Glanbia Regulatory News (GLB)

Excellent First Half delivers 55% INCREASE IN ADJUSTED EARNINGS PER SHARE

full year outlook upgraded to 18% TO 20% expected Growth in ADJUSTED EARNINGS PER SHARE

24 August 2011 - Glanbia plc ('Glanbia'), the international nutritional solutions and cheese group, announces its half year results for the six months ended 2 July 2011. Commentary in this results announcement is primarily based on constant currency.

(1) In the first half there was a net exceptional charge of €7.6 million, post tax (€8.7 million pre tax). This relates to further rationalisation in Consumer Products, which is part of the Group's Dairy Ireland segment. There was no exceptional charge in the first half of 2010.

(2) Constant currency is based on translating half year 2011 results at the 2010 half year average market exchange rate. The 2010 half year average exchange rate was €1 = US$1.326 which compares with the reported average exchange rate for the six months ended 2 July 2011 of €1 = US$1.4044.

(3) Total Group revenue, including Glanbia's share of the revenue of Joint Ventures & Associates, was €1.6 billion for the half year (HY2010: €1.2 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).

Half year results highlights

·; Strong global dairy markets and good demand in key nutritional sectors;

·; Continued strong organic growth in Global Nutritionals supported by product innovation;

·; First time contribution of Bio-Engineered Supplements and Nutrition (BSNâ), acquired in January 2011 in line with expectations;

·; Positive markets and volume growth underpins a good performance by Dairy Ingredients Ireland;

·; Revenue increased 33.2% and operating profit pre exceptional grew 44.2%;

·; EBITA margin pre exceptional grew 50 basis points to 7.6%;

·; Adjusted earnings per share increased 55.3% to 28.91 cents;

·; In process of finalisation and drawdown of US$325 million Private Debt Placement, 10-year senior loan notes with fixed coupon of 5.4%;

·; Dividend per share in respect of the half year increased 10% to 3.33 cents; and

·; Full year outlook upgraded to 18% to 20% expected growth in adjusted earnings per share, on a constant currency basis.

John Moloney, Group Managing Director, said:

"We have had an excellent first half delivering adjusted earnings per share growth of 55%, on a constant currency basis. Global dairy markets were strong as growth in dairy consumption in developing regions underpinned sustained demand and higher prices. US dairy markets were also significantly higher relative to the first half of last year. These positive market conditions underpinned a good performance in Dairy Ingredients Ireland, US Cheese and International Joint Ventures. Our Global Nutritionals' businesses had a very good first half with further growth in demand across all key nutritional markets and product categories.

Glanbia continues to perform well. The overall trading environment remains positive and while global dairy market prices appear to have peaked in the current cycle, indications are for a relatively modest softening in prices for the remainder of the year. Demand-led growth across all product categories in Global Nutritionals is also strong. The calibre of our first half performance, leading market positions and strength of our global portfolio, positions Glanbia strongly for the full year. We are upgrading our 2011 guidance today to 18% to 20% growth in adjusted earnings per share, on a constant currency basis."

For further information contact

2011 half yearly financial report

For the six months ended 2 July 2011

Market commentary

Global dairy markets performed strongly in the first half of 2011, building on a positive 2010 performance. Sustained demand for dairy products from China, the Middle East/North Africa and Russia created a buoyant market and supported higher prices; particularly when coupled with tight global inventories of key dairy products and some milk supply constraints. In the second half there are strong prospects for extra milk supply which will require continued good demand to keep the market in balance. While demand has moderated somewhat recently as supply fears have receded, there is nothing to suggest a fundamental downward shift in underlying demand. The upward trend in global dairy prices appears to have peaked and a modest gradual weakening in prices, which have been at historically high levels, is expected. However, present indications are that there should be no very significant price adjustments in the near-term. As a result, global dairy markets are forecast to be relatively positive for the remainder of the year.

