kuoni gb12 financialreport en 2012

FINANCIAL REPORT 02

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content

coRpoRatE GoVERnancE 241

introduction 243

Group Structure and Shareholders 244

capital Structure 245

Board of Directors 252

the Group Executive Board 264

compensation, Shares and Loans 265

Shareholders' participation Rights 266

changes of control and

Defence measures 269

auditors 270

information policy 272

compensation Report 275

aGEnDa 295

agenda 2013 295

colophon 296

FinanciaL rePort 147

FiVE-yEaR-SummaRy oF KEy Data 150

Kuoni GRoup 153

Statement of Financial position 155

income Statement 156

Statement of comprehensive income 157

Statement of changes in Equity 158

Statement of cash Flows 159

accounting principles 160

notes to the consolidated

Financial Statements 168

principal Subsidiaries and associates 214

Report of Statutory auditor 218

Kuoni tRaVEL hoLDinG LtD 221

Statement of Financial position 223

income Statement 224

notes 225

Board of Directors' proposal for the

appropriation of Retained Earnings 237

Report of the Statutory auditor 238

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Five-Year SummarY oF KeY Data

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02_financial report Kuoni group02_financial report Kuoni group

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CHF million 2012 2011 2010 2009 2008

Turnover Outbound Europe 2 143 2 098 2 285 2 321 2 930

Outbound Nordic 993 929 979 957 1 092Outbound Kuoni Europe 1 151 1 170 1 307 1 364 1 839

Global Travel Services 2 554 1 844 490 415 601Group Travel 964 789 n.a. n.a. n.a.FIT (Fully Independent Traveller) 1 590 1 070 n.a. n.a. n.a.

Emerging Markets & Specialists 1 326 1 286 1 324 1 264 1 464Specialists 922 900 955 950 1 067Outbound Emerging Markets 207 222 226 193 281VFS Global 205 176 156 129 123

Less turnover elimination between Divisions – 178 – 117 – 115 – 106 – 140Total 5 845 5 111 3 984 3 894 4 855

EBITA Outbound Europe 3.8 24.3 55.8 25.2 115.1

Outbound Nordic 40.5 35.1 55.8 21.7 45.8Outbound Kuoni Europe – 36.7 – 10.8 – 0.0 3.5 69.3

Global Travel Services 78.4 62.1 6.5 5.1 18.2Group Travel 22.1 19.0 n.a. n.a. n.a.FIT (Fully Independent Traveller) 61.6 63.3 n.a. n.a. n.a.Acquisition and integration cost – 5.3 – 20.2 n.a. n.a. n.a.

Emerging Markets & Specialists 60.2 79.1 70.9 48.4 59.6Specialists 30.9 35.4 38.8 37.1 52.0Outbound Emerging Markets – 6.2 1.8 – 4.3 – 9.7 – 10.6VFS Global 35.5 41.9 36.4 21.0 18.2

Corporate – 23.1 – 52.6 – 61.0 – 48.4 – 30.1Total 119.3 112.9 72.2 30.3 162.8

EBIT Outbound Europe – 15.3 20.3 53.0 22.4 112.6

Outbound Nordic 39.4 33.9 54.7 20.5 44.6Outbound Kuoni Europe – 54.7 – 13.6 – 1.7 1.9 68.0

Global Travel Services 52.6 36.7 6.1 4.9 17.8Group Travel 17.4 13.4 n.a. n.a. n.a.FIT (Fully Independent Traveller) 40.5 43.5 n.a. n.a. n.a.Acquisition and integration cost – 5.3 – 20.2 n.a. n.a. n.a.

Emerging Markets & Specialists 39.1 69.8 60.3 36.2 50.1Specialists 14.3 26.6 28.9 25.5 43.3Outbound Emerging Markets – 10.7 1.3 – 5.0 – 10.3 – 11.4VFS Global 35.5 41.9 36.4 21.0 18.2

Corporate – 23.1 – 52.6 – 61.0 – 48.4 – 30.1Total 53.3 74.2 58.4 15.1 150.4

CHF million 2012 2011 2010 2009 2008

Net result – 13.2 33.3 23.2 1.6 151.0Investments in tangible fixed assets and intangible assets 58.4 57.2 43.3 44.2 59.5Depreciation 51.5 54.1 41.1 37.2 36.7Amortisation 38.8 38.7 13.8 15.2 12.5Cash flow (net cash from operating activities) 1 106.4 110.5 117.0 46.7 108.7Net debt 291.2 306.4 – 66.6 – 59.3 – 88.0

Non-current assets 1 483 1 576 773 827 809Current assets 927 923 1 048 1 025 919Equity 741 775 562 592 606Equity ratio 30.8% 31.0% 30.9% 32.0% 35.1%Non-current liabilities 130 415 302 319 98Current liabilities 1 539 1 309 957 941 1 024Total assets 2 410 2 499 1 821 1 852 1 728

Invested capital 2 1 025 1 233 748 760 701Return on Invested Capital (ROIC) 3 2.8% 3.3% 5.4% 0.1% 18.8%Kuoni Economic Profit (KEP) 4 – 58.3 – 47.4 – 23.3 – 64.3 71.9

Average number of personnel (FTE) 12 279 11 048 8 772 9 070 9 797Outbound Europe 2 734 2 743 2 697 2 730 3 211

Outbound Nordic 836 817 803 800 854Outbound Kuoni Europe 1 898 1 926 1 894 1 930 2 357

Global Travel Services 3 105 2 247 697 685 745Group Travel 1 767 1 364 697 685 745FIT (Fully Independent Traveller) 1 338 883 0 0 0

Emerging Markets & Specialists 6 325 5 909 5 269 5 530 5 735Specialists 2 198 2 117 2 053 2 132 2 054Outbound Emerging Markets 1 554 1 637 1 422 1 638 1 958VFS Global 2 573 2 155 1 794 1 760 1 723

Corporate 115 149 109 125 106

The data presented are based on the consolidated financial statements. Any changes made to Kuoni Group accounting policies as a result of changes to International Financial Reporting Standards are not retroactively applied.

1 The presentation of the cash flow was adjusted in 2012. 2011 is restated but the past years are not.

2 Invested capital is the average annual total of all net current assets, tangible fixed assets, goodwill, other intangible assets and other net assets (excluding interest-bearing assets and liabilities).

3 Return on Invested Capital (ROIC) is defined as net operating profit after tax (NOPAT) as a proportion of average invested capital. NOPAT is defined as earnings before interest and taxes (EBIT) less income dependent taxes

4 Kuoni Economic Profit or KEP is defined as net operating profit after tax (NOPAT) less the cost of capital invested in operations. The cost of capital invested in operations is determined by multiplying the average invested capital by the weighted average cost of capital (WACC) of 8.50% of the Kuoni Group. The cost of capital invested for GTA was calculated in 2011 for the eight-month period following its acquisition on 1 May 2011.

15102_financial report Kuoni group

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CHF 2012 2011 2010 2009 2008

Cash flow (net cash from operating activities) 5 Per registered share A 5.57 6.41 8.15 3.26 7.60Per registered share B 27.86 32.05 40.76 16.31 38.01

Net result Per registered share A – 0.77 1.84 1.49 0.02 10.54Per registered share B – 3.87 9.22 7.43 0.08 52.68

Equity Per registered share A 38.39 44.43 38.57 40.67 41.74Per registered share B 191.93 222.14 192.84 203.37 208.70

Dividend Per registered share A 0.60 6 7 0.60 7 0.50 7 1.60 2.00Per registered share B 3.00 6 7 3.00 7 2.50 7 8.00 10.00

Total dividend payout 11 995 200 8 11 472 696 7 235 672 22 956 088 28 631 310

Payout ratio n.a. 34.4% 31.2% >100% 19.0%

Yield (at year end rate) 1.09% 1.33% 0.55% 2.29% 2.78%

Registered share A (Nominal value CHF 0.20) Number outstanding 1 249 500 1 249 500 952 000 952 000 952 000Number entitled to dividend 1 249 500 1 249 500 952 000 952 000 952 000Stock market prices not listed not listed not listed not listed not listed

Registered share B (Nominal value CHF 1.00) Number outstanding 3 748 500 3 748 500 2 856 000 2 856 000 2 856 000Number entitled to dividend 3 576 947 9 3 574 332 2 703 869 2 679 111 2 672 731Stock market prices high 341 439 459 387 616 low 217 213 294 253 290 at year-end 274 225 454 349 360Annual trading volume in CHF million 758 839 787 697 1 447

Stock market capitalisation as at 31 December in CHF million 1 096 900 1 383 1 063 1 097

5 The presentation of the cash flow was adjusted in 2012. 2011 is restated but the past years are not.

6 Proposal of the Board of Directors to the General Meeting of Shareholders on 17 April 2013. Subject to definitive approval by the General Meeting of Shareholders.

7 Distribution to shareholders of a withholding tax-free appropriation from the capital contribution reserve.

8 The company will waive its entitlement to such payments from the capital contribution reserve for the treasury shares held on the distribution date which are reserved for use in its employee share plan.

9 As at 31 December 2012.

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Information about the key data is also available on kuoni.com (Quick Search: 12201)

15302_Financial report Kuoni Group

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Kuoni Group Ku

oni G

roup


Assets CHF 1 000 Notes 31 Dec 2012 % 31 Dec 2011 %

Non-current assets Tangible fixed assets [13] 184 576 7.7 200 799 8.0Goodwill [14] 920 922 38.2 939 778 37.6Other intangible assets [15] 302 453 12.5 347 336 13.9Investments in associates [16] 2 221 0.1 11 562 0.5Investments in joint ventures [17] 44 0.0 0 0.0Other financial assets [18] 40 270 1.7 42 273 1.7Deferred taxes [24] 33 093 1.4 34 146 1.4

Total non-current assets 1 483 579 61.6 1 575 894 63.1

Current assets Cash and cash equivalents [19] 321 307 13.3 288 861 11.6Time deposits [20] 13 241 0.5 86 874 3.5Accounts receivable / other receivables [21] 403 837 16.8 366 934 14.7Prepaid expenses 188 371 7.8 180 349 7.1

Total current assets 926 756 38.4 923 018 36.9

Total assets 2 410 335 100.0 2 498 912 100.0

Equity and liabilities CHF 1 000 Notes 31 Dec 2012 % 31 Dec 2011 %

Equity Share capital [22] 3 998 0.2 3 998 0.2Treasury shares [22] – 15 710 – 0.7 – 17 163 – 0.7Reserves 745 022 30.9 779 047 31.1

Equity attributable to shareholders of Kuoni Travel Holding Ltd. 733 310 30.4 765 882 30.6

Non-controlling interests [22] 8 075 0.4 8 728 0.4Total equity 741 385 30.8 774 610 31.0

Liabilities Provisions [23] 15 062 0.6 19 819 0.8Deferred taxes [24] 83 500 3.5 97 118 3.9Financial debts [25] 31 176 1.3 298 068 11.9

Total non-current liabilities 129 738 5.4 415 005 16.6

Financial debts [25] 202 364 8.4 11 391 0.4Accounts payable / other payables [26] 283 558 11.8 306 881 12.3Advance payments by customers 392 252 16.3 372 718 14.9Accrued expenses [26] 661 038 27.3 618 307 24.8

Total current liabilities 1 539 212 63.8 1 309 297 52.4

Total liabilities 1 668 950 69.2 1 724 302 69.0

Total equity and liabilities 2 410 335 100.0 2 498 912 100.0

Statement oF Financial poSition 02_02_01

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CHF 1 000 Notes 2012 % 2011 %

Turnover [3/4] 5 845 493 100.0 5 111 325 100.0

Direct costs – 4 743 026 – 81.1 – 4 085 654 – 79.9Gross profit [3/5] 1 102 467 18.9 1 025 671 20.1

Personnel expense [6] – 603 707 – 10.3 – 524 675 – 10.3Marketing and advertising expense – 73 997 – 1.4 – 82 560 – 1.6Other operating expense [7] – 253 571 – 4.3 – 251 443 – 4.9Share in result from joint ventures [17] – 382 0.0 0 0.0Depreciation [8] – 51 518 – 0.9 – 54 084 – 1.1

Earnings before interest, taxes and amortisation (EBITA) 119 292 2.0 112 909 2.2

Amortisation [15] – 38 781 – 0.7 – 38 723 – 0.7Impairment [14/15] – 27 233 – 0.4 0 0.0

Earnings before interest and taxes (EBIT) [3/9] 53 278 0.9 74 186 1.5

Financial income [10] 5 699 0.1 6 673 0.1Financial expense [10] – 51 321 – 0.9 – 16 068 – 0.3

Result before taxes 7 656 0.1 64 791 1.3

Income taxes [11] – 20 833 – 0.4 – 31 446 – 0.6Net result – 13 177 – 0.3 33 345 0.7

Of which: Attributable to non-controlling interests 1 606 0.0 1 550 0.0Attributable to shareholders of Kuoni Travel Holding Ltd. – 14 783 – 0.3 31 795 0.7

Basic earnings per registered share A in CHF [12] – 0.77 1.84 Diluted earnings per registered share A in CHF [12] – 0.77 1.84

Basic earnings per registered share B in CHF [12] – 3.87 9.22 Diluted earnings per registered share B in CHF [12] – 3.87 9.22

income Statement02_02_02

Information about the statement of financial position as well as the income statement is also available on kuoni.com (Quick Search: 12202/12203)


CHF 1 000 2012 2011

Net result – 13 177 33 345

Other comprehensive income

Realised gains or losses from cash flow hedges transferred to income statement – 14 933 10 599Recognised gains or losses from cash flow hedges – 9 556 14 396Translation differences 5 293 – 64 162Income taxes on other comprehensive income 6 367 – 6 499

Total other comprehensive income – 12 829 – 45 666

Total comprehensive income – 26 006 – 12 321

Of which: Attributable to non-controlling interests 1 454 1 574Attributable to shareholders of Kuoni Travel Holding Ltd. – 27 460 – 13 895

Statement oF comprehenSive income 02_02_03

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Statement oF chanGeS in equitY02_02_04

Reserves

CHF 1 000Share

capitalTreasury

sharesCapital

reservesRetained earnings

Other reserves 1

Total equity of Kuoni

shareholders

Non- controlling

interestsTotal

equity

Equity as at 1 January 2011 3 046 – 3 943 197 123 570 349 – 213 055 553 520 8 874 562 394

Net result 31 795 31 795 1 550 33 345Other comprehensive income: * Realised gains or losses from cash flow hedges transferred to income statement 10 599 10 599 10 599* Recognised gains or losses from cash flow hedges 14 396 14 396 14 396* Translation differences – 64 186 – 64 186 24 – 64 162* Income taxes on other comprehensive income – 6 499 – 6 499 – 6 499

Total comprehensive income 31 795 – 45 690 – 13 895 1 574 – 12 321

Dividends – 7 236 – 7 236 – 1 720 – 8 956Use of treasury shares – 550 – 470 – 1 020 – 1 020Capital increase 952 – 12 670 256 088 – 9 857 234 513 234 513Changes in ownership interests 0 0

Equity as at 31 December 2011 3 998 – 17 163 453 211 584 581 – 258 745 765 882 8 728 774 610

Net result – 14 783 – 14 783 1 606 – 13 177Other comprehensive income: * Realised gains or losses from cash flow hedges transferred to income statement – 14 933 – 14 933 – 14 933* Recognised gains or losses from cash flow hedges – 9 556 – 9 556 – 9 556* Translation differences 5 445 5 445 – 152 5 293* Income taxes on other comprehensive income 6 367 6 367 6 367

Total comprehensive income – 14 783 – 12 677 – 27 460 1 454 – 26 006

Dividends – 11 473 – 11 473 – 2 107 – 13 580Use of treasury shares 1 453 4 908 6 361 6 361Capital increase 0 0Changes in ownership interests 0 0

Equity as at 31 December 2012 3 998 – 15 710 453 211 563 233 – 271 422 733 310 8 075 741 385

1 For further details see note 22.


Statement oF caSh FlowS 02_02_05

CHF 1 000 Notes 20122011

restated

Cash flow from operating activities Net result – 13 177 33 345Income taxes [11] 20 833 31 446Net financial result [10] 45 622 9 395

Earnings before interest and taxes (EBIT) [3/9] 53 278 74 186

Depreciation and amortisation 90 299 92 807Impairment 27 233 0Other non-cash expenses and income (net) 747 – 4 105Changes in net working capital * Accounts receivable / other receivables – 60 835 28 039* Prepaid expenses – 23 107 2 920* Accounts payable / accrued expenses 22 346 – 7 781* Advance payments by customers 27 923 – 46 487Income taxes paid – 31 437 – 29 082

Net cash from operating activities (cash flow) 106 447 110 497

Cash flow from investing activities Purchase of tangible fixed assets [13] – 27 377 – 36 035Purchase of intangible assets [15] – 31 042 – 21 157Acquisition of subsidiaries, net of cash and cash equivalents acquired [2] – 821 – 607 591Disposal of assets 15 519 1 889Sales of Subsidiaries, net of cash and cash equivalents transferred [2] – 9 100 0Decrease in time deposits (net) 75 176 – 792Purchase of shares of associates [16] 0 – 402Investments in joint ventures [17] – 426 0Decrease in other financial assets (net) – 699 629Interest received 4 026 2 249Other financial expenses paid (net) – 12 227 260

Net cash used in investing activities 13 029 – 660 950

Cash flow from financing activities Repayment of financial debts (net) – 74 105 51 032Interest paid – 10 609 – 11 881Share capital increase 0 234 513Distributions to non-controlling interests – 2 107 – 1 720Distributions to shareholders of Kuoni Travel Holding Ltd. – 11 473 – 7 236

Net cash used in financing activities – 98 294 264 708

Effects of exchange rate changes on cash and cash equivalents 11 264 – 13 292

Net increase in cash and cash equivalents 32 446 – 299 037

Cash and cash equivalents at beginning of year 288 861 587 898

Cash and cash equivalents at end of year 321 307 288 861

For further details see note 29.

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accountinG principleS02_02_06

Kuoni Travel Holding Ltd. (the Company) is domiciled in Zurich. The consolidated financial statements for the year ended 31 December 2012 cover the Company and all its subsidiaries (Kuoni Group) and associ-ates and joint ventures. The Company is one of Europe’s leading tourism companies, active in the leisure travel, destination management field and visa services. The consolidated financial statements are pre-pared in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.

■■■■ BaSIS oF PREPaRaTIon

The consolidated financial statements are presented in Swiss francs (CHF), rounded to the nearest thousand. The consolidated financial statements are prepared on the historical cost basis except for derivative financial instruments, financial assets and financial in-struments available for sale, which are stated at their fair value. non-current assets and disposal groups held for sale are stated at the lower of the carrying amount and fair value less costs to sell.

The preparation of the consolidated financial state ments in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. actual re-sults may differ from these estimates. Critical judgements made by management in the application of IFRS that have a significant effect on the financial statements and key sources of estimation uncertainties are dis-cussed separately. The accounting policies have been applied consistently to all periods presented in these consolidated financial statements, with the exceptions described below.

an additional subtotal was added to the presentation of the income statement, the operating result before amortisations and impairment (EBITa), as this figure better expresses the operating performance.

The way cash flows are shown has been amen- ded in 2012. now interest received is shown as part of the cash flow from investing ac-tivities, while interest paid is shown as part of the cash flow from financing activities, because this better reflects the nature of the cash flows. Hitherto, these elements were included in the cash flow from operating activities and published in the notes. The financial effects on the presented cash flows may be summarised as follows:

CHF million 2012 2011Cash flow from: operating activities + 18.8 + 9.4investing activities – 8.2 + 2.5financing activities – 10.6 – 11.9

Following the acquisition of Gullivers Travel associates (GTa) in May 2011 and the introduction of the new corporate structure in october 2011, the Kuoni Group is reporting on the basis of its new organisational structure for the financial year 2012. The segment reporting (incl. previous year’s figures) has been adapted to match the new organisa-tional structure.

outbound nordic includes the Sweden, norway, Denmark and Finland markets with its brand apollo and Falk Lauritsen (only in Denmark), as well as the Scandinavian airline novair and the “Playitas” sports and family holiday resort on Fuerteventura, Spain. Most of the products sold in Scandinavia and Finland are easy-to-book package holidays to short, medium and long-haul beach destinations.

outbound Kuoni Europe includes all the markets in Europe that are operated under the Kuoni brand and its sub-brands, i.e. the markets of Switzerland, United Kingdom, France, Italy, Spain and Benelux (netherlands and Belgium). Most of the business done in these markets falls into the category of premium-sector tour operating, and is focused on individual and tailor-made holiday travel. Package holidays are only offered as an additional line in the Swiss market.

Group Travel includes B2B group travel busi-ness and B2B “MICE” activities. Group travel business focuses on creating individual, tailor-made group travel for tour operators and travel agents. The tour operators buy in these group arrangements and then offer them to their own customers in local source markets. The MICE business, through its different brands, offers itself as a comprehen-sive service agency for the organisation and execution of conferences, congresses, trade fairs, events and incentives. This in-cludes organising infrastructure, logistics, arrivals and de partures (without flights), overnight stays and leisure programmes.

FIT (Fully Independent Traveller) populates Kuoni’s own worldwide databases with a wide range of different travel services. The majority of these services are overnight hotel stays, but they also include individual and regular transfer services, city tours and excursions, tickets, tour guide services and restaurants, all of which can be booked online. The business models in FIT are based on B2B relationships with various business partners.

Emerging Markets includes the tour opera-ting activities in India, China/Hong Kong and Russia.

The specialists focus on their core destina-tions and core styles of travel, and they pride themselves on being able to meet the most exacting customer requirements. Kuoni has outbound specialists in Switzerland, the UK and the netherlands/Belgium. Destination Management specialists are local experts with offices in the holiday destinations them-selves. Kuoni runs a worldwide network of 6 destination management companies (USa, africa, Middle East, India and asia-Pacific).

VFS Global helps governments and embas-sies process travellers’ visa applications securely and efficiently. The authorities out-source the administrative tasks involved to VFS Global.

02_02_06accountinG principleS


■■■■ aDoPTIon oF CHanGED STanDaRDS IFRS

The Kuoni Group adopted the following revised or new standards with effect from 1 January 2012:

* IFRS 7: Disclosure – Transfer of financial Instruments

* IaS 12: Deferred Taxes: realisation of underlying assets

The adoption and application of the above standards and interpretations had no effect on these consolidated financial statements.

■■■■ FUTURE IFRS CHanGES

With the exception of IaS 19, the Kuoni Group does not expect these new and revised standards and interpretations to have any significant effect on its results and financial situation to date. They will, however, have an impact on transactions effected on or after 1 January 2013. This applies in particular to:

The amendments to IaS 19 “Employee Bene- fits” must be adopted from 1 January 2013. From its corresponding analyses to date, the

Kuoni Group expects such adoption to have the following impact on its consolidated results:

In future, actuarial gains and losses will be recognised immediately in “other compre-hensive income”. The previous option of de-ferring such recognition using the “corridor approach” will no longer be permitted. Under that approach, such gains and losses were shown in results for the period if they ex-ceeded 10% of the higher of the prior year’s fund assets or pension obligations amount. as of 31 December 2012, unrecognised actuarial losses amounted to CHF 54 million (2011: CHF 47 million). The adoption of the amend-ments to IaS 19 is thus likely to result in greater volatility in pension fund assets/liabilities and consolidated equity.

as a further consequence of the adoption of the amendments to IaS 19, interest on plan assets will no longer be estimated based on expected asset returns under current asset allocations. In future, such interest will be based on the discount rate. Before account-ing for deferred taxes, the effect of actuarial losses, which have not yet been recognised on the equity as at 1 January 2012, was es-timated to be about CHF 47 million. The net

periodic pension cost would probably have been CHF 1.6 million higher (previous year CHF 2.7 million) if the new provisions had been adopted for the 2012 business year. The im-pact on the other result in the 2012 business year is estimated to be about CHF 6 million.

■■■■ SUBSIDIaRIES

Subsidiaries are entities controlled by Kuoni Travel Holding Ltd. Control is the power to directly or indirectly govern the financial and operating policies of an entity so as to obtain benefits from its activities. This is the case where the Group holds more than 50% of the voting rights of an entity or where the Group has been granted management of an entity contractually or is exercising control by other means. Subsidiaries acquired in the course of the accounting year are consolidated from the date the control effectively commences. Subsidiaries sold in the course of the ac-counting year are deconsolidated as of the date on which control ceases.

The full consolidation method is used, under which all assets, liabilities, income and ex-penses of the subsidiaries are included in the consolidated finan cial statements. The share

Effective datePlanned

applicationNew Standards

IFRS 10 Consolidated Financial Statements 1 January 2013 Reporting year 2013

IFRS 11 Joint Arrangements 1 January 2013 Reporting year 2013IFRS 12 Disclosure of Interests in Other Entities 1 January 2013 Reporting year 2013IFRS 13 Fair Value Measurement 1 January 2013 Reporting year 2013IFRS 9 Financial Instruments and related amendments to IRFS 7 regarding transition 1 January 2015 Reporting year 2015

Revisions and amendments of Standards and Interpretations Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) 1 July 2012 Reporting year 2013IAS 19 Employee Benefits 1 January 2013 Reporting year 2013IAS 28 Investments in Associates and Joint Ventures 1 January 2013 Reporting year 2013Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) 1 January 2013 Reporting year 2013Improvements to IFRSs (May 2012) 1 January 2013 Reporting year 2013Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) 1 January 2014 Reporting year 2014

02_02_06 accountinG principleS

162

of net assets and net profit or loss attribut-able to minority shareholders is presented separately as non-controlling interest on the consolidated statement of financial position, and separately as non-controlling interest in the consolidated income statement.

■■■■ aSSoCIaTES

associates are entities in which the Kuoni-Group is able to exercise significant influ-ence, but not control, over the financial and operating policies. The consolidated financial statements include in the financial result the Group’s share of the total recognised gains and losses of associates on an equity accounting basis, from the date significant influence commences until the date it ceases. When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has incurred further obligations in respect of the associate.

■■■■ JoInT VEnTURES

Joint Ventures are entities which the Kuoni Group cooperatively manages with a joint venture partner, and whereby the Kuoni Group is heavily involved in the management. The consolidated financial statements include in the operating result the Group’s share of the total recognised gains and losses of joint ventures on an equity account-ing basis, from the date joint management commences until the date it ceases. When the Group’s share of losses exceeds the car-rying amount of the joint venture, the carrying amount is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has incurred further obligations in respect of the joint venture.

