Jim Singh – EVP, Finance and Control, Legal, IP, Tax, Treasury, Global Nestlé Business Services Roddy Child-Villiers – Head, IR

David Hayes – Nomura Alain Oberhuber – MainFirst Patrik Schwendimann – Zürcher Kantonalbank Jamie Isenwater – Deutsche Bank Jeremy Fialko – Redburn Robert Waldschmidt – Merrill Lynch Jon Cox Julian Hardwick – RBS Pablo Zuanic – JP Morgan Simon Marshall – Lockyer

Good morning everyone, and welcome to our Results Presentation. For those of you in London, I am sorry that we change our plans at the last minute and are not with you today. But we thought the most important thing was to be sure that we were in touch this morning even if only by webcast rather than to have the risk the event being disrupted aided you to transport our other issues. As usual, we will take you through our performance and key events of the year before opening things up for discussion. As ever, I will start by taking the Safe Harbor Statement as read. Nestle continues to make progress in an environment characterize by volatility and subdued consumer confidence particularly in the developed world. And at the same time as delivering in the short-term, we have again demonstrated our commitment to building the business over the long-term inline with the strategies that we have previously discussed. Our consumer facing marketing spend is up in constant currencies. We have continued to build the innovation pipeline while launching many new products and systems we are now read to a record year for capital investment but the lot going into emerging markets. And we have been able to announce some exciting partnerships and acquisitions again often in emerging markets. Nestle have sciences become operational and new and exciting growth pillars of growth have been established including the soon to be inaugurated Nestle institute of health sciences. We have increased and held market shares in over 70% of measured sales. We intent real internal growth momentum and are seeing increased pricing. 2011 has certainly been an extraordinary year for company with activities in every corner of the world. We have people managing our operations and making progress in those countries that have been making the headlines, but Egypt, Côte d’Ivoire and the Middle East or for other different reasons the Euro Zone and North America. Equally, we have been confronted by record prices for raw materials, extreme volatility in currencies and seemingly on ending increase and the strength of the Swiss Franc. Many of you came to our seminar in June or listened to the web cast. You’ve heard that we have processes in place that enable us to manage through turbulent times and that we have further increased our procurement capabilities since the last period of high input cost pressure. The result is that we can report today, a performance that demonstrates our ability to deliver on our key objectives even in the toughest of times. As I go through the different business areas there is some that have had a strong start to the year and some lesser. But of importance is that we have delivered at the group level Accordingly, we are well set to achieve the Nestlé model again in 2011 being an improvement in margin and constant currency and organic growth at a top end of our 5% to 6% range. Finally, we have unprecedented opportunities to invest in future growth particularly in emerging markets both organically with CapEx and through bolt-ons With that in mind and with an eye on the uncertain economic environment, we will retain financial flexibility to drive our strategic proprieties with the confidence. Now let’s have a look at the headline performance. Organic growth for the first half was 7.5%, a meaningful acceleration from the first quarter with an outstanding second quarter of 8.5%. In line with what we had said at the time, growth from pricing is up from 1.5% at Q1 the 3.8% in Q2 giving 2.7 for the first half. The real internal growth continues to be strong at 4.8% for the first half. The trading operating profit is up by 20 basis points to 15.1% and by 40 basis points in constant currencies. Trading operating profit before other net trading operating expenses and income, EBIT, as previously reported, is flat in constant currencies and down 20 basis points as reported. Please note, that at this margin level last year we had a 60 basis point improvement. A consumer facing marketing spend is up 6.2% in constant currencies. As a reminder this was 14% in constant currencies, up in the first half of 2010. So this is a further increase on top of a big increase last year. The net profit was CHF4.7 billion and the margin was 11.5%. In constant currencies, the net profit margin was virtually unchanged compared to the first half of 2010, which included Alcon. The underlying earnings per share for the Group are up 5.2% in constant currencies. On the next slide, we have created our usual margin bridge for trading operating profit. The benefit from Nestlé continuous excellence and other actions by the organization help to address the significant impact of escalating input costs on costs of goods. In particular, the positive evolution of pricing has also contributed as well as growth leverage and the benefits from restructuring in prior periods. On input cost, I reiterated our June guidance that we expect the impact at the upper end of 2.5 to CHF3 billion range. Distribution costs were up 10 basis points. Efficiency still apart to gain, but also mix and mitigating defects of increasing energy costs. Marketing costs were down 20 basis points. This follows a meaningful increase in the first half of 2010. As I said our consumer facing marketing spend increase in constant currencies even after we have achieved efficiencies through a more global alignment of campaign messaging as well as total use of media mix. Administrative costs were down 150 basis points. There are number of factors that play here. First, we are rolling out Nestlé continuous excellence beyond operations and just part of this we have targeted for admin costs to grow much slower than organic growth. This creates leverage from growth. We were already achieving significant savings in the second half of last year. And consequently, we not expect the second half evolution to be as dramatic. R&D costs increased by 10 basis points. Next are the other net income, net trading income and expenses. These improved by 40 basis points due to lower restructuring cost as well as lower level of cost for litigation and other expenses. You can expect the full year restructuring cost to be 30 to 40 basis points. This then gives you the trading operating profit improvement of 20 basis points, or 40 basis points in constant currencies. I’ve already mentioned the phrase constant currency several times. So let’s have a look at the currency situation. Half year on half year we have a 17% decline in the U.S. dollar against the Swiss Franc and a 12% decline in the Euro. All other currencies are also weaker against the Swiss Franc. The impact of the strong Swiss Franc is clearly significant on translation of our financial for reporting purposes. 13.8% on sales, 20 basis points on trading operating margin, 15% on underlying earnings per share, between 600 and CHF 700 million on operating cash flows and CHF 5 billion on the balance sheet. But importantly, there is no meaningful impact on our underlying operating performance, which as you have seen has remained strong in the first half. Now let’s look at our sales performance, starting with our traditional sales evolution chart. I have already discussed, foreign exchange, divestitures, net of acquisition was negative 6.6% due to the August 2010 sale of Alcon, which in itself impacted our sales evolution by over 8%. By the sale of Alcon and the exchange rates should not overshadowed the very strong operating performance reflected in the organic growth of 7.5%. RIG for the first half was 4.8%. This maintains our momentum from Q1 and is a truly differentiating level of performance. It was also a step-up in pricing in Q2 to 3.8%, giving 2.7% for the first half. I believe this half year number will gradually increase during the rest of the year. I’d like now to pass over to Roddy to do our usual run through the business segments. Roddy? Roddy Child-Villiers: Thanks Jim. Good morning everyone. I’ll start with the total group sales by region. In each region, the numbers include the relevant zone and the globally managed businesses, which are nutrition, waters, professional, Nespresso and now joint ventures. We show this to give you a good read across with our peers. It is once again the picture of broad-based growth, strong relative to the various markets. Europe has accelerated from 3.9% organic growth in Q1 to 5.8% for the half. RIG up a 120 basis points to 4.6% and pricing up 70 to 1.2%. And this is growth-on-growth coming on top of 3.6% organic growth in the first half of 2010. The Americas achieved 5.7% organic growth with RIG of 2.2%. Pricing has accelerated but RIG was lapping a tough second quarter in 2010. Asia, Oceania and Africa achieved 13.3% organic growth. The RIG remain double-digit, pricing was up to 3.2%. The key reason for our broad-based growth is that we’ve been able to deliver growth, both where you would expect strong growth and where you might not. Where you might expect strong growth, the emerging markets and BRIC countries, both growing at 13.3%, and where you might not the developed markets growing at 4.4% and Portugal, Italy, Greece and Spain growing as a group at 3.9%. Let’s now look at the operating segments. And first here is the currency impact by reporting area. Normally, this slide will be in the appendix, but I think let’s being shown upfront this time. The currency impact on sales was most likely remained double-digit. They could lessen a bit due to the relative comparison versus 2010 as you can see on the two graphs. As Jim said the currency