better foods for a better life
annual report
and accounts
2006 rhm’s stated ambition is
to make better foods for a
better life this recognises
that food is an important
part of the fabric of life 
and that rhm will
constantly seek to improve
its products making 
them better to eat more
convenient healthier 
and more enjoyable 
for its consumers
contents
01 financial highlights 
02 case studies
10 chairman’s comments 
12 chief executive’s review 
22 financial review 
26 corporate social responsibility
review
30 board of directors 
31 executive management
32 remuneration committee report 
39 corporate governance review
43 report of the directors
45 independent auditors’ report to the
members of rhm plc
46 accounts 
104 shareholder information 01 rhm annual report and accounts 2006
financial
highlights
underlying results for operating profit pro forma profit before taxation and pro forma
earnings per share are considered and used by management to be the most relevant
measure of group performance
1 underlying results are the results from continuing operations before restructuring costs on the ifrs basis of accounting
2 pro forma profit before tax is defined as the underlying profit before tax for the group assuming that the current capital
structuring and corresponding financing costs have been in place from the start of both reported accounting periods
3 pro forma earnings per share is based on the pro forma profit after tax and the number of shares in issue with the current
financing structure assumed from the start of both accounting periods
all references to turnover underlying operating profit and underlying operating margin relate to continuing operations 
excluding restructuring costs unless explicitly otherwise stated
0 1559
2006
2005
1559
1528
00 00 1735 1735
2006
2005
1735
1582
0000000 0000000 131899994 131899994
2006
2005
1319
1120
00 00 269 269
2006
2005
269
226
0000000 0000000 182199997 182199997
2006
2005
1406
1822
2006 41
0000000 0000000 6370 63700001
2006
2005
76
637
0000000 0000000 110300003 110300003
2005 1103
t urnover £m
underlying results
1
2
3
operating profit before restructuring costs £m
pro forma profit before  
taxation and restructuring costs £m
pro forma earnings per share p
21
97
178
191
operating profit £m
statutory results
profit before taxation £m
basic earnings per share p listening to our
consumers
rhm knows that the tastes and
preferences of consumers are constantly
evolving and we make sure that our
products are constantly evolving too
when our research revealed the fact that
35 per cent of mothers remove the crusts
from their children’s sandwiches we
launched hovis invisible crust the world’s
first bread to be baked without a crust 
consumer insight has been central to the
development of other innovative new
products too mr kipling’s “delightful”
range of lower calorie cakes were designed
for those who want a healthier version of
their favourite treat sharwood’s noodle
boxes suit busy lifestyles and mcdougall’s 
ready to bake pastries allow consumers 
to experience the enjoyment of baking 
at home with the minimum of effort
this year work has continued across our
divisions on removing artificial colours 
and flavours preservatives and other
additives as well as reducing salt levels
we have been adding extra goodness too
for example our “healthiest ever” hovis
range now contains an increased amount
of wholewheat
 better to eat
 more convenient
 healthier
 more enjoyable
02 rhm annual report and accounts 2006 03 rhm annual report and accounts 2006 building 
our brands
developing sustainable category leading
brands is fundamental to success in the
ever more competitive uk grocery market
rhm has some of the longest established
and most popular consumer brands in the
industry and as part of our continuing
transformation we have brought in 
new personnel with a wealth of brand
management experience to strengthen
further our expertise in this area  
our bisto “aah night” campaign to get
families back around the dinner table 
is raising the profile of the brand and
putting bisto at the heart of an increasing
number of meal occasions complementary
brand extension has also contributed to
bisto’s performance
sharwood’s “go east” mr kipling’s
“gossip” and hovis 120 years are other
high profile and successful marketing
campaigns with which rhm brands 
have been strengthened this year
 brand management expertise
 targeted advertising and promotion
 innovative pr
 selective brand extension
04 rhm annual report and accounts 2006 05 rhm annual report and accounts 2006 06 rhm annual report and accounts 2006 07 rhm annual report and accounts 2006
strengthening our
customer relationships
we constantly strive to develop business
relationships with our customers that go
far beyond basic service levels in our
industryleading development kitchens 
for example we develop and showcase
innovative and exciting new products 
that are made to appeal to consumers 
and generate value for our customers
the success of our customer partnerships
division reflects the efforts we make 
in developing and maintaining strong
business relationships with customers but
right across our business customers of all
sizes tell us they value our commitment to
 understanding consumers
 continually innovating
 providing outstanding levels of service driving down 
costs
rhm has been progressively simplifying
restructuring and reengineering its
business to reduce cost and improve
flexibility our centralised procurement 
and logistics team is playing a key role 
in ensuring that rhm reaps the full 
benefit from this increasingly coordinated
groupwide approach to business 
a major project to rationalise and
restructure our cake production came to
fruition this year on time and on budget
as well as contributing significantly to
rhm’s cost saving performance in 2006
our new cake production profile has also
delivered quality improvement operational
efficiencies and environmental benefits
the transformation of rhm’s procurement
function over the past couple of years
was recognised in november 2005 when
rhm won the cips award for the
most improved purchasing operation 
more recently rhm has become one 
of the few companies to undertake the
cips gold certification for strategic
procurement capability
 reducing cost
 reducing risk
 increasing flexibility
 realising operational benefits
08 rhm annual report and accounts 2006 09 rhm annual report and accounts 2006 we are pleased to present our first set of
full year results since rhm rejoined the
stock market in july 2005 the group’s
return to public ownership marked an
important step and was made possible 
by the significant progress that has 
been made in recent years as we seek 
to transform rhm into the leading 
ukfocused food group
since flotation the transformation has
continued apace and for the most part
according to plan we have delivered
overall sales growth of 21 per cent 
within our longterm target of two to four
per cent annual sales growth second half
sales growth was 37 per cent strong sales
of hovis which has reached record market
shares in part due to the launch of hovis
invisible crust and of bisto which
benefited from an extremely effective
advertising campaign helped compensate
for lower branded cakes sales particularly
in the first half of the year as i stated at 
the time of our interim results we have
taken decisive action to improve cakes
performance and following a better result
in the second half the board is confident
that our cakes business will demonstrate
further progress in the coming year 
maintaining a constant attack on costs 
is vital to our success cost reduction
programmes have this year delivered total
savings of £53m across all areas of our
business an excellent performance and
ahead of our own expectations at the 
time of flotation we have also been 
able broadly to offset £11m in increased
energy costs through price increases and
nonbranded volume growth 
these initiatives have made a key
contribution to a 97 per cent improvement
in underlying operating profit from
£1582m to £1735m pro forma earnings
per share increased by 19 per cent from
226p to 269p this reflects a significantly
improved trading performance particularly
in the second half of the year and the
benefit of reduced interest payments 
the group is a strong cash generator with
cash flow from operations for the year
amounting to £124m this has led to a
reduction in year end net debt to £676m
from a pro forma £711m at the time of
flotation and provides us with financial
flexibility in the event that attractive 
bolton acquisition opportunities arise
10 rhm annual report and accounts 2006
chairman’s 
comments
“the board is heartened by 
the significantly improved
trading performance delivered 
in the second half of the year 
and is confident that rhm will
deliver further progress in the
year ahead” pensions review
the board is pleased that following the
completion of the triennial pension review
earlier in the year we have clarity on the
group’s pension obligations and funding
requirements these are explained in more
detail in the financial review the steps
taken during the year have contributed 
to a reduction in our uk pension deficit
under ifrs as at 29 april 2006 to £160m
or £112m net of a deferred tax credit of
£48m this represented an equitable
outcome for employees pensioners and
shareholders and created a solid basis from
which to move forward we will continue
to monitor our pension position carefully
board
i am delighted to report that the three new
nonexecutive directors appointed during
the year michael baulk roger matthews
and erhard schoewel have already made
outstanding contributions to the board’s
strategic thinking and are providing
invaluable support to our executive team
we look forward to benefiting further 
from their complementary experience in
the coming years
we have also announced today the
appointment of brian buchan to the 
rhm board as a nonexecutive director 
he brings enormous operational experience
and consumer insight from over 30 years
spent at the forefront of the consumer
goods industry including most recently
from his role as chief executive officer 
of ssl international plc
dividends
the directors have proposed the payment
of a final dividend of 106p per share
which together with the interim dividend
of 53p paid to shareholders in february
2006 makes a total of 159p per share 
for the year this amounts to a total
payment of £55m and is in line with the
commitment made by the board at the
time of the ipo
employees
ultimately the success of our plans to
transform rhm depend upon the hard
work and enthusiasm of our employees
since becoming your chairman i have
been impressed by the positive attitude
and dedication of the many employees
that i have had the privilege of meeting
on behalf of all shareholders i thank 
them all for their efforts and congratulate 
them on the many achievements of the
past year
outlook
we know that the new year will not be
without its challenges – in particular from 
a competitive market place and further
inflationary cost pressures however we
will continue to invest behind our brands
accelerate new product development and
capitalise on opportunities to reduce costs
across all of our businesses
the board is heartened by the significantly
improved trading performance delivered 
in the second half of the year and is
confident that rhm will deliver further
progress in the year ahead
11 rhm annual report and accounts 2006 chairman’s comments
jan du plessis
chairman
28 june 2006 overview
rhm is one of the largest food
manufacturers in the united kingdom
with over 50 manufacturing and
distribution sites throughout the country
and more than 16000 employees 
over 50 per cent of rhm’s turnover is
generated from the sale of some of the
uk’s best known and most enduring
brands which include hovis bisto 
mr kipling and sharwood’s rhm also
manufactures own label products for 
many of the large uk supermarket chains
and for other customers with whom 
rhm has formed strategic partnerships
the group’s operations form four 
business segments bread bakeries
culinary brands cakes and 
customer partnerships
competitive environment
the uk food industry is highly competitive
in a number of rhm’s key sectors market
share is concentrated among a small
number of wellestablished companies 
that operate on both a national and
international basis with single or multiple
branded product lines rhm’s brands 
also face competition from the own label
products of supermarket chains some of
which are manufactured by rhm itself 
to different recipes during the year 
the food industry has become even 
more competitive with the uk’s largest
supermarkets increasing their share of the
overall market rhm’s top five customers
account for over 52 per cent of the
group’s total sales
operating performance 
total group
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £1559m £1528m 21
underlying
operating
profit £1735m £1582m 97
underlying
operating
profit
margin 111 104 70bps
turnover for the year increased by 
21 per cent to £1559m following an
improved performance in the second half
of the year this reflected both a higher
volume of sales and the impact of price
increases successfully introduced to counter
£11m of energy cost increases incurred
during the year most of which occurred 
in the second half
12 rhm annual report and accounts 2006
chief
executive’s
review
“w e are confident that by
maintaining our focus on
profitable top line growth
and cost saving opportunities
we will create significant
shareholder value” branded turnover increased by £24m or
31 per cent to £788m largely as a result
of higher hovis bisto and granary sales
and new product launches across all
business areas which more than offset 
a decline in mr kipling sales excluding
branded cakes’ turnover which declined
by 77 per cent £137m branded
turnover rose by 64 per cent nonbranded
turnover increased by £7m or 10 per cent
to £764m principally as a result of 
higher thirdparty flour and chilled ready
meal sales 
underlying operating profit increased by
97 per cent to £1735m cost reduction
initiatives delivered in aggregate £53m of
benefits these savings together with the
benefit of higher total turnover more than
offset the impact of the decline in cakes’
trading and were key to the delivery of 
an improvement in underlying operating
profit margin which rose from 
104 per cent to 111 per cent
consistent with our longterm strategy of
building investment behind our brands
advertising and marketing expenditure
increased by £26m in bread bakeries 
and culinary brands in cakes £3m was
tactically reallocated in the second half 
of the year from advertising to instore 
and other promotional activity this was
considered the most effective way of
encouraging consumers to trial our
refreshed mr kipling range following
significant product quality and packaging
improvements we intend to increase
above the line investment in cakes during
the new financial year total group
promotional expenditure increased
significantly as a consequence of the
challenging market environment that
prevailed all year
13 rhm annual report and accounts 2006 chief executive’s review rhm’s bread bakeries division is the
largest vertically integrated baker
and flour miller in the uk it is the
home of hovis celebrating its
120th anniversary  as well as other
famous brands including granary 
mother’s pride nimble and ormo 
we supply around one third of 
the uk’s daily bread delivering 
in excess of two million fresh 
loaves and rolls to over 9000
supermarkets and small
independent stores nationwide
every day  we also produce over
850 other varieties of product
including crumpets fruit buns
croissants rolls scones muffins 
and scotch pancakes
our mills produce over a million
tonnes of flour every year with
over half being used in our own
bread bakeries and other rhm
businesses we produce over 220
different types of flour for external
customers in both bulk and bagged
form marketed in part under the
hovis granary  elephant atta and
fassal brands
turnover increased by 41 per cent to
£786m higher bread turnover was
principally due to increased sales of hovis
reflecting both volume gains and price
increases the success of hovis has been
driven by the effective targeting of the
premium branded market as well as
increased consumer demand for healthier
products hovis’ market share has risen
from 291 per cent to 316 per cent during
the year a gain of 250 basis points
1

initiatives such as healthiest ever hovis
the new granary range hovis best of 
both and hovis invisible crust have been
significant in helping to position hovis 
as a premium brand with strong health
credentials in the minds of consumers
volume has also been increased through
customer wins and we have increased
hovis production capacity with the
acquisition of an additional bakery 
in leicester
thirdparty flour turnover increased from
£134m to £140m during the period the
impact of the closure of three older mills
was more than offset by increased sales
from our wellingborough mill purchased
in july 2005 this acquisition together
with the mill closures has significantly
improved the effectiveness of the group’s
milling asset base
underlying divisional operating profit
increased by 264 per cent to £814m with
underlying operating profit margin rising
by 190 basis points from 85 per cent to
104 per cent mainly due to better pricing
favourable overrider settlements and
successful procurement logistics
restructuring and pension cost savings
these gains have been offset in part by
anticipated higher distribution costs
associated with serving new convenience
store customers and the impact of higher
energy costs
1 source iri multiples  coops 52 weeks ended 
22 april 2006
14 rhm annual report and accounts 2006 chief executive’s review
bread
bakeries
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £786m £755m 41
underlying
operating
profit £814m £644m 264
underlying
operating
profit
margin 104 85 190bps key markets
15 rhm annual report and accounts 2006 chief executive’s review
prepacked bread
definition
prepacked bread including white 
brown wholemeal seeded dieting and
‘half and half’ breads
rhm brands
hovis granary mother’s pride nimble 
and ormo
market
of the markets in which rhm operates this
is the largest with a value of £1106m in the
current year the category grew in value by
76 per cent in the year to 29 april 2006
having grown 55 per cent
1
in the prior year
the category is highly branded with a few
large players accounting for the majority 
of purchases hovis is the market’s leading
brand with a market share of 316 per cent
2
at year end having reinforced its position
with significant share gains this year
consumption drivers
whilst convenience is the biggest driver
of prepacked bread consumption other
factors are influential when consumers are
choosing specific products health concerns
have grown in importance in recent years
particularly amongst families – the largest
consumers of prepacked bread enjoyment is
also a significant driver in the category with
consumers looking for new tastier alternatives
to plain white bread
1 source iri multiples  coops 52 weeks ended 
22 april 2006
2 source iri multiples  coops 4 weeks ended 
22 april 2006
growth sectors
the half and half seeded and brown sectors
have all grown rapidly over the past three
years reflecting increased consumer interest
in health and premium breads half and half
– a category created relatively recently with
the launch of hovis best of both white bread
with the wheatgerm content of wholemeal –
has been a particular success story growing
by 55 per cent in this year alone these gains
have more than offset the longterm decline
in white bread sales with dieting being the
only other sector to decline in value this year 
innovation
hovis has again led the bread category in
innovation with healthiest ever hovis the
addition of whole wheat across the entire
range and the awardwinning hovis invisible
crust the world’s first bread to be baked
without a crust 16 rhm annual report and accounts 2006 chief executive’s review
culinary 
brands
rhm’s culinary brands division
contains some of the uk’s best
loved and most recognisable
grocery brands including bisto
gravy  sharwood’s asian sauces
robertson’s jam golden shred
marmalade and frank cooper’s
preserves atora suet mcdougalls
and cadbury’s baking products
paxo stuffing mixes saxa and
cerebos salt and rombouts coffee
in addition to manufacturing
branded products for sale in retail
outlets the culinary brands division
supplies bulk and partprepared
items for example flourbased
mixes to foodservice customers 
rhm is the clear leader in each of
the grocery markets in which it
operates 91 per cent of culinary
brands’ sales are of branded
products with the remainder 
being private label goods
culinary brands’ turnover increased by
£5m or 18 per cent to £271m reflecting
higher branded sales particularly of bisto
in the seasonally more important second
half of the year branded turnover
accounted for 91 per cent of divisional
sales up from 89 per cent last year 
branded growth was driven by increased
advertising and promotional investment
new advertising campaigns were launched
for the division’s two biggest brands and
were well received the bisto “aah night”
advertising theme encouraged families to
spend one night a week eating together
with “proper food and proper gravy”
whilst the sharwood’s “go east”
advertising celebrated the vibrancy and
excitement of the sharwood’s range of
asian foods many new products were
launched sharwood’s noodle boxes and
squeezable variants of the brand’s mango
chutney met with considerable success
whilst bisto launched chilled readymade
gravy and new variants of chilled and
frozen yorkshire puddings under licence
bisto achieved its highest ever share of the
gravy market in april 2006 678 per cent
up 600 basis points
1
on the same period 
last year
price increases were achieved across the
bisto sharwood’s paxo rombouts
robertson’s and atora ranges which
helped offset increases in energy costs
performance was also aided by the delivery
of further procurement and other cost
saving initiatives including the outsourcing
of the majority of the division’s central
warehousing and transport requirements
and a number of projects that have
resulted in improved production efficiency
in addition during the second half of the
year administration of the four business
units that made up the division centura
foods rhm foodservice mcdougalls
foods and rgb coffee was brought
together in a single location
underlying operating profit increased by
69 per cent to £694m reflecting the
branded sales increase and successful 
costsaving initiatives offset in part 
by the impact of higher advertising 
and promotional spend throughout 
the year and the decline in own label 
sales underlying operating profit 
margin increased by 120 basis points 
to 256 per cent
1 source iri all outlets 4 weeks ended 22 april 2006
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £271m £266m 18
underlying
operating
profit £694m £649m 69
underlying
operating
profit
margin 256 244 120bps 17 rhm annual report and accounts 2006 chief executive’s review
key markets
asian meal solutions
definition
asian meal solutions includes ingredients 
and accompaniments for asian meals to be
consumed in the home incorporating sauces
flat breads noodles chutneys and cooking
powders
rhm brand
sharwood’s
market
asian meal solutions was worth £280m
1
this year an increase of 30 per cent
1
on 
the previous year this is a highly branded
category with a large number of branded
players making it very competitive
sharwood’s is the number one brand with 
a market share of 286 per cent
1
and a
presence in every major product sector
consumption drivers
enjoyment is the leading driver of
consumption in the category with a
significant proportion of consumers saying
they use the category when they are 
looking for a change or something special
convenience is also very important with
speed and ease of preparation to the fore
health concerns are a rapidly growing 
driver but still account for a relatively small
percentage of consumption occasions
growth sectors
the biggest contributors to market growth
have been in accompaniments specific
products showing growth being within
noodles breads pappadums and chutneys
speciality oils and ingredients have also
shown significant growth as consumers’
knowledge of asian cuisine has developed
innovation
new flavours with high quality exotic
ingredients have continued to stimulate
enjoyment and interest in the category 
to serve an increasing consumer focus on
health the sharwood’s balanced living range
was launched in 2005 and continues to 
grow meanwhile with consumer insight
demonstrating the need for ever more
convenient product formats this year saw the
launch of sharwood’s noodle boxes stir fry
noodles and new squeezable chutney
1 source iri all outlets 52 weeks ended 22 april 2006
gravy
definition
gravies includes powders granules 
readytopour ambient and fresh chilled
rhm brand
bisto
market
gravy is a mature highly branded market
with a few large players accounting for the
majority of purchases volume in the gravy
market has remained relatively steady but the
total market value for the year to april 2006
£107m
1
 showed an increase of 57 per cent
1
on the previous year value growth has 
been fuelled by the increasing popularity 
of premium products and chilled variants
bisto is the number one brand in the 
gravy market
consumption drivers
convenience remains the key driver of
consumption in the category and has grown
in importance gravy is now being perceived
as more practical by all consumer groups
especially the 1734 age group enjoyment is
also an important driver and is particularly
evident in the purchase of newly launched
and premium products while health concerns
are the least significant of the three drivers
they are the fastest growing
growth sectors
the key growth sector from last year to this
year has been the sale of sachets these are
smaller packs of granules and their increased
popularity is linked to the demographic shift
towards smaller households the chilled 
liquid gravy sector is also in growth with
convenience and perceived freshness both
important drivers these products are
particularly popular with younger consumers
and are introducing new consumers to 
the category
innovation
sales from new products represent less than 
1 per cent of total sales in the gravy market
with key brands concentrating on extending
their presence in complementary categories 18 rhm annual report and accounts 2006
cakes
rhm is the largest manufacturer 
of cakes for the uk and irish
markets our branded cakes are
predominantly sold under the 
mr kipling cadbury’s lyons and
gateaux brands
cakes’ turnover declined by 87 per cent 
to £241m
avana bakeries rhm’s whole cakes
business which represents approximately
20 per cent of cakes’ turnover performed
well throughout the year due to a
combination of successful innovation
increased consumer demand and improved
operational efficiency
as previously reported trading at manor
bakeries rhm’s manufacturer of small
cakes and slices was disappointing in 
the first half of the year with sales of 
mr kipling cakes and slices falling below
expectations actions taken to improve
profitability in manor bakeries resulted 
in an improved yearonyear financial
performance in the second half of the year
the closure of the eastleigh bakery and
transfer of production to our carlton site
was completed on time in december with
£29m of consequent cost savings being
achieved in the remainder of the year 
all mr kipling cakes are now free from
artificial colours and flavours many recipes
have been upgraded and new packaging
has been introduced across the range 
the mr kipling “delightful” range of lower
fat lower calorie cakes was introduced as
planned in january and has received a
positive consumer response a new 
mr kipling promotional strategy has been
implemented and a nationwide tasting
campaign successfully completed 
we were heartened by reasonable
christmas and easter trading periods as
well as by a slow down in the rate of 
mr kipling yearonyear net sales decline
from 141 per cent in the first half of the
year to 80 per cent in the second as the
steps taken to improve our consumer
offering began to deliver the anticipated
level of benefit encouragingly mr kipling
net sales in the last two months of the
financial year were at a similar level to
those achieved in the same months of 
the previous year we anticipate that 
mr kipling sales in the current year will at
least match last year’s level there remains
however much to be done to realise the
full potential of the mr kipling brand
£3m of marketing spend was tactically
reallocated from advertising to instore 
and other promotional activity on a short
term basis this being a more effective 
way of encouraging consumers to trial 
the improved mr kipling range manor
bakeries’ promotional spend increased
during 2006 by £5m of which £42m was
incurred during the first half of the year
our new promotional strategy which
incentivises consumers to purchase multiple
rather than single packs was successfully
implemented in the second half with a
yearonyear increase in promotional 
spend of less than £1m
cakes’ operating profit for the full year
reduced from £189m to £137m with 
the impact of the lower level of turnover
adverse volume mix and increased
investment in promotional activity
offsetting the benefit of a total of 
£18m of restructuring and rationalisation
procurement and other cost savings
cakes’ operating profit in the second 
half of the year increased from £110m 
to £127m
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £241m £264m 87
underlying
operating
profit £137m £189m 275
underlying
operating
profit
margin 57 72 150bps
chief executive’s review 19 rhm annual report and accounts 2006 chief executive’s review
key markets
ambient cake
definition
ambient cake includes wrapped and
unwrapped cakes that are kept at ambient
temperatures the market can be broadly
segmented into large cakes event cakes 
and individual cakes
rhm brands
mr kipling cadbury’s cakes lyons and
gateaux
market
the total ambient cake market was worth
£916m this year a decline of 02 per cent
1
on the previous year
retailers’ own labels have a very strong
presence in the market showing a steady
increase in share over the past three years
rhm manufactures and markets the
category’s two largest brands mr kipling
number one and cadbury’s cakes
consumption drivers
enjoyment is by far the biggest driver of cake
consumption with consumers turning to cake
when they want a treat
1 source iri all outlets 52 weeks ended 22 april 2006
growth sectors
event cakes – most significantly for christmas
and easter – contributed much of the growth
in the market through both premium and
standard offerings 
innovation
the mr kipling “delightful” range of lower
calorie cakes was launched in the current
year and has exceeded expectations rapidly
growing to become a significant player in the
market improvements have been made to
recipes across the easter mince pies range 20 rhm annual report and accounts 2006 chief executive’s review
customer
partnerships
the customer partnerships business
maintains strategic partnerships
with large customers requiring 
a bespoke service including 
marks  spencer and pizza hut 
it also operates specialist distribution
businesses that supply a selected
range of rhm and third party
products into the irish markets 
as well as supplying industrial
preserves and frozen products 
to uk supermarket chains
customer partnerships’ turnover from
continuing operations increased by 
80 per cent to £262m our chilled 
and frozen businesses achieved strong 
sales growth through a combination 
of innovation and contract gains 
ledbury preserves charnwood foods 
and rhm ireland also made satisfactory
progress in line with our expectations
customer partnerships benefited not 
only from the higher level of activity but
also from procurement and other cost
saving initiatives across all businesses
consequently underlying operating profit
increased by 246 per cent to £294m
20
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £262m £243m 80
underlying
operating
profit £294m £236m 246
underlying
operating
profit
margin 112 97 150bps 21 rhm annual report and accounts 2006 chief executive’s review
outlook
we have made a satisfactory start to our
new financial year in the traditionally 
quiet trading months of may and june
although we are still at an early stage 
of our branded cakes recovery plan we
are encouraged by the initial consumer
response to the actions we have taken 
we are increasing investment behind 
our brands we have a wide range of 
new products under development across 
all business areas with hovis bisto
sharwood’s and cadbury’s cake products
all due to appear in store in the first half 
of the financial year advertising and
marketing spend is anticipated to increase
by more than £5m this year as we support
both our existing portfolio and our 
new launches
assiduously pursuing opportunities 
to reduce our cost base remains a
fundamental part of our strategy 
cost reduction initiatives are anticipated 
to deliver a total of £30m of benefits 
to the group in the coming year with
£14m being derived from rationalisation
and restructuring projects a proportion 
of these savings will inevitably be 
used to offset inflationary and other
pressures given the extremely competitive
environment in which we are currently
operating group energy costs are
expected to rise by a further £11m during
the year as in 2006 we will seek broadly
to offset this cost inflation through 
price increases
we are confident that by maintaining our
focus on profitable top line growth and
cost saving opportunities we will create
significant shareholder value
ian mcmahon
chief executive officer
28 june 2006 22 rhm annual report and accounts 2006
basis of reporting
the results for the year ended 29 april
2006 have been prepared in accordance
with ifrs the comparative results have
been restated to demonstrate how they
would have been reported had ifrs been
adopted for that period
pro forma results
the comparison of performance yearon
year has been made more complex by the
impact of the change of capital structure
and costs incurred as a consequence of 
the group’s flotation on the london stock
exchange accordingly pro forma numbers
are set out below to demonstrate how
rhm’s performance would have been
calculated had rhm’s current capital
structure been in place from the start of
both accounting periods the changes
principally reduce the interest charge as
the group pays a lower rate of interest on
a lower level of borrowings post flotation
and increase the number of shares in issue
to reflect the number of shares currently in
issue from the beginning of both periods
