UPDATE: Uniq Pension Uncertainty Clouds Improved 1H Trade

22nd Jul 2010 11:55

(Adds detail, CEO comment.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Chilled convenience food group Uniq PLC (UNIQ.LN) Thursday reported an improvement in trading performance during its first half, although the results were clouded by lingering uncertainty about its pension scheme. The company said the shift in its strategy to being solely U.K.-focused helped drive a return to a GBP1 million operating profit in the six months to June 30, compared with a GBP3.7 million operating loss a year earlier. Its first half pretax loss narrowed to GBP8.6 million from GBP12.5 million a year earlier. The company--which supplies fresh sandwiches, wraps, salads and desserts to retailers like Marks & Spencer Group PLC (MKS.LN)--said sales from its continuing operations rose to GBP156 million from GBP141 million, aided by new product launches. "The business is on a good path. We built up a good momentum in the first half and we expect that to continue," Chief Executive Geoff Eaton told Dow Jones Newswires. "We've introduced many more new products over the last few months in our desserts business and some of these have performed more than twice as well as we had expected," he said. Among the new ranges are fat-free yogurts and traditional sweets like lemon sherbets. However, earlier this week Uniq said the U.K. Pensions Regulator has turned down its proposals to tackle its retirement fund's finances. As part of its pensions framework, Uniq had proposed to halt payments to its pension scheme until 2013 and then link contributions to profit. If a long-term funding solution isn't found, the company may have to tap shareholders for funds and borrow from its bank. As a worst-case scenario, there is a risk the fund could be wound up, although Eaton said he is confident this won't happen. "What we're proposing hasn't been tried before and the regulator's trying to decide how best to deal with companies with very large pension issues when the business is much smaller than the scale of the pensions deficit," he said. Uniq's market capitalization is about GBP10 million, yet it is saddled with a GBP436 million pension deficit. It has thousands of former milkmen among its pension scheme members, from its previous life as Unigate. "It may be that the best thing to do is to raise as much money as we can from shareholders and borrow from the bank to make a final payment to the scheme, which could be a good outcome for shareholders," Eaton said. He added that the process was a "very complicated" one, as potentially more benefits could be gained through a longer-term solution, although this brings more risk for pension fund members. "None of the shareholders should worry about the business, it's important to recognize in all of this that we have a business that's thriving," Eaton said. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] Order free Annual Report for Marks and Spencer PLC Visit http://djnweurope.ar.wilink.com/?ticker=GB0031274896 or call +44 (0)208 391 6028 (END) Dow Jones Newswires July 22, 2010 06:55 ET (10:55 GMT)