NESTLÉ S.A. 2010 FULL YEAR RESULTS LONDON ROADSHOW TRANSCRIPT

Conference Date: 22 February 2011

Chairperson: Mr Paul Bulcke Chief Executive Officer Nestlé S.A.

Mr James Singh Chief Financial Officer Nestlé S.A.

Mr Roddy Child-Villiers Head of Investor Relations Nestlé S.A.

Disclaimer This transcript might not reflect absolutely all exact words of the audio version. This transcript contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

Mr Roddy Child-Villiers, Nestlé SA, Head of Investor Relations

Title Nestlé 2010 Full Year Results

Good morning everybody and welcome to the Nestlé Full Year Results Roadshow. Before we start I'd just like to introduce a couple of guest that we have with us, Paul Grimwood and Liz Legge who are the CEO and CFO of Nestlé UK. And I can't see him, but also Hermann Wirz, who is in charge of our actuals, or our reporting - closing the books who has come to see and hear the output of his input so to speak. And also at the very back Ian Metcalfe who just joined my team recently, who some of you will have long chats with about your consensus numbers recently. He's also here as well.

Slide 1 Disclaimer

As usual we will take the disclaimer as read, and the plan, the agenda for today is for Jim to start and take you through the net-net change of our reporting and then to hand over to Paul to talk a bit about generating demand and how we're going to do it in the current environment and also about the raw material situation and what we're doing to manage that effectively. So without further ado I'll pass it over to Jim. James Singh, Nestlé SA, Chief Financial Officer

Slide 2 The Reference for Financial Performance (Title slide)

Thank you Roddy and good morning to you all.

Slide 3 Agenda

First I'd like to spend a couple of minutes this morning just to revisit some of the highlights of our 2010 performance and then spend most of the time to talk about changes to Nestlé financial reporting, effective January 1 2011. I think what is perhaps more important is the strategic rationale for these changes and the related consequences for reporting in the future. The restatement of 2010 financials will give you a view of the scope and impact of these changes that have been approved by our board.

Slide 4 2010 Highlights

I think now the highlights for 2010. You've seen these numbers before, but I think we need to remind ourselves that what we achieved in 2010 was a solid performance on all key metrics by remaining organisationally aligned, strategically coherent and executing with focus and discipline within a total performance framework. The company continues to reinforce its market leadership in all channels, measured and unmeasured and over achieve its savings target of 1.5 billion CHF, making meaningful progress year after year, the Nestlé Model. I think just quickly at the numbers, for the Group in total, the Group achieved 110 billion CHF and organic growth of 6.2% and with a negative effect on foreign currency translations of 3.6%. Net profit was a historic 34.2 billion, enabled both by the performance of the business and of course the gain on the sale of the last tranche of the Alcon disposal process. However, the underlying earnings per share at 3.32 CHF per share was 7.4% on a reported

basis, or more than 10 basis points - sorry 10 basis points improvement in constant currency. The dividend at 1.85 CHF was 15.6% increased over last year and will amount to 6.1 billion CHF. I think the continuing operations we achieved 105 billion CHF, 6% organic growth, and there again we had a negative foreign exchange impact of 3.8%. Now, the EBIT also at 14 billion CHF for the continuing business was 13.4% or 30 basis points ahead of last year. Our net trade working capital continues to trend down relative to our sales and at the end of last year it was 7.5% or 40 basis point improvement.

Slide 5 Nestlé’s Total Performance Framework

I think what is important also is to note that consistently we have delivered within the total performance framework, and the pillars of which are achieving simplicity, investment for growth, leveraging our size and scale to become more efficient and effective and thereby provide a constant improvement on a sustainable basis for returns that allow us to continue to invest and to provide attractive returns for our shareholders. So essentially achieving simplicity over the last three years we have reduced, or rationalised 35% of our SKUs, similarly 25% of our legal entities around the world. And in doing so we continue to keep our portfolio healthy by divesting of lower margins, or non-strategic businesses. Our investment for growth, under this capture we invested nearly 4.6% of net proceeds of sales as reported last year and via our investment in R&D, our innovation and renovation pipelines contributed 80 basis point of real internal growth in 2010. We continue to invest heavily in consumer facing marketing, which was up 13% in constant currency. And on the M&A front slightly larger than previous years, 5.6 billion, both in emerging markets and developed markets. We continued to leverage size, to create scale, GLOBE is the capability, GNBS (Global Nestlé Business Services) is the aggregator organisation for back office support services and our NCE (Nestlé Continuous Excellence) programme is a programme designed to guide the mindset of the company towards a zero waste environment. And as you have seen we have continued to improved performance, providing resources for the future investment in the company and deliver attractive shareholder returns.

Slide 6 Outperformance is the keystone of our ambition

So that's more or less a quick summary of our achievements last year. And now I'd like to go to the second part of my discussion, or my presentation this morning. And I'd like to start with the roadmap, which you have seen before. This roadmap has remained consistent for a number of years now, that consistency has enabled us to create a strong sense of alignment across all our businesses. Paul will speak to you later about the roadmap and how it's used to make progress in our company.

Slide 7 Industry reference for financial performance

But what I would like to focus on is our ambitions, especially one of our ambitions in particular. And that ambition is to become the industry reference for financial performance. This is also

tied to trust and trust is the third ambition that you have not seen in the circle, but it is one of our ambitions that we as a company should be trusted by all stakeholders.

Slide 8 Being the reference for financial performance requires....

What do we mean by being a reference for financial performance? I think it means consistent delivery, top and bottom line, high quality results, consistent peer outperformance, financial performance aligned with strategy, credibility and trust and to ensure that we manage the company coherent with our strategies. Balance sheet management for long term shareholder benefit, competitive shareholder returns and transparency and comparability of our performance. I think first of all in order to achieve this ambition we must deliver year after year and sustainably over a long period of time. But we also must make changes in the way we report to facilitate greater comparison to our peers.

Slide 9 Reporting transparency & comparability

What are we changing? Well on November the 19th last year after the board meeting, we announced a change to net-net sales. But we're also taking the opportunity to move from EBIT to a concept which we referred to as trading operating profit. And these changes will have an impact on our segment reporting, because they are also changes within the organisation.

Slide 10 Change to Net-Net sales recognition

Now, the net proceeds of sales which have been modified to now net-net sales, essentially what has happened here is that we have reduced what we call net proceeds of sales by all expenses, allowances and incentives relating to our general terms and condition of sale to our trade partners. We've been very transparent in terms of what is potentially the effect of this and in the past we've guided you to perhaps a 15% reduction in our top line and also importantly an improvement in the reported percentage of sales, increasing by 200 basis points. This is a major change in the organisation, it took us two years to implement this, it was about three years ago we had GLOBE fully implemented in about 90% of our business across the world and therefore providing us the capability and the opportunity to start working on this change. But the change is more than an accounting change, we also had to train 160,000 people across the organisation that are involved either in sales and marketing, supply chain and in finance. We had some programming changes and we had to reform reports and also redesign some KPIs to drive the right behaviour in our company. Whatever we did in the past and whatever we did today are IFRS compliant. As a matter of fact IAS 18 allows a range of treatments and not only the net-net sales model is compliant, but also the structure of the P&L, which I'll talk a little more about, is also IFRS compliant.

Slide 11 From EBIT to Trading Operating Profit

Now, as we contemplated the changes I said to net-net sales we also look at an opportunity to look at the rest of the structure of our profit and loss statement. We recognise that our definition of EBIT was not comparable to our peers. And therefore we must move to adapt

our current reporting with respect to the EBIT. The challenge was to find, or to determine an income level that in fact would be motivational and consequent to our people, in terms of how we measure performance in the future. We finally decided on the concept of trading operating profit, because we recognise that certain expenses do create a future benefit to the operations and our commercial managers around the world are very much involved in some decisions that affect other expenses that we had previously put below EBIT. So the EBIT will no longer be reported, we will change to trade operating profit. The trading operating profit is struck after deducting the normal deductions to arrive at EBIT, which is cost of goods, distribution, marketing and admin, R&D, but also now we will reduce that level of profitability, or contribution to profit by restructuring charges, impairment of assets and results of disposal of assets. Then we have operating profit which is calculating then deducting the impairment of goodwill and some other expenses that are not necessarily controllable by the operations. We maintain earnings per share as we're required to, but we also have underlying earnings per share which we'll maintain in the future. There will be no changes to these calculations. I think the net-net sales and trading operating profit align us more with the reporting by our peers and therefore enables better comparison.

Slide 12 Consolidated Income Statement

Now let's look at the structure of the P&L, I know this is a bit of a tall order, but it's in your book. If you look we have sales, now move to net-net sales, then we have trading operating profit, we no longer have EBIT and then we have operating profit and then the rest follows as usual. But I think it's important when you look at the trading operating profit, the margin on the continuing business is now 14.4% compared to 13.4% on the old EBIT as we had reported just now and as you've seen in the past. And then for the total Group 16% margin at trading operating profit. So that's more or less the structure of the P&L going forward.

Slide 13 Full Year 2010 Trading Operating Profit

Now when you look at it in a little bit more detail what has changed? First of all at the net-net sales level the revenue reported will be about 16.7 billion CHF less. Well where did that come from? First of all we have established a line called other revenue which is essentially the revenue we earn from licensing Nestlé brands to third parties around the world. But also from distribution, 432 million, but from marketing and admin more than 16 billion of expenses have now been reclassified. Now I must tell you that this is a reporting change, this is by no means any less emphasis on the 16.7 billion that we spent in 2010. As a matter of fact our marketing controllership position in our company has become a lot more important because these are the folks who will have to make sure that we do get value for money for our spending, whether it's reported in gross proceeds of sales, or net proceeds of sale, or net-net proceeds of sale. And as you have seen the EBIT no longer exists and the operating income will be after other expenses. So somewhere between operating income and the old EBIT we have restructured the P&L and we have created trading and operating profit.

