Final Results

RNS Number : 3258Y

Glanbia PLC

29 February 2012

 



NEWS RELEASE Glanbia Corporate Communications Telephone  + 353 56 777 2200 Facsimile  + 353 56 777 2222 www.glanbia.com

A world of nutritional solutions and cheese

2011 Full Year Results

29 February 2012

For further information contact

Glanbia plc  [phone]  Siobhán 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)	€2,734.6m	€2,166.7m	+ 26.2%	€2,671.2m	+ 23.3%
EBITA	€186.1m	€151.6m	+ 22.8%	€179.5m	+ 18.4%
EBITA margin	6.8%	7.0%	- 20 bps	6.7%	- 30 bps
Operating profit	€166.8m	€136.5m	+ 22.2%	€161.0m	+ 17.9%
Operating margin	6.1%	6.3%	- 20 bps	6.0%	- 30 bps
EBITDA	€219.4m	€182.8m	+ 20.0%	€212.2m	+ 16.1%
Share of results of Joint Ventures & Associates(3)	€14.7m	€10.1m	+ 45.5%	€14.3m	+ 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 €8.7 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 €1 = US$1.3260 which compares with the reported average exchange rate for 2011 of €1 = US$1.3923.

(3)    Total Group revenue, including Glanbia's share of the revenue of Joint Ventures & Associates, was €3.2 billion, €3.3 billion on a constant currency basis for the year (2010: €2.6 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^®, 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 €2.7 billion; EBITA grew 22.8% to €186.1 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 €14.7 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^® 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
	€m	€m			€m	€m
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 €1 = US$1.3260 which compares with the reported average exchange rate for 2011 of €1 = US$1.3923.

 

Results overview

Total Group revenue, including share of Joint Ventures & Associates, grew by 26.8% to €3.3 billion on a constant currency basis, (2010: €2.6 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^®) acquired in January 2011.

Total Group EBITA, including share of Joint Ventures & Associates, increased 22.5% to €212.1 million on a constant currency basis (2010: €173.2 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			€1,380.4m			€1,021.9m	+ 35.1%		€1,316.9m	+ 28.9%
EBITA pre exceptional					€128.8m	€104.5m	+ 23.3%		€122.2m	+ 16.9%
EBITA margin pre exceptional					9.3%	10.2%	-  90 bps		9.3%	- 90 bps
Operating profit pre exceptional					€113.8m	€93.8m	+ 21.3%		€108.0m	+ 15.1%
Operating margin pre exceptional				8.2%		9.2%	- 100 bps		8.2%	- 100 bps
EBITDA pre exceptional	€142.7m					€116.7m	+ 22.3%		€135.4m	+ 16.0%

 

Analysis on a constant currency basis

In 2011, US Cheese & Global Nutritionals revenue increased 35.1% to €1.38 billion (2010: €1.02 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^® of 11%. Operating profit pre exceptional increased 21.3% to €113.8 million (2010: €93.8 million). EBITA pre exceptional increased 23.3% to €128.8 million (2010: €104.5 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^âfor 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^âis 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^âis 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	€1,353.3m	€1,138.6m	+ 18.9%
EBITA pre exceptional	€57.9m	€47.9m	+ 20.9%
EBITA margin pre exceptional	4.3%	4.2%	+ 10 bps
Operating profit pre exceptional	€53.6m	€43.5m	+ 23.2 %
Operating margin pre exceptional	4.0%	3.8%	+ 20bps
EBITDA pre exceptional	€77.4m	€66.9m	+ 15.7%

In 2011 Dairy Ireland revenue grew 18.9% to €1.35 billion (2010: €1.14 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 €53.6 million (2010: €43.5 million) and the operating margin pre exceptional increased 20 basis points to 4.0% (2010: 3.8%). EBITA pre exceptional increased 20.9% to €57.9 million (2010: €47.9 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 €21.2 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)		€541.0m		€416.6m	+ 29.9%		€524.2m	+ 25.8%
EBITA pre exceptional		€26.0m		€21.6m	+ 20.4%		€25.2m	+ 16.7%
EBITA margin pre exceptional		4.8%		5.2%	- 40bps		4.8%	- 40bps
Operating profit pre exceptional			€26.0m	€21.6m	+ 20.4%		€25.2m	+ 16.7%
Operating margin pre exceptional			4.8%	5.2%	- 40bps		4.8%	- 40bps
EBITDA pre exceptional		€33.6m		€27.8m	+ 20.9%		€32.6m	+ 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 €541.0 million (2010: €416.6 million).

Glanbia's share of operating profit increased 20.4% to €26.0 million (2010: €21.6 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 €4.2 million to €14.3 million (2010: €10.1 million). The table below reconciles operating profit with share of results of Joint Ventures & Associates, as reported in the income statement.

