02 financialreport complete e 0

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50 [ 3.000.000 ]

49 [ 40.000.000 ]

48 [ 660.000 ]

43 [ 90.000 ]

45 [ 1963 ]

40 [ 34.000 ]

39 [ 21 ]37 [ 2.856.000 ]

47 [ 7.000 ]

44 [ 44 ]

31 [ 952.000 ]

38 [ 163 ]36 [ 11 ]35 [ 63 ]

33 [ 7.000 ]

28 [ 9 ]

34 [ 100 ]

25 [100 ]

30 [ 240.261 ]

21 [ 24 ] 19 [ 90 ]

18 [ 12 ]

12 [ 100.000.000 ] 14 [ 38.400 ]

10 [ 1 ]

22 [ 350485 ]

24 [ 3.400.000 ]

32 [ 20 ]

27 [ 16.300 ]

16 [ 106 ]17 [ 58 ]

13 [ 14 ]

05 [ 632 ]

08 [ 47.2 ] 6 [ 250.000 ] 07 [ 400 ]

03 [ 4.038.286 ]

02 [ 41.000.000 ]

01 [ 11.000 ]

04 [ 66 ]

09 [ 1972 ]

23 [ 7 ]

26 [ 87 ]

29 [ 1.546 ]

41 [ 526 ]

46 [ -14.9 ]

15 [ 3 ]

11 [ 23.501 ]

20 [ 8.636.034 ]

42 [ 2.404 ]

FINANCIAL REPORT

0 2 F I N A N C I A L R E P O R T

K U O N I A N N U A L R E P O R T # 2 0 1 1

K U O N I G R O U P

[ Average number of employees in 2011 ][ Visa applications by VFS Global in 10 years ][ Customers worldwide ][ Kuoni hotels in the Maldives ][ Pages in annual report ][ Images in global picture archive ][ Daily number of Japanese visiting Paris with Kuoni ][ Average age of group management ][ Year of stock exchange listing ][ Group CEO ][ Pages in Swiss catalogues ][ Rail kilometres travelled by CH rail specialists in 2011 ][ Flagship Stores ][ Annual number of employee meals at Kuoni headquarters ][ Company-owned aircraft / Novair ][ Years in the travel business ][ Background stories on the groups intranet page in 2011 ][ Opening of remodelled Kuoni travel stores in Switzerland ][ Kuoni hotels with Travelife Award ][ Visa applications by VFS Global in 2011 ][ Kuoni Academy training centres in India ][ Security number of Kuoni registered shares B ][ Members of the Board of Directors ][ Google search results ][ % of CO2-compensated business trips by employees ][ Destinations ][ Tonnes of waste recycled by Kuoni/myclimate in Bali ][ Pages in the Kuoni Code of Conduct ][ Children supported by Kuoni projects ][ Kuoni Facebook Likes ][ Number of registered shares A ][ Kuoni No. 1 Travel Bags ][ Dinners in Burj al Arab organised by Kuoni in 2011 ][ Kuoni travel stores in Switzerland ][ Countries where the Kuoni Group is active ][ Times in a row Worlds Leading Tour Operator ][ Number of registered shares B ][ Number of Kuoni travel stores worldwide ][ Volunteering offers by Kuoni Switzerland ][ GTS clients: travel agencies, tour organisers, online portals ][ VFS Global Visa Centres worldwide ][ Employees of VFS Global ][ Hotels available on Octopus.com ][ % of women in middle and senior management ][ Kuoni opens its first branch in Japan ][ % of US dollars drop against the CHF in 2011 ][ Overnight stays in Italy with GTS per day ][ GTS division bookings in 2011 ][ Daily queries in GTS databases ][ Annual overnight stays of GTS groups in Europe ]

010203040506070809101112131415161718192021222324252627282930313233343536373839404142434445464748495050 facts and figures for the Kuoni Group in 2011

0 2 F I N A N C I A L R E P O R T

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Corporate Governance 258

Introduction 259

Group Structure and Shareholders 260

Capital Structure 261

Board of Directors 268

The Group Executive Board 280

Compensation, Shares and Loans 281

Shareholders Participation Rights 282

Changes of Control and

Defence Measures 285

Auditors 286

Information Policy 287

Compensation Report 292

Appendix 312

Agenda 2012 313

FinAnciAl RepoRt 132

Kuoni Principles (2) 133

The topic of Continuity 134

Comment Financial Report (Group) 136

Five-Year Summary of Key Data 158

Pro Forma Figures 162

Kuoni Group 166

Statement of Financial Position 167

Income Statement 168

Statement of Comprehensive Income 169

Statement of Changes in Equity 170

Statement of Cash Flows 171

Accounting Principles 172

Notes to the Consolidated

Financial Statements 179

Principal Subsidiaries and Associates 230

Report of the Statutory Auditor 234

Kuoni Travel Holding Ltd. 238

Statement of Financial Position 239

Income Statement 240

Notes 241

Board of Directors Proposal for the

Appropriation of Retained Earnings 253

Report of the Statutory Auditor 254

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1 Kuoni has been helping to shape the travel industry since 1906 and it has always focused on meeting cus-tomers needs, expanding its services and staying ahead of the times. A pro-nounced commitment to service is a firmly established part of the com-panys tradition.

The prerequisites for the company and the environment in which it operates may change, but Kuonis reliability as a tour operator makes it a safe bet, of-fering its customers certainty, trans-parency and honesty. This continuity is still one of Kuonis distinguishing factors, forming a solid foundation for the future of travel.

Kuoni PrinciPles (2)

Business comes and goes.+

Unlike a company rooted in tradition, but existing in time.