restructuring flotation and refinancing
costs have also been excluded 
52 weeks to 52 weeks to
29 april 30 april
2006 2005 growth
£m £m 
turnover 15590 15280 21
underlying
operating
profit 1735 1582 97
pro forma
finance costs 416 462 100
pro forma
profit before
tax 1319 1120 178
pro forma 
tax at 292
2005 30 385 336 146
pro forma
profit after 
tax 934 784 191
pro forma
number of 
shares in
issue 3469m 3469m –
pro forma
earnings
per share 269p 226p 191
 underlying operating profit is defined as operating profit
from continuing operations before restructuring costs and
is considered and used by management as the underlying
measure of operating profit within the group
financial
review this analysis shows that pro forma
earnings per share have increased by 
191 per cent from 226p to 269p for 
the year we believe that the pro forma
increase in earnings per share provides a
more meaningful measure of comparative
performance than the level of adjusted
earnings per share shown in the table 
of reported results below 
summary of reported results
52 weeks to 52 weeks to
29 april 30 april
2006 2005
£m £m
turnover 15590 15280
underlying operating
profit 1735 1582
net restructuring
costsincome 329 240
finance costs 552 1137
debt redemption costs 781 48
associates 01 –
profit before tax 74 637
taxation 16 1077
profit after tax 58 1714
weighted average
number of shares 
in issue 3072m 1732m
adjusted eps 273p 247p
turnover
turnover for the year was £1559m an
increase of 21 per cent compared with
2005 and within our longterm target 
of two to four per cent annual sales
growth after only a marginal
improvement in turnover in the first half
turnover increased by 37 per cent in the
second half of the year as a result of better 
trading and the impact of price increases
introduced to recoup higher energy costs
branded sales increased by £24m or 
31 per cent in the year to £788m
principally driven by higher hovis and 
bisto sales excluding cakes branded sales
increased by 64 per cent nonbranded
sales increased by £7m or 1 per cent 
to £764m
operating profit
underlying operating profit for the 
year was £1735m 2005 £1582m 
a 97 per cent improvement the group’s
underlying operating profit margin
increased from 104 per cent to 
111 per cent
cost reduction initiatives
an important contributor to performance
in the current year has been the group’s
success in delivering further cost savings
across all areas of the business
cost reduction initiatives delivered £53m 
of benefits to the group during 2006 a
higher figure than anticipated at the time
of flotation principally as a result of 
£5m of additional restructuring and
rationalisation savings significant savings
have come from each of the areas 
of procurement logistics pensions
restructuring and rationalisation
net procurement savings across rhm
excluding wheat buying and the impact 
of unavoidably higher energy costs but
including all other purchase cost inflation
amounted to over £18m significant
savings were made in key ingredient
purchases including fruit eggs sugar 
and starches
our central logistics team was established
during the year and is now fully
operational £7m of logistics savings 
have been realised from a groupwide
focus on simplifying and improving the
efficiency of our logistics operations
logistics savings exclude the impact 
on costs from increased deliveries and 
a greater share of convenience store
business within bread bakeries which have
contributed to an overall net increase in
logistics costs of £8m
restructuring and rationalisation initiatives
predominantly in the bread bakeries and
cakes divisions generated savings of
£19m major restructuring initiatives
include the completion of the eastleigh
bakery closure headcount reductions and
the closure of three mills in rank hovis
23 rhm annual report and accounts 2006 financial review rhm’s pension service charge declined by
£8m compared with the previous financial
year reflecting the benefit of changes 
to the rhm uk pension scheme agreed 
with our employees and implemented in
september 2005
as referred to above energy costs
increased by £11m reflecting the impact
of significant rises in global oil and gas
prices this cost inflation was broadly
recouped through price increases during
the year
advertising and marketing spend in the
year was £27m the same level as in 2005
head office costs increased by £7m
compared with 2005 due both to the
higher costs associated with operating 
as a public company and the increase in
scope and scale of the group’s centralised
procurement and logistics teams
exceptional items
exceptional costs recorded in the profit 
and loss account total £329m comprising
redundancy and restructuring costs of
£311m and flotation costs of £24m
offset in part by the profit on sale of
properties of £06m the £24m credit 
in the prior year relates to gains on the
pension curtailment £473m and property
disposals £217m less restructuring costs
£439m and flotation costs £11m  
total flotation costs were £373m of which
£255m has been charged to the share
premium account £83m relating to the
new financing has been capitalised and will
be amortised over the life of the debt and
£35m has been charged to exceptional
items as noted above £24m of flotation
costs were charged to exceptional items in
the current year and £11m in the previous
financial year 
consistent with previous guidance we
expect exceptional items to be £10m–£20m
in 2007 principally relating to redundancy
and restructuring projects offset in part by
profits on property disposals
finance costs 
the finance costs for the year were
£552m a £585m reduction on last year
due to the repayment of the unsecured
loan stock and the new lower cost
financing structure put in place at the 
time of the flotation 
debt redemption costs relating to the
previous financing structure of £781m
were incurred in the year being early
redemption costs of £752m and
accelerated amortisation of debt issuance
fees of £29m the cash paid to settle early
redemption costs was £808m of which
£56m in relation to the swap had already
been recognised at the start of the year 
in the previous financial year £48m of
accelerated amortisation of debt issuance
fees were recognised in advance of 
the refinancing
taxation
the underlying tax rate on profit 
before restructuring costs for the year
ended 29 april 2006 is 292 per cent 
the resulting tax charge has been 
adjusted for the tax credit at 30 per cent 
on deductible restructuring and debt
redemption costs this results in an 
overall tax charge of £16m
earnings per share
basic earnings per share for the year ended
29 april 2006 was 41p after restructuring
costs debt redemption costs and the part
year cost of the old financing structure 
a more meaningful measure of underlying
performance is the pro forma earnings per
share which rose 19 per cent to 269p
dividend per share
the board has recommended that a
maiden final dividend of 106p be paid 
on 29 september 2006 to shareholders 
on the register on 1 september 2006 
an interim dividend of 53p was paid 
to shareholders on 24 february 2006 
pro forma earnings per share covered
the total proposed dividend for the year
17 times
cash flow
underlying net operating cash flow for 
the year of £1241m is derived from the
financial statements as follows
52 weeks to
29 april 
2006
£m
operating cash flow 1439
capital expenditure 634
proceeds from sale of assets 90
exclude
exceptional spend 341
discontinued spend 05
underlying net operating cash flow 1241
24 rhm annual report and accounts 2006 financial review 25 rhm annual report and accounts 2006
the underlying net operating cash flow of
£1241m reflects profits from operations 
of £1735m reduced by £20m of pension
contributions in excess of the service
charge capital investment £9m higher than
depreciation and an increase in working
capital requirements of £20m this increase
in working capital principally reflects an
increase in year end trade receivables due
to a combination of easter falling later in
the year and stronger underlying sales in
the final quarter 
borrowings and refinancing
over the year the group’s net debt
reduced by £253m from £929m to £676m
the group’s pro forma level of net debt
was £711m at the time of flotation when
£475m of new equity and £750m of 
new term bank facilities were raised 
these funds were utilised to repay
outstanding senior and secured debt of
£556m and unsecured loan notes of
£472m pay a contribution of £125m 
into the group uk pension scheme and
pay debt redemption and flotation costs 
of £117m   
the group’s facilities comprise £900m
unsecured bank debt repayable between
2008 and 2010 of which £750m is fully
drawn term debt year end cash balances
were £72m pro forma interest cover is
42x and net debtebitda as at 29 april
2006 was 30x the group also has 
a revolving credit facility of £150m 
which was undrawn at the year end 
this financing structure provides us 
with financial flexibility in the event 
that attractive bolton acquisition
opportunities arise
pensions
the reported uk gross pension scheme
deficit at 30 april 2005 was £317m or
£222m net of deferred tax during the
year two changes occurred firstly rhm’s
pension fund trustees completed a triennial
funding valuation as at 30 april 2005 of
the group’s uk defined benefit pension
scheme the primary purpose of the
valuation was to provide a basis for
calculating company contributions for
current service and deficit repayment 
this gave rise to an increase in the gross
deficit of £89m as at 30 april 2005
secondly following flotation rhm made
the £125m contribution referred to above
after taking account of these changes the
uk pension scheme pro forma deficit as 
at 30 april 2005 was £281m gross or
£197m net of deferred tax
after reflecting the market movements 
in the year and the ongoing cash
contributions in excess of the service cost
the uk gross pension scheme deficit as at
29 april 2006 was £160m or £112m net
of deferred tax including the impact of 
the overseas pension schemes the rhm
group total gross pension deficit as at 
29 april 2006 was £163m or £114m 
net of deferred tax
as a result the cash contributions made 
to the rhm pension fund by the group
will increase to £40m in 2007 this is £9m
more than the contributions for 2006 and
is the minimum increase anticipated at the
time of flotation the contribution level 
has been set to ensure that the current
pension fund deficit is repaid over the 
next nine years as previously agreed 
with the scheme’s trustees increased
contributions as a result of changes to
mortality assumptions will be phased in
over the next five years and will rise 
by approximately £5m–£7m per annum 
most of the increase in contributions 
will be applied to reducing the group’s
pension deficit rhm’s annual pension
service charge will increase by approximately
£1m in 2007 from £11m to £12m
balance sheet
year end net assets of £131m have
increased by £448m from the previous
year end principally due to the share issue
proceeds net of issue costs of £450m  
the group’s new financing structure and
the impact of the triennial pension fund
review are reflected in the balance sheet 
as at 29 april 2006
andrew allner
group finance director
28 june 2006
financial review 26 rhm annual report and accounts 2006
rhm has been comprehensively reviewing
its corporate social responsibilities it is
building on the longterm efforts of its
various operations in these areas together
with more central corporate activities to
pull the threads together and demonstrate
how the company views its role and
responsibilities wherever it has an impact
this section provides a summary of the
company’s approach in these areas
bringing visibility to work carried out in 
its businesses over several years
background
rhm has been able to build on a rich
heritage of achievement in its approach 
to corporate social responsibility “csr”
stemming from its origins in 1875 with the
rank family whose philanthropic approach
has been well documented from these
beginnings the group has grown its
strengths in science today running one 
of the leading laboratories in europe for
toxin and specialist trace contaminant 
and gm testing rhm employs over 
500 food scientists and has an extensive
quality system with laboratories 
accredited to is0 17035 for numerous
analytical measures
the group has for many years been able
to translate this expertise in food science
into new product development from as
early as 1886 with the introduction of
wheatgerm bread and in 1955 the
development of nimble the gluten
enriched loaf as a low calorie alternative
to traditional bread through to hovis best
of both and hovis invisible crust such
product innovation and improvement 
has been central to the group’s business
governance
a clear structure exists to manage the
breadth of activities which can be viewed
as part of csr the structure ensures
activities are both managed within the
business as daytoday processes rather
than as an overlay on the business 
at the same time permitting visibility
direction and coordination across the
group the csr strategy which guides 
this approach is overseen by the board and
managed by the executive committee
a steering group supports this strategy 
in three distinct areas food  consumer
environment health  safety and 
people society  community each led 
by a functional manager
corporate 
social 
responsibility
review
food  consumer
 food safety 
 product security
 diet  health
 ethical marketing
 ethical trading
marketing
ethical trading
environment health
 safety
 health  safety
 environment
people society
 community
 employees
 community  charity
 corporate governance
 diversity
the chart below shows a summary of 
the key csr activities in rhm 27 rhm annual report and accounts 2006
food  consumer
food safety is a key priority for the group
and it ensures that all its products are 
safe to eat by the identification and 
control of food safety risks throughout 
the supply chain wherever possible it is
the company’s policy to go beyond the
legal minimum in ensuring the safety of 
its products
in addition to passing key audits from our
major customers the group carries out
internal food safety and hygiene audits 
and provides training aimed at continually
improving standards to exceed legal
requirements on all sites
all products are clearly labelled in
compliance with all current and relevant
legislation the group provides its
consumers with peace of mind by
continuously reviewing and proactively
addressing the food safety issues that are
relevant to its products an appropriate
due diligence testing regime is agreed with
the group’s dedicated scientific branch
rhm technology to ensure that technical
specifications are met
the group has clear policy statements on
all relevant food and consumer issues
including palm oil trans fatty acids 
gm foods and chemical contaminants
through a food policy forum and
representation on various government
bodies we continue to develop ethical
marketing positions the group engages
closely with government agencies industry
bodies and health groups in promoting 
diet and health this has seen a number of
initiatives to reduce levels of fat salt and
trans fat in our products which took over
600 tonnes of salt out of the uk diet in
2004 plans exist to provide clear guideline
daily amounts gdas on all packaging
alongside existing product information
allowing consumers to make even more
informed choices about what they eat
environment health  safety
the group actively promotes the importance
of health safety and environmental
issues through clear accountabilities and
governance processes key performance
indicators “kpi’s” are set for all areas 
of the business in terms of reducing
accidents improving safety and minimising
environmental impact these targets are
regularly benchmarked and reviewed
groupwide policies have been in place for
a number of years supported at operational
level by a central environment health 
safety team which develops standards
provides training and audits all sites
health  safety
through close management of health 
safety rhm has reduced the number of
reportable accidents per 100000 hours
worked from 122 in 2004 to 063 in 2006
with a target for 2007 of 05 the rate of
1284 reportable accidents per 1000
employees is better than the food sector
average of 181000
the royal society for the prevention of
accidents awards for accident prevention
were awarded to sites in erith and
bradford as noted overleaf the group
played an important role in the health 
safety executive’s backs 2005 campaign 
aimed at reducing musculoskeletal injuries
sustained from manual handling incidents
the frequency of manual handling
accidents throughout the group fell 
by 20 per cent during the year
corporate social responsibility review
rhm reportable accidents per 1000 employees
200506
current hse benchmark
reportable accidents
200405
200304
200203
200102
200001
0 5 10 15 20 25 30 35 working in partnership with the 
heath  safety executive
“working with a regulator can be 
quite challenging so we were delighted
when rhm took up the challenge to join
with the health  safety executive to
make a difference via backs 2005 
rhm provided valued input to the
national stakeholder forum and worked
successfully to raise awareness and reduce
risks inhouse all parties benefited from
the partnership which involved pooling
resources and ideas with a clear focus on
outcomes – a reduction in musculoskeletal
disorders rhm’s inhouse results speak 
for themselves”
geoffrey podger chief executive of 
the health  safety executive speaking 
about rhm’s participation in a major hse
initiative focused on reducing workrelated
back injuries
environment
the group has in place a riskbased
environmental audit programme to provide
ongoing assurance and identify specific
areas of risk and liability
in 2003 environmental kpis developed
by the food  drink federation were
adopted and these are monitored on 
a regular basis a programme to reduce
the use of energy and waste is managed
through an operational excellence group
the group participates in the government’s
climate change agreement achieving cuts
in emissions resulting in a rebate of £2m
on the climate charge levy
rhm intends to continue to focus on the
environment as a priority area through
improving data management and setting
targets on water usage and waste in
addition to attempting to meet targets
already set on reducing energy usage 
and carbon dioxide emissions
people society and community
a key achievement in the year has been to
build a focused leadership group and to
launch a leaders’ forum comprising around
the 50 most senior positions in the group
this forum is the key strategic group
through which the transformation of rhm
as well as groupwide communications 
is being managed in the last two years
over 50 per cent of this forum has been
recruited from leading blue chip companies
across different industry sectors 
the group’s approach to ensuring it has
the best people running the businesses 
has been to combine the hiring of quality
external personnel with the selective
identification of leaders with experience
and skills within the group
new processes have been implemented
around the management of people in
particular to ensure that the right people
are in the right jobs the group promotes
skills development in many areas such as
marketing customer management food
technology and supply chain management
we are often one of the largest employers
in our local communities and seek to be an
employer of choice we have a diverse and
experienced workforce and aim to reflect
the communities around our site locations
neighbours
by their very nature our manufacturing
and distribution activities are often
managed on continuous shift bases
sometimes for 24 hours a day and 7 days 
a week we recognise that this may be
disruptive to our immediate neighbours
and organise our activities so as to
minimise inconvenience whilst maintaining
the operational efficiency necessary to 
our business
28 rhm annual report and accounts 2006 corporate social responsibility review 29 rhm annual report and accounts 2006
community involvement
many of our employees are involved in
community activities rhm’s community
involvement varies from site to site but
typically might include
• support for local charities
• providing food hampers for local events
• offering places for schoolchildren on
work experience
• offering places for sandwich students
“a” level or university students 
during holidays
• providing access to rhm facilities for
local community groups
rhm is a member of business in the
community and also supports a number 
of food industry benevolent organisations
in the uk and ireland
employee consultation
rhm met its obligation under the
information and consultation of employees
regulations 2004 by continuing to run
a european employment forum and
holding regular business reviews with
trade unions at national level
rhm is committed to improving employee
communication and consultation and
intends to carry out an employee survey 
in 2007 targeting areas for improvement
ethical trading and the supply chain
the group procurement function has
developed a set of operating policies 
and procedures that clearly outline the
approach to ethical trading and behaviour
towards suppliers rhm was the first uk
food producer to have these policies and
procedures accredited by the chartered
institute of purchasing and supply
the main focus of our ethical trading
policy is to follow best practice as set 
out via the industry standard sedex 
the suppliers’ ethical data exchange 
the group is a founding partner of sedex
and sits on its main governing body 
sedex exists to enable the exchange of
data on working conditions within the
supply chain in a secure manner and helps
companies to identify and take action to
improve their ethical performance
sedex works by allowing the group’s
customers access to ethical information
regarding working practices environmental
practices and employee standards such as
discrimination policies and labour relations
that the group has placed on a central
website for access the group similarly
accesses such information with regards 
to its own suppliers although this
information is initially selfcertifying 
the group requires periodic audits to be
carried out and will audit any supplier
falling below certain standards
the group has committed to ensure 
all its suppliers of ingredients and
packaging complete a sedex questionnaire
or equivalent and is moving towards 
a position whereby all suppliers must
achieve certain standards in order to 
do business with the group sedex has
been supported by a group of retailers 
and suppliers
other key areas of focus have been to
reduce packaging waste promote an
overall energy strategy reduce the 
number of supplier deliveries and
implement backhaul arrangements with
some suppliers delivery routes have 
been rationalised and a fuel monitoring
system is being developed which will help
reduce the impact of emissions on the
environment a programme of ethical
audits is carried out at all operational sites
future csr policy
rhm is fully committed to the achievement
of the highest standards of corporate and
social responsibility food safety and the
health and safety of employees have
always been of primary importance to
rhm significant progress has been made
during the year under review in these 
and other areas of csr policy and we
anticipate reporting on the adoption of a
range of additional initiatives in 2007 
corporate social responsibility review 30 rhm annual report and accounts 2006
jan du plessis 52 
chairman 
jan du plessis was appointed chairman in june
2005 he has also been chairman of british
american tobacco plc since july 2004 having
been a nonexecutive director since 1999 and 
is a nonexecutive director of lloyds tsb group
plc from 1988 to 2004 he was group finance
director of richemont the swiss luxury goods
company jan is chairman of the nominations
committee
ian mcmahon 53
chief executive officer 
ian mcmahon was appointed chief executive
officer in january 2003 he joined rhm as
chief operating officer of the then customer
solutions division in september 2002 prior to
joining rhm he was with ici paints for six years
in senior international management roles and
was previously with grand metropolitan and
tootal plc
andrew allner 52
group finance director 
andrew allner was appointed group finance
director in march 2004 he was formerly chief
executive officer of enodis plc prior to that
andrew was group finance director at dalgety
plc and amersham international plc and director
of financial planning and control at guinness
plc he was previously a partner with price
waterhouse he is a nonexecutive director of
marshalls plc
michael baulk 62
nonexecutive director 
michael baulk is a member of the worldwide
board of the bbdo advertising group and was
chairman and chief executive of its uk arm 
the abbot mead vickers bbdo group until 
june 2006 he was a nonexecutive director 
of debenhams plc between 1998 and 2003 
he is a member of the audit remuneration 
and nominations committees
richard hanson 50
nonexecutive director not pictured 
richard hanson was until recently nonexecutive
chairman of rhm being appointed to that
position in july 2000 he is the joint founder 
of doughty hanson  co the private equity
firm which acquired rhm’s businesses in 
2000 richard is a member of the nominations
committee
roger matthews 52
nonexecutive director 
roger matthews was group finance director 
of j sainsbury plc having previously served 
as managing director and finance director 
of compass group plc he is nonexecutive
chairman of sainsbury’s bank and of land of
leather holdings plc roger is a member of the
remuneration and nominations committees 
and chairman of the audit committee and 
the senior independent director
erhard schoewel 57
nonexecutive director 
erhard schoewel is executive vice president
europe of reckitt benckiser plc and has
responsibility for their european operations
having held various senior international
management roles with them for many 
years erhard is a member of the audit and
nominations committees and chairman of 
the remuneration committee
board of
directors
01 jan du plessis
02 ian mcmahon
03 andrew allner
04 michael baulk
05 roger matthews
06 erhard schoewel
01 02
03 04
05 06 executive 
management
03
31 rhm annual report and accounts 2006
01 ginny knox
02 miles warnick
03 tim kelly
04 susan fox
05 gerry walsh
ginny knox 43 
chief operating officer 
culinary brands division
ginny knox was appointed chief operating
officer of the culinary brands division in april
2003 and is also charged with coordinating
groupwide marketing prior to this she was
rhm’s director of corporate communications
ginny joined rhm in 1996 from cocacola as
managing director of the group’s fruit drinks
business now sold
miles warnick 49 
chief operating officer 
bread bakeries division
miles warnick was appointed chief operating
officer of the bread bakeries division in may
2002 and is also charged with coordinating
groupwide enhancement of its operational
performance he was previously managing
director of ranks hovis the flour milling and
bakery ingredients business he is currently
chairman of the federation of bakers
tim kelly 48
chief operating officer 
cakes  customer partnerships division
tim kelly joined rhm as chief operating officer
of the customer solutions division in august
2003 and is also charged with coordinating
groupwide customer relationships he joined
rhm from constellation brands where he was
chief operating officer international prior to
this he held senior marketing roles at diageo
and cocacola schweppes beverages
susan fox 50
group hr director 
susan fox was appointed group hr director in
september 2003 she joined rhm from cable
and wireless where she was director of human
resources regional and corporate prior to this
susan held hr director roles at leaseplan uk
pearl assurance and grand metropolitan plc 
at the latter of which she was hr director for
international distillers and vintners
gerry walsh 49 
group procurement and logistics director
gerry walsh joined rhm as group procurement
and logistics director in september 2003
before joining rhm he was vice president
global procurement international at american
express prior to this gerry held a number of
senior appointments at tambrands monarch
aluminium and the ford motor company 
he is currently vice president of the chartered
institute of purchasing and supply
01
04
02
05 32 rhm annual report and accounts 2006
prior to flotation the company undertook a full and independent review of its remuneration policy to ensure that it is appropriate 
both for shareholders and the company the introduction of a new policy immediately before flotation followed discussions with
shareholder bodies and was ratified by the board
rhm has a clear set of key principles which underpin the remuneration policy and which will guide the committee’s decisions 
this policy aims to
• support and reinforce rhm’s business objectives 
• drive a high performance culture through encouraging superior business performance
• attract and retain a high calibre senior team
• align executive rewards with shareholder value
• clearly differentiate according to performance and reward high levels of individual achievement
a highly motivated performancedriven leadership team is fundamental to the company’s continued growth and profitability 
the company continues to focus on performance incentives and introduced on flotation a longterm incentive plan the rhm group
performance share plan the “ltip” in addition to an annual incentive plan based on annual targets the company is pleased to be
able to launch a new sharesave scheme in the coming year open to all employees who have been with us since 4 january 2006
we now have an excellent team of executives directors and senior managers and i am confident that the remuneration policy will
continue to align the remuneration of senior executives with the interests of shareholders as well as engaging them in the pursuit of
longterm shareholder value
membership of the remuneration committee
the remuneration committee is a subcommittee of the board and was established in february 2006 with clear terms of reference 
to guide its decisions the committee consists of three independent nonexecutive directors all of whom joined on formation of the
committee
the committee members are erhard schoewel chairman michael baulk and roger matthews 
in addition the chairman and chief executive are regularly invited to attend neither the chairman nor the chief executive attend
when their own remuneration is being discussed 
role
the remuneration committee has responsibility for making recommendations to the board on the company’s policy on the
remuneration of executive directors and senior managers this includes the implementation and operation of share incentive schemes
and the determination within agreed terms of reference of specific remuneration packages for each of the executive directors and
executive management detailed on pages 30 to 31 including pension rights contracts of employment and any compensation
payments
it is committed to principles of accountability and transparency and to ensuring that there is a clear link between performance and
reward it is accountable to shareholders through the annual report and will give consideration to the outcome of the vote at the agm
on the remuneration report
it is expected that the remuneration committee will meet three times during each full financial year the committee’s first meeting
following flotation took place in february 2006 and it met twice during the period under review 
advice
the remuneration committee received independent advice from towers perrin and monks partnership who advised the company 
prior to the establishment of the remuneration committee on market data best practice and governance ashurst provided tax and
legal advice on service contracts and share schemes whilst aon consulting provided advice on retirement benefits ashurst are on 
the group’s roster of legal advisers and aon limited are the company’s insurance brokers the remuneration committee did not
specifically appoint any advisers during the year
remuneration committee report remuneration policy
the key objectives of the remuneration policy are to attract retain and motivate high calibre executives and to provide a clear link
between remuneration and business performance
in developing its policy the company has taken into account its regulatory framework including best practice in corporate governance
and the views of shareholder bodies
total remuneration is benchmarked against the relevant markets to provide executive directors with competitive remuneration 
a high proportion of total remuneration is directly linked to business performance
directors’ remuneration packages consist of several components the fixed elements are basic salary and benefits in kind in addition
the company has an annual incentive plan and the ltip under which payments are linked to the longterm value delivered to
shareholders
the proportion of variable pay to fixed pay was increased in the year under review with the introduction of the ltip approximately
twothirds of executive directors’ potential direct remuneration is now performance related 
as this policy is highly performancedriven the remuneration committee selects performance measures which provide the greatest
alignment with the company’s strategic goals these performance measures are linked to both operational performance and share price
growth they are balanced between absolute financial measures and sector comparative measures details of the performance measures
are set out on page 34
basic salary 
base salaries are targeted at a median level in relation to comparable companies annual bonuses and ltip awards are set to enable
executives to earn total remuneration in the upper quartile range providing the demanding targets and performance conditions have
been met
base salaries are reviewed annually and any increase is usually effective from 1 july base salary is the only pensionable element of
remuneration although pensionable pay was frozen for a four year period from april 2005
in reviewing the base salaries of the executive directors and executive management the remuneration committee commissioned an
independent survey of comparative packages in companies of similar size and across industry sectors 
annual performance bonus
each executive director and member of the senior management team is eligible to participate in a discretionary annual cash bonus plan
based on the achievement of stringent business targets the bonus is nonpensionable
the performance targets are determined by the remuneration committee at the beginning of the financial year 
the target base award is set at 50 of base salary rising to a maximum of 100 for exceptional business performance for the year