impact should not take away from our strong operating performance. On this slide, you can see how broad-based our RIG has been. And our organic growth which ranges from over 4% in zone Europe to over 11% in zone AOA. Those increase pricing in the second quarter in all reporting areas. The RIG evolution remains robust and I’ll go through this in more detail starting with the Americas. The RIG in zone AMERICAS improved marginally from Q1, but there has been the strong acceleration in pricing up 360 basis points in the second quarter from the Q1 With weak consumer sentiment in the U.S.A., the North American business continued to experience tough trading conditions as demonstrated by moderate growth, but a reasonable market share performance. The Frozen continues to be under-pressured generally, Lean Cuisine and Hot Pockets segments are slightly down whereas the Stouffer’s regular meal segment is flat. We have success in Frozen. We have launches under the market creation and farmers harvest banners, as well as range extensions in Lean Cuisine such as spring rolls and dips. The Frozen pizza category is growing. Pizza plus launch being frozen pizza pack with another product such as Nestlé Toll House cookies or chicken rings is performing well. Overall, in frozen the, Buitoni, Stouffer and Lean Cuisine have gained share. The PetCare business is flat, showing increased market shares. New products such as Purina ONE, Fancy Feast Delights and Frisky, Tasty Treasures are performing well. Confectionary is napping the top comps closed by last year’s 1K launch. The shares are stable in the market that is up by a high single-digit percentage. This year, we have launched the successful Ice Cream brand SkinnyCow into confectionary. The early take up is promising. In short, Nestle Toll House is performing well. The Ice Cream business continuing face pressure from private label and premium take home and I assume volume impacted by pricing. Our strongest performance is in the Snack segments and the Super Premium. Innovation has included launches of shakes and smoothies as well as Häagen Dazs cones and SkinnyCow More to Love Pack. Nescafé & Coffee-Mate had a positive first half. The Nescafé Dolce Gusto launch is building momentum with importantly high capital consumption on machine. The Café Collection and Natural Bliss variants of Coffee-Mate have been well-received. Latin America has had a strong first half both for RIG and pricing and continues to deliver double-digit organic growth. Mexico, most of the regions are growing double-digit, while Nestlé Brazil is celebrating its 90th anniversary with high single-digit growth. The big three categories in Brazil being Dairy, Chocolate and Biscuits all accelerated in the second quarter partly due to Easter. Looking at the Latin America categories, the big five being Ambient Dairy, Chocolate, Soluble Coffee, Ambient Culinary and PetCare are all growing double-digit. The rest of world, positive ranging from mid single-digit to over 20%. PPPs are growing in the teens with particularly strong performances in Dairy and Beverages and Soluble Coffee. The Zone’s trading operating margin fell 10 basis points. This reflects a significant increase in raw material costs as well as some relative weakness in volumes in North America. All mitigated by Nestlé Continuous Excellence. The Zone did, however, increase its brand investment in the first half and it’s continuing to address, to bode its brands over the longer term. Next, zone Europe. The zone had a strong second quarter with the uneven quarterly trading pattern created by Easter, they balanced itself. RIG accelerated from 1.9% at the first quarter to 2.7% for the half. Pricing also picked up by 100 basis points to 1.4% to give organic growth of 4.1%. This first half performance is a good reflection of the underlying growth in the zone, perhaps least impressive in Western Europe, with a continued positive growth in Spain, Portugal, Greece and Italy, despite the tough economic environment in these countries. As a Group those countries achieved about 4% organic growth. Maggi Juicy Roasting is performing well in these markets as our Nescafé and Ice Cream. PPP has grown high single-digit in Europe. The growth was about 20% in Spain for example, demonstrating the benefit of our strategy of rolling PPP’s into the developed world. It also confirms our belief that it is possible to generate growth but the right innovation even in less difficult markets. Germany saw a meaningful acceleration in Q2 where 80% sales holding or growing share. Most categories are performing well in Germany. Growth in the GB region was flat, but shares were up overall. The Confectionery business had a strong Easter and has gained share. In Soluble Coffee there was a good performance for Nescafé Dolce Gusto and the mix is variance. Dolce Gusto is now the market leader in the U.K. both in machine and capsule sales. Maggi Juicy Roasting had a successful launched in the U.K. even despite Maggi not being a particularly well-established brand in Britain. This demonstrates the strength of the Juicy Roasting concept. France continued to perform well with mid to single-digit growth and share gains in all categories. Ice Cream, Soluble Coffee and Frozen Food were particularly strong. In Eastern Europe, we are continuing to see subdued sales growth in Russia particularly in the big chocolate category. But we are enjoying good growth in a number of other countries, including the Ukraine and the Baltic region. Looking at the categories for the Zone as a whole, all of the categories were positive. Their performance reflected both in our strong market share performance by country and mainly achievement of above category growth for the Zone as a whole. As we’d expect the category story is one of continued momentum from Q1. The strong performances in Ambient Culinary, Frozen Pizza, Chilled Culinary, Soluble Coffee and PetCare, equally the key innovations, continued perform well. Nescafé Dolce Gusto has gone over 400 share basis points in the machine market. Further expanding a sales base as growth continues above 50%. The other Nescafé launches Green Blend and Crema also continued to perform well. Maggi Juicy Chicken has evolved into Maggi Juicy Roasting and the way just expanded into other medium fish dishes as well as into new markets geographically. This is one of our fastest growing innovations. Innovation is a core aspect of our strategy and we are accelerating our efforts here. We are making a real difference from driving growth and creating value for our consumers. The Zone has delivered a strong operating margin performance in a particularly difficult operating environment, characterized by weak consumer sentiment in some markets and by an extremely tough competitive environment. The key driver of this operating performance is a strong delivery, savings to Nestle continuous excellence, in addition, the benefits of previous restructuring facilities of businesses and employees best retirement programs. Next is AOA. This zone had a very strong first half, especially when one things, the news headlines from the region dominated the first few months of the year. This performance is broad based as we are seeing good growth in Africa, the Middle East and a number of Asian markets. In Japan, we are the first food and bev company get back to full supply to the retailers, a great effort by our people; we are now seeing a performance at normal levels. And we are gaining share in soluble coffee, chocolate and ready-to-drink beverages. The Greater China regions are accelerating with over 20% growth. Our nut business is now back to previous levels and very strong momentum. Our Ice Cream business in China is also are growing very well following its relaunch last year, including a strong PPP portfolio, the growth is over 30%. The Ambient Culinary business had a strong second quarter after a slow start to the year and is growing in the teens. Nescafé is also performing well, both in the soluble and ready-to-drink variance. The Central West Africa region is another highlight even that includes CETIVA while we’re reestablishing supply chain networks. Growth in the regions being led by ambient dairy and beverages. The South Asia region which includes India is growing over 20%, all regions categories are growing double-digit. There have been culinary and chocolate both above 30%. This growth rates explained on increase investment in region. PPPs were accretive to the Zone at 18% organic growth. The Zone’s trading operating profit was up 50 basis points, the increase raw material prices have been offset by savings growth, leverage and pricing. The rest of the raw material pressure for the Zone is in H2 and there is also a greater benefit to come from the Zone’s pricing actions. Next is Nestlé nutrition, nutrition has had a strong first half growth performance driven by the infant nutrition business, which is achieving double-digit organic growth which gained 60 basis points of share on a global basis. The infant nutrition performance is well balanced across all division’s baby food, Infant Cereals and Infant Formula and all regions including some markets where we have seen to be having a tough time more recently. For example, France is achieving double-digit growth and we’ve gaining share in every category and channel there. The emerging markets are growing dynamically whether in Europe, Asia, Africa or Latin America. Infant Cereals continue to perform very well. The North American business is also performing well relative to its market. Our formula market share in the U.S.A. is now 17% up and below 15% three years ago. The Infant nutrition performance is built on a number of pillars which have come together over the last couple of years including successful innovation formula in cereals, improved communication were used around, expanded distribution, regular 60-40 testing, increased competitive