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Final Results

Date : 02/29/2012 @ 2:01AM
Source : UK Regulatory (RNS & others)
Stock : Glanbia (GLB)
Quote : 11.19  -0.025 (-0.22%) @ 11:35AM
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Final Results

TIDMGLB

RNS Number : 3258Y

Glanbia PLC

29 February 2012

 
 
                          NEWS RELEASE 
      Glanbia Corporate Communications 
                Telephone + 353 56 777 
                                  2200 
                Facsimile + 353 56 777               A world of 
                                  2222    nutritional solutions 
                       www.glanbia.com               and cheese 
 

2011 Full Year Results

29 February 2012

For further information contact

 
 Glanbia plc +353 56 777 2200 
  Siobhan Talbot, Group Finance Director 
  TJ Kelly, Group Financial Controller 
  Geraldine Kearney, Corporate Communications Director + 353 
  87 231 9430 
------------------------------------------------------------ 
 

EXCELLENT RESULTS IN 2011, Ahead of market expectations

26.7% growth in adjusted earningS per share

29 February 2012 - Glanbia plc ('Glanbia'), the global nutritional solutions and cheese Group, announces its results for the full year ended 31 December, 2011. Results commentary in this announcement is based primarily on constant currency.

 
 Results summary pre exceptional(1)            Constant Currency(2)                  Reported 
                                              2011          2010     Change          2011     Change 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 Revenue(3)                            EUR2,734.6m   EUR2,166.7m    + 26.2%   EUR2,671.2m    + 23.3% 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 EBITA                                   EUR186.1m     EUR151.6m    + 22.8%     EUR179.5m    + 18.4% 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 EBITA margin                                 6.8%          7.0%   - 20 bps          6.7%   - 30 bps 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 Operating profit                        EUR166.8m     EUR136.5m    + 22.2%     EUR161.0m    + 17.9% 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 Operating margin                             6.1%          6.3%   - 20 bps          6.0%   - 30 bps 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 EBITDA                                  EUR219.4m     EUR182.8m    + 20.0%     EUR212.2m    + 16.1% 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 Share of results of Joint Ventures 
  & Associates(3)                         EUR14.7m      EUR10.1m    + 45.5%      EUR14.3m    + 41.6% 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 Adjusted earnings per share(4)             48.22c        38.07c    + 26.7%        46.32c    + 21.7% 
------------------------------------  ------------  ------------  ---------  ------------  --------- 
 
 
 Financing KPIs                        2011        2010     Change 
-------------------------------  ----------  ----------  --------- 
 Net debt/Adjusted EBITDA(5)      2.1 times   2.1 times          - 
-------------------------------  ----------  ----------  --------- 
 Return on capital employed(6)        12.7%       12.5%   + 20 bps 
-------------------------------  ----------  ----------  --------- 
 

(1) An exceptional item of EUR8.7 million relates to rationalisation costs including the costs of the integration of the liquid milk business acquired from Kerry Group plc in the first half.

(2) Constant currency is based on translating 2011 results at the 2010 average market exchange rate. The 2010 average exchange rate was EUR1 = US$1.3260 which compares with the reported average exchange rate for 2011 of EUR1 = US$1.3923.

(3) Total Group revenue, including Glanbia's share of the revenue of Joint Ventures & Associates, was EUR3.2 billion, EUR3.3 billion on a constant currency basis for the year (2010: EUR2.6 billion). Share of results of Joint Ventures & Associates is an after interest and tax amount.

(4) Adjusted earnings per share is calculated as the profit for the year attributable to the owners of the Group before exceptional items and amortisation of intangible assets (net of tax).

(5) Adjusted EBITDA for the purpose of financing ratios reflects Group EBITDA plus dividends from Joint Ventures & Associates.

(6) Return on capital employed is calculated as EBITA, including share of Joint Ventures & Associates EBITA, (post tax) over capital employed. Capital employed is defined as non-current assets plus working capital.

2011 full year results summary

-- Strong performance by Global Nutritionals, with organic revenue growth well ahead of market growth rates

   --      BSN(R) , acquired in January 2011 for $144 million, performed in line with expectations 
   --      Good performance by Dairy Ireland underpinned by positive global dairy markets 
   --      Revenue increased 26.2% to EUR2.7 billion; EBITA grew 22.8% to EUR186.1 million 

-- EBITA margin down 20 basis points to 6.8%, due largely to input cost pressures in Performance Nutrition

-- Strategic Joint Ventures & Associates profit after tax increased by 45.5% to EUR14.7 million

   --      Adjusted earnings per share grew 26.7% to 48.22 cents 
   --      Dividend per share in respect of the full year increased 10% to 8.27 cents 
   --      $325 million Private Debt Placement of 10 year senior loan notes completed 

John Moloney, Group Managing Director, said:

"Glanbia achieved excellent results in 2011 delivering 26.7% growth in adjusted earnings per share, on a constant currency basis. The acquisition and successful integration of BSN(R) into Performance Nutrition complemented strong organic revenue growth in our three nutritional businesses. These businesses continue to outpace market growth rates, driven by strong market positions and science based, customer focused innovation. Positive global dairy markets underpinned a solid performance by Dairy Ireland despite the challenges of the Consumer Products business.

We expect the operating environment in 2012 to be more challenging than in recent years. Current global economic uncertainty has the potential to impact global dairy markets and fragile consumer confidence. The Group's focus on driving growth in nutritionals, combined with deep dairy market expertise and strong execution capability, position us well for the future. Our guidance for 2012 is for 5-7% growth in adjusted earnings per share, on a constant currency basis."

2011 full year results

For the full year ended 31 December 2011

Market commentary

Global dairy markets

2011 was a positive year for global dairy markets following a good year in 2010. Despite a significant increase in global milk production, overall demand proved to be resilient, resulting in a modest market correction in the second half. Many of the 2011 demand characteristics, including demand from developing economies, are expected to prevail in 2012. There is strong growth currently in global milk production. The key risk to the current global dairy market outlook for 2012 is the significant concern around a global economic downturn and the impact this could have at the consumer level. The current view on global dairy market performance is that prices will soften further in the first half of 2012, relative to the second half of 2011, with increased milk and dairy product availability. The second half of 2012 is forecast to be moderately weaker again. Overall, critical markets such as China, Russia and South East Asia are expected to remain solid throughout 2012, limiting market volatility.

US Cheese & Global Nutritionals

US Cheese: In 2011, US Cheese prices were strong, yet somewhat volatile, for most of the year, compared with 2010. This was due to a combination of market factors. US milk production increased 1.8% for the year and 3.7% in Idaho. However, higher prices for competing dairy products reduced milk volumes processed into cheese, thereby increasing prices. Retail cheese sales were down overall, mainly as a result of consumer resistance to retail price increases. This was more than offset by relatively strong demand from the foodservice sector and export sales of American-style cheddar cheese which were very strong, increasing over 30% in 2011, following a 60% increase in 2010. In 2012 US cheese prices have reduced year to date with the market tone currently driven by supply factors as milk production exceeds expectations. While retail demand is sluggish, demand from foodservice, industrial and exports continues to be robust.

Global Nutritionals: 2011 was a significant year for whey proteins as strong demand and tight supply lead to unprecedented high whey pricing. Demand was fuelled by strong growth in key nutritional markets, which continued throughout the year. Market growth estimates for 2011 for key global nutritional segments included 15% growth in the nutritional bar market, 7% growth in sports nutrition and 18% growth in nutritional beverages. Sports nutrition is the largest market segment and the latest research into this market confirms that growth is driven by an awareness of the benefits of these products by a growing population of nutrition-aware consumers with a desire to live healthy lifestyles. In 2011, the market for customised premix solutions continued to be strong driven by double digit growth in demand from beverages, breakfast cereals, product fortification requirements in infant formula, supplements and nutrition bars. Favourable market demand conditions in key nutritional segments are expected to continue in 2012, although with tight supply in key raw materials. Effective management of the buy/sell equation, particularly in Performance Nutrition, will be important in the face of further potential price inflation in raw material inputs.

Dairy Ireland

The performance of global dairy markets, outlined above, is the key market dynamic that impacts Dairy Ingredients Ireland, as substantially all of Irish dairy output is exported. The trading environment for Dairy Ingredients Ireland was therefore positive in 2011 with some weakness anticipated for 2012. Positive global dairy markets also underpinned the demand for farm inputs and benefited Agribusiness. The trading environment for the Consumer Products business is dictated by both the domestic Irish economy and the indirect impact of global dairy markets on input costs. In 2011, it was another difficult year for the food retail market in Ireland; consumer sentiment was weak and fell sharply towards year-end. Higher global dairy markets during the year resulted in increased milk costs for Consumer Products and while some modest price increases were implemented margins were still lower year-on-year. The Irish economic and fiscal backdrop offers little respite at present to consumers. As a result these market conditions are expected to persist in 2012.

Abolition of EU Milk Quotas in 2015

As previously outlined, Glanbia is in the process of reviewing the implications of the potential expansion of its supply base post the abolition of EU milk quotas in 2015. Glanbia plc, in common with its largest shareholder, Glanbia Co-operative Society Limited, recognises that Ireland has a range of competitive characteristics that facilitates growth in milk supply post 2015. The longer-term outlook for global dairy markets is also positive, driven by rising income levels in developing economies. Both parties and their advisors are working to evaluate possible options for expansion of dairy processing in Ireland. A conclusion on the best way forward for all stakeholders is expected to be reached in the second quarter of 2012.

Any investment opportunities arising would be considered by Glanbia plc in a portfolio context to ensure that Group resources are directed to business segments so as to maximise overall Group performance.

Operations review

Group strategy

Glanbia has invested significant resources in recent years to develop and enhance the US Cheese & Global Nutritionals division. Our key strategic investments and acquisitions in these areas have performed very well and are underpinning our strategic objective of delivering sustainable, profitable earnings growth.