=

Its name stands for only one thing: continuity.1

Financial rePort


K u o n i G R o u p


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nuity.Conti committed to continuity.Over the course of more than a hun-dred years Kuoni has coped with nu-merous negative influences and re-sponded early to trends as they have emerged. To master crises and keep moving forward, it is vital to take a flexible approach to changing market situations and requirements, and to invest in areas with potential for the future. Kuoni does this, guided by con-stant, timeless values such as reliabi-lity, passion and authenticity.

2011 was another year characterised by negative external influences. There was political turmoil in Arabic coun-tries, a serious earthquake followed by a tsunami and a nuclear disaster in Japan, floods in parts of Thailand and a debt crisis in Europe. Tourism has always been dependent on external fac-tors that vary from year to year. Wheth-er its political turbulence, environ-mental disaster or economic change, Kuoni keeps to its principles, reacts re-sponsibly to the challenges that come, invests, acts anticyclically when it has to, and always does its best to produce sustainable, profitable results.

Kuoni is here For the long term.

Travel (ling)

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K u o n i G R o u p


The United Nations World Tourism Or-ganization (UNWTO) has projected the following regional growth rates for international arrivals in 2011 (source: UNWTO, January 2012):

Europe: 6.0%

Asia-Pacific: 5.6%

Americas: 4.2%

Africa: 0.0%

The Middle East: 8.0%

Worldwide: 4.4%

The International Monetary Fund (IMF) has projected global economic growth of 3.8% for 2011 (source: IMF World Economic Outlook Update, Janu-ary 2012), 1.4 percentage points less than the previous year. Once again, the emerging nations were the prime growth drivers (China 9.2%, India 7.4%, Russia 4.1%, Brazil 2.9%), though even these countries faced a less posi-tive economic climate than they had enjoyed in 2010. Growth in the deve-loped markets (Switzerland 1.9%, USA 1.8%, euro zone 1.6%, UK 0.9%) was clearly compromised by the current debt crisis.

investors and consumers. Against this background, the emerging markets continued to be the driving force of global economic growth. The uncertainties over the ramifications of the government debt crisis in Europe had a number of negative effects, including increased volatility in the exchange rates of various currencies against the Swiss franc, which reached new highs in euro and US dollar terms until the Swiss National Bank intervened on 6 September.

GloBAl touRiSt SectoR deFieS muted economic GRoWtH

Despite a worldwide economic situation that was far from bright and despite further unforeseen unfavourable events, the global tourism sector showed largely positive trends. The United Nations World Tourism Organization (UNWTO) expects international arrivals for 2011 to show a 4.4% growth (source: UNWTO, January 2012), continuing the general recovery of the tourist sector that was first felt the previous year. The tsunami and subsequent nuclear crisis in Japan as well as the political upheavals in North Africa and the Arabian Peninsula all had a tangible effect on the tourism sector. Higher costs, meanwhile especially through rising oil prices weighed heavily on the already narrow margins of the fiercely competitive leisure travel segment. The political developments in North Africa also help explain the regional shifts in recent market growth, which has seen a narrowing in rates between mature and emerging markets after the latter had served as the prime mover in global tourism development over the past few years. With the exception of the Middle East and North Africa, all the worlds regions reported positive tourism growth. Arrivals in Europe saw an above-average increase, as Southern Europe attracted more tourists seeking alternative destinations in the light of the unrest in North Africa and the Arabian Peninsula. Asia, too, posted a positive overall trend, despite the Japanese disaster.

SuBStAntiAl incReASe in tuRnoVeR And eARninGS

The Kuoni Group delivered an encouraging business performance for 2011 in a very challenging market environment. Thanks to increased turnover and despite the one-off costs associated with the acquisition and integration of Gullivers Travel Associates (GTA), the net result for the year was a clear improvement on 2010. With the depressed general economic climate and the political upheavals in the Arab world, the market environment proved far from easy in 2011, especially for European tour operating activities. Nevertheless, the Kuoni Group posted turnover for the year of CHF 5111 million, a 28% nominal increase on 2010. The effect of a strongly appreciating Swiss franc eroded 8.3% of the Group turnover. Acquisitions raised Group turnover by 35%. Organic turnover growth amounted to 1.2%, and was driven by the continued sizeable expansion of business within Division Destinations and in the Groups Asian and VFS Global activities. Earnings before interest and taxes (EBIT) amounted to CHF 74.2 million, a 27% improvement on the CHF 58.4 million of the previous year. EBIT net of the costs of the investment and cost-reduction programme, ordinary amortisation of acquisition-related intangible assets and the one-off costs associated with the acquisition and integration of GTA, stood at CHF 168.9 million (compared to CHF 127.1 million in 2010). The net Group result for the year amounted to CHF 33.3 million (compared to CHF 23.2 million for 2010).

RiSinG unceRtAintieS on tHe FinAnciAl mARKetS SloWinG

GloBAl economic GRoWtH

Global economic development slowed substantially in the course of 2011. The loss of momentum can be attributed to a number of negative influen-ces in the first half-year, such as the civil unrest in North Africa and the Arabian Peninsula, the devastating earthquake and tsunami in Japan (and the ensuing critical situation at the Fukushima nuclear power plant) and the uncertainties on the financial markets deriving from Europes debt crisis. Fears of a possible return to recession in the worlds developed markets prompted a sizeable loss of confidence among

business year 201102_01_ Financial rePort


K u o n i G R o u p


Lime Travel AB (acquired effective 1 March 2011) is one of Swedens lead-ing providers of luxury travel arrange-ments. The company generated annual turnover of around CHF 9.3 million in 2010.

www.limetravel.se

Gullivers Travel Associates (GTA) (ac-quired effective 1 May 2011) is a global leader in the rapidly-expanding online travel services market. GTA reported a turnover volume of CHF 1865 million for the 2010 business year.

www.gta-travel.com

Group turnover of CHF 5111 million by activity

Group turnover of CHF 5111 million by segment

worlds financial markets. The Swiss franc, a traditional safe haven currency, gained in value against all of Kuonis main foreign currencies in cost and revenue terms, reducing consolidated turnover for the period. The impact of currency movements eroded some CHF 329 million or 8.3% of the turnover for the year.

