under five years |  | 3.8                    
|after five years                   |  | 3.9                    
|                                    |  |                        
|                                    |  | 8.3                    
|                                    |  |                        

---



Total
commitments under non-cancelable operating leases at January 1, 2005 are as follows:

Company and
RegentrealmAt January 1, 2005(£ million)Due within one year

14.9One to two years

12.3Two to three years

8.5Three to four years

6.8Four to five years

6.2Thereafter

64.8113.5


On
January 7, 2004 the Group completed the disposal of its High Wycombe site, where its research and development facility is located. The Group received net proceeds of
£3.9 million, resulting in a gain on sale of £0.8 million, and leased back one-quarter of the site on a 15-year operating lease commencing
on August 23, 2004 at an annual rental of £0.3 million.

Contingent liabilities

On April 17, 2003, the Group signed a put and call option agreement to acquire a company that supplies and distributes crisps and snack products in the
United Kingdom via a van sales force. The terms of the put and call options were updated during 2004. The option agreement provides the Group with security in relation to this route to market,
however, the Group could be required to purchase the business at the other party's discretion at any time. It is anticipated that if the option were to be exercised, the cost of acquisition would not
exceed £15.0 million.

The
Group is involved in multiple lawsuits in France over the "smiley face" trademark used on the miniBNproducts marketed in France.
Mr. Loufrani, a French citizen, claims to have been the registered owner of the trademark since September 27, 1991, the date of his filing with the French trademark
office. Following a number of court hearings, on April 1, 2003, the Group's lawyers asked for the matter to be removed from the list of outstanding cases in view of the fact that a Settlement
Agreement had been proposed. This was agreed to. There was then a two-year timescale in which the case could be reinstated. Mr. Loufrani had the case reinstated with effect from
March 31, 2005. The Group's annual sales of miniBNproducts in 2004 were €15.6 million (approximately
£11.0 million).

In
1997, the Group's operating subsidiary in the Netherlands, Koninklijke Verkade N.V. ("Verkade") initiated negotiations with property developers Dura Vermeer Bouw Amsterdam B.V.
("Dura") to sell its entire factory site located at Zaandam, the Netherlands. No agreement was reached and negotiations ceased. A dispute has arisen whereby Dura claim an agreement was reached, which
under local law was legally binding. The Group's legal advice is that Dura do not have grounds to support their claim that there was a legally binding contract, although there is a risk that the Group
may be liable for certain costs incurred.

The
Group has provided €300,000 (approximately £0.2 million) in respect of the costs of defending the claim and any costs for which there may be a
valid claim. Based on legal advice, Verkade sold its chocolate factory, which is a part of the Zaandam site, to a third party in 2004. Subsequently Dura served a summons on Verkade in
November 2004 for €14 million (approximately £9.9 million). Verkade has filed a defense to the summons and is strongly contesting the claim.

22    Related Party Transactions

The Group entered into an agreement with the Equity Sponsors with respect to the proposed acquisition of the Predecessor. Financing fees totaling
£23.3 million were payable in respect of this agreement to these parties in consideration of their services in connection with the UB acquisition, its financing and related
transactions. Under the agreement, fees of £6.0 million are payable to Cinven

---



Limited,
£6.0 million to PAI, £3.1 million to DB Capital Partners, and £8.2 million to Nabisco. All fees had been paid by December 29,
2001.

Under
the sublicense entered into with Merola Finance B.V., a licensee of Nabisco, the Group was charged a royalty of £2.5 million in respect of the year ended
January 1, 2005 (2003: £2.3 million). At January 1, 2005, the Group owed Merola Finance B.V. £0.2 million (2003: £0.3 million).

Except
as otherwise disclosed in these financial statements, there were no transactions during the year with the Group's joint ventures or other related parties, which were material
either to the Group or the counter party and which are required to be disclosed under the provisions of Financial Reporting Standard 8 "Related Party Transactions."

Amounts
due to Runecorp, the immediate parent company, by the Company, and to the Company by Regentrealm, falling due after more than one year comprise:

|                                           |                                                | Company |       | Regentrealm
|------------------------------------------ | ---------------------------------------------- | ------- | ----- | -----------
|
|
|Amounts due to Runecorp                    |                                                |         |       |            
|                                           | Loans                                          |         | 855.3 |            
|                                           | Accrued interest (payable on maturity in 2049) |         | 67.1  |            
|                                           |                                                |         |       |            
|                                           |                                                | Total   |       | 922.4      
|                                           |                                                |         |       |            
|Amounts due to United Biscuits Finance plc |                                                |         |       |            
|                                           | Loans                                          |         |       |            
|                                           | Accrued interest                               |         |       |            
|                                           |                                                |         |       |            
|                                           |                                                | Total   |       |            
|                                           |                                                |         |       |            

CompanyAmounts due to Runecorp of £922.4 million principally represent loans granted by Runecorp's parent
companies, Deluxestar Limited and Solvecorp Limited, in favor of Runecorp, the proceeds from which have been passed down to the Company plus accrued interest thereon.

The
terms of these loans, which are broadly mirrored in the terms of the loans granted by Runecorp to the Company, are as follows:



---





Interest is accrued on the loans in line with the discount factors applied at inception. Each year on the anniversary of the grant date, all accrued interest is rolled-up
into the principal balance outstanding. All principal and accrued interest is payable on maturity of the loans in 2049.

RegentrealmAmounts
due to United Biscuits Finance plc of £1,231.5 million represent the proceeds of loans granted to Runecorp which have been passed down
to Regentrealm by its direct parent, United Biscuits Finance plc plus accrued interest thereon, as discussed above, and proceeds from the Senior Subordinated Notes issued by United Biscuits Finance
plc, which were passed down to Regentrealm. Interest payable and repayment terms of the corresponding loan to Regentrealm are in line with those applicable to the Senior Subordinated Notes, as
discussed in Note 16 of Notes to the Financial Statements.