Constant Currency

Glanbia's financial results are exposed to movements in the euro/US dollar currency exchange rate and the impact this has on the translation into euro of the significant portion of the Group's profits that are US dollar denominated. To reflect the underlying performance of the business Glanbia uses constant currency as a basis for discussing financial results and providing earnings guidance. In 2011 US dollar denominated profits represented approximately 65% of the Group's earnings before interest, taxation and amortisation (EBITA).

Revenue, profitability and margins, on a constant currency basis(1)

 
                                            2011                         2010 
                                  Revenue  EBITA  EBITA Margin  Revenue  EBITA  EBITA Margin 
                                     EURm   EURm                   EURm   EURm 
--------------------------------  -------  -----  ------------  -------  -----  ------------ 
US Cheese & Global Nutritionals   1,380.4  128.8          9.3%  1,021.9  104.5         10.2% 
Dairy Ireland                     1,353.3   57.9          4.3%  1,138.6   47.9          4.2% 
Other Business                        1.0  (0.6)       (60.0%)      6.2  (0.8)       (12.9%) 
                                  -------  -----  ------------  -------  -----  ------------ 
Group excluding JVs 
 & Associates                     2,734.7  186.1          6.8%  2,166.7  151.6          7.0% 
JVs & Associates                    541.0   26.0          4.8%    416.6   21.6          5.2% 
                                  -------  -----  ------------  -------  -----  ------------ 
Total including JVs 
 & Associates                     3,275.7  212.1          6.5%  2,583.3  173.2          6.7% 
--------------------------------  -------  -----  ------------  -------  -----  ------------ 
 

(1) Constant currency is based on translating 2011 results at the 2010 average market exchange rate. The 2010 average exchange rate was EUR1 = US$1.3260 which compares with the reported average exchange rate for 2011 of EUR1 = US$1.3923.

Results overview

Total Group revenue, including share of Joint Ventures & Associates, grew by 26.8% to EUR3.3 billion on a constant currency basis, (2010: EUR2.6 billion). This growth is attributable to strong underlying organic volume growth of 8%, higher pricing and an enhanced product mix of 14%, and a 5% positive contribution by acquisitions, primarily Bio-Engineered Supplements and Nutrition (BSN(R) ) acquired in January 2011.

Total Group EBITA, including share of Joint Ventures & Associates, increased 22.5% to EUR212.1 million on a constant currency basis (2010: EUR173.2 million). Total Group EBITA margin fell 20 basis points to 6.5%, on a constant currency basis, (2010: 6.7%) mainly as a result of lower EBITA margins in US Cheese & Global Nutritionals. This was a solid performance given the scale and pace of the input cost pressures in the Performance Nutrition business, which consistently moved ahead of three product price increases effected during the year.

US Cheese & Global Nutritionals

 
                                    Constant Currency                          (i)        Reported 
                                         2011          2010      Change                     2011      Change 
-----------------------------  --------------  ------------  ----------             ------------  ---------- 
 Revenue                          EUR1,380.4m   EUR1,021.9m     + 35.1%              EUR1,316.9m     + 28.9% 
-----------------------------  --------------  ------------  ----------             ------------  ---------- 
 EBITA pre exceptional              EUR128.8m     EUR104.5m     + 23.3%                EUR122.2m     + 16.9% 
---------------------------------  ----------  ------------  ----------             ------------  ---------- 
 EBITA margin pre exceptional            9.3%         10.2%    - 90 bps                     9.3%    - 90 bps 
---------------------------------  ----------  ------------  ----------             ------------  ---------- 
 Operating profit pre 
  exceptional                       EUR113.8m      EUR93.8m     + 21.3%                EUR108.0m     + 15.1% 
---------------------------------  ----------  ------------  ----------             ------------  ---------- 
 Operating margin pre 
  exceptional                            8.2%          9.2%   - 100 bps                     8.2%   - 100 bps 
---------------------------------  ----------  ------------  ----------             ------------  ---------- 
 EBITDA pre exceptional             EUR142.7m     EUR116.7m     + 22.3%                EUR135.4m     + 16.0% 
---------------------------  ----------------  ------------  ----------  ---------  ------------  ---------- 
 
 

Analysis on a constant currency basis

In 2011, US Cheese & Global Nutritionals revenue increased 35.1% to EUR1.38 billion (2010: EUR1.02 billion). The strong growth in total revenue is attributable to underlying organic volume growth of 10%, higher pricing and an enhanced product mix of 14%, and the positive contribution of the acquisition of BSN(R) of 11%. Operating profit pre exceptional increased 21.3% to EUR113.8 million (2010: EUR93.8 million). EBITA pre exceptional increased 23.3% to EUR128.8 million (2010: EUR104.5 million). Operating and EBITA margins pre exceptional decreased by 100 and 90 basis points respectively.

US Cheese: 2011 performance and 2012 outlook

US Cheese delivered a solid performance in 2011. While the US Cheese market was volatile, average prices were higher than 2010 and importantly; the business has increasingly sought to reduce this market related risk through the adoption of a range of risk management tools. Production was down marginally in the year as cheese volumes were aligned with sales demand. Competition for milk was a feature of the year and led to some input cost pressures. These were offset by strong operational management including the implementation of a two year Total Quality Management ('TQM') programme referred to internally as the Glanbia Performance System 'GPS'. US Cheese was the pilot for this programme, which will be rolled out across key Group manufacturing sites. Export sales were strong in the year and significant investment was made in building internal resources to maximise this business opportunity over the longer-term. Revenue, EBITA and EBITA margins grew year-on-year.

US Cheese continues to invest in enhancing its product capabilities and an $11m investment in a cheese innovation centre is planned for 2012. This is to facilitate closer collaboration with customers in developing new products and formats. The trading environment for US Cheese in 2012 has some challenges. Higher US milk production is expected to result in a lower average US cheese market price in 2012. While retail demand was impacted by high prices in 2011, overall demand remains resilient in the foodservice, industrial and export sectors. In response to the current competitive environment for both milk suppliers and US cheese processors, Glanbia is in the process of reviewing the milk price formula for its milk supply base in Idaho. Overall US Cheese is forecast to deliver a performance in 2012 broadly in line with 2011.

Global Nutritionals: 2011 performance and 2012 outlook

Global Nutritionals had a strong year in 2011 and is now the largest business in the Group both by revenue and EBITA, which is a significant strategic transformation for Glanbia in recent years. Organic revenue growth was excellent in all three business units; Performance Nutrition, Customised Premix Solutions and Ingredient Technologies, driven by strong demand and good growth in prices and EBITA also improved in the year. However there were significant raw material price pressures which impacted EBITA margins in Performance Nutrition where significantly higher whey costs were not fully recovered in the market despite a series of price increases and margins declined as a result. This is reflected in the overall 90 basis points reduction in US Cheese & Global Nutritionals divisional EBITA margins for 2011.

On 19 January 2011, Glanbia announced the acquisition of BSN(a) for a total consideration of $144 million. The business was acquired on a debt free basis and was funded through Glanbia's existing banking facilities. BSN(a) is a leading developer, provider and distributor of nutritional products and enhances and extends Performance Nutrition's product portfolio. During the year there has been significant investment in organisation and product development including the re-launch of their flagship Brand, N.O.-XPLODE 2.0 for pre-training performance and energy. The integration of BSN(a) is progressing well and the business performed in line with expectations in 2011.

Market growth in all Glanbia's core nutritional sectors gathered pace in 2011 and the prospects are very good for 2012. These are underpinned by long-term positive structural market growth drivers including healthy living and healthy aging. While raw material availability and cost is expected to remain challenging for Performance Nutrition in the short term, this market dynamic is expected to ease as new supply sources become available in the latter part of 2012. There is a clear focus in Global Nutritionals on developing new products, both nutritional and functional; building a systematic approach to innovation and enhancing organisation and operational capacity. During 2011, all three nutritional businesses developed their international presence and each continues to build scale and global platforms that are customer centric. Overall Global Nutritionals is expected to perform well again in 2012.

Dairy Ireland

 
                                            2011          2010     Change 
----------------------------------  ------------  ------------  --------- 
 Revenue                             EUR1,353.3m   EUR1,138.6m    + 18.9% 
----------------------------------  ------------  ------------  --------- 
 EBITA pre exceptional                  EUR57.9m      EUR47.9m    + 20.9% 
----------------------------------  ------------  ------------  --------- 
 EBITA margin pre exceptional               4.3%          4.2%   + 10 bps 
----------------------------------  ------------  ------------  --------- 
 Operating profit pre exceptional       EUR53.6m      EUR43.5m   + 23.2 % 
----------------------------------  ------------  ------------  --------- 
 Operating margin pre exceptional           4.0%          3.8%    + 20bps 
----------------------------------  ------------  ------------  --------- 
 EBITDA pre exceptional                 EUR77.4m      EUR66.9m    + 15.7% 
----------------------------------  ------------  ------------  --------- 
 

In 2011 Dairy Ireland revenue grew 18.9% to EUR1.35 billion (2010: EUR1.14 billion). The revenue growth is attributable to underlying organic volume growth 4%, higher pricing and an enhanced product mix 13%, and the contribution of a small acquisition 2%. Operating profit pre exceptional increased 23.2% to EUR53.6 million (2010: EUR43.5 million) and the operating margin pre exceptional increased 20 basis points to 4.0% (2010: 3.8%). EBITA pre exceptional increased 20.9% to EUR57.9 million (2010: EUR47.9 million).

Dairy Ingredients Ireland: 2011 performance and 2012 outlook

In 2011, global dairy markets remained largely positive despite significant geopolitical and macroeconomic events during the year. This underpinned solid results from Dairy Ingredients. Volumes and prices were higher and the business also benefited from strong operational and cost management, combined with maximising market reach in emerging markets. Revenue and EBITA grew and EBITA margins also improved somewhat, despite significantly higher milk costs. In 2011, a EUR21.2 million investment in the whey processing facilities was approved which, when commissioned in 2012, will increase the volume of higher protein whey products produced. The 2012 performance of Dairy Ingredients is expected to be broadly in line with 2011.