US Cheese & Global Nutritionals

US Cheese: Domestic demand for American cheese across all channels is up year to date. A favourable US dollar exchange rate and market development supported strong growth in export volumes, although cheese exports remain under-developed relative to other dairy categories. The significant cheese price rally that began in early 2011 continued throughout the first half, but the cheese markets did not rise at the same pace as other dairy products such as butter and milk powders. US milk production grew marginally in the first half but it was variable by State. Despite increased milk production in Idaho, milk procurement in the State remained competitive and as a consequence the most significant market issue in the first half and prevailing throughout the second half of the year is the management of milk supply, pricing and cheese stocks.

Global Nutritionals: In the first half, strong global demand for whey continued across all product categories. Whey prices were significantly higher compared to the prior year. The market for value-added whey continues to grow in key segments such as bars, beverages, fresh dairy, performance/sports nutrition and weight management. Similarly the market for customised premixes remains positive with strong growth in the key energy drink sector and product fortification (infant formula, nutrition bars, breakfast cereals and supplements). Market trends experienced during the second half of 2010 across the Performance Nutrition business have continued into the current year. Good demand and a strong innovation pipeline continue to underpin further market growth opportunities with the main challenge being the impact of significant price inflation across key raw material inputs. Demand-led growth in global nutritionals is firmly based on sustainable long-term trends such as an increased focus on health and wellness, healthy active aging, healthier and more nutritious food options, diet/exercise and wellness as well as weight management. Favourable market dynamics are expected to continue in the second half of the year.

Dairy Ireland

Dairy Ingredients: Most of the milk processed into cheese and dairy-based ingredients by Dairy Ingredients is sold into global dairy markets in more than 50 countries world-wide. The strong performance of global dairy markets in the first half was positive for Dairy Ingredients both in terms of sales pricing and volume with 10% milk supply volume growth year-on-year. Market pricing is expected to be moderately weaker in the second half. The strong volume growth experienced in the first six months is expected to reverse in the second half as Irish farmer suppliers respond to EU super levy concerns; leaving volumes broadly flat against 2010 for the full year. A super levy fine is applied to milk suppliers by the EU if milk production exceeds an annual milk quota. The abolition of the quota system is planned for April 2015 and a detailed evaluation is currently underway within Dairy Ingredients to assess the potential of the milk output expansion which can occur when EU milk quotas are eliminated.

Agribusiness: Global dairy markets also indirectly impact the performance of Agribusiness whose core customers are Irish farmers. Demand for Agribusiness key farm inputs was reasonable in the first half of the year, although many farmers are only purchasing for current use as input prices have been higher year-on-year. Volumes are expected to be challenging for the second half as Irish farmer customers reduce output in response to EU super levy concerns.

Consumer Products: The difficulties in the Irish food retail environment have persisted in the first half of 2011. The market size is estimated to be currently only just above 2007 levels and year-on-year real growth is negligible. Approximately one sixth of total purchases made by consumers are on promotion and a focus on price remains the key market dynamic. Consumer confidence is fragile and declined again in recent months as a result of the difficult domestic economic situation. This challenging trading environment is expected to persist in the second half of the year.

Operations review

Glanbia has four business segments: US Cheese & Global Nutritionals, Dairy Ireland, Joint Ventures & Associates and Other Business, which is a very small division representing less than 0.5% of total Group revenue. Commentary in this announcement on the Group's half year results is primarily based on constant currency.

Relevance of 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 the first half of 2011 US dollar profits represented approximately 69% of the Group's earnings before interest, taxation and amortisation (EBITA).

Segmental analysis

Total Group revenue, including Joint Ventures & Associates, increased by 33.4% to €1,636.0 million (HY2010: €1,226.6 million). The largest segment by revenue is Dairy Ireland which represents 43.1% of total Group revenue (HY2010: 44.3%) and 28.8% of total Group EBITA pre exceptional (HY2010: 25.3%). US Cheese & Global Nutritionals contributed 41.2% of total Group revenue (HY2010: 40.0%) and is the largest division by EBITA accounting for 57.9% of total Group EBITA pre exceptional (HY2010: 62.0%). Joint Ventures & Associates amounted to 15.6% of total Group revenue (HY2010: 15.5%) and 13.7% of total Group EBITA pre exceptional (HY2010: 13.1%).

