HOCHDORF Holding Ltd

Notes to the annual financial statements for 2021

Notes in accordance with article 959c et seqq. CO

1. Company, name, registered office

HOCHDORF Holding Ltd, Siedereistrasse 9, 6280 Hochdorf LU
The holding company does not have any staff (previous year: 0 employees).

2. Principles

General information

These financial statements have been prepared in accordance with the provisions on commercial accounting from the Swiss Code of Obligations (Articles 957-964 b CO). The additional requirements for large companies under Article 961 d (1) of the Swiss Code of Obligations (CO) (additional information in the notes, cash flow statement and management report) are waived because the company prepares its consolidated financial statements in accordance with Swiss GAAP FER.

Cash and cash equivalents and short-term assets with market price

Cash and cash equivalents include cash and deposits on postal and bank accounts. They are recognised at their nominal value. Short-term securities are measured at the market price on the balance sheet date.

Accounts receivables

Accounts receivables are measured at nominal value less value adjustments. Recognisable individual risks are taken into account by means of corresponding value adjustments.

Financial assets, loans to shareholdings, shareholdings

Loans to group companies are measured at no more than acquisition cost less possible value adjustments.

Treasury shares

Treasury shares are entered in the balance sheet as a deduction from equity at cost at the time of acquisition. At subsequent resale, the gain or loss is recorded in the income statement as financial income or expense

3. Information on balance sheet and income statement items

3.1. Remaining receivables to related parties

Other receivables to related parties mainly include the still outstanding repayment of the loan to Pharmalys Invest Holding and the interest incurred (payment date: 30.06.2022) as well as the short-term portion of the monthly repayment of the performance bonus and a receivable of TCHF 18 to the pension fund HOCHDORF.

3.2 Loans to shareholdings (CHF 1,000)

Loans to shareholdings104,089130,852
Loans to shareholdings under subordination91,71490,814
Value adjustments on loans to subsidiaries–5,422–6,327

3.3. Shareholdings

   Capital in 1,000Capital and voting share 
HOCHDORF Swiss Nutrition AG, CH-Hochdorf, SwitzerlandProductionCHF30,00030,000100%100% 
HOCHDORF Swiss Nutrition UGSalesEUR100100%0%1)
HOCHDORF America,s Ltd, UY-Montevideo, UruguayTradeUYU3,2323,283100%60%2)
Thur Milch Ring AG, CH-Sulgen, SwitzerlandTradeCHF17017056%56% 
Bimbosan AG, CH-Welschenrohr, SwitzerlandProductionCHF03500%100%3)
Schweiz. Milch-Gesellschaft AG, CH-Hochdorf, SwitzerlandShell companyCHF100100100%100% 
Snapz Foods AG, CH-Hochdorf, SwitzerlandTradeCHF100100100%100%4)
Zifru Trockenprodukte GmbH, DE-Zittau, GermanyProductionEUR200200100%100%5)
Uckermärker Milch GmbH, DE-Prenzlau, GermanyProductionEUR10,00010,00026%26%6)
Ostmilch Handels GmbH, DE-Bad Homburg, GermanyTradeEUR1,0001,00026%26% 
Ostmilch Handels GmbH Frischdienst Oberlausitz KG, DE-Schlegel, GermanyLogisticsEUR515126%26% 
Ostmilch Frischdienst Magdeburg GmbH, DE-Meitzendorf, GermanyTradeEUR252526%26% 
  1. New company: registered on 28.06.2021
  2. Share increased to 100% as of 12.10.2021; no further business activities
  3. Merger BIMBOSAN AG with HOCHDORF Swiss Nutrition Ltd (absorbing entity) as of 01.01.2021; entry in the Commercial Register on 24.06.2021
  4. In liquidation
  5. In liquidation
  6. Sale of shareholding as at to Ostmilch Handels GmbH, Bad Homburg, which thus owns 100% of the shares. Thereby still held as an indirect interest.

The following changes took place in the reporting period:

Shareholding value 1.1.  (CHF 1,000)88,56690,555
Addition of shareholding in HOCHDORF Swiss Nutrition UG due to formation of new company, registered on 28.06.2021110
Addition of shareholding in HOCHDORF America's Ltd as a result of purchase on 12.10.2021600
Disposal of shareholding in Marbacher Oelmühle due to sale on 31.12.20200–1,989
Shareholding value 31.12.88,63788,566

3.4 Non-current receivables to related parties

This includes the long-term portion of the monthly performance bonus repayment (until 2026) as well as outstanding payments in relation to the Pharmalys Laboratories SA (formerly Pharmalys Invest Holding AG) contract (containing loan and interest).

3.5. Short-term liabilities (CHF 1,000)

Services provided by third parties111238
Short-term interest-bearing payables60
Other (government bodies)01,085
Accrued liabilities and deferred income4,9171,672

The accrued liabilities and deferred income include CHF 4.8 million interest (2.5%) for the hybrid bond since 2017. Other short-term liabilities decreased by CHF 1.1 million due to the payment of withholding tax.

