Investora 21 September 2016HOCHDORF Holding Ltd

1. HOCHDORF in brief Thomas Eisenring

2. HOCHDORF in numbers Marcel Gavillet

3. Market update Thomas Eisenring

4. Strategy 2016-2020 Thomas Eisenring

5. Outlook Thomas Eisenring

6. Questions

AgendaInvestora, 21 September 2016

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HOCHDORF in brief

History

HOCHDORF is an established Swiss food company.

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1895 Founding of the «Centralschweizerische NaturMilch-Exportgesellschaft» (central Swiss milk export company) by 21 shareholders

1906 Start of roller dried whole milk powder production for the chocolate industry

1908 Start of infant formula production

1953 Launch of HUMANA, the first adapted infant formula

2003 Takeover of the Sulgen plant

2006 Start of the global infant formula business

2013 Full takeover of the Medeikiai plant (Lithuania)

2014 60% shareholding in Uckermärker Milch GmbH in Prenzlau (D)

Takeover of Marbacher Ölmühle GmbH in Marbach (D)

2016 Investments in capacity increase for the Baby Care area in Sulgen (logistics and production)

Image

Companies and participations

HOCHDORF Holding Ltd is organised in three business units and holds several subsidiary companies and investments.

HOCHDORF in brief

HOCHDORF Holding Ltd

HOCHDORF Swiss Nutrition Ltd (100%)

HOCHDORF Baltic Milk Ltd (100%)

Uckermärker Milch GmbH (60%)

Ostmilch Handels GmbH (26%)

HOCHDORF Americas Ltd (60%)

HOCHDORF South Africa Ltd (90%)

Marbacher Ölmühle GmbH (100%)

Baby Care

Dairy Ingredients

Cereals &Ingredients

HOCHDORF in brief

Number of employees

More employees due to new facilities and the insourcing of a part of the logistics in Switzerland.

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Currently 30 apprentice in

six professions.

370 373 371

588 614

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100

200

300

400

500

600

700

2012 2013 2014 2015 2016

HOCHDORF in brief

Sales development

HOCHDORF products are sold in around 90 countries.

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0

100

200

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400

500

600

2007 2008 2009 2010 2011 2012 2013 2014 2015 HJ 2016

Turnover Switzerland Export / Turnover foreign countries

In m

io.

CH

F

AgendaInvestora, 21 September 2016

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1. HOCHDORF in brief Thomas Eisenring

2. HOCHDORF in numbers Marcel Gavillet

3. Market update Thomas Eisenring

4. Strategy 2016-2020 Thomas Eisenring

5. Outlook Thomas Eisenring

6. Questions

• Processed liquid quantity: 415.9 Mio. kg (prev. year: 421.4 Mio. kg; -1.3%)

• Quantities sold: 125,604 t (prev. year : 125,767 t; -0.1%)

• EBITDA: CHF 18.4 Mio. (prev. year : CHF 15.5 Mio.; +19.0%)

• EBIT: CHF 13.1 Mio. (prev. year : 10.7 Mio.; +22.7%)

• Net profit: CHF 11.0 Mio. (prev. year : CHF 4.1 Mio.; +168.1%)

• Important decisions

– Investment decision to build the spray tower 9 and the tin line 2

– Signing of the MoU with Pharmalys Laboratories SA for the acquisition of a

majority stake

– Continuation of the strategic projects: Forward integration, product offensive

– Increase production output T8

HOCHDORF in numbers

Good operational first-half results

HOCHDORF performed very well under difficult market conditions, achieving results that exceeded our expectations.