US Cheese & Global Nutritionals

US Cheese: HY2011 performance and FY2011 outlook

US Cheese delivered a solid first half performance. As anticipated, other US dairy product classes continued to outpace cheese prices leading to a more competitive milk supply and pricing environment. As a result production volumes were marginally down. Revenue increased significantly due to higher cheese prices compared with the prior half year. Operating profit and margin also improved mainly reflecting a strong operational performance. The management of milk supply continues to be the key market-related issue for the second half and current expectations are that volumes will decline modestly year-on-year. For the full year US Cheese is expected to deliver a performance that will be broadly in line with 2010.

Global Nutritionals: HY2011 performance and FY2011 outlook

Strong organic volume growth across all key market segments helped to deliver a very good first half performance by Global Nutritionals. Revenue growth in the first six months reflected the positive impact of strong volume performance across the three business units, with growth in all businesses exceeding general market growth rates together with the acquisition of BSNâ in the first half of 2011. Robust demand underpinned by continued product innovation continues to be an underlying positive feature of the business. While revenue and profits improved for Global Nutritionals when compared to the first half of 2010, margin pressure was a feature of the consumer facing elements of the business due to significant price inflation incurred in key raw material inputs.

The integration of BSNâ, acquired in January 2011, is progressing well and has significantly enhanced and extended Glanbia's Performance Nutrition portfolio. In the first half the innovation pipeline has been particularly strong with the relaunch of BSNâ's flagship brand N.O.-XPLODE 2.0 and AMINO Energy from Optimum Nutrition (both pre-training performance and energy products), and Platinum Hydrobuilder from Optimum Nutrition (strength and recovery products). BSNâ's performance has been in line with expectations and results in the first five months reflect significant investment in organisational and product development.

In the second half, the strong structural growth drivers in key nutritional markets are expected to underpin the performance of Global Nutritionals for the full year. Revenue and profits are forecast to show good growth but margins will remain challenged due to ongoing inflationary pressures across key raw material inputs and planned investment in business development.

Dairy Ireland

Dairy Ingredients: HY2011 performance and FY2011 outlook

The improvement in global dairy markets, which commenced with a strong recovery in 2010, continued in the first half of 2011. Dairy Ingredients benefitted from strong global dairy prices, good domestic supply of milk and strong sales volumes. Revenue, operating profit and operating margin improved when compared to the first half of 2010. The trading environment for Dairy Ingredients is expected to soften as a result of an easing of supply fears and modest weakening in demand. In addition, milk supply from the Irish farmer base is expected to contract in the second half in response to quota limitations. These factors will balance a strong first half level of activity. Overall, the performance of Dairy Ingredients is expected to deliver solid revenue, profit and margin growth for the full year.

Consumer Products: HY2011 performance and FY2011 outlook

The Irish food retail market continues to present a very challenging operating environment for food producers and suppliers in particular. Buying power is consolidating as the number of multiples reduces and consumer confidence remains low. Promotional activity and discounting has become a permanent feature of market activity. In the first half of the year this put considerable pressure on Consumer Products and profits and margins declined relative to the first half of 2010. The business responded by introducing new value-added branded milk products and reformulations to attract new customer categories. The acquisition of the Limerick-based liquid milk business of Kerry Group plc was successfully completed in the first half and this has further consolidated Consumer Products' market leading position in branded liquid milk. Consumer Products also continued to rationalise its activities in the first half. This gave rise to an exceptional charge of €8.7 million mainly relating to redundancies. Difficult market conditions are expected to prevail and a year-on-year decline in performance is expected in 2011.