under review 90 of the maximum achievable bonus related to financial performance targets and 10 to personal performance 
for the coming year these percentages will become 95 and 5 respectively
ltip
on flotation and as described in the flotation prospectus the ltip was adopted the plan is designed to provide an appropriate long
term incentive to directors and senior managers in the business taking into account current best practice and institutional guidelines 
the remuneration committee approves the grant of awards offered to executive directors and senior managers the first awards were
granted on flotation and thereafter the intention is for awards to be granted annually the maximum value of shares which may be
awarded to executive directors in any financial year will be limited to 100 of base salary although in exceptional circumstances such
as recruitment awards may be granted in excess of the normal limit up to a maximum of 200 of base salary 
on flotation ian mcmahon was allocated an award to the value of 100 of base salary with awards of 75 of salary being granted
to andrew allner and members of the senior management team the maximum number of shares that could be transferred to each
executive director upon satisfaction of the performance conditions appears in the disclosures relating to directors’ interests for the
coming year both executive directors will receive awards on the same basis as the previous year with other senior management
receiving awards of up to 75 of base salary
remuneration committee report 33 rhm annual report and accounts 2006 34 rhm annual report and accounts 2006
performance measures
the vesting of awards is subject to challenging performance conditions as determined by the remuneration committee performance
will be measured over a period of three years starting with the beginning of the financial year in which the award is made there is no
provision for retesting of the performance conditions on or after the end of the performance period
the awards granted on flotation will vest subject to the achievement of performance criteria based on earnings per share eps and total
shareholder return tsr 50 of the shares awarded are subject to each criterion details of which are set out in the following table
the eps cagr targets in the table below were determined on the basis of accounts prepared under uk gaap the standard adopted by
the company on flotation since then the company’s accounting basis has changed to ifrs and at the vesting date the remuneration
committee will consider the impact of this change on the eps cagr targets
performance conditions for awards made during 2006
eps
normalised eps compound annual growth rate cagr • if cagr equals 15 pa 20 of the total shares subject 
to the award will vest
• if cagr equals 25 pa 50 of the total shares subject 
to the award will vest
vesting for cagr between 15 and 25 pa will be on 
a pro rata straightline basis no shares subject to the eps
condition will vest for performance below the 15 pa
cagr condition “the minimum threshold”
tsr 
comparator group
• rhm plc
• associated british foods plc • median position 20 of total shares subject to the award 
• cadbury schweppes plc will vest
• cranswick plc • upper quartile position 50 of total shares subject to the 
• dairy crest plc award will vest
• greencore group plc for positions between median and upper quartile vesting
• kerry group plc will be on a pro rata straightline basis no shares subject
• northern foods plc to the tsr condition will vest for performance below the
• premier foods plc median position within the comparator group
• robert wiseman dairies plc
• tate  lyle plc
• uniq plc 
• eps will be calculated as basic eps from continuing operations as defined in ias33 and adjusted for oneoff items for 2005 eps will be calculated on a pro forma basis adjusted to include interest costs
based on the financing structure following flotation
• tsr means the percentage change in the average share price over the original share price plus the gross dividend per share
for ltip awards in the coming year the tsr comparator group will remain unchanged the range set for payout under the eps part of
the award will be 6 to 12 cagr per annum calculated under ifrs both of these targets are market competitive the maximum
payouts under both the eps and tsr parts of the award will each remain at 50 of the total shares subject to the award however the
payments for achieving the minimum payout thresholds under both the eps and tsr parts of the award will each be reduced from 20
to 15 of the total shares subject to the award in line with market trends
the remuneration committee will monitor and determine the extent to which the eps and tsr performance conditions are met 
it will also assess the continuing suitability of these conditions and may impose different conditions on future awards for example 
it may amend the peer group if there has been significant consolidation in the industry in line with its policy on transparency the
remuneration committee will explain any adjustments made to the relative tsr ranking in the remuneration report following vesting
and may amend the performance conditions if events occur that would make the amended condition a fairer measure of performance
and provided that any amended condition is not easier to satisfy 
remuneration committee report the following graph illustrates the share price performance of the company since july 2005 against the ftse food producers and
processors index this being the most relevant index for the company 
rhm group sharesave scheme
employee share ownership is a successful tool in enhancing employee engagement and identification with the key business drivers 
the company is introducing an inland revenue approved savingsrelated share option plan during the next financial year executive
directors will be able to participate in the rhm group sharesave scheme on the same basis as other employees the intention is to 
offer the scheme annually no performance conditions will attach to this scheme as it is an allemployee scheme
pensions 
rhm provides a funded contributory pension scheme this provides benefits on a defined basis and is contracted out of the state
second pension 
for four years from april 2005 the pensionable salary used for the accrual of benefits in the pension scheme has been frozen as that
payable in april 2005 subject to a maximum of the then earnings cap of £102000
ian mcmahon is a member of the scheme and accrues pension benefit at 130 of a frozen pensionable salary of £102000 for each year
of service he receives a fixed cash supplement of £126000 per annum in lieu of benefits on salary above £102000
the pensionrelated benefits provided by the company to ian mcmahon are essentially unaffected by the new tax regime on pensions
and no further changes to these arrangements are currently planned in the event of any future modification of rhm’s pension
arrangements executive directors will not be compensated for any changes in personal taxation
details of ian mcmahon’s pension entitlement for the year are as follows
accrued pension at 1 may 2005 £9093
member contributions at 1 may 2005 £14838
transfer value of accrued pension at 1 may 2005 £135074
accrued pension at 29 april 2006 £12163
member contributions at 29 april 2006 £22045
transfer value of accrued pension at 29 april 2006 £192337
increase in pension over period £3070
pension accrued over period net of rpi £2828
member contributions over period £7207
transfer value of pension accrued over period at 29 april 2006 net of rpi £39000
andrew allner is not a member of the pension scheme and instead receives a fixed salary supplement of £65824 per annum in lieu of
this entitlement
normal retirement age for executive directors is 60
remuneration committee report 35 rhm annual report and accounts 2006
jul05
80
85
90
95
100
105
110
115
120
125
aug05 sep05 oct05 nov05 dec05 jan06 feb06 mar06 apr06
rhm        ftse food producers 36 rhm annual report and accounts 2006
other benefits
each executive director is contractually entitled to a lump sum life assurance benefit of four times salary and is provided with a fully
expensed company car or cash allowance private health cover and permanent health insurance the taxable value of these benefits is
included in the table of directors’ remuneration on page 37
service contracts
the executive directors’ service contracts have no fixed term and continue until terminated by the company giving 12 months’ notice 
or the director giving six months’ notice there are no provisions within the contracts for any payments on early termination other than
salary and benefits accrued to the date of termination the contracts are dated 29 june 2005
chairman
jan du plessis was appointed chairman on 1 june 2005 for a period of three years which can be terminated on six months’ notice 
by either party the terms of his appointment and the duties and responsibilities attaching to the role are set out in his letter of
appointment on appointment he received a oneoff fee of £150000 for work done in respect of the flotation he also acquired
219300 shares from doughty hanson immediately prior to the flotation
for his regular ongoing duties as chairman he receives an annual fee of £150000 he does not participate in the company’s incentive
or pension arrangements any future reviews of his remuneration arrangements will be conducted by the remuneration committee
nonexecutive directors
nonexecutive directors are engaged by means of letters of appointment which set out their duties and responsibilities they have been
appointed for an initial threeyear term which is terminable on three months’ notice by either party on termination nonexecutive
directors are entitled to fees and expenses accrued to the date thereof
doughty hanson also has the right to nominate one director for appointment to the board so long as they hold more than 10 of 
the shares of the company richard hanson is currently this nominee prior to flotation john leahy and janka vazanova were also
representatives of doughty hanson on the board resigning on 29 june 2005
name date of appointment notice
erhard schoewel 14 october 2005 3 months
michael baulk 1 september 2005 3 months
roger matthews 1 september 2005 3 months
richard hanson 14 july 2000
the remuneration of the nonexecutive directors is approved by the board on the recommendation of the chairman and executive
members of the board
their remuneration comprises a standard fee of £35000 per annum plus an additional fee of £10000 for the responsibility of chairing
the audit or remuneration committee the remuneration takes into account the level of responsibility experience and abilities required
and the marketplace for similar positions
fees payable 
per annum from 
july 2005
chairman £150000 
basic nonexecutive fee £35000
chairman of audit or remuneration committee £10000
the chairman and the other nonexecutive directors are not eligible to participate in the company’s bonus arrangements ltip 
pension or benefit arrangements 
remuneration committee report the remuneration of the directors for the year ended 29 april 2006 was as follows
salaryfees salaryfees bonus bonus benefits benefits total total
2006 2005 2006 2005 2006 2005 2006 2005
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
ian mcmahon 574 571 81 420 23 36 678 1027
andrew allner 381 341 55 275 5 23 441 639
jan du plessis 288 – – – – – 288 –
michael baulk 23 – – – – – 23 –
roger matthews 45 – – – – – 45 –
erhard schoewel 25 – – – – – 25 –
richard hanson – – – – – – – –
• benefits principally comprise a motor vehicle ian mcmahon only fuel andrew allner only medical and permanent health
insurance and life assurance
• ian mcmahon’s salary figure above includes a supplement of £126000 in respect of pension provision above the earnings cap
• andrew allner’s salary figure above includes a supplement of £65824 in respect of pension provision and a cash car allowance 
of £13000
• the fee of jan du plessis includes a oneoff sum of £150000 paid in respect of work in connection with the flotation
• roger matthews’ fee above includes a oneoff sum of £15000 paid in respect of additional work relating to the group’s internal
audit function
• richard hanson receives no fee from the company as the nominated representative of doughty hanson neither john leahy nor
janka vazanova received any fee from the company for the same reason
other directorships
the company is supportive of executive directors who wish to accept nonexecutive directorship of another company in order to
broaden their experience but this is restricted to a single appointment per director fees received in respect of another appointment
may be retained by the director for the year andrew allner received £40000 in respect of his nonexecutive directorship of 
marshalls plc
directors’ interests in the shares of the company
the beneficial interests of directors at the end of the year in shares in rhm plc were
ordinary shares ordinary shares
of 1p each at of 01p each on
1 may 2005 ordinary shares 1 july 2005 ordinary shares
or on of 1p each on or on of 01p each at
name appointment 30 june 2005 appointment 29 april 2006
jan du plessis – – 219300 219300
ian mcmahon 250000 250000 2500000 2000000
andrew allner 100000 100000 1000000 800000
michael baulk ––– –
richard hanson 20819 20819 208190 3289617
roger matthews – – 15000 15000
erhard schoewel ––– –
• a 10 for 1 share split took place on 30 june 2005 in preparation for the flotation
• excludes interests pursuant to the ltip as disclosed below
• jan du plessis purchased 219300 ordinary shares on 30 june 2005 from dh partnerships and coinvestors
• richard hanson holds his ordinary shares through officers nominees ltd a company which acts as nominee for certain existing 
and former employees and directors of dhc in addition mr hanson is entitled under certain circumstances to receive a portion 
of the proceeds received by the dh partnerships and the coinvestors from the sale of ordinary shares sold by such parties 
of the 3289617 shares disclosed above 3081714 are held by a discretionary trust of which mr hanson is a potential beneficiary
37 rhm annual report and accounts 2006 remuneration committee report • each executive director and member of senior management agreed to lockup arrangements whereby for a period of 365 days 
after flotation they would not offer sell contract to sell mortgage charge assign issue options or warrants in respect of grant 
any option to purchase or otherwise dispose of directly or indirectly any ordinary shares of the company without the prior written
consent of credit suisse securities europe limited this undertaking is subject to certain exceptions as are usual in agreements of
this nature 
• no director holds any nonbeneficial interest in ordinary shares except as disclosed above in respect of richard hanson
• there has been no change in directors’ interests since the year end
conditional awards of ordinary shares made to executive directors under the ltip are shown below
interest in shares awarded interest in value of award earliest date 
shares at in year on shares at per share on awards can vest
director 1 may 2005 22 july 2005 29 april 2006 22 july 2005 under ltip
ian mcmahon – 163636 163636 275p 22 july 2008
andrew allner – 83181 83181 275p 22 july 2008
the aggregate number of ordinary shares conditionally awarded during the year to the company’s senior employees is 1769977 
for a description of the performance and vesting conditions see the disclosures relating to the plan on pages 33 to 35 
rhm group uk employees’ benefit trust “ebt”
as at 29 april 2006 the trustee of the ebt held 1326890 ordinary shares in the capital of the company 2005 40329 this figure
represents 132689 shares of 1p each in the capital of the company prior to the 10 for 1 split on flotation
during the year the trustee purchased 130360 shares of 1p each 2005 238752 for an aggregate consideration of £1746188
2005 £541855 the shares were purchased from employees ceasing to be employed by the group the trustee sold 38000 shares of
1p each 2005 215578 to employees for an aggregate consideration of £576080 2005 £396520 these transactions were carried
out prior to flotation since flotation the trustee’s holding has been used as a hedge with regard to the ltip
compliance statement
in accordance with the uk directors’ remuneration report regulations 2002 the audited part of the remuneration committee report
comprises the following information
• individual directors’ emoluments
• information concerning the ltip
• pensions disclosures
• definitions and interpretations of the above
• approval of the report
the remaining parts are not subject to audit
erhard schoewel
chairman of the remuneration committee
28 june 2006
38 rhm annual report and accounts 2006 remuneration committee report 39 rhm annual report and accounts 2006
corporate governance review
governance
the board is accountable to shareholders for the running of the company and continues to aspire to high standards of corporate
governance believing that good decisionmaking is fundamental to the longterm success of the business
governance processes were reviewed in preparation for the initial public offering by which the shares were listed and the principles set
out in section 1 of the combined code – principles of good governance and code of best practice issued in july 2003 the “code”
have been applied from june 2005 onwards the compliance statement at the end of this review gives further detail on this point 
the board’s approach has been to be guided by the code and ensure that the spirit of the code is observed at the board and within 
the company 
the board
the board takes responsibility for the overall direction of the rhm businesses and decisionmaking processes within the organisation 
it oversees and approves the rhm operating structure under which authority for decisionmaking is reserved or delegated ensuring
that decisionmaking is taken at the right level within the organisation leaving day to day operations to the executive directors and
senior management 
the board has a schedule of matters formally reserved for its decision this includes the approval of overall group strategy and financial
policy board and committee memberships acquisitions and disposals and major capital expenditure the operational running of the
business is delegated to the executive directors and senior management
board composition
the board comprises the chairman two executive directors namely the chief executive and group finance director and four 
nonexecutive directors of whom three are independent for the purposes of the code roger matthews is the senior independent 
nonexecutive director richard hanson as a director of doughty hanson which holds a substantial interest in the shares of the
company is not considered to be independent the board contains a majority of nonexecutive directors and half of the board
excluding the chairman are considered independent 
the board has a range of backgrounds and experience which it is believed are appropriate to a company of rhm’s size and business 
board committees
the board has delegated certain areas of responsibility to subcommittees as recommended by the code these are the audit
remuneration and nominations committees as stated above these consist of a majority or entirety of independent nonexecutive
directors terms of reference are available on the company’s website these terms of reference are aimed at reflecting good practice
deemed appropriate for rhm the audit and remuneration committees follow the guidance relating to such committees appended 
to the code 
jan du plessis was appointed as chairman following the advice of external consultants under the direction of the executive directors
and subsequent appointments were made under the direction of the chairman in february 2006 the nominations committee was
formally established
new appointments received an induction to the board and the company including its business plans senior management and
operational site visits
operational overview 
a written statement of responsibilities between the chairman and the chief executive has been agreed broadly the chairman is
responsible for the management of the board and the good governance of the group whilst the chief executive is responsible for 
the management of the group’s business and operations
at board meetings performance is reviewed via standing reports from the chief executive and group finance director as well as regular
presentations from senior management other business is brought to the board for noting or decisionmaking as appropriate  meetings
the board has met 10 times in the year since listing the board has met eight times this year with committee meetings as required 
the intention is that the board will meet nine times a year going forward the following table sets out the number of meetings and
attendance by each member
audit remuneration nomination 
board committee committee committee
total may 2005 – april 2006 10 1 2 1
jan du plessis 10 10 – – 1 1
ian mcmahon 10 10 – – –
andrew allner 10 10 – – –
richard hanson 5 10 – – – 1
roger matthews 8 8 1 1 2 2 1 1
michael baulk 5 8 1 1 1 2 1 1
erhard schoewel 5 8 1 1 2 2 1 1
figures in brackets indicate the number of meetings held since appointment
the subcommittees of the board were established in february 2006 prior to that time matters that would otherwise have been
considered at subcommittees were reviewed by the board
board papers are circulated in advance of meetings so that directors may make informed decisions in respect of the business
directors are entitled to take independent legal advice at the expense of the company in furtherance of their duties under the
guidance of the company secretary 
shareholder approval of directors
in accordance with the principles of the code a third of the board will retire each year and submit themselves for reelection by the
shareholders directors submit themselves for election at the first general meeting after their appointment in accordance with the
articles of association and if elected serve for a term of 36 months before offering themselves for reelection 
at the first annual general meeting since flotation the following directors will be offering themselves for election
roger matthews
michael baulk
erhard schoewel
brian buchan appointed after the year end
biographies of the directors in office at the year end are set out on page 30
if reelected the board has agreed that to avoid all the independent nonexecutive directors offering themselves for reelection at 
the same time in three years time directors may offer themselves for reelection earlier to ensure that there is suitable continuity of
representation by staggering elections
board committee and chairman’s evaluations
as the board is newly constituted it has been decided to undertake an evaluation of its performance and of its chairman’s and its
committees’ performance once 12 months’ operation has been completed no evaluations have therefore been made in the current year
the nonexecutive directors met without executives present on one occasion in the period
executive committee
the board has formally delegated the day to day operational management of the business to the executive directors the chief
executive chairs a committee the “executive committee” made up of the executive directors and certain members of the senior
management team including the chief operating officers of the three business divisions and heads of certain functions 
the executive committee is also provided with reports from other management groups these groups are created where there is a 
need to consider matters in more detail with a view to recommending options for the executive committee to review the intention 
of these bodies is to assist in ensuring informed and balanced decisionmaking throughout the group 
these groups are comprised of different managers in order to review items such as investment proposals risk management structures
and processes pensions and food issues 
audit committee 
the audit committee was established by the board for the primary purpose of overseeing the accounting financial reporting internal
financial control and risk management processes of the group the committee is chaired by roger matthews and its other members are
michael baulk and erhard schoewel all of whom are independent of the company roger matthews has been identified by the board
as having recent and relevant financial experience for the position of chairman
40 rhm annual report and accounts 2006 corporate governance review the committee keeps under review the effectiveness of the group’s financial reporting and internal control policies and its procedures
for the identification and assessment of risk and reports on these to the board it monitors the integrity of the company’s interim and
annual financial statements together with other financial information prepared for compliance purposes prior to their submission to the
board and ensures that such statements fully comply with all relevant legal regulatory and accounting requirements it also has primary
responsibility for the appointment of the external auditors and the subsequent scope of their engagement as well as monitoring their
independence and making recommendations as to their remuneration any changes in accounting policy or practice would also fall to
the committee for review 
in executing its responsibilities the audit committee will meet the auditors at least twice a year once without the presence of executive
management and review the effectiveness of the audit 
the audit committee also considers any nonaudit services provided by the auditors in order to ensure their continuing independence
and objectivity considerable nonaudit work has been carried out in the current year by pricewaterhousecoopers llp with regard to
the flotation in july 2005 as well as on a consulting project relating to the group pension scheme these are detailed in the notes to
the accounts the audit committee is of the opinion that the auditors were the appropriate advisers for this work due to their prior
knowledge of the group’s activities
going forward a policy has been approved by the audit committee to ensure the continued independence and objectivity of the
auditors under this policy the auditors are excluded from consideration for certain types of professional services that could lead to a
potential conflict of interest it is expected that the amount of nonaudit work will reduce significantly in the coming year
the company established “whistleblowing” procedures for the treatment of complaints or anonymous submissions from employees
regarding possible wrongdoing by the company in financial or other matters which have become part of the responsibilities of the
audit committee since its establishment any such submissions would be treated in confidence and investigated independently
since flotation the company established an internal audit function for the first time the function is cosourced with deloitte  touche
llp and reports to the audit committee the audit committee receives regular updates on the work of the internal audit function and
reviews and approves the planned scope of its work and budget it is the responsibility of the audit committee to satisfy itself that this
function is adequately resourced 
internal control
the directors acknowledge their responsibility for the system of internal control and for reviewing its effectiveness they also recognise
however that such a system cannot eliminate risk and as such can only provide reasonable but not absolute assurance against the
group failing to meet its business objectives or suffering a material loss
the group maintains a comprehensive system of internal control the principal components of which are
• a clearly defined organisational and operating structure which sets out reporting lines and levels of delegated authority within 
that structure
• a comprehensive set of policies and guidance covering areas such as corporate governance risk management project management
management and financial accounting human resources the environment treasury matters procurement and food safety
• a robust budgeting planning and reporting process for all businesses focused on the setting of appropriate objectives and targets
and the monitoring of performance against those targets including quarterly business reviews and 
• the use of self assessment to evaluate the design and operation of internal controls across the group
as part of the due diligence processes undertaken in connection with the flotation the group undertook a number of activities
designed to strengthen and formalise the group’s system of internal control these activities were
• the documentation and communication of the group’s principal operating financial risk management and governance policies 
this process produced the “rhm risk management framework” that was adopted by the board on 29 june 2005 responsibility
for the maintenance of this framework lies with the group hr director the company secretary and the director of financial
planning and control
• the expansion of the group’s risk management activities including the adoption of a common risk model the formation of divisional
and group risk committees and the establishment of divisional and group risk registers and
• the establishment of an internal audit function to provide assurance activities linked to identified risks and the approval of an
internal audit plan for the first year to focus specifically on the review of the design and operation of basic financial controls
the board was satisfied at the time of the flotation that governance structures and the internal control framework were adequate to
meet the requirements of the code 
examples of reports received and reviewed by the board or the audit committee of an internal control nature in the year are
• monthly reports covering the performance of each business against budget for the year ended 29 april 2006
• a three year plan
• a budget for the group for the year
• reports covering commodity and treasury risk management activities
41 rhm annual report and accounts 2006 corporate governance review • a group risk register
• a review of all capital projects with an investment over specified values
• a summary of the results of the groupwide self assessment of internal controls updated as at the year end
• selfcertification from divisional and company chief operating officers or business managing directors and divisional finance
directors relating to the operation of an effective internal control environment in their divisions for the year ended 29 april 2006
• updates from the external auditors
• regular updates on the execution of the internal audit plan and various internal audit reports and 
• a review of the effectiveness of the whistleblowing policy in place across the group
these reports are considered adequate to enable the board to build up a cumulative assessment of the state of control in the group and
the effectiveness with which risk is being managed
as a consequence the board has concluded that in the year under review the system of internal control has been reviewed in line with
the guidance applicable for the year ended 29 april 2006
nature of the risks faced by the group
the nature of those risks has been categorised by the company as falling within strategic operational financial and compliance areas 
examples of these would be increases in raw material or other input prices difficulty in selling specific products credit risks on major
counterparties consistent change in regulation in our fields of operations and where risks arising can impact on the reputation of the
group its products and brands or its managers 
the flotation prospectus laid out the main risks to rhm faced at that time and the board does not consider that they have changed
materially since then 
particularly highlighted were the following key risks
• a dependency on certain major customers
• a dependency on certain brands for large parts of its value
• the need to improve performance in its branded cakes business
• the need for a consistent pipeline of new product development and
• the highly competitive nature of the uk food market
the company also drew attention to the risks associated with the rhm pension scheme given its long history and the extent of its
liabilities the risks highlighted included the fact that it is not fully funded that the valuation is based on certain assumptions which may
vary over time and that the pension trustee has a material degree of control over the scheme 
compliance statement 
for the year under review the directors consider that the company complied with the provisions of the code with the following
exceptions
• until february 2006 the board had not appointed a senior nonexecutive director roger matthews now fulfils that role
• the board operated without subcommittees until february 2006
• as stated above the board and its committees has not yet undertaken an evaluation process of its own performance and that of 
the board chairman
shareholder communications
the board is committed to maintaining an open and constructive dialogue with all of its major shareholders
the chief executive group finance director and director of investor relations with the support of the chairman maintain a
programme of regular visits and presentations to major institutional shareholders these presentations are made available to all
shareholders via the corporate website all directors are kept fully appraised of current investor and market commentator sentiment 
via regular board updates from the company’s broker and investor relations advisor board members also receive copies of all material
analyst reports published on the company
at the annual general meeting the board will be available to meet as wide a range of shareholders as possible and for the chairman to
explain the company’s progress and receive questions from investors it is anticipated that all directors will attend the annual general
meeting on 26 september 2006 
at the meeting in september the company will provide for the vote on each resolution to be by poll using an electronic voting system
rather than by a show of hands this is in line with best practice in this area and will make for greater transparency allowing the votes
of all shareholders to be taken into account including those cast by proxy the voting results will be announced via the regulatory
news service on the same day
42 rhm annual report and accounts 2006 corporate governance review principal activities
the principal activities of the group continue to be food manufacturing and distribution
review of business
a review of the group’s business during the year and future prospects are given on pages 12 to 21
profit and dividends