Slide 14 Agenda (recap)

Now, let's look at what this means for segment reporting.

Slide 15 Segment reporting changes from 1/01/11

First of all when you look at the operating segments, that's basically the management responsibility, there is no change to the Zones or to Nestlé Water. The Other Food and Beverage becomes Other. Healthcare and Nutrition, which was previously part of the management responsibility of Nutrition, has been transferred into the newly created Nestlé Health Science. And therefore Nestlé Health Science will now move into the Other category. Galderma and Laboratoire Innéov will move to other and therefore you will no longer see a Food and Beverage. What we will report on is Nestlé the Group, 99% of which is - you know the old Food and Beverage business that we've referred to in the past. And the Pharma category will be discontinued. On the product group side, which is now the category, how we report by category across management responsibilities and channels will have a product category called Nestlé Nutrition and Healthcare. And that will include the traditional Nestlé Nutrition, plus Nestlé Health Science and plus our share of the revenues from Galderma and Innéov.

Slide 16 Full Year 2010, Operating Segments

Now when we look in terms of what you'll see, in the operating segment, if you look in the yellow box, Nestlé Nutrition goes down to 7.7 billion on a net-net basis, but the Other goes up to 12.4 billion. And that's the major change, but in Others now we have our share of Galderma and Innéov.

Slide 17 Full Year 2010, Products

Now when you look at the product category Nutrition we have added Nestlé Health Sciences and our share of Galderma and Innéov. So those are the major changes from - product segments and management reporting segments.

Slide 18 Agenda (recap)

Now let's look at what this means in terms of the relative weighting of the business as we go forward.

Slide 19 Relative weighting of businesses

First of all Zone Americas remain one third of the business, 33% in terms of sales. AOA is getting pretty close to Zone Europe in terms of sales. And Others now become nearly 14% of our sales. When you look at Powdered and Liquid Beverages, Milk and Ice Cream and Prepared Dishes they remain significant parts of our business and with a growing importance of PetCare and Nutrition. In terms of relative profitability you could see that the landscape of our portfolio in fact

delivers very attractive profiles. In Nestlé Water that is in the single digit, that continues to improve, you see the improvement at EBIT last year of nearly 40 basis points. Now, these changes hopefully will highlight the importance of both the developed markets and the emerging markets and now the emerging markets will be approaching 40% of our total sales when we look at it on a net-net sales basis.

Slide 20 Agenda (recap)

Now let's look at the Nestlé Model, what does this mean for the Nestlé Model?

Slide 21 Enhancing the Nestlé Model

Well even in the current difficult business environment which we have seen over the last three years and continues this year and even more so this year with significant volatility in input costs and currencies, Nestlé has sought to and delivered stable and sustainable improving performance. And this has not only happened over the last two or three years, this is a pattern that has been there for many years now, more than a decade. The Nestlé Model, forces us to combine strategy, focus and excellence in execution to make progress, to advance the company strategically and to create value for society and for our shareholders. We have reaffirmed in our last series of communication, our commitment to delivering the Nestlé Model, which is long term oriented, therefore the model itself must be valid, at least for the next decade. We have enhanced the Nestlé Model, first of all by maintaining the organic growth of 5 to 6%. There's no doubt that Alcon has helped Nestlé over the years, but I must say Nestlé on its own, excluding Alcon has been growing at the 5 to 6% level year after year on an average over the last decade. Now we have dropped the improvement in EBIT margin and the commitment is to annual improvement in trading operating profit margin in constant currencies. And we have added an annual improvement in underlying earnings per share in constant currency, and an improvement in capital efficiency. We have enhanced the model, now including trading operating profit and underlying earnings per share, in order to ensure the sustainability of our improving performance. That's the Nestlé Model. And as I said and I need to repeat, we have maintained our organic growth target of 5 to 6% in the longer term.

Slide 22 Agenda (recap)

This is what we believe will help us drive our ambition; will help us achieve our ambition over time.

Slide 23 Driving our ambition...to be the reference for financial performance

Therefore the Nestlé Model has become a tougher benchmark in our opinion. We're reinforcing accountability for other expenses that were once below EBIT. And the underlying focus, or the focus, ongoing focus on underlying earnings per share will ensure that the underlying performance of the business continues in the long term. And therefore the move to net-net sales and all these other changes we have made will enable the comparison of our performance versus our peers.

Slide 24 Being the reference for financial performance requires...

When we can do this we will become the reference for financial performance, as a matter of fact when you look at our 2010 numbers there's no doubt that our performance represents an outperformance in our industry. Being the reference for financial performance as we said means consistent delivery top and bottom line. High quality results, continuing peer outperformance, financial performance aligned with strategy, ensuring credibility and trust and solid balance sheet management for the long term. And providing competitive returns to our shareholders, transparency and comparability of our performance. We're setting the benchmarks high for the next decade. And as we continue to deliver against the Nestlé Model we will become the reference for financial performance. Thank you. Slides 25-30 Are appendix slides with no speech attached Paul Bulcke, Nestlé SA, Chief Executive Officer

Slide 31 Title Slide

Well thank you Jim and good morning everyone here present and also following us by the webcast. I know that you'll welcome the change to net-net reporting, for the increased comparability, but also I welcome the change to net-net reporting because it gives us the opportunity to sharpen the internal targets. Also it gives the opportunity to really enhance the Nestlé Model and brings an easier comparison with our peers, because we increasingly are talking internally about outperforming - and creating gaps, that's something I shared with you a few years ago. Now going to 2011, it's full of challenges. I was standing in front of you a year ago and we were talking about 2010 being full of challenges, and yes indeed every year has its challenges. Actually the nice thing about challenges is that if a company defines the competitive advantages well, it is in challenging times that competitive advantages are really leveraged. In my presentation I want to walk you through two specific topics; Consumer demand in a two-speed world and how that is challenged in certain parts of the world and the second part is the raw material cost price pressure that is quite an issue for 2011.

Slide 32 Agenda

So my agenda is built around this, I'm going to give you my view on 2010 and 2011 very briefly. Then to look at the two specific topics that we feel are inviting us to have a very effective response. And the first one as you see is this consumer demand in a two speed world. The developed world and how we see that subdued and yet lots of opportunities. And the developing world, that is growing very interestingly last year, how is that going to continue, how can we build and organise around these opportunities in a more effective way. And then the second one, the raw materials, definitely something that is seen as a challenge, the costs linked with that and how we go holistically about this to see how we answer that.

Slide 33 Overview: Nestlé in 2010

The first part then is 2010. A year ago I was standing in front of you and we spoke about how in the last quarter of 2009 we saw increased momentum coming - in growth and bottom line, and how we felt that that momentum had to be continued and how we were putting the

resources behind our operations so that we continued having that momentum also in 2010. Well now I'm standing again in front of you and we feel, again last trimester and in every trimester of last year we had good momentum. And the comparison base of 2009 was a hard comparison base for the last part of 2010 and yet we could deliver again good growth figures and also good EBIT margins. As a whole 2010 has been a good year, with strong performance on all matrixes, top and bottom line. We’re working on maintaining that momentum of growth and margin enhancing activities in 2011. And at the same time we have invested heavily behind our platforms and capabilities to continue that momentum; in our brands, in new products - we have an accelerated rate of innovation in our company, in capabilities with R&D creating innovation renovation and the new technologies for the platforms of tomorrow and in capacity, because growth, especially in the developing markets, comes with quite a lot of investment for capacity. Also in the capital expenditure and M&A activities, which overall in the last year amounted to 10 billion of investment. So in other words we have been preconditioning and investing to keep that momentum going in 2011. Also, we laid the foundations last year to build platforms for the future where we see promising opportunities, with the Nestlé Health Science company where we brought together the Healthcare business, from Nutrition, and the Health Science Institute. And at the same time we have also returned over 15 billion to the shareholders in dividends and share buybacks. So I would say 2010 was a challenging year and yet it has resulted in a very positive and constructive year for Nestlé and also for the shareholders.

Slide 34 ....and into 2011

Now we're looking forward to 2011, in spite of the challenges, with a serene sense of confidence. As I have mentioned, the last quarter of last year confirmed the momentum we felt a year ago, so we have exactly the same dynamics going into 2011. I feel we have invested and we are well positioned to manage the challenges, and I will walk you through two of these as I already mentioned, and we feel we can commit ourselves internally to continuing to deliver the Nestlé Model also in 2011. That is defined by 5 to 6% organic growth and also margin improvement.

Slide 35 Agenda (recap)

Now let me walk you through the first of the two issues I mentioned. Consumer demand. We want to grow and we want to grow worldwide, we have been saying that we are an ‘And’ Company, top and bottom line of growth, in the developed market and in the developing market, not only going where the apparent growth is. So let me see how we see the driver of consumer demand and how we want to go about generating demand and how we want to continuing driving that with initiative and owning our own destiny.

Slide 36 Nestlé categories offer potential for growth

First of all we are working and we are driving our growth in categories that, as a category, have growth worldwide. You see here the Euromonitor forecast for all the different categories that we're working in. And you see that the average category growth projected in general is mid single digit. So our business is in categories that offer growth. And there we

want to outperform, to grow above this category growth.