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HOCHDORF in numbers

Key figures income statement

Gross sales revenue in HY 2016 is characterized by the low milk prices.

in CHF 1‘000 HY 2016 2015 HY 2015 2014

Gross sales revenue 278,401 551,208 284,297 428,689

Gross operating profitAs % of production revenue

70,74224.1%

130,14023.9%

63,82822.3%

105,19924.7%

Earnings before interest, tax, depreciation and amortisation (EBITDA)As % of production revenue

18,447

6.3%

30,455

5.6%

15,503

5.4%

27,197

6.4%

Earnings before interest and tax (EBIT)As % of production revenue

13,1094.5%

20,1463.7%

10,6823.7%

20,0164.7%

Corporate profit (Net profit/-loss)As % of production revenue

11,0393.8%

13,0242.4%

4,1171.4%

16,1393.8%

Earned capital (Cashflow)As % of net sales revenue

17,1936.3%

24,8704.6%

8,4533.0%

25,3106.0%

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HOCHDORF in numbers

Key influences

• Gross sales are influenced by lower milk prices.

• High quantity of liquids processed in Switzerland. Plants were running at more or

less full capacity from the beginning of the year.

• Reduced milk intake in Lithuania for strategic reasons on account of the difficult milk

market.

• High restocking due to high milk volumes and assortment decisions.

• Operating expenses mostly in line with the budget.

• New product wins in the area CI.

• Reorganisation of the sales department in Marbacher Ölmühle.

• First sales HOCHDORF South Africa.

• Recreation of the exchange rate EUR – CHF.

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HOCHDORF in numbers

Balance sheet

Balance sheet total increased and the equity ratio fell slightly.

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Assets

in CHF 1,000 30.06.2016 31.12.2015

Current assets 171,738 47.7% 158,054 46.4%

Fixed assets 187,926 52.3% 182,342 53.6%

Total assets 359,664 100.0% 340,396 100.0%

Liabilities

30.06.2016 31.12.2015

Current liabilities 72,727 20.2% 73,965 21.7%

Non-current liabilities 89,013 24.7% 73,642 21.6%

Total liabilities 161,740 45.0% 147,607 47.4%

Shareholders’ equity 197,924 55.0% 192,788 56.6%

Total liabilities and shareholders’ equity

359,664 100.0% 340,396 100.0%

HOCHDORF in numbers

Cash flow statement

Still high investing activities.

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• Investing activities will remain high for the rest of 2016 and also in 2017.

in CHF 1,000 1.1. – 30.6.2015 1.1. – 30.6.2015

Earned capital 17,193 6.3%* 8,453 3.0%*

Change in net current assets -34,240 -20,250

Cash flow from operating activities -17,047 -6.25%* -11,797 -4.19%*

Cash flow from investing activities -10,997 -10,857

Free cash flow -28,044 -10.28%* -22,654 -8.05%*

Cash flow from financing activities 13,284 2,481

Currency translation 25 1,368

Net change in cash and cash equivalents

-14,735 -18,805

Cash and cash equivalents at 1.1. 43,023 46,380

Cash and cash equivalents at 30.6. 28,288 27,575

* % of net sales revenue

HOCHDORF in numbers

Gross sales revenue by area (in mio. CHF)

Growth in the Baby Care area due to plant “tunings” and portfolio optimisation.

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50.160.2

2015 2016

Baby Care

12.7 13.6

2015 2016

Cereals & Ingredients

221.3204.3

2015 2016

Dairy Ingredients

HOCHDORF in numbers

Gross sales revenue by region (in CHF 1,000)

Biggest sales growth in the Middle East/Africa region.

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Switzerland107 Mio.

39%

Europe117 Mio.

42%

Asia12 Mio.

4%

Middle East/Africa

38 Mio.14%

Americas/ Rest

3 Mio.1%

AgendaInvestora, 21 September 2016

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1. HOCHDORF in brief Thomas Eisenring

2. HOCHDORF in numbers Marcel Gavillet

3. Market update Thomas Eisenring

4. Strategy 2016-2020 Thomas Eisenring

5. Outlook Thomas Eisenring

6. Questions

Qualität

Global dairy markets are recovering

Very low international prices for milk and milk derivatives for more than one year; prices are increasing now.

Market update

Price development of butter, whole milk powder and skimmed milk powder Price development of milk in ct/kg

Quelle: AMI, ife-ev.de, Kieler Rohstoffwert

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Image Qualität

High dynamics in Baby Food

We consider the APAC and MEA regions as the most attractive markets.