Agribusiness: HY2011 performance and FY2011 outlook

Dairy farm incomes have continued to improve this year as a result of higher global prices for dairy products. However, there are significant cost pressures on primary farm inputs due to higher grain prices and energy costs. This resulted in lower volumes in key product categories of feed and fertiliser in Agribusiness in the first half. Despite this, Agribusiness performed well in the first half largely based on an improved product mix and prudent cost management. This business unit is expected to deliver a reasonable full year result with pricing and product mix driving an improvement in revenue and profits and margins broadly in line with the prior year.

Joint Ventures & Associates

(1) Not included in Group revenue.

Joint Ventures & Associates delivered a significant increase in first half performance relative to the first half of 2010 with the performance of all three key international joint ventures exceeding 2010 levels. Revenue, profits and margins in US based Southwest Cheese reflected the benefit of the capacity expansion commissioned in the first half of 2010 combined with higher cheese and whey markets. Glanbia Cheese in the UK benefitted from good pizza demand across Europe and Nutricima, our consumer dairy products joint venture in Nigeria, delivered another improved operating performance due to volume growth across key product categories.

The Group's share of profit after interest and tax was €9.6 million, up from €5.0 million in the first half of 2010. The following table reconciles operating profit with profit after tax for Joint Ventures & Associates, as reported in the income statement.

Full year results for Joint Ventures & Associates are expected to be ahead of 2010, notwithstanding that some of the increase in first half performance will reverse in the second half as US cheese markets are expected to decline prior to the year-end.

Finance review

Glanbia's financial results are exposed to movements in the euro/US dollar currency exchange rate and the impact this has on 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. The Group's reported results reflect the negative impact of a 6% strengthening of the average euro/US dollar exchange rate relative to the same period in 2010.

Results summary pre exceptional

Group revenue increased by 33.2% to €1,380.5 million (HY2010 €1,036.4 million). Total Group revenue, including share of Joint Ventures and Associates, grew by 33.4% to €1,636.0 million (HY2010: €1,226.6 million). US Cheese & Global Nutritionals delivered a strong performance in the first six months of 2011. Revenue increased 37.4% to €674.0 million (HY2010: €490.6 million). Dairy Ireland also performed strongly in the first half of 2011 relative to the prior year. Revenue grew 30% to €705.6 million (HY2010: €542.9 million). For Joint Ventures & Associates Glanbia's share of revenue grew 34.3% to €255.5 million (HY2010: €190.2 million). Other Business is a very small division representing less than 0.5% the total Group revenue.

Group EBITA pre exceptional increased 42.7% to €105.0 million (HY2010: €73.6 million). Total Group EBITA pre exceptional, including Joint Ventures and Associates, grew 43.6% to €121.6 million (HY2010: €84.7 million). US Cheese & Global Nutritionals EBITA pre exceptional grew 34.1% to €70.4 million (HY2010: €52.5 million), mainly due to growing demand across all key nutritional markets and product categories. Strong commodity prices and higher volumes underpinned a 63.6% increase in EBITA pre exceptional for Dairy Ireland, up €13.6 million to €35.0 million (HY2010: €21.4 million). The Group's share of EBITA pre exceptional from Joint Ventures & Associates grew 49.5% to €16.6 million (HY2010: €11.1 million).

Group EBITA margin pre exceptional grew 50 basis points to 7.6% (HY2010: 7.1%). Total Group EBITA margin pre exceptional, including Joint Ventures and Associates, also grew 50 basis points to 7.4% (HY2010: 6.9%). US Cheese & Global Nutritionals EBITA margin pre exceptional declined 30 basis points to 10.4% (HY2010: 10.7%) as a result of higher raw material input costs and continued people and brand investment by Global Nutritionals. Dairy Ireland EBITA margin pre exceptional grew 110 basis points to 5.0% (HY2010: 3.9%), driven by a strong performance in Dairy Ingredients Ireland partly offset by continued margin erosion in Consumer Products. EBITA margin pre exceptional for Joint Ventures & Associates increased 70 basis points to 6.5% (HY2010: 5.8%).