23    Companies Act 1985

These financial statements do not comprise the statutory accounts of the Company or Regentrealm within the meaning of section 240 of the Companies Act 1985
of Great Britain. Statutory accounts of the Company and Regentrealm for the 53 weeks ended January 3, 2004 and for the 52 weeks ended December 28, 2002 on which the auditors gave
unqualified opinions have been delivered to the Registrar of Companies for England and Wales. The auditors have given unqualified opinions on the statutory accounts of the Company and Regentrealm for
the 52 weeks ended January 1, 2005 which have not yet been delivered to the Registrar of Companies for England and Wales.

24    Ultimate Holding Company

The Company's and Regentrealm's ultimate U.K. parent undertaking is United Biscuits Group (Investments) Limited. The Company and Regentrealm are included in its
consolidated financial statements, copies of which are available from its registered office: Hayes Park, Hayes End Road, Hayes, Middlesex UB4 8EE.

In
the directors' opinion, the Company and Regentrealm's ultimate parent undertaking is United Biscuits (Equity) Limited which is incorporated in the Cayman Islands.

25    Difference between United Kingdom and United States generally accepted accounting principles

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United Kingdom ("U.K. GAAP") which differ in
certain respects from those generally accepted in the United States ("U.S. GAAP"). The significant differences applicable in the determination of loss attributable to shareholders, comprehensive loss
and shareholder's deficit are described below.

Tangible Fixed Assets

Under U.K. GAAP, provisions for impairment of tangible fixed assets are included in depreciation.

Under
U.S. GAAP, amounts relating to the impairment of tangible fixed assets are deducted from cost.

Under
U.K. GAAP and U.S. GAAP the carrying value of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be
recoverable.

Goodwill

Under U.K. GAAP, goodwill arising on acquisitions is capitalized and amortized over its estimated useful life up to a maximum of 20 years.

Under
U.S. GAAP, goodwill purchased prior to 2002 was capitalized and amortized over its estimated useful life. For the purposes of the reconciliations below, the Company and Regentrealm
adopted Statement of Financial Accounting Standards 142 "Goodwill and Other Intangible Assets,"

---



("SFAS 142")
for the year ended December 28, 2002. SFAS 142 requires that goodwill is not amortized over its estimated useful life, but instead is tested at least annually for
impairment following a two step process. The first step is a screen for potential impairment, with the second step measuring the amount of impairment if any. The Company and Regentrealm performed the
review at the start of the financial year (December 30, 2001) and at the end of the third quarters of 2002 (October 5, 2002), and 2003 (October 4, 2003) and 2004
(October 9, 2004). There was no impairment charge resulting from these tests in 2003 and 2004. In 2002, under both U.K. GAAP and U.S. GAAP a £4.2 million impairment was
recognized in the year. Adjustments made to goodwill within the "allocation" period under U.K. GAAP, but not permitted, due to the shorter "allocation" period under U.S. GAAP, are included within the
result for the year.

Pension costs

In accordance with FRS17, the operating and financing costs of pension and post-retirement plans are recognized separately in the profit and loss
account. Service costs are systematically spread over the service lives of the employees and financing costs are recognized in the period in which they arise. Financing costs include the interest cost
and the expected return on assets (calculated using the market value of assets). The costs of past service benefit enhancements, settlements and curtailments are also recognized in the period in which
they arise. The differences between actual and expected returns on assets during the year, including changes in actuarial assumptions, are recognized in the statement of total recognized gains and
losses. The surplus or deficit in the plans is reported within the Group's net liabilities.

Under
U.S. GAAP, SFAS No. 87Employers' Accounting for Pensions, the current service cost, the interest cost and the expected return on assets are all charged (or
credited) to operating profit. The difference between actual and expected returns on assets during the year, including changes in actuarial assumptions, are amortized through operating profit over the
average remaining service lives of the employees. Unfunded accrued or prepaid pension costs must be recognized where the unfunded accumulated benefit obligation (being the actuarial present value of
benefits attributed by the pension benefit formula to employee service rendered prior to that date and based on current and past compensation levels) exceeds the fair value of plan assets, an
additional liability must also be recognized. If this liability exceeds the unrecognized prior service cost, the excess is recorded as an increase to Shareholder's deficit, net of tax.

For
the purpose of the reconciliations below, the Group adopted the provisions of Statement of Financial Accounting Standards 87 "Employers' Accounting for Pensions," ("SFAS 87"), with
respect to its pension plans from January 3, 1999. The Group did not implement SFAS 87 as of its effective date
for non-US pension plans (fiscal years beginning after December 15, 1988) due to the unavailability of actuarial data. Accordingly, a portion of the transition asset at
January 3, 1999 was allocated to shareholder's equity based on a ratio of 10/18 for the Pension Plan and 10/21 for the Supplemental Scheme.

Restructuring costs

Included within provisions for liabilities and charges of the Group under U.K. GAAP are amounts which relate to the restructuring and reorganization of certain of
the Group's operations.

Under
U.K. GAAP, a provision for restructuring costs is recognized when an entity has a present obligation, either legal or constructive, as a result of a past event, it is probable that
a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Generally, this requires management to have committed to
a restructuring plan, for the plan to be communicated to employees and for actions required to complete the plan to indicate it is unlikely there will be significant changes to the plan or that the
plan will be withdrawn. In particular, the plan should include the expected completion date, the number of employees to be terminated, their roles and locations and the terms of the benefit
arrangements that employees will receive upon termination in sufficient detail to enable employees to determine the type and amount of benefits they will receive if they are terminated.

---



U.S.
GAAP requires a liability for a cost associated with an exit or disposal plan, which may relate to a restructuring, discontinued operations, a plant closing or other exit or
disposal activity, to be recognized and measured at fair value when the liability is incurred. Therefore, under U.S. GAAP commitment to a plan, by itself, does not create a present obligation to
others that meets the definition of a liability.

The
timing of recognition of termination benefits is dependent on meeting the criteria for U.K. GAAP, but also whether employees will be required to continue to render services beyond a
minimum retention period. If employees are not required to render service until they are terminated in order to receive termination benefits or if they will not be retained to render service beyond
the minimum retention period, a liability for the termination benefits is recognized and measured at its fair value at the date of the communication.