■■■■ InTRaGRoUP TRanSaCTIonS anD BaLanCES

all intragroup transactions and balances and any unrealised gains and losses or income

and expenses arising from intragroup trans-actions are eliminated in the consolidation process.

■■■■ FoREIGn CURREnCy TRanSaCTIonS

Transactions in foreign currencies are trans-lated at the exchange rate on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at year-end rates. non-monetary assets and liabilities in foreign currencies that are stated at histori-cal cost are translated at the exchange rate on the date of the transaction. non-monetary assets and liabilities in foreign currencies that are stated at fair value are translated at the exchange rate at the date the values were determined. Foreign exchange gains or losses arising from translation are recognised in the income statement.

■■■■ ConSoLIDaTIon oF FoREIGn SUBSIDIaRIES

The consolidated financial statements are presented in Swiss francs (CHF). The finan-cial statements of foreign subsidiaries are prepared in their functional currency. assets and liabilities (including goodwill and fair-value adjustments) of foreign subsidiaries are translated to CHF at year-end exchange rates. Revenue, expenses and cash flow amounts are translated at weighted average ex change rates. Foreign exchange differences arising from the translation of foreign subsidiaries are recognised directly in equity as a transla-tion difference.

■■■■ TURnoVER

The Group renders a wide range of travel services. The revenue from rendering these services is recognised in the income state-ment at the time when the significant risks and rewards are transferred to the customer. This is generally the case on the date of departure or, in the case of destination management activities, on the date of arrival. Turnover comprises net sales revenues from

the tour operating business (after deduction of sales taxes, value added tax, discounts and commissions) as well as commissions received from leisure travel retailing.

■■■■ DIRECT CoSTS

Direct costs includes all directly allocable airline, ship, rail, hotel, car rental and similar costs. Direct costs also includes the currency gains or losses from exchange rate differ-ences realised or incurred by individual sub-sidiaries in the course of their operations.

■■■■ EMPLoyEE BEnEFITS

Wages, salaries, social security contributions, paid vacation and sickness-related absences, bonuses and non-monetary benefits are al-located to and shown in the year in which the employee provided the service concerned for the Kuoni Group. Where Kuoni provides long-term employee benefits, the costs are accrued to match the service to be provided by the employee, and the liabilities of the Kuoni Group are discounted to take account of the time value of money where the effects are significant.

■■■■ SHaRE-BaSED CoMPEnSaTIon

Certain employees participate in share-based employee participation plans, i.e. programmes based on equity instruments of Kuoni Travel Holding Ltd. For all share-based employee compensation, the current market value of the shares concerned is determined on the date the entitlement is granted, and is debited to personnel expense on the corre-sponding income statements throughout the period until the entitlement is awarded.

With all employee participation plans under which equity instruments are awarded, the compensation paid and any further amounts resulting from the exercising of such benefits are shown as increases in equity. In the case of cash-based employee participation plans, the compensation awarded is shown as a lia-bility at its fair value on the balance sheet date.



■■■■ RETIREMEnT BEnEFITS

State retirement benefits are provided in the majority of countries in which the Kuoni Group operates. The Group has additionally set up a number of legally independent retire-ment bene fit plans or insurance schemes in the following countries, which are generally funded by the employee and the employer:

Defined benefit plans: Switzerland, the United Kingdom and norway.

Defined contribution plans: Switzerland, the United Kingdom, Italy, France, Sweden, Denmark, norway, the netherlands, austria, the USa, India and Japan.

The plans are funded by the Group’s subsi-diaries (employer) and the employees. Employer’s contributions to defined contribu-tion plans are recognised as an expense in the income statement when incurred. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by qualified actuaries using the projected unit credit method. To the extent that any cumulative unrecognised actuarial gain or loss of a plan exceeds 10% of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion is recognised in the in-come statement over the expected average remaining working lives of the employees participating in the plan. Where actuarial calculations result in a sur plus, this is only re c-ognised to the extent that the Group derives a future economic benefit in the form of a reduction in plan contributions or a refund.

Due to local regulations, the Group maintains certain unfunded retirement benefit plans. The present value of the defined benefit obli-gation of unfunded plans is recognised as a provision for employee benefits.

■■■■ oPERaTInG LEaSE PayMEnTS

Leases where all the major risks and rewards of ownership are effectively retained by the

lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Details of the treatment of finance leases are provided under the accounting policy for tangible fixed assets.

■■■■ DEPRECIaTIon

Depreciation includes the periodic consump-tion of tangible fixed assets and the other intangible assets. It includes depreciation on buildings and other tangible fixed assets as well as on the other intangible assets, which were bought by Kuoni directly. Intangible as-sets capitalised in the course of acquisitions are presented separately (amortisation).

■■■■ aMoRTISaTIon

amortisation includes the periodic con-sumption of intangible assets capitalised in the course of acquisitions.

■■■■ InCoME TaxES

Income tax on the profit or loss for the year comprises current and deferred taxes, based on the local tax rates expected to apply for each Group company. Income tax is recog-nised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recog-nised in equity.

Current income tax is the expected tax pay-able on the taxable income for the year, calculated using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carry-ing amounts of assets and liabilities for finan-cial reporting purposes and the amounts used for taxation purposes. Temporary differences

relating to investments in subsidiaries are not provided for to the extent that they will prob-ably not reverse in the foreseeable future. De-ferred tax liabilities on undistributed profits of subsidiaries are recognised, unless dividend payments to the ultimate Group holding com-pany are not planned for the foreseeable fu-ture. The amount of deferred tax recognised is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or sub-stantially enacted at the balance sheet date.

a deferred tax asset is recognised only to the extent that it is probable that future tax-able profits will be available against which the asset can be utilised.

■■■■ TanGIBLE FIxED aSSETS

Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses. Where an item of tangible fixed assets comprises major components having different useful lives, they are accounted for as separate tangible fixed asset items. The capitalisation of subsequent costs is evalu-ated under the general recognition principle for such assets at the time they are incurred.

Long-term leases of tangible fixed assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Tangible fixed assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the mini-mum lease payments at the inception of the lease, less accumulated depreciation and any impairment losses. The related liabilities are recognised as non-current or current liabilities. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.

Depreciation is charged to the income state-ment on a straight-line basis over the esti-mated useful lives of the items of tangible fixed assets (owned assets and assets under


164

finance leases and/or components thereof) concerned. Land is not depreciated. The estimated useful lives are as follows:

YearsBuildings 20– 50Other tangible fixed assets:

Fixtures and equipment 10Fixtures and equipment at point of sale 8 IT hardware, office equipment and vehicles 5 Personal computers and office machines 3

■■■■ InTanGIBLE aSSETS

Intangible assets comprise software, licen- ces, trademark rights and similar rights acquired from third parties or in a business combination. Intangible assets acquired in a business combination are recognised separately from goodwill if they are subject to contractual or legal rights or are separately transferable and their fair value can be reli-ably estimated. Intangible assets are stated at cost less accumulated depreciation and impairment losses. They are depreciated on a straight-line basis over their expected useful lives of three to ten years.

The Group does not have any intangible assets with indefinite useful lives, except for goodwill.

■■■■ GooDWILL

all business combinations are accounted for by applying the acquisition method. Good- will arising from the acquisition of a subsidi-ary represents the excess of the cost of the acquisition over the fair value of the net identifiable assets acquired, and is allocated to cash-generating units. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate. Purchase price adjustments prior to 1 January 2010 are still effected via goodwill.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is tested at least annually for impairment.

■■■■ FInanCIaL InVESTMEnTS

The Group has investments classified as available for-sale which include minority in-vestments in listed and non-listed companies.

available-for-sale investments are stated at fair value, with any resultant gain or loss recognised directly in equity, except for impairment losses and, in the case of debt securities, foreign ex change gains and losses. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the income statement.

The fair value of listed available-for-sale investments is their quoted bid price at the balance sheet date. The fair value of unlisted investments is estimated using valuation techniques.

Time deposits (with a maturity exceeding 12 months from the date of acquisition), long-term loans and other long-term receivables are stated at their amortised cost less impair-ment losses. Interest is recognised using the effective interest rate method. The Group does not have any instruments classified as “at fair value through profit and loss” (trading), with the exception of derivative financial instruments (see the accounting policy on Derivative Financial Instruments).

■■■■ TIME DEPoSITS, LoanS anD aCCoUnTS RECEIVaBLE

Time deposits (with a maturity bet ween 3 and 12 months from the date of acquisition), short-term loans and accounts receivable are stated at their cost less impairment loss-es. Impairment losses are recognised on an individual basis, or on a portfolio basis (for ac-counts receivable), where there is objective evidence that impairment losses have been incurred. The allowance on bad debt and the

receivable is written off if there are clear indicators (such as a certificate of unpaid debts) that the receivable is not collectable.

■■■■ CaSH anD CaSH EQUIVaLEnTS

Cash and cash equivalents contain cash balances, postal giro accounts and bank current accounts as well as time deposits and money market investments with a maturity not exceeding 3 months from the date of acquisition.

■■■■ IMPaIRMEnT

The carrying amounts of the Group’s assets (other than deferred tax assets and pension assets, for which separate accounting poli-cies apply) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indica-tion exists, the asset’s recoverable amount is estimated. Goodwill is tested at least annually for impairment.

an impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of loans and other receivables carried at amortised cost is calculated as the present value of estimated future cash flows, dis counted at the original effective interest rate inherent in the asset. Receivables with a short duration carried at cost are not discounted. The recoverable amount of available-for-sale securities is their fair value. The recoverable amount of other assets is the greater of their fair value less costs to sell and their value in use.

an impairment loss in respect of goodwill is not reversed. an impairment loss in respect of financial investments classified as available-for-sale is reversed if there is a subsequent increase in the recoverable amount that can be related objectively to an event occurring after the impairment loss was recognised. In respect of other assets, an impair ment loss is reversed if there has been a change in the



estimates used to determine the recoverable amount. Reversals of impairment losses are recognised in the income statement, with the exception of reversals of impairment losses on equity investments classified as available-for-sale.

■■■■ TREaSURy SHaRES

When the Company or its subsidiaries purchase the Company’s own shares, the consider ation paid, including any directly attributable costs, is presented as treasury shares and deducted from equity. Where such shares are subsequently sold or reissued, any consideration received is included in equity.

■■■■ FInanCIaL DEBT

Financial debt is initially recognised at fair value, less attributable transaction costs. Thereafter, financial debt is stated at amor-tised cost using the effective interest rate method, with any difference between cost and redemption value being recognised in the income statement un der financial expense over the borrowing period. The contingent purchase price payments from acquisitions, which are made after 01.01.2010, are recog-nised in the income statement. no changes were made to the fair value of the contingent purchase price payments in the reporting year.

■■■■ PRoVISIonS

a provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appro-priate, the risks specific to the liability.

a provision for onerous contracts is recog-nised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

■■■■ ConTInGEnT LIaBILITIES

Contingent liabilities are possible obligations arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the Group’s control. They may also be present obligations that are unrecognised because the future outflow of resources is not probable or the amount concerned cannot be reliably determined. Contingent liabilities are not recognised in the statement of financial position, but are disclosed.

■■■■ aCCoUnTS PayaBLE

accounts payable are stated at cost.

■■■■ DERIVaTIVE FInanCIaL InSTRUMEnTS

The Group uses derivative financial instru-ments primarily to hedge its exposure to foreign exchange risks arising from opera-tional, financing and investment activities. The Group largely uses forward-exchange contracts, currency options and aviation fuel options for this purpose. In accordance with internal Group accounting principles, deriva-tive financial instruments are not used for trading purposes. However, derivatives used for hedging purposes that do not qualify as hedge accounting are accounted for as trading instruments.

all derivative financial instruments were recognised at market value for the first time. after the first-time recognition, the deriva-tive financial instruments are recognised at their market value and, if they are consumed within the year, reported under receivables from services / other services or debts from services / other services. any gains or losses

on the remeasurement of the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised immediately in the income statement. The fair value of the instruments used is the calcu-lated amount that the Group would receive or pay to terminate the contracts at the balance sheet date, based on quotes from independent counterparties.

■■■■ HEDGInG

Cash Flow Hedges

Where a derivative financial instrument is de- signated as a foreign currency hedge of the variability in cash flows of a firm commitment or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. Contracts of this kind are classified as cash flow hedges.

When the firm commitment or forecast trans-action results in the recognition of a non-financial asset or liability, the cumulative gain or loss is removed from equity and included in the initial cost of the non-financial asset or liability. otherwise, the cumulative gain or loss is removed from equity and recognised in the income statement at the same time as the hedged transaction. The ineffective part of any gain or loss is recognised immediately in the income statement.

When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes the designation of the hedge relation-ship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs.

If the hedged transaction is no longer expect-ed to take place, the cumulative unrealised gain or loss recognised in equity is recog-nised immediately in the income statement.


166

Hedging of Monetary Assets and Liabilities

Where a derivative financial instrument is used to economically hedge the foreign exchange exposure of a recognised monetary asset or liability, no hedge accounting is applied, and any gain or loss on the hedging instrument is recognised in the income statement. Related foreign exchange gains and losses are also recognised in the income statement as incurred.

■■■■ non-CURREnT aSSETS HELD FoR SaLE anD DISPoSaL GRoUPS

non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than from continu-ing use. The asset (or disposal group) must be available for immediate sale in its present condition and the sale must be highly prob-able. Immediately before reclassification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up to date in accordance with the applicable accounting standards. on initial reclassification as held for sale, non-current assets and disposal groups are rec-ognised at the lower of their carrying amount or fair value less costs to sell. any impairment losses on initial classification as held for sale are recognised in the income statement.

■■■■ SEGMEnT REPoRTInG

a segment is a distinguishable component of the Group which provides products and / or services in a particular geographical area or a particular tourism activity and for which separate financial information is available.

The results of the Group’s operating segments are regularly reviewed by the Board of Directors (as the Group’s chief operating decision-maker) to determine how resources should be distributed and performance potential assessed. Segments are managed at the EBIT level.

The segment reporting reflects the manage-ment structure implemented within the Kuoni Group. This divides up leisure travel activities based on the geographical location of the revenue generating Group company, which in turn largely corresponds to the origin of the customers concerned. The same geographical breakdown based on the location of the Group company would be less meaningful for the activities of Destination Management, which largely provides services at holiday destinations.

The Group’s seven reportable segments are outbound nordic, outbound Kuoni Europe, Group Travel, FIT (Fully Independent Traveller), Specialists, outbound Emerging Markets and VFS Global.

Interdivisional revenues are accounted for at market rates. The reportable segments apply the same accounting principles as the Group.

all operational assets and liabilities which can be directly or reasonably assigned to a reportable segment are shown within the divisions concerned.

■■■■ EaRnInGS PER SHaRE (EPS)

Earnings per share are calculated by divid - ing the net result attributable to Kuoni Travel Holding Ltd. shareholders by the weighted average number of registered shares entitled to dividends during the year under review.

Diluted earnings per share further take into account any dilution effect which might have resulted from the exercise of options.

■■■■ ManaGEMEnT ESTIMaTES anD aSSUMPTIonS

Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based, or as a result

of new information or additional experience. Such changes are recognised in the period in which the estimate is revised.

The key assumptions about the future and key sources of estimation uncertainty that have a significant risk of causing a material adjust-ment to the carrying values of assets and liabilities within the next twelve months are described below.

Employee pension plans

Some employees of the Kuoni Group are insured with pension plans with defined benefits. The calculation of the recognised balances (CHF 16.5 million) and liabilities (CHF 0.2 million) in respect of these facilities is based on statistical and insurance-mathematical cal culations of the actuaries. In doing so, the cash value of the performance-oriented liabilities depends on many assumptions, in particular. In addition, the actuaries depending on the Kuoni Group use statistical data, such as the likelihood of withdrawals and life expectancy of the policyholders. Deviations from the assumptions can have an influence on the future reporting periods of recognised balances and liabilities with the employee pension plans.

Tangible fixed Assets, Goodwill and Other Intangible Assets

The Kuoni Group has tangible fixed assets with a carrying value of CHF 185 million (see note 13), other intangible assets with a carrying value of CHF 302 million (see note 15) and goodwill with a carrying value of CHF 921 million (see note 14).

Goodwill is reviewed annually for impairment. The net book values of tangible fixed assets and other intangible assets are reviewed if there is any indication of impairment. To as-sess if any impairment exists, estimates are made of the future cash flows expected to result from the use of the asset and its even-tual disposal. actual outcomes could vary sig-nificantly from such estimates of discounted



future cash flows. Factors such as changes in the planned use of buildings, the presence or absence of competition, technical obso-lescence or lower than anticipated turnover from cash-generating units with capitalised goodwill could result in shortened useful lives or impairment.

Provisions for Warranties and Onerous Contracts

Group companies may become involved in warranty proceedings or onerous contracts in the course of their ordinary operating ac-tivities. Provisions for warranties and onerous contracts are measured on the basis of the information available and a realistic estimate of the expected outflow of resources. The outcome of these proceedings may result in claims against the Kuoni Group that cannot be met at all or in full through provisions or insurance cover.

Litigation Provisions

The Kuoni Group is party to various legal proceedings. Further claims could also arise which might not be covered by existing liabili-ties or by insurance. Moreover, no assurance can be given that the extent of such matters will not increase, or that possible future lawsuits, claims or proceedings will not be material. any such changes that arise could impact the litigation provisions recognised in the statement of financial position in future periods.

Income Taxes

as at 31 December 2012, the net receivable for current income taxes amounts to CHF 7.1 million, the net payable for current income taxes amounts to CHF 24.1 million and the net payable for deferred income taxes amounts to CHF 50.4 million (see note 24). Significant estimates are required in determining the current and deferred tax assets and liabilities. Some of these estimates are based on interpretations of existing tax laws and regulations. Management believes

that these estimates are reasonable and that the recognised liabilities for income-tax- related uncertainties are adequate. Various internal and external factors may have fa-vourable or unfavourable effects on income tax assets and liabilities. These factors include, but are not limited to, changes in tax laws and regulations or their interpretation, and changes in tax rates. any such changes that arise could impact the current and deferred income tax assets and liabilities recognised in the statement of financial posi-tion in future periods. Furthermore, in order to determine whether tax loss carry-forwards may be carried as assets, it is first necessary to critically assess the probability of future taxable profits against which to offset them. Such profits depend themselves on a variety of influencing factors and developments.

168

■■■■ 1. ExchangE RatEs

the following exchange rates were used for the group’s most impor-tant currencies:

■■■■ 2. acquisitions and disposals 2012

■■■■ acquisitions 2012

* Royal tours namibia (pty) ltd., namibia (100% acquired 1 June 2012), tour operating Business

■■■■ disposals 2012

* ski Verbier ltd., london (100% sold 31 october 2012), tour operating Business

* Kuoni travel netherland B.V., amsterdam (100% sold 30 november 2012), tour operating Business

* Viajes Kuoni s.a., Madrid (100% sold 30 november 2012), tour operating Business

* utE Megapolus group co. ltd., Moscow (92% sold 30 november 2012), tour operating Business

Year-end rates in CHF Average rates in CHF

Currency Unit 2012 2011 2012 2011

AED 1 0.249 0.256 0.255 0.242AUD 1 0.951 0.954 0.971 0.914DKK 1 0.162 0.164 0.162 0.166EUR 1 1.207 1.217 1.205 1.233GBP 1 1.478 1.451 1.486 1.421HKD 1 0.118 0.121 0.121 0.114INR 1 0.017 0.018 0.018 0.019NOK 1 0.164 0.157 0.161 0.158SEK 1 0.140 0.136 0.139 0.137THB 1 0.030 0.030 0.030 0.029USD 1 0.916 0.940 0.938 0.887

noteS to the conSoliDateD Financial StatementS02_02_07

02_02_07noteS to the conSoliDateD Financial StatementS



* lime travel aB, stockholm (100% acquired 1 March 2011), tour operating Business

* gullivers travel associates, london (100% acquired 1 May 2011), destination Management services in addition, our shareholdings in the following company were increased in the course of 2011:

* utE Megapolus group co. ltd., Moscow (from 80% to 92%), tour operating Business

■■■■ changEs in thE scopE of consolidation coMpaniEs

CHF Million

Total acquired

2012

Total sold 2012

Gullivers Travel Associates

2011 Others 2011

Total acquired

2011

Tangible fixed assets 0.0 – 2.3 18.8 0.0 18.8Goodwill 0.7 0.0 599.8 1.5 601.3Other intangible assets 0.1 – 0.5 293.2 1.4 294.6Other tangible assets 0.0 – 0.6 5.8 0.1 5.9Cash and cash equivalents 0.1 – 9.1 6.5 1.1 7.6Time deposits 0.0 0.0 0.0 0.3 0.3Accounts receivable / other receivables 0.0 – 1.9 188.8 0.4 189.2Prepaid expenses 0.0 – 10.9 21.7 0.2 21.9Non-current liabilities 0.0 0.0 – 73.0 – 0.4 – 73.4Current liabilities 0.0 20.2 – 446.1 – 1.6 – 447.7Non-controlling interest 0.0 0.0 0.0 0.0 0.0Loss from sale of subsidiaries 0.0 5.1 0.0 0.0 0.0

Purchase price / sales price in cash 0.9 0.0 615.5 3.0 618.5

Cash and cash equivalents acquired / transferred – 0.1 9.1 – 6.5 – 1.1 – 7.6Purchase price not yet paid / sales price not yet received 0.0 0.0 – 1.7 – 0.4 – 2.1Sales price adjustments on prior year acquisitions 0.0 0.0 0.0 – 1.2 – 1.2

Cash flow from acquisitions and disposals 0.8 9.1 607.3 0.3 607.6

02_02_07 noteS to the conSoliDateD Financial StatementS

170


the company acquired in the reporting year bases its annual financial statements on the local accounting principles that differ from the ifRs. predominantly, the fair value adjustments relate to intangible assets and the corresponding deferred taxes. the goodwill arising as part of the acquisition predominantly reflects the value of the expected purchase-specific synergies, business processes and employees taken over. the assets of the company acquired in the previous year were not adjusted in the reporting year.

due to its size, the acquisition made in 2012 is classified as being of minor importance. the purchase price for Royal tours amounted to nad 7.5 million (chf 0.9 million) in chash. the company generated net sales of chf 0.9 million (seven months) and a balanced operating result in 2012.

if the acquisition had been carried out as of 1 January 2012, Kuoni group would have posted nets sales that would have been higher by chf 0.3 million and the same operating result for the 2012 fiscal year.


gulliVERs tRaVEl associatEs (gta), london

the Kuoni group acquired gullivers travel associates (gta) in full, together with its subsidiaries in Europe, asia and the americas, at the beginning of May 2011. gta is one of the world’s leaders in the rapidly-growing online travel services market, with operations in 26 cities. gta’s online reservation facilities were used to book some 12 million hotel bednights in 2010.

gta’s core business is centred on hotel reservations, coach services, transfers, city sightseeing tours and destination services for group and individual travellers. in strategic terms, gta excellently enhances Kuoni’s traditional tour operating business. the acquisition also fits well into the current business activities of Kuoni group travel and fit. While gta’s strengths lie in the swiftly-growing online business-to-business services market, Kuoni activities specialised in group



leisure travel arrangements. gta is also strongly anchored in the rapidly-expanding asian market. gta’s results are incorporated into the reporting segment group travel and fit.

the gta purchase price amounted to usd 664 million in cash. the assets and liabilities in the table were taken over as shown. the acquisition-related intangible assets identified were valued at chf 273 million while non-tax-deductible goodwill amounted to chf 600 million. the resulting goodwill largely reflects the value of the synergies and future earnings which Kuoni expects to generate from the acquisition.

gta reported turnover of chf 1 346 million for the eight-month period of its Kuoni group ownership in 2011 and an EBit after amorti-sation of intangible assets of chf 16.4 million. the Kuoni group incurred acquisition and integration costs of chf 20.2 million as a result of the acquisition. these are included in “other operating expense” 2011.

if the acquisition had been effected as of 1 January 2011, gta would have contributed a chf 472 million higher turnover and a chf 8 million lower EBit result.

■■■■ othER acquisitions 2011

the second acquisition in 2011, of lime travel, is of minor importance in view of its size. the purchase price amounted to sEK 21 million in cash. the company generated turnover of chf 9 million in the ten- month reporting period and achieved a breakeven EBit result.

had the two acquisitions been effected on 1 January 2011, the Kuoni group would have reported an additional chf 474 million of turnover and a chf 8 million lower EBit result for the year.