Group operating profit pre exceptional, including Joint Ventures & Associates, increased by 45.0% to €112.2 million (HY2010: €77.4 million). Group operating margin pre exceptional, including Joint Ventures & Associates, increased 60 basis points to 6.9% (HY2010: 6.3%).

Net financing costs

Financing costs declined €0.6 million to €10.6 million (HY2010: €11.2 million). Rolling 12 month adjusted EBIT to net financing cost interest cover improved to 8.3 times in the first half (HY2010: 6.1 times); rolling 12 month adjusted EBITDA to net debt was 2.5 times (HY2010: 3.0 times). Both the interest cover and EBITDA to net debt calculations are in accordance with the Group's banking covenants. The Group's average interest rate for the half year was 3.9% (HY2010: 4.3%).  

Taxation

The tax charge, pre exceptional items, for the first half of 2011 increased by €5.5 million to €17.1 million (HY2010: €11.6 million) reflecting the Group's improved profitability. The Group's effective tax rate in the first half, excluding Joint Ventures & Associates, was 21% (HY2010: 21%).

Exceptional items

Rationalisation costs of €8.7m, including redundancies related to the integration of the liquid milk business acquired from Kerry Group plc, were incurred by the Consumer Products business within Dairy Ireland.

Earnings per share

Basic earnings per share (EPS), on a reported basis increased 36.1% to 22.38 cents (HY2010: 16.44 cents), reflecting the improved operating performance across the Group and adjusted earnings per share, on a constant currency basis increased 55.3% to 28.91 cents (HY2010: 18.62 cents) driven mainly by the improved organic growth in Global Nutritionals and the benefits of positive global and US dairy markets. Adjusted EPS 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).

Dividend

The Board is recommending a half year dividend of 3.33 cent per share (HY2010: 3.03 cent per share), an increase of 10%. Dividends will be paid on Friday, 14 October 2011 to shareholders on the register of members as at Friday, 2 September 2011. Irish withholding tax will be deducted at the standard rate where appropriate. 

Net debt and cash flow

The Group's net debt position increased by €29.8 million to €569.1 million relative to half year 2010 (HY2010: €539.3 million). Relative to the year ended 1 January 2011, the Group's net debt increased by €161.0 million. This movement in net debt, which is after a favourable foreign exchange movement primarily on US dollar denominated bank debt of €19.4 million, is due to the strong trading performance in the first half represented by EBITDA of €117.0 million, offset by the €116.1 million acquisition spend (primarily BSNâ in January 2011) and an increase in the Group's working capital requirement of €134.3 million arising from annual seasonal factors. The remaining cash outflows for the half year were capital expenditure €20.8 million, interest, tax, net dividends and other payments of €26.2 million.

Financing

The Group has total committed debt facilities of €734.2 million incorporating bank facilities of €670.7 million and €63.5 million cumulative redeemable preference shares. €160.7 million of the bank facilities are renewable in July 2012 and €510.0 million in July 2013. The €63.5 million cumulative redeemable preference shares mature in July 2014. Cash management remains a focus of the Group and as per banking covenants rolling twelve month adjusted EBITDA to net debt improved to 2.5 times (HY2010: 3.0 times). Glanbia is in the process of finalising and drawing down a $325 million Private Debt Placement of 10-year senior loan notes with a fixed coupon of 5.4%. These funds will be used to repay existing bank debt.

Pension

Relative to the first half of 2010, the Group's net pension liability under IAS 19 'Employee benefits', before deferred tax, decreased by €86.4 million to €29.7 million (HY2010: €116.1 million). Relative to the year ended 1 January 2011, the Group's net pension liability decreased by €18.9 million to €29.7 million (FY2010: €48.6 million). This decrease was largely driven by changes in actuarial assumptions used in the discount rates applicable to the Irish schemes, which increased by 50 basis points to 5.9% (FY2010: 5.4%).