Consolidated turnover for 2011 totalled CHF 5111 million, a 28% improvement on the prior-year period. Organic growth (i.e. excluding currency effects and the impact of acquisitions) amounted to 1.2%.

54%Tour OperatingBusiness

46%Destination

ManagementServices

18%Scandinavia

10%UK & Benelux

13%Switzerland

46%Destinations

7%Asia

6%Southern Europe

tHe Kuoni GRoup: tuRnoVeR GRoWtH in ASiA

And At diViSion deStinAtionS

The Kuoni Group increased its turnover substantially in 2011 compared to prior-year levels. Business showed broadly positive development, though substantial differences were seen in the performances of the Groups various regions and activities. Division Destinations reported particularly positive trends and a further increase in turnover from its existing Kuoni Destination Management activities. The new businesses acquired, Gullivers Travel Associates (GTA), also added substantially to the divisions turnover volume. Strong increases were witnessed, too, in the Groups Asian leisure travel business. And VFS Global, the Group subsidiary that specialises in providing administrative consular services, saw another significant expansion of its business activities. On a less positive note, the repercussions of the Arab Spring, declines in both consumer confidence and disposable incomes, high currency fluctuations as well as the uncertain economic outlook all combined to depress the European leisure travel business.

Turnover development in 2011 was influenced exceptionally strongly by Kuonis acquisition activities and the strength of the Swiss franc. The first of these acquisitions, made a substantial contribution to the turnover growth. Kuoni acquired the business of Lime Travel AB of Sweden effective 1 March; with economic effect as of 1 May Kuoni acquired London- based Gullivers Travel Associates (GTA), which has since been assimi- lated into Division Destinations within the Kuoni Group. Extrapolated to the full-year period, the acquisitions executed by Kuoni in the course of 2011 add CHF 1829 million to annual consolidated turnover. The aggregate purchase price for all acquisitions combined amounted to CHF 619 million. The acquisitions added CHF 1355 million to Group turnover in 2011, an increase of 35%.

Currency movements were the second major influence on Group turnover trends. The 2011 business year was characterised by exceptional volatility in foreign exchange rates, as a result of the uncertainty on the

> Comment Financial Report (Group) > Comment Financial Report (Group)

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K u o n i G R o u p


Division Northern Region consists of Kuoni Scandinavia (Sweden, Norway, Denmark, Finland, Russia and the Novair airline, plus the Playitas vaca-tion resort in Spain) and Kuoni United Kingdom & Benelux. The division gen-erated turnover of CHF 1465 million in 2011 (2010: CHF 1640 million).

Scandinavia generated turnover of CHF 958 million (2010: CHF 1045 mil-lion).

Kuoni United Kingdom generated turnover of CHF 402 million (2010: CHF 477 million).

Kuoni Benelux generated turnover of CHF 105 million (2010: CHF 118 mil-lion).

Turnover for individual markets (CHF million) 2010 2011

diViSion noRtHeRn ReGion: tuRnoVeR mAintAined At

pRioR-yeAR leVelS

Kuoni Scandinavia sustained an 8.3% decline in turnover for the year to CHF 958 million, principally as a result of currency movements. In local-currency terms, business volumes for Kuonis Nordic operations were maintained broadly at prior-year levels, despite the relatively severe impact of the political upheavals in North Africa. The source markets of Sweden, Norway and Denmark and business in the newly-tapped Finnish market were spared major damage thanks to flexible capacity management. Novair, the airline operated by Kuoni Scandinavia, was forced to suspend its services to North Africa for several weeks in spring, but swiftly found alternative destinations such as the Canary Islands for the aircraft concerned. The tour operating business of Russia-based Megapolus Tours was substantially reduced in the course of the year, with the high-risk charter airline business abandoned entirely from the start of the summer season. These actions significantly reduced turnover from the Groups Russian market activities, but greatly reduced the operations risks, too. Thanks to its redevelopment as a state-of-the-art sports and family resort, the Playitas complex on Fuerteventura in the Canary Islands was able to tangibly increase its occupancy and turnover volume.

Kuoni United Kingdom & Benelux posted turnover of CHF 507 million for the year, a 15% decline on 2010 that can be primarily ascribed to the tangible weakening of the euro and the British pound against the Swiss franc. As well as Pounds decline, business in the UK market was depressed by a clear deterioration in consumer mood and a slump in vacation demand. The political upheavals in Egypt, one of its important destinations, also negatively affected UK business. Beside, Kuonis UK operation did enlarge its network of own sales offices from 12 to 21, and also expanded its partnerships with various travel agents. For Kuoni Benelux (which is active in the Netherlands and Belgium), the turnover decline was due solely to currency movements. The fall in business volumes via external travel agencies (which was caused by a decision to focus on the organisations own sales offices) was offset through the

The Kuoni Group positions itself as a global and service orientated travel provider that is active in leisure travel services (which accounts for 51% of its turnover), destination management services (which generates 46% of Group turnover) and Visa services (accounting for 3% of turnover). Destination management services increased its share of total Group turnover significantly in 2011, largely as a result of the acquisition of GTA. Kuonis Asian activities also continued their recent trend of accounting for an increasingly higher proportion of total Group turnover. Within the Kuoni Group portfolio, however, the turnover generated remained broadly spread among the Groups three divisions and their various markets. The year also saw a further increase in the inter-nationalisation of the Groups leisure travel business.

