CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS 2010 CONTENTS. Consolidated Statement of Financial Position 1

CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS 2010 CONTENTS Page CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position 1 Consolidated Income Statement 2 Consolidated Statement of Comprehensive Income 3 Consolidated Cash Flow Statement 4 Consolidated Statement of Changes in Equity 5 Notes to the Consolidated Financial Statements 6-100 Appendices References to Notes to the Financial Statements I: Breakdown of group companies 1 2 II: Property, Plant and Equipment 6 III: Other Intangibles Assets 8 IV: Non-Current Financial assets 9 V: Investments accounted for under the equity method 10 VI: Breakdown of Non-controlling interest and contribution to consolidated results 16 VII: Non controlling-interest 16 VIII: Non-Current and Current provisions 21 CONSOLIDATED MANAGEMENT REPORT 1 99

CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES Consolidated income statement for the year ended December 31, 2010 and 2009 (Thousands of euros) Note 2010 2009 (Restated) Operating revenues Net sales and services 29 1,830,390 1,823,819 Increase in inventories of finished goods and work in progress 4,938 - Capitalized expenses of Company work on assets 146 287 Other operating revenues 7,597 10,795 1,843,071 1,834,901 Operating expenses Decrease in inventories of finished goods and work in progress - (36,281) Consumption of goods and other external charges (981,948) (947,233) Employee benefits expense 30 (340,979) (346,469) Depreciation and amortization (55,162) (55,624) Changes in trade provisions (883) (2,177) Other operating expenses (355,856) (368,226) (1,734,828) (1,755,950) Impairment of assets (1,203) - CONSOLIDATED OPERATING PROFIT 107,040 78,951 Finance revenue Other interest and similar income 11,052 4,531 Exchange rate gains 51 7,351 11,103 11,882 Finance costs Interest-bearing loans and borrowings (43,010) (38,518) Other finance costs (20,215) (23,582) Change in fair value of financial instruments (1,145) (1,419) Exchange losses (111) (7,427) (64,481) 70,946 NET FINANCE COST (53,378) (59,064) Share of profit (loss) of investments accounted for using the equity method Appendix V (920) (19) PROFIT BEFORE TAX 52,742 19,868 Income taxes 28 (12,203) (2,036) PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 40,539 17,832 LOSS FOR THE YEAR FROM DISCONTINUED OPERATIONS 15 (491) (3,484) PROFIT (LOSS) FOR THE YEAR 40,048 14,348 Attributable to: Non-controlling interest - 383 Equity holders of the parent 40,048 13,965 Earnings per share for continuing operations: 4 - basic, for profit for the year attributable to equity holders of the parent 0.401 0.176 - diluted, for profit for the year attributable to equity holders of the parent 0.401 0.176 Earnings per share: - basic, for profit for the year attributable to equity holders of the parent 0.396 0.142 - diluted, for profit for the year attributable to equity holders of the parent 0.396 0.142 2

CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES Consolidated statement of comprehensive income for the years ended December 31, 2010 and 2009 (Thousands of euros) Note 2010 2009 PROFIT (LOSS) FOR THE YEAR 40,048 14,348 Translation differences (155) (595) Change in fair value of financial instruments 36 272 (1,048) Income taxes (92) 357 180 (691) Actuarial gains and losses 21 985 (5,376) Income taxes (243) 1,038 742 (4,338) OTHER COMPREHENSIVE INCOME FOR THE YEAR 767 (5,624) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 40,815 8,724 Attributable to: Non-controlling interest - 368 Equity holders of the parent 40,815 8,356 3

CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT for the years ended December 31, 2010 and 2009 (Thousands of euros) Notes 2010 2009 (Restated) Profit before tax from continuing operations 52,742 19,868 Loss before tax from discontinued operations 15 (2,398) (4,239) Depreciation/amortization of assets 55,753 56,877 Impairment of assets 2,687 (859) Financial results 53,908 59,887 Investments accounted for under the equity method App. V 920 19 Government grants (3,346) (3,718) Adjustment to reconcile profit before tax to net cash flows 3,562 14,973 Operating profit before changes in working capital 163,828 142,808 Working capital adjustments 54,482 38,738 Cash flows from operating activities 218,310 181,546 Interest paid (49,281) (35,123) Interest received 1,326 1,306 Provisions and pensions (13,156) (22,921) Income tax paid (4,177) (8,456) Government grants received 1,552 6,656 Net cash flows from operating activities 154,574 123,008 Purchase of property, plant and equipment (53,976) (46,303) Proceeds from sale of property, plant and equipment 1,045 3,160 Investments in group companies (21,353) (924) Investment in other financial assets 284 (372) Acquisitions of non-controlling interests (3,163) - Other receivables 5,665 - Earn-out 32 (3,000) - Net cash flows used in investing activities (74,498) (44,439) Bond issues - 488,075 Other payments related to bond issues - (21,979) Change in current financial liabilities (5,094) (68,412) Cancelled of financial instruments (53,033) - Purchase of treasury shares 16 (5,543) (634) Dividends paid to parent shareholders (7,000) (47,150) Dividends paid to non-controlling interests (291) (319) Repayment of borrowings and bonds 18 - (387,792) Net cash flows used in financing activities (70,961) (38,211) Net increase / (decrease) in cash and cash equivalents 9,115 40,358 Cash and cash equivalents at January 1 14 160,159 119,801 Cash and cash equivalents at December 31 14 169,274 160,159 9,115 40,358 4

CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended December 31, 2010 and 2009 (Thousands of euros) Issued capital (Note 16) Share premium (Note 16) Equity attributable to equity holders of the parent Profit for the year attributabl Other Translation e to equity reserves differences holders of (Note 16) (App. VI) the parent Treasury shares (Note 16) Total Noncontrolling interest (App. VII) Total equity Balance at December 31, 2008 102,221 429,719 89,783 (840) (5,849) (6,741) 608,293 9,965 618,258 Profit for the period - - - - 13,965-13,965 383 14,348 Other comprehensive income - - (5,029) (580) - - (5,609) (15) (5,624) Total comprehensive income (5,029) (580) 13,965 8,356 368 8,724 Distribution of 2008 profit: - - - - - - - - To voluntary reserves - - (20,365) - 20,365 - - - - To reserves at consolidated companies - - 14,516 - (14,516) - - - - Other changes in equity - (4,752) 4,752 - - - - - - Transactions with treasury shares (net) - - (637) - - 5 (632) - (632) Dividends of subsidiaries - - - - - - - (319) (319) Balance at December 31, 2009 102,221 424,967 83,020 (1,420) 13,965 (6,736) 616,017 10,014 626,031 Profit for the period - - - - 40,048-40,048-40,048 Other comprehensive income - - 922 (155) - - 767-767 Total comprehensive income 922 (155) 40,048-40,815-40,815 Distribution of 2009 profit: To voluntary reserves - - (262) - 262 - - - - To reserves at consolidated companies - - 14,227 - (14.227) - - - - Dividends paid (Note 5) - (7,000) - - - - (7,000) - (7,000) Other changes in equity (Note 5) - (6,838) 6,838 - - - - - - Transactions with treasury shares (net) - - (171) - - (5,371) (5,542) - (5,542) Dividends of subsidiaries - - - - - - - (291) (291) Discontinued operations - - 304 1,953 - - 2,257 (304) 1,953 Acquisition of non-controlling interest - - (1,204) - - - (1,204) (9,419) (10,623) Other movements - - (1,082) - - - (1,082) - (1,082) Balance at December 31, 2010 102,221 411,129 102,592 378 40,048 (12,107) 644,261-644,261 5

CAMPOFRÍO FOOD GROUP, S.A. AND SUBSIDIARIES Notes to the 2010 Consolidated Annual Accounts 1. CORPORATE INFORMATION Campofrío Food Group, S.A. (the parent), with registered office at Avda. de Europa, 24, Parque Empresarial la Moraleja in Alcobendas (Madrid), was incorporated as a private limited company in Spain on September 1, 1944, under the registered name Conservera Campofrío, S.A. On June 26, 1996 the Company s name was changed to Campofrío Alimentación, S.A. and on December 30, 2008, it was changed to its current name, Campofrío Food Group, S.A. Campofrío Food Group, S.A. is the parent of a Group of companies accounted under the full and equity consolidation methods. Appendix I provide the breakdown of subsidiaries and associates companies of the Campofrío Group, along with their activities, registered addresses and the percentage of ownership. The parent manufactures and sells products for both human and animal consumption. The principal activity of the parent and the Group companies are to manufacture, sell and distribute processed and canned meat and derivatives from pork and beef by-products and other food products. The Group operates throughout Spain at factories in Burgos, Villaverde (Madrid), Torrijos (Toledo), Ólvega (Soria), Torrente (Valencia) and Trujillo (Cáceres) an through its investments in Belgium, France, Germany, Italy, Portugal and the Netherlands. Through a takeover merger on December 30, 2008, the parent acquired control of the Spanish entity Groupe Smithfield Holdings, S.L., which transferred all of its assets and liabilities to the parent company. As a result of this merger, the parent acquired all 100% of the shares of the Spanish company, Campofrío Food Group Holding, S.L. (formerly Groupe Smithfield, S.L.). Groupe Smithfield Holdings, S.L. is a Spanish holding company and the parent entity of an international food group, engaged in the production and sale of meat products mainly in Belgium, France, Germany, Italy, Portugal and the Netherlands, where it also has industrial facilities. Additionally, on March 4, 2010, the parent signed an agreement with the Romanian Caroli meat processing group, to integrate operations between this group and the Romanian subsidiary of Campofrio Food Group, S.A. (Tabco Campofrío S.A.), and develop its business in that country and surrounding areas. The agreement was formalized between the parties on July 20, 2010 (Notes 7 and 15). 6

2. BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS a) Basis of presentation The accompanying consolidated financial statements were prepared by the directors of the parent in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU-IFRS) in conformity with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council. The Campofrío Group has adopted the latest versions of all applicable standards issued by the EU Accounting Regulatory Committee (EU-IFRS) which are deemed mandatory at December 31, 2010. The 2010 individual financial statements of each Group company will be presented for approval at the respective General Shareholders Meetings within the periods established by prevailing legislation. The directors of the parent consider that no significant changes will be made to the 2010 consolidated financial statements as a result of these meetings. The Campofrío Group s consolidated financial statements for 2010 are drawn up by the parent s Board of Directors on February 25, 2011. They are expected to be approved by the parent s shareholders in general meeting without modification. The figures contained in the documents which make up the consolidated financial statements are expressed in thousands of euros, unless otherwise indicated. b) Comparison of information As required by IAS 1, for comparative purposes, the information contained in these consolidated financial statements for 2009 is presented with the information relating to 2010 and does not in itself constitute the consolidated financial statements for 2009. As explained in Note 15, during 2010, the Group's parent classified all assets and liabilities related to its business in Romania as Non-current assets and liabilities held for sale," due to the agreement to integrate its operations with those of a third party regarding the activity of Tabco Campofrío, S.A. and to its decision to sell the Group's remaining Romanian assets. In compliance with IFRS 5, the results from the activity of the Group in Romania have been reclassified in the separate income statement for the year ended December 31, 2009 to Net loss for the period from discontinued operations. Additionally this is the first year in which the Resolution of December 29, 2010, passed by the Institute of Accounting and Auditors of Accounts ("Instituto de Contabilidad y Auditoría de Cuentas" in Spanish), is applicable to the information concerning late payment to suppliers in commercial transactions, to be included in the Notes to the consolidated financial statements. By virtue of the stipulations in Transitional Provision Two for first-time application, the Company only provides information related to the overdue amounts payable to suppliers which at year end exceed the legal payment deadline. Further, comparative information is not presented with respect to this new obligation, and the financial statements are considered first-time financial statements exclusively in terms of uniformity and comparability. This information is included exclusively for fully consolidated companies based in Spain. 7

c) Changes in accounting policies and disclosures c.1) Standards and interpretations adopted by the European Union applicable in 2010 The accounting policies used in the preparation of the consolidated financial statements for the year ended December 31, 2010 are the same applied to the consolidated financial statements for the year ended December 31, 2009, except for the following standards and interpretations: IFRS 2 "Share-based Payment: Group Cash-settled Share-based Payment Transactions" This standard has been amended to clarify the accounting for group cash-settled share-based payment transactions. This amendment also supersedes IFRIC 8 and IFRIC 11. Adopting this amendment had no impact on the Group s financial position or results. Revised IFRS 3 "Business combinations" and amendment to IAS 27 "Separate and Consolidated Financial Statements" Revised IFRS 3 implies significant changes with respect to certain aspects of accounting for business combinations. The changes affect the valuation of non-controlling interests, the recognition of transaction costs, the initial recognition and the remeasurement of contingent liabilities and business combinations achieved in stages. Amended IAS 27 established the circumstances under which an entity must prepare consolidated financial statements, how parents must account for changes in the percentage of interest in subsidiaries, and how a subsidiary's losses must be distributed between the controlling non-controlling shares. Adopting these changes had no impact on the Group s financial position or results. IAS 39 "Financial Instruments" "Recognition and Measurement" Eligible hedged items" The amendment clarifies that an entity may designate a portion of the changes in fair value or the changes in cash flows of a financial instrument as a hedge. It also addresses the designation of inflation as a hedged item, or a portion of it in special situations. Adopting this amendment had no impact on the Group s financial position or results. IFRIC 12 - Service Concession Arrangements The interpretation clarifies the application of IFRS principles accepted by the Commission to service concession arrangements. IFRIC 12 addresses how service concession operators should account for the obligations they undertake and rights they receive in service concession arrangements. It also clarifies the differences in the distinct phases of these service agreements (construction/development), as well as how they are each recognized in the statement of income and expense. It distinguishes between the two ways to recognize the infrastructure and related income and expenses (financial assets and intangible assets), based on the uncertainty risk affecting the concessionaire's future income. None of the Group companies have carried out transactions of this type and therefore, the adoption of this interpretation had no impact on the Group's financial position or results. 8