Market update

Ø Growth2014-2019 %

Source: TechNavio Insight/own estimation

0 5 10

14

16

1413

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Europe

Americas

MEAAPAC

Mrd. USD 2014

Mrd. USD 2019

Accessibility

Image Qualität

New Food Safety Law in ChinaMarket update

Source: South China Morning Post/China Daily

New Food safety law in China: Risks and new chances.

1. HOCHDORF in brief Thomas Eisenring

2. HOCHDORF in numbers Marcel Gavillet

3. Market update Thomas Eisenring

4. Strategy 2016-2020 Thomas Eisenring

5. Outlook Thomas Eisenring

6. Questions

AgendaInvestora, 21 September 2016

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HOCHDORF’s Vision 2020Strategy HGR 2016-2020

«We transform this company into a most profitable niche player

in global premium food markets.»

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HOCHDORF’s vision is based on its future business model, whereas the transformation has already started.

USP of HOCHDORFStrategy HGR 2016-2020

1. We are a Swiss company• We reflect the whole bunch of Swiss values, like “reliability”, “quality”, “precision”

2. We are a mid sized company• We work with leanest possible structures• We are aware that nothing is more difficult to copy than a personal business relationship• Our talents are our main assets

3. We are an independent company • As one of the few dairy companies we are independent from milk producers and are able to

focus on customer and shareholder values independent from our suppliers

4. We are an agile and responsive company• Our customer service is best in class

5. We are a courageous company • We develop markets where competitors hesitate• Our marketplace is this planet• We consider personal business relationships as the most valuable assets

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HOCHDORF acts consequently as a Swiss mid sized company in a global market.

Value Proposition Policy Strategy HGR 2016-2020

1. Focus on premium markets• In every business we are active, we focus on the premium segment

2. Focus on “unsaturated” countries with high growth rates• MENA countries, Africa, Asia and LATAM are still the countries we focus on• China still limited to 25% market share in Baby Care• Exceptions only in special cases

3. Development of higher margin products• Chocolate• Kid’s Food• Base Powders & Instant Products

4. Enhance margins in existing businesses• Forward integration (!!!)• Elimination of intermediaries where possible• Development of Branded Business

5. Professional focus on cost• Cost efficiency is ALWAYS Key

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HOCHDORF’s aim is to increase added value in its products sold significantly.

Market Development PolicyStrategy HGR 2016-2020

1. Secure position in Switzerland• Since the Swiss origin is one of our USP’s, our position in Switzerland must be secured

(especially in Dairy Ingredients)

2. Unsaturated markets with high growth rates• Main focus in this respect are APAC, MEA and LATAM

3. Niche and premium position• Within the markets we strive for the premium segments

4. Accessibility• This includes e.g. number of competitors and their market position, local legislations, defensive

measures of market players etc.

5. Calculable risks• Change of legislations• Political stability (remark: political instability is often also a chance)

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HOCHDORF’s main focus is on “unsaturated” markets with high growth rates.

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Strategy HGR 2016-2020

Specific country strategies

We consistently limit our China business in the Baby Care area at 25%.

NORTH AMERICA:Opportunities underobservation. Concreteproject in planning.

LATIN AMERICA:Extension HOCHDORF Americas with mainfocus Mexico & Brasil.

Check further coope-ration opportunities.

EUROPE:Growth with existingcustomers.

MEA:Growth with existingcustomers.Analysis forwardintegration Baby Care.

Forward integrationDairy Ingredients (HOCHDORF South Africa).

CHINA & VIETNAM:Growth with existingcustomers.

HOCHDORF tomorrow: closer to the customerStrategy HGR 2016-2020

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HOCHDORF’s two dimensions of forward integration.

1. Product driven forward integration• Product driven forward integration means basically to diversify into products of industries

where we supply today• In this case product development, production and marketing is developed out of the

existing HOCHDORF organisation

2. Business model driven forward integration• Business model driven forward integration means to integrate an existing company into

HOCHDORF which already runs a business with our products on the next level(s) of the value chain

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Strategy HGR 2016-2020

Product Offensive

One of the main programs starting in 2016 will be a product offensive which should provide more added value.

