Directors' Report: Group performance 8Glanbia plc Annual Report 2011Group Managing Director's reviewwww.glanbia.comGlanbia achieved excellent results in 2011 delivering 26.7% growth in adjusted earnings per share, on a constant currency basis (21.7% on a reported basis).The acquisition and successful integration of BSN® into Performance Nutrition complemented strong organic revenue growth in our three nutritionals businesses. These businesses continue to outpace market growth rates, driven by strong market positions and science based, customer focused innovation. US Cheese's performance benefited from strong operational execution. Positive global dairy markets underpinned a solid performance by Dairy Ireland particularly given the significant challenges in the Consumer Products business, as a result of a very difficult Irish food retailing environment. The Group's key strategic joint ventures also delivered a good result.2011 performance highlights> Total Group revenue, including Joint Ventures & Associates, exceeded ?3 billion for the first time rising 23.7% to ?3.2 billion;> Total Group earnings before interest, tax and amortisation (EBITA) grew 18.2% to ?204.7 million; > Total Group EBITA margin declined 30 basis points to 6.4%, which was a solid outcome given the scale and pace of input cost pressures in Performance Nutrition throughout most of 2011; > Strong organic growth across the business was complemented by the acquisition of BSN®, acquired in January 2011 for $144 million. This has expanded our presence and product range in key nutritional market segments in Performance Nutrition; > During the year, we developed our internal risk management framework further to create clear risk priorities and mitigation plans for each business unit. This positions real ownership of the risk management processes with frontline management in each business unit;> Food safety is a key priority for the Group and this is monitored through a cross-business unit audit approach based on Hazard Analysis and Critical Control Point (HACCP) principles; Group Managing Director's review

Directors' Report: Group performance Glanbia plc Annual Report 2011Group Managing Director's reviewwww.glanbia.com9> Operational excellence is an intrinsic feature of how we run our business and we advanced this further in 2011 with the 'Glanbia Performance System', which seeks to optimise the effectiveness and efficiency of all our operations. These processes, developed centrally, were initially implemented in the US Cheese business and are already delivering real financial benefits and facilitating problem solving; and> Working with a number of parties we are building a new sustainability model for our Irish dairy operations. This has the potential to deliver competitive advantage and to align the business as a key supply partner for leading customers. Glanbia is also a member of the US Dairy Sustainability Committee and our US Cheese and Ingredient Technologies businesses will issue their first Sustainability Report this year. Group strategyGlanbia has invested significant resources to develop and enhance its US Cheese & Global Nutritionals division. Our key strategic investments and acquisitions in these areas have performed very well and underpin our strategic objective of delivering sustainable, profitable earnings growth. Disciplined strategic execution has developed market positions in important markets such as: > Leading US American-style cheddar cheese producer;> Global marketer of whey protein isolate; > Leading brand family in Performance Nutrition; and> Global supplier of micronutrient premixes.Our strategy is consistent and clear. It is set out on page 13 of this review which includes the key focus areas for the business in 2012. Our business models are outlined on pages 14 and 15 and show the integrated nature of the Group, with firm foundations and a long history in the dairy industry.The quality of our people is a core strength. We have further enhanced our capabilities again this year in key markets, including in Asia Pacific and Latin America where a billion new consumers are emerging in these developing economies.Our strategic objectives are to deliver attractive and growing returns to shareholders, excellent solutions and service to our customers, value adding routes to market for our milk suppliers and rewarding careers to our employees.Total Shareholder Return (TSR)In 2011, Glanbia delivered TSR of 27.8% and outperformed the ISEQ, the FTSE 300 Index and the FTSE 300 Food Producers Index. In a period of five years the Group has delivered TSR of 72%. Global dairy markets2011 was a positive year for global dairy markets. 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 risk to forecast 2012 market dynamics is the significant concern around a global economic downturn and the impact this could have at the consumer level. John Moloney / Group Managing Director" The Group's focus on driving growth in nutritionals combined with deep dairy market expertise and strong execution capability, positions us well for the future."An integrated business2011 marked a decade of transformation for Glanbia. This journey has been mapped out with a strategic focus on nutritionals and cheese, as well as an unrelenting focus on growth customers in growth markets.Our strategy is built on a global dairy base and a specialist nutrition business, using advanced dairy and other ingredients. This means we play to our core strengths as an organisation with deep roots in the dairy sector.Our nutritional focus spans sports, fitness and healthy aging. Glanbia's product innovation targets health & wellness, convenience for busy lifestyles and healthy snacking. These 'lifestyle products' have a strong emotional bond for consumers and demand is resilient as a result.Global Nutritionals businessLarge scale dairy business