IFRIC 15 - "Agreements for the construction of real estate" The interpretation states that income derived from the construction of residential buildings is to be recognized, particularly if the construction agreements fall within the scope of IAS 11 - "Construction Agreements, or IAS 18 - "Revenue," and offers guidance on how this should be determined. Adopting this interpretation had no impact on the Group s financial position or results. IFRIC 16 Hedges of Net Investments in Foreign Operations This interpretation must be applied prospectively. IFRIC 16 provides guidelines on recognizing the hedge of a net investment. It contains guidelines to identify exchange rate risks that can be included in the recognition of a net investment hedge, where in a group the hedging instrument of a net investment can be held, and how an entity should determine foreign currency gains or losses, on the net investment and on the hedging instrument, which should be reclassified from equity to profit or loss on disposal of the net investment in the foreign operation. Adopting this interpretation had no impact on the Group s financial position or results. IFRIC 17 - "Distributions of non-cash assets to owners" This interpretation clarifies the accounting treatment of the distribution of non-cash assets to the owners of an entity, either as distribution of reserves or dividends. Adopting this interpretation had no impact on the Group s financial position or results. IFRIC 18 - "Customer loyalty programs" The interpretation clarifies and offers guidance on the recognition of transfers of items of property, plant, and equipment from customers or cash to acquire or construct a PP&E item. Adopting this interpretation had no impact on the Group s financial position or results. Improvements to IFRSs issued May 2008 In May 2008, the IASB issued its first omnibus of amendments to its standards within the framework of an annual process of improvements aimed at eliminating inconsistencies and clarifying certain standards. All the modifications were adopted at December 31, 2009, with the following exceptions: - IFRS 5 Non-current Assets Held for Sale and Discontinued Operations : This standard clarifies when a subsidiary is classified as held for sale, even when the entity remains a non-controlling interest after the sale transactions. Adopting this modification had no impact on the Group s financial position or results. Improvements to IFRSs issued April 2009 In April 2009, the Board issued its second omnibus to its standards within the framework of an annual process of improvements aimed at eliminating inconsistencies and clarifying certain standards, including specific transitional provisions for each standard. Adopting the following amendments has led to a change in accounting policies but did not have any impact on the Group s financial position or results. - IFRS 8 - "Operating segments": This standard clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. - IAS 7 Cash flow statement : This standard states that only expenditure that results in recognizing an asset can be classified as a cash flow from investing activities. 9

- IAS 36 Impairment of assets The amendment clarified that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in IFRS 8 before aggregation for reporting purposes. Adoption of this amendment has no impact on the Group as the annual impairment test is performed before aggregation. Other amendments resulting from improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Group: IFRS 2 "Share-based Payments" IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IAS 1 Presentation of financial statements IAS 17 Leases IAS 38 Intangible assets IAS 39 "Financial Instruments" Recognition and Measurement IFRIC 9 Reassessment of Embedded Derivatives IFRIC 16 Hedges of Net Investments in Foreign Operations c.2) Standards and interpretations adopted by the European Union that need not be mandatorily applied in 2010 The Group has not early adopted any standard, interpretation or amendment issued by the IASB but not yet effective. The Group is evaluating the effect that the following non-mandatory standards and interpretations issued by IASB and approved by the European Union might have on its accounting policies, financial situation, or results: IAS 32 "Classification of rights issues": Effective from years beginning February 1, 2010. IAS 24 Related-party disclosures : Effective from years beginning January 1, 2011. These changes caused the modification of IFRS 8. IFRIC 19 Extinguishing financial liabilities with equity instruments : Effective from years beginning July 1, 2010. IFRIC 14 Prepayments of a minimum funding requirement : Effective from years beginning January 1, 2011. c.3) Standards and interpretations issued by the IASB and not yet approved by the European Union At the date of publication of these consolidated financial statements, the following IFRSs and amendments had been issued by the IASB but not were neither mandatory nor approved by the European Union: IFRS 9 "Financial Instruments": Effective from years beginning January 1, 2013. Improvements to IFRS (May 2010): Effective from years beginning January 1, 2011 (except the amendments to IFRS 3 (2008) regarding the measurement of non-controlling interests and share-based remuneration plans, as well as the amendments to IAS 27 (2008) and IFRS 3 (2008) regarding contingent payments arising during business combinations with acquisition dates prior to the date the amendments became effective, which come into effect for years beginning July 1, 2010). 10