172

■■■■ 3. sEgMEnt REpoRting

Information by reportable segments Outbound Nordic

Outbound Kuoni Europe Group Travel

FIT (Fully Independent Traveller) Specialists

Outbound Emerging Markets VFS Global

Total reportable segments Corporate

Investment & cost reduction

programme / Acquisition &

integration cost Group

CHF 1000 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

External turnover 992 637 928 927 1 147 401 1 168 079 952 700 739 035 1 567 132 1 068 590 774 073 808 549 206 321 221 761 205 229 176 384 5 845 493 5 111 325 Turnover with other segments 517 567 3 287 1 715 11 238 49 884 22 576 1 494 147 796 91 878 284 171 0 0 185 698 145 709 Turnover of segments 993 154 929 494 1 150 688 1 169 794 963 938 788 919 1 589 708 1 070 084 921 869 900 427 206 605 221 932 205 229 176 384 6 031 191 5 257 034 Eliminations – 185 698 – 145 709 Turnover 5 845 493 5 111 325

GOP 184 147 169 013 205 033 225 832 170 445 138 812 198 866 148 114 154 306 155 655 35 290 47 386 154 380 140 859 1 102 467 1 025 671 1 102 467 1 025 671GOP – margin 18.5% 18.2% 17.8% 19.3% 17.7% 17.6% 12.5% 13.8% 16.7% 17.3% 17.1% 21.4% 75.3% 80.1% 18.9% 20.1%

Share in result from joint ventures – 382 0 – 382 0 – 382 0

Depreciation – 3 170 – 3 060 – 13 105 – 12 546 – 2 070 – 2 768 – 10 681 – 6 003 – 3 666 – 3 791 – 1 472 – 1 574 – 9 277 – 7 018 – 43 441 – 36 760 – 8 077 – 17 324 – 51 518 – 54 084

Earnings before interst, tax and amortisation (EBITA) 40 522 35 127 – 36 723 – 10 824 22 141 18 979 61 555 63 333 30 909 35 455 – 6 249 1 773 35 526 41 921 147 681 185 764 – 23 103 – 16 886 – 5 286 – 55 969 119 292 112 909EBITA – margin 4.1% 3.8% – 3.2% – 0.9% 2.3% 2.4% 3.9% 5.9% 3.4% 3.9% – 3.0% 0.8% 17.3% 23.8% 2.0% 2.2%

Amortisation – 1 090 – 1 194 – 2 397 – 2 760 – 4 803 – 5 574 – 21 041 – 19 836 – 9 059 – 8 837 – 391 – 522 0 0 – 38 781 – 38 723 – 38 781 – 38 723Impairment – 15 568 0 – 7 620 0 – 4 045 0 – 27 233 0 – 27 233 0

Earnings before interest and taxes (EBIT) 39 433 33 933 – 54 689 – 13 584 17 337 13 405 40 515 43 497 14 230 26 618 – 10 685 1 251 35 526 41 921 81 667 147 041 – 23 103 – 16 886 – 5 286 – 55 969 53 278 74 186EBIT – margin 4.0% 3.6% – 4.8% – 1.2% 1.8% 1.7% 2.5% 4.1% 1.6% 3.0% – 5.2% 0.6% 17.3% 23.8% 0.9% 1.5%

Share in result from associates 193 – 405 – 1 600 – 1 600 – 1 407 – 2 005 119 88 – 1 288 – 1 917Other financial result – 44 334 1 – 7 478 1 – 44 334 – 7 478Result before taxes 39 433 33 933 – 54 496 – 13 989 17 337 13 405 40 515 43 497 14 230 26 618 – 12 285 – 349 35 526 41 921 80 260 145 036 – 67 318 – 24 276 – 5 286 – 55 969 7 656 64 791

Assets 261 007 237 472 402 684 398 444 433 870 337 855 926 073 912 534 493 602 478 358 92 509 95 656 125 561 100 121 2 735 306 2 560 440 – 324 971 1 – 61 528 1 2 410 335 2 498 912Liabilities 228 356 218 609 487 070 351 458 325 530 251 569 361 488 334 452 223 856 215 023 56 343 56 874 51 075 34 313 1 733 718 1 462 298 – 64 768 1 262 004 1 1 668 950 1 724 302

Capital expenditure 6 789 6 770 5 072 13 659 3 815 1 173 11 298 8 122 6 289 4 825 1 734 2 126 15 252 11 203 50 249 47 878 8 170 9 314 58 419 57 192Investments in associates 0 402 0 402 0 402Investments in joint ventures 426 0 426 0 426 0

Number of staff (full-time equivalents): * annual average 836 817 1 898 1 926 1 767 1 364 1 338 883 2 198 2 117 1 554 1 637 2 573 2 155 12 164 10 899 115 149 0 0 12 279 11 048* at year-end 893 859 1 741 1 897 1 726 1 741 1 321 1 404 2 255 2 158 1 425 1 576 2 615 2 322 11 976 11 957 114 147 0 0 12 090 12 104

Information about the segment reporting is also available on kuoni.com (Quick Search: 12204)



■■■■ 3. sEgMEnt REpoRting

Information by reportable segments Outbound Nordic

Outbound Kuoni Europe Group Travel

FIT (Fully Independent Traveller) Specialists

Outbound Emerging Markets VFS Global

Total reportable segments Corporate

Investment & cost reduction

programme / Acquisition &

integration cost Group

CHF 1000 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

External turnover 992 637 928 927 1 147 401 1 168 079 952 700 739 035 1 567 132 1 068 590 774 073 808 549 206 321 221 761 205 229 176 384 5 845 493 5 111 325 Turnover with other segments 517 567 3 287 1 715 11 238 49 884 22 576 1 494 147 796 91 878 284 171 0 0 185 698 145 709 Turnover of segments 993 154 929 494 1 150 688 1 169 794 963 938 788 919 1 589 708 1 070 084 921 869 900 427 206 605 221 932 205 229 176 384 6 031 191 5 257 034 Eliminations – 185 698 – 145 709 Turnover 5 845 493 5 111 325

GOP 184 147 169 013 205 033 225 832 170 445 138 812 198 866 148 114 154 306 155 655 35 290 47 386 154 380 140 859 1 102 467 1 025 671 1 102 467 1 025 671GOP – margin 18.5% 18.2% 17.8% 19.3% 17.7% 17.6% 12.5% 13.8% 16.7% 17.3% 17.1% 21.4% 75.3% 80.1% 18.9% 20.1%

Share in result from joint ventures – 382 0 – 382 0 – 382 0

Depreciation – 3 170 – 3 060 – 13 105 – 12 546 – 2 070 – 2 768 – 10 681 – 6 003 – 3 666 – 3 791 – 1 472 – 1 574 – 9 277 – 7 018 – 43 441 – 36 760 – 8 077 – 17 324 – 51 518 – 54 084

Earnings before interst, tax and amortisation (EBITA) 40 522 35 127 – 36 723 – 10 824 22 141 18 979 61 555 63 333 30 909 35 455 – 6 249 1 773 35 526 41 921 147 681 185 764 – 23 103 – 16 886 – 5 286 – 55 969 119 292 112 909EBITA – margin 4.1% 3.8% – 3.2% – 0.9% 2.3% 2.4% 3.9% 5.9% 3.4% 3.9% – 3.0% 0.8% 17.3% 23.8% 2.0% 2.2%

Amortisation – 1 090 – 1 194 – 2 397 – 2 760 – 4 803 – 5 574 – 21 041 – 19 836 – 9 059 – 8 837 – 391 – 522 0 0 – 38 781 – 38 723 – 38 781 – 38 723Impairment – 15 568 0 – 7 620 0 – 4 045 0 – 27 233 0 – 27 233 0

Earnings before interest and taxes (EBIT) 39 433 33 933 – 54 689 – 13 584 17 337 13 405 40 515 43 497 14 230 26 618 – 10 685 1 251 35 526 41 921 81 667 147 041 – 23 103 – 16 886 – 5 286 – 55 969 53 278 74 186EBIT – margin 4.0% 3.6% – 4.8% – 1.2% 1.8% 1.7% 2.5% 4.1% 1.6% 3.0% – 5.2% 0.6% 17.3% 23.8% 0.9% 1.5%

Share in result from associates 193 – 405 – 1 600 – 1 600 – 1 407 – 2 005 119 88 – 1 288 – 1 917Other financial result – 44 334 1 – 7 478 1 – 44 334 – 7 478Result before taxes 39 433 33 933 – 54 496 – 13 989 17 337 13 405 40 515 43 497 14 230 26 618 – 12 285 – 349 35 526 41 921 80 260 145 036 – 67 318 – 24 276 – 5 286 – 55 969 7 656 64 791

Assets 261 007 237 472 402 684 398 444 433 870 337 855 926 073 912 534 493 602 478 358 92 509 95 656 125 561 100 121 2 735 306 2 560 440 – 324 971 1 – 61 528 1 2 410 335 2 498 912Liabilities 228 356 218 609 487 070 351 458 325 530 251 569 361 488 334 452 223 856 215 023 56 343 56 874 51 075 34 313 1 733 718 1 462 298 – 64 768 1 262 004 1 1 668 950 1 724 302

Capital expenditure 6 789 6 770 5 072 13 659 3 815 1 173 11 298 8 122 6 289 4 825 1 734 2 126 15 252 11 203 50 249 47 878 8 170 9 314 58 419 57 192Investments in associates 0 402 0 402 0 402Investments in joint ventures 426 0 426 0 426 0

Number of staff (full-time equivalents): * annual average 836 817 1 898 1 926 1 767 1 364 1 338 883 2 198 2 117 1 554 1 637 2 573 2 155 12 164 10 899 115 149 0 0 12 279 11 048* at year-end 893 859 1 741 1 897 1 726 1 741 1 321 1 404 2 255 2 158 1 425 1 576 2 615 2 322 11 976 11 957 114 147 0 0 12 090 12 104

1 The assets and liabilities shown under “Corporate” include the Corporate items from the statement of financial position and the financial assets / liabilities and tax assets / liabilities of the Kuoni Group and the resulting expenses / income.


174

■■■■ BREaKdoWn of tuRnoVER By gEogRaphical aREa

1 Tour Operating Business and Destination Management Services

■■■■ BREaKdoWn of tuRnoVER By actiVity

■■■■ infoRMation on significant custoMERs

no customer accounts for more than 10% of total turnover.

■■■■ BREaKdoWn of EBit

CHF 1 000 2012 2011Change

in %

Switzerland 1 701 530 725 537 – 3.3International 5 315 484 4 420 647 + 20.2Eliminations – 171 521 – 34 859 – 392.0

Total 5 845 493 5 111 325 + 14.4

CHF 1 000 2012 2011Change

in %

Tour Operating Business 2 640 098 2 669 404 – 1.1Destination Management Services 3 108 019 2 405 196 + 29.2Visa Services (VFS Global) 205 229 176 384 + 16.4Eliminations – 107 853 – 139 659 – 22.8

Total 5 845 493 5 111 325 + 14.4

CHF 1 000 2012 2011Change

in %

Total EBIT of reportable segments 81 667 147 041 – 44.5Corporate * Corporate cost – 23 103 – 16 886 – 36.8* Acquisition and integration cost – 5 286 – 20 202 + 73.8* Investment and cost-reduction programme 0 – 35 767 + 100.0

Total 53 278 74 186 – 28.2



■■■■ BREaKdoWn of assEts By gEogRaphical aREa

■■■■ 4. tuRnoVER

turnover for 2012 was chf 734 million or 14.4% higher than in the prior year. organic growth increased turnover by + 3.7%, acquisitions added 10.3% and divestments reduced turnover by – 0.2%. currency movements increased turnover volume by 0.6%.

■■■■ 5. gRoss pRofit

gross profit comprises turnover less all directly allocable airline, ship, rail, hotel, car rental and similar costs. gross profit also includes the currency gains or losses from exchange rate differences realised or incurred by individual subsidiaries in the course of their operations.

■■■■ 6. pERsonnEl ExpEnsE

personnel expense increased by 15.1%. organic growth accounted for + 5.4%, acquisitions for + 9.1%, divestments for – 0.2% and currency movements for + 0.8% of the overall change.

CHF 1 000

Tangible fixed assets 31 Dec 2012

Intangible assets

31 Dec 2012Total

31 Dec 2012

Tangible fixed assets 31 Dec 2011

Intangible assets

31 Dec 2011Total

31 Dec 2011

Switzerland 64 689 45 564 110 253 74 904 44 451 119 355International 119 887 1 177 811 1 297 698 125 895 1 242 663 1 368 558

Total 184 576 1 223 375 1 407 951 200 799 1 287 114 1 487 913

CHF 1 000 2012 2011Change

in %

Wages and salaries 483 682 418 326 + 15.6Pension costs 43 911 37 045 + 18.5Other social security costs 41 282 35 805 + 15.3Other personnel costs 34 832 33 499 + 4.0

Total 603 707 524 675 + 15.1


176

■■■■ shaRE-BasEd coMpEnsation

the members of the Board of directors (exclusively non-executive directors) receive fixed compensation. 50% of this total compensation is paid in cash form; the remaining 50% is paid in shares. the issue price of the shares concerned is redefined each year and amounts to the average of all closing prices for the last ten trading days of the month before the ordinary general Meeting of shareholders. the shares are awarded on the trading day following the day of dividend distribution after the ordinary general Meeting of shareholders, and are subject to a blocking period of three years.

a Management performance plan (Mpp) compensation system has been established for group Executive Board members and senior management groupwide. under the Mpp, the members of the group Executive Board receive a yearly compensation which is divided roughly equally into a fixed and a variable performance-based component. around one-third of this variable component takes the form of a short-term incentive, while the remaining two-thirds take the form of a long-term incentive.

the short-term incentive is based in equal amounts on the achievement of annual financial targets and personal targets, and is paid in cash. the long-term incentive, which uses a “performance share plan” to assign entitled persons a certain number of Kuoni shares at the beginning of each plan period (business year), is based by contrast on the value-adding performance of the person concerned over a three-year period. the number of shares assigned at the beginning of the plan period will be multiplied by a factor of between 0.25 and 3, depending on the employee’s subsequent performance in the period concerned. the basis of this financial performance assessment is the value-based management performance indicator known as “Kuoni Economic profit” or KEp. the shares finally awarded – based on the employee’s performance – will be issued in april following the three-year vesting period. these shares will not be subject to any subsequent blocking period.

the KEp target for the Kuoni group underlying this compensation component, which is used to determine the payment of any variable



compensation amount, is itself based on investors’ expected returns on the market value of the Kuoni group and on the corresponding investment risk. the members of group-wide senior management are remunerated under the same Mpp, but with different proportions of the fixed and variable and the short-term and long-term incentive components.

share-based compensation costs for 2012 totalled chf 8.4 million (2011: chf 8.4 million). the average price of the 36 173 shares used for such purposes in 2012 amounted to chf 233 (prior year: 27 572 shares used; average price chf 306). the price of each share so used is determined by its average stock market price on assignment, less a discount for the corresponding measurement period. an adjustment of the performance factor for current plans reduced share-based compensation costs by chf 2.0 million or 7 124 shares (prior year: reduction of chf 9.5 million, or 38 571 shares).

■■■■ dEfinEd BEnEfit REtiREMEnt plans

the group incurs costs for retirement benefit plans in accordance with prevailing regulations in the countries in which it operates. the benefits paid to insured employees are generally calculated as a percentage of their expected salary in the last few years prior to retirement.

the following assumptions (weighted averages) used in actuarial calculations were adjusted to take account of the economic situation in the country concerned:

the expected return on retirement assets on the investments of funded pension plans is based on the long-term historical performance of the individual asset categories for each pension plan.

2012 2011

Discount rate 2.20% 2.50%Expected return on investment 2.90% 3.20%Salary increases 1.60% 1.70%Rate of pension increase 0.20% 0.30%


178

Where funded retirement plans exist, the costs of occupational pension coverage are transferred in accordance with the legislation in force in the country concerned. the deficit of the major defined benefit plans are shown below:

the assets of the independent retirement plans were as follows:

Employers’ contributions for 2013 are estimated at chf 9.0 million. actual income from investments for 2012 amounted to chf 28.5 million (2011: chf 1.8 million). the assets of the retirement plans were invested in the following asset categories at year-end:

CHF 1 000 31 Dec 2012 31 Dec 2011

Assets of independent retirement plans at fair value 364 889 345 708Defined benefit obligations (DBO) of the funded pension plans – 402 270 – 373 883

Deficit – 37 381 – 28 175

Cumulative, unrecognised actuarial and investment loss (net) 53 689 46 707Unrecognised part of defined benefit assets 0 0

Defined benefit assets recognised in the statement of financial position (net) 16 308 18 532

Pension assets 16 498 18 775Pension liabilities 190 243

CHF 1 000 2012 2011

Fair value of assets as at 1 January 345 708 355 875

Expected return on assets 10 753 14 584Employer contributions 8 906 8 210Employee contributions 5 606 5 190Benefits paid – 20 909 – 25 311Actuarial profits on assets 17 787 – 12 788Changes in group of consolidated companies – 3 379 0Translation differences 417 – 52

Fair value of assets as at 31 December 364 889 345 708

31 Dec 2012 31 Dec 2011

Equity securities 31% 26%Debt securities 49% 53%Real estate 11% 9%Other assets 9% 12%

Total assets 100% 100%



the retirement plans hold no shares or other equity instruments of Kuoni travel holding ltd., Zurich. Retirement plan obligations were as follows:

the actuarially determined retirement benefit costs stated above are set against the group’s contributions to retirement benefit plans. the following table gives a calculation of the pension costs of the group’s major defined benefit plans:

the following table shows the deficit/surplus held by the group’s pension plans, the impact of differences between the expected and the actual returns on pension fund assets and the components of the actuarial profits / losses on the defined benefit obligation for the past five years.

CHF 1 000 2012 2011

Present value of obligation as at 1 January 373 883 354 277

Current employer service cost 11 710 10 365Interest cost 8 996 11 072Employee contributions 5 606 5 190Benefits paid – 20 909 – 25 311Actuarial losses on obligation 27 107 18 351Changes in group of consolidated companies – 4 669 0Translation differences 546 – 61

Present value of obligation as at 31 December 402 270 373 883

CHF 1 000 2012 2011

Current employer service cost 11 710 10 365Interest costs 8 996 11 072Expected return on assets – 10 753 – 14 584Recognition of actuarial losses 838 163Effect of the asset ceiling 0 514

Pension cost recognised in income statement 10 791 7 530

Other pension cost (defined contribution plans and state retirement benefits) 33 120 29 515Total pension costs 43 911 37 045


180

■■■■ 7. othER opERating ExpEnsE

■■■■ 8. dEpREciation

■■■■ 9. EaRnings BEfoRE intEREst and taxEs (EBit)

EBit for 2012 was chf 20.9 million or 28.2% down on the prior- year result. organic growth decreased EBit by 15.2%, acquisitions decreased it by 16.2% and divestments and currency movements increased EBit by 0.7% and 2.5%, respectively.

CHF 1 000 2012 2011 2010 2009 2008

Assets of independent retirement plans at fair value 364 889 345 708 355 875 340 322 308 713Defined benefit obligations (DBO) of the funded pension plans – 402 270 – 373 883 – 354 277 – 338 054 – 313 984

Deficit – 37 381 – 28 175 1 598 2 268 – 5 271

Experience-based adjustments to plan assets held 17 787 – 12 788 11 114 17 005 – 73 333Experience-based adjustments to DBO 2 235 5 538 – 1 604 – 5 161 – 1 307Impact of changes in actuarial assumptions on DBO – 29 342 – 23 889 – 16 438 – 6 569 13 305

CHF 1 000 2012 2011Change

in %

Rent and utilities 80 545 67 921 + 18.6Aircraft leasing 17 877 19 015 – 6.0Administrative and other expenses 155 149 164 507 – 5.7

Total 253 571 251 443 + 0.8

CHF 1 000 2012 2011Change

in %

On buildings 4 292 5 266 – 18.5On other tangible fixed assets 27 220 23 221 + 17.2On further intangible assets 20 006 25 597 – 21.8

Total 51 518 54 084 – 4.7



■■■■ 10. financial REsult

the losses from the disposal of subsidiaries include chf 0.6 million in exchange differences of the foreign subsidiaries sold, which were previously recognised in equity.

as a result of the legal uncertainty over the ownership of Et-china.com international holdings ltd., guangzhou, of its key chinese subsidiary and the resulting impossibility of measuring the assets of Et-china.com international holdings ltd., guangzhou, the carrying amount of this affiliated company was fully value adjusted.

other financial expenses include project costs associated with considering a M&a transaction which never materialised, amounting to chf 11.6 million.

■■■■ 11. incoME taxEs

CHF 1 000 2012 2011

Interest income 5 352 5 171Dividend income 10 10Gain on disposal 21 0Share in profits from associates 313 145Non-operational exchange gains (net) 0 1 040Other financial income 3 307

Financial income 5 699 6 673

Interest expenses – 11 666 – 12 417Losses from the disposal of subsidiaries – 12 730 0Share in losses from associates – 1 600 – 2 062Impairment of associates – 8 054 0Non-operational exchange losses (net) – 5 175 0Other financial expenses – 12 096 – 1 589

Financial expense – 51 321 – 16 068

CHF 1 000 2012 2011

Current taxes 26 666 34 429Deferred taxes – 5 833 – 2 983

Total 20 833 31 446


182

tax expense can be analysed as follows:

the weighted average tax rate of the group for the year under review was 7.1% (2011: 16%). the various tax rates applicable to the group subsidiaries’ positive and negative results reduced the tax rate in 2012. depending on the country involved, profit distributions have varying tax consequences, the extent of which cannot be estimated.

the group has the following unrecognised tax loss carried forward:

■■■■ 12. EaRnings pER shaRE (Eps)

there are no dilutive effects.

CHF 1 000 2012 2011

Tax expense at the average weighted Group tax rate (net) 546 10 398Non-tax-deductible expenses 3 799 4 929Tax-free income – 1 023 – 2 313Capitalised deferred tax assets from previously not recognised tax loss carry-forwards – 1 457 – 1 193Utilisation of tax loss carry-forwards, not recognised in the statement of financial position – 2 669 – 953Tax effect from current losses, not eligible for recognition as assets 26 108 20 467Effect of changes in tax legislation – 5 450 – 267Tax expense for earlier periods 979 378

Tax expense reported 20 833 31 446

Expiring CHF 1 000 2012 2011

Up to 1 year 58 511 to 5 years 132 250 146 122Over 5 years 117 939 66 957Unlimited 177 135 141 871

Total 427 382 355 001

Not capitalised maximum positive tax effect 118 581 103 494

2012 2011

Basic earnings per registered share B in CHF – 3.87 9.22Net result attributable to nominal shareholders B of Kuoni Travel Holding Ltd. in CHF 1 000 – 13 816 29 702Weighted average number of nominal shares B outstanding 3 570 844 3 220 792

Basic earnings per registered share A in CHF – 0.77 1.84Net result attributable to nominal shareholders A of Kuoni Travel Holding Ltd. in CHF 1 000 – 967 2 093Weighted average number of nominal shares A 1 249 500 1 135 075



■■■■ 13. tangiBlE fixEd assEts

CHF 1 000Land and buildings

Other tangible fixed assets

Total tangible fixed assets

Purchase cost as at 1 January 2011 194 271 142 046 336 317

Additions 6 538 29 497 36 035Disposals 0 – 16 998 – 16 998Acquisitions 5 269 13 582 18 851Sale of subsidiaries 0 0 0Translation differences – 2 028 – 5 911 – 7 939

Purchase cost as at 31 December 2011 204 050 162 216 366 266

Accumulated depreciation as at 1 January 2011 71 255 84 954 156 209

Depreciation 5 266 23 221 28 487Disposals 0 – 15 377 – 15 377Sale of subsidiaries 0 0 0Translation differences – 241 – 3 611 – 3 852

Accumulated depreciation as at 31 December 2011 76 280 89 187 165 467

Net book value as at 31 December 2011 127 770 73 029 200 799


Additions 1 486 25 891 27 377Disposals – 9 104 – 14 866 – 23 970Acquisitions 0 1 1

Sale of subsidiaries – 1 354 – 6 320 – 7 674Translation differences – 393 – 2 184 – 2 577


Accumulated depreciation as at 1 January 2012 76 280 89 187 165 467

Depreciation 4 292 27 220 31 512Disposals – 3 370 – 11 969 – 15 339Sale of subsidiaries – 1 233 – 4 153 – 5 386Translation differences 28 – 1 435 – 1 407

Accumulated depreciation as at 31 December 2012 75 997 98 850 174 847



184

■■■■ fiRE insuRancE ValuEs

■■■■ 14. goodWill

Because of the withdrawal from various loss-making European tour operating activities, impairments of chf 16.2 million on goodwill were necessary. the cash-generating units of the Kuoni group are considered to be its reportable segments. these are examined to determine whether currently capitalised goodwill amounts still reflect the value thereof, or whether impairments are required. goodwill is allocated to the cash-generating units of the Kuoni group as follows:

CHF 1 000 31 Dec 2012 31 Dec 2011

Buildings 284 926 294 860Furniture, fixtures and equipment 191 392 183 248

CHF 1 000 2012 2011

Net book value as at 1 January 939 778 383 064

Acquisitions 746 601 265Purchase price adjustments 0 – 1 246Impairment – 16 194 0Changes in group of consolidated companies 0 0Translation differences – 3 408 – 43 305

Net book value as at 31 December 920 922 939 778

CHF 1 000Discount rate before taxes 31 Dec 2012 31 Dec 2011

Outbound Europe Outbound Nordic 12.0% 116 897 113 762Outbound Kuoni Europe 12.3% 23 424 31 864

Global Travel Services Group Travel 12.4% 3 389 14 344FIT (Fully Independent Traveller) 12.4% 559 877 564 515

Emerging Markets & Specialists Specialists 14.8% 203 417 199 248Outbound Emerging Markets 21.9% 13 918 16 045VFS Global 16.2% 0 0

Total 920 922 939 778



the value of goodwill is tested at least annually for impairment, or if certain factors or general conditions suggest that its carrying amount can no longer be recovered. the Kuoni group applies a standard method to assess goodwill values. the basic amount which should be recovered by any goodwill reappraised is based on value-in-use, which is determined from cash flow projections that are themselves based on the latest management-approved business plan. this plan pays due and full regard to the organisational changes and includes the latest management estimates on turnover and margin trends and on operating costs. the business plan also pays due regard to historic values based on past experience and includes projections for the next five years. subsequent years are considered on a perpetual annuity basis, using – as in the previous year – growth rates from 0.5% to 2%. the discount rates have been calculated on the basis of the weighted average capital costs of the Kuoni group, with due and full regard to country- and currency-specific risks relating to cash flows.

Management conducted sensitivity analyses of the capitalised good-will for all cash-generating units, which assumed an increase of discount rates of 1% in connection with a reduction of the expected cash flow by 5%. the result of the sensitivity analyses showed that the above changes to the key assumptions will not result in the book value of the cash-generating units exceeding the amount achievable.


186

■■■■ 15. othER intangiBlE assEts

CHF 1 000

Intangible assets from

acquisitions

Further intangible

assets

Total other intangible

assets


Additions 0 21 157 21 157Disposals 0 – 8 551 – 8 551Acquisitions 274 101 20 521 294 622Sale of subsidiaries 0 0 0Translation differences – 17 281 – 2 282 – 19 563


Accumulated depreciation and amortisation as at 1 January 2011 49 596 32 792 82 388

Amortisation 38 723 0 38 723Depreciation 0 25 597 25 597Disposals 0 – 8 276 – 8 276Impairment 0 0 0Sale of subsidiaries 0 0 0Translation differences – 561 – 994 – 1 555

Accumulated depreciation and amortisation as at 31 December 2011 87 758 49 119 136 877



Additions 0 31 042 31 042Disposals 0 – 11 917 – 11 917Acquisitions 41 0 41Sale of subsidiaries – 8 702 – 1 743 – 10 445Translation differences – 1 984 – 366 – 2 350


Accumulated depreciation and amortisation as at 1 January 2012 87 758 49 119 136 877

Amortisation 38 781 0 38 781Depreciation 0 20 006 20 006Disposals 0 – 8 348 – 8 348Impairment 11 039 0 11 039Sale of subsidiaries – 8 701 – 1 197 – 9 898Translation differences – 93 – 233 – 326

Accumulated depreciation and amortisation as at 31 December 2012 128 784 59 347 188 131




intangible assets deriving from acquisitions consist largely of capitalised trademark rights, while further intangible assets include software purchased as well as software projects in the course of construction totalling chf 0.8 million (2011: chf 7.5 million).