Consumer Products: 2011 performance and 2012 outlook

Consumer Products had another difficult year in 2011. Irish macroeconomic circumstances have created unprecedented pressure on suppliers to the Irish food retail and foodservice sectors. Within retail, private label grew market share in all categories as consumers continued to focus on cost and managing their food budgets very tightly. Consumer sentiment is fragile at best as the outlook remains uncertain for European fiscal and monetary developments. Within the food category price promotions are now a permanent market fixture. Higher prices in global dairy markets impacted raw material input costs with only modest price increases passed onto the consumer. Volumes were up in fresh dairy products and natural cheese, but there were mid-single digit declines, on a like for like sales basis, in branded milk. While revenue increased in 2011, largely driven by a small liquid milk acquisition during the year, EBITA and EBITA margins declined. In response to the market challenges, the business has continued to focus on rationalising its operational cost base driven by both headcount reductions and process re-engineering, while also continuing to drive forward its innovation pipeline, with recent new product launches such as 'Heart Active' milk. No significant change in the market environment is expected in 2012 and Consumer Products is forecast to deliver a broadly similar performance to 2011.

Agribusiness: 2011 performance and 2012 outlook

Agribusiness had a good year in 2011 overall. Volumes were marginally down but strong cost focus, favourable production mix and management of key buy/sell equations helped to deliver growth in EBITA. EBITA margins were broadly similar to 2010. The performance of global dairy markets in 2012 is expected to underpin farm input demand at similar levels to this year but the management of milk quota limits the prospects of volume growth. Overall a solid performance is expected from Agribusiness in 2012.

Joint Ventures & Associates

 
                                           Constant Currency                         Reported 
                                              2011        2010       Change         2011      Change 
-----------------------------------  -------------  ----------  -----------   ----------  ---------- 
 Revenue(1)                              EUR541.0m   EUR416.6m      + 29.9%    EUR524.2m     + 25.8% 
-----------------------------------  -------------  ----------  -----------   ----------  ---------- 
 EBITA pre exceptional                    EUR26.0m    EUR21.6m      + 20.4%     EUR25.2m     + 16.7% 
-----------------------------------  -------------  ----------  -----------   ----------  ---------- 
 EBITA margin pre exceptional                 4.8%        5.2%      - 40bps         4.8%     - 40bps 
-----------------------------------  -------------  ----------  -----------   ----------  ---------- 
 Operating profit pre exceptional         EUR26.0m    EUR21.6m      + 20.4%     EUR25.2m     + 16.7% 
---------------------------------------  ---------  ----------  -----------   ----------  ---------- 
 Operating margin pre exceptional             4.8%        5.2%      - 40bps         4.8%     - 40bps 
---------------------------------------  ---------  ----------  -----------   ----------  ---------- 
 EBITDA pre exceptional                   EUR33.6m    EUR27.8m      + 20.9%     EUR32.6m     + 17.3% 
-----------------------------------  -------------  ----------  -----------   ----------  ---------- 
 
 

(1) Not included in Group revenue.

Analysis on a constant currency basis

Joint Ventures & Associates had a good year. Revenue improved as a result of higher volumes and market price increases in US cheese and European mozzarella markets. Nutricima, in Nigeria, also delivered an improved performance and revenue grew year-on-year driven by volume growth. Glanbia's share of revenue grew 29.9% to EUR541.0 million (2010: EUR416.6 million).

Glanbia's share of operating profit increased 20.4% to EUR26.0 million (2010: EUR21.6 million), mainly as a result of a strong performance by Glanbia Cheese and an improved performance in Nutricima.

Operating margins declined 40 basis points year-on-year to 4.8%, driven by a decline in margins in Southwest Cheese, as a consequence of higher milk cost. This is as a result of the impact of relative market pricing of dairy products on milk cost during the year.

The Group's share of profit after interest and tax was up EUR4.2 million to EUR14.3 million (2010: EUR10.1 million). The table below reconciles operating profit with share of results of Joint Ventures & Associates, as reported in the income statement.

 
                                              Reported 
                                        2011    2010   Change 
                                        EURm    EURm     EURm 
------------------------------------  ------  ------  ------- 
 Operating profit pre exceptional       25.2    21.6      3.6 
 Finance costs                         (4.7)   (4.7)        - 
 Income taxes                          (6.2)   (6.8)      0.6 
                                      ------  ------  ------- 
 Share of results of Joint Ventures 
  & Associates                          14.3    10.1      4.2 
------------------------------------  ------  ------  ------- 
 

Finance review

Summary income statement, as reported

 
                                                   2011                                   2010 
                               Pre-exceptional  Exceptional    Total  Pre-exceptional  Exceptional    Total 
                                         EUR'm        EUR'm    EUR'm            EUR'm        EUR'm    EUR'm 
-----------------------------  ---------------  -----------  -------  ---------------  -----------  ------- 
Revenue                                2,671.2            -  2,671.2          2,166.7            -  2,166.7 
Operating profit                         161.0        (8.7)    152.3            136.5         10.2    146.7 
                               ---------------  -----------  -------  ---------------  -----------  ------- 
Net finance costs                       (27.9)            -   (27.9)           (22.1)            -   (22.1) 
Share of results of 
 Joint Ventures & Associates              14.3            -     14.3             10.1            -     10.1 
                               ---------------  -----------  -------  ---------------  -----------  ------- 
Profit before taxation                   147.4        (8.7)    138.7            124.5         10.2    134.7 
Income taxes                            (27.0)          1.1   (25.9)           (25.5)        (0.6)   (26.1) 
Profit for the year                      120.4        (7.6)    112.8             99.0          9.6    108.6 
                               ---------------  -----------  -------  ---------------  -----------  ------- 
Basic earnings per share 
 (cents)                                                       38.22                                  36.86 
                                                             -------                                ------- 
 
Adjusted earnings per 
 share (cents)                                                 46.32                                  38.07 
-----------------------------  ---------------  -----------  -------  ---------------  -----------  ------- 
 

For a review of revenue and operating performance, see the Operations Review on page 3.

Net finance costs

Net financing costs increased by EUR5.8 million to EUR27.9 million (2010: EUR22.1 million) mainly due to the drawdown of a $325 million private debt placement of 10 year senior loan notes during the year. These notes are unsecured, ranking pari passu with existing senior debt and have a fixed coupon rate of 5.4%. The Group's average interest rate for the full year 2011 was 5.0% (2010: 4.2%).

Joint Ventures and Associates

The Group's share of results of Joint Ventures & Associates was up 41.6% (EUR4.2 million) to EUR14.3 million (2010: EUR10.1 million). The improved result reflected strong profitable growth in Glanbia Cheese and improved performance in Nutricima.

Taxation

The 2011 tax charge pre exceptional increased by 5.9%, to EUR27.0 million (2010: EUR25.5 million) which represents an effective rate, excluding Joint Ventures & Associates, of 20.3% (2010: 22.3%). The decrease in the effective rate is driven by the change in mix and geographic locations in which profits are earned.

Exceptional items

Rationalisation costs of EUR8.7m, include redundancies related to the integration of the liquid milk business acquired from Kerry Group plc and were incurred in the first half by the Consumer Products business within Dairy Ireland.

Basic earnings per share

Basic earnings per share (EPS) increased by 3.7% to 38.22 cents per share (2010: 36.86 cents per share), as a net negative movement in exceptional items year on year was offset by an increase in pre exceptional Group profit after tax.

Adjusted earnings per share

Adjusted earnings per share is calculated as the profit for the year attributable to the equity holders of the Parent before exceptional items and amortisation of intangible assets (net of tax). Adjusted EPS increased 21.7% to 46.32 cents per share (2010: 38.07 cents per share) driven mainly by improved operating profit and share of profit after tax from Joint Ventures & Associates, offset by an increased net finance charge.

Dividend per share

The Board is recommending a final dividend of 4.94 cents per share (2010: final dividend 4.49 cents per share). This represents an increase of 10% in the year and brings the total dividend for the year to 8.27 cents per share (2010: 7.52 cents per share).

Summary cash flow

 
                                                  2011      2010    Change 
                                                  EURm      EURm      EURm 
--------------------------------------------  --------  --------  -------- 
 EBITDA pre exceptional(1)                       212.2     182.8      29.4 
 Working capital movement                       (39.0)    (53.6)      14.6 
 Net interest and tax paid                      (39.3)    (34.5)     (4.8) 
 Business sustaining capital investment         (27.3)    (17.3)    (10.0) 
 Other                                          (19.1)    (11.9)     (7.2) 
                                              --------  --------  -------- 
 Free cash flow                                   87.5      65.5      22.0 
 Dividends from joint ventures                    14.8      11.2       3.6 
 Loans repaid by joint ventures                      -      23.3    (23.3) 
 Strategic acquisition/capital expenditure     (133.8)    (16.2)   (117.6) 
 Restructuring costs                            (10.0)     (9.8)     (0.2) 
 Equity dividends                               (22.9)    (20.5)     (2.4) 
                                              --------  --------  -------- 
 Cash flow pre currency exchange/fair value 
  adjustments                                   (64.4)      53.5   (117.9) 
 Currency exchange/fair value adjustments        (7.8)    (19.0)      11.2 
 Net (increase)/decrease in debt during the 
  year                                          (72.2)      34.5   (106.7) 
 Net debt at the beginning of the year         (408.1)   (442.6)      34.5 
                                              --------  --------  -------- 
 Net debt at the end of the year               (480.3)   (408.1)    (72.2) 
--------------------------------------------  --------  --------  -------- 
 

(1) EBITDA pre exceptional comprises US Cheese & Global Nutritionals EUR135.4m, Dairy Ireland EUR77.4m and Other (EUR0.6m)

The Group generated strong free cash flow during the year of EUR87.5 million (2010: EUR65.5 million) an increase of EUR22.0 million year on year. Free cash flow is stated after charging working capital movements and business sustaining capital expenditure, but before dividends received from Joint Ventures, loans repaid by/advanced to Joint Ventures, strategic capital expenditure, restructuring costs, and equity dividends.