Amendment to IFRS 7 Disclosures Transfers of financial assets : Effective from years beginning July 01, 2011. Amendment to IAS 12 Deferred taxes Recovery of underlying assets : Effective from years beginning January 1, 2012. The Group is currently analyzing the impact of applying these standards and amendments. Based on the analyses conducted to date, the Group considers their adoption would not have a significant impact on the consolidated financial statements in the period of their initial application. However, the changes introduced by IFRS 9 will affect financial instruments as well as their related future transactions beginning January 1, 2013. d) Accounting policies The accompanying consolidated financial statements comprise the consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of cash flows, the consolidated statement of changes in equity and the notes to the financial statements, which are integral part of the consolidated financial statements. These consolidated financial statements are presented in accordance with historical cost principles except for financial instruments held for trading, available-for-sale financial assets and derivatives that have been measured at fair value. Non-current assets held for sale have been measured at the lower of their carrying amount or fair value less cost to sell. Accounting policies have been applied in a consistent manner by all Group companies. The main accounting principles applied by the Campofrío Group in the preparation of the consolidated financial statements under EU-IFRS are as follows: d.1) Use of estimates The preparation of the financial statements under EU-IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities at the reporting date. These estimates and assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of the assets and liabilities that are not readily apparent from other sources. However, uncertainty inherent in these assumptions and estimates could result in outcomes that could require an adjustment to the carrying amount of the asset or liability affected in the future. Estimates and assumptions Estimates and assumptions are reviewed on an ongoing basis. The impact of changes in accounting estimates is recognized in the period in which the estimates are changed if they affect only that period, or in the period of the changes and future periods if they affect both current and future periods. The estimates made by the Group relate mainly to: Impairment of non-current assets When measuring non-current assets other than financial assets, especially goodwill and brands, estimates must be made to determine their fair value to assess if they are impaired. To determine fair value, the directors estimate, where applicable, the expected cash flows from assets and the cashgenerating units to which they belong, applying an appropriate discount rate to calculate the present value of these cash flows. The main assumptions used to determine fair value and in the sensitivity analyses are described in Note 7. 11

Pensions and other post-employment benefits The cost of defined benefit pension plans is determined by actuarial valuations. The actuarial valuations require the use of hypotheses on the discount rate, the return on assets, salary increases, mortality tables and social security pension increases. These estimates are subject to significant uncertainties given that such plans are liquidated in the long-term (Note 21). Calculation of fair value, value in use, and present values Fair value, value in use, and current values are calculated based on assumptions related to the value of future cash flows and related discount rates. Estimates and assumptions based on historic experience and other factors are considered reasonable given the circumstances. Fair value of financial instruments When the fair value of financial assets and liabilities recognized on the consolidated statement of financial position cannot be reliably measured in reference to an active market, the Group applies valuation methodologies such as discounted cash flow analyses. Deferred tax assets Deferred tax assets are recognized for all unused tax loss carryforwards and deductible temporary differences for which it is probable that future taxable profit will be available against which these assets may be utilized. To determine the amount of deferred tax assets that can be recognized, the directors estimate the amounts and dates on which future taxable profits will be obtained and the reversion period of taxable temporary differences (Note 28). Provisions related to current claims and ongoing lawsuits The Group has made judgments and estimates as to the likelihood that risks will materialize that could require that a provision be recognized, as well as the corresponding amounts. Accordingly, a provision is recognized only when the risk is considered probable, estimating the cost that would be generated by the obligating event (Note 21). Share-based payment transactions The Group determines the cost of share-based payments using the fair value of the options to be awarded on the closing date. To estimate the fair value of these transactions the appropriate valuation model must be determined, which depends on the agreed-upon terms and conditions. The estimate must likewise take into consideration the option's expected life, the price of the underlying shares, the expected share price volatility, an estimate of expected dividends on the share and the risk-free interest rate for the life of the option, for which the use of assumptions is required. The fair value estimates of the corresponding liabilities are revised, as well as the number of exercisable options; where necessary, these are recognized at each year end until the plan finalizes on the consolidated separate income statement. The option valuation models and the assumptions used for the various plans are described in Note 34. 12