	Reported
	2011 €m	2010 €m	Change €m
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
	€'m	€'m	€'m		€'m	€'m	€'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 €5.8 million to €27.9 million (2010: €22.1 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% (€4.2 million) to €14.3 million (2010: €10.1 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 €27.0 million (2010: €25.5 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 €8.7m, 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
	€m	€m	€m
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 €135.4m, Dairy Ireland €77.4m and Other (€0.6m)

The Group generated strong free cash flow during the year of €87.5 million (2010: €65.5 million) an increase of €22.0 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 €212.2 million (2010: €182.8 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 €14.8 million an increase from the prior year of €3.6 million (2010: €11.2 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 €987.7 million encompassing the $325 million private debt placement (€251.2 million), €673.0 million from nine banks and €63.5 million cumulative redeemable preference shares. The tenure of these facilities ranges from €163.0 million renewable in July 2012, €510.0 million renewable in July 2013, €63.5 million maturing in July 2014 and €251.2 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 debt1 : Adjusted EBITDA2 (times)	3.3	2.1	2.1	2.6
Adjusted EBIT3 : Net finance costs (times)	3.5	6.3	6.7	5.4

¹           Year end net debt includes €63.5 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 €0.2 million to €48.4 million (2010: €48.6 million). The marginal reduction in the Group's deficit reflected the negative movement in actuarial assumptions (€17.0 million), caused primarily by a weak return on invested assets and increased mortality assumptions used, offset by the employer contributions of €17.7 million (net of service cost).

The fair value of the assets of the pension schemes at 31 December 2011 was €400.0 million (2010: €389.3 million) and the value of the scheme liabilities was €448.4 million (2010: €437.9 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: [phone]

US: 171 835 41175

Passcode: 598033

Group income statement for the financial year ended 31 December 2011
	Notes	Pre-exceptional 2011 €'000		Exceptional 2011 €'000		Total 2011 €'000		Pre-exceptional 2010 €'000		Exceptional 2010 €'000		Total 2010 €'000
				(note 3)						(note 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  €'000		2010 €'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 premium €'000		Other reserves €'000		Retained earnings €'000		Total €'000		Non-controlling interests €'000		Total €'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 €93.0 million (2010: €93.0 million) is included in opening and closing retained earnings.

Group statement of financial position as at 31 December 2011
	Notes		2011 €'000		2010 €'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
	Notes		2011 €'000		2010 €'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
			€'000		€'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 (€'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:

		US Cheese & Global Nutritionals €'000		Dairy Ireland €'000		JV's & Associates €'000		Other Business €'000		Group including JV's & Associates €'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 €98.7 million and related party sales between US Cheese & Global Nutritionals and Joint Ventures & Associates of €12.4 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 €'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 €'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:

		US Cheese & Global Nutritionals €'000		Dairy   Ireland €'000		JV's & Associates €'000		Other Business €'000		Group including JV's & Associates €'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:

		US Cheese & Global Nutritionals €'000		Dairy   Ireland €'000		JV's & Associates €'000		Other Business €'000		Group including JV's & Associates €'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 €'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 €'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 €'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:

		US Cheese & Global Nutritionals €'000		Dairy   Ireland €'000		JV's & Associates €'000		Other Business €'000		Group including JV's & Associates €'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 €69.2 million and related party sales between US Cheese & Global Nutritionals and Joint Ventures & Associates of €9.4 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 €'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 €'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:

		US Cheese & Global Nutritionals €'000		Dairy   Ireland €'000		JV's & Associates €'000		Other Business €'000		Group including JV's & Associates €'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:

		US Cheese & Global Nutritionals €'000		Dairy   Ireland €'000		JV's & Associates €'000		Other Business €'000		Group including JV's & Associates €'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 €'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 €'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 €'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 €'000		2010 €'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 €320.0 million (2010: €249.6 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 €267.8 million (2010: €271.5 million) and located in other countries, mainly the USA is €690.4 million (2010: €562.6 million).

3   Exceptional items

	Notes		2011 €'000		2010 €'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 €8.7 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 €10.2 million. This gain relates to curtailment gains and negative past service costs of €1.7 million and €10.9 million respectively offset by a change in the estimate of the prior year curtailment of €2.4 million. 

4   Finance income and costs

	2011 €'000		2010 €'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

	Notes		2011 €'000		2010 €'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 €1.1 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 €0.6 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 €'000		2010 €'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 (€'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 €'000		2010 €'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 €22.9 million (7.82 cents per share) and €20.5 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 €9.7 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 €14.5 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 €'000		2010 €'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 retained earnings €'000		Group retained earnings €'000		Group goodwill write-off €'000		Group Total €'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 Company €'000		2011 Group €'000		2010 Company €'000		2010 Group €'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:

	€'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 €'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 €105 million. BSN contributed profit before interest, tax and amortisation of €12.4 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 €10.3 million. This consisted of €6.0 million intellectual property, €0.7 million working capital and property, plant & equipment and €3.6 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 €0.4 million (2010: €0.6 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 €7.4 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.

 

END

 

 

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