Slide 37 Outperformance is the keystone of our ambition

You see also the Nestlé Roadmap is totally aligned with these categories, as you know the roadmap defines very clearly what we want to be as a company- Nutrition, Health and Wellness and also what we want to leverage, which is our competitive advantages. But also it defines very clearly where we want to grow. And that defines the priorities of growth, what the whole organisation is really geared to and that is nutrition and the Nutrition, Health and Wellness agenda. You saw the categories that are growing fastest are the categories where more Nutrition, Health and Wellness arguments are built in. There is also a defined priority for the emerging consumers with the PPPs (Popularly positioned products) and there again we see higher growth. Out-of-home consumption, subdued because of the crisis in the developed world, is coming back and is showing very promising growth figures again. Then there are premium and super premium products, something that we see with higher than average growth potential.

Slide 38 Nestlé has outperformed its competition

Now we have said we are working in categories that are growing and we want to outperform. And we have now a measurement, we're really focusing on measuring ourselves and our performance versus the market. You see here how we are performing versus the general average market. We are measuring countries and categories and we have close to 300 categories and markets - or countries, that we are measuring overall. So for example Nescafé in a country is a cell that we measure. If we add it all up and do a weighted average you get a feel of how we are doing. So that is managed country by country, but overall we can pull that all together. You see here that in 70% of all the cells that we measure and there are many of them, we are outperforming the competition. And you have seen the acceleration because we are starting really to focus on how we are gaining market share overall in the market. That is actually only the measured channels, as you know we are re-engaging and engaging with the unmeasured channels like the Mom and Pop stores, so that figure, if we were able to measure all channels, is actually even better. So we are working and growing categories. We have focused, profiled and aligned our internal agenda, the roadmap, with these categories and picked up the categories that are growing faster and we want to outperform in these categories. It's definitely creating a strong alignment in our company to go after these opportunities.

Slide 39 Nestlé in developed markets

Now we have a two speed world, the developed markets have other dynamics of growth than the developing markets and you have to gear your organisation and your activities towards these opportunities in a different way. Let me walk you through a few examples to give you a feel of how we see going and organising around these opportunities. First, let's go to the developed markets. The consumer demand in the developed markets is subdued and it's clear in Europe with the debt crisis and so on, and that there is a feeling that somehow that is going to be paid by consumer demand, while Nestlé is quite strong and present there. We make 70 billion of our turnover in the developed markets. And yet at the same time last year, which was seen as one of the difficult years - there was 3.3% organic growth in the developed markets.

We have 135,000 employees there, so we have a really big part of our company - physical part of our company present in the developed world. We've 233 factories, slightly more than 50%. We have a very strong presence of R&D, but you're going to see also in the developing world we are engaging more deeply in R&D too. And we are investing with confidence, investing heavily in the developed world because we see lots of opportunities there.

Slide 40 Europe: the market realities

Let me take you through Europe, the macroeconomic and demographics of Europe don't look at first sight very compelling. You see the population apparently shrinking; private label is strongly present there and is really driving some of the dynamics, although that has started to slow down dramatically lately. So apparently there is no natural growth in Europe and yet at the same time if you analyse very closely it's full of opportunities. If you just think about the birth rates, in certain countries they are going up. You see the aging population and all that represents of value creation potential on a nutritional level. You see the importance of health which is really going to be one of the biggest priorities, and that's why we have Health Science coming. It's definitely something that is promising if you really gear your portfolios and your offering towards that.

Slide 41 F&B spend: av 13.1% EU household income

Actually I have a redefinition, to a certain extent caused by the crisis - redefinition of what is actually quality of life . In Europe the food and beverage part of the family budgets has been going down for many years, just after the World War it started to go down, to be more or less 13% on average. In certain countries that goes down to 7 or 8% and in other countries up to 15 to 17% but it has been going down year after year. Yet now you a little bit of spice coming back, so that food and beverage starts to be again something that people want to consciously go after and to build as part of their quality of life. A small increase in spend in food and beverages in the family budgets can make a big difference. And that's something that we, together with retailers, are starting to work on. So we can make that category relevant again in people's lives in Europe. In the USA it's even lower, 10.2% [of household budget] is linked with food and beverage. So if we can only have 1% by creating new offerings in this category you actually grow the whole category 10% and that's possible. So also you see there that the raw materials impact is not really eating away a huge amount of family budget. These are certain dimensions and trends that just make us feel that we can make food and beverage, quality food and beverage an important part, or an increasing part of family budgets again. Specifically part of quality of life in Europe.

Slide 42 Europe: outperformance is key to growth

Now how do we go about this? Europe has been growing very nicely, also margin improvement, so 2010 has been a very successful year. This is thanks to a virtuous circle of growth as Laurent Freixe, our responsible for Zone Europe, calls it which starts actually with growth. Because growth gives you scale, scale gives you the possibility of going after efficiencies and that is then generating the funds. So the efficiency drive in Europe is funding the investments in our innovation renovation platform. We have increased quite dramatically our consumer facing support behind our

brands and innovations in Europe and that has given us this market initiative that drives profitable growth. That generates, through efficiencies and scale, the resources to invest behind innovation renovation and the circle goes on. That is a circle that is very much linked with execution behind good ideas. And we have quite a few good platforms of innovation renovation, that is very motivating.

Slide 43 Europe: outperformance is key to growth Innovation & renovation

You see here three product platforms that are being rolled out in Europe. We didn't have these three platforms four years ago. And today, in Europe alone they are already over 600 million sales equivalent and growing more than double digit. You see first our Nescafé Dolce Gusto, we had the pleasure of commenting already last year on Dolce Gusto and how strongly that was part of growth. Well it is still going on. Last year alone in Europe we have sold two million Dolce Gusto machines. These are major platforms that are really relevant for future growth, in an area in the world where growth is not easy to find, yet this is premium and it creates a lot of opportunities for the future still. Then you see also this Juicy Roasting, which is actually a PPP that started in Russia, which is rolled out all over Western Europe. This is a new way of cooking in the oven - of basic raw materials like chicken, to make an excellent meal for the family, linking in to bringing good eating as part of people's family happiness. It's definitely something that is working here. So that is a good example of the PPP growth priority we have also playing into the developed world. Then you see also the Nescafé Green Blend. Nescafé is a category that has been around many years and yet you can bring new ideas into a category that is there and established and rejuvenate the whole offering. And that's growing very nicely. It is also playing into the agenda of Nutrition, Health and Wellness as this Green Blend is giving more antioxidants and gives you an excellent cup of coffee.

Slide 44 Innovation in Europe

Speaking about new platforms coming into Europe, and in the developed world, is our innovation of the Special T, a machine system that takes the best out of the best of teas and give you the best cup of tea that you can imagine. That's just starting, we have been rolling it out for a few months now in France and it's going very well. Next is Switzerland and we're going to gear our resources so that we can roll that out in an accelerated way. You have Nespresso, a good success story and bringing innovation and new offerings of machines and capsules with the Nespresso Pixie which takes up a smaller space in the kitchen. Also Viaggi Out-of-Home, this is a super premium vending machine that brings you a combination of beverages, hot or cold beverages of the highest quality, which we have been working on for the last two years is rolling out now in Europe and the rest of the world. And that's going to be an amazing strong platform for the future for our Out of Home priority. You see Nestlé Nutrition with three new products geared towards elderly people or infants, that gives us proprietary competitive advantages.

Slide 45 Europe: outperformance is key to growth Nestlé is consistently growing faster than its categories

So in Europe you see these green bars and blue bars [on the chart], the green bars are how

we, Nestlé, are growing with our major customers. And then you see the blue bars which is the category in these customers and how it grows. So first of all you see quite interesting growth of these categories with the customers and yet we are growing even faster in these categories, which is what customers want and like to have. It is somebody who drives the category faster than the market and also that they are growing their brand faster than actually the category in their stores, because that means the traction comes from our brands and our brands normally leave them quite interesting margins. So in other words it's like winning with the winners, or creating a win-win situation with our customers. And that is driven with all that I mentioned before; it is driven with innovation renovation.

Slide 46 Europe: outperformance is key to growth To outperform we need to create value

So in Europe it's clear, outperformance is key for our growth. If we want to have the developed markets being accretive to our Nestlé Model we have to outgrow the global market, and that is really based on creativity and initiative. So it is to go and see the specific needs of groups of consumers and to gear the whole innovation renovation around this. It is also to create added value on top of raw materials and that is linked with the many systems and added value arguments that we build into our product portfolio. That is something that we have been doing for many years now to bring added value - that is connected with raw material, but it's more linked with science nutrition systems and services into our product portfolio. And by doing that you're gaining market share because you're more relevant towards the consumer. Europe, the United States, the developed world definitely is a platform, if we organise well around value creation we can outperform dramatically the markets and that has been proven last year. We feel we can continue proving that in the years to come. The developed markets are a very big base of our business and are driving and being part of the Nestlé Model in a definite way. So we are focusing on the developed market just as we are focusing on the emerging markets.

Slide 47 Nestlé in emerging markets

The emerging markets where we do close to 40 billion of sales now, we had last year a double digit 11.5% organic growth in the developing markets. We have a few countries starting to be really sizable markets for Nestlé where we can really have interesting scales and bring in efficiency drives. 146,000 employees so a long standing commitment to executional capabilities, 210 - close to half of our factories are there and the new investments are coming in developing markets. You see also six R&D centres now. A few years ago we didn't have them, or not that number. So we're investing in bringing R&D capabilities, because you can think best about Chinese eating habits in China. It's hard to do that on Lake Geneva. So we are really building the capabilities there because we see more innovation coming out of these markets that is very interesting, compelling and relevant not only for these markets, but also having some impact and ideas that can be used in the developed markets. And you see that we are investing also heavily in our capabilities, assets - factories, distribution and logistics capabilities in these countries.