intensity, inclusive record relationships to leverage the scale of other Nestlé businesses in the markets. I’m also pleased to say that our BabyNes launch go off to a good start in Switzerland. The French and British launches of Jenny Craig and the business in Oceania are doing fine. But we have some big – we have some issues in the U.S., our biggest market. It is clear that the weak economy has played a role in impacting the business. We are making some changes including to our marketing strategy and we should start to see an improvements in the coming months, particularly in rebuilding new client needs which are the key to longer-term growth of the business. Nestlé Nutrition’s operating margin is down 90 basis points versus a tough comparison last year. This partly reflects the raw material environment in particular the contrast – the low cost H1 2010, but also the performance of Jenny Craig. We expect to see an improvement in the zones operating margin in H2 as pricing taken already this year works its way into numbers. Nestlé Waters is next. The organic growth of 5.8% reflects continuous strong performances in many markets for the appropriate brands. It is also measurable that the pricing has turn positive in the second quarter after over a year of reducing brands. Highlights included double-digit growth and share gains in France and Belgium. Strong performances globally for Perrier up 14% and S. Pellegrino up 9%, as well as Vittel, Acqua Panna and Nestlé Pure Life a double-digit growth in the emerging markets, both in Asia and in Latin America. The North American market has been challenging. Pricing taken earlier in the year has impacted volumes as others have been slow to follow. We’ve retain shares in North America on the year-to-date basis or a slipped in recent months. In Europe, there is positive growth in many markets including France, Germany, Italy and the U.K. The trading operating margin fell 140 basis points. This was due to increased all related NPET costs not offset by good delivery of efficiencies and gradual price realization. Nestlé Professional is continuing to build positive momentum, notwithstanding the fact that economic conditions remained subdued. Growth was double-digit in emerging markets, as much as 20% in China, for example. Whereas positive growth too in North America where beverages are performing well and in Europe. The 2010 launches of Premium and Super Premium Nescafé machines have been well received by customers and sell momentum is building. Nespresso is continued to grow at a high rate slightly above the Q1 level. This is an investment year for Nespresso. In the first half we’ve seen a very high level of marketing spend, supporting the successful launch of the Pixie machine in the 50 markets simultaneously. This was the first machine launched by Nespresso to be done globally. They have also opened new boutiques in clearly in St. Petersburg and Stockholm. A further development in Nespresso is the launch of new machines for the out-of-home channel. Nestlé Health Science achieved double-digit RIG. The company only created on the 1st of January is now fully operational and has already been active in M&A as you’ll have seen, regarding the future growth platforms in strategic areas. The decline in trading operating profit for the whole segment is done mainly due to investments in Nespresso and Nestlé Health Science. Next is the product group review. I have already touched on most key messages, so I’ll go through this quickly, only making a comment if I have any additional value to add. On this slide you can see that all are delivering positive growth. Let’s now go through them individually. First, is powdered and liquid beverages. Soluble coffee has had a strong first half both in terms of growth which double-digit and in terms of operating margin. Performance was good in all three zones and in Nestlé Professional. The markets have been very focused on their key innovations align with good – with our growth drivers with good execution and appropriate brand support. For example in Europe, these include Nescafé Dolce Gusto and Nescafé Sensazioni both examples of premiumisation, Nescafé Green Blend an example of Nutrition health and wellness and Nespresso 3-in-1 an example of PPP that we’re writing out in Western Europe. We are seeing growth rose double-digits in all of these products as we are globally in PPP’s with our funding mixes such as Cappuccino’s. Pricing is increasing as the year goes on. Powdered beverages also had a strong growth in the first half particularly in Milo. Milo is performing well in Asia and is building its presence in part of Latin America such as Colombia and Chile. Nesquik also achieved positive growth and highlights included Russia and Italy. The powder category has experience significant cost pressure; sugar and cocoa in particular. Accordingly we are also seeing pricing increasing period-on-period. Marketing spends up the category. Liquid beverages performed well with the high single-digit organic growth and improved margins. I would highlight excellent progress by Nescafé and Milo in a number of markets. The trading operating profit margin is down due to innovation and launch cost both at Nespresso and in other segments of the product group. The milk business has again delivered double-digit topline growth in all zones and has accelerated from Q1 both in RIG and price. It has also being able to leverage this growth due to improved operating margin performance. The business is heavily rated to emerging markets thus continue to perform at high level driven by aligned global product priorities, aligned communication themes and focus also on increase leverage of a marketing spend, has achieved market share gains in many countries. Among our growth drivers Nutrition, Health and Wellness, for example, in growing up milks and PPP’s which are also nutritionally enhanced are key drivers. I’ve already touched on Coffee-Mate in my Zone America comments. The Ice Cream investors had a good start to the year in all three zones. Particular successes include China, France, Germany, Switzerland, Egypt, Latin America, Indo-China amongst others. The great drivers and innovation are key contributors here whether out of home or in-house business, the PPPs including our peelable ice creams, which is now in 11 countries and doing well in all of them. And also are now available in new variants, Nutrition, Health and Wellness such Slow Churned or premiumisation such as Häagen-Dazs and Nescafé Frappé Latte in Spain. Next is Prepared Dishes. The frozen food business in Europe continues to be driven by the strong performance of pizza both under the Buitoni and Wagner brands. I’ve already discussed frozen in North America. Culinary Chilled, particularly, Herta continues to perform well in Europe, especially in France and Germany even if part of this business exported from Switzerland is suffering due to the franc euro exchange rate. The ambient culinary business, primarily, Maggi – it had a strong first half both in emerging markets and in Europe. The recent acquisitions in Eastern Europe and Latin America are performing well. We have new capacity coming on-stream in India and China. Our biggest markets are all increasing market shares. The Toll House group – the toll house group’s margin increased 30 basis points. They have good performances in most businesses, which compensated the integration costs for the pizza business and have input cost such as Cheese, Whey and Meat remains frozen. There are also low restructuring charges than in 2010. Next is Confectionery, I will start by reminding you that we had over 8% organic growth in the first half last year. So 4.2% in the first half of 2011 demonstrates good momentum over a tough comparative. The business is performing well, but under 17% of sales gaining share, including key markets such as the U.K. We had a successful Easter season around world, demonstrated by a strong pickup in growth in the second quarter in each zone. Both China and India are growing over 20%. The growth would be even higher above the capacity constraints that we’re addressing in both countries. I’ve already discussed the U.S. Pricing was increased during the year driven by increases in milk and sugar costs. Thus pricing is a contributing factor to the improved margin performance, but equally the higher contributions from some of the faster growing markets as well as benefits from the European restructuring in recent years. Next is PetCare, overall we have seen a building of momentum from the Q1 growth numbers, where growth in Q2 twice the level of Q1. Europe has continued to grow at a good level driven by the success of innovations for cats such as Purina ONE, actually the expansion of Felix brand in the Central and Eastern Europe and the launches of Felix Sensations and Gourmet à la Carte. For dogs, we have enhanced our leadership in all the pets with the successful launch of Pro Plan Senior Seven Plus. We’ve also launched Beneful Little Enjoyers taking Beneful into the small dog market for the first time in Europe. I have already discussed the strong positive performance by the North American business, which achieved share gains in those segments. Growth was double-digit in Latin America and in the emerging markets as a whole. Globally Purina outpaced the growth in its category by a 184 basis points. The trading operating profit was impacted by commodity prices. This is not just because of the 2011 impact, but also because we were very successful in 2010 in the first-half with our commodity hedges. You might remember that the H1 2010 margin was up a 190 basis points. Effectively therefore we made a difficult comparative. We have seen improved margin performance in the second-half out by a nominal comparative and by the benefit of pricing taken in April. That concludes my run through the business performance. I now hand back to Jim.