Net of currency movements, the Division Southern Region and Destinations divisions improved on their prior-year performances in turnover terms. But Division Northern Region and Division Southern Region both sustained declines in their business volumes as a result of the Swiss francs strength. The overall positive trend was driven largely by continued strong growth in the Groups destination management business, in the external consular services offered by VFS Global and in Kuonis Asian tour operating activities.

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K u o n i G R o u p


Division Southern Region comprises Kuoni Switzerland, Kuoni Southern Europe (France, Italy and Spain) and Kuoni Asia (India including VFS Global and China/Hong Kong). The division achieved turnover of CHF 1386 mil-lion in 2011 (2010: CHF 1468 million).

The strength of the Swiss franc against the euro prompted business to be lost to providers outside Switzerland: some to travel agencies in neighbour-ing countries (Germany in particular) and some to online booking portals of-fering euro-denominated deals to the Swiss market.

Kuoni France generated turnover of CHF 196 million (2010: CHF 245 mil-lion).

Kuoni Italy generated turnover of CHF 94 million (2010: CHF 92 million).

Kuoni Spain generated turnover of CHF 15 million (2010: CHF 18 million).

Kuoni India generated turnover of CHF 325 million (2010: CHF 271 mil-lion). This includes VFS Global with a share of CHF 176 million (2010: CHF 156 million).

For a description of the VFS Global business model, please see Page 120.

Kuoni China/ Hong Kong generated turnover of CHF 45 million (2010: CHF 46 million).

business being conducted via external travel agencies proved a clear disadvantage. In view of this, Kuoni France endeavoured to focus on direct sales by expanding its own sales office network. Kuoni Italy raised its turnover year-on-year thanks to the addition of specialist operator Best Tours Italian business activities. The new acquisitions cultural trips to Egypt were, however, especially severely affected by the local political upheavals. After opening new sales offices, Kuoni Spain was able to maintain its annual turnover almost at prior-year levels in local- currency terms.

The Asia region, which consists of Kuoni India and Kuoni Hong Kong/China, achieved a substantial increase in turnover, in a highly favourable business and market environment. The annual turnover of CHF 370 million was not only a 17% improvement on the CHF 316 million of 2010; it was a further record result. Kuoni India saw a substantial increase in its tour operating business, thanks to further market ex-pansion and despite the adverse impact of the Indian rupees weakening against the Swiss franc. Kuoni Indias business-to-business activities, which offer travel products to Indian companies and organisations, raised their passenger volumes by some 50%. The direct customer business also posted significantly higher turnover, thanks largely to the further expansion of the local sales network. In addition to its traditional travel businesses, Kuoni India also reported a tangible increase in the turnover generated by its VFS Global subsidiary, which offers external consular services, as a result of new contractual agreements with various government authorities. VFS Global now provides its services for 37 governments in 62 countries. Kuonis leisure travel company in China/Hong Kong delivered a highly encouraging performance for 2011 in a favourable economic environment. By expanding its product portfolio and by swiftly and flexibly realigning its product offer in response to the tsunami in Japan and the political upheavals in North Africa, Kuoni China/Hong Kong achieved an annual turnover result that was a tangible improvement on 2010 in local-currency terms.

opening of new Kuoni retail outlets and the acquisition of Best Tours Belgian operations.

diViSion SoutHeRn ReGion: ASiA AGAin tHe pRime GRoWtH dRiVeR

Kuoni Switzerland generated turnover of CHF 712 million in 2011, an 11% decline on the prior-year period. The political unrest in Egypt, Tunisia and Morocco adversely affected vacation travel demand in the Swiss market, too. The suspension of leisure travel flights to Egypt and Tunisia had a major impact on business levels: Egypt in particular has been a key Swiss travel destination, especially in the winter season. The slump in business to the countries concerned was only partially offset through new bookings and rebookings for the Canary Islands and from spring onwards to Greece and Turkey. While the strength of the Swiss franc had a basically positive impact on demand in the Swiss market for travel products, this benefit was restricted as it was for many Swiss tour operators by a substantial increase in customers preferring to make their bookings at travel agencies across the border in neighbouring countries or via foreign online portals offering euro-denominated products. Kuoni Switzerlands specialist travel brands also suffered turnover declines, with Africa, Intens Travel and Manta Reisen (diving) particularly hard hit by the developments in the Arab world. Railtour and Frantour, Kuonis two rail travel specialists, continued to face a tough business environment. Results for Northern Europe specialist Kon- tiki, however, were a tangible improvement on the previous year, when business had been severely affected by the Icelandic volcanic eruption.

All Kuonis country organisations in Southern Europe felt the twin impact of the upheavals in North Africa and the bleak economic situation in the euro zone. With consumer mood still depressed, unemployment levels high and tough price competition being waged in the tour operating sector, business volumes for 2011 were down on their prior-year levels. The CHF 305 million turnover for the year was a 14% decline (or 3.8% in local currency). Business at Kuoni France was especially hard hit by the unrest in North Africa. In a consolidating market, the high proportion of


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K u o n i G R o u p


Division Destinations consists of Kuoni Destination Management and Gullivers Travel Associates (GTA), which was acquired in the course of 2011. The division generated turnover of CHF 2405 million for the year (2010: CHF 1017 million), and achieved or-ganic growth (excluding acquisitions and currency factors) of 13%.