Because of the withdrawal from various loss-making European tour operating activities, impairments of chf 11.0 million on other intangible assets were necessary.

■■■■ 16. inVEstMEnts in associatEs

■■■■ 17. inVEstMEnts in Joint VEntuREs

CHF 1 000 2012 2011


Share in profits 313 145Share in losses – 1 600 – 2 062Impairment – 8 054 0Investment in associates 0 402


CHF 1 000 2012 2011

Net book value as at 1 January 0 0

Share in profits 0 0Share in losses – 382 0Investments in joint ventures 426 0Translation differences 0 0

Net book value as at 31 December 44 0

CHF 1 000 2012 2011

Share of assets 3 032 0Share of liabilities 2 988 0Share in turnover 273 0Share in result – 382 0


188

■■■■ 18. othER financial assEts

other financial assets comprise minority holdings and loans amounting to chf 22.8 million (2011: chf 23.5 million), pension assets from funded pension plans totalling chf 16.5 million (2011: chf 18.8 million) – see note 6 – and loans to joint ventures amounting to chf 1.0 million (2011: chf 0.0 million). as in the previous year, there are no loans to associates.

CHF 1 000 2012 2011


Additions 2 861 5 540Disposals – 4 131 – 5 387Acquisitions 0 1 141Sale of subsidiaries – 512 0Translation differences – 221 – 1 290




■■■■ 19. cash and cash EquiValEnts

cash and cash equivalents are denominated in the following currencies:

the average interest rates were:

CHF 1 000 31 Dec 2012 31 Dec 2011

Cash holdings and bank current accounts 286 562 252 388Time deposits and money market investments with original term up to 90 days of the date of the acquisition 34 745 36 473

Total 321 307 288 861

CHF 1 000 31 Dec 2012 31 Dec 2011

CHF 34 654 33 846GBP 56 401 51 325EUR 65 043 52 246USD 47 542 36 521Other 117 667 114 923

Total 321 307 288 861

2012 2011

CHF 0.1% 0.1%GBP 0.9% 0.5%EUR 0.5% 0.9%USD 0.5% 0.3%


190

■■■■ 20. tiME dEposits

this position contains time deposits maturing in more than 90 days.

time deposits are denominated in the following currencies:

the average interest rates were:

CHF 1 000 31 Dec 2012 31 Dec 2011

GBP 0 2 823USD 66 106SEK 0 76 104CNY 7 213 3 581Other 5 962 4 260

Total 13 241 86 874

2012 2011

GBP 1.1% 1.0%USD 0.7% 0.6%SEK 2.1% 1.5%CNY 3.3% 3.3%

02_02_07Notes to the CoNsolidated FiNaNCial statemeNts

19102_FiNaNCial report KuoNi group

■■■■ 21. Accounts ReceivAble And otheR ReceivAbles

other receivables include tax receivables of chF 7.1 million (2011: chF 6.7 million).

Accounts receivable show the following payment dates:

Flat-rate value adjustments to overdue receivables totalled chF 4.1 million (2011: chF 2.4 million) to receivables between 61 and 90 days overdue and chF 18.7 million (2011: chF 20.6 million) to receivables over 90 days overdue. some of the underlying receivables are expected to be paid. the receivables with payment date not yet due relate largely to long-term customer relations with agents or processing companies.

CHF 1 000 31 Dec 2012 31 Dec 2011

Receivables from customers 332 212 295 154Other receivables 83 274 62 099Flat-rate value adjustments – 22 837 – 23 042Positive fair values of derivative financial instruments held 11 188 32 723

Total 403 837 366 934

CHF 1 000 31 Dec 2012 31 Dec 2011

Payment not yet due 200 379 180 596Payment overdue 1 to 30 days 143 021 111 025Payment overdue 31 to 60 days 39 947 31 878Payment overdue 61 to 90 days 12 552 12 793Payment overdue by more than 90 days 19 587 20 961 415 486 357 253Flat-rate value adjustments – 22 837 – 23 042Positive fair values of derivative financial instruments held 11 188 32 723

Total 403 837 366 934

02_02_07 Notes to the CoNsolidated FiNaNCial statemeNts

192

Flat-rate value adjustments showed the following developments:

■■■■ 22. equity

the capital administered by the Kuoni Group corresponds to the consolidated equity. Kuoni’s aims in administering this capital are:

* to maintain the sound structure of its statement of financial position based on going-concern values;

* to maintain the financial scope required for future investments and acquisitions;

* to ensure a return for investors that is commensurate with their investment risk.

the Kuoni Group administers its equity by means of its statement of financial position equity ratio, i. e. the proportion of equity to total assets. the equity ratio amounted to 30.8% on 31 december 2012. the Kuoni Group is not subject to any legal covenants relating to minimum equity requirements. For covenants relating to financial indebtedness, see page 200.

CHF 1 000 2012 2011

Flat-rate value adjustments 1 January 23 042 15 615

Change (net) 433 7 953Sale of subsidiaries – 388 0Translation differences – 250 – 526

Flat-rate value adjustments 31 December 22 837 23 042

CHF 1 000 31 Dec 2012 31 Dec 2011

Equity attributable to shareholders of Kuoni Travel Holding Ltd. 733 310 765 882Non-controlling interests 8 075 8 728

Total equity 741 385 774 610

Total assets 2 410 335 2 498 912Equity ratio 30.8% 31.0%



the board of directors makes a proposal to the Annual General Meeting of shareholders on the use of any profit or balance available for distri bution. the Kuoni Group pursues a results-based distribu-tion policy and generally distributes between 30% and 35% of its net profit for the year to its shareholders. the board of directors will propose to the Annual General Meeting of 17 April 2013 that share-holders receive a with -holding tax-free appropriation from the newly created capital contribution reserve. this payment should also pay due regard to the Kuoni Group’s long-term earnings distribution policy. based on the net result for 2012 excluding one-off costs that had a substantial impact on the overall result in 2012, the board of directors proposes to make a distribution to the shareholders of chF 0.60 per registered share A and chF 3.00 per registered share b.

■■■■ coMPosition oF shARe cAPitAl

All registered shares A and b are fully issued paid up.

■■■■ conditionAl cAPitAl

conditional capital issuable via the exercise of conversion rights and/or warrants linked to bonds or similar debt issued by Kuoni travel holding ltd. or any of its subsidiaries in the domestic or interna-tional capital markets and/or via the exercise of options granted to shareholders amounts to a maximum of chF 384 000, with a further maximum of chF 96 000 reserved for employee stock option plans.

Type of shareRegistered

share ARegistered

share B Total

Number 1 249 500 3 748 500 4 998 000Nominal value in CHF 0.20 1.00 -

Share capital CHF 249 900 3 748 500 3 998 400in % 6.25 93.75 100.00

Voting rights Number 1 249 500 3 748 500 4 998 000in % 25.00 75.00 100.00


194

■■■■ AuthoRised cAPitAl

there is an authorised capital of maximum chF 571 200. We refer to the related information on page 227 of the financial statements of Kuoni travel holding ltd.

■■■■ RestRicted tRAnsFeRAbility PRovisions

the Articles of incorporation stipulate that no more than 3% of total voting rights may be entered in the name of any one shareholder.

■■■■ oPtinG out/oPtinG uP

there is no opting-out or opting-up clause in the Articles of incorporation.

■■■■ PRinciPAl shAReholdeRs

As of 31 december 2012 the largest shareholders known to the Kuoni Group were as follows:

Shareholder

Number/Category of Shares

Voting rights in %

Date of last disclosure

Kuoni and Hugentobler-Foundation, Zurich 1 249 500/A 1 25.00 03/04/1995Previous Year 1 249 500/A 1 25.00 03/04/1995

Silchester International Investors Ltd, London 757 704/B 15.16 31/12/2012Previous Year 755 062/B 15.11 31/12/2011

Federation of Migros Cooperatives, Zurich togehter with Anlagestiftung der Migros Pensionskasse Zurich and Pensionskasse der Globus-Unternehmung, Spreitenbach

284 656/B 39 000 Options 8.50 07/12/2009

Previous Year284 656/B

39 000 Options 8.50 07/12/2009

Pictet Funds S.A., Geneva 151 149/B 3.02 11/04/2012Previous Year n.a. under 3.00 18/03/2011

UBS Fund Management (Switzerland) AG, Basel 156 556/B 3.13 15/11/2012Previous Year n.a. under 3.00 n.a.

1 Status after the capital increase from april 2011



www.six-exchange-regulations.com/ publications/published_notifications/ major_shareholders_de.html

From 1 January 2012 to 31 december 2012, the following changes were disclosed and duly published on the website of siX swiss exchange Regulation.

in July 2012, holdings of ubs Fund Management (switzerland) AG increased for the first time to cross the threshold of 3%. during the financial year 2012, this threshold was crossed several times and reached 3.13% of the voting rights at the time of its last disclosure in november 2012.

in March 2012, holdings of Pictet Funds sA, Geneva, crossed the threshold of 3%. their holdings fell thereafter below the threshold and in April 2012 it crossed the 3% threshold again to reach 3.02% of the voting rights.

■■■■ tReAsuRy shARes

the exercising of subscription rights is related to the rights offering of May 2011. Kuoni exercised all its subscription rights on its treasury shares.

■■■■ shARe PlAn

the remaining treasury shares held are reserved for the employee share plan of the board of directors, the Group executive board and management. the changes to treasury shares reflect the registered shares b issued to the board of directors, the Group executive board and management.

Share plan Number of registered

shares BBook value

CHF 1 000

Held on 1 January 2011 78 867 3 943

Exercise of subscription rights 46 925 12 670Share based payment transaction 10 999 550

Held on 31 December 2011 136 791 17 163

Exercise of subscription rights 0 0Share based payment transaction – 29 049 – 1 453

Held on 31 December 2012 107 742 15 710


196

■■■■ oPtions

options have not been issued from 2005 onwards. the Kuoni Group has had no options outstanding since 31 december 2008.

■■■■ RetAined eARninGs

only a limited amount of retained earnings is available for distribution:

* the free reserves of Kuoni travel holding ltd. subsequent to the approval of an appropriate resolution by the General Meeting of shareholders;

* the reserves of subsidiaries in accordance with local fiscal and legal provisions, provided they are distributed first to the parent company.

■■■■ otheR ReseRves

other reserves contain translation differences as well as fair-value reserves and hedging reserves. the latter two of these are shown with due consideration for deferred taxation amounts.

CHF 1 000Translation differences

Hedging reserves

Fair value reserves Total

Reserves as at 1 January 2011 – 204 449 – 8 606 0 – 213 055

Realised gains or losses from cash flow hedges transferred to income statement 7 843 0 7 843Recognised gains or losses from cash flow hedges 10 653 0 10 653Translation differences – 64 186 0 0 – 64 186

Reserves as at 31 December 2011 – 268 635 9 890 0 – 258 745

Realised gains or losses from cash flow hedges transferred to income statement – 11 050 0 – 11 050Recognised gains or losses from cash flow hedges – 7 072 0 – 7 072Translation differences 5 445 0 0 5 445

Reserves as at 31 December 2012 – 263 190 – 8 232 0 – 271 422



■■■■ tRAnslAtion diFFeRences

the biggest translation differences derived from the translation of the assets and liabilities of Group companies reporting in GbP, euR and seK and of usd-denominated intragroup loans of an equity nature / chF-dominated intragroup loans to subsidiaries with other currency.

■■■■ hedGinG ReseRves

the hedging reserves correspond to the positive or negative fair value of currency and fuel price hedging contracts classified as cash flow hedges. they are expected to be removed from equity within 12 months.

■■■■ FAiR-vAlue ReseRves

the fair-value reserves relate to financial assets available for sale.

■■■■ 23. PRovisions

the provisions for employee benefits relate to defined benefit retirement plans, termination benefits to be paid out in accordance with the law and other retirement benefit obligations. Provisions for direct costs include amounts payable to service providers which are uncertain as to their due dates or size.

CHF 1 000

Employee benefits

2012

Direct costs 2012

Other 2012

Total 2012

Total 2011

Provisions as at 1 January 13 346 2 737 3 736 19 819 18 208

Additions 2 029 30 0 2 059 2 495Used – 2 989 – 531 0 – 3 520 – 2 379Released – 1 607 – 833 – 695 – 3 135 – 2 422Acquisitions 0 0 0 0 4 327Sale of subsidiaries 0 – 36 0 – 36 0Translation differences – 71 – 11 – 43 – 125 – 410

Provisions as at 31 December 10 708 1 356 2 998 15 062 19 819


198

■■■■ 24. deFeRRed tAXes

deferred taxes changed as follows:

At year-end the cumulative deferred taxes recognised directly in equity amounted to chF + 2.9 million (2011: chF – 3.5 million). they arise largely from the positive and negative current market values of the currency and fuel price hedging contracts classified as cash flow hedges. deferred taxes are derived from the following statement of financial position items:

CHF 1 000 2012 2011

Deferred tax assets 34 146 39 861Deferred tax liabilities 97 118 39 438

Deferred tax liabilities as at 1 January (net) 62 972 – 423

Changes recognised in the income statement – 5 833 – 2 983Changes not recognised in the income statement – 6 367 6 499Acquisitions 14 64 185Sale of subsidiaries 42 0Translation differences – 421 – 4 306

Deferred tax liabilities as at 31 December (net) 50 407 62 972

Deferred tax assets 33 093 34 146Deferred tax liabilities 83 500 97 118

CHF 1 000

Deferred tax assets

31 Dec 2012

Deferred tax liabilities

31 Dec 2012

Deferred tax assets

31 Dec 2011

Deferred tax liabilities

31 Dec 2011

Current assets 1 792 3 254 1 405 8 227Tangible fixed assets 3 462 6 788 4 825 4 225Other non-current assets 1 595 63 636 73 81 523Accrued expenses and provisions 12 937 4 273 14 501 2 662

Deferred taxes deriving from timing differences 19 786 77 951 20 804 96 637

Netting of deferred taxes within each Group company – 7 739 – 7 739 – 12 019 – 12 019Deferred taxes deriving from timing differences (net) 12 047 70 212 8 785 84 618

Tax effect on undistributed retained earnings of subsidiaries 13 288 12 500Deferred taxes on recognised tax loss carry-forwards 21 046 25 361

Total 33 093 83 500 34 146 97 118



■■■■ 25. FinAnciAl debts

Kuoni travel holding ltd. issued a chF 200 million bond at an annual interest rate of 3% in october 2009. the bond was issued at 100.309%. the bond has a duration of four years and matures on 28 october 2013. the effective interest rate applied is 3.27%. the bond had a market value of 101.08% at year-end (stock exchange price on 31 december). bank debts consist of mortgages on properties and subsidiaries’ bank overdrafts.

liabilities towards credit institutions include mortgages on proper-ties and bank accounts of subsidiaries with a negative balance on the balance sheet date, together with the syndicated credit facility concluded in 2011.

■■■■ syndicAted cRedit FAcility

the Kuoni Group has access to a chF 350 million syndicated credit facility which was established in March 2011 to part-finance the acquisition of Gullivers travel Associates, london. Kuoni travel holding ltd., Zurich is the liable party. the credit facility is of five years duration and will be terminated on 30 June 2016. As of 31 december 2012, none of the credit was utilised. the maximum credit amount under the facility will be reduced by chF 47 million a year from 30 June 2013 onwards. the interest payable is based on the liboR rate plus a margin of between 1.00% and 2.25%.

CHF 1 000 31 Dec 2012 31 Dec 2011

Bond 199 603 199 124Bank debts 33 817 110 081Other 120 254

Total 233 540 309 459

Of which: Current financial debts 202 364 11 391Non-current financial debts 31 176 298 068


200

in addition to other terms and conditions, the syndicated credit facility contains covenants relating to the degree of indebtedness (ratio of financial debt to ebitdA) and to equity (minimum consolidated equity). Additional customary market terms and conditions also apply. Maximum indebtedness may not exceed three times the ebitdA amount. the outstanding bond issue is subject to the usual cross-default clause, under which the outstanding bond amount(s) may become due for payment if repayment of the syndicated credit amount is demanded owing to non-observance of the credit terms and conditions. these credit terms and conditions were being observed on the balance sheet date.

Financial debts are due as follows:

Financial debts are denominated in the following currencies:

CHF 1 000 31 Dec 2012 31 Dec 2011

Statement of financial position value 233 540 309 459Contractual cash flows 242 820 334 923

Up to 6 months 5 138 14 7067 to 12 months 203 934 5 6231 to 2 years 10 958 207 9762 to 5 years 16 502 98 570Over 5 years 6 288 8 048

CHF 1 000 31 Dec 2012 31 Dec 2011

CHF 224 608 300 456EUR 7 361 8 637Other 1 571 366

Total 233 540 309 459



Average interest rates were:

■■■■ 26. Accounts PAyAble / otheR PAyAbles And

AccRued eXPenses

the reported amount contains taxes owed but not yet paid amounting to chF 24.1 million (2011: chF 28.2 million).

■■■■ 27. RisK MAnAGeMent

the board of directors and the management have maintained a risk management process under which a report is compiled every six months on Kuoni’s present risk exposure and the current status of defined risk-reducing actions and activities. the probabilities of such risks occurring and the anticipated impact of the risk scenarios analysed also form part of this semi-annual risk management reporting. the Kuoni risk management process further extends to quarterly reporting on any newly identified risk scenario or changed risk assessment.

Risks are assessed by conducting interviews with management members and further key personnel. the associated risk scenarios are then developed on the basis of these and further considerations, including corporate goals and strategies. Kuoni’s groupwide risk management covers 19 top Group-level risks. beyond these, three to five specific top risks are managed and monitored for each division and for the most important business units.

Within the internal control system (ics), the corresponding processes had those specific risks systematically monitored which are relevant to the annual accounting process in terms of their incorrect or fraudulent reporting potential. the key controls derived from these were implemented where they were not already fully in place, and documented. Procedures have also been defined to monitor and assess the existence of internal controls.

2012 2011

CHF 2.9% 2.8%EUR 3.2% 3.3%


202

■■■■ 28. FinAnciAl RisK MAnAGeMent

And deRivAtive FinAnciAl instRuMents

the table below shows the financial instruments held by the Kuoni Group.

in the normal course of its business, the Kuoni Group is exposed to liquidity, credit and market risks (interest rate and currency risks). to man age these risks, various derivative financial instruments are used. While these are subject to the risk of market rates changing

Derivative financial instruments

CHF 1 000

Loans, receivables and payables at amortised cost

Available- for-sale

At fair value through profit and loss

Used as cash flow hedges Other 1

Total carrying amount 2

31 Dec 2012

Other financial assets 23 541 231 16 498 40 270 Cash and cash equivalents 321 307 321 307 Time deposits 13 241 13 241 Accounts receivable / other receivables 385 549 216 10 972 7 100 403 837

Total financial instruments – assets 743 638 231 216 10 972 23 598 778 655

Financial debts 233 540 233 540 Accounts payable / other payables 254 936 6 526 22 096 283 558 Accrued expenses 636 936 24 102 661 038

Total financial instruments – liabilities 1 125 412 0 6 526 22 096 24 102 1 178 136

31 Dec 2011

Other financial assets 23 254 244 18 775 42 273 Cash and cash equivalents 288 861 288 861 Time deposits 86 874 86 874 Accounts receivable / other receivables 327 531 1 997 30 726 6 680 366 934

Total financial instruments – assets 726 520 244 1 997 30 726 25 455 784 942

Financial debts 309 459 309 459 Accounts payable / other payables 285 505 4 015 17 361 306 881 Accrued expenses 590 089 28 218 618 307

Total financial instruments – liabilities 1 185 053 0 4 015 17 361 28 218 1 234 647

1 The “Other” position shows items to which the provision of IAS 39 do not apply. 2 The fair values of the financial instruments do not deviate substantially from their carrying amounts.



subsequent to their acquisition, such changes are generally offset by opposite effects on the items being hedged.

■■■■ liquidity RisK

liquidity risk is the risk that the Kuoni Group may be unable to meet its financial obligations when these become due for payment. Kuoni permanently monitors its liquidity to keep it at adequate levels, with monthly reports to the Group executive board. this is done partly by maintaining liquidity reserves, to even out the usual fluctuations in liquidity levels and needs. Kuoni also has unutilised credit facilities to cope with any major liquidity fluctuations. these unused credit facilities totalled chF 410 million on 31 december 2012 and are available for loans, overdrafts and hedging activities. the facilities are spread among several banks, to avoid excessive dependence on a single banking institution.

the due dates of the financial debts held are shown in note 25. the Kuoni Group is currently examining the various refinancing variants for the bond maturing in october 2013 and will decide on this in due course. the other financial instruments held (accounts payable and accrued expenses) are all payable within six months.

■■■■ cRedit RisK

exposure to credit risk is monitored on an ongoing basis and covered by appropriate value adjustments on accounts receivable and pre- payments made (see note 21). credit risks are limited because the customer base of the Kuoni Group consists of a large number of customers spread over a wide range of geo graphical regions. there are no risk concentrations.

the counterparties to derivative financial instruments and cash are carefully selected financial institutions. Given their high credit ratings, the Kuoni Group does not expect any counter party to fail to meet its obligations. the maximum exposure to credit risk is re presented by the carrying amount of each financial asset.


204

■■■■ inteRest RAte RisK

the Kuoni Group is exposed to interest rate risk as a result of movements in inte rest rates in the capital market. Generally, all non-current financial liabilities have fixed interest rates. conse-quently, changes in interest rates can result in fluctuations in the fair value of such financial liabilities. this would not have any impact on the net result or future cash flows, however. the fair values of financial liabilities do not differ significantly from their carrying amounts on the balance sheet date. no corresponding derivatives are outstanding on the balance sheet date.

cash flow sensitivity analysis for financial instruments with variable interest rates: a one percentage point increase in the interest rate applicable would have reduced the net result by chF 0.06 million. A one percentage point reduction in the interest rate applicable would have increased the net result by the same amount. this analysis is based on the assumption that all other influencing factors remain unchanged.

■■■■ FoReiGn cuRRency RisK

the Kuoni Group incurs foreign currency risk primarily on purchases and borrowings denominated in a currency other than the functional currency of the subsidiary concerned. A further foreign currency risk of smaller significance derives from the amount of turnover denominated in a currency other than the measurement currency of the subsidiary concerned. on a consolidated basis, the Group is also exposed to currency fluctuations between the swiss franc and the local measurement cur rencies of its subsidiaries. the major currencies giving rise to currency risk for the Kuoni Group are the euro, the pound sterling, the swedish krona and the us dollar.

Foreign currency risks are monitored within the Kuoni Group in accordance with specified guidelines. these guidelines contain principles on risk limits, the forms of hedging instruments permitted and the relevant risk monitoring processes. the guidelines prohibit on principle the use of derivative financial instruments for specula-tive purposes. the enforcement of these guidelines and general risk



management are provided by the Kuoni Group’s treasury units in the form of a hedging strategy. Monthly reports are submitted to the Group executive board on the current risk situation.

the Kuoni Group uses forward exchange contracts and currency options to hedge its foreign currency risk. Most hedging contracts have maturities of up to 12 months. Where necessary, the forward exchange contracts are rolled over at maturity. the Kuoni Group does not hedge against the foreign currency risks associated with its net investment in foreign entities or the related foreign currency translation of local earnings.

the currency hedging contracts outstanding at year-end are summa-rised in the following table. Gains and losses on hedge contracts qualifying as cash flow hedges are expected to be removed from equity within 12 months. changes in the fair value of forward exchange contracts, currency options and swaps that economically hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognised in the income statement. both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the monetary items are reported under direct costs.

■■■■ deRivAtive FinAnciAl instRuMents

CHF 1 000

Positive fair values

31 Dec 2012

Negative fair values

31 Dec 2012

Contract values

31 Dec 2012


31 Dec 2011


31 Dec 2011

Contract values

31 Dec 2011

Cash flow hedges Currency-related forward contracts, swaps and options 10 076 – 21 709 983 572 28 914 – 16 537 855 340Commodity options (aviation fuel) 896 – 387 41 478 1 812 – 824 46 058

Other derivative financial instruments Currency-related forward contracts, swaps and options 216 – 6 526 168 712 1 997 – 4 015 288 224

Total 11 188 – 28 622 1 193 762 32 723 – 21 376 1 189 622


206

the fair value is the (higher or lower) value at which a derivative contract could be concluded on the balance sheet date. the fair values calculated on the balance sheet date should be looked at not in isolation but together with the calculated value of anticipated future transactions and hence in the context of the aggregate reduction in the Group’s exposure to cur rency movements. Positive or negative fair values of derivative financial instruments are carried on the statement of financial position under accounts receivable / other receivable or accounts payable/ other payable.

derivative financial instruments by currency:

Maturities of derivative financial instruments:

CHF 1 000


31 Dec 2012


31 Dec 2012

Contract values

31 Dec 2012


31 Dec 2011


31 Dec 2011

Contract values

31 Dec 2011

EUR 2 911 – 10 928 424 398 7 295 – 11 685 493 550USD 2 861 – 8 065 326 509 16 792 – 5 060 327 643THB 84 – 917 29 008 827 – 324 40 737Other currencies 4 436 – 8 325 372 369 5 997 – 3 483 281 634Commodity options (aviation fuel) 896 – 387 41 478 1 812 – 824 46 058

Total 11 188 – 28 622 1 193 762 32 723 – 21 376 1 189 622

CHF 1 000


31 Dec 2012


31 Dec 2012

Contract values

31 Dec 2012


31 Dec 2011


31 Dec 2011

Contract values

31 Dec 2011

Up to 6 months 4 104 – 13 237 699 809 15 572 – 9 329 672 0987 to 12 months 3 833 – 10 418 337 580 12 508 – 8 357 393 1141 to 2 years 3 251 – 4 967 156 373 4 643 – 3 690 124 4102 to 3 years 0 0 0 0 0 0

Total 11 188 – 28 622 1 193 762 32 723 – 21 376 1 189 622



the table below shows the financial instruments used, valued at their fair market values and using their valuation method.

the levels are defined as follows:

level 1: current market value in an active market of an identical financial instrument. level 2: current market value in an active market of a similar financial instrument or a valuation method whose prime input factors are not based on observable market data. level 3: valuation method whose prime input factors are not based on observable market data.

