Dottikon Es : Condensed Annual Report 2022/23

2022/23 Condensed Annual Report More than Hazardous Reactions.

3  DOTTIKON ES

Condensed Annual Report 2022/23

Content

Summary/Outlook	5
Group Financial Statements DOTTIKON ES Group	17
	Consolidated Income Statements	18
	Consolidated Balance Sheets	19
	Consolidated Cash Flow Statements	20
	Consolidated Statements of Changes in Equity	21
	Notes	23
Corporate Governance	33
Investor Relations	43

The Annual Report 2022/23 in English includes only condensed financial information.

The comprehensive Annual Report 2022/23 is available in German.

5  Summary/Outlook DOTTIKON ES Group

Condensed Annual Report 2022/23

Dear Shareholder,

Herewith we present to you DOTTIKON ES Group's Condensed Annual Report 2022/23 for the period from April 1, 2022, to March 31, 2023.

With this Annual Report, we say thank you

• To our customers for the business relationship and their trust
• To our employees and our suppliers for their commitment and dedication
• To all friends and family members, our neighbors and the authorities for their support and understanding
• To our long-term shareholders for their support and loyalty

A demanding environment marked by complexity and rapid changes requires holistic, ­analytical, conceptual, and creative thinking - but above all, it requires common sense. Our Lisa von Bünzikon is blessed with this gift and will offer readers a different perspective on our Annual Report.

Review

At CHF 319.5 million, net sales of DOTTIKON ES in the business year 2022/23 were 26.8 percent higher than in the previous year and were broad-based in terms of products and cus- tomers. Semi-finished and finished goods increased by CHF 11.2 million. Other operating income rose to CHF 9.3 million, primarily driven by higher capitalized own production as a direct result from higher investments in new production capacities and infrastructure. At CHF

102.6 million, material expenses were up 28.3 percent compared to the previous year and represented 31.0 percent of the production output - net sales plus inventory changes in semi-finished and finished goods - and rose by another 2.3 percentage points compared to the previous year due to higher raw material costs. Personnel expenses rose by 3.8 percent to CHF 82.0 million in the business year 2022/23. The average staff number increased by 2.0

6  Summary/Outlook DOTTIKON ES Group

Condensed Annual Report 2022/23

percent to 678 full-time equivalents, with the remainder of the increase in personnel expenses being attributable to higher salaries. In combination with other operating expenses of CHF 38.8 million, nearly unchanged compared to the previous year, EBITDA was CHF 116.6 million, up 31.3 percent, with an EBITDA margin of 36.5 percent (previous year: 35.2 percent). At CHF 20.6 million, depreciation and amortization was slightly below the previous-year fig- ure. Compared to the previous year, EBIT rose by 41.9 percent to CHF 96.0 million, with an EBIT margin of 30.0 percent (previous year: 26.9 percent). At CHF -2.0 million, the financial result was CHF 3.7 million below the previous year's figure due to lower employer contribution reserve valuations as a result of negative financial asset returns in the pension fund (pre- vious year: higher valuations as a result of positive financial asset returns). After the result of associated companies and lower income taxes related to the newly applicable reduced income tax rate in the business year 2022/23 and the related extraordinary effect of a onetime revaluation of deferred tax liabilities, net income was CHF 87.7 million (previous year: CHF 59.3 million), 47.9 percent above the previous year's figure, with a net income margin of 27.5 percent (previous year: 23.5 percent).

Cash flow from operating activities rose by CHF 53.3 million to CHF 89.5 million, mainly due to the higher net income and a less pronounced inventory buildup compared to the previous year. In the previous year, the buildup was significantly higher because of higher inventory levels to ensure availability. Cash outflows from high investment activities was CHF 136.4 ­million in the reporting period, representing another strong increase of 72.5 percent or CHF

KEY FIGURES, APRIL-MARCH

CHF million	2021/22	2022/23	Changes
	Net sales	251.9	319.5	26.8%
	EBITDA	88.8	116.6	31.3%
	EBITDA margin  (in % of net sales)	35.2%	36.5%
	EBIT	67.7	96.0	41.9%
	EBIT margin  (in % of net sales)	26.9%	30.0%
	Net income	59.3	87.7	47.9%
	Net income margin  (in % of net sales)	23.5%	27.5%
	Cash flow from operating activities	36.2	89.5	147.2%

7  Summary/Outlook DOTTIKON ES Group

Condensed Annual Report 2022/23

57.3 million compared to the previous year. Additions to property, plant and equipment was CHF 180 million in the business year 2022/23. At around CHF 1'054 million, total assets broke the CHF 1 billion threshold for the first time in the company's 110-year history. At the end of the business year, long-terminterest-bearing financial liabilities amounted to CHF 60 million, the respective interest expense in the reporting period was CHF 0.3 million. The equity ratio was at 76.2 percent. Cash and cash equivalents and current financial assets were CHF 219.2 million at the end of the reporting period.