the results for the year are set out in the consolidated income statement on page 46
the directors have recommended the payment of a final dividend of 106p if approved at the agm it will be payable on 
29 september 2006 to shareholders on the register on 1 september 2006
total dividends for the year are as follows
interim dividend paid 53p £184m
final dividend proposed 106p £366m
total dividend for 2006 158p £550m
share and loan capital
immediately prior to and conditional upon the admission of the company’s shares to the official list of the ukla and to trading on 
the london stock exchange on 22 july 2005
i 1875000 ordinary shares were issued and allotted at par in order to satisfy the exercise of an option and a further 172727273
ordinary shares were issued and allotted at a price of 275p per share as part of the global offer under the underwriting and
sponsor agreement and 
ii each of the outstanding issued “a” ordinary shares were converted into ordinary shares
substantial shareholdings
as of 28 june 2006 the company has been notified in accordance with sections 198 to 208 of the companies act 1985 of the
following interests in its issued ordinary share capital 
ordinary shares 
dh partnerships  coinvestors 92686201 2661
barclays plc 42514353 1221
merrill lynch  co inc 19658858 564
franklin resources inc 10767990 309
research and development
applied research and development work continues to be directed towards the introduction of new and improved products 
the application of new technology to reduce unit and operating costs and to improve service to customers
directors and their interests
the directors who served during the year and their biographies are given on page 30 details of their interests in the shares of the
company are given on page 37
jan du plessis was appointed as chairman on 1 june 2005 michael baulk and roger matthews were appointed as nonexecutive
directors on 1 september 2005 and erhard schoewel was appointed as a nonexecutive director on 14 october 2005 as announced 
on 29 june 2006 after the date of this report but prior to its printing brian buchan was appointed on 1 july 2006
messrs baulk matthews schoewel and buchan have been appointed to the board since the last general meeting and will therefore 
be offering themselves for election at the forthcoming agm 
directors’ interests in contracts
no contract existed during the year in relation to the company’s business in which any director had a material interest
directors’ and officers’ liability
the company has arranged liability insurance covering the directors and officers of the company and its subsidiaries
employment policies
the company recognises the importance of encouraging all employees to contribute to the achievements of the group it has a
comprehensive set of employment practices designed to achieve that objective in particular the group’s equal opportunities policy is
designed to create an environment in which all employees are encouraged to develop their individual potential whatever their sex race
religion colour age or disability the same opportunities for training career development and promotion are available to all employees
including those with disabilities in so far as that disability does not prevent them from performing their job or any suitable alternative
available job applications for employment by disabled persons are fully considered bearing in mind the respective aptitudes and abilities
of the applicant concerned
43 rhm annual report and accounts 2006
report of the directors consultation with employees or their representatives takes place at all levels there is an rhm european employment forum which
satisfies the requirements of the european works council directive and other communication processes appropriate to the company’s
businesses these are designed to ensure that employees’ views are taken into account when decisions are made that are likely to affect
their interests
great importance is attached to the quality of communication with all employees employees are provided with information about the
performance of the group through a variety of briefing mechanisms appropriate to their circumstances
creditor payment policy
the group’s policy is to determine terms and conditions of payment with suppliers when negotiating each transaction to ensure that
suppliers are made aware of the terms and how disputes are to be settled and to abide by the terms of payment
the average number of days’ credit taken by the group for trade purchases at 29 april 2006 was 43 days 2005 39 days
charitable and political donations
during the year the group made various charitable donations totalling £18283 2005 £31246 no political donations were made
2005 nil
directors’ responsibilities
company law requires the directors to prepare financial statements for each financial year that give a true and fair view of the state 
of affairs of the company and the group and of the profit or loss of the group for that period
in preparing those financial statements the directors are required to select suitable accounting policies and then apply them on a
consistent basis making judgements and estimates that are prudent and reasonable the directors must also prepare the financial
statements on the going concern basis unless it is inappropriate to presume that the company will continue in business and ensure 
that applicable accounting standards have been followed
the directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial
position of the group and enable them to ensure that the financial statements comply with the companies act 1985 the “act” 
the directors are also responsible for safeguarding the assets of the group and for taking reasonable steps for the prevention and
detection of fraud and other irregularities
so far as each director is aware there is no relevant audit information as defined by the act of which the auditors are unaware 
each director has taken all steps that ought to be taken by a director to make themselves aware of and to establish that the auditors
are aware of any relevant information
a copy of the financial statements is placed on the rhm group website the maintenance and integrity of this website is the responsibility 
of the directors the work carried out by the auditors does not involve consideration of these matters and accordingly the auditors accept 
no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website
legislation in the united kingdom governing the preparation and dissemination of financial statements may differ from legislation in
other jurisdictions
going concern
the balance sheet shows the financial position of the group at 29 april 2006 the group has sufficient funding arrangements in place
to meet its liquidity requirements and is in a position to service its debt obligations as they fall due the group is not in breach of any
financial covenants or loan agreements as a result of this and after having made due and careful enquiries the directors have a
reasonable expectation that the group has adequate resources to continue in existence for the foreseeable future for these reasons
they continue to adopt the going concern basis in the preparation of the financial statements
auditors
resolutions proposing the reappointment of pricewaterhousecoopers llp as the company’s auditors and authorising the directors to
determine their remuneration will be proposed at the forthcoming annual general meeting
authority to make market purchases
the company will be seeking authority at the forthcoming agm to make market purchases of its own shares in line with current
practice the company does not currently have this authority
agm
the annual general meeting of the company is to be held at haberdashers’ hall at 230 pm on tuesday 26 september 2006 notice of
the meeting together with explanatory notes is given in the booklet accompanying this report
by order of the board
andrew allner
group finance director
28 june 2006
registered office
chapel house liston road
marlow buckinghamshire sl7 1tj
registered in england and wales number 3946774
44 rhm annual report and accounts 2006 report of the directors we have audited the group and parent company financial statements the ‘‘financial statements’’ of rhm plc for the year ended 
29 april 2006 which comprise the group income statement the balance sheets the cash flow statements the statement of recognised
income and expense and the related notes these financial statements have been prepared under the accounting policies set out
therein we have also audited the information in the remuneration committee report that is described as having been audited
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report the remuneration committee report and the financial statements in
accordance with applicable law and international financial reporting standards ifrss as adopted by the european union are set out 
in the report of the directors
our responsibility is to audit the financial statements and the part of the remuneration committee report to be audited in accordance
with relevant legal and regulatory requirements and international standards on auditing uk and ireland this report including the
opinion has been prepared for and only for the company’s members as a body in accordance with section 235 of the companies act
1985 and for no other purpose we do not in giving this opinion accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing
we report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements 
and the part of the remuneration committee report to be audited have been properly prepared in accordance with the companies 
act 1985 and article 4 of the ias regulation we report to you whether in our opinion the information given in the report of the
directors is consistent with the financial statements we also report to you if in our opinion the company has not kept proper
accounting records if we have not received all the information and explanations we require for our audit or if information specified 
by law regarding directors’ remuneration and other transactions is not disclosed
we review whether the corporate governance review reflects the company’s compliance with the nine provisions of the 2003 
frc combined code specified for our review by the listing rules of the financial services authority and we report if it does not 
we are not required to consider whether the board’s statements on internal control cover all risks and controls or form an opinion 
on the effectiveness of the group’s corporate governance procedures or its risk and control procedures
we read other information contained in the annual report and consider whether it is consistent with the audited financial statements
the other information comprises only the report of the directors the unaudited part of the remuneration committee report the
financial highlights the case studies the chairman’s comments the chief executive’s review the financial review the corporate
social responsibility review the board of directors and executive management sections the corporate governance review and the
financial calendar 2006 we consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements our responsibilities do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with international standards on auditing uk and ireland issued by the auditing practices
board an audit includes examination on a test basis of evidence relevant to the amounts and disclosures in the financial statements
and the part of the remuneration committee report to be audited it also includes an assessment of the significant estimates and
judgments made by the directors in the preparation of the financial statements and of whether the accounting policies are appropriate
to the group’s and company’s circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order 
to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the remuneration
committee report to be audited are free from material misstatement whether caused by fraud or other irregularity or error in forming
our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the
remuneration committee report to be audited
opinion
in our opinion
• the group financial statements give a true and fair view in accordance with ifrss as adopted by the european union of the state
of the group’s affairs as at 29 april 2006 and of its profit and cash flows for the year then ended
• the parent company financial statements give a true and fair view in accordance with ifrss as adopted by the european union as
applied in accordance with the provisions of the companies act 1985 of the state of the company’s affairs as at 29 april 2006 and
cash flows for the year then ended
• the financial statements and the part of the remuneration committee report to be audited have been properly prepared in
accordance with the companies act 1985 and article 4 of the ias regulation and
• the information given in the report of the directors is consistent with the financial statements
as explained in note 2 to the group financial statements the group in addition to complying with its legal obligation to comply with
ifrss as adopted by the european union has also complied with the ifrss as issued by the international accounting standards board
in our opinion the group financial statements give a true and fair view in accordance with ifrss of the state of the group’s affairs as
at 29 april 2006 and of its profit and cash flows for the year then ended
pricewaterhousecoopers llp
chartered accountants and registered auditors
london 28 june 2006
45 rhm annual report and accounts 2006
independent auditors’ report 
to the members of rhm plc 46 rhm annual report and accounts 2006
year ended year ended
29 april 2006 30 april 2005
note £m £m
continuing operations
revenue 4 15593 15275
cost of sales 9875 9893
gross profit 5718 5382
distribution costs 2944 2838
administrative expenses 1040 981
other operating income 01 19
operating profit before restructuring costs 1735 1582
gain on pension curtailment 5 – 473
gain on sale of properties 5 06 217
other restructuring costs 5 311 439
flotation costs 24 11
operating profit 6 1406 1822
finance costs 9 552 1137
debt redemption costs 9 781 48
share of results of associates 16 01 –
profit on ordinary activities before taxation 74 637
income tax chargecredit on profit on ordinary activities 10 16 119
income tax credit on pension liability 10 – 958
profit for the year from continuing operations 58 1714
discontinued operations 11 67 195
profit for the year 125 1909
attributable to
equity holders 125 1910
minority interests – 01
125 1909
earnings per share for the profit attributable to the equity holders 
of the company during the year expressed in pence
basic
continuing operations 19 990
discontinued operations 22 113
total 13 41 1103
diluted
continuing operations 19 979
discontinued operations 22 112
total 13 41 1091
the company has elected to take the exemption under section 230 of the companies act 1985 and has chosen not to present its
individual company profit and loss account and related notes
consolidated income statement 47 rhm annual report and accounts 2006
year ended year ended
29 april 2006 30 april 2005
note £m £m
profit for the financial year 125 1909
gains on cash flow hedges 29 29 –
deferred tax on gains on cash flow hedges 28 09 –
exchange gain 29 05 –
actuarial gains 28 1049 1325
pension mortality 28 960 –
deferred tax on pension mortality 28 288 –
deferred tax on actuarial gains 28 315 –
net gains not recognised in income statement 87 1325
total recognised income for the year 212 3234
ias 39 opening balance adjustment 58 –
deferred tax on opening balance adjustment 17 –
attributable to
equity holders of the parent 212 3233
minority interests – 01
212 3234
statement of recognised 
income and expense at at
29 april 2006 30 april 2005
note £m £m
noncurrent assets
property plant and equipment 15 4288 4253
goodwill 14 1518 1502
other intangible assets 14 3283 3283
investment in associates 16 05 04
other receivables 18 06 09
deferred tax asset 23 752 764
9852 9815
current assets
inventories 17 702 694
trade and other receivables 18 2169 2055
financial assets 22 08 –
cash and cash equivalents 19 719 878
3598 3627
assets classified as held for sale 15 12 56
3610 3683
current liabilities
trade and other payables 20 2578 2760
current income tax liabilities 31 21
financial liabilities 22 03 –
borrowings 21 180 291
provisions 24 63 221
2855 3293
net current assets 755 390
total assets less current liabilities 10607 10205
noncurrent liabilities
borrowings 21 22 7431 9985
other payables 20 44 50
pension obligations 30 1625 3211
provisions 24 198 127
9298 13373
net assetsliabilities 1309 3168
equity
calledup share capital 26 28 04 02
share premium account 26 28 4667 172
own shares 28 13 01
other reserves 29 39 –
retained earnings 28 3389 3342
capital and reserves attributable to the company’s equity holders 1308 3169
minority interests 28 01 01
total equity 1309 3168
approved by the board of directors on 28 june 2006
48 rhm annual report and accounts 2006
consolidated balance sheet at 29 april at 30 april
2006 2005
note £m £m
noncurrent assets
investment in subsidiaries 16 4892 167
trade and other receivables 18 680 –
5572 167
current assets
trade and other receivables 18 11 –
income tax 11 –
cash and cash equivalents 19 10 –
32 –
current liabilities
bank overdraft 19 – 05
trade and other payables 20 76 01
76 06
net current liabilities 44 06
total assets less current liabilities 5528 161
noncurrent liabilities
trade and other payables 20 231 28
231 28
net assets 5297 133
equity
calledup share capital 26 04 02
share premium account 26 4667 172
share based incentive plan 28 05 –
retained earnings 28 621 41
total equity 5297 133
approved by the board of directors on 28 june 2006
49 rhm annual report and accounts 2006
company balance sheet group company
year ended year ended year ended year ended 
29 april 2006 30 april 2005 29 april 2006 30 april 2005
note £m £m £m £m
cash flows from operating activities
cash generated from operations 31 1439 1172 15 01
interest paid 539 669 – –
income tax paid – net 13 59 – –
net cash generated from operating activities 887 444 15 01
cash flows from investing activities
purchases of property plant and equipment ppe 601 608 – –
purchases of intangibles 33 17 – –
proceeds from sale of ppe 90 370 – –
pension contribution on sale of subsidiary 10 106 – –
cash disposed of with subsidiary 11 – 67 – –
proceeds on disposal of subsidiary 11 09 787 – –
interest received 06 22 – –
net cash generated from investing activities 539 381 – –
cash flows from financing activities
issue of shares 3 28 4752 – 4752 –
share issue costs 3 28 255 – 255 –
investment in subsidiary 16 – – 4725 –
pension contributions 30 1267 – – –
purchase of treasury shares 28 12 – – –
increase in shortterm borrowings – 08 – –
capital element of finance leases 13 08 – –
repayment of secured loan 3 32 10137 2033 – –
refinancing costs 3 808 – – –
proceeds from new loans issued 3 32 7417 745 – –
decrease in intercompany funding – – 476 –
dividends received – – 888 –
dividends paid to shareholders 184 – 184 –
dividends paid to minority interests – 02 – –
net cash used in financing activities 507 1290 – –
net decrease in cash and bank overdrafts 159 465 15 01
cash and cash equivalents at the beginning of the year 878 1343 05 04
cash and cash equivalents at the end of the year 19 719 878 10 05
50 rhm annual report and accounts 2006
consolidated cash flow statement 1 general information
rhm plc the “company” is a company incorporated in the united kingdom under the companies act 1985
rhm plc formerly rhm group one limited reregistered as a public limited company and changed its name to rhm plc on 
1 july 2005 on 22 july 2005 rhm plc’s shares were admitted to the official list of the ukla and to trading on the london stock
exchange see note 3 rhm plc and its subsidiaries together the “group” operate in the food manufacturing and distribution
industry principally in the united kingdom
the operating companies of the group are disclosed within note 36
2 summary of significant accounting policies
21 basis of preparation
these financial statements have been prepared in accordance with international financial reporting standards and international
financial reporting interpretations committee ifric interpretations as adopted for use in the eu effective for the year ended 
29 april 2006 and with those parts of the companies act 1985 applicable to companies reporting under ifrs the financial statements
are prepared under the historical cost convention as modified by revaluation of financial assets and liabilities held for trading
during the year the iasb and ifric have issued the following standards and interpretations which have an effective date post the
financial statements
ifrs 7 “financial instruments disclosures”
ias 1 amendment presentation of financial statements – capital disclosures
ias 21 amendment net investment in foreign operations
ias 39 fair value option
ias 39 amendment to ias 39 and ifrs 4 financial guarantee contracts
ifric 4 determining whether an arrangement contains a lease
ifric 5 rights to interests arising from decommissioning restoration and environmental rehabilitation funds
ifric 6 waste electrical and electronic equipment
ifric 7 applying ias 29 for the first time in hyperinflationary economies
ifric 8 scope of ifrs 2 “sharebased payment”
ifric 9 reassessment of embedded derivatives
the directors do not anticipate that the adoption of the above standards and interpretations will have a material impact on the financial
statements of the group adoption of ifrs 7 requires additional disclosures of capital and financial instruments for periods commencing
on or after 1 january 2007 there will be no effect on reported income or net assets
a summary of the more important group accounting policies is set out below together with an explanation of where changes have
been made to previous policies on the adoption of new accounting standards in the year
the consolidated financial statements of the group prior to 30 april 2005 had been prepared in accordance with generally accepted
accounting principles in the united kingdom uk gaap the comparative figures within this report for the full year ended 30 april
2005 are restated for ifrs except for ias 32 “financial instruments disclosure and presentation” and ias 39 “financial instruments
recognition and measurement” full details of the restatement and reconciliations of the uk gaap financial information for the year
ended 30 april 2005 are in note 37
the preparation of financial statements that conform to ifrs requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period although these estimates are based on management’s best knowledge of the amount event or actions actual results
ultimately may differ from those estimates
the annual financial statements are made up to the saturday nearest to 30 april the 2006 financial statements are for the 52 weeks
ended 29 april 2006 2005 52 weeks ended 30 april 2005
51 rhm annual report and accounts 2006
notes to the financial statements 2 summary of significant accounting policies continued
22 ifrs 1 exemptions
the group has adopted ifrs 1 “firsttime adoption of ifrs” for these financial statement and has applied the following relevant
optional exemptions from full retrospective application of ifrs
a only to apply ias 32 “financial instruments disclosure and presentation” and ias 39 “financial instruments recognition and
measurement” from 1 may 2005 onward a restatement of the opening balance sheet for the financial year ended 30 april 2005
has been disclosed within note 37
b to allow business combinations which were affected before the ifrs transition date to be exempted from restatement according 
to ifrs 3 “business combinations” in addition the group has elected to continue its treatment of the goodwill on acquisition of
foreign entities before 1 may 2004 as the company’s own asset
c not to apply ifrs 2 “sharebased payments” on sharebased payments as all options were granted prior to 7 november 2002
d to apply ias 21 “the effects of changes in foreign exchange rates” prospectively from the date of transition to ifrs in relation 
to the consolidated cumulative translation differences on foreign operations
e to apply ifric 1 “changes in existing decommissioning restoration and similar liabilities” prospectively from the date of
transition to ifrs in relation to changes in decommissioning restoration or similar liabilities
the group has elected to early adopt ias 19 “amendments to employee benefits” and the option available that is similar to frs 17
under uk gaap the adoption immediately recognises any actuarial gains and losses outside of the income statement
the financial information has been prepared on the historical cost basis as modified by revaluation of financial assets and liabilities held
for trading the principal accounting policies adopted are set out below
23 basis of consolidation
subsidiaries
the consolidated financial information incorporates the financial information of the company and the entities controlled by the
company its subsidiaries control is achieved where the company has the power to govern the financial and operating policies 
of an investee entity so as to obtain benefits from its activities
on acquisition the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of
acquisition any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill
any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired discount on acquisition is credited
to the income statement in the period of acquisition the interest of minority shareholders is stated at the minority’s proportion of the
fair values of the assets and liabilities and contingent liabilities recognised subsequently any losses applicable to the minority interest in
excess of the minority interest are allocated against the interests of the parent unless the minority interests have an obligation to make
good these losses
the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal as appropriate
where necessary adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those
used by the group
all intragroup transactions balances income and expenses are eliminated on consolidation
associates
associates are all entities over which the group has significant influence but not control generally accompanying a shareholding 
of between 20 and 50 of the voting rights investments in associates are accounted for using the equity method of accounting 
and are initially recognised at cost the group’s investment in associates includes goodwill net of any accumulated impairment loss
identified on acquisition
the group’s share of its associates’ postacquisition profits or losses is recognised in the income statement and its share of 
postacquisition movements in reserves is recognised in reserves the cumulative postacquisition movements are adjusted against 
the carrying amount of the investment when the group’s share of losses in an associate equals or exceeds its interest in the associate
including any other unsecured receivables the group does not recognise further losses unless it has incurred obligations or made
payments on behalf of the associate
unrealised gains on transactions between the group and its associates are eliminated to the extent of the group’s interest in the
associate unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred
accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group
associates do not have coterminous financial year ends bakers basco limited has a financial year ending march and staper limited 
has a financial year ending december
52 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
24 revenue recognition
revenue is the value of sales excluding transactions with or between whollyowned subsidiaries after deduction of overrider and 
other sales related discounts value added tax and other salesrelated taxes sales are recognised upon despatch of goods shipped or 
on receipt of confirmation that services provided have been accepted by the customer where the sales price is agreed and collectability
is reasonably assured shipping and handling costs are included in selling and distribution costs
overrider and other sales related discount reserves are calculated based on the expected amounts necessary to meet claims by the
group’s customers in respect of these discounts and rebates
25 segmental reporting
a business segment is a distinguishable component of the group engaged in providing products and services that are subject to risks
and returns that are different from those of other business segments a geographical segment is engaged in providing products and
services within a particular economic environment that are subject to risks and returns that are different from those of segments
operating in other economic environments primary segment reporting reflects the internal management structure and the way the
businesses are managed
intersegment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available
to unrelated third parties
segment assets consist primarily of property plant and equipment intangible assets inventories receivables and operating cash 
they exclude deferred taxation segment liabilities comprise operating liabilities including pension liabilities and exclude items such
as income tax and corporate borrowings
26 other operating income
other operating income consists of rent receivable and royalty income
27 restructuring costs and other nontrading items
restructuring costs include the restructuring of existing businesses any related impairments and the integration of new businesses in 
the group other nontrading items include the disposal of land and buildings pension curtailments and the refinancing of the group
these activities give rise to significant incremental oneoff items that distort the underlying operating profit of the group and therefore
the ability to measure financial performance as a result restructuring costs and other significant nontrading items are included as a
separate line item on the face of the income statement
28 leasing
leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to 
the lessee all other leases are classified as operating leases
assets held under finance leases are recognised as assets of the group at their fair value or if lower at the present value of the
minimum lease payments each determined at the inception of the lease the corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation
lease payments are apportioned between the finance element which is charged to the income statement using the effective interest
rate method and the capital element which reduces the outstanding obligation for future instalments
rentals payable under operating leases are charged to income on a straightline basis over the terms of the relevant leases
lease incentives received are credited to the income statement on a straightline basis over the term of the leases to which they relate
29 provisions
provisions for restructuring costs are recognised when the group has a detailed formal plan for the restructuring that has been
communicated to affected parties provisions are not recognised for future operating losses
provisions for onerous contracts are recognised for the present value of the obligation that arises under the contract
where the time impact of the provision is considered to be material a nominal riskfree pretax rate is used to discount the obligation
to its present value
other provisions are recognised in accordance with ias 37 “provisions contingent liabilities and contingent assets”
210 capitalisation of borrowing costs
borrowing costs incurred directly in connection with the issue of debt are capitalised in the balance sheet reducing the initial carrying
value of debt these costs are released to the income statement over the term of the debt at a constant rate on the carrying amount
53 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
211 property plant and equipment
property plant and equipment are stated at cost less accumulated depreciation depreciation is calculated so as to write off the cost of
an asset less its estimated residual value on a straightline basis over the useful economic life of that asset as follows
computer equipment 3 to 7 years
motor vehicles 2 to 6 years
plant and machinery 2 to 20 years
fixtures and fittings 2 to 15 years
short leasehold buildings length of lease
freehold and long leasehold buildings 10 to 50 years
land is not depreciated interest on borrowings for fixed assets is not capitalised and is taken to the income statement
long leasehold buildings are depreciated over the shorter of their useful economic lives as noted above and the lease terms
subsequent costs are included in the asset’s carrying amount or recognised as a separate asset as appropriate only when it is probable
that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably
all other repairs and maintenance are charged to the income statement during the financial period in which they are incurred
assets in the course of construction are depreciated when they have been commissioned and brought into operational use
commissioning costs relating to the commissioning period for plant where the plant cannot physically operate at normal levels are
deemed to be directly attributable costs and thus are capitalised whilst the machinery is run in and equipment is tested other startup
costs are expensed as incurred
useful economic lives and residual values are reviewed and adjusted if appropriate at each balance sheet date
an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount
gains and losses on disposals are determined by comparing proceeds with carrying amount these are included in the income statement
for leased assets specific provisions are made for dilapidation or decommissioning if there is a legal obligation to return an asset in a
specified condition and a reliable estimate can be made of the cost of fulfilling that obligation
212 intangible assets
brands
brands have been capitalised and assigned values where title is clear brand earnings are separately identifiable the brand could be sold
separately from the rest of the business and where the brand achieves earnings in excess of those achieved by unbranded products 
all brands are acquired and these are not amortised as the directors consider that the brands have an indefinite life and are not written
down unless there is permanent impairment in value below cost see note 213
licence brands are not capitalised
brands are reviewed for impairment at least annually any impairment is recognised immediately in the income statement and is not
subsequently reversed
goodwill
goodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value of the
identifiable assets and liabilities of a subsidiary associate or jointly controlled entity at the date of acquisition