MICE stands for meetings, incentives, conferences and events. Kuonis MICE business organises conferences, con-gresses and trade fairs of all kinds for companies and other institutions, along with incentive travel arrange-ments that form part of employees bonus schemes.

Having posted a sound recovery the previous year, Destination Management India & South Asia saw its turnover decline 10% to CHF 72 million in 2011, as a result of currency exchange factors. In local- currency terms, the unit raised its turnover 7.7% year-on-year, despite the difficult economic conditions in its key European source markets.

Destination Management Africa raised its annual turnover 3.0% to CHF 57 million. The growth stemmed largely from East Africa, which saw a surge in demand for individual travel products and smaller lodges on various safari tours. The stronger business here offsets the currency-related declines in business volumes in South Africa and Namibia, the units two further regions.

2011 business at Destination Management Asia-Pacific was severely affected by the flooding in Thailand, Vietnam, Cambodia and Australia. Despite these setbacks, however, the annual turnover of CHF 88 million was a 4.7% improvement on the previous year net of currency factors.

KuoniS GRoSS pRoFit SuBStAntiAlly incReASed,

But AcQuiSitionS pRompt decline in GRoSS pRoFit mARGin

Kuoni achieved a gross profit for 2011 of CHF 1026 million the first time the company has exceeded the CHF 1 billion threshold in its corporate history. The result is a 18% improvement on the previous year. Acquisitions accounted for 23% of the gross profit growth, while currency movements depressed gross profit by 8.9%.

diViSion deStinAtionS: oRGAnic GRoWtH And GtA AcQuiSition

BooSt BuSineSS VolumeS

For Division Destinations, the prime event of 2011 was the Kuoni Groups acquisition and integration of Gullivers Travel Associates (GTA), which added a further CHF 1346 million to the divisional turnover. If the acquisition had been effected as of 1 January 2011, GTA would have added a further CHF 472 million to the divisions turnover for the year. Business at Division Destinations existing destination management operations saw overall positive trends in all regions, though the corresponding results were muted by adverse currency movements. The division posted turnover for the year of CHF 1059 million, a 4.2% increase on its 2010 equivalent.

Destination Management Europe, the divisions largest constituent unit, raised its turnover 6.7% to CHF 494 million, with the Far East source markets showing particularly strong growth. This, together with the Kuoni Connect business-to-business hotel database launched in 2009, helped offset the slump in volumes from Japan following the tsunami disaster and the subsequent nuclear power plant problems.

The strongest organic growth within the division was seen at Desti- nation Management Middle-East, which increased its turnover from the CHF 116 million of 2010 to CHF 140 million. The higher business volume was driven by greater demand for individual travel products and by the previous years acquisition of the Gulf Dunes and Reem Tours companies.

Destination Management USA generated turnover of CHF 215 million for the year. With the US dollar losing almost 15% of its value, the units Swiss-franc turnover volume was broadly in line with prior-year levels in Swiss francs terms. The volume growth in local-currency terms was due primarily to rising turnover from Kuoni Connect and to strong growth in the MICE sector.


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K u o n i G R o u p


Gross Profit for individual markets (CHF million)

2010 2011

As part of its groupwide investment and cost-reduction programme, Kuo-ni has taken action to accelerate its transformation process and enhance its infrastructure, with a special em-phasis on expanding and refining its market- and customer-focused distri-bution channels (e-business and its own sales outlets).

Kuonis workforce (full-time equiva-lents) was at 12104 as per end of the year (2010: 9048).

saw a slight increase in its gross profit margin after raising the direct-sales share of its UK business. In Southern Europe, the new sales offices in France and Spain had a similarly beneficial effect. Kuoni Switzerland further improved its gross profit margin, too, thanks to the positive effects of realigning the product mix and achieving better capacity utilisations (also at its specialist operators). The margins at Kuoni Asia declined, owing largely to higher direct costs in the tour operating segment. Over- all gross profit margin for Kuoni Destination Management remained at its 2010 level. The higher margins achieved through the sizeable increase in demand in the Europe target market were offset by margin declines at other destinations and the adverse impact (in margin terms) of GTAs acquisition.

SuBStAntiAlly-incReASed eBit ReSult deSpite one-oFF GtA

AcQuiSition coStS

Having achieved both organic and (in particular) acquisition-related business growth in the course of the year, the Kuoni Group saw its nominal operating costs increase in 2011 over their prior-year levels. At the same time, however, operating cost efficiency was further improved through a range of actions that included optimising and auto-mating various business processes.

The 2011 income statement includes non-recurring costs of the acquisition and integration of Gullivers Travel Associates (GTA), which amounted to CHF 11.3 million and CHF 8.9 million respectively. The investment and cost-reduction programme initiated in 2009 was concluded as planned at the end of 2011. The costs of the programme amounted to CHF 36 million (compared to CHF 40 million for 2010). A total of CHF 106 million was spent on the programme over its three- year duration.

Average Kuoni Group workforce numbers rose 26% in 2011, from 8772 to 11048 full-time equivalents. The increase was due largely to the acquisition of Gullivers Travel Associates (GTA), the strong growth in

The Kuoni Group posted a gross profit margin for 2011 of 20.1%. The decline from the prior-year level of 21.9% is due to the acquisitions effected in the course of 2011. Gullivers Travel Associates (GTA), the biggest of these, had a particularly strong impact on gross profit margin for the year, since the company operates a highly automated large- volume business with substantially lower margins than those of Kuonis traditional activities. In organic terms, Kuoni slightly increased its gross profit margin, thanks largely to the expansion of VFS Globals consular services business.