Slide 48 AOA: the market realities

Now let me walk you through as an example AOA, our Asia Oceania and African Zone, to see some realities. First of all the population, 76% of the world population is in AOA. Also it is a young population because many of the babies born in the world are there. You have the big urbanisation going on, with the problems and opportunities that it brings with it. You see Asia is really thriving, it is now 34% of global GDP and that's growing very fast. Just think about China, how that is growing fast. You see China, the second largest economy and in a few years time, it looks like – all things being equal, that it is going to be the biggest economy in the world, again. So back to what it was before. And you just see the dynamics. In a nutshell what we see is the developing markets are developing. And that's a fact that you sometimes feel the Western world is still coping with, what does it mean? Does it meaning stepping in our footsteps and trying to catch up? No, it is going to be a development that will be different in style. It's going to be a development that is linked with internal markets and doing it on their own terms. You see how China goes about growth, and also Brazil, they create their own growth now and that's the huge opportunity for Nestlé.

Slide 49 AOA: expanding presence is key to winning

In that sense I would say Nestlé has some competitive advantages that are just geared towards that opportunity. And I want to share with you a few facts of how we go about that. You see here again a virtuous circle and you see this circle is inspired by the same dynamics, yet there are different elements to that. You see again, operational efficiency that's something that is underlying because that is a direct impact of growth as efficiency, scale and how you leverage your size into scale and competitive advantage. That brings you some differentials and money to invest in your brands, in your operations. Also you see the very important part of PPP to answer the dimension of a lower income base, or the one billion new consumers that are coming into the cash economy. You answer that with a profiled portfolio that responds to their capabilities, possibilities and their needs. It is clear that PPP and the developing world has a much deeper distribution. So the capillary distribution, how you go about delivering these products in infrastructures which are quite different and different from country to country, requires investing, quite dramatically. And not only investment in physical capabilities, but also having the people, structures and organisations to handle that capillary distribution, Mom and Pop stores and so on. We're actually looking to drive that even faster, we have been doing that for the last ten years and continue doing that. Then also the whole challenge of logistics, these countries they don't have the highways, infrastructure or the organisational structures from governments. That is still in the making and how you handle and work in an environment like that is totally different. The capabilities of understanding and being effective in these environments is key and that's something that we are investing in also.

Slide 50 AOA: expanding presence is key to winning

I want to share a few perspectives on that through the next slide. The key of success that allow us to leverage even more our competitive advantages. And one of our competitive advantages is our brand and product portfolios that we have had in these countries for many, many years. So we have already many, many years of links with these consumers through

our brands. So we have an amazingly strong platform of emotional balance with all these consumers that we can leverage. But also, linked with years of experience in these markets, we have the people, who have been living there, who have an understanding of the idiosyncrasies of these countries. So that can really leverage this growth opportunity in a much more efficient and effective way than if we were just going there now for the first time. The PPP concept is something that is not new, we have been talking about PPP in Nestlé for 20 years, but it is actually reaching now full potential. We have the initiatives and we are now starting to measure PPP, although we had it for 20 years, we're really measuring in recent years now how specific initiatives, that are successful, are rolled out in different markets. We have initiatives that we are measuring in 90 countries that is now 11 billion equivalent and is showing double digit growth. You see also how we use the brands that have been present for many years in these markets and we widen them to go from premium, super premium, to PPP so that we don't have to disconnect the branding from these initiatives. We have been working with reformulating with local ingredients to give a better, effective cost base. That's why we have some R&D capabilities in these countries, as in Abidjan for example, to work on how we reformulate, because there is one basic underlying principal and that is that the developing world is developing on their own terms. And also you see the product categories, the product portfolios, the nutrition definition is different country by country. It is not any more the Western style brought in and adapted only on marginal dimensions. It is really redefining the whole dynamics of product portfolio, nutrition definition, logistics - the business models are evolving dramatically. You have to have more flexible production capabilities; we call it finishing factories which are lighter in structure, more flexible, closer to the consumer. These are all new ways, new dimensions that are coming in.

Slide 51 AOA: expanding presence is key to winning

What you see here is our investment - and these are only the investments in bricks and mortar, these investments are accelerating dramatically in the developing world. It is growing fast, you have to build the capabilities of producing the products there and you see how that is growing very interestingly.

Slide 52 AOA: expanding presence is key to winning To win we need....

In other words in AOA, and in all the developing markets, we have to build capabilities and we have been doing that for many years. So we have the platforms already and we are widening it more to go after these opportunities. The developing markets are also linked into our Nestlé Continuous Excellence. The external environment is not inducing that efficiency, so if you drive it, even though the environment is not inducing it, actually you create stronger competitive advantages. Also the human capabilities and that is one of the most important investments that we have been making over many years that is giving us this drive and this competitive advantage. It's to have the people who really understand these countries, who can be effective.

For example in Egypt during the turmoil, our factories didn't stop. The operators actually went to the factories to defend our assets so that they could go again on Monday to work. We didn't have strikes after the change of government. That is the involvement, that is the commitment, that is the leadership of our people in these countries and that is giving us quite an interesting competitive edge. And that is what we want to continue investing in. We are truly a multinational company, you just think about the 95 nationalities that we have in our headquarters managing this company, understanding and coming from all angles of society and countries, that is a good combination to really manage the many different opportunities in the world.

Slide 53 Agenda (recap)

So to conclude on consumer demand, I wanted to share with you the feeling that Nestlé is really gearing the appropriate strategies to drive growth and market share in categories that are growing in the world in general, and to outperform the category growth. And do to that in a differentiated way, linked with the same roadmap but executed in a different way and adapted to the realities of the developed markets and the developing markets. And that in the developed market, even if there is a feeling of subdued consumer demand there is an amazing amount of opportunity. And it's for us to go there and organise around these opportunities and drive the growth. I said we had two issues that actually were quite on the minds of many of you and us too. And the second one is raw material and the price increases, or cost increases and the volatility linked to that.

Slide 54 Costs: volatility is an issue; trends are the key

Let me now share for a few minutes how we see this challenge. The raw material prices have shown a lot of volatility lately but it is not so much to start analysing why this is happening as to see what are we going to do with that and how are we going to handle that. The fact is that the gearing towards answers on this topic have been there forever. 2008 was one of these years where we had major volatility in raw material prices and even before, and our strength was in that year was that we anticipated quite effectively that it was coming in 2008. And we have not lost the alertness towards raw material prices ever since, you have to see through the volatility and to take distance from it and then gear and organise around the basic underlying trends. And that gives you the perspective then also to avoid creating and inducing unnecessary nervousness into your organisation. There's one basic equation, if you have volatility of raw material prices, as we have them today, there is no way you can translate that in nervousness on your consumer prices. That's a totally different dynamic there. So how do you handle that tension between the nervousness here and the capabilities of pricing or other actions to neutralize on the other side? So the answer to this is really a holistic view, we call it from Farm to Fork, going through the whole value chain and seeing how you can answer this tension that you see as an underlying trend, because the underlying trend of raw materials is clear, for whatever reasons and basically the basic reason is demand is going up. Without having the right answer on generating the supply to a certain measure, demand that is linked with what we just mentioned, the world going better. There is worldwide growth, there is also biofuels, but I don't want to go into there. But there is underlying tension towards higher prices which is actually coming back to what it was after so many years of raw materials prices going down.

Slide 55 Managing raw material costs: an opportunity for competitive advantage in the market place

So we want to go about this holistically. And the first thing is that it's a multiple approach. And this slide is bringing it all together and I'm going to get into a few of these specific topics. First of all it is to have procurement and raw material security as one of the key priorities and it is one of the key competitive advantages if you can work and organise to put the right professionalism into it. You actually bring that as an integral part of your success, you drive efficiency and effectiveness into your organisation. You go upstream and work in a way that is really creating value for consumer. That is local expertise we have. We have 600,000 farmers that we work directly on with this - this gives your company a very good feel. We have a very interesting basket of raw materials, we're not depending on one. We have an holistic view on agriculture where we can use the information to see these trends, hedge when that is operationally meaningful. So it is a good way of anticipating and organising in time, to see the patterns and work to do modelling around it. Then also on the upstream you can look for dramatic waste reduction because we're so intertwined with these suppliers. There is an amazing amount of waste on the fields, especially in the developing world. Being close and having the factories close you can reduce waste dramatically. Also working long term, you work with the farmers to have better yields, more productivity and I'm going to come back to that on the Cocoa plan, Nescafé plan. That is not an answer of the raw material prices of this year. But we are now seeing positive effects coming from the investment we have made over the years towards our cost base. That is one part, procurement; upstream, organisation, good insights, working with our suppliers. Then you have the second part - innovation and renovation. There is so much innovation that is driven and that is creating added value on top of raw materials. So our portfolio is less raw material nervous than five or ten years ago. This is linked with systems, added value, nutritional added value and services, just think about Jenny Craig. So this whole strategic move towards more added value products is actually giving you a certain resistance or resilience towards raw material increases. And that is in very sharp contrast with private label, so private label has a bigger issue there than us. So there again you see a possible shift of dynamics. So we have first of all procurement as one and innovation renovation that is the second one. Then efficiency, and we have been talking about Nestlé Continuous Excellence and how that has helped to offset quite a lot of cost pressures in the past. How it has delivered again - quite a good answer last year and has helped to drive the margin increases too. This is definitely somewhere we have to put even more alertness and put higher on the agenda because of the pressures we have. And when you have played all the holistic, Farm to Fork, answers to these raw material price increases, when there is pricing that needs still to be done then you have to price too and do that in a timely fashion. So you have to anticipate again which is linked with the first point, anticipate so that you actually drive the pricing and not in a proactive way, so you can smooth that out, you can create a value and arguments behind it in the right way and it is not reactive which is always the worse place to be. So the approach to this is really from Farm to Fork and the whole organisation is geared

towards answering that now, in an accelerated way. This is not new to the organisation it is just much more intense.