Judgments In the process of applying the Group's accounting policies, management has made the following judgments, apart from those involving estimations, which have a significant effect on the amounts recognized in the consolidated annual financial statements: Operating lease commitments Group as lessee The Group has entered into leases to carry out its business. The Group has determined, based on an evaluation of the terms and conditions of some of the arrangements, that the lessor retains all the risks and rewards of ownership of the assets and so accounts for the contracts as operating leases. Operating lease payments are recognized as an expense in the consolidated income statement on a straight line basis over the lease term. d.2.) Basis of consolidation The consolidated financial statements comprise the financial statements of Campofrío Food Group, S.A. and subsidiaries. The financial statements for the subsidiaries have the same financial year end as the parent s and have been prepared using the same accounting standards. Any restatements necessary due to differences in accounting criteria have been made. The information relating to subsidiaries and associates, as well as each company s contribution to consolidated results, is shown in Appendixes I (Breakdowns of Group companies) and VI (Breakdown and composition of non-controlling interest and the contribution to consolidated results), which form an integral part of this note. d.2.1 Consolidation principles Subsidiaries are consolidated from the date on which control is obtained from the company to the Group, and cease to be consolidated from the moment when that control is transferred away from the Group. In the event of the Group losing control of a subsidiary, the consolidated financial statements include the results of the portion of the year during which the Group held control. d.2.2 Subsidiaries The full consolidation method is used for companies within the consolidation scope: (i) in which the parent has a direct or indirect interest greater than 50% and holds a majority of the voting rights in the corresponding governing bodies; (ii) in which the ownership interest is 50% or less and the parent has control over the management. d.2.3 Associates Companies over which the Campofrío Group holds no control, but exercises significant influence, have been consolidated under the equity method. For the purposes of the preparation of the consolidated financial statements, the Group has been deemed to exercise significant influence over the companies in which it holds an interest of more than 20%, with the exception of specific cases in which the Group holds a smaller percentage interest but there is clear evidence of the existence of significant influence. 13

d.2.4 Jointly controlled entities Entities in which the Campofrío Group has joint control resulting from contractual agreements with the other shareholders have been accounted for using the equity method. For the purpose of the preparation of these consolidated financial statements, joint control was considered to exist where there is a contractual arrangement to share an economic activity, as well as to make unanimous strategic decisions regarding financial and operating policies between the parties sharing control (the participants). d.2.5 Transactions between companies included in the consolidation scope The following transactions and balances have been eliminated on consolidation: Reciprocal receivables and payables and the expenses and income from intra-group transactions. Income from the purchase and sale of property, plant and equipment and unrealized gains on inventories, if the amount is significant. Internal dividends and debit balance due to interim dividends recorded by the company that paid them. d.2.6 Year-end dates The closing date for the financial statements of the companies making up the Campofrío Group is December 31. d.2.7 Non-controlling interests Non-controlling interests represent the portion of profit or loss and net equity not held by the Group. The value of the share of minority interests in equity and results for the year of consolidated subsidiaries is shown in Non-controlling interest on the consolidated statement of financial position and in Profit (loss) Attributable to non-controlling interests in the consolidated income statement, respectively. d.2.8 Translation of financial statements of foreign subsidiaries The consolidated annual financial statements are presented in euros, which is the Group's functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The consolidated statement of financial position and consolidated income statement headings of consolidated foreign companies are translated to euros at the year-end exchange rate, which means: All assets, rights and liabilities are translated to euros at the exchange rate ruling at the close of the foreign subsidiaries accounts. The items on the consolidated income statement are translated at the average exchange rate. The difference between the equity of foreign companies, including the balance on the consolidated income statement, translated at year-end exchange rates and the equity obtained translating the assets, rights and liabilities by applying the criteria set forth above are shown under Translation differences, under equity in the consolidated statement of financial position. 14

d.3.) Business combinations and goodwill Business combinations since January 1, 2010 Business combinations are accounted for using the acquisition method. The identifiable assets acquired and the liabilities assumed are measured at fair value at the acquisition date. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Acquisition costs incurred are expensed and included in the income statement. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognized in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. Goodwill acquired in a business combination is initially measured at cost being the excess of the aggregate consideration transferred and the amount reconised for non-controlling interest over the net assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units or groups of cash-generating units expected to benefit from the combination s synergies, irrespective of whether other Group assets or liabilities are assigned to those units or groups of units. Impairment is determined by assessing the recoverable amount of the cash-generating unit or groups of cash-generating units to which the goodwill relates. If the recoverable amount of the cashgenerating unit or group of cash-generating units is less than the carrying amount, the Group recognizes an impairment loss. Goodwill impairment losses cannot be reversed in future periods. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. 15