Gross profit margin trends showed wide variations from unit to unit and within the Groups various business segments. The Scandinavian leisure travel business faced sizeable flight overcapacities attributable at least in part to strong expansions among low-cost carriers. Regional gross profit margin was also dented by the need to repatriate vacationers following the suspension in spring of all flights to North Africa. Gross profit margin for Kuonis Russian activities was tangibly increased following the abandonment of the high-risk charter business in favour of a stronger focus on individual travel arrangements. The Playitas sports and family resort on Fuerteventura also achieved a much-improved gross profit margin, thanks in particular to the higher occupancies recorded following completion of the hotels refurbishment. Kuoni UK & Benelux

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K u o n i G R o u p


EBIT net of the costs of the investment and cost-reduction programme, the planned amortisation of acquisition-related intangible assets and the one-off costs of acquiring and integrating GTA) amounted to CHF 168.9 million (2010: CHF 127.1 million).

EBIT was raised 28% by organic growth. The declines in the exchange rates of all relevant foreign currencies against the Swiss franc eroded 18% or CHF 10 million from the EBIT figure. Acquisitions had a 17% positive impact on the EBIT result.

Earnings before interest and taxes (EBIT) (CHF million)

Group EBIT by market/division (CHF million) 2010 2011

In accordance with international ac-counting principles, goodwill is not amortised. It is, however, subjected an-nually to an impairment test to deter-mine its current value.

FuRtHeR impRoVement in net GRoup ReSult

The net group result amounted to CHF 33.3 million. The increase on the prior year was driven by the strong improvement in consolidated EBIT and an improved financial result. Tax expense was higher, however, owing to the increase in operating profit.

The Kuoni Group reported a net financial result of CHF 9.4 million, a tangible improvement on the CHF 18 million of 2010. This is due largely to the fact that the prior-year result was more strongly influenced by non-operational foreign exchange differences and by underlying profits and losses deriving from the valuation of long-term balance-sheet items. The prior-year result also included one- time costs of CHF 3.1 million incurred through the attempts to acquire ET-china. Interest expense in 2011 was substantially higher, owing primarily to financing costs associated with the Gullivers Travel Asso- ciates (GTA) acquisition.

Tax expense amounted to CHF 31 million (2010: CHF 17 million). The average weighted tax rate was higher than the long-term average, because the mix of different tax rates for profit and loss results had a net upward effect on the tax rate as a whole. The fact that acquisition

-20-10

010203040506060.0

50.0

40.0

30.0

20.0

10.0

0.0

-10.0

-20.0






8.3 8.1

4.48.9

42.248.6

43.9

28.5

8.22.9

21.2

47.6

the Groups Asian business and the further expansion of VFS Global and its activities.

As a result of the acquisition-driven increase in turnover and the organic growth at Division Destinations and in Asia, the Kuoni Group substantially raised its earnings before interest and taxes (EBIT) result for 2011. Despite the one-off costs of acquiring and integrating GTA, the CHF 74.2 million EBIT recorded for the year was a CHF 15.8 million or 27% improvement on the CHF 58.4 million of 2010.

As in previous years, all three divisions made a positive contribution to the overall EBIT achieved. The declines in all key foreign currencies against the Swiss franc in the course of 2011 did, however, have a tangible effect on the consolidated EBIT result. The acquisition of Gullivers Travel Associates (GTA) made a positive impact in EBIT terms; and Kuonis Asian activities and almost all the units within Division Destinations substantially improved their earnings performances. With declining volumes in the European tour operating business, Kuoni Scandinavia, UK & Benelux, Switzerland and Southern Europe saw year-on-year declines in their EBIT contributions.

0255075

100125150175200200

175

150

125

100

75

50

25

0

EBITReported

Acquisition& Integration

Costs GTA

UnderlyingEBIT

InvestmentProgramme

AmortisationIFRS 3

74.2

38.8

20.2 168.9

35.7 148.7


02_01_


K u o n i G R o u p


The effective capital increase, net of costs and the effect of own shares was at CHF 235 million.

KEP is calculated from net operat-ing profit after tax (NOPAT) less the cost of capital invested in operations. Group-level capital costs have been set at a sustainable rate weighted average cost of capital (WACC) of 8.5%. Specific capital cost rates have also been set for the Groups individual divisions and markets that accommodate the cor-responding economic and currency considerations.

Earnings per registered share B (CHF)

The statement of comprehensive in-come includes the net Group result and all further capitalised value ad-justments which are not shown on the income statement under IFRS provi-sions. These include market-value ad-justments to financial instruments (CHF 19 million) and currency trans-lation differences (CHF 64 million). The biggest currency translation dif-ferences derived from the translations of the balance sheets of Kuoni Group subsidiaries reporting in GBP, EUR and SEK, of USD-denominated intra-group loans of an equity nature and of CHF-denominated intragroup loans to subsidiaries with other functional currencies.

and Southern Europe; and the further expansion of VFS Globals activities entailed additional tangible-asset investments. The capital spending effected under the groupwide investment and cost-reduction programme was substantially lower than in 2010.

The Kuoni Group held cash and cash equivalents of CHF 376 million at the end of 2011, a decline of some CHF 300 million from their prior-year level. Cash flow from operating activities decreased to CHF 101 million and includes a one-off negative seasonal effect deriving from the acquisition of Gullivers Travel Associates (GTA). The fact that the GTA acquisition was financed not only with equity and loans but also with available cash has substantially reduced liquid-fund levels. Advance payments from customers rose from the CHF 352 million of 2010 to CHF 373 million. The Group reported a net debt position of CHF 306 million at year-end (compared to a net cash position of CHF 67 million at the end of 2010).