3.6. Long-term interest-bearing payables (CHF 1,000)

Syndicated loan27,00070,000
Long-term financial liabilities ( hybrid bonds)125,000125,000
Loans of shareholdings8897

Maturity structure (CHF 1,000)

Up to five years27,08870,097
More than five years125,000125,000

3.7. Income from equity investments/financial income/operating income

Income from equity investments273147
Financial income4,1105,406
Operating income205,402

Income from equity investments includes dividends from Ostmilch Handels GmbH, Ostmilch Handels GmbH Frischdienst Oberlausitz and Ostmilch Frischdienst Magdeburg. Financial income mainly includes interest from loans to subsidiaries (CHF 3.4 million), as well as interest from the outstanding Pharmalys purchase price payment (CHF 0.6 million) and exchange rate gains of CHF 0.1 million.

In the previous year the other operating income included a bonus in connection with the deferral of the outstanding purchase price payment from the Pharmalys sale and the current supply business.

3.8. Operating expenses

Property insurances, fees–236–28
Administration and IT expenditure–1,579–661
Marketing and sales expenditure–215–35
Other operating expenses–74–5
Bank charges, agency fees–5–6

3.9. Financial expenses

Interest costs–7,933–8,979
Other financial expenses–1313,044
Value adjustments on shareholdings/loans from the sale of Marbacher Olmühle0–4,148

The other financial expenses mainly include exchange rate losses of CHF 0.1 million (2020: CHF 0.4 million)
In the previous year, the sale of the Marbacher Oelmühle resulted in a total loss of CHF 4.1 million, of which CHF 4.1 million was due to the value adjustments on shareholdings/ loans; the remaining investment book value/loan amount was covered in the previous year by the sales proceeds of EUR 2.4 million.
In the previous year, other financial expenses included proceeds of CHF 4.3 million from the sale of Uckermärker Milch GmbH. The proceeds originated exclusively from the partial release of a provision for the utilisation of a loan to Commerzbank.

4. Shareholders

Shareholders >3% of total share capital31.12.202131.12.2020
Amir Mechria, Zug20.63%20.63%
ZMP Invest AG, Lucerne17.95% 17.95% 
Bermont Master Fund LP, Cayman Island (previously: Stichting General Holdings, Amersfoort)14.55% 14.55% 
Weiss Family and Innovent Holding AG, Wollerau5.58%5.58%
Shareholders >3% of the total voting rights31.12.202131.12.2020
The maximum entry limit is 15% in the share register of votes.  
Amir Mechria, Zug15.00%15.00%
ZMP Invest AG, Lucerne15.00%15.00%
Bermont Master Fund LP, Cayman Island (previously: Stichting General Holdings, Amersfoort)14.55%14.55%
Weiss Family and Innovent Holding AG, Wollerau5.58%5.58%

5. Transactions with treasury shares

Business year 2021
(in CHF)
  Business year 2020
(in CHF)
01.01.2021 balance29,738 sharesexchange rate 209.3001.01.2020 balance29,738 sharesexchange rate 209.30
2021 purchases0 sharesdaily exchange rate 02020 purchases0 sharesdaily exchange rate 0

2021 sales

0 sharesdaily exchange rate 02020 sales0 sharesdaily exchange rate 0
31.12.2021 balance29,738 sharesexchange rate 209.3031.12.2020 balance29,738 sharesexchange rate 209.30

6. Contingent capital/capital increase

There was no change in capital in 2021 (including no contingent capital). In 2020, the contingent capital from previous years, of nom. CHF 3,937,710, corresponding to 393,771 registered shares at nom. CHF 10 was used to increase the share capital.

7. Capital reserves

The capital reserves remained unchanged in 2021.
In 2020, the net loss for 2019 and the associated half capital loss were counteracted by withdrawing CHF 130 million from the capital reserves and transferring it to profit reserves. The remaining loss of CHF 35.4 million was carried forward (Resolution AGM 2020). As of 26.03.2020, the mandatory convertible bond was converted into equity. The gross amount of CHF 119.9 million was reduced by the emission levy of CHF 1.2 million and the share increase of CHF 3.9 million.

8. Shareholdings of the Board of Directors and the Group Management

As at 31 December, the members of the Board of Directors and the Group Management (including related persons) held the following number of shares in the company:

Board of Directors

 Anzahl Aktien
Anzahl Aktien
Jürg Oleas, Chair from 30.06.2000
Andreas Herzog, Vice Chair from 30.06.2000
Ralph Siegl, from 30.06.20100100
Markus Bühlmann, from 12.04.201900
Jean Philippe Rochat, from 30.06.2000
Total – Board of Directors100100

Group Management

Dr Peter Pfeilschifter, CEO to 21.01.22257257
Nanette Haubensak, CFO from 29.06.2000
Géza Somogyi, COO from 01.07.2000
Total – Group Management257257
Total – Board of Directors and Group Management357357

According to the 2020 remuneration regulations, the remuneration for the Board of Directors and the Group Management is paid in cash. There is therefore no allocation of shares.