As previously advised a strategic review of the Group's pension arrangements was completed during 2009 and 2010 following which the Group revised benefits under the Irish defined benefit pension schemes giving rise to a combined exceptional gain and corresponding reduction in the pension deficit of €110.3 million. The process to effect the benefit reductions involved a funding proposal, including a Section 50 application to the Irish Pensions' Board, the Irish regulatory body. While approval from the Pensions' Board was not a pre requisite to the Group recognising the combined curtailment gain and negative past service cost and associated reduction in pension deficit of €110.3 million, we can advise that the Group received approval for the funding proposal, including a Section 50 application, from the Pensions' Board during the first half of 2011, thus facilitating final implementation of the benefit reductions across the main Irish schemes.

Principal risks and uncertainties in the second half of 2011

The principal risks and uncertainties facing the Group are set out in detail in the 2010 Annual Report at http://www.glanbia.com/annualreport2010. The performance of the Group is influenced by economic growth, global dairy and US cheese markets, and consumer confidence in key markets. Further economic uncertainty or excessive volatility in global dairy prices would represent a material change to the Group's trading environment.

In the second half of 2011, the principal risks and uncertainties affecting the Group's performance are:

·; Any significant or unanticipated change to the supply or demand dynamics in major markets and the influence of such an event on the fundamentals of pricing in global dairy markets;

·; Any potential imbalance in the pricing of dairy product classes on the availability or cost of milk procurement for the US cheese business; and

·; The effect of a further deterioration in consumer confidence on the Irish food retail market.

2011 outlook

Glanbia continues to perform well. The overall trading environment remains positive and while global dairy market prices appear to have peaked in the current cycle, indications are for a relatively modest softening in prices for the remainder of the year. Demand-led growth across all product categories in Global Nutritionals is also strong. The calibre of the Group's first half performance, leading market positions and strength of our global portfolio, positions Glanbia strongly for the full year. 2011 guidance is today being upgraded to 18% to 20% growth in adjusted earnings per share, on a constant currency basis.

Responsibility statement

The Directors are responsible for preparing the half yearly financial report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with IAS 34, Interim Financial Reporting as adopted by the European Union.

The Directors confirm that, to the best of their knowledge:

● The Group Condensed Financial Statements for the half year ended 2 July 2011 have been prepared in accordance with the international accounting standard applicable to interim financial reporting adopted pursuant to the procedure provided for under Article 6 of the Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002;

● The half yearly financial report includes a fair review of the development and performance of the business and the position of the Group;

● The half yearly financial report includes a fair review of the important events that have occurred during the first six months of the financial year, and their impact on the Group Condensed Financial Statements for the half year ended 2 July 2011, and a description of the principal risks and uncertainties for the remaining six months;

● The half yearly financial report includes a fair review of related party transactions that have occurred during the first six months of the current financial year that have materially affected the financial position or the performance of the Group during that period and any changes in the related parties transactions described in the last Annual Report that could have a material effect on the financial position or the performance of the Group in the first six months of the current financial year; and

● The directors of Glanbia plc are listed in the Glanbia plc 2010 Annual Report, with the exception of the following changes in the period: Mr Victor Quinlan, Mr Edward Fitzpatrick, Mr James Gilsenan and Mr Anthony O'Connor retired on 26 May 2011 and Mr William Carroll, Mr David Farrell, Mr Patrick Murphy and Mr Eamon Power were appointed on the same date. A list of current directors is maintained on the Glanbia plc website: www.glanbia.com

On behalf of the Board

John Moloney Siobhán Talbot

Group Managing Director Group Finance Director

24 August 2011

Cautionary Statement

This report 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 report, 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 www.glanbia.com/HYR-Webcast, where the presentation can be also be viewed / downloaded. In addition, a dial-in facility is available using the following numbers:

Ireland: 01 2421074

UK: 01296 480 100

Europe: +44 1296 480 100

US: 1718 354 1175

Passcode: 221803

Condensed inclome statement

For the half year ended 2 July 2011

Condensed statement of comprehensive income

For the half year ended 2 July 2011

Condensed statement of changes in equity

For the half year ended 2 July 2011

Goodwill previously written off amounting to €93.0 million (2010: €93.0 million) is included in opening and closing retained earnings.