Other
costs associated with an exit or disposal plan are simply recognized when they are incurred, which is normally when the goods or services associated with the activity are received.

During
2003, the Group initiated a major restructuring project when it announced the closure of its biscuit factory at Ashby-de-la-Zouch, part of the
UK segment. The closure and consequent relocation of production to other sites improved factory utilization across the UK business and supported growth of priority brands. The total income statement
charge in relation to this closure was approximately £33 million.

In
relation to this closure, during 2003, an impairment charge was recognized in relation to the factory site and plant and machinery of £10.8 million, under both U.K.
GAAP and U.S. GAAP. Further charges of £18.6 million under U.K. GAAP and £10.1 million for U.S. GAAP purposes, were made in relation to anticipated termination
costs, project management, production relocation and other similar costs related to the closure. During 2004, a further £3.6 million of costs were charged to operating exceptional
items under U.K. GAAP, while £12.1 million was charged under U.S. GAAP reflecting timing differences in recognition of the liabilities. The closure was completed by the end of 2004.

During
2004 under U.K. GAAP a charge of £3.8 million in relation to the sale of the Benelux snacks business was reflected in the profit and loss account. Under U.S.
GAAP an amount of £0.3 million in relation to termination payments to employees due to be terminated, during 2005, who have been required to render services through the period since
disposal until termination has been excluded in arriving at net loss.

Deferred Taxation

Under U.K. GAAP, provision is made for deferred taxation in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with certain exceptions.

Under
U.S. GAAP, provision for deferred taxation is made using the full liability method on all temporary differences between the book and tax bases of assets and liabilities. Deferred
taxation assets under U.S. GAAP would be recognized only to the extent that it is more likely than not that they will be realized.

Exceptional items

Items classified as exceptional under U.K. GAAP and reported after operating profit would be included in the determination of operating profit or in other
income/expense under U.S. GAAP. This difference in classification does not affect net income.

Debt issue costs

Under U.K. GAAP, debt issue costs are deducted from the related debt amounts and amortized over the life of the debt.

---



Under
U.S. GAAP, debt issue costs are carried as current or non-current assets, as appropriate, and amortized over the life of the debt.

Joint ventures

Under U.K. GAAP, the Group's interest in joint ventures is accounted for using the "gross equity method of accounting". Under this method of accounting, the
Group's share of turnover, operating profit, interest and taxation of its joint ventures is included in the appropriate captions in the consolidated profit and loss account, and its investment in
joint ventures is presented on the consolidated balance sheet analyzed between its share of gross assets and gross liabilities.

Under
U.S. GAAP, the Group's share of after tax profits would be reflected as a single line item before minority interest and the investment in joint ventures would be reflected as a
single line item on the consolidated balance sheet. This difference in presentation would have no impact on net loss or shareholder's equity/(deficit).

Accounting for derivatives

For the purposes of the reconciliations below, the Company and Regentrealm adopted Statement of Financial Accounting Standards 133 "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS 133") on December 31, 2000.

Derivative
financial instruments are initially recognized on the balance sheet at cost and are remeasured to their fair value at subsequent reporting dates. The method of recognizing the
resulting gain or loss is dependent on whether the derivative contract qualifies for hedge accounting.

All
of the Group's hedges that qualify for hedge accounting are cash flow hedges. Changes in the fair value of derivatives that are designated and effective as hedges of future cash
flows relating to firm commitments and forecasted transactions are recognized in accumulated other comprehensive income. If the hedged firm commitment or forecasted transaction results in the
recognition of an asset or liability, the gains or losses previously included in accumulated other comprehensive income are included in the initial measurement of the asset or liability. For hedges
that do not result in the recognition of an asset or liability, amounts deferred in accumulated other comprehensive income are recognized in earnings in the same period in which the firm commitment or
forecasted transaction affects earnings.

Certain
derivative instruments, while providing effective economic hedges under the Group's policies, do not qualify for hedge accounting. Changes in the fair value of any derivative
instruments that do not qualify for cash flow hedge accounting are recognized immediately in earnings.

At
the inception of the transaction the Group documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for
undertaking hedge transactions. This process includes linking all derivatives designated as hedges to specific firm commitments or forecasted transactions. The Group also documents its assessment,
both at the hedge inception and on an ongoing basis, as to whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of hedged items.

Hedge
accounting is discontinued when the hedging instrument expires or is terminated, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the
hedging instrument recognized in accumulated other comprehensive income remains in accumulated other comprehensive income until the forecasted transaction occurs. If a hedged transaction is no longer
expected to occur, the cumulative gain or loss recognized in accumulated other comprehensive income is transferred to earnings immediately.

The
Group's forward foreign exchange contracts do not qualify for hedge accounting under the provisions of SFAS 133. Accordingly, the Company and Regentrealm recorded a cumulative
effect of a change in accounting principle amounting to £0.9 million, net of income taxes, as an adjustment to net income in the 52 weeks ended December 29, 2001. The fair
value of the Company's and Regentrealm's

---



forward
foreign exchange contracts at January 1, 2005 of £0.1 million (2003: £0.9 million) is recorded in other current assets, and the change in their
fair value during the 52 weeks ended January 1, 2005 of £1.0 million (£0.4 million for the 53 weeks ended January 3, 2004,
£0.8 million for the 52 weeks ended December 28, 2002) is charged to net loss for the period. The maximum length of time over which the Company and Regentrealm hedge the
exposure to variability in future cash flows for forecasted transactions is 12 months.

As
of December 31, 2000, all of the Company's and Regentrealm's floating rate to fixed rate interest rate swaps were designated as cash flow hedges. During the 52 weeks ended
January 1, 2005, unrealized net gains totaling £1.0 million, after taxes, were recorded in other comprehensive income (2003: unrealized net gains totaling
£3.7 million, 2002: unrealized losses totaling £1.1 million). It is expected that £0.9 million of this will be reclassified to earnings within
the next 12 months. The hedges are considered to be fully effective as the critical terms match exactly.