9. Contingent liabilities

On 30.04.20, HOCHDORF Holding AG issued a letter of comfort to Zifru Trockenprodukte GmbH, Herwigdorfer Str. 10c, 02763 Zittau, Germany. The company is in liquidation; the letter of comfort secures liquidity up to an amount of EUR 0.5 million. This contingent liability still exists in 2021.

10. Assessment as a going concern (See also note 31 of the Annual financial statements of HOCHDORF Group)

10.1. Uncertainties at 31.12.2021 and for the 2022 and 2023 business year

HOCHDORF's Board of Directors and Group Management take the view that, depending on how the situation develops, the significant uncertainties highlighted below may raise significant doubts about the Group's ability to continue as a going concern, but that despite these uncertainties, HOCHDORF's ability to continue as a going concern is not in question at this time.

  1. Recoverability of receivables from Pharmalys Group companies (as at 31 December 2021: CHF 45.1 million from the supply business to Hochdorf Swiss Nutrition Ltd and CHF 10.9 million related to the sale of the shares in the Pharmalys company, repayment of outstanding loan and interest due to HOCHDORF Holding Ltd)
  2. Ensuring solvency and compliance with the covenants from the credit agreement

Risk 1 affects HOCHDORF Holding Ltd as a direct creditor of Pharmalys Laboratories SA (formerly Pharmalys Invest Holding AG) as well as indirectly, in that the recoverability of the investment value or the outstanding loans of HOCHDORF Swiss Nutrition Ltd would have to be called into question. Risk 2 affects HOCHDORF Holding Ltd. as a debtor of the syndicated loan.

10.2. Assessment by the Board of Directors

Recoverability of receivables from Pharmalys Group companies

At present, the Board of Directors and the Group Management assume that the receivables from Pharmalys companies, which have been reduced from CHF 72.7 million (31.12.2020) to CHF 56.1 million (31.12.2021) as a result of incoming payments, continue to be recoverable. Based on the payments received from Pharmalys companies of CHF 65 million in 2021 (CHF 30 million to HOCHDORF Holding Ltd) the Board of Directors of HOCHDORF continues to assume that there will be no default in payment or any associated value adjustment of the receivables.
In the course of the 2021 business year, the Board of Directors and the Group Management intensified the cooperation with Pharmalys Laboratories SA resulting in greater transparency regarding the contractual basis and agreed payment terms between Pharmalys Laboratories SA and its customers and thus regarding expected incoming payments. The common goal is to reduce payment terms to an industry-standard level for the North Africa and Middle East regions supplied by Pharmalys Laboratories SA.

Ensuring solvency and compliance with the covenants from the credit agreement
The key financial indicators to be complied with under the loan agreement continue to be the equity ratio and the debt factor (net debt in relation to EBITDA). In 2021 HOCHDORF succeeded in substantially reducing its net debt from CHF 87.6 million to CHF 32.9 million. On account of the rise in raw material prices in 2021 and the related pressure on the product margin, the Board of Directors is concentrating on faster implementation of the agreed strategy focussing on innovation and smart nutrition in order to make inroads into areas with higher added value. In this context, cooperation opportunities with partners are also being explored. Based on current information, the Board of Directors and Group Management considers achievement of the covenants to be a realistic prospect if these plans are implemented.

HOCHDORF also has a free credit line at its disposal of CHF 11 million (as at: 08.03.2022), which can be used in the advent of a further delay in payment. The 12-month liquidity plan shows that this credit line would be sufficient in case of realisation of the operating business and in case of assumed massive payment delays by the Pharmalys companies. However, this credit line would not be able to compensate for a complete default of the Pharmalys Group's outstanding payments.

For these reasons, the Board of Directors sees no increased risk of impairment of the investment values or the loans to HOCHDORF Swiss Nutrition Ltd.

After the balance sheet date, the following events occurred with respect to the risks described:

  • Since 31 December 2021 there has been a cumulative payment receipt from Pharmalys Laboratories SA of EUR 2.0 million to the HOCHDORF Swiss Nutrition Ltd (as at: 08.03.2022)
  • Emmi Schweiz AG and HOCHDORF have agreed a cooperation in the area of speciality powders, for both milk-based and vegan products. HOCHDORF will produce semi-finished and finished products with special requirements in powder form for Emmi. This operational cooperation is contractually structured as contract manufacturing.

10.3. Events after the balance sheet date

The following events occurred after the balance sheet date and until the approval of the consolidated financial statements by the Board of Directors: As of 21.01.2022, the CEO, Dr Peter Pfeilschifter, decided to leave the HOCHDORF Group with immediate effect. Mr Ralph Siegl has taken over the Group Management as a Delegate of the Board of Directors of HOCHDORF Holding with immediate effect.