goodwill is recognised as an asset and reviewed for impairment at least annually any impairment is recognised immediately in the
income statement and is not subsequently reversed
on disposal of a subsidiary associate or jointly controlled entity the attributable amount of goodwill is included in the determination 
of the profit or loss on disposal
goodwill arising on acquisitions before the date of transition to ifrs has been retained at the previous uk gaap amounts subject to
being tested for impairment at that date
54 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
212 intangible assets continued
research and development expenditure
expenditure on research activities is recognised as an expense in the period in which it is incurred
costs incurred on development projects relating to the design and testing of new or improved products or processes are recognised 
as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility and
costs can be measured reliably other development expenditure is recognised as an expense as incurred development costs previously
recognised as an expense are not recognised as an asset in a subsequent period development costs that have been capitalised 
are amortised from the commencement of the commercial production of the product on a straightline basis over the period of its
expected benefit
computer software costs
acquired computer software licences and software developed inhouse are capitalised on the basis of the costs incurred to acquire and
bring to use the specific software these costs are amortised over their estimated useful lives of three to seven years
costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred
licences
licences acquired other than those which provide the use of a brand are capitalised as an intangible asset capitalised licences are
amortised over the life of the licence or over 20 years if they have an indefinite life
213 impairment of property plant and equipment and intangible assets
assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually and whenever there 
is an indication that they might be impaired the decision of the directors to adopt indefinite useful lives for brands is based on 
the stability of the industry and the typical life span of the group’s products many of which have been in existence for more than 
100 years assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable
an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount the recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use for the purposes of assessing impairment assets are
grouped at the lowest levels for which there are separately identifiable cash flows cashgenerating units cash flows are then
discounted at a pretax discount rate to provide a value in use
214 government grants
government grants relating to property plant and equipment are treated as deferred income and released to the income statement over
the expected useful lives of the assets concerned
grants from the government are recognised at their fair values where there is a reasonable assurance that the grants will be received
and the group expects to comply with all attached conditions
215 inventories and work in progress
inventories are stated at the lower of cost and net realisable value cost comprises direct materials and where applicable direct labour
costs and those overheads that have been incurred in bringing inventories to their present location and condition cost is determined
using the weighted average cost method net realisable value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing selling and distribution
216 financial assets
financial assets include financial assets at fair value through profit or loss cash and cash equivalents trade receivables and loans 
and receivables financial assets are classified at initial recognition and measured at fair value fair value is the transaction price and 
in the case of financial assets at fair value through profit or loss clearly attributable transaction costs the group has not restated
comparatives in the application of ias 32 and ias 39 as permitted by ifrs 1 firsttime adoption of international reporting standards
see note 37
financial assets at fair value through profit or loss
financial assets held for trading are those acquired in the short term and derivatives classified as held for trading unless they are
designated hedging instruments are included in this category the policy for hedging instruments is disclosed within note 230
cash and cash equivalents
cash and cash equivalents includes cash in hand deposits held at call with banks other shortterm highlyliquid investments with
original maturities of three months or less and bank overdrafts which are included within the group offset arrangement
55 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
216 financial assets continued
trade receivables
trade receivables are recognised initially at fair value less provision for impairment a provision for impairment of trade receivables is
established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms 
of the receivables the amount of the provision is recognised in the income statement within “selling and marketing costs”
loans and receivables
loans and receivables are nonderivative financial assets with fixed or determined payments they do not qualify as trading assets and
are not quoted on an active market such assets are carried at amortised cost using the effective interest method of the time value of
money is significant
217 impairment of financial assets
assets carried at cost
if there is evidence of an impairment loss on a financial asset carried at cost then the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of
return for a similar financial asset
218 financial liabilities
financial liabilities at fair value through profit or loss
financial derivatives classified as held for trading unless they are designated hedging instruments are included in this category 
the policy for hedging instruments is disclosed within note 230
trade and other payables
trade and other payables are initially measured at fair value and subsequently measured at amortised cost trade and other payables 
are subject to discount if the time value of money is considered material
borrowings
borrowings are recognised initially at fair value inclusive of accrued interest the fair value of any interest rate swap held to hedge
borrowings and net of transaction costs incurred borrowings are subsequently stated at amortised cost any difference between the
proceeds net of transaction costs and the redemption value is recognised in the income statement over the period of the borrowings
using the effective interest method
borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date
219 employee benefits
a pensions
the group operates one main defined benefit pension scheme for its uk employees and two further defined benefit schemes covering
most of the eire employees the cost of providing benefits is determined using the projected unit credit method with full actuarial
valuations every three years and updates being carried out at each balance sheet date actuarial gains and losses are recognised in full
in the period in which they occur they are recognised outside the income statement and presented in the statement of recognised
income and expense
the retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as
adjusted for unrecognised past service cost and as reduced by the fair value of scheme assets
b terminations benefits
termination benefits are payable when employment is terminated by the group before the normal retirement date or whenever 
an employee accepts voluntary redundancy in exchanges for these benefits the group recognises termination benefits when it is
demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without
possible withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy
c profitsharing and bonus plans
the group recognises a liability and an expense for bonuses and profitsharing based on a formula that takes into consideration the
profits attributable to the company’s shareholders after certain adjustments the group recognises a provision where contractually
obliged or where there is a past practice that has created a constructive obligation
56 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
220 share capital
ordinary shares are classified as equity incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction net of tax from the proceeds share premium represents the premium received for shares issued over and above their
nominal value
221 taxation
the tax charge or credit is based upon the result for the period and takes into account tax deferred due to timing differences between
the treatment of certain items for tax and accounting purposes
deferred taxation
deferred tax is provided in full using the liability method on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial information however if the deferred tax arises from initial recognition
of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss it is not accounted for deferred tax is determined using tax rates that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax 
liability is settled
deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised
deferred tax is provided on temporary differences arising on investments in subsidiaries and associates except where the timing of 
the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse 
in the foreseeable future
222 sharebased payment
longterm incentive plans and other employee schemes set up since the adoption of ifrs which are to be settled in shares are
accounted for under the guidance of ifrs 2 “sharebased payment”
fair values for equity settled transactions are measured at the date of grant using valuation techniques taking into account 
nontransferability exercise restrictions and performance criteria the fair value of any awards are taken to the income statement 
on a straightline basis over the vesting period
223 noncurrent assetsliabilities held for sale and discontinued operations
noncurrent assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less 
costs to sell
noncurrent assets and disposal groups and related liabilities are classified as held for sale if their carrying amount will be recovered
through a sale transaction rather than through continuing use this condition is regarded as met only when the sale is highly probable
and the asset or disposal group is available for immediate sale in its present condition management must be committed to the sale
which should be expected to qualify for recognition as a completed sale within one year from the date of classification
a discontinued operation is a component of an entity that either has been disposed of or that is classified as held for sale and 
a represents a separate major line of business or geographical area of operations b is part of a single coordinated plan to dispose 
of a separate major line of business or geographical area of operations or c is a subsidiary acquired exclusively with a view to resale
224 investment in own shares
investments in own shares are shown as a deduction in shareholders’ funds
57 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
225 foreign currencies
functional and presentation currency
items included in the financial information of each of the group’s entities are measured using the currency of the primary economic
environment in which the entity operates the functional currency the consolidated financial information are presented in pounds
sterling which is the company’s functional and presentation currency
transactions and balances
foreign currency transactions except where hedge accounting is applied are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement
year ended year ended
principal rate of exchange 1£ 29 april 2006 30 april 2005
year end 144300 147940
average 146450 146376
group companies
the accounts of overseas subsidiary undertakings are translated into pounds sterling on the following basis
i assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet
ii income and expenses for each income statement are translated at average exchange rates and
iii all resulting exchange differences are recognised as a separate component of equity
on consolidation exchange differences arising from the translation of the net investment in foreign entities and of borrowings and
other currency instruments designated as hedges of such investments are taken to shareholders’ equity when a foreign operation is
sold such exchange differences are recognised in the income statement as part of the gain or loss on sale
goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate this only applies to goodwill from acquisitions occurring after 1 may 2004 goodwill arising from
acquisitions prior to 1 may 2004 continues to be treated as an asset of the acquirer
226 post balance sheet events
dividends are a post balance sheet event for the group and company interim dividends are accounted for on a cash basis whilst final
dividends are recognised after approval from shareholders
227 contingent liabilities and assets
a contingent liability is a possible obligation that arises from past events existence will only be confirmed by the resolution of one or
more uncertain future events which are not wholly within the control of the group it can also be a present obligation whose probable
outflow cannot be reliably measured the group discloses contingent liabilities in the notes to the accounts and when a change in the
circumstances occurs a provision will be made
contingent assets are possible economic inflows arising from past events and who existence will only be confirmed by the resolution 
of one or more uncertain future events which are not wholly within the control of the group the group disclosed contingent assets
within the notes the accounts unless the economic inflow is virtually certain and then the asset is recognised
228 critical accounting estimates and judgements
estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of
future events that are believed to be reasonable under the circumstances
the group makes estimates and assumptions concerning the future the resulting accounting estimates will by definition seldom
precisely equal the related actual results the estimates and assumptions that have a significant risk of causing a material adjustment 
to the carrying amounts of assets and liabilities within the next financial year are discussed below
estimated impairment of goodwill
the group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated earlier in this
note the recoverable amounts of cashgenerating units have been determined based on valueinuse calculations these calculations
require the use of estimates
58 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
228 critical accounting estimates and judgements continued
estimated value and impairment of brands
brands are not amortised as it is considered that their useful economic lives are not limited this policy is appropriate due to the 
longterm nature of the business and the enduring nature of the brands which are a key part of the strategy of the group and are
supported by investment on an ongoing basis their carrying values are reviewed annually by the directors to determine whether 
there have been any permanent impairments in value and any such reductions in their values are taken to the income statement
deferred tax assets
deferred tax assets are recognised on the basis of a detailed assessment of the group’s future taxable profits and this assessment relies
on key assumptions regarding future activities
pension liability
the group’s pension liability which is assessed each year by actuaries is based on key assumptions including return on plan assets
discount rates mortality rates inflation and future salary and pension costs these assumptions individually or collectively may be
different to actual outcomes
decommissioning provisions
decommissioning provisions are based on the estimated future cost of fulfilling a contractual obligation of restoring the leased asset 
to its original condition these estimates may differ from actual outcomes
229 financial risk management
treasury policies and management
the financing and liquidity of the group is managed through a central treasury function which provides a service to subsidiaries 
the group’s treasury policies are designed to ensure that adequate financial resources are available for the development of the 
group’s businesses whilst managing currency key commodity and interest rate risks
treasury systems and controls have been implemented to ensure compliance with the group’s financing arrangements liquidity risk 
is managed by a combination of medium and shortterm cash forecasting processes these processes are designed to ensure that the
group is able to operate within the credit facilities available
objectives policies and strategies
the group has the following treasury risks
• interest rate
• liquidity
• credit
• foreign exchange
• key commodity price
the group makes prudent use where appropriate of financial instruments and derivatives for example interest rate swaps and forward
foreign exchange contracts to manage material financial exposures associated with its trading and funding activities and does not
engage in any speculative transactions the group’s policy is to apply hedge accounting to hedging relationships where it is both
permissible under ias 39 practical to do so and its applications reduces volatility however transactions that may be effective hedges 
in economic terms may not always qualify for hedge accounting under ias 39 where hedge accounting is not adopted for specific
hedging relationships movements in the fair value of derivative instruments will be immediately recognised in the income statement
and may lead to increased volatility whilst the impact is not expected to be significant the group will separately disclose the effects 
of such volatility
interest rate risk
the group’s policy in respect of exposure to interest rate fluctuations is to use interest rate derivatives in order to hedge at an
appropriate level interest payable on floating rate borrowings it is the group’s policy to maintain a minimum of 60 of term debt 
at a fixed rate after taking derivatives into account the overall percentage of fixed rate borrowings to total borrowings was 77 at 
29 april 2006 30 april 2005 97 where these derivatives meet the effectiveness criteria they would qualify as cash flow hedges
under ias 39 details of accounting treatment are disclosed in note 230
59 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
229 financial risk management continued
liquidity risk
the group aims to ensure certainty of funding together with a cost effective borrowing structure the policy is to ensure that projected 
net borrowing requirements are met by committed facilities with a minimum of £50m in unutilised committed facilities details of
current longterm borrowings and the facilities are disclosed in note 21 shortterm funding is managed via offset arrangements and
drawdowns under the revolving credit facilities
credit risk
surplus cash is invested on shortterm deposits with a1 shortterm rated credit institutions the group has no significant
concentrations of credit risk it has policies in place to ensure that wholesale sales of products are made to customers with an
appropriate credit history
foreign exchange risk
the group’s exposure to foreign exchange risk is restricted to trading activities and is minimal as the group is mainly uk based and 
sells mainly to uk customers foreign exchange transactional risk arises from overseas operations and from purchases in currencies other
than gbp the group uses forward exchange contracts and currency options to manage this risk however it is not a group policy to
hedge the translation of overseas results into sterling where these derivatives meet the effectiveness criteria they would qualify as 
cash flow hedges under ias 39 details of accounting treatment are disclosed in note 230
key commodity price risk
commodity price risk arises in connection with the purchase of raw materials such as wheat sugar and utilities the group uses
derivatives such as overthecounter swaps commodity futures contracts and currency options to manage this risk where necessary
these commodity contracts are combined with currency options or forward foreign exchange options to manage the full sterling
commodity price risk where these derivatives meet the effectiveness criteria they would qualify as cash flow hedges under ias 39
details of accounting treatment are disclosed in note 230
the group also enters into certain contracts for the physical delivery of raw materials which may implicitly contain a transactional
currency exposure an embedded derivative the group’s policy is to take forward cover for forecasted receipts and payments 
including intercompany transactions in line with committed flows
230 accounting for derivative financial instruments and hedging activities
the policy applied for derivatives and financial instruments for the year ended 30 april 2005 was frs 13 uk gaap in line with the
ifrs 1 exemption taken to qualify as a hedge the financial instrument had to be related to actual assets and liabilities or constitute 
a firm commitment or a probable transaction gains and losses were recognised in the income statement at the completion of the
underlying transaction or as part of the related asset or liability amounts payable or receivable in respect of interest rate swaps were
recognised as adjustments to net interest income or expense over the period of the contract gains and losses on nonqualifying 
hedges were recognised immediately in the income statement
under frs 13 when a financial instrument ceased to be a hedge either as a result of the underlying asset or liability being extinguished
or because a future event was no longer likely to occur the instrument would thereafter be marked to its fair value and any loss
accounted for in the income statement
the group adopted ias 32 “financial instruments presentation and disclosure” and ias 39 “financial instruments recognition 
and measurement” from 1 may 2005 the financial impact on the balance sheet for the year ended 30 april 2005 has been disclosed
within note 37 the accounting policy applied from 1 may 2005 is discussed below
derivatives are initially recognised and measured at fair value on the date a derivative contract is entered into and subsequently
measured at fair value the gain or loss on remeasurement is taken to the income statement except where the derivative is a
designated cash flow hedging instrument the accounting treatment of derivatives classified as hedges depends on their designation
which occurs on the date that the derivative contract is committed to the group designates derivatives as
a hedge of the incomecost of a highly probable forecasted transaction or commitment “cash flow hedge”
in order to qualify for hedge accounting the group is required to document in advance the relationship between the item being
hedged and the hedging instrument the group is also required to document the relationship between the hedged item and the
hedging instrument and demonstrate that the hedge will be highly effective on an ongoing basis this effectiveness testing is 
reperformed at each period end to ensure that the hedge remains highly effective
60 rhm annual report and accounts 2006 notes to the financial statements 2 summary of significant accounting policies continued
230 accounting for derivative financial instruments and hedging activities continued
gains or losses on cash flow hedges that are regarded as highly effective are recognised in equity where the forecast transaction results
in a financial asset or liability gains or losses previously recognised in equity are reclassified to profit or loss in the same period as the
asset or liability affects profit or loss where the forecasted transaction or commitment results in a nonfinancial asset or a liability then
any gains or losses previously deferred in equity are included in the carrying amount of the related asset or liability if the forecasted
transaction or commitment results in future income or expenditure gains or losses deferred in equity are transferred to the income
statement in the same period as the underlying income or expenditure
for the portion of hedges where it is not permissible or deemed impractical to apply hedge accounting under ias 39 any change 
in assets or liabilities is recognised immediately in the income statement and are therefore a financial asset or liability measure at 
fair value through profit or loss where a hedge no longer meets the effectiveness criteria any gains or losses deferred in equity 
are only transferred to the income statement when the committed or forecasted transaction is recognised in the income statement
however where an entity applied cash flow hedge accounting for a forecasted or committed transaction that is no longer expected 
to occur then the cumulative gain or loss that has been recorded in equity is transferred to the income statement when a hedging
instrument expires or is sold any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statement
fair value estimation
the fair value of the interest rate swaps and currency swaps is based on the market price of comparable instruments at the balance
sheet date if they are publicly traded the fair value of the forward currency contracts has been determined based on market forward
exchange rates at the balance sheet date where there is no active market fair value is determined using valuation techniques
the fair values of shortterm deposits loans and overdrafts with a maturity of less than one year are assumed to approximate to their
book values in the case of bank loans and other loans due in more than one year the fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the group for
similar financial instruments
3 refinancing
on 30 june 2005 each of the ordinary shares of £001 were subdivided into 10 ordinary shares of £0001 each
on 22 july 2005 the group issued 172727273 new ordinary shares listed on the london stock exchange at a price of £275 giving
total proceeds of £4750m in addition 1875000 ordinary shares were issued for 10p giving total proceeds of £187500 in order to
satisfy the exercise of an option by a former director
on 1 july 2005 the company and rhm group holding limited entered into a multicurrency term and revolving facilities agreement
arranged and underwritten by credit suisse first boston and the royal bank of scotland plc whereby the lenders have agreed to
provide up to £9000m in four facilities
• facility a a term loan of £2500m repayable on 31 july 2008 with an interest charge 70 basis points above libor
• facility b1 a term loan of £2500m repayable by instalments by 30 july 2010 with an interest charge 90 basis points above libor
• facility b2 a term loan of £2500m repayable on 30 july 2010 with an interest charge 90 basis points above libor
•facility c a multicurrency revolving credit facility of up to £1500m
facilities a b1 and b2 were fully drawn down between 22 july 2005 and 30 august 2005
the group used the net proceeds from the issue of new shares and funds available under the new facilities to
• purchase the unsecured subordinated loan notes £4574m and repay associated accrued interest £143m totalling £4717m 
on 22 july 2005
• repay outstanding debt under the senior credit agreement of £980m on 22 july 2005
• redeem all outstanding secured loan notes amounting to £4583m on 30 august 2005
• settle prepayment cost of £808m on early redemption of certain classes of secured loan notes £751m and closing out of an interest
rate swap £57m in relation thereto on 30 august 2005
• make a payment of £1100m to the trustee of the rhm pension scheme on 19 august 2005 and a further payment of £150m 
was made on 24 march 2006
61 rhm annual report and accounts 2006 notes to the financial statements 3 refinancing continued
the debt redemption costs give rise to a £752m charge to the income statement as the £808m cash costs are offset by the release of
a £56m liability already recognised as the fair value of the interest rate swap this liability arose from the recognition of the fair value
of the interest rate swap at 30 april 2005 as part of the transition adjustment resulting from the adoption of ias 32 and ias 39 on
financial instruments
the early redemption of senior credit debt and secured loan notes gave rise to accelerated amortisation of associated capitalised debt
issuance costs of £29m in the period year ended 30 april 2005 £48m
the costs of the flotation were £373m of which costs incurred in issuing the shares amounting to £255m have been charged against
the share premium account costs of £83m incurred in raising the debt have been capitalised and set against the gross value of the
debt a further £35m of costs incurred as a result of the listing exercise but not eligible to be set against the share premium have
been reflected in restructuring costs of which £11m was recognised in the year ended 30 april 2005 and £24m in the year ended 
29 april 2006
4 business and geographical segments
primary reporting format
business segments
for management reporting purposes the group is organised into four operating divisions – bread bakeries culinary brands cakes and
customer partnerships these four segments are the basis on which the group reports its primary segment information
principal activities are as follows
bread bakeries
rhm’s bread bakeries division is the largest baker and largest flour miller in the uk based on volumes with a comprehensive brand and
product portfolio it is a vertically integrated manufacturer and distributor of wrapped bread and morning goods marketed under the
“hovis” “granary” “mother’s pride” and “nimble” leading brand names the division also manufactures and distributes bulk and
bagged flour and frozen partbaked products for subsequent bakeoff by retailers bread bakeries’ uk nationwide network of flour mills
provides a costeffective and secure source of the main ingredient in bread and other bakery products
culinary brands
rhm’s culinary brands division manufactures markets and distributes a range of leading branded grocery products in the uk 
the division’s product portfolio consists of wellknown uk brands with a strong british heritage including “bisto” gravy “sharwood’s”
asian sauces and accompaniments “robertson’s” and “frank cooper” preserves and “golden shred” marmalade “atora” suet 
the “mcdougall’s” range of home baking products “paxo” stuffing mixes and “saxa” salt
cakes
rhm’s cakes division is the leading manufacturer of cakes in the uk primarily marketed under the “mr kipling” “cadbury’s” 
and “lyons” brands
customer partnerships
rhm’s customer partnerships division is responsible for rhm’s strategic relationships with marks  spencer and pizza hut and for
managing certain of rhm’s specialist distribution channels including supplying supermarket chains with frozen pies ready meals 
and desserts and distributing the full range of rhm’s branded products into the irish market
corporate
corporate relates to costs incurred or credits received which are not specifically associated with the defined business segments
these divisions are the basis on which the group reports its primary segment information discontinued operations relate to the
operations of the golden west foods group and any disposal groups identified within the business see note 11
62 rhm annual report and accounts 2006 notes to the financial statements 4 business and geographical segments continued
segmental income statement
for the year ending 29 april 2006
bread culinary customer
bakeries brands cakes partnerships corporate continuing discontinued group
£m £m £m £m £m £m £m £m
revenue
total sales 8117 2783 2470 2717 – 16087 – 16087
intersegment sales 262 73 60 99 – 494 – 494
sales to third parties 7855 2710 2410 2618 – 15593 – 15593
result
operating profitloss 
before restructuring costs 814 694 137 294 204 1735 – 1735
gainloss on sale 
of properties 03 – 01 03 01 06 06 12
gain on sale of subsidiary –––––– 61 61
other restructuring costs 85 33 160 15 18 311 – 311
flotation costs – – – – 24 24 – 24
operating profitloss 732 661 22 282 247 1406 67 1473
share of results of associates 01 – 01
finance costs 552 – 552
debt redemption 781 – 781
profit before taxation 74 67 141
tax charge 16 – 16
profit for the year 58 67 125
the share of results of associates relates to bread bakeries
bread culinary customer
bakeries brands cakes partnerships corporate continuing discontinued group
£m £m £m £m £m £m £m £m
capital additions 348 37 164 56 02 607 – 607
intangible additions 27 – 04 01 01 33 – 33
depreciation and 
amortisation 255 41 102 90 09 497 – 498
impairment of 
trade receivables 28 – – 01 – 29 – 29
63 rhm annual report and accounts 2006 notes to the financial statements 4 business and geographical segments continued
for the year ending 30 april 2005
bread culinary customer
bakeries brands cakes partnerships corporate continuing discontinued group
£m £m £m £m £m £m £m £m
revenue
total sales 7883 2748 2702 2529 01 15863 1157 17020
intersegment sales 334 87 62 104 01 588 09 597
sales to third parties 7549 2661 2640 2425 – 15275 1148 16423
result
operating profit before 
restructuring costs 644 649 189 236 136 1582 145 1727
gain on sale of properties 63 – 06 01 159 217 – 217
gain on sale of subsidiaries–––––– 42 42
gain on pension curtailment 254 57 120 52 10 473 41 514
other restructuring costs 70 47 261 12 60 450 – 450
operating profit 891 659 42 277 47 1822 228 2050
finance costs 1185 – 1185
profit before taxation 637 228 865
tax creditcharge 1077 33 1044
profit for the year 1714 195 1909
bread culinary customer
bakeries brands cakes partnerships corporate continuing discontinued group
£m £m £m £m £m £m £m £m
capital additions 198 28 260 104 14 604 17 621
depreciation and 
amortisation 263 47 120 98 04 532 63 595
impairment of 
trade receivables 30 – – 04 – 34 – 34
segmental net assets
for the year ended 29 april 2006
bread culinary customer
bakeries brands cakes partnerships corporate continuing discontinued group
£m £m £m £m £m £m £m £m
assets 5100 3166 2227 1409 84 11986 – 11986
other liabilities 1536 329 408 464 144 2881 05 2886
net operating assets 3564 2837 1819 945 60 9105 05 9100
pension liability 1008 172 294 80 71 1625 – 1625
investments in associates 05
cash and cash equivalents 719
deferred tax assets 752
borrowings see note 21 7611
other debtors 
and creditors 31
1309
total liabilities 2544 501 702 544 215 4506 05 4511
64 rhm annual report and accounts 2006 notes to the financial statements 4 business and geographical segments continued
for the year ended 30 april 2005
bread culinary customer
bakeries brands cakes partnerships corporate continuing discontinued group
£m £m £m £m £m £m £m £m
assets 5002 3124 2206 1477 23 11832 20 11852