Higher EBITDA in 2011 of EUR212.2 million (2010: EUR182.8 million) was offset by year on year investment in working capital, increased business sustaining capital investment and interest outflows. The working capital outflow in the year primarily reflects the reduction of a debt purchase agreement which was in place with a financial institution since 2005. Dividends received from joint ventures during 2011 were EUR14.8 million an increase from the prior year of EUR3.6 million (2010: EUR11.2 million) and reflect a good cash return to the Group from both Southwest Cheese and Glanbia Cheese.

Financing KPIs

The Group remained focused on cash management in 2011 and delivered a robust year end net debt/adjusted EBITDA financing ratio of 2.1 times (2010: 2.1 times), notwithstanding significant strategic acquisition capital expenditure and one off working capital outflows. This is well within the Group's year end covenant of 3.3 times.

In 2011, adjusted EBIT to net financing cost cover was 6.3 times (2010: 6.7 times), reflecting the increased cost of the private debt senior loan notes in the year. The Group's average interest rate for the full year 2011 was 5.0% (2010: 4.2%), reflecting the mix of financing facilities of the Group. Glanbia operates a policy of fixing a significant amount of its interest exposure with approximately 75% of projected 2012 debt currently contracted at fixed rates.

Financing

The Group currently has three sources of debt finance; 10 year senior loan notes issued as a private debt placement in 2011, senior bank debt with nine banks under bilateral arrangements with common terms and conditions and cumulative redeemable preference shares. Committed debt facilities total EUR987.7 million encompassing the $325 million private debt placement (EUR251.2 million), EUR673.0 million from nine banks and EUR63.5 million cumulative redeemable preference shares. The tenure of these facilities ranges from EUR163.0 million renewable in July 2012, EUR510.0 million renewable in July 2013, EUR63.5 million maturing in July 2014 and EUR251.2 million maturing in June 2021. The Group will be reviewing the overall group financing in 2012 as part of the normal bank debt renewal process.

 
 Key financial covenants                 Covenant   2011   2010   2009 
--------------------------------------  ---------  -----  -----  ----- 
 Net debt(1) : Adjusted EBITDA(2) 
  (times)                                     3.3    2.1    2.1    2.6 
 Adjusted EBIT(3) : Net finance costs 
  (times)                                     3.5    6.3    6.7    5.4 
--------------------------------------  ---------  -----  -----  ----- 
 

(1) Year end net debt includes EUR63.5 million cumulative redeemable preference shares

(2) Adjusted EBITDA reflects Group EBITDA, pre exceptional items, plus dividends from Joint Ventures & Associates

(3) Adjusted EBIT reflects Group EBIT, pre exceptional items, plus dividends from Joint Ventures & Associates

Return on capital employed

The overall return on capital employed has improved by 20 basis point to 12.7% (2010: 12.5%). The return is defined as a post tax measure of the return earned by the Group on capital invested including Joint Ventures & Associates. The improvement was driven by the strong growth in operating performance of the Group allied with the prudent deployment and strong utilisation of capital across the Group.

Pension

At 31 December 2011 the Group's net pension liability under IAS 19 'Employee Benefits', before deferred tax, decreased by EUR0.2 million to EUR48.4 million (2010: EUR48.6 million). The marginal reduction in the Group's deficit reflected the negative movement in actuarial assumptions (EUR17.0 million), caused primarily by a weak return on invested assets and increased mortality assumptions used, offset by the employer contributions of EUR17.7 million (net of service cost).

The fair value of the assets of the pension schemes at 31 December 2011 was EUR400.0 million (2010: EUR389.3 million) and the value of the scheme liabilities was EUR448.4 million (2010: EUR437.9 million).

Financial Strategy

The Group has significantly restructured and re orientated its business strategy in recent years. As the Group has been in strategy delivery mode, the financial goals have remained consistent, that is; to diversify earnings, improve operating margin and deliver sustained earnings growth through rigorous cost management and prudent deployment of capital to the highest returning investment opportunities. The Group requires as part of its assessment of the business case for significant acquisition and development projects, that the projects achieve a minimum hurdle rate of 12% post tax return in year 3.

Annual General Meeting (AGM)

The Group's AGM will be held on Wednesday, 9 May 2012 in The Newpark Hotel, Castlecomer Road, Kilkenny. On the same day Glanbia will issue an Interim Management Statement.

Principal risks and uncertainties affecting the Group's performance in 2012

The Board of Glanbia plc has the ultimate responsibility for risk management. The performance of the Group is influenced by global economic growth, global dairy and US cheese markets, and consumer confidence in the markets in which it operates. Economic uncertainty or excessive volatility in global dairy pricing represents a material change to the Group's trading environment.

In 2012, the principal risks affecting the Group's performance are:

   --     An uncertain global economic outlook; 
   --     Sustainability of demand / supply balance in global dairy markets 
   --     Buy / sell balance in US Cheese and Performance Nutrition; and 
   --     Consumer confidence in Ireland. 

The principal risks and uncertainties will be outlined in detail in the 2011 Annual Report.

2012 Outlook

We expect the operating environment in 2012 to be more challenging than in recent years. Current global economic uncertainty has the potential to impact global dairy markets and fragile consumer confidence. The Group's focus on driving growth in nutritionals, combined with deep dairy market expertise and strong execution capability, position us well for the future. Our guidance for 2012 is for 5-7% growth in adjusted earnings per share, on a constant currency basis.

Cautionary statement

This announcement contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The Directors undertake no obligation to update any forward-looking statements contained in this announcement, whether as a result of new information, future events, or otherwise.

Results webcast and dial-in facility

There will be a webcast and presentation to accompany this results announcement at 8.30 a.m. today. Please access the webcast from our website at Link: http://www.glanbia.com/FYR-Webcast, where the presentation can also be viewed / downloaded. In addition, a dial-in facility is available using the following numbers:

Ireland: 01 2421074

UK: 01296 311600

Europe: +44 1296 311600

US: 171 835 41175

Passcode: 598033

 
Group income statement 
 for the financial year ended 
 31 December 2011 
 
                                Pre-exceptional   Exceptional        Total  Pre-exceptional   Exceptional        Total 
                                           2011          2011         2011             2010          2010         2010 
                         Notes          EUR'000       EUR'000      EUR'000          EUR'000       EUR'000      EUR'000 
                                                        (note                                       (note 
                                                           3)                                          3) 
-----------------------  -----  ---------------  ------------  -----------  ---------------  ------------  ----------- 
Revenue                      2        2,671,151             -    2,671,151        2,166,695             -    2,166,695 
Cost of sales                       (2,233,556)       (2,959)  (2,236,515)      (1,784,263)             -  (1,784,263) 
                                ---------------  ------------  -----------  ---------------  ------------  ----------- 
 
Gross profit                            437,595       (2,959)      434,636          382,432             -      382,432 
 
Distribution expenses                 (137,342)       (3,598)    (140,940)        (115,896)             -    (115,896) 
Administration expenses               (139,227)       (2,166)    (141,393)        (130,029)             -    (130,029) 
Other gains and losses                        -             -            -                -        10,238       10,238 
                                ---------------  ------------  -----------  ---------------  ------------  ----------- 
 
Operating profit                        161,026       (8,723)      152,303          136,507        10,238      146,745 
 
Finance income               4            3,056             -        3,056            3,290             -        3,290 
Finance costs                4         (30,997)             -     (30,997)         (25,420)             -     (25,420) 
Share of results 
 of Joint Ventures 
 & Associates                            14,331             -       14,331           10,103             -       10,103 
                                ---------------  ------------  -----------  ---------------  ------------  ----------- 
 
Profit before taxation                  147,416       (8,723)      138,693          124,480        10,238      134,718 
Income taxes                 5         (26,975)         1,090     (25,885)         (25,527)         (558)     (26,085) 
                                ---------------  ------------  -----------  ---------------  ------------  ----------- 
 
Profit for the year                     120,441       (7,633)      112,808           98,953         9,680      108,633 
                                ---------------  ------------  -----------  ---------------  ------------  ----------- 
 
Attributable to: 
Equity holders of 
 the Parent                                                        112,178                                     108,047 
Non-controlling 
 interests                                                             630                                         586 
                                                               -----------                                 ----------- 
 
                                                                   112,808                                     108,633 
                                                               -----------                                 ----------- 
 
 
Basic earnings per 
 share (cents)               6                                       38.22                                       36.86 
                                                               -----------                                 ----------- 
 
Diluted earnings 
 per share (cents)           6                                       37.90                                       36.63 
-----------------------  -----  ---------------  ------------  -----------  ---------------  ------------  ----------- 
 

On behalf of the Board

   L Herlihy    J Moloney    S Talbot 

Directors

 
Group statement of comprehensive income 
 for the financial year ended 31 December 2011 
----------------------------------------------------  --------  -------- 
                                                          2011      2010 
                                                       EUR'000   EUR'000 
----------------------------------------------------  --------  -------- 
 
Profit for the year                                    112,808   108,633 
 
Other comprehensive income/(expense) 
Actuarial (loss)/gain - defined benefit schemes       (17,029)    13,379 
Deferred tax credit/(charge) on actuarial gain/loss      2,615   (1,250) 
Share of actuarial (loss)/gain - Joint Ventures 
 & Associates                                             (38)     2,760 
Deferred tax charge on actuarial loss/gain - 
 Joint Ventures & Associates                              (77)     (316) 
Currency translation differences                        18,538    20,169 
Net investment hedge                                       230         - 
Revaluation of available for sale financial 
 assets                                                (1,484)   (5,381) 
Fair value movements on cash flow hedges                 3,563     3,936 
Deferred tax on cash flow hedges and revaluation 
 of available for sale financial assets                  1,214     2,267 
                                                      --------  -------- 
 
Other comprehensive income for the year, net 
 of tax                                                  7,532    35,564 
                                                      --------  -------- 
 
Total comprehensive income for the year                120,340   144,197 
                                                      --------  -------- 
 
Total comprehensive income attributable to: 
Equity holders of the Parent                           119,710   143,611 
Non-controlling interests                                  630       586 
                                                      --------  -------- 
 
