Directors' Report: Group performance 16Glanbia plc Annual Report 2011Group Finance Director's reviewwww.glanbia.comGlanbia delivered a very good performance with respect to its key performance indicators in 2011. This follows a strong performance in 2010. All KPIs delivered good momentum with the exception of margins, where a 30 basis points reduction in reported EBITA margin resulted from a time lag between rising input costs and price increases implemented in Performance Nutrition within the US Cheese & Global Nutritionals division.The Group's financial flexibility was enhanced by a 33.6% increase in free cash flow to ?87.5 million (2010: ?65.5 million). 2011 year-end net debt: adjusted EBITDA, which is monitored for financing covenants, was 2.1 times (2010: 2.1 times). This was ahead of target and was achieved after adverse currency movements and significant development capital and acquisition spend of ?133.8 million in the year.Return on capital employed grew 50 basis points to 13.3% (2010: 12.8%). RevenueReported Group revenue grew by 23.3% to ?2.7 billion (2010: ?2.2 billion) reflecting continued strong organic growth primarily in Global Nutritionals and the impact of higher global dairy and US Cheese market prices. Total Group revenue, including our share of Joint Ventures & Associates, grew by 23.7% to ?3.2 billion (2010: ?2.6 billion). EBITA & EBITA marginReported Group EBITA grew strongly by 18.4% to ?179.5 million (2010: ?151.6 million). The result includes the first time contribution of BSN®, acquired in January 2011, which is performing in line with expectations. While Group EBITA margin declined by 30 basis points in the year, this was a very solid performance given the scale of the input cost pressures within the Performance Nutrition business. Joint Ventures and AssociatesThe 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 across our key strategic joint ventures. Net financing 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%. Group Finance Director's review

Glanbia plc Annual Report 201117Directors' Report: Group performance Group Finance Director's reviewwww.glanbia.comThe Group's average interest rate for the full year 2011 was 5.0% (2010: 4.2%). 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 for 2012. Taxation The 2011 tax charge pre exceptional increased by 5.9%, ?1.5 million, 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 & As reported - pre exceptional 20112010 ChangeRevenue(1)?2,671.2m?2,166.7m+ 23.3%EBITA ?179.5m?151.6m+ 18.4%EBITA margin 6.7%7.0%- 30 bpsOperating profit ?161.0m?136.5m+ 17.9%Operating margin 6.0%6.3%- 30bpsNet finance cost(?27.9m)(?22.1m)- ?5.8mShare of results of Joint Ventures & Associates(1)?14.3m?10.1m+ 41.6%Income taxes(?27.0m)(?25.5m)- ?1.5mProfit for the year?120.4m?99.0m+ 21.6%Adjusted earnings per share(2)46.32c38.07c+ 21.7%Exceptional items - pre tax(?8.7m)?10.2m- ?18.9mDividend per share in respect of the full year8.27c7.52c+ 10%On a constant currency basis - pre exceptional20112010 ChangeRevenue(1)?2,734.7m?2,166.7m+ 26.2%EBITA ?186.1m?151.6m+ 22.8%Adjusted earnings per share(2)48.22c38.07c+ 26.7%(1) Total Group revenue, including Glanbia's share of the revenue of Joint Ventures & Associates, was ?3.2 billion for the year, ?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.(2) 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).2011 results Siobhán Talbot / Group Finance Director" Glanbia delivered another year of strong profitable growth within a robust financial and risk framework."