The
fair value of the Company's and Regentrealm's interest rate swaps of £1.4 million (2003: £2.9 million) of which £0.2 million
(2003:£2.9 million) is recorded as other non-current liabilities and £1.2 million (2003:nil) as current liabilities.

The
Group's commodity contracts do not qualify as hedges under the provisions of SFAS 133. The fair value of the Company's and Regentrealm's commodity contracts at
January 1, 2005 of £0.3 million is recorded in current liabilities (January 3, 2004: £1.1 million current assets), and the change in fair value
during the 52 weeks ended January 1, 2005 of £1.4 million is debited to net loss for the period (credited to net loss 2003: £0.8 million, 2002:
£0.3 million).

Neither
the Company nor Regentrealm had any fixed rate to floating rate interest rate swaps.

Discontinued Operations

Under U.K. GAAP the results of operations arising from discontinued operations are presented in the profit and loss account under the relevant captions and the
profit or loss on disposal is reported on a separate line item after operating profit and before interest.

Under
U.S. GAAP the results of operations from discontinued operations and the profit and loss on their disposal are reported as separate line items immediately before net income.

Accounting for the impairment or disposal of long-lived assets

For the purposes of the reconciliation below, the Company and Regentrealm adopted Statement of Financial Accounting Standard 144 "Accounting for the Impairment or
Disposal of Long-lived Assets," ("SFAS 144") in the financial statements for the year ended December 28, 2002. SFAS 144 superseded Statement of Financial Accounting
Standard 121 "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of," ("SFAS 121"). Although SFAS 144 retained many of
the recognition and measurement provisions of SFAS 121, it significantly changed the criteria that have to be met in order to classify long-lived assets as
held-for-sale, and excluded goodwill and intangible assets not being amortized from its impairment provisions.

Business Combinations

During 2004, the Group acquired Jacob's and Triunfo and under UK GAAP recognized intangible assets (purchased brands) of £110.3 million and
goodwill of £96.7 million on acquisition.





---











Accounting for certain sales incentives and consideration paid to resellers

For the purpose of the reconciliations below, the Company and Regentrealm adopted the provisions of the Emerging Issues Task Force (EITF) Issue
No. 00-14, "Accounting for Certain Sales Incentives," and EITF Issue No. 00-25, "Vendor Income Statement Characterization of Consideration Paid to a Reseller of
the Vendor's products," (codified in EITF Issue No. 01-09) for the year ended December 28, 2002. The impact on the financial statements of the Company and Regentrealm
resulting from the application of these requirements is to reduce turnover and reduce distribution, selling and marketing costs by the amount of "slotting fees" paid to retailers, some of which under
U.K. GAAP have been included in distribution, selling and marketing costs.

In
the year ended January 1, 2005 the amount of this reclassification was £37.2 million (2003: £34.1 million, 2002:
£29.9 million).

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities"
("FIN 46"). Variable interest entities ("VIEs") are entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders
lack adequate decision-making ability based on criteria set forth in the interpretation. As at January 1, 2005 and January 3, 2004, the Group had no VIEs.

---



Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires a guarantor to recognize a liability, at inception of the guarantee, for the fair value of obligations it has undertaken in issuing the
guarantee and also requires more detailed disclosures with respect to guarantees. FIN 45 is effective for guarantees issued or modified after December 31, 2002 and requires additional
disclosures for existing guarantees. As at January 1, 2005 and January 3, 2004, the Group had no guarantees in place to which FIN 45 refers.

Profit /(loss) on Disposal of Fixed Assets

Under U.K. GAAP profit/(loss) on disposal of fixed assets is presented as a non-operating profit/(loss).

Under
U.S. GAAP profit or loss on disposal of fixed assets is presented as a component of operating profit.

Reconciliation statements

The following statements provide reconciliations between the loss attributable to shareholder under U.K. GAAP and net loss under U.S. GAAP and between
shareholder's deficit under U.K. GAAP and shareholder's deficit under U.S. GAAP, as well as showing comprehensive loss under U.S. GAAP.

---



Net loss

|                                                                                                         |                                                  | Company |      
|-------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------- | -----
|
|
|Loss attributable to shareholder as reported in the consolidated profit and loss account under U.K. GAAP |                                                  | (126.5  | )    
|Adjustments:                                                                                             |                                                  |         |      
|                                                                                                         | Pension costs                                    |         | (3.8 
|                                                                                                         | Amortization of goodwill                         |         | 37.7 
|                                                                                                         | (Loss)/gain on commodity contracts               |         | (1.4 
|                                                                                                         | Profit/(loss) on forward currency contracts      |         | 1.0  
|                                                                                                         | Restructuring costs                              |         | (4.2 
|                                                                                                         | Stock value adjustment on acquisition of Jacob's |         | (2.5 
|                                                                                                         | Deferred taxationmethodology                    |         | 0.1  
|                                                                                                         | on pension
adjustments                          |         | 1.1  
|                                                                                                         | on other
adjustments                            |         | (0.4 
|                                                                                                         |                                                  |         |      
|Net loss in accordance with U.S. GAAP                                                                    |                                                  | (98.9   | )    
|                                                                                                         |                                                  |         |      
|Arising from:                                                                                            |                                                  |         |      
|                                                                                                         | Continuing operations                            |         | (97.0
|                                                                                                         | Discontinued operationsresult for the year      |         | (1.9 
|                                                                                                         | Cumulative effect on adoption of SFAS 142        |         |     
|                                                                                                         |                                                  |         |      
|                                                                                                         | Net loss                                         |         | (98.9
|                                                                                                         |                                                  |         |      