Thanks, Roddy. On the next slide is the rest of the P&L. I have shown both the 2010 comparison against the continuing operations and the group performance. Reduction in net financing cost and lower tax expenses contribute to a 60 basis points improvement in net profit for the continuing operations. A comparison with the 2010 group numbers including Alcon shows a marginal decline of 10 basis points in net profit as reported. The group’s underlying earnings per share are up 5.2% in constant currencies. Turning to cash flow and net debt, the operating cash flow is CHF1.7 billion. This is a good performance albeit lower than the first half of 2010 recognizing the impacts of the sale of Alcon, currency weaknesses and working capital. First Alcon, Alcon’s cash flow was about 1.4 billion in the first half of 2010. Now currencies, you may assume a conversion impact on our cash flow broadly similar to the impact on our sales. On top of this, we made an investment in 2010 to protect foreign currency assets. This was already reflected in the full year 2010 cash flow. These impacts created a negative comparison from first half 2010 to first half 2011 of about CHF 1 billion. Third, working capital, which increased about CHF1.2 billion, but improved slightly as a percentage of sales. We made a tactical decision to increase inventories in order to manage capacity constraints in some of our fast growing emerging markets and a disruption in our supply chain caused by external events. As a whole, working capital has improved as a percentage of sales. Turning now to our net debt position, half year net debt was CHF14.5 billion compared to CHF29.6 billion in the first half of 2010. The big impacts include the sale of Alcon, the dividend payment in 2011, the share buyback and the medium to long-term investments in treasury shares and other long to medium-term investments. The 2010 dividend payment, which was up 15.6% per share in Swiss francs resulted in a payout of CHF5.9 billion. We bought about CHF4 billion of shares in the first half and continued in July to nearly complete our CHF10 billion program started last year. We have increased our medium to long-term investments from 2 billion to about 4 billion. These investments are Blue Chip, we have made them because we needed to manage the proceeds from Alcon beyond those which were used either to restructure a debt or for the share buyback. The benefit of treasury shares are mid to long-term investments beyond the inherent – investment characteristic is that they enable us to maintain an appropriate degree of financial flexibility. With CHF14.5 billion of net debt, we are approaching the level that we had at the end of 2009, which we told you was an appropriate level for the Group at this time. If our medium to long-term investments are included, then net debt would be CHF 10.5 billion. Now let’s look – have a look at our priorities for our Use of Cash. As you know our clear priority is to invest in our business either internally or externally. We have stepped-up the level of capital investment. You can assume it will about CHF5 billion in 2011. We have also stepped-up our M&A activity though we remained focused on bolt-ons. I will come back to both these areas on the next slide. After investment in our business, the next priority is to return cash to shareholders through our dividend. The priority for us is the actual Swiss Franc amount of the dividend, not necessarily a ratio. We would expect that all things being equal to continue to enhance the dividend we pay to our shareholders. Buying our own shares, well as part of the buyback or the whole is treasury shares is optional. We see this is a tool from managing excess cash assuming that the share price is it in appropriate level. Therefore our announcements of the share buybacks having being part of the discipline approach to managing our balance sheet, whilst retaining financial flexibility. On completion of the current program, we would have returned CHF39 billion to shareholders since 2005 through share buybacks at an average price of CHF48 per share. At the same time, we would have paid CHF31 billion in the dividend. In the first half of 2011, we’ve committed to about CHF10 billion to the dividend and share buyback. This had to be paid in Swiss Francs from cash flows generated in significant weaker currencies. We’ve also committed about CHF10 billion Swiss Francs, the total capital and acquisitions. Given the current economic environment and the consequent need for financial flexibility, given the fact that we use currency cash, foreign currency cash flows to buy our shares in Swiss Franc and importantly, given the fact that there are potential alternative usage of our cash, such as investments and capabilities and bolt-ons, that provide greater long-term strategic value for our shareholders. We believe that today is not the right time to be launching a new share buyback program. However, buybacks will stay on the board review on an ongoing basis as an option to address excess cash built-up by our company. On this slide you can see some of the capital investments that we have announced recently. It is not exhaustive, however. The projects include Confectionery and Culinary in India and China, PetCare in Hungary, Powdered Beverages, Cereals and Milk in Indonesia, Cereals in Malaysia and Turkey, Infant Formula in Germany, Milk in Brazil, Culinary in Nigeria and South Africa and so on. On this slide you can see some of the recently announced and our completed acquisitions. These include our two proposed acquisitions in China, now on the consideration by the authorities as well as three deals for Nestlé Health Science, Culinary in Eastern Europe, Beverages in the U.S., Dermatology in Sweden among us. By now you know our strategic roadmap well. Our performance in the first half has been coherent with our strategic priorities. I would like to tell briefly on brands and innovation, which are key areas of investment for us. First, a quick look at our Billionaire Brands: as you’ve heard during Roddy’s presentation, these brands have contributed greatly to our first half performance. In total they achieved over 8% organic growth compared to 7.5% for the group as a whole. Their growth is reflected in strong market share performances. All the brands in beverages, nutrition, waters and confectionery are achieving positive organic growth. In Frozen, Lean Cuisine has returned to positive growth in a declining Frozen Food category. Stouffer is marginally in negative territory, but it is gained share over the last year. PetCare continues to be a generally good picture, despite the slower growth of the category as a whole. Friskies, ONE, and Purina all positive and the growth of more than 10% for Dog Chow, Ice cream, in ice cream, the Dreyer’s brand, which is heavily present in the U.S. Premium Glycom Segment has been under pressure from private label and original brands that is only marginally done less than 1%. One other reason for the strong performances over Billionaire Brand is our continued high level of innovation. Innovation is a value-added growth driver for all our categories. The great benefit is as we enhance value for consumers at each consumption movement, we also enhance value for our shareholders. Making this more tangible, here are few of the innovations from last year that have contributed to strong first half improvement in our performance. Nescafé would have clear segmentation strategy for its innovation, super premium with Dolce Gusto, Premium and Nutrition, Health and Wellness with Nescafe Green Blend and PPP such as Nescafé 3-in-1, launching successfully in Europe. We’re seeing strong growth in all these segments from well over 50% for Dolce Gusto, doubled 15% for our premium range. In ice cream, we also have a range of PPPs the peel of a PPP ice cream has been one of the most successful launches in this category. On this slide, we have captured just some of the innovations launched in the first half. In ice cream, we have launched the new shake concept in developed markets as well as Häagen Dazs noticed in the U.S. The dairy businesses extended Coffee-Mate out of the non-dairy creamer market into dairy creamers. It also has a raft of launches and extensions in the emerging markets included value-added liquid milks such as Needle protectors . In Prepared Dishes and Cooking Aids, the Maggi Juicy Chicken range, the leader in this segment has evolved into juicy roasting now for beef broth or fish, for example and its international rollout continues. In the U.S. frozen category, we have responded to the tough environment with news lines and extension such as Lean Cuisine snacks. In PetCare where I mentioned, our improving market share performance on a global basis, there is a strong roll call of innovations, a few of which are listed on the slide. In Chocolate, we are building on the – and the Wonka extension into chocolate and are now extending SkinnyCow into the category. We launched Aero biscuit in the U.K. We took KitKat into Brazil and launch KitKat Black in Japan with a special type of wafer. These were just some examples of recent launches and extensions and our pipeline has much more to come. The future will not just be bringing new products, but in addition also new routes to market, new technologies, new system capabilities, as well as a range of innovation in nutrition and Nestlé Health Science. Next slide that I showed at the first – at the full year conference call early this year, we said then that we understand the challenges we faced in 2011, and that we would be taking a holistic approach to managing that. I think these first half numbers demonstrate that we’ve done that. We’ve compensated input cost pressures not just to savings in those areas that have been directly impacted, but also through savings in administrative cost for example. We also talked about a rich pipeline of innovation and about growth momentum. We’re seeing the benefit of both in our continued strong level of real internal growth. This is a growth on top of growth year-after-year. But we also have momentum in extending Nestlé continuous excellence and with our growth drivers, such as Nutrition, Health and Wellness, PPP, premiumisation and out-of-home. Our growth momentum is contributing a positive mix effect due to the faster growth of our emerging markets, which are benefiting from increased capacity investment. We also said then that we would deliver a Nestlé model again in 2011. We’re confirming this guidance with organic growth at a top end over 5% to 6% range. We continue to run the business with the mix of long-term inspiration and short-term delivery. And we believe that in today’s environment these qualities will really help us outperform. So to conclude, it has been a challenging first half. But we need to separate the foreign exchange impact under reported numbers from the underlying solid operational performance. The foreign exchange movements on our numbers are a big impact on translation, no question. But it have only a small impact on our underlying operations. We are fundamentally a conglomeration of local currency and regional currency businesses that are leveraging – our global skill to compete successful. I believe that we have demonstrated our operational strength in the first half by delivering a strong performance in all KPI’s. Organic growth is strong, the operating margin is up and our underlying earnings are improved in constant currencies and we have continued to invest in the future. The real differentiating highlights of the first half of 2011 is that Nestle has not only delivered where you would expect us to deliver but we have also delivered against the odds as our businesses have demonstrated their ability to perform in the toughest of times. Where it is in Central West Africa achieving double-digit growth despite beyond rest in the region or the Japanese business disrupted by natural disasters already it is our business in the troubled economies of Southern and Western Europe that continue to deliver positive growth. These achievements not only differentiate or performance in the first half, they also give us confidence in our ability to deliver for the rest of the year but beyond. Finally as I said, we have unprecedented opportunities to invest in future growth particularly the emerging markets both organically with CapEx and through bolt-ons. With that in mind and we then eye on the certain economic environment. We are retaining financial flexibility to drive our strategic priorities with confidence. Thank you. Now, let’s open up for discussions.

