Wallet Distribution and Bank Relationship Management “Interactive  PEP  session – DACT” Klaas Springer – Director Corporate Treasury 10 April 2014

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FrieslandCampina

Contents • General Introduction

• Bank Relationship Management: Quid Pro Quo

• Wallet Distribution Model: Why and How?

• Application in Combination with Refinancing

• Adam Smith Award

General introduction

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employees 21.186

11.4 billion euro revenue

28 Facilities in

countries 100 Export to over

countries

Millions of consumers

member dairy farmers own the Company

19,244

Every day

2013

Figures 2013

5 1 before goodwill impairment

With good results

Figures 2013

10.8% up

Revenue

313 million euro

Operating profit

513 million euro

before goodwill impairment

2.7% Operating profit as a % of net revenue

4.5% before goodwill impairment

Revenue in millions of euros

11,418 10,309 9,626 8,972

2013 2012 2011 2010

Operating profit in millions of euros

513 487 403 434

20131 2012 2011 2010

2013 313

Operating profit as a % of net revenue in percentages

4.5 4.7 4.2 4.8

20131 2012 2011 2010

2013 2.7

Figures 2013 * in millions of euros

Worldwide

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North and South America

United States of America

Africa and the Middle East

Nigeria Ghana United Arab Emirates Saudi Arabia

Asia and Oceania

Indonesia Malaysia Singapore Thailand Vietnam Philippines China Hong Kong India Japan New Zealand

Europe

Netherlands Germany Belgium Greece Hungary Romania Russia France Spain Italy Austria United Kingdom

1,165 revenue *

1,026 employees

19 locations

2,938 revenue *

6,846 employees

30 locations

6,965 revenue *

13,147 employees

68 locations

350 revenue *

167 employees

6 locations

Our position in the dairy sector

7 Figures 2012 in billion of euros

Company Dairy Revenue

3.3

3.5

4.1

4.4

4.44.5

4.5

4.5

5.1

5.8

6.0

6.5

6.9

8.49.4

10.512.5

14.0

15.123.4

20. Müller - Germany19. Schreiber Foods - USA

18. Bongrain - France17. DMK - Germany

16. Kraft Foods - USA15. Mengniu - China14. Sodiaal - France

13. Morinaga - Japan12. Yili - China

11. Unilever - Netherlands/UK10. Meiji - Japan

9. Saputo - Canada8. Dean Foods - USA

7. Arla Foods - Denmark/Sweden6. Dairy Farmers of America - USA

5. FrieslandCampina - Netherlands4. Fonterra - New Zealand

3. Lactalis - France2. Danone - France

1. Nestlé - Switzerland

5. FrieslandCampina - Netherlands

Source: Rabobank, August 2013

Concluding remarks: performance since the merger end 2008

2008

0,77

2,6

543 (5,7)

30,0

KPI

• Performance premium (cash + in kind) in € per

100 kg

• Operating profit in % of revenue*

• EBITDA in € million** (in

% of revenue)

• Equity as % of total assets

2013

3,04

4,5

961 (8,4)

37,0

* Performance premium included in the costs of goods sold, before goodwill impairment ** Annualized with performance premium added back to EBIT 8

Bank Relationship Management: Quid Pro Quo

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Vision on the role of banks

• Financing: - Providing the flexible layer on the liability side - Commitment that financing banks will get the opportunity to pitch - In the strategic sense company does not want to rely on banks • Service provider: cash management, trade finance, FX, etc.

• Trusted advisor: - Financial advisor (e.g. M&A, DCM) - Strategic advisor (e.g. Outside-In views, Sustainability) - Research and sector knowledge

Bank Relationship Management: Quid Pro Quo

• Participating in RFC’s Revolving Credit Facility is the entrance ticket for other banking services

• Level Playing Field: the opportunity to pitch, but no guarantee for success

• To keep the balance: the company will strive, to a reasonable extent, to keep the distribution of the wallet aligned with the  banks’  commitments

Wallet Distribution Model: Why and How?