Slide 56 Procurement: helping our markets win

And so the first point is procurement, to have procurement really embedded in your business decision processes. Procurement is all over the place in Nestlé, much more than in the past because of the need for it, but also because we see competitive advantage there. And that is linked with how we have set it up, how we have linked procurement on a permanent level with all markets. So that the markets know how Nestlé sees, works, anticipates and projects the raw material prices going forward. How we leverage our scale and don't just leave these insights, studies and decision making in the markets alone. So we have now integrated in a proactive, permanent way, procurement with all the different markets. And we are monitoring that worldwide, more profoundly and for many more raw materials now than we did in the past. So we are taking procurement and organising it in such a way that we can create and build it into a competitive advantage. To really have the best professionals, be the best organised, the best in the insights, etc. So it is trying to really be in front of the market and organise it in such a way that it brings stability in your organisation and not nervousness.

Slide 57 Procurement: helping Nestlé win

Also on the procurement - and I was talking from Farm to Fork, there's short term reaction to see how you work and there's some hedging there. But we are really gearing our scale towards these benefits too. But it is also long term, how we work long term to keep our raw material base security, to make sure that we have and find the right quality, the right quantity, etc. And invest up front, with our partners, suppliers, or farmers long term. We have talked about the Cocoa Plan and the Coffee Plan, these are major plans. The Coffee Plan is that in the next ten years we're going to invest 500 million, only for securing quality and quantity of coffee. And we have an equivalent plan for cocoa, 150 million there foreseen. And this is holistic in the sense that it is for productivity and yields and quality. It is also for - in the light of creating shared value, creating an environment that is more stable, an income for the farmers, so that we have continuity of raw material base. It is linked also with plantlets so we can bring the physical dimension of yields and productivity and quality into - into our upstream activities. So we are increasing our R&D capability there too and Abidjan, our R&D centre in Abidjan is doing exactly that. So it is also long term engaging with a dimension where we can have an impact.

Slide 58 Procurement: helping Nestlé win

So in conclusion I would say procurement is definitely a very much bigger, visible part of our competitive advantage, how we organise our efficiency there. Also our engagement up front and how we have built it into our NCE now in a more dramatic way. You may remember we had these projects where we were working within the walls of our factories. Well that's definitely extended and where we have extended fastest is in procurement because of the raw material costs. So it is now an integral part of our answer, combined with GLOBE, which allows the link of the worldwide organisation Nestlé in a meaningful and fast manner.

Slide 59 Outperformance: it goes beyond operations

I said that we have different answers holistically. Procurement and how we go about that in a proactive way and efficiency in procurement. Also innovation renovation which generates demand and scale. And another part of it is the whole dimension of NCE (Nestlé Continuous Excellence), and NCE is deeply embedded in our way of going about business. GLOBE has been the basic precondition that allows us now to leverage even more our capabilities. GLOBE is now ten years old, and the first ten years has been about unlocking our potential, looking at how we organise effectively and efficiently what we have. It has moved now to be the enabler of NCE, so GLOBE is the indispensible precondition for NCE to be effective and passable. It is underlying, so GLOBE is intimately linked with NCE and that's why we're calling it One Step Ahead, because NCE is about the whole way of creating gaps, creating differentiation at every step of the value chain versus the market, or versus competition. It is to be one step ahead in every part of the value chain.

Slide 60 NCE touches all Nestlé

So NCE, enabled by GLOBE, is not about cost savings alone, which would be efficiency, it is actually about effectiveness and efficiency. It is rethinking and reorganising completely our whole way of going about our business. So it is the enabler, the platform of global, or total performance. And this slide shows how holistic this whole Nestlé Continuous Excellence is. And that is lived by 280,000 people in Nestlé and understood in a meaningful way by the operator on a machine, or by the product manager in the headquarters. This chart shows the Lean process in Nestlé and how it is based on enhancing the fundamentals, which is compliance, which is the leadership development. You delegate much deeper all decision making into your organisation, then you lead - you need more leadership skills, even the operator on the machine needs to lead the project, so driving out waste on his machine. That is the strong dimension that has helped us last year, that is helping us this year. It is the operators, it is distribution people in the warehouses. It is the new product development cycle that is shortened through the product manager managing more efficiently, together with R&D, to bring to market which is then successful, reflected in products like Dolce Gusto. So this is leadership, it definitely is key to this. Also goal alignment, I'm very enthusiastic about good alignment in an organisation like ours, the roadmap is part of that, the whole Lean process is also linked with goal alignment. And how we then, enhancing the fundamentals, move that to optimising the value stream.

Slide 61 NCE touches all Nestlé

That is fundamental to our NCE; it is how we see the Lean enterprise in Nestlé linked with the consumer. It is consumer centric. You can speak about how are you going to do pricing, we speak in Nestlé about how are we creating value for the consumer. And that is first to understand what the customer or the consumer values. And then also to evaluate which activities bring or add value to that equation and then also define what is not bringing value; and all that is not bringing value to the consumer or customer is to be driven out of the organisation. That is the war on waste that we declared, which is intimately linked with the whole NCE. And then finally also it is optimising then the whole process.

Slide 62 Driving efficiencies and effectiveness

This whole process is then measured through KPIs (Key performance indicators) that we all share. We set ourselves targets and you see here cost and productivity, safety etc, it is our holistic way of going on and Nestlé Continuous Excellence. If you do the right things right for the first time you have better safety, you have better savings, you have a better supply chain, KPIs, you have better service to the customer, you have fresher product on the shelf for the consumer. Actually it is just a no brainer. It's hard to organise, execution is key here and that is what has been driving us also towards our sustainability agenda, lower resources used for more production. We have produced 75% more volume in our company, through our factories in the last ten years. And we have used, in absolute terms, one third less water and have generated 30 or 40% less wastewater to produce 75% more production. We have used, in absolute terms, 5% less energy with 16% less greenhouse gas emission to produce 75% more and we have used more than half a million tonnes less packaging. It just makes sense; I mean less packaging is less cost. That's why we see sustainability also so closely linked with our NCE process.

Slide 63 Reduction in waste is a key factor but... The real win is entrepreneurship & creativity

But what NCE does is also it allows the organisation to focus on what matters. You have to read this slide from the bottom up. Instead of efficiencies taking over and having many repetitive actions, corrections, daily task you see there, or fire fighting, invoices that are not 100% first time, etc. Through the GLOBE enabled NCE you can really move your organisation to give more time to really what matters. And what matters for us is to drive profitable growth, and to outperform the market. That is linked with Continuous Improvement, entrepreneurship, creativity, it is to have, define, redefine and challenge the strategies in a meaningful way that then drives your R&D, that then drives your upfront investments that have an effect longer term. A Nescafé plan is not possible if we stick on the bottom of this chart where you have fire fighting a daily task. It comes when you start to be on the top of it, where you see holistically through the future and what's going to matter in the years to come.

Slide 64 Agenda (recap)

I'm now coming to the conclusion of my presentation, we went quickly through 2010 to 2011 and how we feel confident with the two topics that are on the minds of many people; Growth and consumer demand in the two speed world and also the raw material pressure. I have shared with you how we handle this and how we believe that our competitive advantages in a world like that and with these challenges, are even more relevant and creating more competitive advantages than what we would expect actually in a normal, stable, environment. So we're really going to leverage what we have leveraged in the past, be even more meaningful, be even more alert and have a sharper sense of urgency.

Slide 65 Conclusion

In conclusion we have a roadmap, the roadmap stands; it has guided us through turbulent times in the past. It is a compelling roadmap and we do have in the organisation a very strong alignment, understanding and buy-in to that roadmap. And then we have to anticipate, contextual thinking is very important in the days of today with more uncertainty and more risk in the world, so that we are able to really manage the downsides, but also go after the upsides. And it is actually the upsides that are going to be more relevant, because we do feel we have good traction in managing the downside. It is to build competitive advantage along the whole value chain. And there you saw how procurement has become a much more relevant and important part in building differentiation versus the market, to outperform. We have a good momentum, it is to keep it, to fuel, it to inspire it. We have a good mix, product mix momentum, country mix momentum, to also be aware of that and play on it and to really go where the margins are. Our market share performance is strong, you have seen that 70% of the cells that we measure, which is only the measured cells, are giving us growth versus competition. And we have a very well fuelled innovation renovation pipeline. Innovation renovation creativity is key in everything we do and linked with added value. We are a long term thinking, a long term investing, a long term planning, a long term inspired company, but we're very aware that action is now and that is what we're doing. Thank you very much. Roddy Child-Villiers: Okay, we're going to go to the Q&A session. Just before we start two points. There are some appendix slides, where you'll find the half-year numbers on the net-net and also the quarterly sales on the net-net as well. So you've got the remaining like for like numbers on the net-net. And if you hadn't realised, I'm sure you had, but the numbers in Paul's slides were under the old 2010 accounting, not under the new accounting. Q& A session

Questions on; D&E and mature market sales split D& E and mature market split in Beverages, PetCare, Waters and Infant formula

