Notes to the half-year results

Principles of consolidation

Accounting principles

These consolidated interim financial statements comprise the unaudited half-year results of Emmi AG and its subsidiaries for the period ending 30 June 2018. The consolidated interim financial statements for 2018 have been prepared in compliance with Swiss GAAP FER 31 “Additional accounting and reporting recommendations for listed companies” and the consolidation and accounting principles described in the 2017 consolidated financial statements.

Income taxes are calculated based on an estimate of the expected income tax rate for the full-year 2018, adjusted for the non-recurring profit from the sale of the minority stake in “siggiʼs”. The consolidated half-year results should be read in conjunction with the consolidated financial statements compiled for the financial year ending 31 December 2017, as they represent an update of the last complete financial statements and therefore do not contain all information and disclosures required in the year-end consolidated financial statements. The consolidated half-year results are presented in Swiss francs (CHF). Except where stated otherwise, all amounts are presented in thousands of Swiss francs (CHF 000s).

The consolidated interim financial statements were approved by the Board of Directors on 24 August 2018.

Changes to the scope of consolidation or capital share

Centrale Laitière de Mahdia, S.A.

On 16 January 2018, Kaiku Corporación Alimentaria, S.L. “Kaiku”, an Emmi subsidiary based in San Sebastián (Spain), increased its stake in Centrale Laitière de Mahdia SA “Vitalait”, based in Mahdia (Tunisia), from 45.4 % to 54.7 %. As a result, Emmi, which holds 73.4 % of the shares in Kaiku, now has a 40.2 % stake in Vitalait. The transaction has no impact on the consolidation method as Emmi already exercised control over Vitalait before this transaction.

Servicios Logísticos Jundiz, S.L.

Servicios Logísticos Jundiz, S.L., based in Vitoria (Spain), was founded on 24 January 2018.

Kaiku Internacional, S.L. Agencia en Chile

Kaiku Internacional, S.L. Agencia en Chile, based in Santiago (Chile) was liquidated on 28 June 2018.

The Icelandic Milk and Skyr Corporation

The Icelandic Milk & Skyr Corporation “siggiʼs” was sold to the French milk processor Lactalis on 1 February 2018. The sale of the minority stake of 22 % held by Emmi had a significant impact on the income statement in the period under review. The sale resulted in a pre-tax profit of CHF 78.2 million (USD 80.9 million) or CHF 56.9 million (USD 58.9 million) after taxes. This profit will change again slightly in the second half of 2018 due to minor adjustments to the purchase price. The profit in Swiss francs also depends on the future performance of the CHF and USD currency pair.

The profit from this sale is included in the position “Income from associates and joint ventures”. Accordingly, earnings before taxes (EBT) rose by CHF 78.2 million and net profit by CHF 56.9 million.

Changes in the financial year 2017

We refer to the consolidated financial statements 2017 for the changes to the scope of consolidation in the financial year 2017.

Contingent liabilities

Emmi is involved in legal disputes in connection with ordinary operating activities. Although the outcome of the lawsuits currently cannot be predicted with certainty, Emmi assumes that none of the disputes will have any fundamental negative impact on operating activities or on the Groupʼs financial situation. Expected outgoing payments are provided for accordingly.

Subsequent events

On 2 July 2018, Emmi increased its stake in AVH dairy trade B.V., headquartered in Bergen (the Netherlands) from 75 % to 90 %. As a consequence, Emmi’s share in Goat Milk Powder B.V., which is directly held by AVH dairy trade B.V., increased from 45 % to 54 %. Both companies were already controlled by Emmi and therefore fully consolidated before this transaction.

On 31 July 2018, Emmi increased its stake in SAS Emmi Ambrosi France E.A.F. and EAF Immo 84 SCI from 51 % to 85 % in each case. As a consequence, Emmi’s share in Ets Schoepfer SAS and Distribution Disfrais SAS, which are directly held by SAS Emmi Ambrosi France E.A.F., increased from 51 % to 85 % in each case. All companies mentioned were already controlled by Emmi and therefore fully consolidated before this transaction.

From the balance sheet date until the consolidated financial statements were approved by the Board of Directors on 24 August 2018, no other major events occurred which could adversely affect the validity of the interim financial statements for 2018.