Thank you, ladies and gentlemen your question-and-answer session will now begin. (Operator Instructions). Our first question comes from David Hayes (Nomura). Please go ahead. Your line is now open. David Hayes – Nomura: Good morning, gentlemen. Thank you. and you just have the quick on the buyback or if you can give us any kind of background as to whether that decision on the policy would change or taken in the last few weeks would be – obviously the market and the economic uncertainty that we’ve seen and whether also with the Swiss Franc with the last few weeks that you delay and that’s recent dividend pay through considerate which is part of that decision process as well as you watch that play out. And then I guess still especially on cash flow again. You kind of eluded to maybe some other points in the presentation. But I am just facing that the variation in other operating assets and liabilities is in additional outflow about 1 billion in the first half versus last year and then other investing cash flows about additional 1.5 billion. There is one of thing is in your color is to what those outflows actually willing to why there quite a big difference to the first half for last year. Thanks very much.

Okay. Let’s come back to the share buyback program. David, we have always said the share buyback program is optional given the priorities we have laid out. The priority is always been to invest in building or business. I believe that this year as we have communicated to you that we have several opportunities to invest in CapEx for organic growth in the areas where – especially in the areas today where we are constraint because of very demanding utilization of existing capacities. And you’ve seen what we’ve announced in terms of possible M&A transactions this year. In addition, our commitment to the dividend, you see the dividend increasing year-after-year. Those are really our priorities. I think you’re right, given the economic environment in which we operate, plus combined with the opportunities we have to invest the cash flows, we believe it is a point in time where we have to focus on driving the business with confidence. We’re not saying that share buybacks will never occur, as we said share buybacks will continue to be under the watchful eye of the board and they will make a decision on that from time-to-time. But I think at this moment as we’ve communicated, our focus is really driving our internal priorities. On the cash flow, yeah, just on the cash flow, David, I think generally I don’t want to get into the specific lines. If you look at our cash flow, CHF1.7 billion in cash – in operating cash flow and about 300 million in free cash flow, which is about just under 3 billion down for what we reported last year. First of all, we said Alcon, the impact and the disposal of Alcon in our free cash was about 1.4 billion. Working capital increased about a billion. The carry of the foreign currency on financial assets, the impact and refunding, the negative impact was about one billion and minority and associates was positive about 0.5 billion. When you add those up, it basically explain where we were half-year versus half-year. Now, you also realize that the impact on the cash investments, etcetera for the Alcon on proceeds, most of those occurred in the second-half of last year. So they are more or less in this half-year versus last half-year. So the comparisons are a bit different, the base is slightly different. However, I would say those three or four items explain the movement in cash flow. David Hayes – Nomura: Okay, thanks. Just quickly on back on the buybacks, from what you are saying the decision on the buyback policy today, which you say may be reviewed, but that could well be the same decision three months ago rather than today effectively. It was kind of a long-term. It’s a long-term plan rather than a reactionary to the marketplace.

Yeah. It is and as we said David, when we announced our first half-year results, we said that we will not make any decision on the share buyback while we are continuing to execute the existing program. David Hayes – Nomura: Okay. Thank you.

Also...

Our next question comes from Alain Oberhuber from MainFirst. Please go ahead. Your line is now open. Alain Oberhuber – MainFirst: Okay. Good morning, Roddy. Good morning, Jim. I also have two questions. First is about the working capital increase in H1. Is it a strategic one just for this year or is it also for 2012 giving that the coming guidance remains difficult. Maybe you can elaborate a little bit on that probably if it looks pretty interesting. Secondly, could you give us some views about your numbers as we tend go through and PPT revenue numbers please?

Just on working capital – Alain thanks for the question – the 1.2 billion was significantly influenced by inventories and the inventory build in the first half compared to the first half last year, as I said, related to some specific circumstances. There are markets especially in the emerging markets particularly in Asia, where we had to build our inventories to overcome certain capacity issues that exist at that point in time. We are addressing those as you noticed on the chart by accelerating our investments in several factories to address these issues. And the other issue is that we have had severe disruption in certain parts of the world, because of high impact events that have been announced from time-to-time. So I think our objective over time is to manage our working capital relative to the evolution of our sales. And in spite of the increase this increase in working capital, working capital as a percentage of our sales is trending down, so I think that trend will continue, at least that is our objective. Roddy Child-Villiers: And on your second question, PPPs, and we gave you a number, grew 13.3%, Dolce Gusto was well over 50%. Those the numbers – Alain Oberhuber – MainFirst: (inaudible)

Okay, well, the PPP is around 5 billion we haven’t got the Dolce Gusto number at this stage in the year, it’s not, it’s not a – Roddy Child-Villiers: Just to let you know that that Dolce Gusto is trending to exceed CHF0.5 billion, more than CHF0.5 billion. Alain Oberhuber – MainFirst: Thank you.

Thank you. Our next question comes from Patrik Schwendimann. Please go ahead. Your line is now open. Patrik Schwendimann – Zürcher Kantonalbank: Patrik Schwendimann, Zürcher Kantonalbank. I think I really, first regarding your statements about the dividend, you are mentioning that you are continue to enhance it, so does means that your overall 6 billion for the current financial year in spite probably negative improvement in Swiss franc? And secondly, regarding the margin improvement, which will – really goes – the gross margin to be 40 basis points in local currency in the second half you were already mentioning that the second half of 2010 has already this admin cost improvements in it. So does mean that in H2, the margin could more or less be stable in local currency? That’s my second question. Thank you.

Thanks Patrik, the dividend as we said assuming everything else being equal, that it is the intention to enhance the dividend in Swiss Franc. That’s the intention. And that is how we have approached the dividends in the last four or five years. Every year you have seen a substantial increase in the dividend, but that’s the level, you know it is our intention that we will improve the dividend payout in Swiss Franc to our shareholders. How much will depend on the particular circumstances. The margin improvement, we said also that our margin including the all EBIT margin, the model is that we will improve in constant currencies. You notice that the EBIT level we were flat in constant currencies. So we are expecting that margins will improve also in the second-half. Roddy Child-Villiers: You will remember for 2010 we had a sort of reverse of 2011 with a very tough H1 comp and an easier H2 comp. So it’s the reverse this year, there’s opportunity for the margin from previous divisions . Patrik Schwendimann – Zürcher Kantonalbank: Okay. Great, and thanks.

Thank you. Our next question comes from Jamie Isenwater from Deutsche Bank. Please go ahead. Your line is now open. Jamie Isenwater – Deutsche Bank: Good morning, just one question actually. There is a big decline in your litigation in onerous lease costs in the first-half rather CHF100 million swing. I was just wondering what the driver of that was and whether you can give us any help on what we should expect for the full-year. Thank you.

Morning, Jamie and thanks. Yes, there is a decline in the other, what we called other trading operating expense – other trading expenses and income. You know the litigation expenses are triggered depending on different circumstances. This year so far, it has been very low and I’d love to give you guidance, but I really don’t know, because I don’t want to tell you, we are going to spend more in litigation and in fact so far we have spend very little. And so I really can’t give you guidance. We have given you guidance more or less in restructuring, which we said, it will be 30 to 40 basis points. We will have to make decisions with respect to making provisions for litigations, depending on what’s there to be. We don’t see any particular material litigation currently, but we have to manage that from time-to-time. Jamie Isenwater – Deutsche Bank: And just on the own risk leases, presumably you’ve got a bit of – you can see for the full year, is that a big number? Is that a big swing factor?

Not so far this year. Last year we had some arrangements with respect to 13 contractual arrangements, 300 supply chain that we’ve had to sort out. This year we don’t have any of those so far. There always going to be litigations and on owners contract et cetera. But I really can’t give you any guidance on that. But let’s say we do our best to manage our business in a way that we avoid those costs. Jamie Isenwater – Deutsche Bank: All right. Thank you very much.

Okay.

Thank you. Our next question comes from Jeremy Fialko from Redburn. Please go ahead. Your line is now open. Jeremy Fialko – Redburn: Hi, Good morning. Jeremy Fialko of Redbank here. Couple of questions. The first question is on your Europe, your zone Europe margins. You mentioned net of pension cost benefit within the half. Can you quantify how much contributed that was to the region’s margins and what you see the impacts to be in the full year? And the second question is on your coffee business, saying that’s one which has had some very significant input cost inflation in it. Can you say how much of that you hope was really price through and kind of how the volume reactions have been so far and what you’d expect in the second half of the year? Thanks.