|                                                                                                         |                                                  | Regentrealm |      
|-------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------- | -----
|
|
|Loss attributable to shareholder as reported in the consolidated profit and loss account under U.K. GAAP |                                                  | (126.2      | )    
|Adjustments:                                                                                             |                                                  |             |      
|                                                                                                         | Pension costs                                    |             | (3.8 
|                                                                                                         | Amortization of goodwill                         |             | 37.7 
|                                                                                                         | (Loss)/gain on commodity contracts               |             | (1.4 
|                                                                                                         | Profit/(loss) on forward currency contracts      |             | 1.0  
|                                                                                                         | Restructuring costs                              |             | (4.2 
|                                                                                                         | Stock value adjustment on acquisition of Jacob's |             | (2.5 
|                                                                                                         | Deferred taxationmethodology                    |             | 0.1  
|                                                                                                         | on pension
adjustments                          |             | 1.1  
|                                                                                                         | on other
adjustments                            |             | (0.4 
|                                                                                                         |                                                  |             |      
|Net loss in accordance with U.S. GAAP                                                                    |                                                  | (98.6       | )    
|                                                                                                         |                                                  |             |      
|Arising from:                                                                                            |                                                  |             |      
|                                                                                                         | Continuing operations                            |             | (96.7
|                                                                                                         | Discontinued operationsresult for the year      |             | (1.9 
|                                                                                                         | Cumulative effect on adoption of SFAS 142        |             |     
|                                                                                                         |                                                  |             |      
|                                                                                                         | Net loss                                         |             | (98.6
|                                                                                                         |                                                  |             |      

---



Comprehensive loss

Comprehensive loss under U.S. GAAP is as follows:

|                                                                                                                                                |                                                                                                             | Company |    
|----------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ------- | ---
|
|
|Net loss under U.S. GAAP                                                                                                                        |                                                                                                             | (98.9   | )  
|Other comprehensive income foreign exchange translation adjustments, net of tax effect of £1.1 million (2003: £0.5 million, 2002: £0.2 million) |                                                                                                             | (2.4    | )  
|Interest rate swaps                                                                                                                             |                                                                                                             |         |    
|                                                                                                                                                | Gain/(loss) arising in the year, net of tax effect of £0.5 million (2003: £1.6 million, 2002: £0.5 million) |         | 1.0
|Additional pension liability adjustment net of tax effect of £10.2 million (2003: £9.2 million, 2002: £65.5 million)                            |                                                                                                             | 23.8    |    
|                                                                                                                                                |                                                                                                             |         |    
|Comprehensive loss                                                                                                                              |                                                                                                             | (76.5   | )  
|                                                                                                                                                |                                                                                                             |         |    

|                                                                                                                                                |                                                                                                             | Regentrealm |    
|----------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ----------- | ---
|
|
|Net loss under U.S. GAAP                                                                                                                        |                                                                                                             | (98.6       | )  
|Other comprehensive income foreign exchange translation adjustments, net of tax effect of £1.1 million (2003: £0.5 million, 2002: £0.2 million) |                                                                                                             | (2.4        | )  
|Interest rate swaps                                                                                                                             |                                                                                                             |             |    
|                                                                                                                                                | Gain/(loss) arising in the year, net of tax effect of £0.5 million (2003: £1.6 million, 2002: £0.5 million) |             | 1.0
|Additional pension liability adjustment net of tax effect of £10.2 million (2003: £9.2 million, 2002: £65.5 million)                            |                                                                                                             | 23.8        |    
|                                                                                                                                                |                                                                                                             |             |    
|Comprehensive loss                                                                                                                              |                                                                                                             | (76.2       | )  
|                                                                                                                                                |                                                                                                             |             |    

---



Movements in accumulated comprehensive loss are as follows:

|                                                                           |                                                             | Company and Regentrealm |     
|-------------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------- | ----
|
|
|At December 30, 2001                                                       |                                                             | (8.7                    | )   
|Interest rate swaps:                                                       |                                                             |                         |     
|                                                                           | Loss arising in the year, net of tax effect of £0.5 million |                         |    
|Other comprehensive income                                                 |                                                             |                         |     
|                                                                           | Gain arising in the year, net of tax effect of £0.2 million |                         | 0.6 
|Additional pension liability adjustment net of tax effect of £65.5 million |                                                             |                        |     
|                                                                           |                                                             |                         |     
|At December 28, 2002                                                       |                                                             | (8.1                    | )   
|Interest rate swaps:                                                       |                                                             |                         |     
|                                                                           | Gain arising in the year, net of tax effect of £1.6 million |                         |    
|Other comprehensive income                                                 |                                                             |                         |     
|                                                                           | Gain arising in the year, net of tax effect of £0.5 million |                         | 1.3 
|Additional pension liability adjustment net of tax effect of £9.2 million  |                                                             |                        |     
|                                                                           |                                                             |                         |     
|At January 3, 2004                                                         |                                                             | (6.8                    | )   
|Interest rate swaps:                                                       |                                                             |                         |     
|                                                                           | Gain arising in the year, net of tax effect of £0.5 million |                         |    
|Other comprehensive income                                                 |                                                             |                         |     
|                                                                           | Loss arising in the year, net of tax effect of £1.1 million |                         | (2.4
|Additional pension liability adjustment net of tax effect of £10.2 million |                                                             |                        |     
|                                                                           |                                                             |                         |     
|                                                                           | At January 1, 2005                                          |                         | (9.2
|                                                                           |                                                             |                         |     