CHF 1 000

31 Dec 2012 Level 1 Level 2 Level 3 Total

Derivative financial assets 0 11 188 0 11 188Other financial assets 0 0 0 0

Total financial assets 0 11 188 0 11 188

Derivative financial liabilities 0 28 622 0 28 622Other financial liabilities 0 0 0 0

Total financial liabilities 0 28 622 0 28 622

31 Dec 2011 Level 1 Level 2 Level 3 Total

Derivative financial assets 0 32 723 0 32 723Other financial assets 0 0 0 0

Total financial assets 0 32 723 0 32 723

Derivative financial liabilities 0 21 376 0 21 376Other financial liabilities 0 0 0 0

Total financial liabilities 0 21 376 0 21 376


208

the table below shows the currency risk deriving from financial instruments whose currency differs from the functional currency of the subsidiary holding the instrument concerned:

A change in the foreign-currency positions shown at year-end as a result of a 5% or 3% change in currency exchange rates would have increased or decreased consolidated equity and the net Group result by the amounts shown below. this analysis is based on the assump-tion that all other variables (and interest rates in particular) remained unchanged. the consolidated income statement may also be substantially affected by any changes in currency exchange rates relating to financial instruments bought and sold within the business year to which the provisions of iFRs 7 do not apply.

In million foreign currency

USD 31 Dec 2012

EUR 31 Dec 2012

THB 31 Dec 2012

USD 31 Dec 2011

EUR 31 Dec 2011

THB 31 Dec 2011

Intercompany loans 0.2 0.4 0.0 0.2 0.1 0.0Other financial assets 2.5 0.3 0.0 3.2 0.2 0.0Cash and cash equivalents 33.4 25.0 54.1 18.3 22.6 31.2Time deposits 0.0 0.0 0.0 0.0 0.0 0.0Accounts receivable 3rd party 46.3 35.0 9.0 43.2 48.3 5.2Accounts receivable intercompany 42.8 15.0 84.3 8.0 14.5 22.2Prepaid expenses 8.6 12.4 67.6 8.2 11.8 78.6Less assets hedged (fair value hedge) 0.0 0.0 0.0 – 6.3 – 19.1 0.0

Assets exposure 133.8 88.1 215.0 74.8 78.4 137.2

Intercompany loans 3.2 0.0 0.0 0.0 35.8 0.0Accounts payable 3rd party 13.1 22.6 33.4 16.9 39.1 73.9Accounts payable intercompany 77.2 37.7 99.4 23.5 56.9 64.6Accrued expenses 69.7 63.2 434.4 69.6 41.6 199.8Advance payments by customers 10.8 2.8 0.0 2.0 1.6 0.0Less liabilities hedged (fair value hedge) – 43.2 – 50.0 – 273.3 – 46.3 – 49.2 – 232.9

Liabilities exposure 130.8 76.3 293.9 65.7 125.8 105.4

Net balance sheet exposure 3.0 11.8 – 78.9 9.1 – 47.4 31.8

Estimated forecast sales 42.8 38.9 0.0 45.0 33.4 0.0Estimated forecast purchases – 359.8 – 437.2 – 1 128.8 – 384.2 – 384.6 – 1 959.4

Gross estimated forecast exposure – 317.0 – 398.3 – 1 128.8 – 339.2 – 351.2 – 1 959.4

Foreign currency hedges 183.6 219.4 599.1 277.8 278.5 1 005.2

Net exposure – 130.4 – 167.1 – 608.6 – 52.3 – 120.1 – 922.4



■■■■ FoReiGn-cuRRency sensitivity AnAlysis

■■■■ 29. FRee cAsh FloW

Nominal currency USD +/– 5%

Nominal currency EUR +/– 3%

Nominal currency THB +/– 5%

CHF million Functional currency Equity

Income Statement Equity

Income Statement Equity

Income Statement

31 Dec 2012

CHF 1.5 0.5 1.3 1.1 0.1 0.0GBP 1.7 0.2 0.3 0.1 0.1 0.0SEK 4.6 0.2 5.6 0.1 0.4 0.1EUR 0.9 0.5 n.a. n.a. 0.0 0.1

31 Dec 2011

CHF 1.3 0.2 0.4 0.6 0.1 0.1GBP 2.6 0.1 0.5 0.1 0.1 0.0SEK 4.8 0.2 6.4 0.1 0.8 0.1EUR 1.5 0.1 n.a. n.a. 0.2 0.0

CHF 1 000 2012 2011

Cash flow from operating activities 106 447 110 497Purchase of tangible fixed assets – 27 377 – 36 035Purchase of other intangible assets – 31 042 – 21 157Disposal of assets 15 519 1 889

Free cash flow 63 547 55 194


210

■■■■ 30. RelAted PARties

Related parties are directors and Group executive board members (together with members of their families), major shareholders and companies controlled by these parties, associates and pension plans. transactions with related parties are priced on an arm’s length basis.

Apart from the compensation paid to the board of directors and the Group executive board and the ordinary contributions to occupa-tional pension plans, there were no significant transactions with related parties in 2012.

■■■■ Kuoni And huGentobleR-FoundAtion, ZuRich

the Kuoni and hugentobler-Foundation received a (gross) dividend of chF 0.7 million on the basis of its shareholding.

■■■■ AssociAtes

All transactions with associates are priced on an arm’s length basis. the Kuoni Group made sales to associates totalling chF 0.3 million in 2012 (2011: chF 1.1 million), while, as last year, no purchases were made from associates. For receivables outstanding, please see notes 16 and 21. As in the previous year, no profits were distributed by associates in 2012.

■■■■ Joint ventuRes

All transactions with joint ventures are priced on an arm’s length basis. the Kuoni Group made no sales to joint ventures, while no purchases were made from joint ventures. there are loans to joint ventures amounting to chF 1.0 million (2011: chF 0.0 million). no profits were distributed by joint ventures in 2012.



■■■■ Pension PlAns

the transactions between the Kuoni Group and the various defined benefits pension plans for its employees are shown in note 6. As in the previous year, the Kuoni Group currently has no liabilities towards these pension plans.

■■■■ GRouP eXecutive boARd And boARd oF diRectoRs

coMPensAtion

the total compensation (including employer’s contributions to social security and pension funds) paid to members of the Group executive board and the board of directors, which is included in personnel expense, consisted of:

the compensation paid to and shares held by members of the board of directors and the Group executive board are shown in detail on pages 230 to 233 of the financial statements of Kuoni travel holding ltd., in compliance with swiss law.

Group Executive Board Board of Directors Total

CHF Million 2012 2011 2012 2011 2012 2011

Short-term employee benefits 6.1 4.5 1.0 0.9 7.1 5.4Post-employment benefits 0.9 0.8 0.1 0.1 1.0 0.9Termination benefits 0.0 0.0 0.0 0.0 0.0 0.0Share-based payments 2.0 – 0.1 0.7 0.7 2.7 0.6

Total 9.0 5.2 1.8 1.7 10.8 6.9

Notes to the CoNsolidated FiNaNCial statemeNts

212

02_02_07

■■■■ 31. continGent liAbilities, Assets PledGed

the assets pledged were used to secure bank loans with mortgage collateral.

the contingent liabilities are related to garanties with former subsidiaries, which were sold to local management in the previous financial year.

■■■■ 32. leAsinG liAbilities

■■■■ FinAnce leAses

As in the prior year, there are no finance leasing liabilities.

■■■■ oPeRAtinG leAses

this position mainly relates to leasing liabilities of novair for certain aircrafts and to lease contracts for buildings.

CHF 1 000 31 Dec 2012 31 Dec 2011

Contingent liabilities 13 857 0Assets pledged 71 229 73 948

CHF 1 000 31 Dec 2012 31 Dec 2011

Liabilities payable up to 1 year 63 117 59 426Liabilities payable 1 to 5 years 116 096 117 113Liabilities payable over 5 years 6 176 9 201

Total leasing liabilities not recognised in the statement of financial position 185 389 185 740

Amount recognised in the income statement in respecitve year 72 914 71 014



■■■■ 33. Post-yeAR-end events

on 7 March 2013 the Kuoni Group announced the sale of Kuoni italia s.p.A., Genua. the execution of this transaction followed on the same day. the results of this subsidiary were recognised in the reportable segment outbound Kuoni europe.

the consolidated financial statements of the Kuoni Group were approved and released for publication by the board of directors on 15 March 2013. the board of directors also resolved on the same date to propose to the General Meeting of shareholders that share-holders receive a withholding tax-free appropriation from the capital contribution reserve of chF 0.60 per registered share A and chF 3.00 per registered share b for the 2012 financial year. the final approval of the above is subject to the General Meeting of shareholders of 17 April 2013.

no more events have occurred since 31 december 2012 that would necessitate an adjustment to the carrying amounts of the Group’s assets and liabilities.

214

■■■■ euRoPe02_02_08_01

Activity CurrencyPaid-in

share capitalInvestment

in % Consolidation

Switzerland Kuoni Reisen AG, Zurich T/D CHF 7 000 000 100 CRailtour Suisse SA, Berne T CHF 1 600 000 93 CKIT Solution AG, Zurich C CHF 1 000 000 100 C

Austria Kuoni Destination Management Ges.m.b.H., Vienna D EUR 253 000 100 C

Belgium Kuoni Travel Belgium B.V. B.A., Gent T EUR 7 335 000 100 C

Denmark Kuoni Scandinavia Danmark, Copenhagen T DKK 0 100 CKuoni Destination Management A/S, Copenhagen D DKK 600 000 100 CFalk Lauritsen Rejser A/S, Herning T DKK 500 000 100 C

France Voyages Kuoni S.A., Paris T/D EUR 507 000 100 C

Hungary Kuoni Destination Management Kft., Budapest D HUF 3 000 000 100 C

Italy Kuoni Italia S.p.A., Genoa T EUR 1 200 000 100 CKuoni Destination Management S.p.A., Rome D EUR 1 548 000 100 COctopus Travel Italia SRL, Rome D EUR 20 000 100 C

The Netherlands Kuoni Destination Management B.V., Amsterdam D EUR 55 815 100 CKuoni Specialists B.V., Amsterdam T EUR 20 418 100 C

priNCipal subsidiaries, assoCiates aNd JoiNt VeNtures

02_02_08

02_02_08priNCipal subsidiaries, assoCiates aNd JoiNt VeNtures




in % Consolidation

Norway Kuoni Scandinavia Norway, Oslo T NOK 0 100 C

Spain Kuoni Destination Management S.L., Madrid D EUR 150 000 100 CSotavento S.A., Fuerteventura T EUR 3 060 000 100 CGullivers Travel Associates S.A., Madrid D EUR 420 708 100 C

Sweden Kuoni Scandinavia AB, Stockholm T SEK 23 000 000 100 CNova Airlines AB, Stockholm T SEK 15 000 000 100 C

United Kingdom Kuoni Travel Ltd., Dorking T/D GBP 1 500 000 100 CCV Travel Holdings Ltd., London T GBP 1 100 CKirker Holdings Ltd., London T GBP 1 100 CVoyages Jules Verne Ltd., London T GBP 100 100 CCarrier Ltd., Cheshire T GBP 139 000 100 CDonvand Ltd., London D GBP 177 194 100 CGTA travel.com Ltd., London D GBP 10 000 100 COctopus Travel.com Limited, London D GBP 50 000 100 C

Activity:

T Tour Operating BusinessD Destination Management ServicesV Visa ServicesC Corporate

Consolidation:

C ConsolidatedE Valuation according to equity method

priNCipal subsidiaries, assoCiates aNd JoiNt VeNtures

216

02_02_08

■■■■ oveRseAs02_02_08_02



in % Consolidation

Australia Australian Tours Management Pty Ltd., Melbourne D AUD 500 000 100 CGTA Australasia Pty Limited, Sydney D AUD 100 000 100 COctopus Travel.com (Australia) Pty Limited, Sydney D AUD 50 000 100 C

China Kuoni Travel (China) Ltd., Hong Kong T HKD 4 800 000 100 CS.K.Y. Business Consultancy Co. Ltd., Shanghai D CNY 1 198 115 100 CEt-china.com International Holdings Ltd., Guangzhou R CNY 0 30 EKuoni Travel (China) Ltd., Beijing D CNY 0 100 CGullivers Travel Associates (Hong Kong) Limited, Kowloon D HKD 3 064 000 100 CGullivers (Beijing) Commercial Consulting Services (China), Beijing D USD 250 000 100 CGullivers Travel Associates (China) Limited, Beijing D CNY 4 000 000 100 C

India Kuoni Travel (India) Pvt. Ltd., Mumbai T/D INR 83 600 000 100 CKuoni Business Travel India Pvt. Ltd., Delhi T INR 8 450 000 100 CVFS Global Services Pvt. Ltd., Mumbai T INR 373 670 000 100 V

Japan Kuoni Travel (Japan) Ltd., Tokyo D JPY 50 000 000 100 CGullivers Travel Agency co Ltd (Japan), Tokyo D JPY 40 000 000 100 COctopus Travel.com Japan KK, Tokyo D JPY 10 000 000 100 C

Kenya Private Safaris (E.A.) Ltd., Nairobi D KES 62 500 000 100 C

Mauritius Kuoni Asian Investments (Mauritius) Ltd., Port Louis C USD 1 000 000 100 CVF Worldwide Holdings Ltd., Port Louis T GBP 4 303 000 100 V

Namibia Royal Tours Namibia (Pty) Ltd., Namibia T NAD 1 500 000 100 K

Nepal Sita World Travel (Nepal) Pvt. Ltd., Kathmandu D NPR 2 250 000 63 C

02_02_08priNCipal subsidiaries, assoCiates aNd JoiNt VeNtures




in % Consolidation

Singapore Kuoni Travel (S) PTE Ltd., Singapore D SGD 100 000 100 CGullivers Travel Associates (Singapore) Pte Limited, Singapore D SGD 100 000 100 C

South Africa Kuoni Private Safaris (Pty) Ltd., Cape Town D ZAR 500 000 100 C

South Korea Kuoni Travel (Korea) Ltd., Seoul D KRW 100 000 000 100 CGullivers Travel Associates Korea Limited, Seoul D KRW 350 000 000 100 C

Sri Lanka Sita World Travel (Lanka) Pvt. Ltd., Colombo D LKR 2 500 000 76 C

Taiwan Gullivers Travel Associates (Taiwan) Limited, Taipei D TWD 6 000 000 100 C

Thailand Asian Trails Ltd., Bangkok D THB 24 000 000 49 CKuonissimo (Thailand) Ltd., Bangkok D THB 2 451 000 49 C

United Arab Emirates Desert Adventures Tourism LLC, Dubai D AED 300 000 80 CGulf Dunes LLC, Dubai D AED 300 000 100 CGullivers Travel Associates Middle East FZ LLC, Dubai D AED 50 000 100 CVFS Tasheel International JLT, Dubai T AED 300 000 50 EVasco Worldwide JLT, Dubai T AED 300 000 50 E

USA AlliedTPro, Inc., New York D USD 170 000 100 CKuoni Travel (Atlanta) Inc., Atlanta D USD 50 000 100 CKuoni Holding Delaware, Inc., Wilmington C USD 1 100 CGTA Americas LLC, Delaware D USD 29 700 000 100 COctopus Travel.com (USA) Limited, Delaware D USD 1 000 100 C

Activity:

T Tour Operating BusinessD Destination Management ServicesV Visa ServicesC Corporate

Consolidation:

C ConsolidatedE Valuation according to equity method

218

report oF the statutory auditor02_02_09

Report of the statutory Auditor on the consolidated Financial statements to the General Meeting of shareholders of Kuoni travel holding ltd., Zurich.

As statutory auditor, we have audited the accompa-nying consolidated financial statements of Kuoni travel holding ltd., presented on pages 155 to 217, which comprise the statement of financial position, income statement, statement of comprehen-sive income, statement of changes in equity, statement of cash flows and notes for the year ended 31 december 2012.

■■■■ boARd oF diRectoRs’ ResPonsibility

the board of directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with interna-tional Financial Reporting standards (iFRs) and the requirements of swiss law. this responsibility includes designing, implementing and main-taining an internal control system relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. the board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reason-able in the circumstances.

■■■■ AuditoR’s ResPonsibility

our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with swiss law and swiss Auditing standards as well as international standards on Auditing. those standards require that we plan and perform the

audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. the procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated finan-cial statements, whether due to fraud or error. in making those risk assessments, the auditor con-siders the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appro priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial state-ments. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

■■■■ oPinion

in our opinion, the consolidated financial state-ments for the year ended 31 december 2012 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with international Financial Reporting standards (iFRs) and comply with swiss law.


report oF the statutory auditor

■■■■ RePoRt on otheR leGAl RequiReMents

We confirm that we meet the legal requirements on licensing according to the Auditor oversight Act (AoA) and independence (article 728 co and article 11 AoA) and that there are no circumstances incompatible with our independence.

in accordance with article 728a paragraph 1 item 3 co and swiss Auditing standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the board of directors.

We recommend that the consolidated financial statements submitted to you be approved.

KPMG AG

Martin schaad licensed Audit expert Auditor in charge

Pascal schmid licensed Audit expert Zurich, 15 March 2013

22102_financial report Kuoni travel Holding ltd.

Kuoni travel Holding ltd.

02_03

Kuon

i Tra

vel

Hold

ing

Ltd.

222

Information about the financial statements of the Kuoni Travel Holding Ltd. is also available on kuoni.com (Quick Search: 12205)


Statement of financial poSition 02_03_01

Assets CHF Notes 31 Dec 2012 % 31 Dec 2011 %

Non-current assets Investment in subsidiaries [6] 527 002 016 33.3 489 896 212 32.6Loans to group companies 1 006 034 298 63.6 960 062 190 63.7Loans to third parties 0 0.0 1 242 340 0.1Other financial assets 226 279 0.0 145 895 0.0Tangible fixed assets * Land and building [2] 4 460 000 0.3 4 460 000 0.3* Furniture, fixtures and equipment [2] 1 0.0 1 0.0

Total non-current assets 1 537 722 594 97.2 1 455 806 638 96.7

Current assets Cash and cash equivalents 1 503 256 0.1 897 250 0.1Securities [9] 18 902 300 1.2 20 167 750 1.2Accounts receivable * from third parties 148 901 0.0 60 807 0.0* from group companies 18 680 889 1.3 6 876 543 0.6Prepaid expenses 3 688 206 0.2 20 370 454 1.4

Total current assets 42 923 552 2.8 48 372 804 3.3

Total assets 1 580 646 146 100.0 1 504 179 442 100.0

Equity and liabilities CHF Notes 31 Dec 2012 % 31 Dec 2011 %

Equity Share capital [7] 3 998 400 0.3 3 998 400 0.3Legal reserves * General reserve 8 000 000 0.5 8 000 000 0.5* Share premium reserve 58 631 373 3.7 58 700 077 3.9* Reserve from capital contribution [8] 375 322 267 23.7 379 855 161 25.2* Reserve for treasury shares [9] 18 902 300 1.2 20 167 750 1.3Other reserves [7] 389 097 700 24.6 376 832 250 25.1Retained earnings * Profit carried forward 1 856 934 0.1 1 177 433 0.1* Net result – 42 796 384 – 2.7 11 679 501 0.8

Total equity [7] 813 012 590 51.4 860 410 572 57.2

Liabilities Provisions 238 968 000 15.1 239 227 000 15.9Bond [11] 200 000 000 12.7 200 000 000 13.3Bank loans 277 191 698 17.5 150 118 521 10.0Accounts payable * to third parties 8 515 964 0.5 1 422 598 0.1* to group companies 25 211 107 1.6 35 276 687 2.3Accrued expenses 17 746 787 1.2 17 724 064 1.2

Total liabilities 767 633 556 48.6 643 768 870 42.8

Total equity and liabilities 1 580 646 146 100.0 1 504 179 442 100.0

224

CHF Notes 2012 2011

Income Financial income [3] 14 230 274 17 225 475Income from investments in subsidiaries [4] 47 800 994 46 563 904Other operating income 767 250 721 858

Total income 62 798 518 64 511 237

Expenses Personnel expense 18 680 216 13 427 414Administrative expense 9 427 544 6 969 962Expenses related to investments in subsidiaries [5] 66 311 401 8 738 560Other expenses 247 050 7 380 125Financial expense 10 738 945 15 800 136Income taxes 189 746 515 539

Total expenses 105 594 902 52 831 736

Net result – 42 796 384 11 679 501

income Statement02_03_02


■■■■ IntroductIon

In legal terms, Kuoni shareholders are shareholders of Kuoni travel Holding Ltd., Zurich, which controls the subsidiaries listed at the end of the consolidated accounts. From an economic standpoint, the shareholders of Kuoni travel Holding Ltd. are invested in the entire Group, so the consolidated accounts are of primary importance. the accounts of Kuoni travel Holding Ltd. are conform with Swiss company law.

■■■■ 1. contInGent LIabILItIeS, aSSetS PLedGed

contingent liabilities consist of securities and guarantees for subsidiaries.

■■■■ 2. FIre InSurance VaLueS

■■■■ 3. FInancIaL Income

the financial income derives largely from interest on investments.

■■■■ 4. Income From InVeStment In SubSIdIarIeS

the income from investment in subsidiaries consists of dividends received as well as income from the sale of subsidiaries. as in the prior year, all wholly-owned subsidiaries were charged management fees to cover Group overheads.

CHF 31 Dec 2012 31 Dec 2011

Contingent liabilities 469 776 374 375 929 871Assets pledged 0 0

CHF 31 Dec 2012 31 Dec 2011

Buildings 10 346 000 10 157 000Furniture, fixtures and equipment 914 000 914 000

noteS 02_03_03

02_03_03 notes

226

■■■■ 5. ExpEnsEs RElatEd to InvEstmEnt In subsIdIaRIEs

this item relates to support given to subsidiaries as well as to currency- related value adjustments and provisions. Where necessary, losses incurred by subsidiaries were offset by direct subsidies or appropriate allocations were made to provisions earmarked for that purpose.

■■■■ 6. InvEstmEnt In subsIdIaRIEs

We refer to the information on principal subsidiaries and associates on pages 214 to 217 of the Financial Report.

■■■■ 7. EquIty

CHF Share capital Legal reserves Other reservesRetained earnings Total equity

Equity as at 1 January 2010 3 046 400 188 668 582 371 110 150 29 931 137 592 756 269

Net result 21 425 261 21 425 261Appropriation of retained earnings 5 000 000 – 5 000 000 0Dividends – 22 956 088 – 22 956 088Sale of treasury shares 686 793 139 800 826 593Use of treasury shares 377 468 75 600 453 068

Equity as at 31 December 2010 3 046 400 189 732 843 376 325 550 23 400 310 592 505 103

Net result 11 679 501 11 679 501Appropriation of retained earnings 1 10 222 877 12 000 000 – 22 222 877 0Dividends – 7 235 672 0 – 7 235 672Use of treasury shares 7 811 079 1 176 450 8 987 529Capital increase 952 000 266 191 861 – 12 669 750 254 474 111

Equity as at 31 December 2011 3 998 400 466 722 988 376 832 250 12 856 934 860 410 572

Net result – 42 796 384 – 42 796 384Appropriation of retained earnings 11 000 000 – 11 000 000 0Dividends – 11 472 696 0 – 11 472 696Use of treasury shares 5 605 648 1 265 450 6 871 098

Equity as at 31 December 2012 3 998 400 460 855 940 389 097 700 – 40 939 450 813 012 590

1 Includes the resolution by the Annual General Meeting regarding the reassignment of reserves from “Other reserve from capital contribution” to “Legal reserve from capital contribution”.

02_03_03notes


the share capital is composed as follows:

■■■■ CondItIonal CapItal

Conditional capital issuable via the exercise of conversion rights and / or warrants linked to bonds or similar debt issued by Kuoni travel Holding ltd. or any of its subsidiaries in the domestic or international capital markets and / or via the exercise of options granted to share-holders amounts to a maximum of CHF 384 000, with a further maximum of CHF 96 000 reserved for employee stock option plans.

■■■■ autHoRIsEd CapItal

the authorised capital of Kuoni travel Holding ltd. amounts to CHF 571 200 and is valid until 20 april 2013. the use of the authorised capital is limited to the financing or refinancing of Gta Holdco limited, Gta americas llC, octopus travel.com (usa) limited and Columbus technology developments limited which was effected in 2011. the board of directors may not issue any new shares for any other purpose on the basis of the authorised capital. the board of directors will delete article 3ter of the articles of Incorporation of Kuoni travel Holding ltd. relating to authorised capital upon the expiration of its validity on 20 april 2013.

although the authorised capital of Kuoni travel Holding ltd. can virtually no longer be used as a result of the above restriction, the following information is still provided because it is required to be included:

CHF 31 Dec 2012

1 249 500 registered shares A CHF 0.20 nominal value 249 9003 748 500 registered shares B CHF 1.00 nominal value 3 748 500

Total share capital 3 998 400

02_03_03 noteS

228

In accordance with article 3ter of the articles of Incorporation of Kuoni travel Holding Ltd., the board of directors is authorised to in - crease share capital by up to cHF 571 200 through the issue of a maximum of 178 500 fully-paid-up registered shares a with a nominal value of cHF 0.20 per share and a maximum of 535 500 fully-paid- up registered shares b with a nominal value of cHF 1.00 per share at any time until 20 april 2013. Should it do so, the board of directors shall specify the issue amount, the type of contribution, the date of such issue and the commencement of dividend entitlement. In the issue of any such shares, the subscription rights of existing share-holders shall be granted in full. the board of directors may also issue such new registered shares through their firm acquisition by a bank or a third party and subsequent offering to existing shareholders. the board of directors is empowered to determine the subscription price and the further subscription-right provisions. Should sub-scription rights not be exercised, the board of directors may permit these to lapse, place them (and the corresponding shares) on the market at market rates or use them in any other way in the interests of the company. the exercising of contractually acquired subscription rights and the subscription to and acquisition of the new registered shares, and any subsequent trannsfer thereof, are subject to article 5 of the articles of Incorporation of Kuoni travel Holding Ltd. every new share entitles its holder to one vote.