Business combinations prior to January 1, 2010 In comparison to the above-mentioned requirements, the following differences applied: Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The noncontrolling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree s identifiable net assets. Contingent consideration was recognized if the Group had a present obligation, and the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognized as part of goodwill. d.4.) Other intangible assets Other intangible assets acquired by the Group are stated at cost less accumulated amortization and any accumulated impairment losses. The cost of other intangible assets acquired in a business combination is fair value as of the date of acquisition. Internally generated intangible assets -excluding capitalized development costs- are not capitalized. Costs are charged against profits for the year in which they were incurred. An intangible asset is recognized only if it is probable that it will generate future income for the Group and that its cost can be reliably measured. Costs incurred in each particular development project are capitalized when the Group can demonstrate the technical viability of completing the intangible asset in order to use it or sell it, the intention of completing the asset use it or sell it, the ability to generate future economic benefits, the availability of resources to complete it, and its ability to measure expenditure attributable to the intangible asset reliably. Following initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and any accumulated impairment losses. Capitalized development costs are amortized over the period of expected future sales from the related project. The parent assesses the intangible asset s useful life to be either finite or indefinite. The amortization expense on intangible assets with finite lives is recognized in the consolidated income statement on a straight-line basis over their estimated useful life. Intangible assets are amortized from the date they are available for use. The amortization percentages used are as follows: Software 20%-25% Patents and licenses 5%-33% Intangible assets with indefinite useful lives, which are limited to brand names, are not amortized and are assessed for impairment at least annually. The assessment of the indefinite useful life of these assets is reviewed annually. Gains or losses on the disposal of an intangible asset are carried at the difference between the net proceeds and the carrying amount of the asset and recorded in the consolidated income statement once the asset is disposed of. d.5) Property, plant and equipment Property, plant and equipment are stated at acquisition or production cost, which includes all costs and expenses directly related to the assets acquired until they are available for use and legal revaluations made by the Group up to the transition date to adjust the value of the assets to inflation, less accumulated depreciation and any impairment loss. 16

Leased assets in which the terms of the contract transfers to the Group substantially all the risks and benefits incidental to ownership are classified as leases. Assets acquired under financial lease arrangements are recognized, based on their nature, at the fair value of the leased item or, if lower, the present value at the commencement of the lease of the minimum lease payments. A financial liability is recorded for the same amount. Lease payments are apportioned between finance charges and reduction of the lease liability. These assets are depreciated, impaired, and derecognized using the same criteria applied to assets of a similar nature. Subsequent expenses incurred in connection with the asset are only capitalized when such expenses increase the future economic benefits of the related asset. All other expenses are charged to the consolidated income statement when incurred. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year the asset is derecognized. The depreciation expense is recognized in the consolidated income statement on a straight-line basis over the estimated useful life of each asset. The assets are depreciated from the moment they are available for use. Depreciation is calculated on a straight-line basis to write off the cost of the assets over their estimated useful lives, as follows: Buildings 33-50 Plant and machinery 5-16 Other installations, tools and furniture 4-17 Other 4-13 At each year end, the Group reviews and adjusts, where necessary, the assets residual values, useful lives and depreciation method. Borrowing costs that are directly attributable to the acquisition or development of property, plant and equipment are capitalized when assets require generaly more than a year to be ready for use. During 2010 and 2009 no borrowing costs have been capitalized. d.6) Financial Assets Recognition and measurement Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets on initial recognition and re-evaluates this designation at each financial year end. All financial assets are initially measured at fair value, except investments which are not at fair value through profit and loss; these are measured at fair value plus any directly attributable transaction costs. 17

Held-for-trading financial assets Financial investments classified as held for trading are recognized at fair value, with any resulting gain or loss recognized in the consolidated income statement. Fair value is the market price at the date of the consolidated statement of financial position. Financial assets classified as held for trading are included in the category "Financial assets at fair value through profit and loss". Financial assets are classified as held for trading when they are acquired for the purpose of selling in the near future. Derivatives are also classified as held for trading unless they are effective hedging instruments and identified as such. Loans and receivables The Group recognizes in this category trade and non-trade receivables, which include financial assets with fixed or determinable payments that are not quoted on active markets and for which the Group expects to recover the full initial investment, except in cases of the debtor's credit deterioration. They are carried at amortized cost using the effective interest method, less any impairment charges. Loans and receivables maturing in 12 months or less from the date of the consolidated statement of financial position are classified therein as current and those maturing in over 12 months as noncurrent. The Group makes a provision for impairment of loans and receivables when there is objective evidence of impairment and the circumstances are such that they can reasonably be classified as of doubtful collectability. Current investments are not shown at their discounted value. Held-to-maturity investments Held-to-maturity investments include debt instruments with fixed maturities and fixed or determinable payments that are traded on active markets and which the Company has the positive intention and the financial capacity to hold to maturity. These are recognized at fair value upon initial recognition on the consolidated statement of financial position. Thereafter they are carried at amortized cost using the effective interest method, less any impairment charges. Available-for-sale financial assets This category includes debt securities and equity instruments that have not been classified in any of the preceding categories. They are recognized at fair value and any changes in fair value are recognized directly in equity ( Other comprehensive income ) except impairment losses, which are included directly in the consolidated income statement. When these investments are sold, any accumulated gains or losses directly recognized in equity are included in the consolidated income statement. If an available-for-sale investment has no benchmark market price in an active market and there is no other way to reasonably determine its fair value, the investment is carried at cost less any impairment loss. 18