                                                       120,340   144,197 
----------------------------------------------------  --------  -------- 
 
 
 
 Group statement of changes in equity 
 for the financial year ended 31 December 2011 
                                             Attributable to equity holders 
                                                      of the Parent 
                                       ------------------------------------------ 
                                            Share 
                                          capital 
                                        and share      Other   Retained            Non-controlling 
                                          premium   reserves   earnings     Total        interests     Total 
                                          EUR'000    EUR'000    EUR'000   EUR'000          EUR'000   EUR'000 
 
Balance at 2 January 2010                  99,219    108,672     83,004   290,895            6,493   297,388 
 
Profit for the year                             -          -    108,047   108,047              586   108,633 
 
Other comprehensive income/(expense) 
Actuarial gain - defined 
 benefit schemes                                -          -     13,379    13,379                -    13,379 
Deferred tax on actuarial 
 gain                                           -          -    (1,250)   (1,250)                -   (1,250) 
Share of actuarial gain 
 - Joint Ventures & Associates                  -          -      2,444     2,444                -     2,444 
Fair value movements                            -    (1,445)          -   (1,445)                -   (1,445) 
Deferred tax on fair value 
 movements                                      -      2,267          -     2,267                -     2,267 
Currency translation differences                -     20,169          -    20,169                -    20,169 
                                       ----------  ---------  ---------  --------  ---------------  -------- 
 
Total comprehensive income 
 for the year                                   -     20,991    122,620   143,611              586   144,197 
 
Dividends paid during 
 the year                                       -          -   (20,453)  (20,453)            (187)  (20,640) 
Cost of share based payments                    -      2,937          -     2,937                -     2,937 
Transfer on exercise, 
 vesting or expiry of share 
 based payments                                 -      (373)        373         -                -         - 
Shares issued                                  17          -          -        17                -        17 
Premium on shares issued                      505          -          -       505                -       505 
                                       ----------  ---------  ---------  --------  ---------------  -------- 
 
Balance at 1 January 2011                  99,741    132,227    185,544   417,512            6,892   424,404 
 
Profit for the year                             -          -    112,178   112,178              630   112,808 
 
Other comprehensive income/(expense) 
Actuarial loss - defined 
 benefit schemes                                -          -   (17,029)  (17,029)                -  (17,029) 
Deferred tax on actuarial 
 loss                                           -          -      2,615     2,615                -     2,615 
Share of actuarial loss 
 - Joint Ventures & Associates                  -          -      (115)     (115)                -     (115) 
Fair value movements                            -      2,079          -     2,079                -     2,079 
Deferred tax on fair value 
 movements                                      -      1,214          -     1,214                -     1,214 
Currency translation differences                -     18,538          -    18,538                -    18,538 
Net investment hedge                            -        230          -       230                -       230 
                                       ----------  ---------  ---------  --------  ---------------  -------- 
 
Total comprehensive income 
 for the year                                   -     22,061     97,649   119,710              630   120,340 
 
Dividends paid during 
 the year                                       -          -   (22,942)  (22,942)            (387)  (23,329) 
Cost of share based payments                    -      2,388          -     2,388                -     2,388 
Transfer on exercise, 
 vesting or expiry of share 
 based payments                                 -    (1,057)      1,057         -                -         - 
Shares issued                                  42          -          -        42                -        42 
Premium on shares issued                    1,179          -          -     1,179                -     1,179 
Purchase of own shares                          -    (2,075)          -   (2,075)                -   (2,075) 
                                       ----------  ---------  ---------  --------  ---------------  -------- 
 
Balance at 31 December 
 2011                                     100,962    153,544    261,308   515,814            7,135   522,949 
-------------------------------------  ----------  ---------  ---------  --------  ---------------  -------- 
 

Goodwill previously written off amounting to EUR93.0 million (2010: EUR93.0 million) is included in opening and closing retained earnings.

 
 Group statement of financial position 
  as at 31 December 2011 
----------------------------------------------  ------  ----------  ---------- 
                                                              2011        2010 
                                                 Notes     EUR'000     EUR'000 
----------------------------------------------  ------  ----------  ---------- 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                             394,552     369,346 
 Intangible assets                                         467,277     356,830 
 Investments in associates                                  12,178      11,757 
 Investments in joint ventures                              58,484      58,945 
 Trade and other receivables                                14,575      23,084 
 Deferred tax assets                                        11,255       7,388 
 Available for sale financial assets                        11,165      14,127 
 Derivative financial instruments                                -       1,643 
                                                        ----------  ---------- 
 
                                                           969,486     843,120 
                                                        ----------  ---------- 
 Current assets 
 Inventories                                               336,855     303,881 
 Trade and other receivables                               304,301     246,831 
 Derivative financial instruments                            6,161       3,912 
 Cash and cash equivalents                           8     231,373     229,101 
                                                        ----------  ---------- 
 
                                                           878,690     783,725 
                                                        ----------  ---------- 
 
 Total assets                                            1,848,176   1,626,845 
                                                        ----------  ---------- 
 
 EQUITY 
 Issued capital and reserves attributable 
  to equity holders of the Parent 
 Share capital and share premium                           100,962      99,741 
 Other reserves                                            153,544     132,227 
 Retained earnings                                   9     261,308     185,544 
                                                        ----------  ---------- 
 
                                                           515,814     417,512 
 Non-controlling interests                                   7,135       6,892 
                                                        ----------  ---------- 
 
 Total equity                                              522,949     424,404 
                                                        ----------  ---------- 
 
 LIABILITIES 
 Non-current liabilities 
 Borrowings                                          8     658,896     636,251 
 Derivative financial instruments                            1,319       3,315 
 Deferred tax liabilities                                   93,459      75,966 
 Retirement benefit obligations                             48,425      48,560 
 Provisions for other liabilities and charges               22,120      22,392 
 Capital grants                                             17,161      18,609 
                                                        ----------  ---------- 
 
                                                           841,380     805,093 
                                                        ----------  ---------- 
 Current liabilities 
 Trade and other payables                                  400,850     366,246 
 Current tax liabilities                                     6,656       2,538 
 Borrowings                                          8      52,808         972 
 Derivative financial instruments                            5,657       6,487 
 Provisions for other liabilities and charges               17,876      21,105 
                                                        ----------  ---------- 
 
                                                           483,847     397,348 
                                                        ----------  ---------- 
 
 Total liabilities                                       1,325,227   1,202,441 
                                                        ----------  ---------- 
 
 Total equity and liabilities                            1,848,176   1,626,845 
----------------------------------------------  ------  ----------  ---------- 
 

On behalf of the Board

   L Herlihy    J Moloney    S Talbot 

Directors

 
Group statement of cash flows 
 for the financial year ended 31 December 
 2011 
-------------------------------------------------  -----  ---------  --------- 
                                                               2011       2010 
                                                   Notes    EUR'000    EUR'000 
-------------------------------------------------  -----  ---------  --------- 
 
Cash flows from operating activities 
Cash generated from operations                        10    145,386    107,214 
Interest received                                             3,134      3,054 
Interest paid                                              (29,729)   (25,613) 
Tax paid                                                   (12,738)   (11,955) 
                                                          ---------  --------- 
 
Net cash inflow from operating activities                   106,053     72,700 
                                                          ---------  --------- 
 
Cash flows from investing activities 
Acquisition of subsidiary, net of cash acquired           (114,252)          - 
Payment of deferred consideration on acquisition 
 of subsidiaries                                            (1,146)      (644) 
Purchase of property, plant and equipment                  (47,239)   (31,631) 
Purchase of intangible assets                               (1,646)    (4,333) 
Dividends received from joint ventures                       14,761     11,210 
Loans repaid by joint ventures                                    -     23,280 
Decrease in available for sale financial 
 assets                                                       2,283        438 
Proceeds from sale of property, plant and 
 equipment                                                      420      1,163 
                                                          ---------  --------- 
 
Net cash outflow from investing activities                (146,819)      (517) 
                                                          ---------  --------- 
 
Cash flows from financing activities 
Proceeds from issue of ordinary shares                        1,221        522 
Purchase of own shares                                      (2,075)          - 
Private debt placement                                      226,828          - 
(Decrease)/increase in borrowings                         (160,780)     21,823 
Finance lease principal payments                              (968)      (926) 
Dividends paid to Company shareholders                 7   (22,942)   (20,453) 
Dividends paid to non-controlling interests                   (387)      (187) 
Capital grants received                                         564      1,432 
                                                          ---------  --------- 
 
Net cash inflow from financing activities                    41,461      2,211 
                                                          ---------  --------- 
 
Net increase in cash and cash equivalents                       695     74,394 
 
Cash and cash equivalents at the beginning 
 of the year                                                229,101    152,789 
Effects of exchange rate changes on cash 
 and cash equivalents                                         1,577      1,918 
                                                          ---------  --------- 
 
Cash and cash equivalents at the end of the 
 year                                                       231,373    229,101 
                                                          ---------  --------- 
 
 
Reconciliation of net cash flow to movement 
 in net debt                                                   2011       2010 
                                                            EUR'000    EUR'000 
-------------------------------------------------  -----  ---------  --------- 
 
Net increase in cash and cash equivalents                       695     74,394 
Cash movements from debt financing                         (65,080)   (20,897) 
                                                          ---------  --------- 
 
                                                           (64,385)     53,497 
 
Fair value movement of interest rate swaps 
 qualifying as fair value hedges                                387    (2,165) 
Exchange translation adjustment on net debt                 (8,211)   (16,836) 
Movement in net debt in the year                           (72,209)     34,496 
Net debt at the beginning of the year                     (408,122)  (442,618) 
                                                          ---------  --------- 
 
Net debt at the end of the year                           (480,331)  (408,122) 
                                                          ---------  --------- 
 
Net debt comprises: 
Borrowings                                                (711,704)  (637,223) 
Cash and cash equivalents                                   231,373    229,101 
                                                          ---------  --------- 
 
                                                       8  (480,331)  (408,122) 
-------------------------------------------------  -----  ---------  --------- 
 

Notes to the financial information

for the financial year ended 31 December 2011

   1   Basis of preparation 

The financial information has been prepared under the historical cost convention as modified by use of fair values for available for sale financial assets and derivative financial instruments, and the accounting policies that the Group has adopted for 2011.