Base PowdersAs ingredients for morebasic infant formulas

Weaning FoodsOnly branding/trading

Kid’s FoodsWith fruit, vegetableand wheat

Instant MilkFortified with minerals and vitamins

ChocolateProduced in South Africa«on the continent for thecontinent»

Forward IntegrationLine Extension

Product driven: AfrikoaStrategy HGR 2016-2020

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Development of Afrikoa is promising. Pipeline already exceeds production capacity three times.

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Strategy HGR 2016-2020

Business Model driven Forward IntegrationForward Integration in Baby Care means not just to acquire next level’s business; it means to take over control over the whole value chain.

BTB-Producer

Brand Owner

Distri-buter

Retailer/Pharmacy

Customer(Doctor)

Push MarketingMake the product available

Pull MarketingCreate demand

Pharmalys IStrategy HGR 2016-2020

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Pharmalys is a partner of HOCHDORF since the very beginning and is active in more than 40 countries.

Pharmalys IIStrategy HGR 2016-2020

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Pharmalys is a choice for a forward integration with highest added value at lowest risk.

1. High profitability• Pharmalys runs an excellent business model with outstanding profitability

2. Successful in our targeted markets• MEA and Asia are our target markets. Pharmalys is exactly in these markets very strong (Especially

MEA; China very promising)

3. At the right point of development• Pharmalys grew fast and needs more structure which we can deliver.• Valuation is (even if it is double then HOCHDORF) at a level we can afford the transaction (this will

end very soon)

4. High match in mutual interests• We need the markets and margins; Pharmalys needs to secure supply with Swiss milk

5. Proven track record and long term relationship• Target is very well known, since we work together from the very beginning

6. High reliability of data• Since the big part of the volumes goes over our tables we can exactly validate data/figures

Capacity Increase: T9Strategy HGR 2016-2020

1. Main volume drivers build on Swiss origin• Liptis focus 100% on Swiss origin• Pharmalys has alternative sources, but mainly due to capacity constraints of HGR• Liptis and Pharmalys are HGR’s biggest customers

2. Product Offensive and LATAM• 2016 starting product offensive (Base Powders and Instant Milks) can be produced at UMP

without big investments and very quickly• New and much more attractive alternative for LATAM (JV with Conaprole)

3. Risk minimisation• An investment in a complete new tower and infrastructure for 30.000 MT/year would

completely overwhelm the organisation at UMP

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To invest in new capacity in Switzerland is the right decision; this for many good reasons.

1. HOCHDORF in brief Thomas Eisenring

2. HOCHDORF in numbers Marcel Gavillet

3. Market update Thomas Eisenring

4. Strategy 2016-2020 Thomas Eisenring

5. Outlook Thomas Eisenring

6. Questions

AgendaInvestora, 21 September 2016

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HOCHDORF is more and more interestingOutlook

Many good reasons for an investment into HOCHDORF Group.

1. Solid Track Record• In the past three years HOCHDORF has proven that we succeed in operating solid even

under difficult conditions and that we are relentless in the execution of our strategy

2. Outstanding USPs• Concerning Food Safety, HOCHDORF as a Swiss company enjoys an excellent reputation • HOCHDORF is the only third-party manufacturer of Swiss infant milk formulas• The only Swiss manufacturer of lactose in IMF quality

3. Respectable margin potential• Forward integration is at the very beginning (further possibilities beside Pharmalys)• Product development for added value products/specialties is at the beginning (some new

Kid’s Food-Products already in 2016)

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• 26 January 2017 Initial information about the 2016 business year

• 13 March 2017 Results for the 2016 business year

• 05 Mai 2017 Annual General Meeting

• 17 August 2017 Half-year results for 2017

Investora, 21 September 2016

Financial Calendar

Upcoming HOCHDORF Group events.

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Thank you for your interest in the HOCHDORF Group