■■■■ reStrIcted tranSFerabILIty ProVISIonS

the articles of Incorporation stipulate that no more than 3% of total voting rights may be entered in the share register in the name of any one shareholder.

■■■■ oPtInG out / oPtInG uP

there is no opting-out or opting-up clause in the articles of Incorporation.

02_03_03noteS


■■■■ 8. reSerVeS From caPItaL contrIbutIonS

the overall amount held in reserves from capital contributions is cHF 375 million, which is made up of the various types of contribu-tions and share premiums since 1 January 1997. the Swiss Federal tax administration disputes reserves from capital contributions of cHF 11.5 million.

■■■■ 9. treaSury SHareS

CHF

Legal reserve from capital contribution

Other reserve from capital contribution Total

Capital contribution as at 1 January 2012 379 855 161 0 379 855 161Distribution – 11 472 696 0 – 11 472 696Increase from treasury shares 6 939 802 0 6 939 802

Capital contribution as at 31 December 2012 375 322 267 0 375 322 267

Share plan: number of registered

shares BBook value

CHF 1 000

Held on 1 January 2011 173 489 8 674

Purchase 0 0Use – 23 529 – 1 176Capital increase 46 925 12 670

Held on 31 December 2011 196 885 20 168

Purchase 0 0Use – 25 309 – 1 266

Held on 31 December 2012 171 576 18 902

02_03_03 noteS

230

■■■■ SHare PLan

the remaining treasury shares held are reserved for the share pur - chase plan of the Group executive board and management. the changes to treasury shares reflect the registered shares b purchased by or issued to the board of directors, the Group executive board and management.

■■■■ 10. PrIncIPaL SHareHoLderS

We are aware of the following principal shareholders:

■■■■ 11. bond

Kuoni travel Holding Ltd. issued a cHF 200 million 3% bond in october 2009. the bond has a duration of four years and matures on 28 october 2013.

■■■■ 12. reLated PartIeS

In accordance with its shareholding, the Kuoni and Hugentobler Foundation was awarded a gross dividend payment of cHF 0.7 million.

Shareholder

Number/Category of Shares

Voting rights in %

Date of last disclosure

Kuoni and Hugentobler-Foundation, Zurich 1 249 500/A 1 25.00 03/04/1995Previous Year 1 249 500/A 1 25.00 03/04/1995

Silchester International Investors Ltd, London 757 704/B 15.16 31/12/2012Previous Year 755 062/B 15.11 31/12/2011

Federation of Migros Cooperatives, Zurich togehter with Anlagestiftung der Migros Pensionskasse Zurich and Pensionskasse der Globus-Unternehmung, Spreitenbach

284 656/B 39 000 Options 8.50 07/12/2009

Previous Year284 656/B

39 000 Options 8.50 07/12/2009

Pictet Funds S.A., Geneva 151 149/B 3.02 11/04/2012Previous Year n.a. under 3.00 18/03/2011

UBS Fund Management (Switzerland) AG, Basel 156 556/B 3.13 15/11/2012Previous Year n.a. under 3.00 n.a.

1 Status after the capital increase from april 2011

02_03_03noteS


■■■■ 13. comPenSatIon PaId

■■■■ comPenSatIon PaId to memberS oF

tHe board oF dIrectorS

For their service in 2012, the members of the board of directors received the compensation shown in the table below. the aggregate compensation paid to the members of the board of directors in 2012 amounted to cHF 1.8 million (2011: cHF 1.6 million). no com - pen sation was paid in 2012 to members of the board of directors who had left in the prior period or earlier. Kuoni travel Holding Ltd. and its Group companies had not granted any collateral, loans, advances or credits to members of the board of directors or to persons associated with them as at 31 december 2012. no options were allocated in the year under review.

Basic cash compensation

(fixed)

Share-based compensation

(fixed) 1Social security

contributions Total

CHF 1 000Number of

shares CHF 1 000 CHF 1 000 CHF 1 000

2012 Henning Boysen, Chairman 274 755 210 29 513Heinz Karrer 128 347 97 15 240Jae Hyun (Jay) Lee 84 227 63 10 157John Lindquist 84 227 63 10 157Adrianus (Adriaan) Nühn 84 227 63 10 157David Schnell 157 378 105 0 262Annette Schömmel 84 227 63 10 157Raymond D. Webster 82 227 63 8 153

Total 977 2 615 727 92 1 796

2011 Henning Boysen, Chairman 276 593 210 30 516Wolfgang Beeser 98 214 76 9 183Heinz Karrer 112 237 84 13 209John Lindquist 84 178 63 10 157David Schnell 157 297 105 0 262Annette Schömmel 84 178 63 10 157Raymond D. Webster 84 178 63 10 157

Total 895 1 875 664 82 1 641

1 The shares were valued at a market value of CHF 278 (2011: CHF 354). The market value calculated includes a 16% discount in view of the shares’ restricted availability at the time of their assignment.

02_03_03 noteS

232

■■■■ comPenSatIon PaId to tHe GrouP executIVe board

For their service in 2012, the members of the Group executive board received the compensation shown in the table below. the aggregate compensation paid to the members of the Group executive board in 2012 amounted to cHF 9.7 million (2011: cHF cHF 7.8 million). the highest individual total compensation paid in 2012 amounted to cHF 2.7 million (2011: cHF 2.1 million).

2012 CHF 1 000

Group Executive Board 1

Of which: Peter Rothwell

Basic cash compensation (fixed) 3 397 940Variable compensation: * in cash 2 2 134 670* in shares 3 2 710 789Pension scheme contributions 4 655 111

Social security contributions 791 151Other compensation amounts 39 6Termination benefits 0 0

Total 9 726 2 667

2011 CHF 1 000



Basic cash compensation (fixed) 3 234 900Variable compensation: * in cash 6 659 232* in shares 7 2 617 714Pension scheme contributions 4 662 110Social security contributions 638 114Other compensation amounts 39 6Termination benefits 0 0

Total 7 849 2 076

1 Five members.

2 The members of the Group Executive Board were paid STI variable compensation in cash form of CHF 0.7 million in 2012 for the prior-year period. The cash-form variable compensation paid to CEO Peter Rothwell amounted to CHF 0.2 million.

3 The members of the Group Executive Board were assigned 11 822 registered shares B in the 2012 business year. These shares were valued at a market price of CHF 229. The market value calculated includes a 16% discount in view of the shares’ restricted availability at the time of their assignment. The share-based compen-sation for 2012 will be awarded at the end of the three- year reference period in spring 2015. A total of 6 264 re - gistered shares B (worth CHF 2.1 million) were awarded

to members of the present Group Executive Board in 2012 from the share-based compensation assigned in 2009. (Since CEO Peter Meier was not appointed to the Group Executive Board until 2010, he was not awarded any such shares in 2012.) For share-based compensation in 2009 2 221 registered shares B (CHF 0.7 million) were paid to Peter Rothwell in 2012.

4 One member of the Group Executive Board is entitled to take early retirement in accordance with the regulations of the “Patronale Fürsorgestiftung”. The non-contribution-based costs of the corresponding benefits are included in the pension fund contributions shown. The corresponding regulations have not been extended to any new Group Executive Board member since 2005.

5 Five members.

6 The members of the Group Executive Board were paid STI variable compensation in cash form of CHF 1.1 million in 2011 for the previous year. The cash-form variable compensation paid to CEO Peter Rothwell amounted to CHF 0.4 million.

7 The members of the Group Executive Board were assigned 8 975 registered shares B in the 2011 business year. These shares were valued at a market price of CHF 292. The market value calculated includes a 16% discount in view of the shares’ restricted availability at the time of their assignment. The share-based compen - sa tion for 2011 will be awarded at the end of the three-year reference period in spring 2014. No shares were awarded in 2011.

02_03_03noteS


the compensation includes basic salaries for 2012 and variable bonus payments for 2012. Share-based compensation includes the registered shares b allocated for 2012, which will be adjusted and paid out after a three year performance assessment period. the registered shares b paid on in the 2012 financial year on the basis of the 2010 share-based compensation are shown in footnote 3.

no compensation was paid in 2012 to any members of the board of directors who had left in the prior period or earlier. Kuoni travel Holding Ltd. and its Group companies had not granted any collateral, loans, advances or credits to members of the board of directors or to persons associated with them as at 31 december 2012. no options were allo cated in the year under review.

02_03_03 noteS

234

■■■■ 14. SHare oWnerSHIP

■■■■ board oF dIrectorS and GrouP executIVe board

Registered share B as at 31 December Other equity instruments

Number of shares Voting rights Number of shares Voting rights

2012 Board of Directors

Henning Boysen, Chairman 5 038 0.10% 0 Heinz Karrer 1 514 0.03% 0 Jae Hyun (Jay) Lee 227 0.00% 0 John Lindquist 1 373 0.03% 0 Adrianus (Adriaan) Nühn 227 0.00% 0 David Schnell 2 805 0.06% 0 Annette Schömmel 953 0.02% 0 Raymond D. Webster 1 573 0.03% 0 Wolfgang Beeser 1 1 052 0.02% 0

Group Executive Board Peter Rothwell 1 716 0.03% 0 Leif Vase Larsen 1 207 0.02% 0 Stefan Leser 5 178 0.10% 0 Rolf Schafroth 2 573 0.05% 0 Peter Meier 1 0.00% 0

Total 25 437 0.51% 0 0%

2011 Board of Directors 0

Henning Boysen, Chairman 4 283 0.09% 0 Wolfgang Beeser 1 052 0.02% 0 Heinz Karrer 1 167 0.02% 0 John Lindquist 1 146 0.02% 0 David Schnell 2 647 0.05% 0 Annette Schömmel 1 326 0.03% 0 Raymond D. Webster 1 346 0.03%

Group Executive Board 0 Leif Vase Larsen 808 0.02% 0 Stefan Leser 3 329 0.07% 0 Rolf Schafroth 1 768 0.04% 0 Peter Meier 1 0.00% 0

Total 18 873 0.38% 0 0%

1 Member of the Board of Directors who left the company during 2012.

02_03_03noteS


■■■■ board oF dIrectorS (non-executIVe memberS onLy)

■■■■ GrouP executIVe board (current)

■■■■ 15. rISK manaGement

the board of directors and the management use a risk management process under which a report is compiled every six months detailing Kuoni’s present risk exposure and the current status of defined risk-reducing actions and activities. the probabilities of such risks occurring and the anticipated impact of the risk scenarios analysed also form part of this semi-annual risk management reporting. the Kuoni risk management process further extends to quarterly reporting on any newly identified risk scenario or changed risk assessment.

Number of shares 31 Dec 2012 31 Dec 2011

no blocking period 8 366 6 279blocking period 2012 0 2 907blocking period 2013 1 906 1 906blocking period 2014 1 875 1 875blocking period 2015 2 615 0


no blocking period 10 675 5 757blocking period 2012 0 149

02_03_03 notes

236

Risks are assessed by conducting interviews with management members and further key personnel. The associated risk scenarios are then developed on the basis of these and further considerations, including corporate goals and strategies. Kuoni’s group-wide risk management covers 19 top Group-level risks and three to five specific top risks for each of the divisions and the most important business units.

Within the Internal Control System (ICS), the corresponding pro - cesses had those specific risks systematically monitored which are relevant to the annual accounting process in terms of their incorrect or fraudulent reporting potential. The key controls derived from these were implemented where they were not already fully in place, and documented. Procedures have also been defined to monitor and assess the existence of internal controls.


Instead of a dividend, the board of directors will propose to the annual General meeting that shareholders receive a withholding tax-free appropriation from the capital contribution reserve of cHF 0.60 per registered share a and cHF 3.00 per registered share b.

CHF 2012 2011

Profit carried forward 1 856 934 1 177 433Net result for the year – 42 796 384 11 679 501

Retained earnings – 40 939 450 12 856 934

Dividends:

Per registered share A 0 0Per registered share B 0 0

Total dividends 0 0

Allocation from other reserves – 40 939 450 11 000 000Appropriation of profit – 40 939 450 11 000 000

Profit carried forward to new account 0 1 856 934Retained earnings – 40 939 450 12 856 934

CHF 2012 2011

Legal reserve from capital contribution 375 322 267 379 855 161Distribution from legal reserve from capital contribution 11 995 200 11 472 696

Distribution 1 Per registered share A CHF 0.60 749 700 749 700Per registered share B CHF 3.00 * on 3 576 947 shares entitled to dividend at 31 December 2012 10 730 841 10 722 996* on 171 553 treasury shares set aside for the employee share plan at 31 December 2012 514 659 0

Total distribution 11 995 200 11 472 696

1 The company will waive its entitlement to such payments from the capital contribution reserve for the treasury shares held on the distribution date which are reserved for use in its employee share plan. The amount due on these shares will be taken to the legal reserve from capital contributions.

02_03_04Board of directorS’ propoSal for tHe appropriation of retained earningS

238

report of tHe Statutory auditor02_03_05

report of the Statutory auditor on the Financial Statements to the General meeting of Shareholders of Kuoni travel Holding Ltd., Zurich

as statutory auditor, we have audited the accompa-nying financial statements of Kuoni travel Holding Ltd., presented on pages 223 to 236, which comprise the statement of financial position, income statement and notes for the year ended 31 december 2012.

■■■■ board oF dIrectorS’ reSPonSIbILIty

the board of directors is responsible for the preparation of the financial statements in accord-ance with the requirements of Swiss law and the company’s articles of incorporation. this responsi-bility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. the board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

■■■■ audItor’S reSPonSIbILIty

our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss auditing Standards. those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures

selected depend on the auditor’s judgment, includ-ing the assessment of the risks of material mis-statement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. an audit also includes evaluating the appropriate-ness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

■■■■ oPInIon

In our opinion, the financial statements for the year ended 31 december 2012 comply with Swiss law and the company’s articles of incorporation.

■■■■ rePort on otHer LeGaL requIrementS

We confirm that we meet the legal requirements on licensing according to the auditor oversight act (aoa) and independence (article 728 co and article 11 aoa) and that there are no circum-stances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 co and Swiss auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the board of directors.


report of tHe Statutory auditor

We further confirm that the proposed appropria-tion of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPmG aG

martin Schaad Licensed audit expert auditor in charge

Pascal Schmid Licensed audit expert

Zurich, 15 march 2013

24102_financial report corporate governance

02_04

corporate governance

Corp

orat

e Go

vern

ance

242

Trust, reliability and security are all basic prerequisites for a healthy and success-ful company. Maintaining these essen-tial parameters of business management and control is the key task of Corporate Governance. Professionally implemented Corporate Governance is essential for any successful and responsible company that seeks to fulfill its shareholders, employees and external stakeholders.

Information about Corporate Governance is also available on kuoni.com (Quick Search: 12206)


this corporate Governance report describes the principles of management and control as they apply to the top decision-making bodies of the Kuoni Group. to enhance transparency and thus comparability with prior years and other companies, it has been prepared in conformity with the SIx corporate Governance directive of 29 october 2008. unless otherwise specified, all the information contained in the report is based on data as at 31 december 2012. the principles and rules of corporate governance as practised by the Kuoni Group are set out in the company’s articles of Incorporation, its organisational regulations and the regulations of the board of directors committees. the chairman of the board of directors reviews the content and current relevance of the corporate govern-ance provisions regularly, and proposes any additions or amend-ments required to the board of directors.

the Kuoni Group meets all the relevant corporate governance pro - visions. In particular, the Kuoni Group abides by all existing legis-lation, the directives of the SIx Swiss exchange (and the remarks thereto) and the Swiss code of best Practice for corporate Governance issued by economiesuisse, Switzerland’s umbrella business associa-tion (as updated in 2007).

this document contains, under Point 02_04_10, the compensation report of the board of directors, which also complies with the provisions of newsletter 2010/1 of FInma, the Swiss confederation’s financial markets supervisory authority.

introduction 02_04_00

244

■■■■ GrouP Structure

Kuoni travel Holding Ltd. is a joint-stock holding company under Swiss law which has direct or indirect shareholdings in all the compa-nies worldwide which belong to the Kuoni Group. the Kuoni Group maintains lean and efficient management structures at all levels. While the board of directors devotes itself to overall management, strategic and super visory duties, the Group executive board is entrusted with operational management tasks. For a diagram of the operational structure of the Kuoni Group, see page 29. the registered shares b of Kuoni travel Holding Ltd., Zurich, which have a nominal value of cHF 1.00, are traded on the main Standard of the SIx Swiss exchange (securities number 350 485, ISIn cH 0003504856). the registered shares a of Kuoni travel Ltd., Zurich, which have a nominal value of cHF 0.20, are not listed. the company’s legal domicile is at neue Hard 7, Zurich. Kuoni travel Holding Ltd. does not hold any equity interests in any stock-exchange-listed companies. For details of the unlisted companies that belong to the Kuoni Group of consolidated companies, see pages 214 to 217 of the Financial report. a detailed description of the global activities of the Kuoni Group is available on the company website.

■■■■ PrIncIPaL SHareHoLderS

the information on principal shareholders of Kuoni travel Holding Ltd. is provided in the table on page 194 of the Financial report. this shows those shareholders holding over 3% of the company’s voting rights, together with their current holdings (based on informa-tion provided by the same). the company received several notifica-tions of significant shareholders as required under article 20 of the Swiss Federal act on Stock exchanges and Securities trading in the course of 2012. these notifications were published on the SIx Swiss exchange’s notifications platform and on the company website. Kuoni travel Holding Ltd. is not aware of any other shareholders holding more than 3% of the company’s voting rights as of 31 decem-ber 2012.

02_04_01_01

02_04_01_02

02_04_01 group Structure and SHareHolderS

www.kuoni.com/group

www.six-swiss-exchange.com/ shares/companies/ major_shareholders_de.html


www.kuoni.com/major-shareholders

www.kuoni.com/share-capital-structure

Kuoni travel Holding Ltd. is not aware of any shareholders’ agreements.

■■■■ croSS-SHareHoLdInGS

Kuoni travel Holding Ltd. has no cross-shareholdings, whether purely of a capital nature or involving voting rights.

■■■■ caPItaL

For further details and the composition of the amounts of ordinary, authorised and conditional capital of Kuoni travel Holding Ltd. at yearend, please see note 22 on page 193 of the Financial report. Further information on the capital structure is available on the company website.

■■■■ autHorISed and condItIonaL caPItaL In PartIcuLar

the authorised capital of Kuoni travel Holding Ltd. amounts to cHF 571 200 and is valid until 20 april 2013. the use of the authorised capital is limited to the financing or refinancing of Gta Holdco Limited, Gta americas LLc, octopus travel.com (uSa) Limited and columbus technology developments Limited which was effected in 2011. the board of directors may not issue any new shares for any other purpose on the basis of the authorised capital. the board of directors will delete article 3ter of the articles of Incorporation of Kuoni travel Holding Ltd. relating to authorised capital upon the expiration of its validity on 20 april 2013.

although the authorised capital of Kuoni travel Holding Ltd. can virtually no longer be used as a result of the above restriction, the following information is still provided because it is required to be included in a company’s annual report by the corres - ponding corporate governance information directive of the SIx Swiss exchange:

02_04_01_03

02_04_02_01

02_04_02_02

02_04_02capital Structure

02_04_02 capitalStructure

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In accordance with article 3ter of the articles of Incorporation of Kuoni travel Holding Ltd., the board of directors is authorised to increase share capital by up to cHF 571 200 through the issue of a maximum of 178 500 fully-paid-up registered shares a with a nominal value of cHF 0.20 per share and a maximum of 535 500 fully-paid- up registered shares b with a nominal value of cHF 1.00 per share at any time until 20 april 2013. Should it do so, the board of directors shall specify the issue amount, the type of contribution, the date of such issue and the commencement of dividend entitlement. In the issue of any such shares, the subscription rights of existing sharehold-ers shall be granted in full. the board of directors may also issue such new registered shares through their firm acquisition by a bank or a third party and subsequent offering to existing shareholders. the board of directors is empowered to determine the subscription price and the further subscription-right provisions. Should sub-scription rights not be exercised, the board of directors may permit these to lapse, place them (and the corresponding shares) on the market at market rates or use them in any other way in the interests of the company. the exercising of contractually-acquired subscrip-tion rights and the subscription to and acquisition of the new registered shares, and any subsequent trannsfer thereof, are subject to article 5 of the articles of Incorporation of Kuoni travel Holding Ltd. every new share entitles its holder to one vote.

conditional capital issuable via the exercising of conversion rights and / or warrants linked to bonds or similar debt issued by Kuoni travel Holding Ltd. or any of its subsidiaries in the domestic or inter national capital markets amounts to a maximum of cHF 384 000. In the case of issues of bonds or similar debt instruments to which conversion and / or warrant rights are attached, the pre-emptive rights of the existing shareholders are excluded. the holders of the said conversion and / or warrant rights are entitled to subscribe for new registered shares b. the acquisition of registered shares through the exercise of conversion and / or warrant rights and any subsequent transfer thereof are subject to the transfer and voting restrictions contained in the articles of Incor poration. the board of directors

02_04_02capitalStructure


is authorised to restrict or revoke the pre-emptive rights of sharehold-ers when such bonds or similar debt instruments to which con-version and / or warrant rights are attached are issued to finance the acqui sition of other companies or parts of companies. If shareholders’ pre-emptive rights are revoked by a decision of the board of directors, the conversion and / or warrant rights concerned will be issued at the prevailing market price, and the new registered shares will be issued at market rates, with due regard to the current market price of the registered shares concerned and / or of comparable financial instruments with a market price. the exercise period is limited to ten years for conversion rights and to seven years from the date of the bond issue for warrant rights.

conditional capital of a maximum of cHF 96 000 also exists for use in exercising subscription or option rights granted to employees of Kuoni travel Holding Ltd. or its subsidiaries under one or more employee stock option plans. In such cases, new registered shares b may also be issued to employees at rates below the current stock market price, and existing shareholders shall have no subscription rights. the terms and conditions for the issue of such shares shall be determined by the board of directors. the acquisition of regis-tered shares under such employee stock option plans and any subsequent transfer thereof are subject to all the relevant statutory transfer and voting right restrictions.


248

■■■■ cHanGeS In caPItaL and SHare buybacK ProGramme

For 2010, 2011 and 2012 please refer to note 7 on page 226 of the Financial report.

■■■■ SHareS and PartIcIPatIon certIFIcateS

the composition of the share capital of Kuoni travel Holding Ltd. is shown on page 193 of the Financial report. at the General meeting of Shareholders of Kuoni travel Holding Ltd. each registered share carries one vote. these voting rights can only be exercised if the share - holder is registered as a shareholder with voting rights in the Kuoni travel Holding Ltd. share register. under the articles of Incorporation, such registration also requires a declaration from the shareholder that they have acquired the shares concerned in their own name and for their own account.

the unlisted registered shares a (nominal value cHF 0.20) have a five times lower nominal value than the listed registered shares b (nominal value cHF 1.00), and thus have five times greater voting rights in terms of the capital invested.

the registered shares of Kuoni travel Holding Ltd. are uncertificated. the shareholder may demand at any time that Kuoni travel Holding Ltd. issue a confirmation in respect of the registered shares which the shareholder currently owns. the shareholder is not entitled to the printing and delivery of certificates for registered shares. Kuoni travel Holding Ltd., by contrast, may print and deliver certificates repre-senting shares (single or global share certificates or certificates comprising multiple shares) at any time instead of uncertificated securities. Kuoni travel Holding Ltd. may also cancel without replacement any such pre viously issued share certificate or uncerti-ficated security.

02_04_02_03

02_04_02_04



Securities held with an intermediary may only be disposed of or used as collateral in compliance with the terms of the Swiss Inter-mediary-Held Securities act (“bucheffektengesetz”). uncertificated securities which do not qualify as securities held with an inter me-diary may only be transferred by assignment. Such assignment shall only be valid if Kuoni travel Holding Ltd. is notified thereof.

all registered shares are entitled to a dividend. Kuoni travel Holding Ltd. waives its entitlement to a dividend on any shares held by the company as treasury shares at the time of the dividend payment. the voting rights attached to such shares are suspended by law.

Kuoni travel Holding Ltd. has not issued any participation certificates.

■■■■ dIVIdend-rIGHt certIFIcateS

Kuoni travel Holding Ltd. has not issued any dividend-right certificates.

■■■■ reStrIctIonS on tranSFerabILIty and nomInee

reGIStratIonS

the following provisions apply to the registered shares a and b of Kuoni travel Holding Ltd.

the board of directors of Kuoni travel Holding Ltd. will deny the registration of an acquirer of registered shares subject to the provisions of the last paragraph in this chapter 02.04.02.06 as the holder or usufructuary of the registered shares with voting rights concerned if, as a result of such registration, the acquirer were to acquire or collectively hold, directly or indirectly, more than 3% of the registered share capital entered in the commercial register. For the registered shares exceeding this 3% ceiling, the acquirer shall be registered in the share register as the holder or usufructuary of these registered shares without voting rights.

02_04_02_05

02_04_02_06


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Legal entities or partnerships that are interrelated through capital ownership, voting rights or uniform ma nagement or are otherwise linked with one another, as well as individual persons or legal entities or partnerships who act in concern for the purpose of circumventing the limitation for registration in the share register shall, for the purposes of the preceding paragraph, be treated as one single acquirer.

the limitation for registration in the share register set forth in para - graph 1 of this chapter 02.04.02.06 subject to article 652b, paragraph 3 of the Swiss code of obligations, also applies to registered shares which are acquired through the exercising of pre-emptive rights, warrants and conversion rights. the limitation for registration in the share register shall not apply to an acquisition of registered shares by succession or division of estate or under marital property law.

other than set forth above, acquirers of registered shares shall be regis tered in the share register as shareholders with voting rights upon their application, provided they expressly declare that they have acquired the registered shares in their own name and for their own account.

the board of directors of Kuoni travel Holding Ltd. may register individual persons who do not expressly declare that they hold the registered shares for their own account (“nominees”) in the share register with voting rights if the nominee has entered into an agree-ment with the board of directors with respect to such status and if the nominee is subject to the supervision of a recognised bank or financial market.

the board of directors of Kuoni travel Holding Ltd. may also, after having heard the person concerned, cancel a person’s registration in the share register as a shareholder or nominee with voting rights with retroactive effect to the date of registration if such registration was based on incorrect information from the acquirer, and shall then in such cases register the shareholder or nominee concerned



in the share register as a shareholder or nominee without voting rights. In the event of any such action, the shareholder concerned must be immediately informed.

the board of directors of Kuoni travel Holding Ltd. shall specify the particulars and give the necessary directions to ensure compliance with the preceding provisions. It may also allow exemptions in parti - cular cases from the regulation regarding nominees and the per-centage limitation specified in paragraph 1. the board of directors issues regulations on this. the board may also delegate its duties.

no exemptions from the transferability and nominee registration restrictions were granted in 2012.

the vested rights of the shareholders entered in the share register on 25 February 1995 (including those of their legal successors by virtue of the devolution or partition of an estate, a matrimonial property regime or a merger with or incorporation into a directly-controlled, wholly-owned holding company) remain intact. the limitations outlined above shall also not apply to shares which have been or will be acquired by the shareholders entered in the share register on 25 February 1995 or their legal successors as defined above through the exercising of subscription, warrant, option or conversion rights arising from the shares entered in the share register on 25 February 1995 and any shares derived therefrom.