The financial information set out in this document does not constitute full statutory financial statements but has been derived from the Group financial statements for the year ended 31 December 2011 (referred to as the 2011 financial statements). The 2011 financial statements have been audited and have received an unqualified audit report. Amounts are stated in euro thousands (EUR'000) unless otherwise stated. The financial information is prepared for a 52 week year ending on 31 December 2011. Comparatives are for the 52 week year ended on 1 January 2011. The statements of financial position for 2011 and 2010 have been drawn up as at 31 December 2011 and 1 January 2011 respectively.

The financial statements were approved by the Board of Directors on 28 February 2012 and signed on its behalf by L Herlihy, J Moloney and S Talbot.

   2   Segment information 

In accordance with IFRS 8, Operating Segments the Group has four segments as follows: US Cheese & Global Nutritionals, Dairy Ireland, Joint Ventures & Associates and Other Business. These segments align with the Group's internal financial reporting system and the way in which the Chief Operating Decision Maker assesses performance and allocates the Group's resources. A segment manager is responsible for each segment and is directly accountable for the performance of that segment to the Group Operating Executive Committee which acts as the Chief Operating Decision Maker for the Group.

Each segment derives its revenue as follows: US Cheese & Global Nutritionals earns its revenue from the manufacture and sale of cheese, whey protein and other nutritional solutions; Dairy Ireland incorporates the manufacture and sale of a range of dairy products and farm inputs; Joint Ventures & Associates revenue arises from the manufacture and sale of cheese, whey proteins and dairy consumer products. The Other Business segment refers to all other businesses which comprise of a Property business unit, a small dairy processing operation in Mexico which was disposed of in September 2010 and a small dairy sales office in Mexico which ceased trading in June 2011. Each segment is reviewed in its totality by the Chief Operating Decision Maker.

The Group Operating Executive Committee assesses the trading performance of operating segments based on a measure of earnings before interest, tax, amortisation and exceptional items.

   2.1         The segment results for the year ended 31 December 2011 are as follows: 
 
                                                                                                      Group 
                                         US Cheese                                                including 
                                          & Global                      JV's &                       JV's & 
                                      Nutritionals  Dairy Ireland   Associates  Other Business   Associates 
                                           EUR'000        EUR'000      EUR'000         EUR'000      EUR'000 
-----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 
Total gross segment revenue     (a)      1,319,944      1,365,823      524,293           1,046    3,211,106 
Inter-segment revenue                      (3,023)       (12,639)            -               -     (15,662) 
                                     -------------  -------------  -----------  --------------  ----------- 
 
Segment external revenue                 1,316,921      1,353,184      524,293           1,046    3,195,444 
                                     -------------  -------------  -----------  --------------  ----------- 
 
Segment earnings before 
 interest, tax, amortisation 
 and exceptional items          (b)        122,194         57,854       25,226           (550)      204,724 
-----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 

Included in external revenue are related party sales between Dairy Ireland and Joint Ventures & Associates of EUR98.7 million and related party sales between US Cheese & Global Nutritionals and Joint Ventures & Associates of EUR12.4 million.

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.

2.1 (a): Segment revenue is reconciled to reported external revenue as follows:

 
                                           2011 
                                        EUR'000 
------------------------------------  --------- 
 
Segment revenue                       3,211,106 
Inter-segment revenue                  (15,662) 
Joint Ventures & Associates revenue   (524,293) 
                                      --------- 
 
Reported external revenue             2,671,151 
------------------------------------  --------- 
 

2.1 (b): Segment earnings before interest, tax, amortisation and exceptional items are reconciled to reported profit before tax and profit after tax as follows:

 
                                                                          2011 
                                                                       EUR'000 
--------------------------------------------------------------------  -------- 
 
Segment earnings before interest, tax, amortisation and exceptional 
 items                                                                 204,724 
Amortisation                                                          (18,472) 
Exceptional items - rationalisation costs                              (8,723) 
Joint Ventures & Associates interest and tax                          (10,895) 
Finance income                                                           3,056 
Finance costs                                                         (30,997) 
                                                                      -------- 
 
Reported profit before tax                                             138,693 
Income taxes                                                          (25,885) 
                                                                      -------- 
 
Reported profit after tax                                              112,808 
--------------------------------------------------------------------  -------- 
 

Finance income, finance costs and income taxes are not allocated to segments as this type of activity is driven by the central treasury and taxation functions, which manage the cash and taxation position of the Group.

Other segment items included in the income statement for the year ended 31 December 2011 are as follows:

 
                                                                                                       Group 
                                          US Cheese                                                including 
                                           & Global                      JV's &                       JV's & 
                                       Nutritionals  Dairy Ireland   Associates  Other Business   Associates 
                                            EUR'000        EUR'000      EUR'000         EUR'000      EUR'000 
------------------------------------  -------------  -------------  -----------  --------------  ----------- 
 
Depreciation of property, 
 plant and equipment                         13,272         20,868        7,653               -       41,793 
Amortisation of intangibles                  14,198          4,274            -               -       18,472 
Capital grants released 
 to the income statement                       (57)        (1,383)        (268)               -      (1,708) 
Exceptional items - rationalisation 
 costs                                            -          8,723            -               -        8,723 
------------------------------------  -------------  -------------  -----------  --------------  ----------- 
 

The segment assets and liabilities at 31 December 2011 and segment capital expenditure and acquisitions for the year then ended are as follows:

 
                                                                                                     Group 
                                        US Cheese                                                including 
                                         & Global                      JV's &                       JV's & 
                                     Nutritionals  Dairy Ireland   Associates  Other Business   Associates 
                                          EUR'000        EUR'000      EUR'000         EUR'000      EUR'000 
----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 
Segment assets                 (c)        931,923        571,681       85,237          14,215    1,603,056 
                                    -------------  -------------  -----------  --------------  ----------- 
 
Segment liabilities            (d)        268,418        266,542            -           1,190      536,150 
                                    -------------  -------------  -----------  --------------  ----------- 
 
Segment capital expenditure 
 and acquisitions              (e)        140,833         30,432        4,042               -      175,307 
----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 

2.1 (c): Segment assets are reconciled to reported assets as follows:

 
                          2011 
                       EUR'000 
-------------------  --------- 
 
Segment assets       1,603,056 
Unallocated assets     245,120 
                     --------- 
 
Reported assets      1,848,176 
-------------------  --------- 
 

Unallocated assets primarily include taxation, cash and cash equivalents, available for sale financial assets and derivatives.

2.1 (d): Segment liabilities are reconciled to reported liabilities as follows:

 
                               2011 
                            EUR'000 
------------------------  --------- 
 
Segment liabilities         536,150 
Unallocated liabilities     789,077 
                          --------- 
 
Reported liabilities      1,325,227 
------------------------  --------- 
 

Unallocated liabilities primarily include items such as taxation, borrowings and derivatives.

2.1 (e): Segment capital expenditure and acquisitions are reconciled to reported capital expenditure and acquisitions as follows:

 
                                                      2011 
                                                   EUR'000 
------------------------------------------------  -------- 
 
Segment capital expenditure and acquisitions       175,307 
Joint Ventures & Associates capital expenditure    (4,042) 
Unallocated capital expenditure                        215 
                                                  -------- 
 
Reported capital expenditure and acquisitions      171,480 
------------------------------------------------  -------- 
 
   2.2         The segment results for the year ended 1 January 2011 are as follows: 
 
                                                                                                      Group 
                                         US Cheese                                                including 
                                          & Global                      JV's &                       JV's & 
                                      Nutritionals  Dairy Ireland   Associates  Other Business   Associates 
                                           EUR'000        EUR'000      EUR'000         EUR'000      EUR'000 
-----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 
Total gross segment revenue     (a)      1,024,653      1,154,023      416,564           6,244    2,601,484 
Inter-segment revenue                      (2,752)       (15,473)            -               -     (18,225) 
                                     -------------  -------------  -----------  --------------  ----------- 
 
Segment external revenue                 1,021,901      1,138,550      416,564           6,244    2,583,259 
                                     -------------  -------------  -----------  --------------  ----------- 
 
Segment earnings before 
 interest, tax, amortisation 
 and exceptional items                     104,506         47,943       21,560           (831)      173,178 
-----------------------------------  -------------  -------------  -----------  --------------  ----------- 
 

Included in external revenue are related party sales between Dairy Ireland and Joint Ventures & Associates of EUR69.2 million and related party sales between US Cheese & Global Nutritionals and Joint Ventures & Associates of EUR9.4 million.

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.

2.2 (a): Segment revenue is reconciled to reported external revenue as follows:

 
                                           2010 
                                        EUR'000 
------------------------------------  --------- 
 
Segment revenue                       2,601,484 
Inter-segment revenue                  (18,225) 
Joint Ventures & Associates revenue   (416,564) 
                                      --------- 
 
Reported external                     2,166,695 
------------------------------------  --------- 
 

2.2 (b): Segment earnings before interest, tax, amortisation and exceptional items are reconciled to reported profit before tax and profit after tax as follows:

 
                                                                          2010 
                                                                       EUR'000 
--------------------------------------------------------------------  -------- 
 
Segment earnings before interest, tax, amortisation and exceptional 
 items                                                                 173,178 
Amortisation                                                          (15,111) 
Exceptional items - defined benefit pension schemes                     10,238 
Joint Ventures & Associates interest and tax                          (11,457) 
Finance income                                                           3,290 
Finance costs                                                         (25,420) 
                                                                      -------- 
 
Reported profit before tax                                             134,718 
Income taxes                                                          (26,085) 
                                                                      -------- 
 
Reported profit after tax                                              108,633 
--------------------------------------------------------------------  -------- 
 

Finance income, finance costs and income taxes are not allocated to segments as this type of activity is driven by the central treasury and taxation functions, which manage the cash and taxation position of the Group.