The Kuoni Groups equity was increased substantially in 2011, from CHF 562 million to CHF 775 million. A CHF 257 million rights issue was conducted in association with the Gullivers Travel Associates (GTA) acquisition. The equity funds generated were used to part-finance the acquisition, with the remainder of the CHF 615 million purchase price financed via a syndicated credit facility. This increased the companys debt levels; but the balance sheet equity ratio remains on 31% a high value for the travel sector that reflects the Kuoni Groups sound balance-sheet policy.

Kuoni economic pRoFit FuRtHeR impRoVed, deSpite one-oFF

neGAtiVe eFFectS

The Kuoni Groups value-based management approach is intended to keep top management aligned as closely as possible to creating sus-tainable added value. The central management performance indicator here is known as Kuoni Economic Profit or KEP.

costs could not be used for tax reduction purposes also impacted negatively on the tax rate for the year.

Earnings per registered share B amounted to CHF 9.22 (2010: CHF 7.43). The Board of Directors will recommend to the Annual General Meeting of Shareholders of 17 April 2012 that the profit for the year be partly distributed in the form of a withholding tax-free appropriation of the newly-established capital contribution reserve. The amount paid should also comply with the broad parameters of the Kuoni Groups long-term profit distribution policy. The Board of Directors will therefore ask the Meeting to approve a withholding tax-free distribution of CHF 0.60 per registered share A and CHF 3.00 per registered share B for the 2011 business year (2010: CHF 0.50/2.50). The payout factor resulted at 34% (2010: 31%).

Total comprehensive income for 2011 amounted to CHF 12 million (prior year: CHF 17 million).

Solid cASH FloW eVen AFteR GtA AcQuiSition

Capital spending on tangible and intangible assets in 2011 amounted to CHF 57 million, and was primarily on IT. The investment amount was a CHF 14 million increase on the CHF 43 million of 2010. A large part of the extra spending derived from the acquisition of Gullivers Travel Associates (GTA) in the course of the year. Kuoni also invested in expand-ing and refurbishing its branch office networks in the UK, Benelux

0

10

20

30

40

50

60

2007 2008 2009 2010 2011

60.0

50.0

40.0

30.0

20.0

10.0

0.0

46.452.7

0.17.4 9.2


02_01_


K u o n i G R o u p


NOPAT divided by the average capi-tal invested in operations gives return on invested capital (ROIC), which is compared with WACC for the Kuoni Group and/or its constituent units to determine value-adding performance.

ROIC (%)

The International Monetary Fund (IMF) forecasts global economic growth of 4.0% for 2012 (source: IMF World Economic Outlook, September 2011) the same level as is expected for 2011. In making its projection, the IMF expects the substantial recovery in Japan (in particular) and a slight economic recovery in the USA to off-set the decline in Europes economic momentum.

Kuoni economic profit (CHF million)

Return on invested capital (ROIC) for 2011 amounted to 3.3%. Excluding the costs of the investment and cost-reduction programme, ROIC stood at 5.6% for the year.

BASed on GloBAl FocuS Kuoni eXpectS to Be ABle to pARtici-

pAte in tHe GRoWtH pARticulARly in ASiA in 2012

After a relatively favourable first half-year, the last six months of 2011 saw a slowdown in business growth and momentum. The numerous crises and events that occurred in the course of the year had a tangible impact on the global economy, which continues to be plagued by sizeable uncertainty and offers only cloudy prospects for the immediate future. Based on the most recent prognoses available, the year is likely to see further weak growth in global GDP terms. Economic growth in Europe is expected to feel the pinch of the financial policies now being implemented in response to the debt crisis. Growth rates projected for 2012 in emer-ging economies are likely to be slightly below prior year, though these nations should continue to serve as a powerful motor for further global economic expansion.

Key Figures (CHF million) 2011 2010

Net operating profit after tax (NOPAT) 40.9 40.2Average invested capital 1 233.4 748.2Return on invested capital (ROIC) 3.30% 5.40%Weighted average capital costs (WACC) 8.50% 8.50%ROIC WACC spread 5.10% 3.1%Kuoni Economic Profit (KEP) 47.4 23.3Delta KEP 24.1 40.9

-5

0

5

10

15

2020.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

2007 2008 2009 2010 2011

17.0%18.8%

0.1%

5.4%3.3%

Kuoni has integrated this value-based management approach based on the KEP performance indicator into its entire management process, to ensure that it has a sustainable effect. To this end, planning and budget-ing, performance measurement, internal and external communications and the long-term variable-compensation models applicable to senior management positions have all been consistently adapted to the sustain-able value-creation philosophy.

Kuoni Economic Profit declined in 2011 from CHF 23.3 million to CHF 47.4 million. The increase in turnover volumes and the improve-ment in operating earnings performance were more than offset by higher capital interest costs. With the acquisition of Gullivers Travel Associates (GTA), the Kuoni Groups average invested capital increased 65% from CHF 748 million to CHF 1233 million, prompting a corresponding sizeable rise in its capital costs.

-80-60-40-200

2040608080.0

60.0

40.0

20.0

0.0

-20.0

-40.0

-60.0

-80.0

2007 2008 2009 2010 2011

60.471.9

64.3

23.3

47.4


02_01_


K u o n i G R o u p


Turnover (CHF million)

EBIT and net result (CHF million) EBIT Net result

0

1000

2000

3000

4000

5000

6000

2007 2008 2009 2010 2011

6000

5000

4000

3000

2000

1000

0

4699 4855

3894 3984

5111

-50

0

50

100

150

200200.0

150.0

100.0

50.0

0.0

-50.0

2007 2008 2009 2010 2011

139.5 135.7150.4 151.0

15.1

58.4

23.21.6

74.2

33.3

For the tourist sector, the United Nations World Tourism Organiza-tion (UNWTO) expects further growth in global international tourism, though at more modest rates. The UNWTO is currently projecting growth of 3% to 4% for 2012 as a whole (source: UNWTO, January 2012).