Derecognition The Group derecognizes a financial asset when it has transferred its rights to receive cash flows from the asset or when the Group retains these rights, but has assumed an obligation to pay them to a third party or has transferred substantially all the risks and rewards of the asset. In the transfer of assets where the Group retains substantially all the risks and rewards of the asset, the transferred financial asset is not derecognized. A financial liability is recognized for the same amount as the consideration received and the asset is subsequently measured at amortized cost. The transferred financial asset is measured using the same criteria as for the asset. Both the revenue from the financial asset transferred and the cost of the financial liability are recognized in profit or loss, without offsetting on the consolidated income statement. d.7) Investments accounted for under the equity method Group investments in associates or joint venture are accounted for under the equity method of accounting. Under the equity method, investments in associates or joint venture are carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group s share of net assets of the associate or joint venture less any impairment losses. The consolidated income statement reflects the percentage of share in the profit (loss) of the associate. When there has been a change recognized directly in the equity of the associate or joint venture, the Group recognizes its share of the change in Other reserves and discloses this, when applicable, in the statement of changes in equity. d.8) d.8.1 Impairment of assets Impairment of non-financial assets The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For assets that do not generate cash inflows that are largely independent of those from other assets or groups of assets, the recoverable amount is determined for the cash-generating units to which the asset belongs. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognized in the consolidated income statement. Impairment losses in respect of Cash-Generating Units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating units and, then, to reduce the carrying amount of the other assets based on a review of the individual assets that show indications of impairment. Except in the case of goodwill, a previously recognized impairment loss is reversed if there has been a change in the estimates used to determine the asset s recoverable amount. Such reversal is recognized in the consolidated income statement. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset. 19

The following criteria are also applied in assessing impairment of specific assets: d.8.2 The Group tests goodwill and intangible assets with indefinite useful lives for impairment annually or more frequently when circumstances or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill and intangible assets with indefinite useful lives by assessing the recoverable amount of the cash-generating units. When the recoverable amount of a cash-generating unit is less than its carrying amount of the goodwill or the intangible assets an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performed impairment tests on goodwill at December 31, 2010 and 2009. Impairment of financial assets There is objective evidence that debt instruments (trade receivables, loans and debt securities) are impaired when after initial recognition an event occurs which has a negative impact on the related estimated future cash flows. The Group classifies as impaired assets (doubtful exposures) debt instruments for which there is objective evidence of impairment, which refers basically to the existence of unpaid balances, noncompliance issues, refinancing and data which evidences the possible irrecoverability of total agreedupon future cash flows or collection delays. There is objective evidence that equity instruments are impaired when one or more events have occurred after initial recognition that indicate that their carrying amount may not be recovered due to a prolonged or significant decline in their fair value. When a decline in the fair value of an available-for-sale financial asset has been directly recognized in equity and there is objective evidence that the asset is impaired, the cumulative losses previously reported in equity are included in the consolidated income statement. The cumulative loss recognized in profit or loss is the difference between cost and current fair value. Reversals in respect of equity instruments classified as available-for-sale are not recognized in profit for the year. If the fair value of a debt instrument classified as available for sale increases and this increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, this loss can also be reversed in the consolidated income statement. The recoverable amount of held-to-maturity investments and loans and receivables at their amortized cost is calculated as the present value of expected future cash flows discounted at the original effective interest rate. The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is not recognized in profit or loss for the year. Impairment losses related to Loans and receivables recognized at amortized cost are reversed if the subsequent increase in the recoverable amount can be objectively related to an event occurring after the impairment loss was recognized. d.9) Biological assets Biological assets are measured both initially and at year end at fair value less estimated costs to sell. Gains or losses arising on initial recognition of a biological asset at fair value less estimated costs to sell caused by subsequent changes in fair value less estimated costs to sell are included in the consolidated income statement of the financial year in which they arise. 20