other liabilities 1564 337 557 440 230 3128 24 3152
net operating assets 3438 2787 1649 1037 207 8704 04 8700
pension liability 1976 400 580 177 78 3211 – 3211
investments in associates 04
cash and cash equivalents 878
deferred tax assets 764
borrowings see note 21 10276
other debtors 
and creditors 27
3168
total liabilities 3540 737 1137 617 308 6339 24 6363
the investment in associates relate to bread bakeries 2005 bread bakeries
secondary reporting format – geographical segments
the group’s operations are located principally in the united kingdom and the rest of europe
sales by destination continuing and discontinued
year ended year ended
29 april 2006 30 april 2005
£m £m
continuing
united kingdom 14343 13999
rest of europe 1250 1276
15593 15275
discontinued
united kingdom – 981
rest of europe – 167
– 1148
15593 16423
sales are allocated based on the country in which the customer is located
total assets
year ended year ended
29 april 2006 30 april 2005
£m £m
continuing
united kingdom 11167 11153
rest of europe 819 679
11986 11832
discontinued
united kingdom – 20
rest of europe – –
– 20
11986 11852
total assets are allocated based on where the assets are located
65 rhm annual report and accounts 2006 notes to the financial statements 4 business and geographical segments continued
secondary reporting format – geographical segments continued
additions to property plant and equipment and intangibles
year ended year ended
29 april 2006 30 april 2005
£m £m
continuing
united kingdom 622 518
rest of europe 18 24
640 542
discontinued
united kingdom – 101
rest of europe – –
– 101
640 643
additions to property plant and equipment and intangibles are allocated based on where the assets are located
5 restructuring costs
year ended year ended
29 april 2006 30 april 2005
£m £m
gain on pension curtailment – 473
gain on sale of properties 06 217
other restructuring costs
flotation costs see note 3 24 11
redundancy costs 98 273
operational restructuring costs 167 106
impairment of tangible fixed assets see note 15 46 60
329 240
redundancy and operational restructuring costs were incurred as a result of the continued implementation of a range of cost 
reduction initiatives
during the financial year ended 30 april 2005 a gain on pension curtailment arose due to a change in the level of benefits available
through the pension scheme of £499m which was offset by the £26m cost of performing the review a further £41m gain on
curtailment was included within the result for discontinued operations
exceptional cash spend of £341m relating to restructuring costs was incurred in the year 2005 £71m
66 rhm annual report and accounts 2006 notes to the financial statements 6 operating profit before restructuring costs
operating profit before restructuring costs has been arrived at after chargingcrediting
year ended year ended
29 april 2006 30 april 2005
£m £m
staff costs see note 8 3981 4618
lossprofit on disposal of property plant and equipment 09 252
net foreign exchange losses – 01
research and development costs 34 33
amortisation of government grants 04 09
depreciation of property plant and equipment see note 15
– owned assets 470 556
– finance leases 13 15
operating lease rentals
– land and buildings 144 149
– plant and machinery 85 79
asset impairment see note 15 – 14
amortisation of intangible assets see note 14 14 24
auditors’ remuneration for audit services 13 21
gains on financial assets and liabilities held for trading 05 –
amounts payable to pricewaterhousecoopers llp by the company and its subsidiary undertakings in respect of nonaudit services are
£25m 2005 £66m
during the year the group including its overseas subsidiaries obtained the following services from the group’s auditor at costs detailed
below which are included in operating profit
year ended year ended
29 april 2006 30 april 2005
£m £m
audit services
statutory audit 11 15
ifrs audit including project support 02 06
13 21
tax services
compliance services 01 01
advisory services 01 02
other services
capital structure advisory – 08
actuarial consulting support for pension change programme 10 14
advisory work related to group restructuring and change management – 09
corporate finance support including for sale of golden west foods group – 13
ipo related services
reporting accountants 13 16
other advice and support – 02
other services not covered above – 01
38 87
this fee was not charged in arriving at the profit for the year ending 30 april 2005 but is deducted from ipo proceeds
the company audit fee was borne by a subsidiary undertaking for both years
67 rhm annual report and accounts 2006 notes to the financial statements 7 government grants
government grants relating to the purchase of property plant and equipment amounting to £19m 2005 £22m are included in 
noncurrent liabilities and £04m 2005 £04m in current liabilities as deferred government grants and credited to the income
statement on a straightline basis over the expected lives of the related assets
8 employee benefit expense
the average monthly number of staff including directors employed by the group during the financial period amounted to
year ended year ended
29 april 2006 30 april 2005
number number
bread bakeries 8098 8255
culinary brands 1158 1330
cakes 3392 3987
customer partnerships 2395 2454
corporate 98 161
15141 16187
discontinued – 1228
15141 17415
the aggregate payroll costs of the above were
year ended year ended
29 april 2006 30 april 2005
£m £m
continued
wages and salaries 3499 3710
social security costs 373 368
pension costs – defined benefit plans see note 30 109 176
3981 4254
discontinued
wages and salaries – 298
social security costs – 32
pension costs – defined benefit plans see note 30 – 34
– 364
3981 4618
68 rhm annual report and accounts 2006 notes to the financial statements 9 finance costs
year ended year ended
29 april 2006 30 april 2005
£m £m
interest expense
– bank borrowings 327 129
– secured bond interest 146 512
– loan note interest 104 428
– finance lease interest expense 04 04
– amortisation of current debt issuance costs 15 47
– other financing incomecharge 34 37
– other 03 01
interest receivable
bank interest 06 21
fair value movements arising from derivatives designated as fair value through profit or loss
gains 07 –
552 1137
debt redemption costs see note 3 752 –
accelerated amortisation of debt issuance costs see note 3 29 48
1333 1185
debt redemption costs relate to early redemption of certain classes of secured loan notes and associated closing out of an interest rate
swap see note 3
accelerated amortisation of debt issuance costs is a oneoff charge of £29m 52 weeks to 30 april 2005 £48m due to the capital
restructuring undertaken in the period see note 3
10 income tax expense
year ended year ended
29 april 2006 30 april 2005
£m £m
current tax
uk corporation tax – –
foreign tax 23 14
23 14
deferred tax see note 23
current year 08 133
prior year adjustment 15 –
deferred tax on pension liability – 958
total deferred tax 07 1091
income tax chargecredit on profit on ordinary activities 16 1077
income tax chargecredit on continuing operations 16 119
deferred tax asset on pension scheme deficit see note 23 – 958
total income tax chargecredit 16 1077
69 rhm annual report and accounts 2006 notes to the financial statements 10 income tax expense continued
the income tax on the group’s profit before tax differs from the standard uk rate of tax as follows
year ended year ended
29 april 2006 30 april 2005
£m £m
profit before taxation see note 4 74 637
income tax at the uk corporation tax rate of 30 22 191
income tax effects of expenses that are not deductible in determining taxable profit 17 20
nondeductible financing costs – 07
adjustments in respect of foreign tax rates 05 05
nontaxable gains on disposal of property plant and equipment 03 56
nontaxable pension adjustment and pension curtailment – 276
deferred tax on pension liability see note 23 – 958
adjustments to prior year deferred tax 15 –
total income tax chargecredit 16 1077
11 discontinued operations
discontinued operations – sale of golden west group
during the year ended 30 april 2005 the group disposed of tgp 182 ltd and its subsidiaries golden west foods ltd golden west
foods nv sti uk limited glassflat ltd and heligold sl known as the golden west group together with rhm property company
one ltd which owned certain assets used by the golden west group companies heligold sl was sold on 10 march 2005 loss on
disposal £06m and the remainder of the companies on 23 april 2005 profit on disposal £48m total proceeds amounted to £787m
net assets sold including goodwill were £745m resulting in a profit on disposal of £42m the proceeds were based on an estimate of
the working capital at completion and the profit included provision for certain unresolved liabilities
net assets consisted of
£m
total assets 964
total liabilities 219
net assets 745
heligold sl was a 70 owned subsidiary and sti uk limited a 97 owned subsidiary all other companies sold were wholly 
owned subsidiaries
year ended year ended
29 april 2006 30 april 2005
£m £m
revenue – 1148
expenses – 962
gain on sale of properties 06 –
profit on disposal of discontinued operations 61 42
profit before tax 67 228
attributable tax charge – 33
net profit attributable to sale of golden west group 67 195
during the year ended 29 april 2006 completion accounts for the golden west group were finalised giving rise to an additional
£09m proceeds and the unresolved liabilities were settled with a net release of provisions of £52m and profit on sale of properties 
of £06m giving total additional disposal profits of £67m
cash flows from sale of golden west group
year ended year ended
29 april 2006 30 april 2005
£m £m
net cash flows from operating activities 30 170
net cash flows from investing activities 20 263
net cash flows from financing activities – 351
10 82
70 rhm annual report and accounts 2006 notes to the financial statements 12 dividends
year ended year ended
29 april 2006 30 april 2005
£m £m
amounts recognised as distributions to equity holders in the period
interim paid 53p per share 184 –
the directors are proposing a final dividend in respect of the financial year ending 29 april 2006 of 106p per share which will absorb
an estimated £366m of shareholders’ funds it will be paid on 29 september 2006 with an exdividend date of 30 august 2006
13 earnings per share
the reconciliation between basic and adjusted eps and between the earnings figures used in calculating them is as follows
year ended year ended
29 april 2006 30 april 2005
£m £m
profit for the year from continuing operations 58 1714
gain on pension curtailment – 473
flotation costs 24 11
other restructuring costs 311 439
gain on sale of properties 06 217
debt redemption costs 752 –
accelerated amortisation of debt issuance costs 29 48
tax credit on adjusting items 330 136
tax credit on pension liability – 958
profit for the year from continuing operations – adjusted 838 428
discontinued operations
profit on sale of subsidiaries 67 42
tax credit on sale of subsidiaries – 54
pretax profits from discontinued operations – 186
tax charge relating to discontinued operations – 87
minority interest on discontinued operations – 01
profit for the year from discontinued operations 67 196
average shares used in basic eps calculation 3072 1732
dilutive share schemes and options 18 18
shares used in diluted eps calculation 3090 1750
basic earnings per share has been calculated by dividing earnings attributable to ordinary shareholders by the weighted average number
of ordinary shares of the company excluding shares held by the employee benefit trust see note 28
diluted earnings per share has been calculated using the basic earnings per share adjusted to assume conversion of all potentially
dilutive ordinary shares
71 rhm annual report and accounts 2006 notes to the financial statements 13 earnings per share continued
year ended year ended
29 april 2006 30 april 2005
pence pence
basic eps
continuing 19 990
discontinued 22 113
41 1103
basic adjusted eps 273 247
diluted basic eps
continuing 19 979
discontinued 22 112
41 1091
diluted adjusted eps 271 244
14 goodwill and other intangible assets
goodwill brands licences software total
£m £m £m £m £m
cost
as at 1 may 2004 1668 3234 – 150 5052
derecognised on disposal of a subsidiary 166 – – – 166
additions – 15 – 07 22
as at 30 april 2005 1502 3249 – 157 4908
additions 16 – 09 08 33
disposals – – – 28 28
as at 29 april 2006 1518 3249 09 137 4913
accumulated amortisation and impairment
as at 1 may 2004 – – – 99 99
amortisation charge for the year – – – 24 24
as at 30 april 2005 – – – 123 123
disposals – – – 25 25
amortisation charge for the year – – – 14 14
as at 29 april 2006 – – – 112 112
net book value
at 29 april 2006 1518 3249 09 25 4801
at 30 april 2005 1502 3249 – 34 4785
at 1 may 2004 1668 3234 – 51 4953
goodwill arose during the year on the acquisition of a mill within the bread bakeries division
an impairment review based on value in use was carried out on the group’s goodwill and brands during the year this did not result in
any impairment being identified
amortisation of £14m is all included within administrative expenses
72 rhm annual report and accounts 2006 notes to the financial statements 14 goodwill and other intangible assets continued
goodwill
a segmentlevel summary of the goodwill allocation is presented below
at at
29 april 2006 30 april 2005
£m £m
bread bakeries 293 277
culinary brands 360 360
cakes 607 607
customer partnerships 258 258
total 1518 1502
key assumptions used for valueinuse calculations
the recoverable amount of each cash generating unit cgu is determined based on valueinuse calculations these calculations 
use cash flow projections based on financial budgets approved by management covering a threeyear period cash flows beyond the
threeyear period are extrapolated using the perpetuity approach
management determined budgeted operating cash flow before restructuring costs and other nontrading items based on past
performance and its expectations for the future a single groupwide pretax discount rate of 99 2005 107 was used for the
goodwill and brand impairment testing the change in the discount rate used reflects the changes in refinancing that has occurred in
the group see note 3 a growth rate of 2 was applied to the perpetuity cash flows reflecting growth within the uk as a whole
main brands
rhm’s main brands are bisto gravy hovis bread and flour and mr kipling cakes the brands are not separable from the cgu and
hence are tested for impairment on a cgu basis
a segmentlevel summary of the brand values is presented below
at at
29 april 2006 30 april 2005
£m £m
bread bakeries 1045 1045
culinary brands 1881 1881
cakes 323 323
total 3249 3249
company
the company has no intangible assets
73 rhm annual report and accounts 2006 notes to the financial statements 15 property plant and equipment
group
freehold and plant and 
leasehold property machinery total
£m £m £m
cost
at 1 may 2004 3349 8658 12007
additions 190 431 621
exchange differences – 01 01
reclassifications 01 01 –
assets classified as held for sale 75 – 75
disposals 234 439 673
assets disposed of with subsidiaries 285 624 909
at 30 april 2005 2946 8026 10972
additions 76 531 607
exchange differences 03 08 11
reclassifications 13 – 13
assets classified as held for resale 33 – 33
disposals 09 370 379
at 29 april 2006 2996 8195 11191
accumulated depreciation and impairment
at 1 may 2004 979 6140 7119
charge for the year 89 482 571
exchange differences – 01 01
reclassifications 01 01 –
assets classified as held for resale 19 – 19
impairment 11 63 74
disposals 90 423 513
assets disposed of with subsidiaries 32 482 514
at 30 april 2005 939 5780 6719
charge for the year 81 402 483
exchange differences 02 05 07
reclassifications 06 – 06
assets classified as held for resale 21 – 21
impairment 10 36 46
disposals 04 333 337
at 29 april 2006 1013 5890 6903
net book value
at 29 april 2006 1983 2305 4288
at 30 april 2005 2007 2246 4253
at 1 may 2004 2370 2518 4888
depreciation expense of £384m 2005 £457m has been charged in cost of sales £51m 2005 £63m in distribution expenses and
£48m 2005 £51m in administrative expenses
£46m 2005 £60m of the total impairment charge of £46m 2005 £74m was included under other restructuring costs see note 5
£25m 2005 £01m of the total charge related to bread bakeries £03m 2005 £nil to culinary brands £18m 2005 £35m to
cakes £nil 2005 £08m to corporate and £nil 2005 £30m to discontinued operations impairment charges were triggered
primarily due to restructuring activities within the group and the subsequent vacation of properties
74 rhm annual report and accounts 2006 notes to the financial statements 15 property plant and equipment continued
finance lease arrangements
included within the net book value of £4288m is £115m 2005 £127m relating to assets held under finance lease arrangements 
the depreciation charged in the year in respect of such assets amounted to £13m 2005 £19m
operating lease arrangements
included within land and buildings net book value is £05m 2005 £06m relating to assets leased under operating lease arrangements
freehold and leasehold property
the net book value of the group’s freehold and leasehold property includes £1531m 2005 £1593m in respect of freehold land 
and buildings £117m 2005 £122m in respect of long leasehold land and buildings and £234m 2005 £241m in respect of 
short leasehold land and buildings
freehold land amounting to £374m 2005 £431m is not depreciated
assets under construction
plant and machinery includes assets under construction of £82m 2005 £169m which are not depreciated
assets classified as held for sale
properties with a carrying amount of £12m 2005 £56m were reclassified as noncurrent assets held for sale during the year since it
is management’s intention to dispose of them in the near future of the total £02m 2005 £nil relates to bread bakeries £nil 2005
£31m relates to culinary partnerships £nil 2005 £10m to cakes and £10m 2005 £15m to corporate properties with a carrying
amount of £07m all relating to customer partnerships were reclassified from noncurrent assets held for sale to property plant and
equipment as the properties have been sold within the group rather than to a third party
group
£m
at 1 may 2004 –
assets classified as held for sale 56
at 30 april 2005 56
assets classified as held for sale 12
assets classified as fixed assets 07
disposals 49
at 29 april 2006 12
company
the company has no property plant and equipment
75 rhm annual report and accounts 2006 notes to the financial statements 16 investments
group company
at at at at
29 april 2006 30 april 2005 29 april 2006 30 april 2005
fixed asset investments £m £m £m £m
shares in group undertakings
at beginning of year – – 167 167
additions in year – – 4725 –
at end of year – – 4892 167
investment in associates
at 30 april 2005 04 04 – –
additions in year – – – –
share of profit 01 – – –
at 29 april 2005 05 04 – –
the group has a 50 interest in one associate staper ltd which is accounted for using the equity method the share of profit in the
year has been reflected within the income statement
on 4 february 2006 the group made an investment of £100 for 20 of the share capital of bakers basco limited
summary financial information of associates
£m
assets 11
liabilities 03
revenue 17
profit 02
on 20 may 2005 the company made an investment of £1 for the share capital of rhm new co ltd on 25 may 2005 rhm new 
co ltd changed its name to rhm group holding ltd on 27 may 2005 rhm group holding ltd issued shares to the company in
exchange for 100 of the shareholding in rhm group two ltd rhm group holding ltd is an intermediate holding company and 
no trade assets or liabilities were acquired with the company
as part of the refinancing structure of the group see note 3 the company increased its investment in rhm group holding ltd by
£4720m for cash consideration
as part of the longterm incentive plan see note 27 the company has made capital contributions of £05m to rhm group holding
ltd thereby increasing its investment
details of subsidiary companies have been disclosed in note 36
17 inventories
group
at at 
29 april 2006 30 april 2005
£m £m
raw materials 386 384
work in progress 09 09
finished goods 307 301
702 694
inventories recognised as an expense for the year ending 29 april 2006 was £8251m 2005 £7861m
the inventory provision held for the year ended 29 april 2006 was £22m 2005 £24m
company
the company has no inventories
76 rhm annual report and accounts 2006 notes to the financial statements 18 trade and other receivables
group company
at at at at
29 april 2006 30 april 2005 29 april 2006 30 april 2005
£m £m £m £m
trade receivables 1952 1833 – –
less provision for impairment of receivables 29 34 – –
trade receivables – net 1923 1799 – –
tax and social security 118 120 08 –
other receivables 24 63 – –
amounts owed by associates see note 35 12 – – –
amounts owed by group undertakings – – 682 –
prepayments and accrued income 98 82 01 –
total 2175 2064 691 –
analysis of trade and other receivables
noncurrent 06 09 680 –
current 2169 2055 11 –
2175 2064 691 –
noncurrent amounts owed by group undertakings are interest free denominated in sterling unsecured and due in greater than 
five years
19 cash and cash equivalents
group
group company
at at at at
29 april 2006 30 april 2005 29 april 2006 30 april 2005
£m £m £m £m
cash and cash equivalents 1589 1377 10 –
bank overdrafts 870 499 – 05
cash and cash equivalents 719 878 10 05
the cash and cash equivalents of the group are subject to a legal right of offset and are therefore presented net on the balance sheet
the effective interest rate on the net overdraft balance is 55 2005 475
20 trade and other payables
group company
at at at at
29 april 2006 30 april 2005 29 april 2006 30 april 2005
£m £m £m £m
trade payables – non related parties 1048 1120 – –
bills of exchange 33 34 – –
other taxation and social security 146 151 – –
owed to associates 10 – – –
amounts owing to group undertakings – – 307 29
other payables 494 613 – –
accruals and deferred income 891 892 – –
2622 2810 307 29
trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs
the average number of days credit taken by the group for trade purchases at 29 april 2006 was 43 days 2005 39 days
77 rhm annual report and accounts 2006 notes to the financial statements 20 trade and other payables continued
analysis of trade and other payables
group company
at at at at
29 april 2006 30 april 2005 29 april 2006 30 april 2005
£m £m £m £m
noncurrent
amounts owing to group undertakings – – 231 28
other payables – 03 – –
accruals and deferred income 44 47 – –
current 2578 2760 76 01
2622 2810 307 29
noncurrent amounts owing to group undertakings are interest free denominated in sterling unsecured and due in greater than 
five years
21 borrowings
group
at at
29 april 2006 30 april 2005
£m £m
current
secured senior credit agreement – 53
secured loan notes – 224
other loans 02 02
bank loans 168 –
obligations under finance leases see note 25 10 12
180 291
noncurrent
secured senior credit agreement – 918
unsecured subordinated loan notes – 4613
secured loan notes – 4410
bank loans 7398 –
other loans 04 06
obligations under finance leases see note 25 29 38
7431 9985
total borrowings 7611 10276
bank loans are unsecured
bank and other loans – maturity analysis
group
at at
29 april 2006 30 april 2005
£m £m
amounts falling due
between one and two years 499 197
between two and five years 6902 750
over five years 01 9000
7402 9947
the maturity analysis for obligations under finance leases is disclosed within note 25
78 rhm annual report and accounts 2006 notes to the financial statements 21 borrowings continued
effective interest rates
group
at 29 april 2006 at 30 april 2005
term interest rates term interest rates
bank loan 2008–2010 52–56 ––
other loans 2006–2014 0 2005–2014 0
unsecured subordinated loan notes–– 2014 100
secured loan notes –– 2011–2020 88 to 115
senior credit agreement –– 2011–2013 725 to 825
following the listing of the company on the london stock exchange the group’s finances were restructured resulting in the purchase 
of all outstanding unsecured subordinated loan notes and the redemption of all outstanding secured loan notes other loans were
restructured and a new credit facility was put in place see note 3
company
the company has no borrowings
22 financial instruments
numerical financial instruments disclosures are set out below it should be noted that the policy for derivatives and financial instruments
for the year ended 30 april 2005 is frs 13 uk gaap in line with the ifrs 1 exemption taken see note 230 additional disclosures
are included within accounting policies see note 2 and note 37
financial assets financial liabilities
at 29 april 2006
interest rate swaps – cash flow hedge
1
35 –
interest rate swaps – held for trading
1
– 01
forward foreign currency contracts – held for trading – 03
commodity swap – held for trading 08 –
43 04
current portion 08 04
note 1 – interest rate swaps are reflected within borrowings in the balance sheet to show the fair value of debt see note 32
fair values of financial assets and liabilities
at 29 april 2006 at 30 april 2005
book value fair value book value fair value
£m £m £m £m
assets
trade and other receivables see note 18 2175 2175 2064 2064
cash and cash equivalents see note 19 719 719 878 878
derivative financial instruments
other financial assets at fair value through profit or loss 08 08 ––
liabilities
shortterm borrowings 180 180 366 372
longterm borrowings 7431 7499 10029 9265
trade and other payables see note 20 2622 2622 2810 2810
provisions see note 24 261 261 348 348
derivative financial instruments
interest rate swaps –– – 57
other financial liabilities at fair value through profit or loss 03 03 ––
79 rhm annual report and accounts 2006 notes to the financial statements 22 financial instruments continued
the fair value of the interest rate swaps agreement foreign currency contracts and commodity swaps have been calculated on a mark
to market basis
the notional principal amounts of the outstanding forward foreign exchange contracts at 29 april 2006 were £75m 2005 £99m
losses on forward foreign exchange contracts not designated for hedge accounting of £02 have been recognised in the income
statement the restatement of the opening balance sheet has been disclosed within note 37 receipts and payments of contracts will
occur in euros sterling and dollars
the notional principal amounts of the outstanding interest rate swaps at 29 april 2006 were £6450m 2005 £1701m at 29 april
2006 the fixed interest rates vary from 45 to 47 2005 49 to 68 and floating rates are 46 libor gains on the
derivative financial instruments of £29m have been recognised in the hedge reserve see note 29 and are expected to reverse in 
the income statement during the next four years gains on interest rate swaps not designated for hedge accounting of £07m 
2005 £nil have been recognised in the income statement all contracts are in sterling with cash flows occurring periodically over 
the next four years
the notional principal amounts of the outstanding commodity swaps at 29 april 2006 were £40m 2005 £nil commodity swaps 
are not designated for hedge accounting as a result the movement in fair value of £07m has been charged to the income statement
receipts and payments of contracts will occur in sterling and dollars
included in the above analysis are borrowings with a book value of £7438m 2005 £5627m which are not traded in an open 
market loans with a book value of £7572m 2005 £1014m are fair valued under the effective interest rate method the fair value 
of longterm borrowings excludes capitalised debt issue costs see note 32 which are included in the book value
for the year ending 30 april 2005 the remaining loans not traded with a book value of £4613m were particularly sensitive to the
discount rate used as the principal and the total interest compounded over the life of the loan were repayable in one lump sum at the
end of the period in order to establish the fair value of these liabilities the expected future cash flows were discounted at estimated
rates specific to each liability and determined through the consideration of a number of factors including changes in the issuer and the
market since issue and the collateral supporting and repayment period of each loan a discount rate of 145 was applied by taking
into account the high coupon payable and reflecting the higher risk associated with these loans as a consequence of the significant debt
burden in the company a 1 increase in the discount rate used would result in a reduction of £267m in the fair value of the loan as
disclosed these loans have now been settled due to the refinancing of the group see note 3
the fair value of the traded loans of £nil 2005 £4656m is calculated on a mark to market basis
shortterm financial instruments cash and cash equivalent have a fair value equal to their book value
in accordance with ias 39 “financial instruments recognition and measurement” contracts have been reviewed for embedded
derivatives that are required to be separately accounted for there are currently no such contracts within the group
interest rate risk profile
financial assets and liabilities except for borrowings not exposed to interest rate risk are excluded from the following interest rate risk
and maturity profiles these consist of trade and other receivables trade and other payables and other financial instruments held for
trading the maturity profile of provisions which are considered to be floating rate financial liabilities are disclosed within note 24
interest rate risk profile of financial assets
the interest rate risk profile of the group’s financial assets was
at 29 april 2006 at 30 april 2005
sterling euro total sterling euro total
£m £m £m £m £m £m
floating rate financial assets 555 164 719 769 109 878
80 rhm annual report and accounts 2006 notes to the financial statements 22 financial instruments continued
interest rate risk profile of financial liabilities
the interest rate risk profile of the group’s financial liabilities after taking account of the interest rate swaps used to manage the
interest rate profile and including finance leases was
at 29 april 2006 at 30 april 2005
sterling euro total sterling euro total
£m £m £m £m £m £m
floating rate financial liabilities 1850 – 1850 273 – 273
fixed rate financial liabilities 5735 20 5755 9971 24 9995
financial liabilities on which no interest is paid 04 02 06 06 02 08
7589 22 7611 10250 26 10276
fixed rate financial liabilities
at 29 april 2006 at 30 april 2005
sterling euro total sterling euro total
weighted average interest rate  545 462 545 951 467 950
weighted average period for which rate is fixed years 272 10 7 10
financial liabilities on which no interest is paid
at 29 april 2006 at 30 april 2005
sterling euro total sterling euro total
weighted average period for which rate is fixed years 485 596
maturity of financial liabilities
at 29 april 2006 at 30 april 2005
debt finance leases total debt finance leases total
£m £m £m £m £m £m
within one year 170 10 180 279 12 291
in more than one year but not more that two years 499 08 507 197 10 207
in more than two years but not more than five years 6902 12 6914 750 15 765
in more than five years 01 09 10 8961 13 9013
7572 39 7611 10226 50 10276
borrowing facilities
the group has committed borrowing facilities all of which attract interest on drawdown at a floating rate the undrawn portion of
these facilities attracts commitment fees at market rate the facilities available at year end in respect of which all conditions precedent
have been met were as follows
at at
29 april 2006 30 april 2005
£m £m
expiring in more than two years – 1228
expiring in more than four years 1500 –
1500 1228
the purpose of the committed borrowing facilities is for general corporate use
the group’s core debt facility contains two financial covenants relating to the ratio of net debt to ebita and the ratio of ebita to 
net finance charges all terms are defined in the facility documentation in addition to standard events of default clause none of
which are expected to occur the group is currently in compliance with all requirements under the facility
81 rhm annual report and accounts 2006 notes to the financial statements 22 financial instruments continued
at 29 april 2006 at 30 april 2005
book value fair value book value fair value
company £m £m £m £m
assets
trade and other receivables – current see note 18 11 11 ––
trade and other receivables – noncurrent see note 18 680 101 ––
cash and cash equivalents see note 19 10 10 05 05
liabilities
trade and other payables – current see note 20 76 76 01 01
trade and other payables – noncurrent see note 20 231 34 28 04
noncurrent assets and liabilities are fair valued under the effective interest rate method
23 deferred tax
deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred taxes relate to the same fiscal authority the offset amounts are as follows
at at 
29 april 2006 30 april 2005
group £m £m
deferred tax assets
– deferred tax asset to be recovered after more than 12 months 576 783
– deferred tax asset to be recovered within 12 months 342 268
918 1051
deferred tax liabilities
– deferred tax liability to be recovered after more than 12 months 166 167
– deferred tax liability to be recovered within 12 months – 120
166 287
net deferred tax asset 752 764
the gross movement on the deferred tax asset is as follows
£m
at 30 april 2005 764
ias 39 adjustment see note 37 17
at 30 april 2005 as restated 781
credited to the income statement 07
recognised in the statement of recognised income and expense 36
at 29 april 2006 752
82 rhm annual report and accounts 2006 notes to the financial statements 23 deferred tax continued
the movement in deferred tax assets and liabilities during the year without taking into consideration the offsetting of balances within
the same tax jurisdiction is as follows
deferred tax liabilities
accelerated capital 
allowances total
£m £m
at 30 april 2005 287 287
credited to the income statement 121 121
at 29 april 2006 166 166
deferred tax assets
provisions  
tax losses of assets pension liability total
£m £m £m £m
at 30 april 2005 – 93 958 1051
ias 39 adjustment see note 37 – 17 – 17
at 30 april 2005 as restated – 110 958 1068
creditedcharged to the income statement 296 36 446 114
recognised in the statement of recognised income and expense – 09 27 36
at 29 april 2006 296 137 485 918
no deferred tax was transferred from other reserves to retained earnings
deferred tax assets are recognised for the deficit in the pension scheme liabilities the recovery of the deferred tax assets is based 
on forecasts of taxable profits
there are no deferred tax liabilities on the unremitted earnings of overseas subsidiaries such amounts are either reinvested or 
if remitted to the uk are covered by underlying tax credits resulting in no additional uk tax