I think I’ll take – sorry – I’m taking the coffee question. As we said, the soluble coffee business had a good year both in terms of price and in terms of margin. So we’ve clearly been successful in recovering the cost pressure that we faced. The same is through in the Nespresso business. The weaker H1 related to 2010 is simply a result of the launch of this, a first ever global launch of a coffee machine, the Pixie machine. So we have been successful in protecting the margin. We have priced up clearly. And we have not necessarily always been following as quickly as we would have hoped by the competition. And soluble is – has had some share pressure as a result of competition has since followed and we are seeing the share coming back. So I think the soluble business is in good shape. The strength in Nescafe brand helping us to keep the necessary pricing. Roddy Child-Villiers: Jeremy on the pension question first of all, I think, the first half we’ve seen some good results from our pension plans. Or especially in Europe the pension, the funding ratios have been up. We have some benefit, of course, by virtue of foreign exchange translation. But over the last two years, we have done a lot of work and trying to restructure – benefit plans for post-retirement benefits. And we’ve started to make some good progress last year in some markets and this year we continue to do that. Last year we had about 125 million for the whole year. This year we would like to get closer slightly above that. But what I must caution is that most of the benefits that we got last year was stores in the second half whereas this year the benefits are in first half. So, that was sort of average itself during the course of the year, but we expect around that as a benefit from the restructuring of our post-retirement benefit plans with the big focus in Europe where we have not done that for many years, but now we’re doing this. That’s – hope that I answers the question? Jeremy Fialko – Redburn: Yeah, Thanks. Thank you.

Thanks John.

Thank you. Our next question comes from Robert Waldschmidt from Merrill Lynch. Please go ahead. Your line is now open. Robert Waldschmidt – Merrill Lynch: Good morning, gentlemen. Two questions if I may. In terms of the margin bridge and how we think about second half, I remember guidance was margin to be stronger delivery second half weighted. Can you remind us in terms of input cost that would be first half weighted from memory what do you expect the impact to the second half? And then two, in terms of A&P, consumer facing it was up in first half can you – can you eliminate first half will be in second half? And then second question you mentioned unprecedented opportunities to invest in the business both organic and inorganic. Can you remind us in terms of what opportunities you are looking for in terms of deals, sizes, categories and regions perhaps? Thank you.

Okay. Just let me deal with input cost. Yeah, we did say that – we did say that the input costs this year, the impact would be somewhere between to the upper-end of the range we had given which is 2 to 5, 2.5 billion to 3 billion, CHF2.5 billion to CHF3 billion in terms of price mix. We’ve seen a slightly more than half of that impact in the first half of the year. So, we do expect that there will be a marginal decline on impact on the second half of the year. On A&P we continue to spend to support our brands. You’ve seen in constant currencies or consumer facing marketing was up 6.2 in constant currencies and this was on top what we spend the same time in 2010, which was up 14% in constant currency. So, it is an investment priority for us. And you have seen that – you have seen the benefits of that, primarily through the improvement in market shares on a global basis and the strong real internal growth of nearly 4.8% for the first half. On capital, so – by the way just coming back on the input costs guidance, I want to maintain – I want to reiterate our guidance on input costs this year for pricing mix to be somewhere at the upper-end of the 2.5 to CHF 3 billion range. On capital expenditures, we have announced and that’s portrayed on the slide, we announced several major capital expenditure programs around the world, primarily in the developed – in the emerging markets, where we are experiencing very good growth. So that of course has always been a priority for us, and this year we will spend about close to CHF 5 billion, I mean, that recognizing that there is also an impact in the exchange. So we had said 5 to 5.5 billion given the exchange impact we’ll be closer to 5 billion this year. On M&A, we also have included that on the slide. Those are dues that have been completed and announced not yet completed. And that – those are the projects we are working on to make sure we bring them to a successful completion. I unfortunately will not give you any specific targets, but I would say that we are looking for M&A opportunities all over the world in the developed world, in the emerging markets and in categories that are of strategic importance to our future. So we are focused on bolt-on acquisitions and that what we will continue to do. Robert Waldschmidt – Merrill Lynch: On – thus do you see more opportunities now than a year ago? Should we expect the activity to increase again?

Yeah, I would say in our industry, I have seen a little more activity this year than last year and it’s not only in emerging markets, it’s all over the world. But we are going to be very discriminate in terms of what is strategically compelling and with good financial logic, and that’s how we are pursuing these deals. Some maybe we will win, others we wouldn’t, but that’s how we are – that’s how we have always conducted our M&A – executed M&A strategy for the Group. Robert Waldschmidt – Merrill Lynch: Thank you very much.

Thanks.

Thank you. Our next question comes from (inaudible). Please go ahead. Your line is now open.

Good morning, James. Good morning, Roddy. Two questions if I may. The first one just on the raw material guidance the 2.5 to 3 billion, given the strength of the Swiss franc effectively as the underlying increment, but just a little bit surprise that given what we are seeing name number of commodities. I know although the – hedging etcetera but we still have seen a number of new material inputs come down quite significantly over the last quarter. So I am just a little puzzled as to how and on the underlying basis you’re effectively increasing the commodity savings? And so if you shed any color on that and that would be great? And secondly, on the long-term financial investments, could you give any color as to what is actually in there and also the rationale. So you’re effectively using your favorable short-term borrowing cost to buy longer-term investments on the asset side or if you could just qualify a little bit the thinking behind it. Thanks.

Okay. On raw materials, yeah I mean we, in the guidance towards the 3 billion impact does include the benefits of transaction exchange cost in the markets. So, yeah, there is – the question is, if do you see everything was okay in the world and with this number increase or down, but unfortunately it is not and there is continues to be significant volatility in the markets. So, giving where we are and we have spent slightly more than half that number already, it’s difficult – I don’t think it’s advisable to change because of volatility in currency and commodities. We have more or less seen some offsetting impacts and we’re confident the guidance to the upper end of 2.5 billion to 3 billion is what we’ll likely experience this year. Roddy Child-Villiers: (inaudible) It’s worth remembering that our guidance does not based on prices at the time. It was based on our expectation for our prices are going to evolve over the course of the year. So the pricing – so the guidance was incorporated a view on the various commodities as well as on currency impacts.

On the long-term investments, this is what we did is really the overflow of the income from Alcon disposition and the timing horizons of our data obligations. And we had the excess cash was invested in equities, a lot of it is in European equities where we are spending a lot of – making a lot of investments in capital and also some of our M&A deals and in bonds. And then of course we also have some treasury shares which we are holding. So, as I said in the discussion that this – the nature of these investments are good from a return point of view, but also give us the flexibility in event we need cash in those parts of the world.

So it’s just – one point of clarification, did you see some of this money is been invested into European equities?

No, no Asian equities.

Right. But this is sort of Plain Vanilla coated equity limit?

Yeah, more or less. Well, when you see a Plain Vanilla – yeah, these are Blue Chip companies in these markets. And we have investment managers. This is being managed by our investment management company. So, we have a target return for the Group of assets and that’s what we expect to get.

Right. Okay, thank you.

Thanks.

Thank you. Our next question comes from Jon Cox. Please go ahead. Your line is now open.

Yes. Jon Cox (inaudible). I have couple of questions for you. First on the guidance – your 5% to 6% will be towards the top end this year and obviously – in the half in Q2, when you saying that pricing will actually increase as we go through the year. You said regarding that you are only going to be somewhere around 4, 4.5 in the second half of the year. It’s all going to be volume, I am sorry, it’s all going to be pricing and actually volume will go negative. Is that a correct, sort of, extrapolation of what you are saying or are you just being slightly cautious as we still have some ways to go for the EBIT. That’s the first question. Second question, Jim previously you said you don’t want Nestle to go back to AAA credit rating. You said that you need probably 25 billion net debt on your balance sheet to avoid that. My calculation is at least including your investments you will be probably around 7 billion at the end of this year, because you have stopped the buyback program. Is it still your aim, I can understand what you are saying about the M&A and you probably have a bit of a pipeline. But can you still see that you are going back to the 25 billion net debt just on the M&A, just wanted sort of bit more guidance on that, if possible. Thank you.

Okay, John. Thanks and good morning. First of all, on the organic growth guidance I think, yeah, we are cautious, because of the environment in which we are operating. And by the way to get even to 6% we have to do more than 5% for the rest of the year. We are not saying that is what we are going to do, but our guidance, yeah, you can say we are being cautious. I think at this time this is what we believe is prudent to do. We are not letting up in the organization to do less. We will do and we will be competitive as we have done in the past and as we need to be to make sure we get fair share of growth, and continue to drive our market shares. But at this time, yeah, we are guiding towards the top end of our 5% to 6% range. We’ve look at it in the third quarter again. But we feel comfortable with this. And we think that’s a good challenge to the rest of the organization to keep driving our competitive performance in the marketplace. Roddy Child-Villiers: John, I think also the Q2 is perhaps not the right start point for which to base your expectations for the full year, because the Q2 RIG was clearly inflated by the late Easter. So probably the half one is a better start point than the Q2 number if you’re thinking about your full year. We told you back in the Q1 that Q1 was impacted negatively, Q2 impacted positively on RIG side and clearly has been. So I think the H1 numbers are a better start point than the Q2 number.