Geopolitical and economic assessment of situation

As a result of the Russian attrition war in Ukraine as well as Russia's economic isolation and approximation to China, the hitherto tripolar world order increasingly transforms into a dipolar one - the United States versus China. This new world order is characterized by geopolitical tension between the United States and China in the struggle to secure world supremacy. Both sides strive to build and expand their respective alliances and partnerships in this con- flict. US Americans and Europeans have grown closer as a result of their similar interests in the war over Ukraine. China, meanwhile, is trying to prevent a unified EU geopolitical strategy by cleverly exploiting the attitude of the large EU states, which is characterized by economic and opportunistic self-interest.

According to the United States, China is the only competitor in the world that not only has the intention to reshape the world order, but also has the economic, diplomatic, military, and technological power to do so. The United States views the coming ten years as decisive in preventing Chinese dominance. To this end, the United States will implement and enforce this national security strategy unconditionally, even at the cost of economic sacrifices. Export controls and bans to China and the subsidy of domestic production to invigorate the United States' competitiveness - for example in the tech sector for high performance chips - are merely a first step towards the United States' decoupling and disentanglement from China. Respective Chinese countermeasures to weaken the United States and its allies have been observed for quite some time now. China has its eyes set on dominating world politics by

Employees  (FTE, annual average)	665	678	2.0%

8  Summary/Outlook DOTTIKON ES Group

Condensed Annual Report 2022/23

2049. As early as 2013, China has introduced its dual circulation strategy to reach technological self-reliance and independence from the West, its self-proclaimed ideological enemy. China is developing into the world's largest economy, with a population four times larger than that of the United States and a robust industry built on a broad-based scientific and technological foundation that the world needs to reckon with. Roughly two-thirds of all countries in the world trade more with China than with the United States. The declining efficiency of massive state investments in infrastructure development and declining productivity have led to massive debt accumulation by local and regional governments as well as state-owned enterprises in China. The slowdown in global economic growth due to persistently high inflation and resulting interest rate increases in Europe and the United States have also recently weighed on demand for Chinese goods.

Growing geopolitical tension and the painful experience of supply chain disruptions during the COVID-19 pandemic or the war in Ukraine with related sanctions against Russia put the focus of decoupling from China well ahead of Europeans' sustainability efforts, especially in the United States. In the event of an armed conflict and economic escalation, the high degree of specialization, concentration, and organization of the global value chains and their segments bear an immense potential for economic, technological, and cultural loss. This threat awakens the need for a reduction in geopolitical dependence and a corresponding realignment of interest linkages. For this reason, the material financial, or at least the material economic, disentanglement between rival parties is mutually pursued and promoted. Implementing the respective steps is a demanding, lengthy, and costly process, especially for globally positioned large companies. Values such as consistency, trust, and reliability as well as cultural regional anchoring and proximity are an important trust base for building new or expanding existing business as well as political relations. Therefore, repatriation through near- and onshoring as well as the regionalization trends continue. The value chains for sensitive goods are given a strategically broader regional base in the interest of achieving greater supply security. This also means that the more energy- and CO²-intense production steps, formerly outsourced to the East, will increasingly have to be relocated to the West again - despite

9  Summary/Outlook DOTTIKON ES Group

Condensed Annual Report 2022/23

higher production costs and inevitably higher prices. For the coming decade, therefore, rein- dustrialization - and hence the demand for (fossil) energy - will increase substantially in Europe and North America. Only those who explore, mine, extract, and manufacture will have unrestricted access to goods - and these are energy-intensive steps. Against this back- ground, the reduction of its value chain's dependence on China has become a strategic priority for US companies as well, and they aim to achieve it primarily through decoupling and geographic diversification. Due to the absence of a unified geopolitical strategy within the EU to date, this realization has not yet taken hold to the same extent among European compa- nies. To make matters worse, the decoupling and the energy transition - two aspects that result in higher consumer prices - have to take place in an environment marked by already high (core) inflation and therefore rising interest rates. The rapid interest rate hikes by national banks have already led to initial distortions among banks this year due to a loss of confi- dence. With governmental rescue operations, the situation has been briefly calmed down, but the underlying danger is not averted. Going forward, the central banks' room for maneuver for further interest rate hikes is limited because banks are apparently exposed to more widespread risks than previously assumed due to large maturity gaps between assets and liabilities. Should inflation remain at high levels due to rising consumer prices, interest rate policies become a balancing act between counteracting a loss of prosperity due to asset devaluation and declining purchasing power or financial and thus economic crises as a result of a loss of confidence in interest-exposed banks and deficit-ridden countries.

Biopharmaceutical market

Demographic developments of an increasingly aging population with the associated rise in drug demand especially in developed countries with high purchasing power, the accelerated market approvals for novel drugs, the growth of biosimilars as well as government attempts to reduce drug prices and health care costs remain key medium- and long-term volume growth and innovation drivers in the biopharma market. In addition, the demographic trend ensures stable fundamental volume growth in the long term. In the medium term, expected