---



Shareholder's deficit

|                                                                                    |                                                      | Company                    |       | Regentrealm |      
|----------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------------- | ----- | ----------- | -----
|
|
|Shareholder's deficit as reported in the consolidated balance sheet under U.K. GAAP |                                                      | (748.2                     | )     | (641.2      | )    
|                                                                                    |                                                      |                            |       |             |      
|Adjustments:                                                                        |                                                      |                            |       |             |      
|                                                                                    | Intangible fixed assetsgoodwill                     |                            |       |             |      
|                                                                                    |                                                      | Cost                       |       | (59.8       | )    
|                                                                                    |                                                      | Amortization               |       | 173.2       |      
|                                                                                    |                                                      |                            |       |             |      
|                                                                                    |                                                      | Net                        |       | 113.4       |      
|                                                                                    |                                                      |                            |       |             |      
|Current assets                                                                      |                                                      |                            |       |             |      
|                                                                                    | Deferred debt issue costscurrent portion            |                            | 3.1   |             | 1.7  
|                                                                                    | Fair value of commodity contracts                    |                            |      |             | 1.1  
|                                                                                    | Fair value of derivativesforward currency contracts |                            | 0.1   |             |     
|Non-current assets:                                                                 |                                                      |                            |       |             |      
|                                                                                    | Deferred debt issue costs                            |                            | 15.4  |             | 8.5  
|                                                                                    | Pensionsprepaid benefit cost                        |                            | 7.5   |             | 5.8  
|Creditors: amounts falling due within one year:                                     |                                                      |                            |       |             |      
|                                                                                    | Loans, overdrafts and finance lease obligations      |                            | (2.0  | )           | (1.7 
|                                                                                    | Current liabilitiespremium on debt issue            |                            | (1.1  | )           |     
|                                                                                    | Fair value of derivatives:                           |                            |       |             |      
|                                                                                    |                                                      | Commodity contracts        |       | (0.3        | )    
|                                                                                    |                                                      | Interest rate swaps        |       | (1.2        | )    
|Creditors: amounts falling due after more than one year:                            |                                                      |                            |       |             |      
|                                                                                    | Loans and finance lease obligations                  |                            | (9.7  | )           | (8.5 
|                                                                                    | Long-term liabilitiespremium on debt issue          |                            | (5.7  | )           |     
|                                                                                    | Fair value of derivatives:                           |                            |       |             |      
|                                                                                    |                                                      | Forward currency contracts |       |            |      
|                                                                                    |                                                      | Interest rate swaps        |       | (0.2        | )    
|Pensionsaccrued benefit liability                                                  |                                                      | 67.8                       |       | 73.6        |      
|Provisions for liabilities and charges                                              |                                                      | 0.3                        |       | 8.5         |      
|Deferred taxation:                                                                  |                                                      |                            |       |             |      
|                                                                                    | methodology                                          |                            | 1.1   |             | 1.0  
|                                                                                    | on pension adjustments                               |                            | (22.6 | )           | (23.9
|                                                                                    | on other adjustments                                 |                            | 3.8   |             | 1.0  
|                                                                                    |                                                      |                            |       |             |      
|Shareholder's deficit in accordance with U.S. GAAP(1)                               |                                                      | (578.5                     | )     | (504.7      | )    
|                                                                                    |                                                      |                            |       |             |      

---

---



Consolidated statement of cash flows

The consolidated statement of cash flows prepared under U.K. GAAP presents substantially the same information as that required under U.S. GAAP but may differ,
however, with regard to classification of items within the statements and as regards the definition of cash under U.K. GAAP and cash and cash equivalents under U.S. GAAP.

Under
U.S. GAAP, cash and cash equivalents include short-term highly liquid investments but do not include bank overdrafts. Under U.K. GAAP, cash flows are presented
separately for operating activities, returns on investments and servicing of finance, taxation, capital expenditure
and financial investment, acquisitions and disposals, dividends and management of liquid resources and financing. U.S. GAAP, however, requires only three categories of cash flow activity to be
reported: operating, investing and financing. Cash flows from taxation and returns on investments and servicing of finance shown under U.K. GAAP would be included as operating activities under U.S.
GAAP. Under U.K. GAAP all interest is treated as part of returns on investments and servicing of finance. Under U.S. GAAP capital expenditure and financial investment and acquisitions are reported
within investing activities.

The
categories of cash flow activity under U.S. GAAP can be summarized as follows:

|                                                    |                     | Company |     
|--------------------------------------------------- | ------------------- | ------- | ----
|
|
|Cash inflow from operating activities               |                     | 67.1    |     
|Net cash outflow from investing activities          |                     | (277.9  | )   
|Net cash inflow/(outflow) from financing activities |                     | 256.1   |     
|                                                    |                     |         |     
|Increase/(decrease) in cash and cash equivalents    |                     | 45.3    |     
|Effect of foreign exchange rate changes             |                     | 0.9     |     
|Cash and cash equivalents at:                       |                     |         |     
|                                                    | Beginning of period |         | 31.4
|                                                    |                     |         |     
|                                                    | End of period       |         | 77.6
|                                                    |                     |         |     

|                                                    |                     | Regentrealm |     
|--------------------------------------------------- | ------------------- | ----------- | ----
|
|
|Cash inflow from operating activities               |                     | 67.1        |     
|Net cash outflow from investing activities          |                     | (202.9      | )   
|Net cash inflow/(outflow) from financing activities |                     | 181.1       |     
|                                                    |                     |             |     
|Increase/(decrease) in cash and cash equivalents    |                     | 45.3        |     
|Effect of foreign exchange rate changes             |                     | 0.9         |     
|Cash and cash equivalents at:                       |                     |             |     
|                                                    | Beginning of period |             | 31.4
|                                                    |                     |             |     
|                                                    | End of period       |             | 77.6
|                                                    |                     |             |     