■■■■ conVertIbLe bondS and oPtIonS

Kuoni travel Holding Ltd. had no convertible bonds or options outstanding at the end of 2012.

02_04_02_07

252

■■■■ memberS oF tHe board oF dIrectorS

a) the board of directors of Kuoni travel Holding Ltd. consists of the following eight members:

the curricula vitae of the individual board members can be viewed as of page 30 and on the company website.

b) all the members of the board of directors are non-executive independent directors.

c) none of the present board members sat on the Group executive board of Kuoni travel Holding Ltd. or on the executive board of any group subsidiary of Kuoni travel Holding Ltd. within the last three years. Similarly, none of the present board members maintains material business relationships with Kuoni travel Holding Ltd. or with any group subsidiary of Kuoni travel Holding Ltd.

■■■■ otHer actIVItIeS and FunctIonS

details of other activities and functions of the members of the board of directors are available on the company website.

■■■■ eLectIon and term oF oFFIce

each individual member of the Kuoni travel Holding Ltd. board of directors is elected separately by the General meeting of

02_04_03_01

Name Born Nationality Function Joined Current term expires

Henning Boysen 1946 Danish Chairman 2003 2015Heinz Karrer 1959 Swiss Deputy Chairman 2007 2014David Schnell 1947 Swiss Member 2002 2015Anette Schömmel 1965 Swiss Member 2004 2013Raymond D. Webster 1946 British/New Zealander Member 2006 2013John Lindquist 1950 British/US-American Member 2007 2014Jae Hyun Lee 1964 Corean Member 2012 2015Adrianus Nühn 1953 Dutch Member 2012 2015

02_04_03_02

02_04_03_03

02_04_03 Board of directorS

www.kuoni.com/board-of-directors

www.kuoni.com/board-of-directors

253

02_04_03Board of directorS


Shareholders. as specified in the articles of Incorporation, the board of directors consists of a mini mum of five and a maximum of nine members. these members are each elected for a term of office that shall not exceed three years, with each year extending from one ordinary General meeting of Shareholders to the next. the board of directors is self-constituting. the board appoints its chairman, one deputy chairmen and a Secretary, the last of whom need not be a board member.

the organisational regulations and company bylaws also stipulate that members of the board of directors will automatically retire from the board on the date of the General meeting of Shareholders following their 70th birthday.

For information on the initial election and remaining period of office of each member of the present board of directors, please see the table under 02_04_03_01 above.

■■■■ InternaL orGanISatIon

the internal organisation of the board of directors is based on the company’s organisational regulations, which are issued by the board of directors and were last revised in december 2012. the organisa-tional regulations may be viewed on the company website.

■■■■ dIVISIon oF dutIeS WItHIn tHe board oF dIrectorS

Within the board of directors, the chairman has the following duties and authorities. the deputy chairman deputises for the chairman in his absence, and bears the same duties and authorities when doing so. apart from these duties and authorities, the chairman and deputy chairman have no particular function within the board of directors.

02_04_03_04

www.kuoni.com/ corporate-governance

254


www.kuoni.com/committees

the chairman is responsible for the formal and organisational leader - ship and management of the board of directors. In urgent cases, he shall also take the necessary decisions and precautions until the matter can be decided upon by the board of directors. the chairman further monitors the observance of legal requirements, the articles of Incorporation, regulations and directives by the company’s manage-ment bodies, and submits the requisite motions, requests and proposals to the board of directors. the chairman also ensures, in collaboration with the Group executive board, that information is provided in good time on all major aspects of the company which are of relevance to the monitoring of its activities and to the cor-porate decision-making process. Further details of the duties and authorities of the chairman of the board are provided in Section 2.5 of the organisational regulations.

■■■■ board commItteeS

the board of directors has formed the following two committees to assist it in its work: the audit committee and the nomination and compensation committee.

each of these committees has written regulations specifying its tasks and responsibilities.

the audit committee currently consists of david Schnell (chairman), adrianus nühn and John Lindquist . the audit committee has assured itself that the majority of its members have the requisite expertise in accounting and financial management. the audit committee reports to the board of directors on its con clusions, and the board of directors decides upon appro priate action.

255



the prime duty of the audit committee is to support the board of directors in its monitoring and super vision of the company’s account-ing and financial management. Its main tasks therein comprise: * providing independent and objective monitoring of the integrity * of the company’s consolidated reporting process, internal

financial control systems and accounting and their compliance with the relevant legal provisions;

* assessing the independence and performance of both the external and the internal auditors;

* ensuring open communications between the Group executive board, the board of directors and the internal and external auditors.

the audit committee further reviews: * the guidelines imposed by the Group executive board to ensure efficient financial reporting processes and controls; * periodic discussions of the current state of affairs with the Group executive board and the internal auditors and separately with the external auditors.

the audit committee also performs the following main tasks which have been assigned to it by the board of directors: * reviewing the annual report, the annual and interim financial statements, the nine-month business update and the auditing reports and management letters of the Kuoni Group and Kuoni travel Holding Ltd. and submitting proposals to the board of directors; * ensuring compliance with set accounting standards within the Group; * approving the integrated audit plans of the external auditors as well as the internal auditors; * assessing and discussing the external auditors’ audit reports; * assessing the performance, independence and compensation of the external auditors;

256


www.kuoni.com/committees

* selecting the auditing company to be proposed to the General meeting of Shareholders for election as the company’s statutory auditor and submitting the corresponding proposal to the board of directors;

* periodically reviewing internal processes and procedures; * periodically reviewing the suitability and effectiveness of the internal auditors; * submitting proposals to the board of directors on entries into the share register for shareholders with voting rights in connection with article 5 of the articles of Incorporation; * periodically reviewing the guidelines issued on ad-hoc publicity and the prevention of insider dealing; * submitting proposals to the board of directors on notifying the courts in the event of overindebtedness; * periodically reviewing all internal guidelines and directives that are not reviewed by any other committee.

the audit committee has its own authority on the following matters: * ensuring the auditors’ fulfilment of the legal requirements on licensing as stipulated in the auditor oversight act (aoa) and independence (Swiss code of obligations, article 728); * maintaining the share register; * periodically reviewing the organisation of the internal auditor; * reviewing strategic tax planning issues; * remunerating external auditors for subsidiaries; * appointing and dismissing the Head of Internal audit.

the nomination and compensation committee is composed of Heinz Karrer (chairman), annette Schömmel and raymond d. Webster. the main tasks of the nomination and compensation committee are to monitor the organisation, qualification, performance and remu-neration of management and the board of directors and to review the terms and conditions of any employee share purchase plan. other tasks performed by the committee are assessing the performance of the ceo and of the members of the Group executive board, arranging succession plans for the members of the board of directors and the Group

257



executive board, seeking and proposing new members for the board of directors and furthering the development of management as a whole. the nomination and compensation committee enlisted the services of two external specialists, Hostettler Kramarsch & Partner, and Pricewaterhousecoopers, both in Zurich, in 2012 to assist it in its decisions and recommendations. the nomination and compensa-tion committee reports to the board of directors on its conclusions, and the board of directors decides upon appropriate action on the basis thereof. In this connection, please also see the compensation report (note 02_04_10).

■■■■ WorKInG metHodS oF tHe board oF dIrectorS and ItS

commItteeS

the board of directors and its committees meet as often as business requires, but a minimum of six times a year for the board of directors, four times a year for the audit committee and three times a year for the nomination and compensation committee. the board of directors met eight times for regular meetings in 2012 (average length: 8 hours). In addition three extraordinary telephone confer-ences (average length: 45 minutes) took place. the audit committee held four regular meetings (average length: 6.5 hours); and the nomination and compensation committee held four regular meet-ings (average length: 3.0 hours) and three extraordinary telephone conferences (average length: 45 minutes).

the board of directors meets at the invitation of its chairman. a board meeting may also be demanded by any of its members or by the ceo.

the agenda of the board of directors’ meetings is set by the chairman. any member of the board of directors may table an agenda item. the members of the board of directors each receive documentation prior to the meetings which enables them to prepare for discussion of the agenda items concerned.

258


board meetings are chaired by the chairman. a board meeting shall be quorate provided the majority of board members are present. the board votes and passes resolutions by a simple majority. In the event of a tie, the meeting chair has the casting vote. In addition to its members, meetings of the board of directors are generally attended by the ceo and the chief Financial officer (cFo), and by further members of the Group executive board as and when required. these attendees have only an advisory function, along with the right to table motions or agenda items. Persons who are not members of the Group executive board may also attend as specialists at the chair’s invitation.

minutes are kept of all meeting deliberations. board resolutions may also be passed by written approval (letter, fax, email or other written form), again by a simple majority, provided all board members have had the opportunity to cast their vote and provided no member demands oral discussion of the matter concerned.

board committee meetings are held at the invitation of the chair. a board committee meeting may also be demanded by any committee member or the ceo (and an audit committee meeting may addi-tionally be demanded by the chairman of the board, the cFo or the internal or external auditors). the agenda of board committee meetings is compiled by the chair. any committee member may table an agenda item.

the committee members each receive documentation prior to the meetings which enables them to prepare for discussion of the agenda items concerned.

board committee meetings are chaired by the committee chair. a com mittee meeting shall be quorate (and empowered to submit pro po- sals to the board of directors) provided the majority of committee members are present. the meeting votes and passes resolutions by a simple majority. In the event of a tie, the meeting chair has the casting vote. In addition to its members, meetings of the audit committee are generally attended by the chairman of the board, the ceo, the cFo,

259



the Head of Internal audit and a representative of the external auditors. In addition to its members, meetings of the nomination and compensation committee are generally attended by the chairman of the board, the ceo and the chief Human resources officer.

minutes are kept of all board committee meetings. committee resolutions may also be passed by circular written communication, provided no member demands that a meeting be convened.

an annual self-assessment procedure has been established to perma-nently monitor and if possible enhance the performance of the board of directors. this evaluates how efficiently the board and its committees are performing their functions and meeting their responsibilities, whether each board member participates actively in board discussions and makes contributions based on independent judgement, and whether an environment of open discussions is maintained at board meetings.

■■■■ areaS oF reSPonSIbILIty

the board of directors is the company’s supreme managing body and is responsible for supervising the management of the company and its business. It deals with all matters that are not entrusted to another body of the company under the law, the company’s articles of Incorporation or its organisational and business regulations.

With regard to the non-transferability and inalienability of duties of the board of directors, reference is made to article 716a of the Swiss code of obligations and article 20 of the articles of Incorporation.

the board of directors may also, subject to the relevant legal provisions, delegate all or part of its duties to manage and represent the company to one or more of its members (as managing directors) or to third parties by issuing the appropriate organisational regulations. In this connection, the board of directors has issued a set of organisational regulations which specify (under Section 2.3) its further duties and

02_04_03_05

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ww.kuoni.com/corporate-governance

authorities and list (under Section 4.3) those business items which require its approval.

the board of directors of Kuoni travel Holding Ltd. manages the subsidiaries under its legal and / or economic control as a corporate group. the responsibility for the resolutions taken by the board of directors there fore extends not only to the company in the legal sense but also to all the subsidiaries described above by virtue of the board’s authority to issue instructions to the representatives of the company in their respective governing bodies. Within the overall parameters imposed by the law and the articles of Incorpora-tion, the board of directors delegates the management of the com-pany to the Group executive board by means of the relevant organi-sational regulations, which can be viewed on the company website.

the Group executive board has the duty and the authority to manage the Kuoni Group’s business operations. It is responsible in particular for: * planning, managing and monitoring the company’s profitability, risk positions, balance sheet structure and liquidity within the guideline parameters laid down by the board of directors; * devising the business strategy, multi-year business plan and

budget for the following business year, and submitting these to the board of directors;

* preparing and submitting proposals to the board of directors, particularly in relation to financing policy, investment policy, asset management policy, risk management and sourcing and trading policy, and in other areas as and where required.

the Group executive board shall also ensure the subsequent detailed adoption of such policies and the obser vance of the principles laid down in connection therewith, and shall report regularly to the board of directors thereon:* compiling the annual and half-year accounts and the nine-month

business update and providing the additional information required in connection therewith, and submitting these to the board of directors.

261



* ensuring that all legal requirements are observed and that all applicable legal provisions are familiar to and observed by the company’s employees (corporate compliance; the basic parameters here are laid down in the company’s code of

conduct);* the internal organisation and the internal control system; * hiring and dismissing employees; * monitoring the performance of external service providers; * preparing meetings of the board of directors together with its chairman and presenting the necessary documents; * reporting to the board of directors.

the Group executive board is empowered to pass resolutions on all business assigned to it. the Group executive board may submit such business to the board of directors for approval. the provisions on which items of business must be submitted to the board of directors for approval are laid down in the organisational regula-tions (article 4.3 thereof).

■■■■ InFormatIon and controLLInG InStrumentS For

SuPerVISInG tHe GrouP executIVe board

the management Information System (mIS) of the Kuoni Group is structured as follows. the financial state ments of the individual subsidiaries are prepared on a monthly, quarterly, semi-annual and annual basis. these figures are aggregated per segment/division and consolidated for the Group. the figures are compared with the previous year and the budget. the attainability of the budget is assessed on the basis of quarterly reporting and forecasts. the heads of the divisions submit monthly written reports on the progress of business to the Group executive board and the board of directors. these reports are discussed with the Group executive board at the board of directors’ meetings, as are the implementation and observance of board resolutions and the company’s liquidity levels.

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any member of the board of directors may demand to be informed about the company’s affairs. the ceo is responsible for informing the board of directors about the current course of business and important business transactions occurring in the company and in its subsidiaries. the ceo reports to the chairman of the board at regular intervals. the ceo must also inform the chairman immedia-tely of any unusual events, and the chairman will in turn pass such information on to the members of the board.

to ensure the direct information of the full board of directors, the ceo regularly attends meetings of the board of directors and its committees unless the board or its committees need to conduct a closed meeting session. the cFo also attends all meetings of the audit committee and is further present for most agenda items at full board meetings. the further members of the Group executive board attend board meetings for particular agenda items as and when required. the chairman of the board also receives copies of the minutes of all meetings of the Group executive board.

the company’s risk management function provides an established risk model for identifying, managing and moni toring strategic and operational risks throughout the Kuoni Group. the groupwide risk profile consists of the risks identified in the Group’s main country organisations (adopting the bottom-up approach) and groupwide strategic risks (adopting the top-down approach). the present risk profile and the current status of risk-reducing measures resolved are regularly monitored and are reported twice-yearly to the board of directors.

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Internal audit complements the controlling mechanisms available to the board of directors and reports directly to the board’s audit committee. Internal audit supports the Group executive board in special projects as requested by the ceo or other members of the Group executive board, and in other matters. Internal audit’s main task is to conduct an independent assessment of internal control systems and their effectiveness with regard to potential risks. the reports prepared by Internal audit regarding the audits carried out are submitted to the members of the audit committee, the chairman of the board, the ceo, the cFo, the Head of It, the Head of corporate controlling, the Group General counsel and the external auditor. each report also contains comments by the Group executive board regarding the key findings of the audits conducted in addition to suggested improvements.

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www.kuoni.com/executive-board

tHe group executive Board02_04_04

■■■■ memberS oF tHe GrouP executIVe board

For details of the members of the Group executive board, please see as of page 35.

■■■■ otHer actIVItIeS and FunctIonS

details of other activities and any further functions of Group execu-tive board members are provided on the company website.

no member of the Group executive board holds any official function or political office.

■■■■ manaGement contractS

Kuoni travel Holding Ltd. and its Group subsidiaries have not concluded any management contracts with any third parties.

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Details of the compensation, shares and loans of members of the Board of Directors and the Group Executive Board are provided in the Compensation Report (note 02_04_10).

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■■■■ REstRiCtion anD REpREsEntation of VotinG RiGhts

Each share entitles its holder to one vote at the annual General Meeting. When exercising the right to vote, no shareholder shall be able to vote, directly or indirectly, with more than 3% of the registered share capital entered in the Commercial Register; this 3% includes their own shares and shares represented by proxy. this limitation on voting rights does not apply to corporate proxies (article 689c of the swiss Code of obligations), independent proxies (article 689c of the swiss Code of obligations), depositaries (article 689d of the swiss Code of obligations) or shareholders registered in the share register as shareholders with voting rights for more than 3% of the registered share capital entered in the Commercial Register.

Legal entities or partnerships that are interrelated through capital ownership, voting rights or uniform ma nage ment or that are otherwise linked with one another, as well as individual persons or legal entities or partnerships acting in concert for the purpose of circumventing the limitation on registration in the share register are regarded as one single shareholder for the purposes of the preceding paragraph.

the Board of Directors of Kuoni travel holding Ltd. issues procedural rules regarding participation in and representation at the General Meeting of shareholders. a shareholder may only be represented at the General Meeting of shareholders by their legal representative, another shareholder with the right to vote, the corporate proxy, the independent proxy or a depositary. all the shares held by a share-holder may be represented by one person only.

the members of the Board of Directors of Kuoni travel holding Ltd. who are present at the annual General Meeting of shareholders decide whether powers of attorney are to be recognised.

the vested rights of the shareholders entered in the share register on 25 february 1995 (including those of their legal successors by virtue

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shareholders’ participation rights02_04_06


of the devolution or partition of an estate, a matrimonial property regime or merger with or incorporation into a directly-controlled, wholly-owned holding company) remain intact. neither do the limitations outlined above apply to shares which have been or will be acquired by the shareholders entered in the share register on 25 february 1995 or their legal successors as defined above through the exercise of subscription, warrant, option or conversion rights arising from the shares entered in the share register on 25 february 1995 and any shares derived therefrom.

■■■■ statutoRy QuoRuMs

as a general principle, the General Meeting of shareholders votes and passes resolutions by an absolute majority of the votes in favour and votes against cast (excluding abstentions). the following resolutions of the General Meeting of shareholders require at least two-thirds of the votes represented and an absolute majority of the nominal value of the shares represented to be passed: * amendments to the articles of incorporation, including any

changes to the company’s purpose;* the creation of shares with privileged voting rights; * limiting or relaxing the transferability of registered shares; * an authorised or conditional capital increase; * a capital increase through the conversion of capital surplus, in return for a non-cash contribution or for the purposes of acquiring property and granting special rights; * limiting or revoking pre-emptive rights; * changes to the location of the company’s registered office; * the dissolution of the company through liquidation or by merger.

■■■■ ConVEninG thE GEnERaL MEEtinG of shaREhoLDERs

the ordinary General Meeting of shareholders is convened in accordance with the relevant legal requirements. it is generally convened in april, and must be held within six months of the end of the financial year to which it relates. an Extraordinary General

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www.kuoni.com/annual-general- meeting

www.kuoni.com/annual-general- meeting

Meeting of shareholders can be convened if the Board of Directors or the external auditors deem this appropriate. the convention of an Extraordinary General Meeting of shareholders may also be demanded by shareholders representing at least 10% of share capital, provided this is done jointly and in writing stating the items to be discussed and the corresponding proposals or, in the event of elections, the names of the candidates proposed.

Every registered shareholder receives a personal invitation to attend, a detailed meeting agenda and notes on the various agenda items at least 20 days in advance of the meeting concerned. the agenda will also be published in various swiss newspapers and on the website.

■■■■ aGEnDa

shareholders representing shares with a nominal value of Chf 20 000 or more can demand that an item be included on the agenda of a General Meeting of shareholders up to 45 days before the meeting concerned. this request must be submitted in writing, and must also specify the motions to be put to the meeting. the submission deadline is published on the website.

■■■■ EntRy in thE shaRE REGistER

all shareholders entered in the share register as shareholders with voting rights up to three working days before a General Meeting of shareholders may vote at the meeting concerned. shareholders who sell their shares before the General Meeting of shareholders takes place are no longer entitled to vote. shareholders who buy additional shares or sell part of their shareholding after their meeting admission card has been issued must exchange the card sent to them at the information desk on arriving at the meeting concerned.

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■■■■ Duty to MaKE an offER

there are no opting-up or opting-out clauses in the articles of incor poration of Kuoni travel holding Ltd. in view of this, any person owning more than one-third of the voting rights of Kuoni travel holding Ltd. must make an offer for all the company’s listed shares.

■■■■ ChanGE-of-ContRoL CLausEs

the following change-of-control clauses apply:

■■■■ BoaRD of DiRECtoRs

there are no change-of-control clauses in any agreements or plans to the benefit of members of the Board of Directors.

■■■■ MEMBERs of thE GRoup ExECutiVE BoaRD

anD GRoupWiDE sEnioR ManaGEMEnt

in the event of a change of control, the current three-year vesting period under the Long-term incentive shall end immediately and the corre- s ponding shares shall be assigned. apart from this, there are no change-of- control clauses in any agreements or plans to the benefit of members of the Group Executive Board or groupwide senior Management.

■■■■ BonDhoLDERs

in the event of a change of control, bondholders are entitled to demand the premature repayment of their bond amount.

■■■■ synDiCatED CREDit faCiLity LEnDERs

in the event of a change of control, the banks participating in the syndicated credit facility are entitled to demand the premature repayment of any current loan amounts thereunder and/or to terminate the facility.

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■■■■ DuRation of ManDatE anD tERM of offiCE

of thE auDitoR-in-ChaRGE

the auditing mandates issued to KpMG Ltd., Zurich have a duration of one year each. KpMG Ltd., Zurich, has been the auditor of Kuoni travel holding Ltd. since 1970. the auditor-in-charge, Martin schaad, has been in office since april 2009. the auditor-in-charge is changed at least every seven years.

■■■■ auDit fEE

KpMG charged the Kuoni Group fees amounting to Chf 2.9 million during the 2012 financial year for services in connection with the auditing of the annual accounts of Kuoni travel holding Ltd. and its Group subsidiaries, as well as the consolidated financial statements of the Kuoni Group. an additional Chf 0.4 million was charged by other audit companies.

■■■■ aDDitionaL fEEs

KpMG also charged the Kuoni Group fees totalling Chf 3.0 million for additional services, i.e. accountancy and tax compliance and project costs associated with the consideration of an M&a transaction which never materialised. other fees amounting to Chf 0.1 million were charged by other audit companies for any 0ther services.

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■■■■ supERVisoRy anD ContRoLLinG instRuMEnts With

REGaRD to thE ExtERnaL auDitoRs

Each year, the audit Committee of the Board of Directors evaluates the performance, remuneration and independence of the statutory auditor and proposes an external auditor to the Board of Directors who will be put forward for election at the General Meeting of shareholders. the audit Committee also annually examines the scope of external auditing, the auditing plans and the relevant processes, and discusses the audit results with the external auditors. Representatives of the external auditors also regularly attend audit Committee meetings, and attended all such meetings in 2012.

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information policy02_04_09

Kuoni travel holding Ltd. maintains an open and transparent communication policy towards its shareholders, current and poten-tial investors, financial analysts, customers, business partners and other stakeholder groups. Kuoni travel holding Ltd. provides prompt and comprehensive information on the Group’s business activities, while paying due and full regard to all the applicable provisions and directives of the six swiss Exchange. in its endeavours to present details of its business development to its stakeholders, Kuoni travel holding Ltd. also makes forward-looking statements. these state-ments are assessments by the management about the present and future situation and performance of the company as they appear at the time the statement is made.

the latest key dates are always available on the website.

Kuoni travel holding Ltd. publishes a comprehensive annual Report each year informing its shareholders about business developments and the company’s annual results. the annual Report can be ordered by any shareholder via the invitation to the ordinary General Meeting of shareholders. of particular importance are the Corporate Governance report integrated into the annual Report and the financial Report on the past business year. all Kuoni’s consolidated financial statements are compiled in compliance with inter national financial Reporting standards (ifRs).

Key Dates for 2013

Financial year close: 31 December 20122012 annual results published: 21 MarchAnnual Report published: 21 MarchGeneral Meeting of Shareholders: 17 AprilDividend paid to banks: 24 April (ex-day: 19 April)First half-year close: 30 JuneHalf-year results announced: 22 AugustNine-month business update announced: 07 November

www.kuoni.com/financial-calendar


the reports on first-half results and the nine-month business update are published and dis tri buted in the same way as the company’s media releases. these reports contain unaudited financial results which are compiled in compliance with ifRs guidelines.

Kuoni travel holding Ltd. occasionally publishes information on current developments within its various business units or on other Group activi ties. in compliance with the relevant listing regulations of the six swiss Exchange, these communications are always issued simultaneously to a broad circle of recipients.

an archive containing the company’s annual Reports, half-year reports, nine-month business updates and further information and presentations is available on the website. Kuoni travel holding Ltd. also maintains an archive of all its published ad-hoc disclosures and other communications on the website. all this information is publicly available. interested parties may also register on the website to receive ad-hoc disclosures and other published communi cations by e-mail.

the information contained in these reports and communications is considered correct at the time of its publication. Kuoni travel holding Ltd. does not update media releases issued in the past in the light of subsequent market or business developments.

as part of its investor relations programme, Kuoni travel holding Ltd. organises: * the presentation of its annual results; * conference calls around the publication of its half-year results, the nine-month business update or other information; * meetings with investors and analysts, either individually or in groups at roadshows in key financial centres; * analysts’ and investors’ events on specific topics or issues; * presentations at brokers’/banks' events.

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www.kuoni.com/archive

www.kuoni.com/group-news

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information policy02_04_09

these activities are conducted with a focus on recently announced developments or financial results, and in full compliance with six Exchange Regulation’s Directive on ad-hoc publicity.

the presentations for financial analysts and investors are regularly archived on the Kuoni Group website. these presentations are not constantly updated, but document long-term developments within the company.