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Why a Wallet Distribution Model?

• When you make a commitment, you have to manage it!

• In order to substantiate statements and make adjustments

when necessary to create balanced relationships

• Ability to lead discussion instead of being reactive

• But: - Keep  it  simple:  can’t  afford  to  spend  too  much  time - No structural dependence on consultant - Rather a Golf than a Rolls

Request For Proposal 2010

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How?:  Overview  of  Corporate  Treasury’s  Business Wallet

In the overview, all relevant key areas are listed that were considered in the wallet estimation for 2010 FY:

Source: RFI Bank Services, dd 4/2/2011

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How?: Countries in Scope of the Wallet Distribution Analysis

Given our bank relations considered in the wallet distribution exercise the following countries – and their respective currencies – were taken into consideration:

Europe (Greater Area) Asia and Australia Americas

The Netherlands Greece Malaysia USA

Belgium Hungary Indonesia Africa & Middle East

France Romania Thailand Nigeria

Spain Russia Vietnam Saudi Arabia

UK Switzerland Singapore United Arab Emirates

Germany Austria China

Italy

How?: Assumptions regarding pricing

What does a bank earn on?

• Liquidity management: information from RFP’s

• Deposits: interest rate spreads, e.g. Nigeria 0.6%, Malaysia 0.7%, Indonesia 1.0%, Europe 0.15%

• FX: Spots 1.1 bps and Forwards 1.4 bps

• IR: IRS 1 bps, Cross Currency IRS 1 bps

• Credit Cards: EUR 25 fee per card

• Etc.

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Main Conclusions of Wallet Distribution Exercise

1. Banking wallet is fairly divided between our current banks in the RCF

• 1 Bank has less wallet due to limited product offering

• 1 Bank has 4% gap between commitment and wallet, due to fee business

• Current pricing of products used by FC, are overall below or at the market price, based on insights of Zanders

2. Next steps are

• To integrate this approach in our Long Term Funding Plan

• Discuss outcome with all banks

• Expand the Wallet Sizing tool with none RCF-banks, for Thailand, Nigeria and Vietnam.

• The process needs to be repeated on a yearly basis

Application in Combination with Refinancing

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Discussing with our Banks: Classification and Positioning of our Banks

Category Result, Implementation Bank #

Free Lunchers

It is advisable to ask the bank to participate in a credit facility

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Balanced Partners

It is important to keep these banks „happy“  and  to  nominate  them  as  core  bank candidates

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Enigmas • „Greedies“  – have increased participation

• „Inescapables“  – gently pressure to participate or look for alternative solution

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Goodies This discrepancy could trigger relation issues if it is not tackled adequately

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The  table  below  helps  us  to  interpret  Zanders’  classification  of  banks  in  their  Wallet  Distribution  Tool  with  possible  actions  to  be  taken  (see  column  “Result,  Implementation”):

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Refinancing 2011?

• Q2/Q3 2011: Discussing outcomes with the banks - Openness was highly appreciated - Generally high level of satisfaction with the relationship - Open for new business • Summer 2011: GREXIT as dominant theme, EB and Audit Committee wanted to build in more certainty of funds giving increased market volatility • Putting 2 and 2 together: - Following up recent discussion with request to discuss doable refinancing transaction - Implement Amend and Extend refinancing (plus two years at improved conditions)

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Early Refinancing 2014?

• No extensive wallet distribution exercise this time: pretty balanced picture • Pitch with core banks to request for their refinancing proposal, discuss relationship and business wallet development • Invite to limited number of banks to facilitate at either € 150 million (Tier 1) or € 50 million (Tier 2) • Closing scheduled 3d week of April: - Market (better) pricing - Higher amount: from € 1 bln to € 1,5 bln - Documentation borrower friendlier - Rebalancing banking group

Adam Smith Award

Adam Smith Award

Questions?