---



Additional information required by U.S. GAAP in respect of pension costs

|                                                                                                                         |  | Company and Regentrealm |  
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | -
|
|
|
|Benefit obligation at beginning of period                                                                                |  | 1,055.9                 |  
|Jacob's schemes' benefit obligation at acquisition                                                                       |  | 116.6                   |  
|Service cost                                                                                                             |  | 20.4                    |  
|Interest cost                                                                                                            |  | 57.6                    |  
|Employee contributions                                                                                                   |  | 6.0                     |  
|Expenses                                                                                                                 |  | (1.2                    | )
|Unfunded retirement benefits                                                                                             |  | 1.9                     |  
|Actuarial (gain)/loss                                                                                                    |  | (39.5                   | )
|Benefits paid                                                                                                            |  | (48.7                   | )
|                                                                                                                         |  |                         |  
|Benefit obligation at end of period                                                                                      |  | 1,169.0                 |  
|                                                                                                                         |  |                         |  
|Market value of assets at beginning of period                                                                            |  | 687.3                   |  
|Market value of Jacob's schemes' assets at acquisition                                                                   |  | 95.0                    |  
|Employer contributions                                                                                                   |  | 20.4                    |  
|Employee contributions                                                                                                   |  | 6.0                     |  
|Benefits paid                                                                                                            |  | (48.7                   | )
|Expenses                                                                                                                 |  | (1.2                    | )
|Actual investment return                                                                                                 |  | 69.9                    |  
|                                                                                                                         |  |                         |  
|Market value of assets at end of period                                                                                  |  | 828.7                   |  
|                                                                                                                         |  |                         |  
|Funded status                                                                                                            |  | (340.3                  | )
|Unrecognized net loss                                                                                                    |  | 369.6                   |  
|Unrecognized prior service cost                                                                                          |  | 5.5                     |  
|                                                                                                                         |  |                         |  
|Net amount recognized                                                                                                    |  | 34.8                    |  
|                                                                                                                         |  |                         |  
|Amounts recognized in the balance sheet consist of:                                                                      |  |                         |  
|Prepaid benefit costs                                                                                                    |  | 5.5                     |  
|Accrued benefit liability                                                                                                |  | (265.9                  | )
|Accumulated comprehensive loss                                                                                           |  | 295.2                   |  
|                                                                                                                         |  |                         |  
|Net amount recognized                                                                                                    |  | 34.8                    |  
|                                                                                                                         |  |                         |  
|The aggregated funded status of pension plans can be analyzed as follows:                                                |  |                         |  
|For plans with projected benefit obligation in excess plan assets:                                                       |  |                         |  
|Aggregate projected benefit obligation                                                                                   |  | 1,169.0                 |  
|Aggregate fair value of plan assets                                                                                      |  | 828.7                   |  
|The aggregate amounts for plans in which accumulated benefit obligations exceeds plan assets can be analyzed as follows: |  |                         |  
|Aggregate accumulated benefit obligations                                                                                |  | 975.5                   |  
|Aggregate fair value of plan assets                                                                                      |  | 730.6                   |  

---



|                                                    |  | Company and Regentrealm |  
|--------------------------------------------------- |  | ----------------------- | -
|
|
|
|Benefit obligation at beginning of period           |  | 42.3                    |  
|Service cost                                        |  | 0.5                     |  
|Interest cost                                       |  | 2.0                     |  
|Expenses                                            |  | (2.6                    | )
|Actuarial loss/(gain)                               |  | 1.0                     |  
|Benefits paid                                       |  |                        |  
|Foreign exchange                                    |  | 0.2                     |  
|                                                    |  |                         |  
|Benefit obligation at end of period                 |  | 43.4                    |  
|                                                    |  |                         |  
|Market value of assets at beginning of period       |  | 44.4                    |  
|Employer contributions                              |  | 0.4                     |  
|Benefits paid                                       |  | (2.7                    | )
|Expenses                                            |  |                        |  
|Actual investment return                            |  | 1.7                     |  
|Foreign exchange                                    |  | 0.2                     |  
|                                                    |  |                         |  
|Market value of assets at end of period             |  | 44.0                    |  
|                                                    |  |                         |  
|Funded status                                       |  | 0.6                     |  
|Unrecognized net loss                               |  | 7.5                     |  
|                                                    |  |                         |  
|Net amount recognized                               |  | 8.1                     |  
|                                                    |  |                         |  
|Amounts recognized in the balance sheet consist of: |  |                         |  
|Prepaid benefit costs                               |  | 8.1                     |  
|Accrued benefit liability                           |  |                        |  
|                                                    |  |                         |  
|Net amount recognized                               |  | 8.1                     |  
|                                                    |  |                         |  

The principal assumptions used in calculating the income statement charge were as follows:

|                         |  | Company and Regentrealm
|------------------------ |  | -----------------------
|
|
|UK Schemes               |  |                        
|Rate of return on assets |  | 7.2                    
|Discount rate            |  | 5.4                    
|Future salary increases  |  | 3.6                    
|Future pension increase  |  | 2.4                    
|Netherlands Scheme       |  |                        
|Rate of return on assets |  | 5.0                    
|Discount rate            |  | 4.5                    
|Future salary increases  |  | 3.5                    
|Future pension increase  |  | 0.75                   

---



Pension expense comprises:

|                                   |  | Company and Regentrealm |   | Company and Regentrealm |  
|---------------------------------- |  | ----------------------- | - | ----------------------- | -
|
|
|
|Service cost                       |  | 20.4                    |   | 17.1                    |  
|Interest cost                      |  | 57.6                    |   | 50.3                    |  
|Expected return on plan asset      |  | (59.8                   | ) | (55.7                   | )
|Amortization of prior service cost |  | 0.4                     |   | 0.4                     |  
|Amortization of net loss           |  | 10.4                    |   | 1.9                     |  
|                                   |  |                         |   |                         |  
|Pension expense/(income)           |  | 29.0                    |   | 14.0                    |  
|                                   |  |                         |   |                         |  

On December 23, 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards 132 (revised
2003), "Employee Disclosures about Pensions and Other Post-retirement Benefits, an amendment of FASB Statements 87, 88 and 106, and a revision of FASB Statement 132. This requires the
following additional information for the UK Schemes:

Cash flows

The Group anticipates contributing approximately £22.4 million to its UK Schemes in 2005.

Plan assets

The Groups' UK Schemes' weighted average allocations at January 1, 2005 and January 3, 2004, and target allocations by asset category at
January 1, 2005, were as follows:

Target
Allocation

Percentage of UK Schemes
AssetsJanuary 1,
2005

January 1,
2005

January 3,
2004percentageAsset CategoryEquity securities

75

74

77Debt securities

25

25

22Other assets



1

1100

100

100


Long-term
policy targets are set by the UK Schemes' investment fund trustees based upon current market and economic environments, actual asset allocation may periodically
deviate from policy targets as determined by the UK Schemes' investment fund trustees.

Assumptions

The following are the principal actuarial assumptions, used for calculating the January 1, 2005 and January 3, 2004 funded status of the UK Schemes:

Funded Status2004

2003Weighted average
(percentage)Discount rate

5.4

5.4Future salary increases

3.6

4.3Return on assets

7.2

7.1


---



The
overall expected long-term return on plan assets was determined based on outside published and internal capital market forecasts for each asset class. The measurement
date used to determine pension benefit measurements for the UK Schemes was January 1, 2005.

