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 2019. The consolidated interim financial statements for 2019 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 2018 consolidated financial statements.

Income taxes are calculated based on an estimate of the expected income tax rate for full year 2019. The consolidated half-year results should be read in conjunction with the consolidated financial statements compiled for the financial year ended 31 December 2018, 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 of Emmi AG on 26 August 2019.

Changes to the scope of consolidation or capital share

Acquisition of a blue cheese production site in the US

On 28 February 2019, Emmi acquired a blue cheese production site from the Great Lakes Cheese Company in the US. The transaction included the acquisition of the production building in Seymour, Wisconsin, the related land and the production facilities. The some 50 employees at this production site currently produce almost 3.5 million kilograms of cheese every year.

Sale of Emmi Frisch-Service AG

On 3 April 2019, Emmi sold its Swiss trading and supply company Emmi Frisch-Service AG to the Transgourmet Group. The negative impact on sales in 2019 amounts to approximately CHF 40 million. In addition, as a result of the transaction, around 160 employees joined the Transgourmet Group. The transaction did not have any significant impact on results.

Acquisition of a majority stake in Leeb Biomilch GmbH and Hale Gmbh

On 2 June 2019, Emmi announced the acquisition of a 66 % stake in Austrian Leeb Biomilch GmbH and Hale GmbH. Leeb Biomilch GmbH has established a leading position in Europe for organic goat’s and sheep’s milk products in fresh and UHT milk, milk drinks and yogurt. Hale GmbH was founded in 2016 and distributes vegan organic products made from almonds, coconut and oats. The two companies employ some 50 people and generate annual sales of around EUR 15 million (approx. CHF 17 million). The closing of the transaction is subject to approval by the responsible competition authorities; the announcement therefore had no impact on the half-year results.

Acquisition of a minority stake in NATUR-ALL BBVV-2018, S.L.U.

On 17 June 2019, Kaiku Corporación Alimentaria, S.L. acquired a 25 % stake in Spain’s NATUR-ALL BBVV-2018, S.L.U., which produces vegan drinks. Emmi has a 73 % stake in Kaiku Corporación Alimentaria, S.L.; Emmi considers NATUR-ALL to be an associated company.

Increased stake and acquisition of control in Laticínios Porto Alegre Indústria e Comércio S.A.

On 18 June 2019, Emmi announced an increase in its stake in Brazilian company Laticínios Porto Alegre Indústria e Comércio S.A. from 40 % to 70 %. Emmi has held a stake in the dairy since July 2017, which has continued to develop positively since then and is now among the top three largest dairies in its primary market of Minas Gerais. Laticínios Porto Alegre generated net sales of around BRL 630 million (approx. CHF 160 million) in 2018 and employs some 1,250 members of staff. The closing of the trans­action is subject to approval by the local competition authorities; the announcement therefore had no impact on the half-year results.

Changes in the 2018 financial year

We refer to the consolidated financial statements 2018 for the changes to the scope of consolidation in the 2018 financial year.

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 Group’s financial situation. Expected outgoing payments are provided for accordingly.

Subsequent events

Acquisition of Pasticceria Quadrifoglio S.r.l.

On 25 July 2019, Emmi announced its acquisition of Italian company Pasticceria Quadrifoglio S.r.l. The company is well established in its home market of Italy, both in food retail as well as in the food service sector in particular, and therefore strengthens Emmi’s existing dessert network in Italy. It employs some 90 staff and generated net sales of around EUR 19 million (approx. CHF 21 million) in 2018. The closing of the transaction is subject to the approval of the relevant competition authorities.

From the balance sheet date until the consolidated financial statements were approved by the Board of Directors of Emmi AG on 26 August 2019, no other major events occurred which could adversely affect the validity of the interim financial statements for 2019.

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