Other segment items included in the income statement for the year ended 1 January 2011 are as follows:

 
                                                                                               Group 
                                  US Cheese                                                including 
                                   & Global                      JV's &                       JV's & 
                               Nutritionals  Dairy Ireland   Associates  Other Business   Associates 
                                    EUR'000        EUR'000      EUR'000         EUR'000      EUR'000 
----------------------------  -------------  -------------  -----------  --------------  ----------- 
 
Depreciation of property, 
 plant and equipment                 12,514         19,997        6,823              58       39,392 
Amortisation of intangibles          10,711          4,400            6               -       15,117 
Capital grants released 
 to the income statement              (330)        (1,089)        (526)                      (1,945) 
Exceptional items - defined 
 benefit pension schemes                  -       (10,238)            -               -     (10,238) 
----------------------------  -------------  -------------  -----------  --------------  ----------- 
 

The segment assets and liabilities at 1 January 2011 and segment capital expenditure and acquisitions for the year then ended are as follows:

 
                                                                                                     Group 
                                        US Cheese                                                including 
                                         & Global                      JV's &                       JV's & 
                                     Nutritionals  Dairy Ireland   Associates  Other Business   Associates 
                                          EUR'000        EUR'000      EUR'000         EUR'000      EUR'000 
----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 
Segment assets                 (c)        725,960        556,455       87,362          17,041    1,386,818 
                                    -------------  -------------  -----------  --------------  ----------- 
 
Segment liabilities            (d)        200,380        288,125            -           1,536      490,041 
                                    -------------  -------------  -----------  --------------  ----------- 
 
Segment capital expenditure 
 and acquisitions              (e)         23,085         13,522       11,901             124       48,632 
----------------------------  ----  -------------  -------------  -----------  --------------  ----------- 
 

2.2 (c): Segment assets are reconciled to reported assets as follows:

 
                          2010 
                       EUR'000 
-------------------  --------- 
 
Segment assets       1,386,818 
Unallocated assets     240,027 
                     --------- 
 
Reported assets      1,626,845 
-------------------  --------- 
 

Unallocated assets primarily include taxation, cash and cash equivalents, available for sale financial assets and derivatives.

2.2 (d): Segment liabilities are reconciled to reported liabilities as follows:

 
                               2010 
                            EUR'000 
------------------------  --------- 
 
Segment liabilities         490,041 
Unallocated liabilities     712,400 
                          --------- 
 
Reported liabilities      1,202,441 
------------------------  --------- 
 

Unallocated liabilities primarily include items such as taxation, borrowings and derivatives.

2.2 (e): Segment capital expenditure and acquisitions are reconciled to reported capital expenditure and acquisitions as follows:

 
                                                      2010 
                                                   EUR'000 
------------------------------------------------  -------- 
 
Segment capital expenditure and acquisitions        48,632 
Joint Ventures & Associates capital expenditure   (11,901) 
Unallocated capital expenditure                        466 
                                                  -------- 
 
Reported capital expenditure and acquisitions       37,197 
------------------------------------------------  -------- 
 

2.3 Entity wide disclosures

Revenue from external customers for each group of similar product in the US Cheese & Global Nutritionals, Dairy Ireland, Joint Ventures & Associates and Other Business segments are outlined at section 2.1 and 2.2 above.

Geographical information

Revenue by geographical destination is reviewed by the Chief Operating Decision Maker. The breakdown of revenue by geographical destination is as follows:

 
                      2011       2010 
                   EUR'000    EUR'000 
---------------  ---------  --------- 
 
Ireland            799,489    725,834 
UK                 162,028    137,874 
Rest of Europe     254,991    189,308 
USA              1,119,417    901,717 
Other              335,226    211,962 
                 ---------  --------- 
 
                 2,671,151  2,166,695 
---------------  ---------  --------- 
 

Revenue of approximately EUR320.0 million (2010: EUR249.6 million) is derived from a single external customer. The breakdown of revenue by geographical destination in 2010 has been updated to reflect the current year classification.

The total of non-current assets, other than financial instruments and deferred tax assets, located in Ireland is EUR267.8 million (2010: EUR271.5 million) and located in other countries, mainly the USA is EUR690.4 million (2010: EUR562.6 million).

   3   Exceptional items 
 
                                                      2011      2010 
                                           Notes   EUR'000   EUR'000 
-----------------------------------------  -----  --------  -------- 
 
Rationalisation costs                        (a)   (8,723)         - 
Irish defined benefit pension scheme         (b)         -    10,238 
                                                  --------  -------- 
 
Total exceptional (charge)/credit before 
 tax                                               (8,723)    10,238 
 
Exceptional tax credit/(charge)                5     1,090     (558) 
                                                  --------  -------- 
 
Net exceptional (charge)/credit                    (7,633)     9,680 
-----------------------------------------  -----  --------  -------- 
 

(a) An exceptional charge of EUR8.7 million was incurred during 2011, primarily relating to rationalisation costs in the Dairy Ireland segment.

(b) During 2010, revisions to the Group's pension arrangements for three Irish defined benefit pension schemes, consistent with the revisions made to the Group's main pension schemes, were finalised giving rise to an exceptional gain, in accordance with IAS 19 - Employee benefits, in the year of EUR10.2 million. This gain relates to curtailment gains and negative past service costs of EUR1.7 million and EUR10.9 million respectively offset by a change in the estimate of the prior year curtailment of EUR2.4 million.

   4   Finance income and costs 
 
                                                       2011      2010 
                                                    EUR'000   EUR'000 
-------------------------------------------------  --------  -------- 
Finance income 
Interest income                                       2,874     3,008 
Interest income on deferred consideration               182       282 
                                                   --------  -------- 
 
Total finance income                                  3,056     3,290 
                                                   --------  -------- 
 
Finance costs 
Bank borrowings repayable within five years        (14,092)  (13,001) 
Interest cost on deferred consideration               (106)      (80) 
UK pension provision                                  (113)     (121) 
Finance lease costs                                   (188)     (256) 
Interest rate swaps, transfer from equity           (4,876)   (7,613) 
Interest rate swaps, fair value hedges                2,308     2,733 
Fair value adjustment to borrowings attributable 
 to interest rate risk                              (2,308)   (2,733) 
Finance cost of private debt placement              (7,273)         - 
Finance cost of preference shares                   (4,349)   (4,349) 
                                                   --------  -------- 
 
Total finance costs                                (30,997)  (25,420) 
                                                   --------  -------- 
 
Net finance costs                                  (27,941)  (22,130) 
-------------------------------------------------  --------  -------- 
 

Net finance costs exclude borrowing costs attributable to the acquisition, construction or production of a qualifying asset.

   5   Income taxes 
 
                                                         2011      2010 
                                              Notes   EUR'000   EUR'000 
-------------------------------------------  ------  --------  -------- 
Current tax 
Irish current tax                                       8,641    11,620 
Adjustments in respect of prior years                   (435)     (422) 
                                                     --------  -------- 
 
Irish current tax on income for the year                8,206    11,198 
 
Foreign current tax                                     6,223     2,285 
Adjustments in respect of prior years                   1,539     1,050 
                                                     --------  -------- 
 
Foreign current tax on income for the year              7,762     3,335 
                                                     --------  -------- 
 
Total current tax                                      15,968    14,533 
 
Deferred tax                                           11,007    10,994 
                                                     --------  -------- 
 
Pre exceptional tax charge                             26,975    25,527 
 
Exceptional tax (credit)/charge 
Current tax                                     (a)   (1,090)         - 
Deferred tax                                    (b)         -       558 
                                                     --------  -------- 
 
Total tax charge                                       25,885    26,085 
---------------------------------------------------  --------  -------- 
 

(a) The rationalisation cost charged during the year resulted in an exceptional current tax credit of EUR1.1 million.

(b) The curtailment gains and negative past service costs recognised in the defined benefit pension schemes in 2010 resulted in an exceptional deferred tax charge of EUR0.6 million.

The exceptional net tax credit and charge in 2011 and 2010, relating to income and costs which have been presented as exceptional, have been separately disclosed above.

The tax on the Group's profit before tax differs from the theoretical amount that would arise applying the corporation tax rate in Ireland, as follows:

 
                                                             2011      2010 
                                                          EUR'000   EUR'000 
-------------------------------------------------------  --------  -------- 
 
 Profit before tax                                        138,693   134,718 
                                                         --------  -------- 
 
Income tax calculated at Irish rate of 12.5% (2010: 
 12.5%)                                                    17,337    16,840 
Earnings at higher/(reduced) Irish rates                      836     (902) 
Difference due to overseas tax rates                        7,496     6,999 
Adjustment to tax charge in respect of previous 
 periods                                                  (1,170)   (1,811) 
Tax on post tax profits of Joint Ventures & Associates 
 included in profit before tax                            (1,791)   (1,263) 
Expenses not deductible for tax purposes and other 
 differences                                                3,177     6,222 
                                                         --------  -------- 
 
Total tax charge                                           25,885    26,085 
-------------------------------------------------------  --------  -------- 
 

Factors that may affect future tax charges and other disclosure requirements

The total tax charge in future periods will be affected by any changes to the applicable tax rates in force in jurisdictions in which the Group operates and other relevant changes in tax legislation including amendments impacting on the excess of tax depreciation over accounting depreciation. The total tax charge of the Group may also be influenced by the effects of corporate development activity.

   6   Earnings per share 

Basic

Basic earnings per share is calculated by dividing the net profit attributable to the equity holders of the Parent by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Group and held as own shares.

 
                                                             2011         2010 
----------------------------------------------------  -----------  ----------- 
Profit attributable to equity holders of the Parent 
 (EUR'000)                                                112,178      108,047 
                                                      -----------  ----------- 
 
Weighted average number of ordinary shares in issue   293,536,350  293,105,068 
                                                      -----------  ----------- 
 
Basic earnings per share (cents per share)                  38.22        36.86 
----------------------------------------------------  -----------  ----------- 
 

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potential dilutive ordinary shares. Share options are potential dilutive ordinary shares. In respect of share options, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated above is compared with the number of shares that would have been issued assuming exercise of the share options.