Yeah. And the other thing John is that the first half price was 2.7% and that’s what we said that that average will increase as the year progresses. Now coming back on the AAA and the debt ceiling and the debt level, we had said in London during our subsequent discussions that we were targeting by the end of 2012 that we will be back to our net debt position as to where we were at the end of 2009, and at the end of 2009 with Alcon, we were about slightly over 15 billion, without Alcon we were about 18 billion. So somewhere between those two numbers is where we think we will be at the end of 2012, 2013. So we’ve have never mentioned the CHF25 billion numbers. There must have been some miscommunication, but that is – that is or in – that’s what we said at that time and that’s telling our objective. With respect to AAA, we’ve said, we believe that our current credit quality of AA, AA+ is a gold standard that we should try for. And we know as a company, we are AAA quality company and – but we are very happy with where we are from a credit quality and a credit rating point of view. And AAA is not an objective for our organization.

Okay. I wanted just some clarifications on the pricing. I think during this I understood when you were talking about the Q2 pricing of 3.8% would actually rise as we went through the year, you’re basically saying now actually it’s a 2.7 average?

Yeah that’s...

We saw in April , it will rise as we go through into the second half of the year. So...

Yeah, because we are talking, we are talking cumulative Jon.

Yeah.

Yeah.

Okay. But even so to taking all that into account and obviously you have 4% of pricing in Q2 and I presumed that H2 will be similar to that. You seem to be implying that there will be a serious deceleration volume or you guys already working on the assumption that the volume will decline, close to zero by the end of the year? It’s – that might be imply to (inaudible) I understood, but why are you saying that?

Well, I don’t – I don’t necessarily agree with you. I think we are not – we believe that a performance guiding at the top end of our range is a prudent one. We have no expectation that our volumes are going to be negative because as I’ve said, we will continue to compete and we will drive a combination of RIG and price albeit – may be price is going to be a slightly bigger part of the mix going forward. But we were not expecting to have any kind of negative real internal growth numbers for the balance of this year.

Okay. Great, thank you.

Okay.

Thank you. Our next question comes from Julian Hardwick (RBS). Please go ahead. Your line is now open. Julian Hardwick – RBS: Good morning, two questions from me. One, Jim on the currency impact for the year. I thought, I heard you say that for the full year you didn’t seek the currency impact would be as that as the 30% or decline in the first half, is that correct that my numbers looks steady, it will still get worse by the time we get to the full year? And secondly, just like on this long-term investment, can you tell us how much of the 4 billion is invested in your treasury stock and presumably the right way to think about this is that your net debt is really 10.8 rather than 14.5 at the moment. If we try to sort of look at value, how you are going to get to your 15 to 18 rental target?

Yeah. I think on the currency, Julian, I think you may be right. If you look at the U.S. dollar in the first six months this year compared to the first six months last year, we move from an average of about -I don’t know 108 to about $0.90 over 16, 17%. As we’ve said in the same thing for the euro. It’s difficult to predict, it could be slightly better, it could be slightly worse. But at the end of the day, we have to find or we have to manage to do this as you seen we have done – we’ve done in the first half. So it’s really – it’s really difficult to give a guidance on currency impact. Given what we have seen over the last two or three days especially Swiss francs relative to other currencies. The last time I looked the Swiss franc relative to the euro was about 105, 106 and $0.73, $0.72 – $0.73 same teens to the dollars. So, but it is a reality overall and we have to manage that. Now, the impact in terms of the margin was 20 basis points and that’s also something we have to manage, and that’s why we gave our guidance in constant currencies, while also making some important underlying improvements in our performance. Now the long-term value, as I said our net debt at the end of the first half was 14.5 billion, and if you did deduct the long-term investment success rate, it would be 10.8. I think that’s a number we use. So you are absolutely right there, Julian. Julian Hardwick – RBS: And how much related to treasury stock?

2 billion. Julian Hardwick – RBS: 2 billion. Thank you.

2 billions in addition to the 4 billion. 4 billion in long-term investments and 2 billion in treasury shares. Roddy Child-Villiers: Yeah. So, the 2 billion is not part of – in other words, if we were to convert – the 2 billion is not part of the net debt whether its 14.5 or 10.8. Julian Hardwick – RBS: Okay. Thanks a lot.

Just going to back on the currency comment, since I made it in my speech. What I said was that it could lessen a bit due to the relative comparison versus 2010. In other words, the deterioration of the currency was already happened in the second half of last year. So the comparison is easier. Clearly, the currencies continues to deteriorate, then the situation will get worst as simply the volume was, but the relative start point is easier in H2 than it was in H1. Roddy Child-Villiers: Sure. I think data white spot rates are exceeding today. We were expected to see it, maybe for the full year or for the first half. Julian Hardwick – RBS: Sure.

Okay. Thanks a lot.

Thank you. Our next question comes from David Hayes (Nomura). Please go ahead. Your line is now open. David Hayes – Nomura: Hi, James. Sorry – there is a couple of follow-up again. Just getting back to that point earlier about the investments you are making on securities I guess cheating just in terms of where that comes through sort of, about setting up the cash flow. But since as when I comes through, is that included in the 2 billion of other investing cash flow then you, sort of, reconcile that with the fact that shorter investments with an inflow of 3.9 billion in the first half of the year and I then guess also just in terms of mark-to-market of those investments, do mark-to-market of those investments at the end of each period and is that appearing as approximately all other sides on the P&L and where does that appear? And I guess related to that as well, if an investor said to ask why are you investing in Asian (inaudible) equities rather than Nestlé equities, does that not mean you think Nestlé it was more other side. Wonder what you would respond to that. Thanks very much.

Okay. David thanks for the question. As you said, as you note we said before that we are also investing in Nestlé equities. We have about just under a billion in Asian equities and we have about 2 billion in Nestlé shares. And yes, if we’d likely continue to do some more Nestlé shares depending, of course, on the price. Now, I am sorry, what was the other question, David? David Hayes – Nomura: Just in terms of where you see those, that investments going through P&L, through the cash flow.

It goes into... David Hayes – Nomura: And whether you mark-to-market the investments, the return on those investments.

Yeah. It goes into the, it is mark-to-marketed, the period end as you say and it goes into the comprehensive income statement. David Hayes – Nomura: Which is equity?

Yes. David Hayes – Nomura: Okay. But not through financial income or any other, not through the main....

No, not through the operating income. David Hayes – Nomura: Yeah. And then sorry, one other operational question as well, just in terms of the confectionary margin, obviously a big movement there. You kind of explained some of the moving parts, is that the new norm margin-wise the confectionary or is that kind of a higher level than you would expect it to hold. Or is that now what we should be looking for confectionary is going to sustain as a margin point. Thank you.

I think confectionary as we said has gotten some benefits primarily in the administrative cost reduction. And that will start to normalize during the course of the year. So it’s not a target. I expect the margins will certain flatten out for the balance half – balance of the year. David Hayes – Nomura: Okay, it’s more in line with last year or frankly in terms of the first half...

We don’t give – on the margin, but just to say that it did get a benefit as we talk for this important reduction in the administrative cost in the first half. It will start to normalize itself – not normalize but it will not it will be less impactful in the second half or the full year comparison. David Hayes – Nomura: Okay. Thank you.

There also – I mean there lot million pieces going on in confectionary both the seasonality issue or so. We are seeing very strong growth in some of the emerging markets where we have very good margins. So there is as you’ve seen over now I think three, four, five years even there has been a continuing trend of improvement in terms in that business. So there is also an underlying clear improvement going on overtime. David Hayes – Nomura: Okay. Okay, great. Thank you very much.

Thank you. Our next question comes from Pablo Zuanic (JP Morgan). Please go ahead. Your line is now open. Pablo Zuanic – JP Morgan: Good morning, everyone. (inaudible) have questions over the quarter, but maybe to just structural questions. Roddy can you talk about your baby formula users in China. You know from outside we hear that Mead Johnson competes mostly in the premium segment than on apparently across the board in all the segments. Obviously the value – the low end of the market is not growing. So they tend to be losing share. Can you just talk about your business in baby formula and remind us, what your market shares are in China and baby formula versus Mead Johnson, Wyeth and Danone. And then just a follow-on on a Nespresso and Dolce Gusto, just give us some more color there, your business just looking usage sales likely growth I think in the first quarter I guess against more than 20%, which is how much of the business in Nespresso at the moment is coming outside of Western Europe? What’s the provision making in the U.S. particularly with Nespresso? And I move it to Dolce Gusto, what’s the progress of that business in the U.S. and other European markets, say versus (inaudible) versus in sale particularly in Western Europe, bit of a color would help? Thank you.