Accumulated benefit obligation

The accumulated benefit obligation for the UK Schemes was £1,059.7 million and £955.6 million at January 1, 2005 and
January 3, 2004, respectively.

Projected benefit payments

Projected benefit payments for the UK Schemes over the next ten years are as follows:

(£ million)Year 1

47.4Year 2

48.3Year 3

50.0Year 4

51.5Year 5

54.3Years 6-10

370.8622.3


Additional information required by U.S. GAAP in respect of deferred taxation

The analysis of the deferred taxation balance under U.S. GAAP is as follows:

|                              |                                                          | Company and Regentrealm |       
|----------------------------- | -------------------------------------------------------- | ----------------------- | ------
|
|
|Deferred taxation liabilities |                                                          |                         |       
|                              | Excess of book value over taxation value of fixed assets |                         | (14.9 
|                              | Other temporary differences                              |                         | (7.3  
|                              |                                                          |                         |       
|                              |                                                          | (22.2                   | )     
|                              |                                                          |                         |       
|Deferred taxation assets      |                                                          |                         |       
|                              | Excess of taxation value over book value of fixed assets |                         | 1.5   
|                              | Tax effect of losses carried forward                     |                         | 170.4 
|                              | Other temporary differences                              |                         | 82.7  
|                              | Less: Valuation allowance                                |                         | (155.0
|                              |                                                          |                         |       
|                              |                                                          | 99.6                    |       
|                              |                                                          |                         |       
|Net deferred taxation asset   |                                                          | 77.4                    |       
|                              |                                                          |                         |       
|Of which:                     |                                                          |                         |       
|                              | Current                                                  |                         | (50.9 
|                              | Non-current                                              |                         | 128.3 
|                              |                                                          |                         |       
|                              |                                                          | 77.4                    |       
|                              |                                                          |                         |       

Valuation
allowances are provided mainly on capital losses and other non-trading losses, which can only be utilized against future capital gains and non-trading
profits respectively. Provision is made to the extent that the Company and Regentrealm believe it is more likely than not that the tax benefit will not be realized.

At
January 1, 2005, the Group had tax losses carried forward of approximately £531 million (2003: £520 million). Of these, approximately
£491 million (2003: £480 million) relate to capital and non-trading losses in the United Kingdom, which have no expiry dates but can only be relieved
against

---



future
U.K. capital and non-trading profits, respectively. The balance of £40 million (2003: £40 million) arises in France, Spain and Belgium and the
United States, with £36 million (2003: £36 million) expiring at various dates through 2014 and the remaining £4 million (2003:
£4 million) having no expiry date.

Concentrations of credit risk

Potential concentrations of credit risk to the Group consist principally of cash and cash equivalents and trade receivables. Cash and cash equivalents are
deposited with high credit, quality financial institutions. Trade receivables across Europe comprise a large, widespread customer base.

The
Group did not consider there to be any significant concentration of credit risk at January 1, 2005 or January 3, 2004.

26    Post balance sheet events

The biscuit factory in Carlisle was subject to heavy flooding over the weekend of January 8 and 9, 2005 as a result of bad weather conditions in the local
area. Carlisle is the Group's second largest facility, in terms of utilization, in the United Kingdom.

In
accordance with normal practice, and as required under the terms of the Senior Credit Facility, the Group carries insurance. The material damage insurance carried covers the costs of
the clean up and the cost of repairs of plant and machinery or replacement where necessary. The Group is working with loss adjusters to establish which items of plant can be repaired and which will
require replacement. The Group's insurers have agreed in principle that material damage claims will be reimbursed on a basis that results in minimal impact on the Group's cash flows. The first claim
for £4.5 million, less a deduction of £1.0 million to cover the insurance excess, has been paid. The group also carries substantial business interruption
insurance, which allows it to claim for a period of up to 30 months after an event. Business interruption insurance claims are more complex and the Group is
working on the methodology with its insurers. It has been accepted, in principle, that periodic payments should apply to these claims as well. The Group has submitted an interim claim to cover losses
up to the end of the second period of 2005 in the sum of £5.7 million. The insurers have recommended payment of £5.3 million of this, which the Group expects to
receive shortly. In addition, the Group is in discussion with the North West Development Agency concerning a grant that it has offered to assist in the reopening of the site.

---



SCHEDULE II

UNITED BISCUITS FINANCE plc        and REGENTREALM LIMITED        VALUATION AND QUALIFYING ACCOUNTS

|                                      |  | Balance at
beginning
of period |  | Charged
to/(released
from) costs
and
expenses |   | Charged
to other
accounts |  | Deductions |   | Balance at
end of
period
|------------------------------------- |  | ------------------------------ |  | --------------------------------------------- | - | ------------------------- |  | ---------- | - | ------------------------
|
|52 weeks ended January 1, 2005        |  |                                |  |                                               |   |                           |  |            |   |                         
|Provisions for bad and doubtful debts |  | 2.3                            |  | (0.4                                          | ) |                          |  | (0.4       | ) | 1.5                     
|53 weeks ended January 3, 2004        |  |                                |  |                                               |   |                           |  |            |   |                         
|Provisions for bad and doubtful debts |  | 1.9                            |  | 0.4                                           |   | 0.2                       |  | (0.2       | ) | 2.3                     
|52 weeks ended December 28, 2002      |  |                                |  |                                               |   |                           |  |            |   |                         
|Provisions for bad and doubtful debts |  | 1.2                            |  | 0.6                                           |   | 0.2                       |  | (0.1       | ) | 1.9                     

---



EXHIBIT INDEX

|Exhibit |  | Description                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|8.1     |  | Subsidiaries of United Biscuits Finance plc                                                                                                                   
|12.1    |  | Chief Executive Officer certification, dated April 6, 2005, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                  
|12.2    |  | Chief Financial Officer certification, dated April 6, 2005, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                  
|12.3    |  | Chief Executive Officer certification, dated April 6, 2005, furnished pursuant to 18 U.S.C. 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
|12.4    |  | Chief Financial Officer certification, dated April 6, 2005, furnished pursuant to 18 U.S.C. 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

---



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