in the event of a sale of the brands at their book value see note 14 there would be no corporation tax payable on chargeable gains
arising due to the availability of indexation allowances and capital losses the directors have no intention of selling the brands
in the event of a sale of freehold land at its net book value see note 15 no liability is expected to arise due to the availability of
indexation allowances and capital losses
company
the company has no deferred tax provision
83 rhm annual report and accounts 2006 notes to the financial statements 24 provisions for liabilities and charges
restructuring 
and 
redundancy onerous leases decommissioning other total
group £m £m £m £m £m
at 30 april 2005 181 20 69 78 348
additional provisions 63 52 05 53 173
released during the year 43 – 11 25 79
utilised during year 144 07 03 25 179
unwinding of discount – – 02 – 02
at 29 april 2006 57 65 58 81 261
analysis of total provisions
at at
29 april 2006 30 april 2005
£m £m
noncurrent 198 127
current 63 221
261 348
the majority of the restructuring and redundancy provision costs are expected to be incurred in the next financial year
the costs associated with the onerous lease provisions will be incurred over a number of years in accordance with the length of the
leases onerous lease provisions have been discounted at rates between 0–5
the decommissioning provision represents the present value of the estimated costs of dismantling and removal of assets and restoring
the sites on which they are located arising as a result of contractual obligations on yielding up of leasehold properties at the end of 
their lease terms the unwinding of the discount is charged to other financing incomecharge
other provisions include dilapidations litigation pension related liabilities and minor customer claims costs associated with these
provisions will be incurred within the next one to ten years
longterm liabilities have been discounted using a rate of 5
company
the company has no provisions for liabilities and charges
84 rhm annual report and accounts 2006 notes to the financial statements 25 obligations under finance leases
at 29 april 2006 at 30 april 2005
present value present value
minimum of minimum minimum of minimum
lease payments lease payments lease payments lease payments
£m £m £m £m
amounts payable under finance leases
within one year 12 10 13 12
in the second to fifth years inclusive 24 20 30 25
after five years 12 09 14 13
48 39 57 50
less future finance charges 09 07
present value of lease obligations 39 50
analysis of lease obligations
at at
29 april 2006 30 april 2005
£m £m
noncurrent 29 38
current 10 12
39 50
it is the group’s policy to lease certain of its fixtures and equipment under finance leases interest rates are fixed at the contract date
all leases are on a fixed repayment basis and no significant arrangements have been entered into for contingent rental payments
the majority of the lease obligations are denominated in sterling
the fair value of the group’s lease obligations approximates to their carrying amount the group’s obligations under finance leases are
secured by the lessors’ charges over the leased assets
company
the company has no finance leases
85 rhm annual report and accounts 2006 notes to the financial statements 26 share capital and share premium
at 29 april 2006
group and company number £
authorised
ordinary shares of £0001 each 550000000 550000
550000000 550000
allotted called up and fully paid
ordinary shares of £0001 each 348227273 348227
348227273 348227
at 30 april 2005
group and company number £
authorised
“a” ordinary shares of £001 each 16723684 167237
ordinary shares of £001 each 1750000 17500
18473684 184737
issued and fully paid
15800000 “a” ordinary shares of £001 each 15800000 158000
1562500 ordinary shares of £001 each 1562500 15625
17362500 173625
on 30 june 2005 each of the ordinary shares of £001 were subdivided into 10 ordinary shares of £0001 each
on 22 july 2005 the group issued 172727273 new ordinary shares listed on the london stock exchange at a price of £275 giving
total proceeds of £4750m in addition 1875000 ordinary shares were issued for 10p giving total proceeds of £187500 in order to
satisfy the exercise of an option by a former director
there were no differences between the rights and restrictions of the “a” ordinary shares and the ordinary shares
27 sharebased payments
group
the longterm incentive plan ltip was introduced in august 2005 a description of the scheme is included within the remuneration
committee report on pages 32 to 38 eligibility for the 2005 ltip award was restricted to the leadership team and above shares
granted under the ltip will become exercisable on the third anniversary of the grant date and subject to continued employment within
the group at that date shares were valued at the market price on the date of grant
a fair value calculation has been performed for the tsr and eps elements of the scheme due to limited historical information for the
group an equal probability method taking account of the correlation between share price growth and higher ranking positions within
the comparator group has been used for tsr as this is considered to be the most appropriate the fair value of the eps element is the
share price at grant date and has been adjusted for dividends dividends do not accumulate on the shares during the vesting period and
consequently the calculated fair value is reduced
86 rhm annual report and accounts 2006 notes to the financial statements 27 sharebased payments continued
the following assumptions were used in the fair value calculation
grant date 1 august 2005
share price at grant date £275
exercise price nil
number of employees 45
shares under plan 1840530
vesting period 3 years
expected dividends expressed as a dividend yield 575
possibility of ceasing employment before vesting 33
expectations of meeting performance criteria 4934
weighted average fair value of award £198
at 
29 april 2006
number
outstanding at 30 april 2005 –
granted 1840530
forfeited 70531
exercised –
outstanding at 29 april 2006 1769999
the total charge for the year relating to employee share based payment plans was £05m 2005 £nil of which £05m related to equity
settled share based payment after deferred tax the net charge was £04m £05m is included within other reserves representing the
equity settled part of the scheme
28 shareholders’ funds and statement of changes in shareholders’ equity
share premium other reserves retained
share capital account own shares see note 29 earnings total minority interest total
group £m £m £m £m £m £m £m £m
at 1 may 2004 02 172 – – 6578 6404 04 6400
profitloss for the period – – – – 1911 1911 01 1910
exchange differences – –––––––
other actuarial loss – – – – 1325 1325 – 1325
purchase of own shares – – 01 – – 01 – 01
minority interest 
dividends paid –––––– 02 02
at 30 april 2005 02 172 01 – 3342 3169 01 3168
ias 32ias 39 restatement 
see note 37 – – – – 41 41 – 41
at 30 april 2005 as restated 02 172 01 – 3383 3210 01 3209
87 rhm annual report and accounts 2006 notes to the financial statements 28 shareholders’ funds and statement of changes in shareholders’ equity continued
share premium other reserves retained
share capital account own shares
1
see note 29 earnings
1
total minority interest total
group £m £m £m £m £m £m £m £m
at 30 april 2005 
as restated 02 172 01 – 3383 3210 01 3209
share issue see note 3 02 4750 – – – 4752 – 4752
share issue costs see note 3 – 255 – – – 255 – 255
profitloss for the period – – – – 125 125 – 125
dividends see note 12 – – – – 184 184 – 184
exchange differences – – – 05 – 05 – 05
pension mortality – – – – 672 672 – 672
other actuarial gain – – – – 734 734 – 734
fair value gain on 
financial instruments – – – 29 09 20 – 20
purchase of own shares – – 12 – – 12 – 12
sharebased incentive plan – – – 05 – 05 – 05
at 29 april 2006 04 4667 13 39 3389 1308 01 1309
1
total retained earnings is comprised of own shares and retained earnings the opening balance of retained earnings was £3343m and following the ias 39 restatement became £3384m 
the closing balance of retained earnings was £3402m included within the closing balance of retained earnings is the pension reserve of £1625m 2005 £3211m
in march 2002 the company established an ebt to distribute shares in the company held by departing employees for the benefit of
future and existing employees
the ebt is funded by means of an interest free loan from a subsidiary of the group a dividend waiver is in place on all shares held 
by the ebt
as at 29 april 2006 the trustee of the ebt held 1326890 ordinary shares 2005 40329 in the capital of the company the value 
of the company’s shares held by the trustee of the ebt at 29 april 2006 was £36m 2005 £06m based on market value at the 
year end
share premium retained sharebased 
share capital account earnings incentive plan total
company £m £m £m £m £m
at 1 may 2004 02 172 39 – 135
profitloss for the period – – 02 – 02
at 30 april 2005 02 172 41 – 133
share issue see note 3 02 4750 – – 4752
share issue costs see note 3 – 255 – – 255
profit for the period – – 846 – 846
dividends – – 184 – 184
sharebased incentive plan – – – 05 05
at 29 april 2006 04 4667 621 05 5297
the profit dealt with in the accounts of the parent company was £662m 2005 £02m loss
the directors have taken advantage of section 230 of the companies act 1985 not to publish its own income statement
88 rhm annual report and accounts 2006 notes to the financial statements 29 other reserves
sharebased hedging exchange
incentive plan reserve reserve total
group £m £m £m £m
at 1 may 2004 and 30 april 2005 ––––
exchange differences – – 05 05
fair value gain on financial instruments – 29 – 29
sharebased incentive plan 05 – – 05
at 29 april 2006 05 29 05 39
30 pension obligations
the group has elected to adopt the december 2004 amendments to ias 19 as encouraged by the iasb in particular the group has
adopted a policy of recognising all actuarial gains and losses for all of its defined benefit plans in the period in which they occur outside
the income statement in the consolidated statement of recognised gains and losses
uk scheme
the group operates one main pension scheme for its uk employees which is a defined benefit scheme the scheme’s assets are held
separately from the assets of the group and are administered by trustees and managed professionally
the latest formal actuarial valuation of the scheme was made at 5 april 2005 subsequently a new full actuarial valuation has been
carried out for the group specifically for group accounting purposes this was carried out as at 5 september 2005 and has been
updated by an independent qualified actuary to 29 april 2006 for the purposes of these accounts
a provision has also been made for the unfunded pension liability arising in respect of certain employees whose earnings were above
the permitted maximum as defined in section 590c icta 1988
company contributions for the next financial year are expected to be £400m
eire schemes
the companies in the group based in eire contribute to two separate defined benefit plans covering most employees the assets of 
the plans are held in separate funds administered by trustees the latest actuarial valuations of the plans were as at 1 may 2002 and 
6 april 2003
other schemes
other companies outside the united kingdom and eire operate defined benefit plans or consider that state benefits are adequate 
full provision is made for liabilities arising under defined benefit schemes as calculated in accordance with actuarial advice
assumptions
the major assumptions used by the actuaries were
at at 
29 april 30 april
2006 2005
longterm rate of increase in pensionable salaries
1
30 32
rate of increase in benefits in payment
23
3423 325
discount rate 52 54
inflation assumption 30 27
expected return on assets 65 65
1
pensionable salary increases are assumed to be nil for the four years commencing 5 april 2005 and the rates shown thereafter
2
in respect of pensions earned between april 1997 and april 2005 where increases are linked to rpi with a 3 minimum and 5 maximum and pensions earned after september 2005 where increases are
also linked to rpi but with a maximum of 25 other levels of increase are largely fixed and are valued accordingly deferred benefits are revalued in a similar way and consistent assumptions are used
the assumptions are expressed as appropriately weighted averages
3
the rate of increase in benefits in payment in the year ended 29 april 2006 was 34 up to 1 september 2005 and 23 thereafter
89 rhm annual report and accounts 2006 notes to the financial statements 30 pension obligations continued
assumptions continued
the expected return on assets assumption has been derived by considering the appropriate return for each of the main asset classes
listed below the yields assumed on bond type investments are based on published redemption yields at the balance sheet date 
the assumed return on equities and property reflects an assumed allowance for the out performance of these asset classes over bonds
in the long term the rates of return are shown net of investment manager expenses but gross of scheme administration expenses
the mortality tables used in the actuarial valuation were making allowances for projected future improvements in mortality
for active and deferred members pxa92b1965sc  3 year age rating 
for current pension members pxa92b1935sc  3 year age rating
the life expectancies implied by these tables for typical members are
pensioner currently aged 70 male 142 years female 169 years
future pensioner when aged 65 male 198 years female 225 years
assets
the total assets the split between the major asset classes in the schemes the present value of the schemes’ liabilities and the amounts
recognised in the balance sheet are shown below
value at value at
29 april 2006 30 april 2005
£m £m
equities 11348 8734
bonds 7317 5767
property 736 603
other 161 280
total market value of assets 19562 15384
present value of funded obligations 21172 18584
deficit in funded schemes 1610 3200
present value of unfunded obligations 15 11
total deficit within all schemes 1625 3211
unrecognised net actuarial gainloss – –
nonvested unrecognised past service cost – –
net liability 1625 3211
the deficit within the main uk scheme included within the above figures is £1603m 2005 £3166m
90 rhm annual report and accounts 2006 notes to the financial statements 30 pension obligations continued
amounts included within the income statement
year ended year ended
29 april 2006 30 april 2005
£m £m
periodic operating costs
current service cost 109 210
nonperiodic operating costs
curtailment gain due to benefit change – 540
curtailment due to disposal of subsidiaries – 35
increase in liabilities arising from redundancies over the year 25 22
financing costs
expected return on assets 1021 978
interest cost 985 1009
total financing cost 36 31
on 18 august 2005 a special contribution of £110m was made to the uk scheme following the issue of shares and listing of the
company on the london stock exchange in accordance with an agreement with the scheme trustees under the terms of this
agreement a further payment of £15m was paid on 24 march 2006
a formal actuarial review of the uk scheme was conducted by the actuary to the trustee as at 5 april 2005 to determine funding
requirements for current service and repayment of past service deficits using similar assumptions for mortality to those implied by the
company’s recent mortality study gives rise to an increase in scheme liabilities of £960m over those disclosed in 2005 this increase
together with an associated increase in deferred tax assets of £288m has been reflected as an actuarial loss within movements 
on reserves
the first curtailment item shown above relates to the decision to cease the practice of providing enhanced early retirement terms 
this was previously allowed for within the ias 19 assumptions at 2 may 2004
the total current service cost of £109m 2005 £210m was included in cost of sales £63m 2005 £113m distribution expenses
£32m 2005 £65m and administrative expenses £14m 2005 £32m
the actual return on plan assets was £3365 2005 £1168m
changes in the present value of the defined benefit obligation
year ended year ended
29 april 2006 30 april 2005
£m £m
defined benefit obligation at 1 may 2005 18595 19725
current service cost 109 210
curtailment gain due to benefit change – 540
curtailment charge due to disposal of subsidiaries – 35
increase in liabilities arising from redundancies in the year 25 22
interest cost 985 1009
member contributions 118 107
national insurance rebates 48 59
benefits paid 931 897
actuarial lossgains on liabilities 2238 1135
defined benefit obligation at 29 april 2006 21187 18595
91 rhm annual report and accounts 2006 notes to the financial statements 30 pension obligations continued
changes in the fair value of the schemes’ assets
year ended year ended
29 april 2006 30 april 2005
£m £m
plan assets at 1 may 2005 15384 14341
special contributions 1267 –
normal employer contributions 312 480
contributions in respect of disposal of subsidiaries – 116
contributions in respect of enhanced benefits on redundancy 10 10
ppf levy 06 –
member contributions 118 107
national insurance rebates 48 59
expected return on assets 1021 978
benefits paid 931 897
actuarial gain on assets 2327 190
plan asset at 29 april 2006 19562 15384
amounts recognised in the statement of recognised income and expense
year ended year ended
29 april 2006 30 april 2005
£m £m
actuarial gains 89 1325
total gain recognised in statement of recognised income and expense 89 1325
cumulative amount of gains recognised in statement of changes in equity since 1 may 2005 1414 1325
amounts for current and previous years
year ended year ended
29 april 2006 30 april 2005
£m £m
defined benefit obligation 21187 18595
plan assets 19562 15384
deficit 1625 3211
experience lossgain on schemes’ liabilities over year 2238 1135
experience gain on schemes’ assets over year 2327 190
other postemployment benefits schemes
the group does not operate any other postemployment benefits schemes
92 rhm annual report and accounts 2006 notes to the financial statements 31 cash flows from operating activities
reconciliation of operating profit to net cash inflow from operating activities
group company
year ended year ended year ended year ended
29 april 2006 30 april 2005 29 april 2006 30 april 2005
note £m £m £m £m
profitloss for the year 125 1909 845 02
adjustments for
tax chargecredit 10 16 1044 11 –
dividends received – – 888 –
depreciation and impairment of property plant and equipment 15 529 612 – –
amortisation of intangibles 14 14 24 – –
profitloss on disposal of property plant and equipment 02 210 – –
profitloss on disposal of subsidiaries 11 61 42 – –
net pension charge less contributions 188 808 – –
interest 9 1333 1185 – –
other noncash movements 05 – 05 –
operating cash flows before movements in working capital 1775 1626 49 02
increasedecrease in inventories 08 85 – –
increase in trade and other receivables 116 244 10 –
decreaseincrease in trade and other payables 122 419 74 –
decreaseincrease in provisions for liabilities and charges 90 124 – –
cash generated from operations 1439 1172 15 02
cash flows are shown inclusive of discontinued operations see note 11 for discontinued disclosures
32 net borrowings
at at 
29 april 2006 30 april 2005
£m £m
debt
secured senior credit agreement – 971
unsecured subordinated loan notes – 4574
secured loan notes – 4561
bank loans 7432 –
other loans 06 08
obligations under finance leases see note 25 39 50
total debt 7477 10164
cash at bank 719 878
net debt 6758 9286
borrowings – fair value adjustments
1

total debt 7477 10164
interest accrual 168 112
fair value of interest rate swaps see note 22 34 –
total borrowings per balance sheet see note 21 7611 10276
capitalised fees 68 29
total borrowings excluding capitalised fees 7679 10305
1
ias 39 requires the carrying value of borrowings to be shown at fair value which includes accrued interest and the fair value of any interest rate swap held to hedge the borrowings
93 rhm annual report and accounts 2006 notes to the financial statements 33 commitments and operating lease arrangements
capital expenditure contracted for at the balance sheet date but not yet incurred is as follows
at at 
29 april 2006 at 30 april 2005
group £m £m
property plant and equipment 60 157
there was no capital expenditure contracted for intangible assets at the year end 2005 nil
operating lease commitments
the group leases various offices under noncancellable operating lease agreements the leases have varying terms escalation clauses
and renewal rights
the group also leases various plant and machinery under cancellable operating lease agreements the lease expenditure charged to the
income statement during the year is disclosed in note 6
the future aggregate minimum lease payments under noncancellable operating leases are as follows
at at
29 april 2006 30 april 2005
group £m £m
not later than one year 134 149
later than one year and not later than five years 358 503
later than five years 1596 1138
2088 1790
operating lease income
the group sublets various offices under noncancellable operating lease arrangements the future aggregate minimum lease receipts
under these leases are as follows
at at
29 april 2006 30 april 2005
group £m £m
not later than one year 01 01
later than one year and not later than five years 06 06
later than five years 07 08
14 15
company
the company has no commitments or operating lease arrangements
34 contingent liabilities
there were no material contingent liabilities at 29 april 2006 30 april 2005 none
94 rhm annual report and accounts 2006 notes to the financial statements 35 related party transactions
trading transactions
transactions between the company and its wholly owned subsidiaries which are related parties have been eliminated on consolidation
and are not disclosed in this note
the following transactions were carried out with related parties
year ended year ended
29 april 2006 30 april 2005
group £m £m
sales of goods
– associates 09 12
purchases of goods
– associates 06 06
year end balances arising from purchases of goods
at at
29 april 2006 30 april 2005
group £m £m
loans to associates 02 –
owed from associates 10 –
12 –
owed to associates 10 –
loans to associates are subject to libor  25 and are repayable in greater than one year
remuneration of directors
the directors who served the group during the year were as follows
r p hanson
j vazanova resigned 29 june 2005
j j m leahy resigned 29 june 2005
i r mcmahon
a j allner
j du plessis appointed 1 june 2005
r j matthews appointed 1 september 2005
m r g baulk appointed 1 september 2005
e h j schoewel appointed 14 october 2005
the directors’ remuneration information required by the companies act 1985 and the listing rules of the fsa is contained on 
pages 32 to 38 in the remuneration committee report
the remuneration of the directors and those who are considered key management personnel of the group is set out below in
aggregate for each of the categories specified in ias 24 related party disclosures
year ended year ended
29 april 2006 30 april 2005
£000 £000
salaries and other shortterm employee benefits 2955 1704
retirement benefits 529 407
sharebased incentive schemes 148 –
termination benefits – 241
3632 2352
one director has retirement benefits accruing under the group’s defined benefit plan
95 rhm annual report and accounts 2006 notes to the financial statements 35 related party transactions continued
directors’ transactions
there were no material transactions with directors for the year ended 29 april 2006
company
year ended year ended
29 april 2006 30 april 2005
transactions £m £m
management charges
– subsidiary undertakings 07 –
balances
at at
29 april 2006 30 april 2005
£m £m
amounts owed by group undertakings
current 02 –
noncurrent 680 –
682 –
amounts owed to group undertakings
current 76 –
noncurrent 231 28
307 28
36 list of subsidiary and associate undertakings
with the exception of rhm group holding limited which is owned 100 by rhm plc all shares in group companies are held
indirectly by rhm plc separate financial statements are prepared for subsidiary entities
nature of business country of incorporation holding class of share
trading companies
avana bakeries ltd food manufacture and distribution england and wales 100 ordinary
british bakeries ltd food manufacture and distribution england and wales 100 ordinary
centura foods ltd food manufacture and distribution england and wales 100 ordinary
charnwood foods ltd food manufacture and distribution england and wales 100 ordinary
granary south pacific pty ltd food manufacture and distribution australia 100 ordinary
kildorough ltd food manufacture and distribution ireland 100 ordinary
le pain croustillant ltd food manufacture and distribution england and wales 100 ordinary
manor bakeries ltd food manufacture and distribution england and wales 100 ordinary
martine specialites sas food manufacture and distribution france 100 ordinary
rf brookes ltd food manufacture and distribution england and wales 100 ordinary
rank hovis ltd food manufacture and distribution england and wales 100 ordinary
rgb coffee ltd food manufacture and distribution england and wales 100 ordinary
rhm foodservice ltd food manufacture and distribution england and wales 100 ordinary
rhm frozen foods ltd food manufacture and distribution england and wales 100 ordinary
rhm ireland ltd food manufacture and distribution ireland 100 ordinary
rhm technology ltd research and development england and wales 100 ordinary
robertson’s – ledbury preserves ltd food manufacture and distribution england and wales 100 ordinary
sofrapain sas food manufacture and distribution france 100 ordinary
96 rhm annual report and accounts 2006 notes to the financial statements 36 list of subsidiary and associate undertakings continued
nature of business country of incorporation holding class of share
intermediate holding companies and 
other subsidiaries
cf ip ltd intellectual property holding england and wales 100 ordinary
london superstores ltd intermediate holding company england and wales 100 ordinary
mb ip ltd intellectual property holding england and wales 100 ordinary
phoneridge ltd property company england and wales 100 ordinary
rhm group ltd formerly ranks hovis 
mcdougall ltd b intermediate holding company england and wales 100 ordinary
rhbb ip ltd intellectual property holding england and wales 100 ordinary
rhm finance ltd finance company cayman islands 100 ordinary
rhm food solutions ltd intermediate holding company england and wales 100 ordinary
rhm foodbrands ltd intermediate holding company england and wales 100 ordinary
rhm group holding ltd intermediate holding company england and wales 100 ordinary
rhm group three ltd intermediate holding company england and wales 100 ordinary
rhm group two ltd intermediate holding company england and wales 100 ordinary
rhm holdings ireland ltd intermediate holding company ireland 100 ordinary
rhm group services ltd formerly 
rhm group ltd and rhm ltd c intermediate holding company england and wales 100 ordinary
rhm overseas ltd intermediate holding company england and wales 100 ordinary
rhm property company ayr ltd property company england and wales 100 ordinary
rhm property company cambridge ltd property company england and wales 100 ordinary
rhm property holding company ltd a property company england and wales 100“a” ordinary
rhm property holding company ltd a property company england and wales 0“b” ordinary
nontrading companies
alpha cereals unlimited dormant england and wales 100 ordinary
associated family bakers surrey ltd dormant england and wales 100 ordinary
associated family bakers surrey ltd dormant england and wales 100 preference
atora ltd dormant england and wales 100 ordinary
atora merchandising ireland ltd dormant ireland 100 ordinary
avana group trustees ltd dormant england and wales 100 ordinary
bisto ireland ltd dormant ireland 100 ordinary
bisto foods ltd dormant england and wales 100 ordinary
bisto ltd dormant england and wales 100 ordinary
brand  co ltd dormant england and wales 100 ordinary
cerebos ireland ltd dormant ireland 100 ordinary
cerebos ltd dormant england and wales 100 ordinary
charnwood foods sl dormant spain 100 ordinary
european food solutions ltd dormant england and wales 100 ordinary
federal bakeries ltd dormant england and wales 100 ordinary
fleming howden ltd dormant england and wales 100 ordinary
food brands plus ltd dormant england and wales 100 ordinary
frank cooper ltd dormant england and wales 100 ordinary
gateaux ltd dormant ireland 100 ordinary
global dough partners ltd dormant england and wales 100 ordinary
a the “a” ordinary shares held by group control 995 of the voting rights
b ranks hovis mcdougall ltd changed its name to rhm group ltd on 28 march 2006
c rhm ltd changed its name to rhm group ltd on 1 july 2005 and then to rhm group services ltd on 28 march 2006
d acquired on 4 february 2006
97 rhm annual report and accounts 2006 notes to the financial statements 36 list of subsidiary and associate undertakings continued
nature of business country of incorporation holding class of share
nontrading companies continued
grocery international ltd dormant england and wales 100 ordinary
grocery logistics ltd dormant england and wales 100 ordinary
holgran ltd dormant england and wales 100 ordinary
hovis ltd dormant england and wales 100 ordinary
ja sharwood  co ltd dormant england and wales 100 ordinary
ja sharwood  co ireland ltd dormant ireland 100 ordinary
rhm sc one ltd dormant england and wales 100 ordinary
james robertson  sons ltd dormant england and wales 100 ordinary
joseph rank ltd dormant england and wales 100 ordinary
kevany ltd dormant ireland 100 ordinary
lyons cakes ltd dormant england and wales 100 ordinary
mcdougalls foods ltd dormant england and wales 100 ordinary
mcdougalls ltd dormant england and wales 100 ordinary
mr kipling ltd dormant england and wales 100 ordinary
ormeau bakery ltd dormant england and wales 100 ordinary
paxo ireland ltd dormant ireland 100 ordinary
paxo ltd dormant england and wales 100 ordinary
r f foods ltd dormant england and wales 100 ordinary
rhm bread bakeries ltd dormant england and wales 100 ordinary
rhm consumer brands ltd dormant england and wales 100 ordinary
rhm customer solutions ltd dormant england and wales 100 ordinary
rhm direct deliveries ltd dormant england and wales 100 ordinary
rhm european food solutions ltd dormant england and wales 100 ordinary
rhm food brands plus ltd dormant england and wales 100 ordinary
rhm foods ltd dormant england and wales 100 ordinary
rhm group four ltd dormant england and wales 100 ordinary
rhm group trustee ltd corporate trustee england and wales 100 ordinary
rhm pension trust ltd corporate trustee england and wales 100 ordinary
rhm pension trustees ltd dormant england and wales 100 ordinary
rhm trustees ltd dormant england and wales 100 ordinary
robertson foods ltd dormant england and wales 100 ordinary
saxa ireland ltd dormant ireland 100 ordinary
sebon ltd dormant england and wales 100 ordinary
sitoni foods ltd dormant england and wales 100 ordinary
supreme salt company ltd dormant england and wales 100 ordinary
the enjoy organic company ltd dormant england and wales 100 ordinary
the family loaf bakery ltd dormant england and wales 100 “a”  ”b” 
ordinary
the family loaf bakery ltd dormant england and wales 936 preference
the yorkshire pudding company ltd dormant england and wales 100 ordinary
tiffany foods ltd dormant england and wales 100 ordinary
tiffany sharwood’s frozen foods ltd dormant england and wales 100 ordinary
associates
staper ltd england and wales 50 “b”ordinary
bakers basco ltd d england and wales 20 ordinary
a the “a” ordinary shares held by group control 995 of the voting rights
b ranks hovis mcdougall ltd changed its name to rhm group ltd on 28 march 2006
c rhm ltd changed its name to rhm group ltd on 1 july 2005 and then to rhm group services ltd on 28 march 2006
d acquired on 4 february 2006
98 rhm annual report and accounts 2006 notes to the financial statements 37 reconciliation of net assets and profit under uk gaap to ifrs
the consolidated financial statements of the group prior to 30 april 2005 had been prepared in accordance with generally accepted
accounting principles in the united kingdom uk gaap the comparative figures within this report for the full year ended 30 april
2005 are restated for ifrs full details of the restatement and reconciliations of the uk gaap financial information for the year ended
30 april 2005 are detailed below along with explanations of the impacts to the restated numbers
consolidated balance sheet as at 1 may 2004
ifrs adjustments
employee intangible income
benefits assets leases taxes inventories total ifrs 
uk gaap ias 19 ias 38 ias 17 ias 12 ias 2 adjustments ifrs
£m £m £m £m £m £m £m £m
intangibles 4902 51 51 4953
tangibles 4916 51 23 28 4888
investment in associates 05 05
noncurrent assets 9823 – 23 23 9846
current assets 4232 02 02 – 4232
current liabilities 4280 40 07 47 4327
noncurrent liabilities 15983 135 30 03 168 16151
net liabilities 6208 173 – 14 03 02 192 6400
share capital 02 02
share premium 172 172
pension reserve 5254 130 130 5384
accumulate losses 1132 43 14 03 02 62 1194
total shareholders’ equity 6212 173 – 14 03 02 192 6404
minority interest 04 04
6208 173 – 14 03 02 192 6400
current and noncurrent liabilities under uk gaap do not include provisions which are shown separately on the balance sheet 
these are included within liabilities under ifrs and £92m has been included as a current liability
99 rhm annual report and accounts 2006 notes to the financial statements 37 reconciliation of net assets and profit under uk gaap to ifrs continued
consolidated balance sheet as at 30 april 2005
ifrs adjustments
employee intangible income income
benefits assets leases taxes taxes inventories total ifrs 
uk gaap ias 19 ias 38 ias 17 ias 12 ias 12 ias 2 adjustments ifrs
£m £m £m £m £m £m £m £m £m
intangibles 4658 127 127 4785
tangibles 4267 34 20 14 4253
deferred tax – 723 41 764 764
other debtors 09 – 09
investment in associates 04 – 04
noncurrent assets 8938 93 20 723 41 877 9815
current assets 3684 01 02 01 3683
current liabilities 3260 27 06 33 3293
noncurrent liabilities 12481 141 28 723 892 13373
net liabilities 3119 167 93 14 – 41 02 49 3168
share capital 02 02
share premium 172 172
own shares 01 01
pension reserve 2158 136 917 1053 3211
accumulated losses 1135 31 93 14 917 41 02 1004 131
total shareholders’ equity 3120 167 93 14 – 41 02 49 3169
minority interest 01 – 01
total equity 3119 167 93 14 – 41 02 49 3168
current and noncurrent liabilities under uk gaap do not include provisions which are shown separately on the balance sheet 
these are included within liabilities under ifrs and of the £348m £221m has been included as a current liability
