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Investor relation during an IPO Considerations and Challenges Lars Frederiksen, CEO

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Chr. Hansen in brief Founded in 1874 in Copenhagen by Danish pharmacist Christian D.A. Hansen Since 2005 owned by French capital fund PAI partners Introduced on NASDAQ OMX in June 2010

Sales in 2010/11 of EUR 636 million 14% Organic growth 25% EBIT margin

2.400 employees in 30 countries Considerable investments in Research and development State-of-the-art production facilities on five continents

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Chr. Hansen – A bioscience based company Cultures are living microorganisms which

Cultures

control fermentation processes in a range of food products

Enzymes

Enzymes are proteins which catalyze naturally occurring processes Transforms milk to cheese

Probiotics

Selected microorganisms recognized for their healthy properties Science progresses fast in this area

Natural colors

A complete color range extracted from seeds, roots, and berries Natural alternative to synthetic colors

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Strong market leadership positions and strong financials 2010/11

Global market share

Cultures & Enzymes

Health & Nutrition

approx. 45%

approx. 15%

Natural Colors

Chr. Hansen total

approx. 20% 166

636

Revenue

379

(EUR million)

91

6%

16%

111

30

EBIT-margin b.s.i

29%

ROIC excl. goodwill

30%

Organic growth

EBIT b.s.i. (EUR million)

4

40%

14%

18

159

33%

11%

25%

34%

27%

30%


The IPO Process Getting there and staying there‌..

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The IPO process from A to Z Jun 2009

Internal preparation

IPO execution

Marketing

IPO and after

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Aug 2009

Oct 2009

Dec 2009

Feb 2010

Apr 2010

Jun 2010

Aug 2010

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2

3

4

Oct 2010


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Internal preparation: Articulating our Equity Story

Equity story

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Know.. Agree.. Document.. and Communicate

WHY WE ARE GREAT


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The core of our Equity Story

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Internal preparation: Financial documentation 

Creating a data book suitable for verification of all financial data and qualitative statements

Backing up our equity story and mitigating our risk factors (zooming on 2005 => 2010)

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Sustainable organic growth of 10 pct p.a.

Growth across all our business areas and regions

Margin improvements driven by a scalable platform

Effect of divestments

No single customer dependency

Stronger R&D performance

No significant raw material dependency

Exchange rate exposure Data book of +500 pages created by internal Finance with PWC as project manager


The IPO process from A to Z Jun 2009

Internal preparation

IPO execution

Marketing

IPO and after

11

Aug 2009

Oct 2009

Dec 2009

Feb 2010

Apr 2010

Jun 2010

Aug 2010

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2

3

4

Oct 2010


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IPO Execution Dec 2009

Beauty contest

Kick off meeting

Governance

Prospectus and due diligence

Analyst presentation

Intention to float

Investor relations

Road show presentation

The rest!

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Jan 2010

Feb 2010

Mar 2010

Board, incentive schemes etc

Apr 2010

May 2010

Jun 2010


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Internal preparation: Prospectus and Due Diligence  Due Diligence  Request list/Scope • Interests between parties not entirely aligned  Build up of data room = significant workload for the organization  Confidentiality

 Prospectus  230 pages of limitation of liability/marketing document • Interests between parties not entirely aligned  First draft 9 February 2010 – Changes made almost right up until publication on 19 May 2010  Significant workload for management team

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Internal preparation: Investor education  Build and fine-tune equity story  What is the core of the company  Document and substantiate everything Prepare presentation for financial analysts for initial coverage  Describe company, products, markets, competitors in an understandable manner  A full day presentation Conduct analyst education  Follow up with one-on-ones, answer questions, correct Initial coverage  Answer questions, clarify issues Setting the scene  Extremely important that analysts and investors get a clear perception of the company and the value drivers. 14


The IPO process from A to Z Jun 2009

Internal preparation

IPO execution

Marketing

IPO and after

15

Aug 2009

Oct 2009

Dec 2009

Feb 2010

Apr 2010

Jun 2010

Aug 2010

1

2

3

4

Oct 2010


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Marketing Pilot fishing

Investor education

Road show

 Carried out in November / 2009

 Period up until ITF used to educate “research analysts”

 Started right after release of Prospectus

 Facilitated by two global investment banks

 Main events were Analyst presentation and Q&A’s

 Major cities in Europe and US visited

 30 min. management presentation to selected investors (~10)

 Draft research reports commented by Management

 Two teams, 10 days, 7-10 meetings per day

 Structured feedback on “key excitements”, “key concerns” and “valuation”  Equity story re-designed to address feedback

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 Investor education initiated  One-on-One meetings and right after ITF (26 Apr), group meetings publication of research reports  Orders received in the book  Research analyst road show to simultaneously investors in the period until release of Prospectus


The IPO process from A to Z Jun 2009

Internal preparation

IPO execution

Marketing

IPO and after

17

Aug 2009

Oct 2009

Dec 2009

Feb 2010

Apr 2010

Jun 2010

Aug 2010

1

2

3

4

Oct 2010


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IPO and after  During and after IPO  Handle the press – make sure things are alligned  Design quarterly reporting standards  Set up road shows, one-on-one’s, participating in seminars etc  Educate Board of Directors as to the markets perception of the company  Educate investors and financial analysts

 Standard IR work  Focus on delivering what we have promised  Keep on educating  Be accessible to address concerns and misunderstandings

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A steady evolution in our share price Chr. Hansen share price performance since IPO Rebased to Chr. Hansen

Chr. Hansen +31.4%

130

OM XC-20 -8.1%

Volume (mm)

10 9

120

8 7

110

6 100

5 4

90

3 2

80

1 70 2-Jun-10

0 1-Sep-10

1-Dec-10

2-M ar-11

1-Jun-11

31-Aug-11

Source: Bloomberg as of August 31, 2011

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Our approach During 5 years of PE ownership we kept a close contact to financial analysts IPO of a private equity owned company always raises eyebrows We engaged an experienced IR consultant to help us in January 2010 Needed someone with strong personality and experience Counterbalance to banks, lawyers, journalists and others Provided good guidance to management on “do and don’t” Financially Market guidance Public relation

Did not want to attract someone if IPO was pulled

After successful IPO in June 2010 we hired Anders Mohr Christensen as head of IR

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Questions ?

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/Lars_Frederiksen_IPO_20032012  

http://www.dirf.dk/Files/Filer/Lars_Frederiksen_IPO_20032012.ppt

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