Chris Wickham, Matrix: I was wondering on the new basis if you can give us the D&E markets and mature markets split in sales? And secondly you've got four categories here which are growing faster than the Group growth rate, that's obviously Beverage, PetCare, Waters and Infant Formula and I was wondering within those, whether you could give us some idea of the D&E mature market split? So in other words which parts of the business are growing because of the category rather than because of the geography? Paul Bulcke: Well under the new reporting the developed markets are closing in to 40% of our turnover,

our sales figures. So it has a positive effect on the developing markets. On the second part of your question, I don't know if you have the detail then of the split in these categories. James Singh: We don't have it, if you look at the businesses, last summer we did look at the businesses split by developed and emerging markets and therefore it differs by category. But essentially I would say in each of these categories we have our larger brands and a predominant amount of our larger brands are growing on a global basis. So we don't provide the split by developed and emerging markets. We did that last summer, but we haven't done it this time around. Paul Bulcke: But we do have difference mixes though, for example PetCare is basically still pretty much developed market based and having good growth. Developed markets are not linked to no growth for us, we're growing there too and PetCare definitely is more geared towards that. But we are growing [in PetCare] in the developing world, in Latin America, we are now starting to engage much more dynamically and in Asia. You know the pets are a different part of society in different countries, so we have to see where the growth potential is. Water is the same thing, because of the success we have in the developed market we are just starting to really engage in the developing market. Water was 10% in the developing markets; it's now 15, going up very rapidly. Infant Formulas, definitely we have a very good footprint in Infant Formulas in the developing world. So we have different categories there - and in my eyes these differences, in different categories, are motivating for giving the right targets to the right people, to really bring our portfolio in balance everywhere. And that is the opportunity we have.

Questions on; Capex spend impact on margins in AOA Margin guidance in old definition Category development in Europe in Q4

David Hayes, Nomura: Three if I can, just on the AOA push with the Capex spend obviously behind that as well and the acceleration of reach, is there risk in the short term that margins in AOA suffer as you basically try and develop that scale? Related to that I guess just in terms of the Nestlé Model delivery this year and the guidance and the new definitions, would the margin be up on the old operating profit definition as well as the trading profit definition that we're moving to? And then thirdly, just on slide 39, you look at the category development across Europe, it looks like quite a sharp slow down in the fourth quarter versus the third quarter, it looks like a bit of an outlier, I just wonder whether you can talk about that trend, whether that's a worry, or whether that continues into next year; particularly given that pricing, you'd have thought, would have started coming through in the categories in the fourth quarter? Paul Bulcke: We are investing heavily in AOA to be able to produce the growth that's quite clear. It is clear also that our size is going to be translated into scale, scale into competitive advantage

and efficiency. So in other words I don't want to see margin suffering from that. Actually it should continue increasing, so it should be accretive to the Nestlé Model, definitely. The net-net may have introduced some doubts to you but all things being equal we go after margin increases. And in AOA, where you have higher risk, you should have higher margins, that's a logic that you understand very well. But that's a logic that we want to see also reflected. You have higher volatility, by higher risk, so we see there a need for higher margins to justify the investments. And that's why I have said that this whole understanding of the logistics, how we are gearing new production models into these countries is just to go after these efficiencies. If you take the way of going about production and logistics of the developed world into the developing world you end up with a totally ineffective model that is very expensive. So you have to rethink completely your industrial set up and that is what we call the finishing factories. We have a little bit of a specialisation in the developed world on factory level, because you have the size and the population density of the developed world is different than in developing countries. So you can have different industrials set ups where you have profiled one product factories. You don't think about that in the developing world where you don't have these logistics, population density, etc, so you go for a multi category finishing factories. These are all things that we are applying now much more aggressively than in the past. That brings margin. PPP per se is not low margin, PPP is an adapted business model where we gear the whole marketing mix towards a specific part of the population with specific nutritional needs, distribution, etc. It doesn't mean lower margin, definitely it is not. James Singh: Just coming back to the Nestlé Model, during the conference call we did recommit to delivering the Nestlé Model this year, which is an organic growth of 5 to 6% and increase in trading operating profit margin in constant currency and also now underlying earnings per share in constant currency. David Hayes, Nomura: For both definitions? James Singh: Yes. Paul Bulcke: On the European last quarter. Roddy Child-Villiers: It was clear from the graph the market was down; our European performance accelerated in the final quarter, Western Europe as well as Eastern Europe. And just on the emerging markets distribution and the increased distribution, one million additional outlets in 2011. This is not - we're not starting from scratch, in 2010 just in India our distribution touched 400,000 new outlets. So we're not suddenly leveraging things up from nowhere, this is an ongoing process.

Questions on; Organic growth target Trading operating margin target

Julian Hardwick, RBS: One question for Paul and one for Jim, for Paul going back to your category growth rate table that you put up. I haven't been able to calculate the weighted growth, but it would look as though on a weighted basis you're probably somewhere close to 6%, across the Group. And if your ambition is to grow ahead of your categories that would seem to suggest that your 5 to 6% organic growth target is perhaps not as stretching as it might be, would you care to comment on that? And for Jim by including some of the trading income and expense items in your new trading operating margin target, you're including some items, which are inherently going to be quite volatile and lumpy from year to year. And one assumes also are things that the operational management are not necessarily going to have any control over. I just wondered if you could talk about the thinking behind that? Paul Bulcke: On the category growth rate first of all the food and beverage industry overall grew 2% or something like that last year, so that's what we all grow basically. These growth rates that we have used, I use them internally to motivate my people to really go after the 6% . They're also based on an estimate two, three years ago, and then they have been revisited. So basically the outgrowing and outperforming is based on category by category, sale by sale; and that is at 70% that we are monitoring, which is really measured. These growth rates are framing growth rates over two or three years ago. James Singh: Yes, we did look at the impact on volatility, and you're absolutely right. When you look at a pattern of the other expenses, year by year, I think if you look at our restructuring expenses, if you look at the last five years, we were spending about 50 basis points. Some years it's more; some years it's lower. And that is why we have incorporated in the model, in addition to the commitment to delivering improvement in trading operating profit in constant currency, we also have implemented the underlying earnings per share as a model. Which means essentially the old EBIT; you have to maintain that and progress that also in order to achieve the underlying earnings per share. So there is a balance there that hopefully keeps us very focused, and yes, I would say whether or not you do restructuring, to what degree it is, there's always a benefit to that in the markets, and our market heads - and we have one in the company here today - they have significant influence on how they spend those funds. So they need to think, we all need to think about how we spend money. At the end of the day it's what is necessary to deliver a sustainable performance over the longer term. And yet there may be some years where you have a little more volatility than the others.

Question on; Percentage of sales gaining share

Martin Dolan, Espirito Santo: Just a question on the chart on page 32 which Paul just referred to on the 70% of sales that's now gaining share. Just so we can calibrate it, could you give us an indication of what that

would have been at the start of the chart, in other words in June '06? Would that be 55% or 60%? And also the 70%, how far do you think you can realistically push that? Because obviously we've seen a very large increase in the last 12 months. Paul Bulcke: You are asking for what would that be at the beginning of the chart. I can hardly project - but we were having 50%, 55% of sales growing, so you want to see the proportion. We have accelerated the 70% which is a historical level. This is only measured markets - measured channels. As you know, also we have engaged much deeper into unmeasured channels, which is small mom and pop stores. So I feel that this percentage, if you would take all sales together, is higher. So in that sense I would say that I still see upside. 70% of the sales maintaining or increasing can go up, and that is what we're looking for - to really create even more dynamics into the measured channels, and also continued involvement in the unmeasured channels - although we don't have then that kind of figures. So this momentum is good; it has accelerated, and we don't see any reason why we should not continue growing there. And that is linked with all our performance and philosophy; this is linked with keeping the initiative of the category growth. This is linked with category management, and that's why also the chart of the major customers in Europe, for example, we measure category growth of the customers and how we grow there too. And this modern trade is basically what is measured here.

Questions on; Raw material prices Influence of direct relationships on cost volatility

Michael Steib, Morgan Stanley: My two questions relate to raw material prices and the procurement strategy that you talked about, Paul. Firstly, last week on the call, you gave us a figure of a cost increase that you were expecting for this year of about CHF2.5 billion to CHF3 billion, I think in 2011. What are the underlying assumptions behind that? Do you essentially expect raw material prices to continue to trend upwards throughout the year, or is that just basically factoring in the increases that we've seen over the past 12 months essentially? And then secondly, you were talking about direct relationships with farmers, with suppliers. Can you give us an idea of how exposed to the fluctuations in the world market prices Nestlé as a group actually is? I would imagine that these direct relationships, direct supply contracts with farmers, would enable you to reduce the volatility of the prices that you have to pay. Paul Bulcke: First of all the raw materials are 2 to 3 billion that we projected. That was my first chart where we tried to really read through the volatility. You saw again at the end of December / January we had another spike in some raw materials - not all, but in some. So it is a trick to really see and to take distance from that, to see in context what the underlying trend is, and really gear the organisations towards that hypothesis. Because what