Details of the relevant contacts and the Kuoni investor Relations mailbox are available on the website.

interested parties may also add their name to the investor Relations e-mail list on the website.

Subject Link

Share capital and capital structure www.kuoni.com/share-capital-structureInformation on Kuoni’s shares www.kuoni.com/shareBoard of Directors www.kuoni.com/board-of-directorsGroup Executive Board www.kuoni.com/executive-boardOrganisational Regulations www.kuoni.com/corporate-governanceCorporate Governance (including Compensation Report) www.kuoni.com/corporate-governanceKey dates www.kuoni.com/financial-calendar

www.kuoni.com/investor-presentations

www.kuoni.com/contact-IR

www.kuoni.com/group-news


compensation report

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Information about the Compensation Report is also available on kuoni.com (Quick Search: 12207)

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■■■■ CoMpEnsation REpoRt

in view of the fact that Kuoni travel holding Ltd. is listed on the six swiss Exchange, and in line with the desire of its Board of Directors and Group Executive Board to maintain a transparent compensation policy, the present Compensation Report contains all the information required under the swiss Code of obligations (article 663b bis and article 663c, paragraph 3) and section 5.1 of the Direc-tive on information Relating to Corporate Governance issued by six Exchange Regulation. in its corporate governance provisions and its reporting thereon, the Kuoni Group also observes the swiss Code of Best practice for Corporate Governance issued by economiesuisse, the umbrella association for swiss business and industry. the Kuoni Group’s financial statements are compiled in accordance with international financial Reporting standards (ifRs). the directives issued by each of these bodies and authorities show slight variations in their presentation and inter pretation provisions.

the Compensation Report below complies with the provisions of section 5.1 of the Directive on information Relating to Corporate Governance issued by the six swiss Exchange, and also pays due regard to annex 1 of the swiss Code of Best practice for Corporate Governance issued by economiesuisse. the Report presents the compensation system used by the Kuoni Group. the compensation paid in accordance with the afore mentioned provisions of the swiss Code of obligations is shown and commented on in 02_04_10_06 (as of page 289).

the present Compensation Report is intended to inform the public about the compensation paid by the Kuoni Group. this Compen-sation Report will be presented to the 2013 ordinary General Meeting of shareholders both for approval as an integral part of the 2012 annual Report and for its separate consultative voting approval.

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02_04_10 compensation report

since the members of the Board of Directors of Kuoni travel holding Ltd. are independent and are not members of the Group Executive Board, the details of the compensation of the Board of Directors and of the Group Executive Board are presented in two separate sections.

the Kuoni Group strives constantly to be a first-choice employer which is able to recruit, retain and motivate the best and most professional employees around the world who are of the calibre that is essential to Kuoni’s continued success.

■■■■ thE RoLE of thE noMination anD CoMpEnsation

CoMMittEE (nCC)

the Kuoni Group’s nCC is appointed by the Board of Directors and consists solely of independent non-executive members. the present members of the nCC are heinz Karrer (chairman), annette schömmel and Raymond Webster. Board Chairman henning Boysen also attended all the nCC’s meetings in 2012.

the main duty of the nCC is to monitor the organisation, qualification, performance and remuneration of executive management and the Board of Directors and to review the terms and conditions of any employee share purchase plan. other tasks performed by the nCC include assessing the performance of the CEo and the further individual members of the Group Executive Board, arranging succession plans for the members of the Board of Directors and the Group Executive Board, submitting proposals for and recruiting new members of the Board of Directors and furthering the develop-ment of management as a whole.

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the nCC submits to the Board of Directors – generally once a year in December – its proposal for the structure and the amounts of compensation to be paid to the members of the Board of Directors and the salaries of the members of the Group Executive Board (including the relevant bonus programmes), for the Board of Directors to confirm or modify in accordance with the nCC’s recommen-dations. it may also enlist the services of external consultants when doing so. “Compensation” in this sense includes salaries and all further benefits received, including (but not limited to) all shares and similar securities, pension fund payments, discretionary and other bonuses, insurances, company vehicles, leaving settlements and further termination agreement benefits.

the nCC ensures that all executive personnel are compensated fairly, appropriately, competitively, in line with their performance and in accordance with the strategic goals of the Kuoni Group. to do so, the nCC devises proposals which are submitted to the Board of Directors for decision, monitors the implementation of employee-related corporate guidelines and upholds the norms of good business management practice in the long-term interests of the company’s shareholders.

the Board of Directors took decisions on a number of major issues in 2012 following corresponding proposals from the nCC. these included:

* Rolling out of a new compensation system for a long-term compensation as part of the already established total compensa-tion approach in 2013 in order to further improve the alignment of the long-term compensation with the business strategy. pricewaterhouseCoopers, Zurich was tasked with the mandate of accompanying this new design in its capacity as a consultant. the complex benefit factors of the current system will be re - placed with new benefit factors that are easier to understand and easier to verify by senior Management. the aim is to further improve simplicity, measurability, clarity and compliance with shareholder interests.

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the changes should compensate a conduct of the Group Execu-tive Board and the senior Management that takes into account the following four main targets:

1. performance 2. Cash flow 3. Growth 4. profitability

in short, the aim is increasingly to achieve “profitable growth without increasing the net working capital”.

in detail, the “performance share plan” (psp) already applied is now supplemented by a “Restricted share plan” (Rsp) for the Group Executive Board and senior Vice presidents. the psp now has a weighting of 60% of the long-term target compensation and the Rsp a weighting of 40%.

the psp, which assigns the persons entitled thereto Kuoni shares at the beginning of april, is guided by the value-adding perfor-mance over a three-year reference period (three business years). the number of shares assigned at the beginning of the reference period will be multiplied by a performance factor within a range, based on actual performance achieved, between a floor of 0 and a cap of 2.5, instead of the previous cap of 3.0. the basis of this financial performance assessment is the free cash flow (at a rate of 2/3) and the turnover of the Kuoni Group (1/3).

the Rsp, which assigns the persons entitled thereto Kuoni shares at the beginning of april for a three-year period, is predominantly designed to promote loyalty to the company. 1/3 of the shares are transferred to the person entitled thereto after one year for the first time, with further transfers of 1/3 each on completion of further one-year periods, as long as a valid employment relation-ship exists.

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to determine the targets for the psp annually, a target Committee was established, which consists of the Chairman of the Board of Directors, the Chairman of the nCC and the Chairman of the audit Committee. the CEo and Cfo of the Kuoni Group are also involved in consultation capacity.

the programmes currently in place for long-term compensation will be completed as planned.

* When determining the payment of the short-term incentives for the 2012 business year, in addition to the appraisal of the performance targets set, a bonus for the transformation process over the past two years in the form of a one-off payment was also included.

* the structure and amount of compensation for the Board of Direc- tors and Group Executive Board will remain unchanged in 2013.

* Due to a serious illness of a close family member, Group Executive Board Member Leif Vase Larsen requested a six-month sabbatical until 31 March 2013, which was granted.

When determining the compensation levels (including basic salary, incentives and fringe benefits) to be set and the service agreements to be concluded, the nCC pays particular regard to:

i) external comparisons of comparable roles with international corporations of similar size from all business and industry sectors;

ii) internal comparisons with the salaries and further benefits awarded to management personnel elsewhere throughout the Kuoni Group. here the Kuoni Group uses Mercer’s international position Evaluation (ipE) system, which grades each function via a “position evaluation” based on a series of criteria: impact (size of organisation, influencing scope, financial contribution), com-munication (need for the position to communicate, organisational

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framework), innovation (requirement to identify, improve or further develop processes, services or products) and knowledge (knowledge required to achieve the position’s goals and make a value contribution, team size and team expertise required, and geographical context in which knowledge must be used);

iii) the future development of the Kuoni Group in performance and profitability terms (based on the corresponding Kuoni Group three-year planning, in which external market developments are also projected).

the members of the Group Executive Board have no right of partici-pation or consultation in the determining of their compensation (including any payments due under the relevant bonus programmes). the CEo is, however, present when the compensations proposed for Group Executive Board members are explained (except for his own compensation amounts).

the decision on the structure and amount of compensation for the members of the Board of Directors is taken by the Board of Directors and laid down in a set of regulations. in any vote on the compen-sation to be paid to a particular member of the Board of Directors, however, the Board member concerned must observe the relevant general withdrawal/abstention procedures.

the nCC establishes and maintains a philosophy of payment for services and performance rendered that is in line with overall company strategy, and submits this to the Board of Directors for approval.

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■■■■ CoMpEnsation foR thE BoaRD of DiRECtoRs

the system applied for the compensation of the Board of Directors is based on the “total compensation” approach and comprises:

* a basic salary * long-term incentives (shares) and * fringe benefits.

the members of the Board of Directors receive the fixed compensation proposed by the nCC (generally in December) and approved by the full Board whose amount per Board role is specified in the “Com-pensation Elements of the Board of Directors of Kuoni travel holding” regulations of 18 april 2007. these regulations were devised at Kuoni’s own discretion on the basis of the Ethos survey entitled

“Executive Remuneration in the 100 Largest Companies listed in switzerland” of november 2006 and a report on compensation practices for chairmen of the board of directors produced by the CC&t company in 2002. in 2012 pricewaterhouseCoopers, Zurich was commissioned with conducting an analysis of the structure and amount of the compensation for the Board of Directors. the fixed compen sation awarded to members of the Board of Directors has been confirmed (instead of adjusted) annually since 2007.

50% of the total compensation paid to members of the Board of Directors is paid in cash form; the remaining 50% is paid in shares. the issue price of the shares concerned is redefined each year and amounts to the average of all closing prices for the last ten trading days of the month before the ordinary General Meeting of share-holders. the shares are awarded on the trading day following the day of dividend distribution after the ordinary General Meeting of shareholders, and are subject to a blocking period of three years.

the members of the Board of Directors are entitled to travel con-cessions which predominantly match those granted to Kuoni Group employees.

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■■■■ CoMpEnsation foR thE GRoup ExECutiVE BoaRD

the compensation guidelines of the Kuoni Group are an integral part of Kuoni’s personnel policy, and are intended to motivate and retain existing employees, to recruit talented new personnel and to help and encourage all employees to deliver a performance that is of a continuously high level. the Kuoni Group’s compensation system is based on the “total compensation” principle and comprises:

* a basic salary * short-term incentives (personal performance in relation to

quality/quantity goals, and financial results in relation to budget) * long-term incentives (value-adding performance and further corporate development in relation to the objectives set) and * fringe benefits.

the short-term and long-term incentives offered are closely linked to the company’s financial development and success. this establishes and maintains a commonality of interests between the company’s shareholders and its employees.

the Kuoni Group maintains various forms of pension and other retirement benefit schemes for employees entitled thereto. these schemes cover a large majority of the Kuoni Group’s personnel. for further details, please refer to pages 177 to 180 in the financial Report.

it is the duty of the Group Executive Board and of human Resources Management to ensure that Kuoni attracts, retains and further develops the best executive talent in the respective business area within the Kuoni Group.

a Management performance plan (Mpp) compensation system has been in place since 2008 for Group Executive Board members and senior management (senior Vice presidents and Vice presidents) groupwide. under the Mpp, the members of the Group Executive

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Board can receive compensation for the 2012 business year which is divided into a fixed (roughly 40%) and a variable (roughly 60%) performance-based component. around one-third of this variable component takes the form of a short-term incentive, while the remaining two-thirds take the form of a long-term incentive.

the short-term incentive is based in equal amounts on the achievement of annual financial targets (the 2012 Kuoni Group EBit compared to budgeted projections, with a possible target achievement of between 0% and 200%) and personal targets (with a possible target achieve-ment of between 0% and 120%), with payment in april 2013 in cash form. the personal targets here should always serve to help ensure the overall further development of the Group or the business units concerned. the personal targets for Group Executive Board members are proposed by the CEo, discus sed on the nCC and approved by the Board of Directors. the personal targets for the CEo are proposed by the Chairman of the Board of Directors. these personal targets generally fall into four categories – strategy, trans formation, people and stakeholders – with their relative weightings varying according to the function held.

the long-term incentive, which uses a psp to assign the persons entitled thereto a certain number of Kuoni shares at the beginning of each plan period (business year), is based by contrast on the value-adding performance achieved over a three-year period extending from 2012 to 2014. the number of shares assigned at the beginning of the reference period will be multiplied by a “performance factor” whose value will depend on the subsequent performance achieved in the period concerned.

a long-term incentive will only be paid if no negative cumulative EBit is incurred in the reference period concerned. the performance factor will range, based on actual performance achieved, between a floor of 0.25 and a cap of 3. the basis of this financial performance assessment is the value-based management performance indicator known as the “Kuoni Economic profit” or KEp.

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for clarification purposes the challenge of achieving a “factor 1” result under the above provisions is shown below.

the KEp target is based primarily on two considerations. first, the KEp target reflects a risk-adjusted expected return (8.5% WaCC) that is based on market value. secondly, as a profit value, the KEp incorporates not only operating costs but also the costs of capital employed. as such, it represents a far more challenging target than the usual profit criteria.

the maximum factor of 3 will only be applied if investor expectations (8.5% WaCC) have been clearly exceeded in return terms.

Kuoni’s long-term incentive (Lti) is designed to be self-financing, i.e. any additional costs incurred through the Lti are already included in the KEp result. Kuoni strives to enable its management to partici-pate in the company’s value-adding achievements in accordance with the “pay for performance” principle. the Lti plan provides such participation in the event of both over- and underperformance. in accordance with this, a factor of zero will be applied if the EBit result falls below a specified level. Based on the entitlement of international plan participants and the past history of Kuoni’s long- term incentive systems, the current long-term incentive plan has a maximum factor of 3, to ensure that significant overperformance over a longer period can continue to be rewarded appropriately.

the calibration of the KEp target for the long-term incentive is essentially based on an investor’s perspective which considers not only Kuoni but also comparable companies with similar business portfolios. this process also pays due regard to the growth expectations, risk profiles, investment levels and profitability levels that are typical of the industry. all such considerations flow directly into the Kuoni KEp target-setting process.

the KEp target-setting process assumes that investors expect a risk-adjusted return on their investment which is based on market

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value, and translates such expected returns over a three-year period into operational KEp targets. the KEp target for the Kuoni Group for the 2012– 2014 period was devised with the assistance of independent external consultants hostettler Kramarsch & partner, Zurich, based on shareholders’ expectations (external perspective, 8.5% WaCC).

the shares concerned will be awarded in april 2015, based on actual performance in the corresponding reference period. once awarded, the shares will not be subject to any further vesting period.

the Lti plan is intended to provide the company’s top management with a further incentive to contribute to the success and business health of the Kuoni Group, and thereby enhance the Group’s market value, to the benefit of its shareholders. the plan should also enable the company’s top management to participate in the Kuoni Group’s long-term success.

in the event of a change of control of the company, the present compen sation system excludes on principle the conclusion of any generous “golden parachute” agreements. apart from any possible legal obligations, the system also excludes any kind of severance payments in the event of termination of employment.

Contractual obligations dating from 2005 exist in respect of one member of the Group Executive Board. under these obligations, should the employment be terminated by the employer, the Group Executive Board member concerned will receive six monthly salaries plus one monthly salary for every year of their age after age 47 until age 56.

no share options have been issued since 2005.

the Kuoni Group’s compensation programmes have been designed to ensure that they are comparable and competitive with those of a benchmark group of other world-class corporations of similar rank and renown which are also constantly on the lookout for manage-ment talent worldwide.

288


the total compensation (including basic salary, incentives and fringe benefits) paid to members of the Group Executive Board is deter-mined with due regard to a market comparison conducted by Mercer Zurich management consultants. this comparison considers com-parable roles of international corporations of comparable size from all industry sectors. Mercer Zurich was not commissioned with any further services by Kuoni travel Ltd. in 2012.

■■■■ VaLuE-BasED ManaGEMEnt

the value-based management approach at the Kuoni Group is founded on the “economic profit” concept. this aims to keep top management aligned as closely as possible to creating long-term added value on behalf of the Group’s owners. the central management perfor-mance indicator here is known as Kuoni Economic profit or KEp. KEp is calculated from net operating profit after tax (nopat) less the average cost of capital invested in operations. the Group-level weighted average cost of capital (WaCC) has been set at a sustainable rate of 8.5%, which was calculated by ifBC aG, Zurich. ifBC aG, Zurich had no further mandate at Kuoni travel holding Ltd. in the year under review.

specific WaCC rates that accommodate economic and currency considerations have also been set for the Group’s individual divisions and markets. nopat divided by the average capital invested in operations gives return on invested capital (RoiC), which is compared with the WaCC for the Kuoni Group and/or its constituent units to determine value-adding performance.

Kuoni has integrated this value-based management approach found-ed on the KEp performance indicator into its entire management process, to ensure that it has a sustainable value-adding effect. to this end, planning and budgeting, performance measurement, internal and external communications and the long-term incentive (Lti) compensation for senior management staff have all been consistently adapted to the sustainable value-adding philosophy.

02_04_10_05

289



a KEp target which reflects investors’ expectations of a return on their invested capital that is appropriate to their investment risk is set as part of the annual strategic planning process. Based on Kuoni’s enterprise value, a KEp target is set for the Group as a whole whose achievement will provide the company’s shareholders with a return on their investment that is at least as high as Kuoni’s capital costs (8.5% WaCC).

the KEp and RoiC for the Kuoni Group are calculated every quarter and compared with the corresponding budgeted and prior-year figures as an integral part of the reporting process. the development of KEp over time (known as “delta KEp”) and changes in the differ-ence between RoiC and WaCC reveal the value added by the Group as a whole and its divisions. Linking these results to the operational value drivers of turnover growth, cost efficiency and capital efficiency also reveals how such value was achieved.

the presentation of KEp and RoiC trends for the Kuoni Group is a key part of Kuoni’s external communications with financial analysts and investors. this clearly and bindingly illustrates the Kuoni Group’s focus on sustainable value creation to the outside world.

the provision of a long-term incentive plan based on the absolute achievement of KEp targets provides senior management with an attractive incentive that is firmly aligned to ensuring sustainable value creation within the Kuoni Group.

■■■■ CoMpEnsation

■■■■ CoMpEnsation to MEMBERs of thE BoaRD of DiRECtoRs

for their service in 2012, the members of the Board of Directors received the compensation shown in the table below.

the aggregate compensation paid to the members of the Board of Directors in 2012 amounted to Chf 1.8 million (2011: Chf 1.6 million).

02_04_10_06

290


no compensation was paid in 2012 to any members of the Board of Directors who had left in the prior period or earlier. Kuoni travel holding Ltd. and its Group companies had not granted any collateral, loans, advances or credits to members of the Board of Directors or to persons associated with them as at 31 December 2012. no options were allo cated in the year under review.

Basic cash compensation

(fixed)

Share-based compensation

(fixed) 1Social security

contributions Total

CHF 1 000Number of

shares CHF 1 000 CHF 1 000 CHF 1 000

2012 Henning Boysen, Chairman 274 755 210 29 513Heinz Karrer 128 347 97 15 240Jae Hyun (Jay) Lee 84 227 63 10 157John Lindquist 84 227 63 10 157Adrianus (Adriaan) Nühn 84 227 63 10 157David Schnell 157 378 105 0 262Annette Schömmel 84 227 63 10 157Raymond D. Webster 82 227 63 8 153

Total 977 2 615 727 92 1 796

2011 Henning Boysen, Chairman 276 593 210 30 516Wolfgang Beeser 98 214 76 9 183Heinz Karrer 112 237 84 13 209John Lindquist 84 178 63 10 157David Schnell 157 297 105 0 262Annette Schömmel 84 178 63 10 157Raymond D. Webster 84 178 63 10 157

Total 895 1 875 664 82 1 641

1 The shares were valued at a market value of CHF 278 (2011: CHF 354). The market value calculated includes a 16% discount in view of the shares’ restricted availability at the time of their assignment.

291



■■■■ CoMpEnsation to thE GRoup ExECutiVE BoaRD

the nCC’s general authorities for determining the compensation to be paid to the members of the Group Executive Board are specified on page 284. the aggregate compensation to the members of the Group Executive Board in 2012 amounted to Chf 9.7 million (2011: Chf 7.8 million). the highest individual total compensation in 2012 amounted to Chf 2.7 million (2011: Chf 2.1 million).

the compensation shown includes basic salaries for 2012 and the variable compensation payable for the 2012 business year. share-based compen sation includes the registered shares B assigned for 2012, which will be modified and awarded based on actual performance in a subsequent three-year reference period. the registered shares B awarded in 2012 from the share-based compensation for 2010 are presented in footnote 3.

apart from this, no compensation was paid to any Group Executive Board member who had left in the prior period or earlier. neither Kuoni travel holding Ltd. nor its Group companies had granted any collateral, loans, advances or credits to any member of the Group Executive Board or to any persons associated with them as at 31 December 2012. no options were allocated in the year under review.

292


2012 CHF 1 000



Basic cash compensation (fixed) 3 397 940Variable compensation: * in cash 2 2 134 670* in shares 3 2 710 789Pension scheme contributions 4 655 111

Social security contributions 791 151Other compensation amounts 39 6Termination benefits 0 0

Total 9 726 2 667

2011 CHF 1 000



Basic cash compensation (fixed) 3 234 900Variable compensation: * in cash 6 659 232* in shares 7 2 617 714Pension scheme contributions 4 662 110Social security contributions 638 114Other compensation amounts 39 6Termination benefits 0 0

Total 7 849 2 076

1 Five members.

2 The members of the Group Executive Board were paid STI variable compensation in cash form of CHF 0.7 million in 2012 for the prior-year period. The cash-form variable compensation paid to CEO Peter Rothwell amounted to CHF 0.2 million.

3 The members of the Group Executive Board were assigned 11 822 registered shares B in the 2012 business year. These shares were valued at a market price of CHF 229. The market value calculated includes a 16% discount in view of the shares’ restricted availability at the time of their assignment. The share- based compen sation for 2012 will be awarded at the end of the three-year reference period in spring 2015. A total of 6 264 registered shares B (worth

CHF 2.1 million) were awarded to members of the present Group Executive Board in 2012 from the share-based compensation assigned in 2009. (Since CEO Peter Meier was not appointed to the Group Executive Board until 2010, he was not awarded any such shares in 2012.) For share-based compensation in 2009 2 221 registered shares B (CHF 0.7 million) were paid to Peter Rothwell in 2012.

4 One member of the Group Executive Board is entitled to take early retirement in accordance with the regulations of the “Patronale Fürsorgestiftung”. The non-contribution-based costs of the corres ponding benefits are included in the pension fund contributions shown. The corresponding regulations have not been extended to any new Group Executive Board member since 2005.

5 Five members.

6 The members of the Group Executive Board were paid STI variable compensation in cash form of CHF 1.1 million in 2011 for the previous year. The cash-form variable compensation paid to CEO Peter Rothwell amounted to CHF 0.4 million.

7 The members of the Group Executive Board were assigned 8 975 registered shares B in the 2011 business year. These shares were valued at a market price of CHF 292. The market value calculated includes a 16% discount in view of the shares’ restricted availability at the time of their assignment. The share-based compensation for 2011 will be awarded at the end of the three-year reference period in spring 2014. No shares were awarded in 2011.

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■■■■ shaRE oWnERship

■■■■ BoaRD of DiRECtoRs anD GRoup ExECutiVE BoaRD

02_04_10_07

Registered share B as at 31 December Other equity instruments

Number of shares Voting rights Number of shares Voting rights

2012 Board of Directors

Henning Boysen, Chairman 5 038 0.10% 0 Heinz Karrer 1 514 0.03% 0 Jae Hyun (Jay) Lee 227 0.00% 0 John Lindquist 1 373 0.03% 0 Adrianus (Adriaan) Nühn 227 0.00% 0 David Schnell 2 805 0.06% 0 Annette Schömmel 953 0.02% 0 Raymond D. Webster 1 573 0.03% 0 Wolfgang Beeser 1 1 052 0.02% 0

Group Executive Board Peter Rothwell 1 716 0.03% 0 Leif Vase Larsen 1 207 0.02% 0 Stefan Leser 5 178 0.10% 0 Rolf Schafroth 2 573 0.05% 0 Peter Meier 1 0.00% 0

Total 25 437 0.51% 0 0%

2011 Board of Directors 0 Henning Boysen, Chairman 4 283 0.09% 0 Wolfgang Beeser 1 052 0.02% 0 Heinz Karrer 1 167 0.02% 0 John Lindquist 1 146 0.02% 0 David Schnell 2 647 0.05% 0 Annette Schömmel 1 326 0.03% 0 Raymond D. Webster 1 346 0.03%

Group Executive Board 0 Leif Vase Larsen 808 0.02% 0 Stefan Leser 3 329 0.07% 0 Rolf Schafroth 1 768 0.04% 0 Peter Meier 1 0.00% 0

Total 18 873 0.38% 0 0%

1 Member of the Board of Directors who left the company during 2012.

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■■■■ BoaRD of DiRECtoRs (non-ExECtuVE MEMBERs onLy)

■■■■ GRoup ExECtuVE BoaRD (CuRREnt)


no blocking period 8 366 6 279blocking period 2012 0 2 907blocking period 2013 1 906 1 906blocking period 2014 1 875 1 875blocking period 2015 2 615 0


no blocking period 10 675 5 757blocking period 2012 0 149

29502_financial report agenda

agenda 02_05

■■■■ the financial Report and the information on Corporate Governance constitute an integral part of the Kuoni Group annual Report.

■■■■ this annual Report is also available in German. the German original shall prevail.

■■■■ Der Geschäftsbericht ist auch in deutscher sprache erhältlich. Massgebend ist der deutsche originaltext.

■■■■ aGEnDa 2013

the Kuoni Group will be providing information on its further business performance on the following dates: half-year-results 22 august 2013 nine-month Business update 07 november 2013

the annual General Meeting will take place on 17 april 2013 at: Renaissance Zurich tower hotel turbinenstrasse 20, 8005 Zurich 10:00 a.m. (door opening 09:30 a.m.)

■■■■ inVEstoR RELations

Laurence Bienz Kuoni travel holding Ltd. neue hard 7, Ch– 8010 Zurich tel + 41 (0)44 277 45 29 fax + 41 (0)44 277 40 31 [email protected]

02_05_01

kuoni gb12 financialreport en 2012

Documents

outbound kuoni europe

outbound emerging markets

outbound nordic

kuoni travel

turnover outbound europe

group travel

ebita outbound europe

ebit outbound europe