 
                                                             2011         2010 
----------------------------------------------------  -----------  ----------- 
Weighted average number of ordinary shares in issue   293,536,350  293,105,068 
Adjustments for share options                           2,413,436    1,874,570 
                                                      -----------  ----------- 
 
Adjusted weighted average number of ordinary shares   295,949,786  294,979,638 
                                                      -----------  ----------- 
 
Diluted earnings per share (cents per share)                37.90        36.63 
----------------------------------------------------  -----------  ----------- 
 

Adjusted

Adjusted earnings per share is calculated on the net profit attributable to equity holders of the Parent, before net exceptional items and intangible asset amortisation (net of related tax). Adjusted earnings per share is considered to be more reflective of the Group's overall underlying performance.

 
                                                            2011      2010 
                                                         EUR'000   EUR'000 
------------------------------------------------------  --------  -------- 
 
Profit attributable to equity holders of the Parent      112,178   108,047 
Amortisation of intangible assets (net of related 
 tax)                                                     16,163    13,222 
Net exceptional items                                      7,633   (9,680) 
                                                        --------  -------- 
 
Adjusted net income                                      135,974   111,589 
                                                        --------  -------- 
 
Adjusted earnings per share (cents per share)              46.32     38.07 
                                                        --------  -------- 
 
Diluted adjusted earnings per share (cents per share)      45.94     37.83 
------------------------------------------------------  --------  -------- 
 
   7   Dividends 

The dividends paid in 2011 and 2010 were EUR22.9 million (7.82 cents per share) and EUR20.5 million (6.98 cents per share) respectively. On 14 October 2011 an interim dividend of 3.33 cents per share on the ordinary shares amounting to EUR9.7 million was paid to shareholders on the register of members as at 2 September 2011. The Directors have recommended the payment of a final dividend of 4.94 cents per share on the ordinary shares which amounts to EUR14.5 million. Subject to shareholders approval this dividend will be paid on 11 May 2012 to shareholders on the register of members at 30 March 2012, the record date. This announcement does not reflect the final dividend.

If a shareholder's registered address is in the UK and a shareholder has not previously provided the Company with a mandate form for an Irish euro account, a shareholder will default to a sterling payment. All other shareholders will default to a euro payment.

   8   Net debt 
 
                                      2011       2010 
                                   EUR'000    EUR'000 
-------------------------------  ---------  --------- 
Borrowings due within one year      52,808        972 
Borrowings due after one year      658,896    636,251 
Less: 
Cash and cash equivalents        (231,373)  (229,101) 
                                 ---------  --------- 
 
Net debt                           480,331    408,122 
-------------------------------  ---------  --------- 
 
   9   Retained earnings 
 
                                         Company      Group       Group 
                                        retained   retained    goodwill     Group 
                                        earnings   earnings   write-off     Total 
                                         EUR'000    EUR'000     EUR'000   EUR'000 
-------------------------------------  ---------  ---------  ----------  -------- 
 
Balance at 2 January 2010                 59,913    175,965    (92,961)    83,004 
 
Profit for the year                          745    108,047           -   108,047 
 
Other comprehensive income/(expense) 
Actuarial gain - defined benefit 
 schemes                                       -     13,379           -    13,379 
Deferred tax on actuarial gain                 -    (1,250)           -   (1,250) 
Share of actuarial gain - Joint 
 Ventures & Associates                         -      2,444           -     2,444 
                                       ---------  ---------  ----------  -------- 
 
Total comprehensive income for the 
 year                                        745    122,620           -   122,620 
 
Dividends paid during the year          (20,453)   (20,453)           -  (20,453) 
Transfer on exercise, vesting or 
 expiry of share based payments              373        373           -       373 
                                       ---------  ---------  ----------  -------- 
 
Balance at 1 January 2011                 40,578    278,505    (92,961)   185,544 
 
Profit for the year                       59,114    112,178           -   112,178 
 
Other comprehensive income/(expense) 
Actuarial loss - defined benefit 
 schemes                                       -   (17,029)           -  (17,029) 
Deferred tax on actuarial loss                 -      2,615           -     2,615 
Share of actuarial loss - Joint 
 Ventures & Associates                         -      (115)           -     (115) 
                                       ---------  ---------  ----------  -------- 
 
Total comprehensive income for the 
 year                                     59,114     97,649           -    97,649 
 
Dividends paid during the year          (22,942)   (22,942)           -  (22,942) 
Transfer on exercise, vesting or 
 expiry of share based payments            1,057      1,057           -     1,057 
                                       ---------  ---------  ----------  -------- 
 
Balance at 31 December 2011               77,807    354,269    (92,961)   261,308 
-------------------------------------  ---------  ---------  ----------  -------- 
 

10 Cash generated from operations

 
                                          2011      2011      2010      2010 
                                       Company     Group   Company     Group 
                                       EUR'000   EUR'000   EUR'000   EUR'000 
------------------------------------  --------  --------  --------  -------- 
 
Profit before taxation                  59,114   138,693       745   134,718 
 
Development costs capitalised                -   (4,042)         -   (2,821) 
Impairment charge                            -     1,195         -     1,372 
Non-cash exceptional loss/(gain)             -     8,723         -  (10,238) 
Share of results of Joint Ventures 
 & Associates                                -  (14,331)         -  (10,103) 
Depreciation                                 -    34,140         -    32,569 
Amortisation                                 -    18,472         -    15,111 
Cost of share based payments             2,388     2,388     2,937     2,937 
Difference between pension charge 
 and cash contributions                      -  (17,706)         -  (14,598) 
Loss on disposal of property, plant 
 and equipment                               -       363         -       957 
Interest income                              -   (3,056)         -   (3,290) 
Interest expense                             -    30,997         -    25,420 
Non cash-movement in investments         (761)         -         -         - 
Amortisation of government grants 
 received                                    -   (1,440)         -   (1,419) 
                                      --------  --------  --------  -------- 
 
Cash generated from operations 
 before changes in working capital      60,741   194,396     3,682   170,615 
Change in net working capital: 
- (Increase) in inventory                    -  (19,087)         -  (97,009) 
- Decrease/(increase) in short 
 term receivables                          103  (29,122)    66,449  (28,065) 
- (Decrease)/increase in short 
 term liabilities                     (40,829)    11,219  (36,693)    66,048 
- (Decrease) in provisions               (204)  (12,020)     (246)   (4,375) 
                                      --------  --------  --------  -------- 
 
Cash generated from operations          19,811   145,386    33,192   107,214 
------------------------------------  --------  --------  --------  -------- 
 

11 Business combinations

On 19 January 2011 the Group acquired the business and assets of a US based performance nutrition business, Bio-Engineered Supplements and Nutrition ("BSN"). BSN is a leading developer, provider and distributor of nutritional products designed for health, physique development and training.

Details of net assets acquired and goodwill arising from the acquisition is as follows:

 
                                      EUR'000 
------------------------------------  ------- 
Purchase consideration - cash paid    103,369 
Less: Fair value of assets acquired    85,853 
                                      ------- 
 
Goodwill                               17,516 
------------------------------------  ------- 
 

The acquisition of BSN significantly enhances the Group's Performance Nutrition portfolio and delivers further growth opportunities in this area. In particular, the acquisition builds on the Group's scale position in the sports nutrition sector; broadens Performance Nutrition's product portfolio into new categories and channels and represents a further step change in international growth opportunities for Performance Nutrition. The goodwill is attributable to the profitability and development opportunities through combined R&D and the benefits associated with the extension of Glanbia's scale and specific capabilities to the acquired business.

The fair value of assets and liabilities arising from the acquisition is as follows:

 
                                               Fair value 
                                                  EUR'000 
---------------------------------------------  ---------- 
 
Property, plant and equipment                       1,700 
Intangible assets - brands/know-how                47,641 
Intangible assets - customer relationships         36,721 
Inventories                                         9,433 
Trade and other receivables                         7,419 
Trade and other payables                         (10,290) 
Provisions for other liabilities and charges      (2,181) 
Deferred tax                                      (4,590) 
                                               ---------- 
 
Fair value of assets acquired                      85,853 
---------------------------------------------  ---------- 
 

The revenue included in the Group income statement from 19 January 2011 to 31 December 2011 contributed by BSN was EUR105 million. BSN contributed profit before interest, tax and amortisation of EUR12.4 million over the same period.

On 1 April 2011, the Group also acquired the business and assets of Kerry Group plc's Limerick based liquid milk business for EUR10.3 million. This consisted of EUR6.0 million intellectual property, EUR0.7 million working capital and property, plant & equipment and EUR3.6 million goodwill.

The revenue and profit of the Group determined in accordance with IFRS for the year ended 31 December 2011 would not have been materially different than that reported above if the acquisition date for all business combinations completed during the period had been at the beginning of the year.

Acquisition related costs included in administration expenses in the Group income statement for the period ended 31 December 2011 amounted to EUR0.4 million (2010: EUR0.6 million).

No contingent liabilities were recognised on the acquisitions completed during the period. The gross contractual value and fair value of trade and other receivables as at the respective dates of acquisition amounted to EUR7.4 million. No allowance for doubtful debts is included as the full amount is expected to be recoverable.

12 Events after the reporting period

There were no significant events, outside the ordinary course of business affecting the Group since 31 December 2011.

13 Statutory financial statements

The financial information in this preliminary announcement is not the statutory financial statements of the Company, a copy of which is required to be annexed to the Company's annual return filed with the Companies Registration Office. A copy of the financial statements in respect of the financial year ended 31 December 2011 will be annexed to the Company's annual return for 2012. The auditors of the Company have made a report, without any qualification on their audit, of the financial statements of the Group and Company in respect of the financial year ended 31 December 2011, which were approved by the Directors on 28 February 2012. A copy of the financial statements of the Group in respect of the year ended 1 January 2011 has been annexed to the Company's annual return for 2011 and filed with the Companies Registration Office.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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