current assets under uk gaap include longterm debtors which are separately disclosed within the notes to the financial statements
these are included within noncurrent assets under ifrs and therefore £09m of other debtors have been included as a noncurrent
asset for reconciliation purposes
consolidated income statement for the year ended 30 april 2005
ifrs adjustments
employee intangible income
benefits assets leases taxes total ifrs 
uk gaap ias 19 ias 38 ias 17 ias 12 adjustments ifrs
£m £m £m £m £m £m £m
revenue 15275 15275
gross profit 5366 15 01 16 5382
operating profit before restructuring costs 1550 30 02 32 1582
operating profit 1694 33 93 02 128 1822
finance costs 1163 20 02 22 1185
profit on ordinary activities before taxation 531 13 93 106 637
taxation 1033 03 – – 41 44 1077
profit for the year from continuing operations 1564 16 93 41 150 1714
discontinued operations 193 02 02 195
profit for the year 1757 18 93 – 41 152 1909
the £41m tax credit arises from a oneoff deferred tax adjustment resulting from the recognition of the deferred tax asset on the
pension deficit in 2005 the pension deficit under ias 19 is £136m higher than the deficit under frs 17 and so there is a higher
associated deferred tax asset under ifrs
discontinued results are not separated out on the face of the uk gaap income statement but for the reconciliation to ifrs have been
shown as a separate line this has resulted in a decrease in revenue of £114 8m a decrease in gross profit of £186m a decrease in
operating profit of £228m and an increase in taxation of £33m
100 rhm annual report and accounts 2006 notes to the financial statements 37 reconciliation of net assets and profit under uk gaap to ifrs continued
consolidated cash flow statement for the year ended 30 april 2005
ifrs adjustments
employee intangible income
benefits assets leases taxes total ifrs 
uk gaap ias 19 ias 38 ias 17 ias 12 adjustments ifrs
£m £m £m £m £m £m £m
profit for the year 1757 18 93 41 152 1909
adjustments for
tax 1000 03 41 44 1044
depreciation of property plant and equipment 636 24 24 612
amortisation of intangibles 103 79 79 24
profit on disposal of property plant and equipment 210 210
profit on disposal of subsidiaries 52 10 10 42
net pension charge less contributions 785 23 23 808
finance costs 1163 20 02 22 1185
operating cash flows before movements 
in working capital 1612 12 02 14 1626
decrease in inventories 85 85
increase in trade and other receivables 245 01 01 244
decease in trade and other payables 406 13 13 419
increase in provisions for liabilities and charges 124 124
movement in working capital 442 12 12 454
operating cash flow 1170 02 02 1172
interest paid 665 665
income tax – net 59 59
net cash from operations 446 – – 02 – 02 448
discussion of impact of ifrs on financial results
the previous tables show the impact of ifrs on the consolidated income statement for the year ended 30 april 2005 as well as the
impact on net assets as at 1 may 2004 and 30 april 2005 below is a discussion of the main areas impacted by the transition
ias 19 employee benefits
under ifrs the group applies ias 19 “employee benefits” this standard follows a balance sheet approach which is similar to that of
frs 17 which the group had adopted in 2004 whereby scheme deficits or surpluses are recognised on the balance sheet the income
statement expense comprises the current service cost the interest cost the expected return on any plan assets and the appropriate
portion of any past service cost
application of ias 19 has resulted in a total reduction in reserves of £13m made up of £2m representing the difference between
valuing pension assets using bid values rather than mid values and £11m being the present value of future pension administration costs
the group’s uk gaap accounting policy was to accrue for holiday entitlements under various union arrangements the basis of these
arrangements were that in the first year of employment holiday entitlement was earned but not taken and that the entitlement is 
paid when employees leave the group these arrangements were no longer available to new employees from 2000 but the liability 
to employees joining before that date continues to be accrued at current rates of pay
holiday accruals were also made in accordance with specific local legal requirements in france
ias 19 requires that a liability is recorded for all accrued entitlements for holiday for all employees at each balance sheet date 
the reason that a difference arises between uk gaap and ifrs is due to different measurement bases under each gaap
the impact on the group is to increase the employee benefits expense in the income statement
101 rhm annual report and accounts 2006 notes to the financial statements 37 reconciliation of net assets and profit under uk gaap to ifrs continued
ias 38 intangible assets
goodwill amortisation charged to the income statement under uk gaap has been reversed as under ifrs goodwill is not subject to an
annual amortisation charge but instead is subject to an annual impairment review
under uk gaap purchased software licences were capitalised within tangible fixed assets as part of the computer hardware to which
they related and depreciated over their useful economic lives
ias 38 requires that the computer software that is an integral part of the related hardware such as an operating system is treated as
property plant and equipment software that is not an integral part of the related hardware must be capitalised as an intangible asset
and amortised over its useful economic life
the effect of this change is to reclassify certain software licences from property plant and equipment to intangible assets in the balance
sheet and to reclassify the related depreciation expense to amortisation expense in the income statement
ias 17 leases classification and lease incentives
the uk gaap accounting standard on leases ssap 21 “accounting for leases and hire purchase contracts” is similar to the ifrs
standard ias 17 “leases” in terms of the classification of a lease as either an operating lease or a finance lease
whilst both standards define a finance lease as a lease that transfers substantially all the risks and rewards of ownership of the asset to
the lessee ssap 21 provides a numeric test which does not exist in ias 17 that was used as persuasive evidence of whether this
transfer had taken place a consequence of adopting ias 17 has been that some leases previously classified as operating leases under
uk gaap have been classified as finance leases under ifrs
furthermore lease incentives which are amortised over a period until the first lease break under uk gaap are amortised over the
entire lease term under ias 17 resulting in adjustments
ias 12 income taxes
the first adjustment on the closing balance sheet constitutes the tax effect of the other adjustments resulting in an increased deferred
tax asset and a reduction in the liability under ifrs this resulted in a credit to the income statement
the second adjustment on the closing balance sheet arises from a oneoff deferred tax adjustment resulting from the recognition of the
deferred tax asset on the pension deficit in 2005 the pension deficit under ias 19 is higher than the deficit under frs 17 and so there
is a higher associated deferred tax asset and a corresponding credit in the income statements under ifrs
the adjustment on the opening balance sheet constitutes the tax effect on the ifrs adjustments
ias 2 inventories
ias 2 specifically disallows storage costs to be capitalised that are in excess of costs necessary in the production process before a further
production stage hence warehouse costs for finished goods have been removed from the cost of inventories
impact of ias 32 and ias 39
the group adopted ias 32 “financial instruments presentation and disclosure” and ias 39 “financial instruments recognition and
measurement” from 1 may 2005 in the preparation of the comparative figures within this report under ifrs the group applied 
the hedge accounting rules of uk gaap taking advantage of the exemption under ifrs 1 “first time adoption of ifrs” under this
exemption interest rate swaps commodity and foreign exchange contracts that were previously accounted for as fair value hedges
under uk gaap were not measured at fair value within the financial statements on adoption of ias 39 the difference between the
financial instruments previously reported carrying value and their fair value has been reflected within opening retained earnings
ias 39 requires the group to recognise transitional adjustments in accounting for its financial instruments this affects the treatment 
of the group’s commodity contracts foreign exchange contracts and interest rate swaps which were previously treated as cash flow
hedges of forecasted transactions and were not recognised prior to their date of settlement these instruments are considered to be
nonqualifying hedging instruments at the date of transition and have been recognised at fair value the effect is to increase the
group’s liabilities by £58m with an associated deferred tax asset of £17m giving a net increase in net liabilities at 1 may 2005 
of £41m
102 rhm annual report and accounts 2006 notes to the financial statements 37 reconciliation of net assets and profit under uk gaap to ifrs continued
ias 39 transition balance sheet
restatement of consolidated balance sheet to include ias 32 and ias 39
ias 39 restated
52 weeks to transition including 
30 april 2005 adjustment ias 39
£m £m £m
noncurrent assets 9815 17 9832
current assets
inventories 694 694
trade and other receivables 1799 1799
other taxes receivable 120 120
other debtors prepayments and accrued income 136 136
cash and cash equivalents 878 878
3627 3627
noncurrent assets held for sale 56 56
3683 3683
current liabilities
trade and other payables 2760 58 2818
corporation tax 21 21
obligations under finance leases 12 12
borrowings 279 279
shortterm provisions 221 221
3293 58 3351
net current assets 390 58 332
total assets less current liabilities 10205 41 10164
noncurrent liabilities 13373 13373
net liabilities 3168 41 3209
equity
calledup share capital 02 02
share premium account 172 172
own shares 01 01
pension reserves 3211 3211
accumulated losses 131 41 172
capital and reserves attributable to the company’s equity holders 3169 41 3210
minority interests 01 01
total equity 3168 41 3209
company
there are no reconciling differences between ifrs and uk gaap for the company
103 rhm annual report and accounts 2006 notes to the financial statements financial calendar 2006
24 february payment date for the interim dividend
29 april year end
29 june announcement of the full year results for the year to 29 april 2006
29 june final dividend declared
30 august exdividend date for final dividend
1 september record date for final dividend
26 september annual general meeting
29 september payment of final dividend
corporate website – investor relations
rhm’s corporate website provides access to a wide range of information including current and historic share price information recent
announcements financial reports and investor presentations this can be accessed via the investor relations section of the corporate
website wwwrhmcom
shareholder services and helpline 
the company has appointed lloyds tsb registrars as its registrar to manage and maintain the shareholder register and to pay
dividends a range of shareholder information is available online at wwwshareviewcouk including practical help on transferring 
shares or updating personal details shareholders can also check their shareholding and register to receive information and documents
electronically alternatively if you have any queries concerning your shareholding please contact the registrar by telephone or by post 
lloyds tsb registrars
the causeway
worthing
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telephone 0870 600 3970 
available business days between 830am and 530pm 
overseas callers 44 121 415 7047
registered office 
rhm plc 
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liston road 
marlow 
buckinghamshire sl7 1tj 
telephone 44 01628 478484
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website wwwrhmcom
auditors
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104 rhm annual report and accounts 2006
shareholder information designed and produced by radley yeldar london rhm plc
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sl7 1tj
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wwwrhmcom


Summary:
 overview
rhm is one of the largest food
manufacturers in the united kingdom
with over 50 manufacturing and
distribution sites throughout the country
and more than 16000 employees 
over 50 per cent of rhm’s turnover is
generated from the sale of some of the
uk’s best known and most enduring
brands which include hovis bisto 
mr kipling and sharwood’s rhm also
manufactures own label products for 
many of the large uk supermarket chains
and for other customers with whom 
rhm has formed strategic partnerships
the group’s operations form four 
business segments bread bakeries
culinary brands cakes and 
customer partnerships
competitive environment
the uk food industry is highly competitive
in a number of rhm’s key sectors market
share is concentrated among a small
number of wellestablished companies 
that operate on both a national and
international basis with single or multiple
branded product lines rhm’s brands 
also face competition from the own label
products of supermarket chains some of
which are manufactured by rhm itself 
to different recipes during the year 
the food industry has become even 
more competitive with the uk’s largest
supermarkets increasing their share of the
overall market rhm’s top five customers
account for over 52 per cent of the
group’s total sales
operating performance 
total group
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £1559m £1528m 21
underlying
operating
profit £1735m £1582m 97
underlying
operating
profit
margin 111 104 70bps
turnover for the year increased by 
21 per cent to £1559m following an
improved performance in the second half
of the year this reflected both a higher
volume of sales and the impact of price
increases successfully introduced to counter
£11m of energy cost increases incurred
during the year most of which occurred 
in the second half
12 rhm annual report and accounts 2006
chief
executive’s
review
“w e are confident that by
maintaining our focus on
profitable top line growth
and cost saving opportunities
we will create significant
shareholder value” branded turnover increased by £24m or
31 per cent to £788m largely as a result
of higher hovis bisto and granary sales
and new product launches across all
business areas which more than offset 
a decline in mr kipling sales excluding
branded cakes’ turnover which declined
by 77 per cent £137m branded
turnover rose by 64 per cent nonbranded
turnover increased by £7m or 10 per cent
to £764m principally as a result of 
higher thirdparty flour and chilled ready
meal sales 
underlying operating profit increased by
97 per cent to £1735m cost reduction
initiatives delivered in aggregate £53m of
benefits these savings together with the
benefit of higher total turnover more than
offset the impact of the decline in cakes’
trading and were key to the delivery of 
an improvement in underlying operating
profit margin which rose from 
104 per cent to 111 per cent
consistent with our longterm strategy of
building investment behind our brands
advertising and marketing expenditure
increased by £26m in bread bakeries 
and culinary brands in cakes £3m was
tactically reallocated in the second half 
of the year from advertising to instore 
and other promotional activity this was
considered the most effective way of
encouraging consumers to trial our
refreshed mr kipling range following
significant product quality and packaging
improvements we intend to increase
above the line investment in cakes during
the new financial year total group
promotional expenditure increased
significantly as a consequence of the
challenging market environment that
prevailed all year
13 rhm annual report and accounts 2006 chief executive’s review rhm’s bread bakeries division is the
largest vertically integrated baker
and flour miller in the uk it is the
home of hovis celebrating its
120th anniversary  as well as other
famous brands including granary 
mother’s pride nimble and ormo 
we supply around one third of 
the uk’s daily bread delivering 
in excess of two million fresh 
loaves and rolls to over 9000
supermarkets and small
independent stores nationwide
every day  we also produce over
850 other varieties of product
including crumpets fruit buns
croissants rolls scones muffins 
and scotch pancakes
our mills produce over a million
tonnes of flour every year with
over half being used in our own
bread bakeries and other rhm
businesses we produce over 220
different types of flour for external
customers in both bulk and bagged
form marketed in part under the
hovis granary  elephant atta and
fassal brands
turnover increased by 41 per cent to
£786m higher bread turnover was
principally due to increased sales of hovis
reflecting both volume gains and price
increases the success of hovis has been
driven by the effective targeting of the
premium branded market as well as
increased consumer demand for healthier
products hovis’ market share has risen
from 291 per cent to 316 per cent during
the year a gain of 250 basis points
1

initiatives such as healthiest ever hovis
the new granary range hovis best of 
both and hovis invisible crust have been
significant in helping to position hovis 
as a premium brand with strong health
credentials in the minds of consumers
volume has also been increased through
customer wins and we have increased
hovis production capacity with the
acquisition of an additional bakery 
in leicester
thirdparty flour turnover increased from
£134m to £140m during the period the
impact of the closure of three older mills
was more than offset by increased sales
from our wellingborough mill purchased
in july 2005 this acquisition together
with the mill closures has significantly
improved the effectiveness of the group’s
milling asset base
underlying divisional operating profit
increased by 264 per cent to £814m with
underlying operating profit margin rising
by 190 basis points from 85 per cent to
104 per cent mainly due to better pricing
favourable overrider settlements and
successful procurement logistics
restructuring and pension cost savings
these gains have been offset in part by
anticipated higher distribution costs
associated with serving new convenience
store customers and the impact of higher
energy costs
1 source iri multiples  coops 52 weeks ended 
22 april 2006
14 rhm annual report and accounts 2006 chief executive’s review
bread
bakeries
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £786m £755m 41
underlying
operating
profit £814m £644m 264
underlying
operating
profit
margin 104 85 190bps key markets
15 rhm annual report and accounts 2006 chief executive’s review
prepacked bread
definition
prepacked bread including white 
brown wholemeal seeded dieting and
‘half and half’ breads
rhm brands
hovis granary mother’s pride nimble 
and ormo
market
of the markets in which rhm operates this
is the largest with a value of £1106m in the
current year the category grew in value by
76 per cent in the year to 29 april 2006
having grown 55 per cent
1
in the prior year
the category is highly branded with a few
large players accounting for the majority 
of purchases hovis is the market’s leading
brand with a market share of 316 per cent
2
at year end having reinforced its position
with significant share gains this year
consumption drivers
whilst convenience is the biggest driver
of prepacked bread consumption other
factors are influential when consumers are
choosing specific products health concerns
have grown in importance in recent years
particularly amongst families – the largest
consumers of prepacked bread enjoyment is
also a significant driver in the category with
consumers looking for new tastier alternatives
to plain white bread
1 source iri multiples  coops 52 weeks ended 
22 april 2006
2 source iri multiples  coops 4 weeks ended 
22 april 2006
growth sectors
the half and half seeded and brown sectors
have all grown rapidly over the past three
years reflecting increased consumer interest
in health and premium breads half and half
– a category created relatively recently with
the launch of hovis best of both white bread
with the wheatgerm content of wholemeal –
has been a particular success story growing
by 55 per cent in this year alone these gains
have more than offset the longterm decline
in white bread sales with dieting being the
only other sector to decline in value this year 
innovation
hovis has again led the bread category in
innovation with healthiest ever hovis the
addition of whole wheat across the entire
range and the awardwinning hovis invisible
crust the world’s first bread to be baked
without a crust 16 rhm annual report and accounts 2006 chief executive’s review
culinary 
brands
rhm’s culinary brands division
contains some of the uk’s best
loved and most recognisable
grocery brands including bisto
gravy  sharwood’s asian sauces
robertson’s jam golden shred
marmalade and frank cooper’s
preserves atora suet mcdougalls
and cadbury’s baking products
paxo stuffing mixes saxa and
cerebos salt and rombouts coffee
in addition to manufacturing
branded products for sale in retail
outlets the culinary brands division
supplies bulk and partprepared
items for example flourbased
mixes to foodservice customers 
rhm is the clear leader in each of
the grocery markets in which it
operates 91 per cent of culinary
brands’ sales are of branded
products with the remainder 
being private label goods
culinary brands’ turnover increased by
£5m or 18 per cent to £271m reflecting
higher branded sales particularly of bisto
in the seasonally more important second
half of the year branded turnover
accounted for 91 per cent of divisional
sales up from 89 per cent last year 
branded growth was driven by increased
advertising and promotional investment
new advertising campaigns were launched
for the division’s two biggest brands and
were well received the bisto “aah night”
advertising theme encouraged families to
spend one night a week eating together
with “proper food and proper gravy”
whilst the sharwood’s “go east”
advertising celebrated the vibrancy and
excitement of the sharwood’s range of
asian foods many new products were
launched sharwood’s noodle boxes and
squeezable variants of the brand’s mango
chutney met with considerable success
whilst bisto launched chilled readymade
gravy and new variants of chilled and
frozen yorkshire puddings under licence
bisto achieved its highest ever share of the
gravy market in april 2006 678 per cent
up 600 basis points
1
on the same period 
last year
price increases were achieved across the
bisto sharwood’s paxo rombouts
robertson’s and atora ranges which
helped offset increases in energy costs
performance was also aided by the delivery
of further procurement and other cost
saving initiatives including the outsourcing
of the majority of the division’s central
warehousing and transport requirements
and a number of projects that have
resulted in improved production efficiency
in addition during the second half of the
year administration of the four business
units that made up the division centura
foods rhm foodservice mcdougalls
foods and rgb coffee was brought
together in a single location
underlying operating profit increased by
69 per cent to £694m reflecting the
branded sales increase and successful 
costsaving initiatives offset in part 
by the impact of higher advertising 
and promotional spend throughout 
the year and the decline in own label 
sales underlying operating profit 
margin increased by 120 basis points 
to 256 per cent
1 source iri all outlets 4 weeks ended 22 april 2006
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £271m £266m 18
underlying
operating
profit £694m £649m 69
underlying
operating
profit
margin 256 244 120bps 17 rhm annual report and accounts 2006 chief executive’s review
key markets
asian meal solutions
definition
asian meal solutions includes ingredients 
and accompaniments for asian meals to be
consumed in the home incorporating sauces
flat breads noodles chutneys and cooking
powders
rhm brand
sharwood’s
market
asian meal solutions was worth £280m
1
this year an increase of 30 per cent
1
on 
the previous year this is a highly branded
category with a large number of branded
players making it very competitive
sharwood’s is the number one brand with 
a market share of 286 per cent
1
and a
presence in every major product sector
consumption drivers
enjoyment is the leading driver of
consumption in the category with a
significant proportion of consumers saying
they use the category when they are 
looking for a change or something special
convenience is also very important with
speed and ease of preparation to the fore
health concerns are a rapidly growing 
driver but still account for a relatively small
percentage of consumption occasions
growth sectors
the biggest contributors to market growth
have been in accompaniments specific
products showing growth being within
noodles breads pappadums and chutneys
speciality oils and ingredients have also
shown significant growth as consumers’
knowledge of asian cuisine has developed
innovation
new flavours with high quality exotic
ingredients have continued to stimulate
enjoyment and interest in the category 
to serve an increasing consumer focus on
health the sharwood’s balanced living range
was launched in 2005 and continues to 
grow meanwhile with consumer insight
demonstrating the need for ever more
convenient product formats this year saw the
launch of sharwood’s noodle boxes stir fry
noodles and new squeezable chutney
1 source iri all outlets 52 weeks ended 22 april 2006
gravy
definition
gravies includes powders granules 
readytopour ambient and fresh chilled
rhm brand
bisto
market
gravy is a mature highly branded market
with a few large players accounting for the
majority of purchases volume in the gravy
market has remained relatively steady but the
total market value for the year to april 2006
£107m
1
 showed an increase of 57 per cent
1
on the previous year value growth has 
been fuelled by the increasing popularity 
of premium products and chilled variants
bisto is the number one brand in the 
gravy market
consumption drivers
convenience remains the key driver of
consumption in the category and has grown
in importance gravy is now being perceived
as more practical by all consumer groups
especially the 1734 age group enjoyment is
also an important driver and is particularly
evident in the purchase of newly launched
and premium products while health concerns
are the least significant of the three drivers
they are the fastest growing
growth sectors
the key growth sector from last year to this
year has been the sale of sachets these are
smaller packs of granules and their increased
popularity is linked to the demographic shift
towards smaller households the chilled 
liquid gravy sector is also in growth with
convenience and perceived freshness both
important drivers these products are
particularly popular with younger consumers
and are introducing new consumers to 
the category
innovation
sales from new products represent less than 
1 per cent of total sales in the gravy market
with key brands concentrating on extending
their presence in complementary categories 18 rhm annual report and accounts 2006
cakes
rhm is the largest manufacturer 
of cakes for the uk and irish
markets our branded cakes are
predominantly sold under the 
mr kipling cadbury’s lyons and
gateaux brands
cakes’ turnover declined by 87 per cent 
to £241m
avana bakeries rhm’s whole cakes
business which represents approximately
20 per cent of cakes’ turnover performed
well throughout the year due to a
combination of successful innovation
increased consumer demand and improved
operational efficiency
as previously reported trading at manor
bakeries rhm’s manufacturer of small
cakes and slices was disappointing in 
the first half of the year with sales of 
mr kipling cakes and slices falling below
expectations actions taken to improve
profitability in manor bakeries resulted 
in an improved yearonyear financial
performance in the second half of the year
the closure of the eastleigh bakery and
transfer of production to our carlton site
was completed on time in december with
£29m of consequent cost savings being
achieved in the remainder of the year 
all mr kipling cakes are now free from
artificial colours and flavours many recipes
have been upgraded and new packaging
has been introduced across the range 
the mr kipling “delightful” range of lower
fat lower calorie cakes was introduced as
planned in january and has received a
positive consumer response a new 
mr kipling promotional strategy has been
implemented and a nationwide tasting
campaign successfully completed 
we were heartened by reasonable
christmas and easter trading periods as
well as by a slow down in the rate of 
mr kipling yearonyear net sales decline
from 141 per cent in the first half of the
year to 80 per cent in the second as the
steps taken to improve our consumer
offering began to deliver the anticipated
level of benefit encouragingly mr kipling
net sales in the last two months of the
financial year were at a similar level to
those achieved in the same months of 
the previous year we anticipate that 
mr kipling sales in the current year will at
least match last year’s level there remains
however much to be done to realise the
full potential of the mr kipling brand
£3m of marketing spend was tactically
reallocated from advertising to instore 
and other promotional activity on a short
term basis this being a more effective 
way of encouraging consumers to trial 
the improved mr kipling range manor
bakeries’ promotional spend increased
during 2006 by £5m of which £42m was
incurred during the first half of the year
our new promotional strategy which
incentivises consumers to purchase multiple
rather than single packs was successfully
implemented in the second half with a
yearonyear increase in promotional 
spend of less than £1m
cakes’ operating profit for the full year
reduced from £189m to £137m with 
the impact of the lower level of turnover
adverse volume mix and increased
investment in promotional activity
offsetting the benefit of a total of 
£18m of restructuring and rationalisation
procurement and other cost savings
cakes’ operating profit in the second 
half of the year increased from £110m 
to £127m
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £241m £264m 87
underlying
operating
profit £137m £189m 275
underlying
operating
profit
margin 57 72 150bps
chief executive’s review 19 rhm annual report and accounts 2006 chief executive’s review
key markets
ambient cake
definition
ambient cake includes wrapped and
unwrapped cakes that are kept at ambient
temperatures the market can be broadly
segmented into large cakes event cakes 
and individual cakes
rhm brands
mr kipling cadbury’s cakes lyons and
gateaux
market
the total ambient cake market was worth
£916m this year a decline of 02 per cent
1
on the previous year
retailers’ own labels have a very strong
presence in the market showing a steady
increase in share over the past three years
rhm manufactures and markets the
category’s two largest brands mr kipling
number one and cadbury’s cakes
consumption drivers
enjoyment is by far the biggest driver of cake
consumption with consumers turning to cake
when they want a treat
1 source iri all outlets 52 weeks ended 22 april 2006
growth sectors
event cakes – most significantly for christmas
and easter – contributed much of the growth
in the market through both premium and
standard offerings 
innovation
the mr kipling “delightful” range of lower
calorie cakes was launched in the current
year and has exceeded expectations rapidly
growing to become a significant player in the
market improvements have been made to
recipes across the easter mince pies range 20 rhm annual report and accounts 2006 chief executive’s review
customer
partnerships
the customer partnerships business
maintains strategic partnerships
with large customers requiring 
a bespoke service including 
marks  spencer and pizza hut 
it also operates specialist distribution
businesses that supply a selected
range of rhm and third party
products into the irish markets 
as well as supplying industrial
preserves and frozen products 
to uk supermarket chains
customer partnerships’ turnover from
continuing operations increased by 
80 per cent to £262m our chilled 
and frozen businesses achieved strong 
sales growth through a combination 
of innovation and contract gains 
ledbury preserves charnwood foods 
and rhm ireland also made satisfactory
progress in line with our expectations
customer partnerships benefited not 
only from the higher level of activity but
also from procurement and other cost
saving initiatives across all businesses
consequently underlying operating profit
increased by 246 per cent to £294m
20
52 weeks 52 weeks
ended ended
29 april 30 april
2006 2005 change
turnover £262m £243m 80
underlying
operating
profit £294m £236m 246
underlying
operating
profit
margin 112 97 150bps 21 rhm annual report and accounts 2006 chief executive’s review
outlook
we have made a satisfactory start to our
new financial year in the traditionally 
quiet trading months of may and june
although we are still at an early stage 
of our branded cakes recovery plan we
are encouraged by the initial consumer
response to the actions we have taken 
we are increasing investment behind 
our brands we have a wide range of 
new products under development across 
all business areas with hovis bisto
sharwood’s and cadbury’s cake products
all due to appear in store in the first half 
of the financial year advertising and
marketing spend is anticipated to increase
by more than £5m this year as we support
both our existing portfolio and our 
new launches
assiduously pursuing opportunities 
to reduce our cost base remains a
fundamental part of our strategy 
cost reduction initiatives are anticipated 
to deliver a total of £30m of benefits 
to the group in the coming year with
£14m being derived from rationalisation
and restructuring projects a proportion 
of these savings will inevitably be 
used to offset inflationary and other
pressures given the extremely competitive
environment in which we are currently
operating group energy costs are
expected to rise by a further £11m during
the year as in 2006 we will seek broadly
to offset this cost inflation through 
price increases
we are confident that by maintaining our
focus on profitable top line growth and
cost saving opportunities we will create
significant shareholder value
ian mcmahon
chief executive officer
28 june 2006