Pablo. Thanks, Pablo. Just on China, I mean as you I think know well it’s a relatively small business, it’s only a few hundred million, so it’s not exactly material to the results discussion. So I haven’t got a lot of information, right, but I mean the market shares the Nielsen market shares are around mid single-digit. They probably understood our two market share, because we are very present in rural areas, where – where Nielsen isn’t, but the business is growing very meaningfully in double-digits, performing very well, we’ve seen a very material acceleration in traction across infant formula all the way through, it’s a growing up milk business as well in China. Their whole business is absolutely flying at the moment. So it’s doing really very well. The market shares as I say, is not really a great, a great, is not itself particularly accurate. And also we haven’t – the reason that we would also said (inaudible) share is now accurate is we’ve been growing that business double-digit, I mean over 20% for couple of years. And the market share data point hasn’t moved. And there – then money beggars been born in China. So, we are clearly doing well coming back from a difficult period two or four years ago. I’m very excited about it, but it’s not a material part of the Nestlé Group. Pablo Zuanic – JP Morgan: (inaudible) the material market right, it’s one of the largest market and being 4 million in the world, I mean you’re big in Latin America, maybe 4 million not in China that’s my point, I can –

Yeah, and that’s why, I’d say fantastic we are doing so well in that business at the moment in China, is absolutely a key market, customer growing as I say well over 20% and its going well. On Nespresso, the performances as you said is, I haven’t got the percentage that the Europe relative to the rest of the world. It’s going to change very much and the last number we gave you, because Europe is as you know over 80%t growing double-digit. So it’s not going to change materially from the last number we gave you. The business is continued to deliver double-digit growth in these big markets. It’s growing much faster in the U.S. as you would expect of a smaller base again similar levels of growth that we saw in the first quarter. And we provided you number then of around 50%. Dolce Gusto as we said is going over 50% globally, again it’s a predominant European business, so the growth in Europe continues to be very, very strong. We provided you 420, 480 basis points in market share gain in system sales in Europe. So that business clearly has real attraction. In the U.S. – the U.S. launch, which is primarily in Wal-Mart that launch is that where we have sold the machines the capsule consumption is higher than we are seeing in most other markets. So the take-up, once machines are sold, is very, very strong and that is a reason – that is the reason why we are very bullish about that project going forward in the U.S. Pablo Zuanic – JP Morgan: Can I just have a follow on? I mean obviously you know it’s very early days and you’re doing well in the U.S. with Dolce Gusto, but given the explosive growth of the amount in coffee roasters and their huge size in single-serve coffee will make sense for Nestlé to actually make Dolce Gusto take us for the Green Mountain or that – there would be announcing , and would not make sense for you?

Our strategy on Dolce Gusto is clearly one that is focused on our total control and execution. We are doing – that’s a strategy. That’s a strategy we are executing around the world, and that’s the model we have in the U.S. and obvious we are not going to change that. Roddy Child-Villiers: Also I don’t remember the U.S market is growing – well, indeed the global market is growing but also the U.S. market is growing very rapidly in systems. So it’s not about having all to be in one system, those driven for number of players in that market and we clearly intent to be one of the leaders. We are – but we are the leader at the moment globally. Pablo Zuanic – JP Morgan: Sure. Thank you.

Thank you. Our next question comes from Jon Cox. Please go ahead. Your line is now open.

Hi, Jon.

You’re having your own shares – the investments you have in your own shares and running parallel to the buyback program. I am just wondering when you actually investing your own shares. I guess you’re not using that straight in trading line. You just coming into the market when you feel there is an opportunity moment or are you saying basically you won’t cancel the 5 billion worth of shares about your – you be completed in the next, – I guess in the next couple of weeks. You won’t cancel next year that’s the first question. Just secondly, just on the BabyNes you said, it’s going very well in Switzerland. Just wondering, does that mean you will do a sort of more of an international launch, should we expect that over the next couple of months and quarters? Thanks.

Okay. John, thanks the shares, yeah, the treasury shares are bought in the normal market whereas the share buyback is done on the second trading line. Yes, the intension is what we do in share buybacks will be cancelled. So hope that deals with your first question. I think, BabyNes, we had a very successful launch based on our criteria for the project and maybe as we progress later on in the year. We would like to give you an update John. But right now the focus is trying to get the launch right in all the dynamics that included in making such – taking such an important innovation to the marketplace. So we are very focused in getting the Swiss which is the first market right and building and using the learning’s there to – to build the program for the other markets.

Okay. Just to come back to this – you’re investing in your own shares. You know, how should we think about that going forward and will you just act opportunistically the things share is looking interesting from how you want value it and you just coming and buy the stock in every tier of that – every half year when you announce or – which you announce in stock exchange in a normal way that depend key ratio on the Swiss Stock Exchange Regulation?

Yeah. If you – I don’t think we will get to a level where we have to make any disclosure. It is – it is an activity, we engaging from time-to-time. But as I said, it’s not a priority for us. It’s one way of managing the cash flows, in the short-term. Before we did our – before we did our share buybacks, the share buybacks through cancellation, we – I think if I remember well back in 2004, we’ve never announced the treasury share amount annually, not by annually. So I don’t think you can expect to have greater updates on whether we’re buying or selling our treasury shares.

Okay. Thanks.

Thank you. Our next question comes from Simon Marshall-Lockyer. Please go ahead. Your line is now open. Simon Marshall – Lockyer: Yes, good morning Roddy, good morning Jim. Just two questions, one with the machine based system, can you just update us on specialty and the gadgetry machine and could you give us some indication as to the correction deadline in respect to the IP losses around perhaps assuming 2012, I think on correcting thing? And the second question is, could you give us more granularity in perspective in Eastern Europe, including Russia, but particularly on Poland, Russia and Ukraine, how this department business trend in the first half and what you’re expecting there? Thank you.

On specialty to start specialty is continuously performed very well, it’s to our expectations. We are not going to give you any numbers because it’s so clearly not material at this stage. The clear focus now obviously is to have a very successful Christmas season as we have the other systems machines, the big selling for the machines is during the Christmas season, gifting. But so far we are very pleased with how specialty is going. On the – on what you call the capital 2012 issue, I mean fundamentally we have a whole series of protections around the Nespresso systems. So there isn’t one issue that’s going to be material to us. I’ve got no update to give you because its – there is nothing new that happens. It’s just a situation that we will have some patterns come off of protection in 2012, but all the other patterns will continue to be on protection. And there is no material business risk to Nespresso. Russia is bit of a mix picture. The – if you stop at the zone, the impulse business, primarily chocolate which is our big zone business continues to suffer from poor consumer sentiment. The other less impulse, more fundamental businesses like the soluble coffee business, the soup business are doing very well. If you go – ice cream is also doing okay. If you go out of the zone into nutrition, nutrition business is doing terrifically well, double-digit growth now for a number of years and (inaudible) doing very well. And also I mentioned in my presentation PetCare also performing very well in Russia. Ukraine, equally – well Ukraine especially performing very well indeed across the business. We’ve been quite active as you know in recent years in acquisitions in Ukraine. We have a super business in Ukraine. We’ve also recently opened up service – our shared service in the Europe and Ukraine and that business is performing very, very well indeed. And Poland, where I think we’re having reasonable progress in the first half. So we’re quite happy with the markets that you have mentioned. Russia continues to improve albeit, a bit slowly. Yeah, I starting this – in Russia that we’re opening a Nescafé factory immediately, may even just open. So that’s a big benefit for us in terms of leveling the Plainfield, having local manufacture in Nescafé in Russia. Okay. Any – Simon Marshall – Lockyer: Thank you.

Thank you. We have no more questions. I would like – now like to hand the call over to Mr. Singh.

Well, thank you for your attention this morning, your time and attention. As you’ve seen, we have delivered a very solid performance in the first half, which really gives us the confidence of that our strategies are working even in these difficult times as we look at the business and the economic environment in which we operate around the world. The performance in the first half gives us confidence that we can once again recommit ourselves to achieving the Nestlé model in 2011, which as you know and this time we reiterate organic growth at the top end of our 5 to 6% range and an improvement in our margins in constant currencies. Thank you.

Thank you for joining us today, ladies and gentlemen.