we try to have is stability in our organisation. We don't leave it to every operation, every factory to decide what the cost is going to be for the year, because then you would really build in nervousness and an environment where you have actually this volatility. And that's why I mentioned our procurement activity in Nestlé that has different dimensions. It has in the headquarters, where we have the big trend makers or trend readers, together with general management. We have regional centres and we have also the country centres, who are all much more linked and talking much more globally about these issues than before, because the need is there now, and it makes much more sense, and it's much more relevant than before. So what we see there is the underlying trend for the year; hypotheses that we take, and try to really build in stability so that we can really manage our business in a meaningful, stable way, in spite of the environment out there which is very turbulent. So it is the underlying trend actually. If you then ask me - is that the price of today, projected? I think it's quite high but I'm not going to go more into detail there because that would be wandering on thin ice. I feel it's like quite a lot of materials peaked. But it's not going to go down to where it was before, it's going to stick. A lot of price increases are going to stick. And that's how we are geared, and that's where the 2 to 3 billion comes in. Then the direct farm relationships. We have a multi-dimension on procurement. For example, milk; we have quite a lot of milk districts where we have to have direct contact with milk farmers. But we also buy on the international markets where we don't have milk districts, and we need it. So we have a multi-faceted approach to procurement. And that is different from raw material to raw material. Milk we have been quite close to milk. We don't have farms; we don't have cows; we have relationships. And we do work with 600,000 farmers directly, and through suppliers we are indirectly linked with millions of farmers because our agronomists are working with our suppliers too. So directly with farmers; indirectly through our suppliers working together. So we do see some competitive advantage in having these links. First of all the feeling - you're close to your raw material, and you have a better knowledge about your raw material. It is linked to quality because you drive quality, you're much more vocal on quality. But also on quantity. Now is that an invitation, because of the volatility, to re-engage even deeper and more? Well, actually we have announced that. Nescafé plan or the cocoa plan is doing just that. They’re not only having a positive influence there, in the sense that they are driving quality through helping and leveraging our R&D or agronomies working with these farmers' best practice. So we want to increase our direct purchasing of coffee beans. Why? Because then actually you drive some costs out of the system that helps then to neutralise part of the cost pressure. So this is definitely part of our holistic going about our procurement in channel. But it is not just making sure we have the raw material; it is also to induce quality, induce yields, induce efficiency longer term, because we do feel that there is a need for bringing R&D in agriculture. And we can do that with a sizeable impact - 600,000, and we're not alone in doing that, I'm sure. So it has an impact, and it is part of the equation of answering the raw material needs and price impact.

Questions on; Capex increase Clarification of trading operating margin

Xavier Croquez, Cheuvreux: Two technical questions. The first one is on capex. I discovered this morning that 3 billion of capex for developed markets - and I think last week we had 2.5 for developing markets; so that makes 5.5, which is a little bit more than previous years. Is this a one-year optic? Is this a two year investment phase? Or is this something on which we should pencil a little bit more than what we used to? And the second question - building on the volatility of the trading operating margin, if I try to apply the new set of numbers roughly on 2009, my understanding is that the underlying EPS was up in constant currency very clearly, but the trading operating margin would have been marginally down in 2010 versus 2009? Or am I wrong here? Thank you. Paul Bulcke: I'll give that to Jim, but first on this increased investment, it is clear that we see, with 11.5% of capital needs in the developing world that has to be produced, we have been able through NCE - our Continuous Excellence, to free up capacity in an important way; that is definitely playing where we have the capacity, developed markets, etc. And in developing markets we have to increase our investment to be able to answer our growth objectives and the perspective that we have. So that's why you see an acceleration to some extent. And you saw the blue bars that I showed there, that actually we are accelerating because we want to be ahead of the curve of volume needs. And that is also an expression of our confidence that growth in developing markets is going to be there also in the future. You see that, and you may say also with some instability politically, but that is not new to us. We have known that for so many years. Everywhere - Latin America - I was there 20 years ago, so I know. It is that investment that we need - and capabilities, production capabilities, infrastructure, that you see reflected in these figures. Now is that a trend? Well, it depends on how we project. I'm very confident that growth is going to be there, so I see the needs of investment. It has to do with the need and the capability of having the money to invest. And I think we have these two. This is a competitive advantage. It is, so we want to play it upfront, and that is what these figures reflect. Now on this volatility of trading, operating, James Singh: When you go through our financials, when you have a chance to read it, on page 44, we have the comparison on the old reporting system. And if you look at EBIT, the way we report EBIT up to last year, EBIT was up about CHF800 million. But then you look at our restructuring charges; that's up perhaps about a billion. So I would say the trading operating profit will be more or less close, slightly down, but pretty close.

Questions on; Identification of charges in reporting of trading operating profit

Charlie Mills, Credit Suisse: Jim, just a question for you on this new reporting of trading operating profit. Are you actually going to identify by region what the exceptional or the new charges that are going to be coming into each of these divisions? James Singh: Yes. If you look at the chart we showed on segments and by categories, you'll see the disclosure there - below the trading operating profit. Charlie Mills, Credit Suisse: I'm just a bit confused because those add up to 683 million, yet you're saying there's about one and a half billion that's actually being charged against the divisions. James Singh: No. These are what - the 600 is what has been charged against the business for that element of trading operating profit. Charlie Mills, Credit Suisse: You've lost me. I'll speak to you later about it. James Singh: Okay, but those are the numbers, Charlie, those are the numbers that have been charged below EBIT but before trading operating profit - or after deducting those to get to trading operating profit.

Questions on; Margin opportunities in Europe Opportunities in lower margin businesses and biggest margin opportunities by category

Warren Ackerman, Evolution: Two related questions on the longer-term margin opportunities at Nestlé. If I look at your new definitions, you've got margins in Zone America and AOA at 18% to 19%, but margins in Europe are 500 basis points lower at 13%. I was wondering, Jim, whether you could talk about some of the specific margin opportunities in Europe, and where do you think European margins can get to over time? Or do you think 13% to 14% is the right kind of level. That's the first one. And secondly, if I look at the margins by category, again you've got very big ranges; you've got Pet Food now up at 20% operating margins and Beverages at 23%. But you've got Water down at 7% and Prepared Dishes at 12%. I know you don’t split out Ice Cream, but certainly post Dreyer's margins were quite low in the Ice Cream division as well. I was wondering whether you can talk about some of the margin opportunities in the lower margin businesses, and where you see the biggest margin opportunities by category in the

next five years? Thank you. James Singh: Well, just coming back to Europe versus some of the other zones. Europe has traditionally been lower margins. And I think we went through this. Part of it has to do with the categories, Ice Cream is a lower margin category, and Frozen Foods. Therefore the product mix is slightly different. However, Zone Europe is not an exception to the Nestlé model, and you'll see they've delivered over the last couple of years, including last year. So we believe that by constantly innovating and upgrading the products and the value of the products in Europe, we will continue to see improvement in the margins. On the other categories, I think we see opportunity in all of the categories to improve the margins, including Water. In spite of the fact that Water is low. When you look at Ice Cream in 2010, there was significant margin improvement in Ice Cream. They had real growth in Ice Cream; they outgrew the categories and therefore gained share on global basis. So in each of these categories we see potential for improvement both at the top line and the bottom line. Paul Bulcke: In general I would say - there's no such thing as having a category or a region just being there, using the energy of the other regions. Everybody has to be part and own their rights to be part of the Nestlé model. So they have to be accretive to getting the Nestlé model. And Ice Cream has done that, bringing increased margins. So we really go with quite an iron discipline towards every business. Every country should be, over time , accretive and part of the Nestlé model. Now that doesn't mean that we want to have all the margins to be all the same to two digits behind a comma, because that's not how we drive this competitive environment. There are possibilities; there are different mixes in countries, because when you talk categories, you have a different mix of countries. So you have to see by cell - we call it cells, how it is doing in the market versus competition. And outperform. And by aggregation you get to these figures. But one thing: everybody has to show growth over time and have the potential to deliver margin increases. And that in a model that is really comparable and effective in the market place, cell by cell. In that sense also return against the capital is something that we're working on much more and deeper to see how the money invested in the business is delivering back to the capital invested - which is another yardstick that we are using internally.

Questions on; Reduction in organic grow Increasing growth in Water category Beating expections year on year

Joseline Gaudino, Société Générale: I just want to come back to your new accounting system. And if you have retreated the organic growth, I mean that in your old organic growth should have been inflated by these rebates discount. Have you retreated organic growth? That's my first question. My second is - regarding your Euromonitor category growth, Water is extremely high - 8.2%.

If I look at what you've achieved over the last three years, you are far from this number. How can you reach from 4% to 8%? And I'm here just to discover your secret, because it seems to me that every year in the last quarter you beat expectation, even though your basis of comparison is high. If I'm looking to the last five years, four years out of five you are beating expectation. Is it because you have a clear view of your A&P, and you know exactly - I know that you are not managing the company for the short term, but is it because you know exactly and you overspend in A&P over the last quarter ? Paul Bulcke: Well, first of all it's a good problem to have. But this strength of the figures and the consistency of the figures is linked also with the fact that we are in different categories, different markets. So all the figures you see is bringing lots of figures together. So you have to see also the smoothing effect of these things on the consistency. Outperforming, not outperforming, we had doubled on what we said, so you have to see also how we manage the reality today. So that I would say it's a reflection of good strength and good consistency in delivering. Now on TTS and organic growth, Jim, if you want to answer this - James Singh: The new model, the 5% to 6% is based on a net-net basis. And in the past, whether there was a benefit, marginal benefit, or a loss, it averages out over the years. So some years you get a small benefit, others you don't. But what I would say going forward - we feel very confident that we can deliver over time the Nestlé model, even on a net-net sales basis. Because we have said before, whether the old reporting or the new reporting, we still have positive price over the years. Now the question on the category, on the 8% for Water, as Paul said this is IRI data; it's a global data. A lot of it is influenced by what's happening in emerging markets. So it's not necessarily your business is being measured in the geographies in which we do business, and not necessarily to a global category. Paul Bulcke: But anyhow, there you have a point that we are engaging more in the developing markets. You know that we have 85% of all sales is in the developed markets, and there we are outperforming the competition, gaining market shares. North America, Europe - big brands, per year and gaining market shares, which is good. But it's in the lower environment. So we have a little bit of mix that gives these figures. We're going to invest over time so that we don't have to explain it - so that the figures are going to be obvious. But in the developing markets, like Brazils of this world, we're growing 40%, 50%, 60%, 70%. So these are huge increases. That's why we went from 10% in our mix in the developing markets, in the developing markets, to 15% in one year or two years. And we want to invest more dramatically there.