Condensed statement of financial position

As at 2 July 2011

Condensed statement of financial position

As at 2 July 2011

Condensed statement of cash flows

For the half year ended 2 July 2011

1 General information

Glanbia plc ("the Company") and its subsidiaries (together "the Group") is a global nutritional solutions and cheese group with its main operations in Ireland, Europe, the USA, Canada, Asia and Nigeria.

The Company is a public limited company incorporated and domiciled in Ireland. The address of its registered office is Glanbia House, Kilkenny, Ireland. The Group is controlled by Glanbia Co-operative Society Limited ("the Society"), which holds 54.5% of the issued share capital of the Company and is the ultimate parent of the Group.

The Company shares are quoted on the Irish and London Stock Exchanges.

2 Basis of preparation

The condensed interim financial statements for the six months ended 2 July 2011 and 3 July 2010 have not been audited by the Group's auditors. The amounts disclosed for the full year ended 1 January 2011 represent an abbreviated version of the Group's financial statements for that year, which received an unqualified audit report. The statutory accounts for the financial year ended 1 January 2011 were approved by the Board of Directors on 1 March 2011 and have been filed with the Companies Registration Office.

The Group's condensed interim financial statements for the six months ended 2 July 2011 have been prepared in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with IAS 34, 'Interim Financial Reporting'. These condensed interim financial statements do not constitute statutory accounts within the meaning of Section 19 of the Companies (Amendment) Act 1986. The condensed interim financial statements should be read in conjunction with the financial statements for the year ended 1 January 2011, which have been prepared in accordance with IFRS.

The Group meets its day-to-day working capital requirements through its bank facilities. The Group's forecasts and projections, taking account of changes in trading performance, show that the Group expects to be able to operate within the level of its current facilities. After making enquiries, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed interim financial statements for the six months ended 2 July 2011.

3 Accounting policies

The methods of computation and accounting policies adopted in the preparation of the Group's condensed interim financial statements are consistent with those applied in the annual report for the year ended 1 January 2011 except for the IFRS' outlined below. The Group's accounting policies are set out in the financial statements in the 2010 Annual Report.

The following standards and interpretations, issued by the International Accounting Standards Board ('IASB') and the International Financial Reporting Interpretations Committee ('IFRIC'), are effective for the Group for the first time in the current financial period and where relevant have been adopted by the Group:

Amendments to IAS 32, 'Financial instruments: presentation', on classification of rights issues

Amendment to IFRS 1, 'First-time adoption', on financial instrument disclosures

IFRIC 19, 'Extinguishing financial liabilities with equity instruments'

Amendment to IAS 24, 'Related party disclosures'

Amendment to IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'

Adoption of the standards and interpretations above had no significant impact on the results or financial position of the Group during the period.

4 Changes in estimates and assumptions

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 1 January 2011, with the exception of changes in estimates outlined in note 8 - exceptional items and note 18 - retirement benefit obligations.

Notes to the condensed financial statements

For the half year ended 2 July 2011

5 Financial risk management

The Group's activities expose it to a variety of financial risks: market risk, (including currency risk, interest rate risk, price risk, liquidity and cash flow risk) and credit risk. The interim condensed financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements in the 2010 Annual Report.

There have been no changes to the risk management procedures or policies since 2010 year end.

Fair value estimation

The fair value of financial instruments traded in active markets (such as available for sale financial assets) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date.

In accordance with IFRS 7 - Financial Instruments: Disclosures, the Group has disclosed the fair value of instruments by the following fair value measurement hierarchy:

·; quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1)

·; inputs, other than quoted prices included in level 1, that are observable for the asset and liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)

·; inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)

The following table presents the Group's assets and liabilities that are measured at fair value at 2 July 2011 and 1 January 2011:

2 July 2011

1 January 2011