Questions on; Growth targets Pricing Nestlé exposure in Arab states experiencing unrest

Simon Marshall-Lockyer, Jefferies: Just in respect to the 5% to 6% organic growth target, given the fact that the new accounting puts 40% of your business in D&E - and that's about four percentage points more I think on the old method; in theory I think we calculated just back of the envelope that that's an additional 30 basis points of organic growth - just in terms of the morphology geographically of that mix. So would you agree that your 5% to 6% growth target is actually slightly lighter, given the fact of the change than it was previously? That's my first question. The second question is - you've given that detailed outlook in terms of your assumptions for input pricing and the impact for this year - 2.5 to 3 billion. Jim, on the call the other day, could you just give your view on where you're expecting pricing to be overall, and whether you're expecting to fully price that? And could you relate that to whether you're expecting further inflation, i.e. higher investment in A&P as well in 2011, given A&P or your marketing spend has actually been going up in relative terms over the last few years? And then finally maybe just one point. Have you worked out what the overall total exposure is in terms of the countries that are caught up in these political developments in the Arab world currently represent for Nestlé? Just a figure. Thank you. Paul Bulcke: Jim is going to talk about the input prices then, but you say organic growth 5% to 6% as part of the Nestlé model is now lighter than before. I do feel it differently, it's amazing how you can see the same price differently. We don't have the little tailwind coming from Alcon and we don't have the little tailwind that trade spend increase could give you. So I feel this is much more crude; 5% to 6% - what you see is what you get. In an area where in the past we were lower, so that is actually bringing the targets up a little bit. It is showing also our ambition, and also the mix that is moving towards higher growth. So it's very honest in that sense because the developing markets are getting more importance relatively in the mix; we're going for higher value products. So that should show up also, that's why we said although we have all the dynamics going lower on growth, I commit and continue to commit to 5% to 6% organic growth. Getting down to the political situation. It is true that we see all of a sudden quite a few countries in turmoil. And I really hope that it gets to a solution peacefully and fast, first of all for these countries and the development they've just started to engage in; that they can do that in a peaceful environment with the necessary democratic dimensions. It is clear that there are some impacts in our business. But that is not actually new. I remember when I started in Nestlé quite a few years ago now, I was in Peru, and Peru had some political instability. And I would say that it creates a lot of adversity and difficulty in managing the business. But again it’s in an adverse situation that our competitive advantages are actually working even better. Just to give you an example many factories and operations of many companies were closed in Tunisia and also in Egypt. Actually Nestlé never stopped - or stopped only for a very limited time - our operations. So while the others then had strikes, we didn't have strikes. We had been discussing always proactively with our workers and the unions - our workers

are committed to the company in a way that actually is exemplary. We have operations also in Africa that are going through difficult times - Ivory Coast for example. I met the management there two weeks ago. I really give them my highest esteem and appreciation for what they do there in spite of everything, and I know what I'm talking about, because I lived part of my life through these - that is where I feel Nestlé is very strong. And that is what I mean by this having these people in the field that, managing and being creative - finding creative ways of continuing to maintain our operations - producing the products that the consumers are buying. Our commitment is towards the population of the countries we are committed, and we are always long term committing into these countries. You know our philosophy. You need the people to run these things. So I hope that the situation clears. It has not cleared; you see some sparks coming in and spilling over to other countries. I hope that doesn't get more violent than in certain countries because that doesn't help at all. And that's something we don't want to see happening. In the meantime we try - in all that adversity - to continue our operations. James Singh: Just coming back to the question on commodities, yes, we guided a cost impact on our total input costs basket, over 2.5 to 3 billion. And as Paul said that's based on , what we know today in terms of inventory or covers, and on some of the instruments we're using to manage volatility - and our view as to where an individual commodity type is or packaging type is. As we know it today, and we believe we have a fairly good view of what's happening in the market. I think at the end of the day we don't necessarily only depend on price increases to deal with commodity cost inflation. There are other levers in the company in terms of upgrading our product through innovation and renovation; taking waste out of the company; getting better technology to get better extraction from the materials we use. But given the size and magnitude of what we face today, there is going to be price increase, and the markets will have to manage that on a product category, brand by brand. And therefore I don't want to give you an estimate as to what our pricing will be or will have to be. At the end of the day our commitment is trying to make sure we grow the top line and also improve the bottom line, and there is lots of stuff out there in the middle that gives us the confidence that we can continue to do that. Roddy Child-Villiers: I think it's worth just saying on the organic growth as well that - it may be 5% or 6%, but in our world it's billions of francs and it's tens of billions of food items. And Paul talked a lot about investing capacity and in capabilities, and we need to manage the growth from that perspective, rather than focusing on it as a percentage. You need to remember it's tens of billions of food products, incremental each year.

Questions on; Consumer facing marketing Top line guidance

Alan Erskine, UBS: Two questions, one sort of strategic and the other definition. Just on the definition one, Jim, the 13.2% increase in consumer facing marketing - other than A&P, what is included in that

definition? And my second question just comes back to some of the other questions that have been asked around the top line guidance. Obviously you've thought a lot about the Nestlé model and recalibrated some of it. And I just wondered why maybe you didn't change the top line guidance to at least 5%, rather than have that upper limit as well, particularly when you're facing a year when, if we think back to 2008, with the pricing you had to take then, the growth was above 6. And I'm wondering, going back to something you said Paul in Vevey in the summer, do you think there's an optimal growth rate for Nestlé that you wouldn't like to see it grow too fast, that it might get a little bit ahead of itself? And is that why you've retained the upper ceiling to the Nestlé model, when you had the opportunity to change it? Thank you. James Singh: Alan, just - when we say consumer facing marketing, it's the money we spend in the organisation against our brands for building direct relationship or interaction with the consumer. And it's our media, whether it's print, television, internet, social media. That kind of expenses; it's really our media and consumer communication. When we talk about consumer facing, that's what we mean. And that was up 13.2% in constant currency. Paul Bulcke: On the top line guidance, we have defined 5% to 6% because around 5, you would say - no, I would like more minimum 5, and there we go. The Nestlé model is actually 5% to 6% top line growth and bottom line. That's what you have to do to be healthy, just grow profitably, and leverage scale that gives you margin. You say - well, would you feel bad if you had 6.1%? Well we have it, and I don't feel bad. The fact is that this is a line. It's like raw material prices, volatility and all that. You have to have this line. This is, in my eyes, a very healthy line to walk 5% to 6% organic growth, over time. So you can have sometimes 6.something or more, because you just work in an environment that allows this. Sometimes in product innovation you have a little bit more push during the year. Actually thinking in years is a very artificial way of going about business, but that's how we are organised. So 5% to 6% is the healthy line we want to walk. And sometimes you're under it. Sometimes you're under it, because you have a certain environment - but over time 5% to 6% is a healthy growth. Just think - 5% to 6% is now CHF6 to CHF7 billion - heavy money - to produce. You just think 1.2 billion products a day, more or less, that is what we produce or sell every day. If you grow 10% that is 120 million more products every day. So actually we're talking about 100 million products more every year, every day. You have to produce them with the quality we want. You have to have the operators who manage that. You have to link up with consumers that buy these products. You have to have your factories built with engineers, to have the machines there. So I feel this is healthy, but we don't leave opportunities because we say - well, 6% is enough. We go after that. And that's why actually it is to outperform in the sales we have, in the markets we have, in the categories where we have the growth. And we do have a sizeable impact that's driving the growth of that category, or driving the growth of Food and Beverages. And that is what we do then in Europe. And in Europe we had 3.5% in the developed world of growth, which is under the 5% to 6%, but it is above what the market has given, so we are gaining positions.

So I feel 5% to 6% has been proven to be a very healthy inclination of growth over time. You always can accelerate and say - well, for one year I push it even harder. It's like a car; you can push a car, but all of a sudden it breaks down, so you have to watch out that you maintain this healthy balance of alignment, of capabilities, of talent level - and we are speaking big numbers here. So I feel it is healthy. But again, if you can go and there is opportunity for more one day, well we go; we don't manage only the figures. We manage the realities in the markets, and the opportunities existing there. And it looks like with the dynamics, intrinsic resourcing and strength that we have, that a 5% to 6% is a challenging line. But it's a line that motivates us and that we are realising if you see it over the last years. So I would continue - it creates a lot of dynamics. It's not there; you have to really work and go for it. It's a stretch, but I feel it is a healthy stretch that keeps this company I would say very healthy. Roddy Child-Villiers: Okay, that's all we have time for. Thank you very much indeed, everybody in the room, and also whoever's listening. Paul, do you want to say any final words? Paul Bulcke: I just would say that we have a momentum, that momentum has been building up where a year ago we were talking the same language, and it is with the same confidence that I'm looking forward for 2011, which announces itself - like every year - a challenging year, specifically on these two topics that we have been discussing. Raw materials is definitely something that is quite challenging, but each challenge is an opportunity to play our competitive advantages, and that is what we want to do. Thank you very much. Roddy Child-Villiers: Thank you very much. END