Continuing economic growth is leading to a further increase in standards of living, especially in Asian source markets, and this is having a positive effect on Kuoni Groups relevant business activities. By contrast, the effects of the European debt crisis, including the effect on consumer sentiment in the European tour operating sector, are still hard to predict. Based on the latest trading figures for the first weeks of the current year, Kuoni is confident about 2012. The further expansion through the acquisition of Gullivers Travel Associates (GTA) of the Kuoni Groups position particularly in the Asian market will make a positive contribution to the development of the Kuoni Group. The integration of GTA and the adoption of the new group structure will be further pursued in 2012.

Kuoni will continue to pursue its present growth strategy. Kuoni aims to increase its business volumes at rates that are above the general market average, through a combination of targeted acquisitions and its own organic growth. In doing so, and by continuously enhancing its business processes, Kuoni will ensure further earnings improvements. Kuoni will also remain true to its strategy of low vertical integration. The Group will continue to focus on its core travel competence, with a particular strong positioning in growth markets, in Destination Man-agement services and in online business. By offering a broadly-based portfolio of services that are closely tailored to individual needs, by selectively promoting and developing contemporary sales channels and by practising strict cost management, Kuoni aims to ensure that it continues to create added financial value.


02_01_

156 | 157 K u o n i A n n u A l R e p o R t # 2 0 1 1fig. 1: Blossoming season of the rapeseed fields between limestone hills in Luoping in the east of the province of Yunnan.

remote Placeswithin reach.


K u o n i G R o u p


02_02_ oF Key DataFive-year summary

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 Invested capital is the average annual total of all net current assets, tangible fixed assets, goodwill actually paid (less any impairments effected) and other net assets (excluding interest-bearing assets and liabilities). In the case of GTA, invested capital was calculated for the full 12-month period: the corresponding reduction in view of GTAs shorter eight-month ownership period (i.e. from 1 May 2011) was effected via capital costs (see footnote 3).

2 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

3 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 for the eight-month period following its acquisition on 1 May 2011.

4 Proposal of the Board of Directors to the General Meeting of Shareholders on 17 April 2012. Subject to definitive approval by the General Meeting of Shareholders.

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

6 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.

7 As at 31 December 2011.

CHF million 2011 2010 2009 2008 2007

Turnover 5 111 3 984 3 894 4 855 4 699Total Northern Region 1 465 1 640 1 664 2 017 1 970Scandinavia 958 1 045 1 012 1 193 1 004UK & Benelux 507 595 652 824 966

Total Southern Region 1 386 1 468 1 462 1 871 1 856Switzerland 712 797 821 1 028 1 001Southern Europe 305 355 374 539 558Asia 370 316 267 304 297

Destinations 2 405 1 017 894 1 101 1 009Corporate 0 0 0 0 0

EBIT 74.2 58.4 15.1 150.4 139.5Total Northern Region 31.4 52.1 14.5 61.2 84.3Scandinavia 28.5 43.9 5.3 29.0 38.9UK & Benelux 2.9 8.2 9.2 32.2 45.4

Total Southern Region 47.8 46.1 33.5 80.8 55.9Switzerland 8.1 8.3 1.5 39.4 19.7Southern Europe 8.9 4.4 6.1 18.9 20.1Asia 48.6 42.2 25.9 22.5 16.1

Destinations 47.6 21.2 15.5 38.5 32.0Corporate 52.6 61.0 48.4 30.1 32.7

Net result 33.3 23.2 1.6 151.0 135.7Investments in tangible fixed assets and intangible assets 57.2 43.3 44.2 59.5 53.2Depreciation and amortisation 92.8 54.9 52.4 49.2 56.3Cash flow (net cash from operating activities) 101.1 117.0 46.7 108.7 256.9Net cash 306.4 66.6 59.3 88.0 88.8

Non-current assets 1 576 773 827 809 795Current assets 923 1 048 1 025 919 1 142Equity 775 562 592 606 607Equity ratio 31.0% 30.9% 32.0% 35.1% 31.3%Non-current liabilities 415 302 319 98 115Current liabilities 1 309 957 941 1 024 1 216Total assets 2 499 1 821 1 852 1 728 1 937

Invested capital1 1 233 748 760 701 711Return on Invested Capital (ROIC)2 3.3% 5.4% 0.1% 18.8% 17.0%Kuoni Economic Profit (KEP)3 47.4 23.3 64.3 71.9 60.4

Average number of personnel (FTE) 11 048 8 772 9 070 9 797 8 826Total Northern Region 1 683 1 693 1 757 1 878 1 725Scandinavia 915 984 1 021 1 122 992UK & Benelux 768 709 736 756 733

Total Southern Region 5 329 4 692 4 914 5 557 5 052Switzerland 1 107 1 166 1 190 1 426 1 434Southern Europe 545 503 546 718 789Asia 3 677 3 023 3 178 3 413 2 829

Destinations 3 867 2 262 2 264 2 256 1 950Corporate 169 125 135 106 99

CHF million 2011 2010 2009 2008 2007

Cash flow (net cash from operating activities) Per registered share A 5.87 8.15 3.26 7.60 17.62Per registered share B 29.33 40.76 16.31 38.01 88.11

Net result Per registered share A 1.84 1.49 0.02 10.54 9.27Per registered share B 9.22 7.43 0.08 52.68 46.36

Equity Per registered share A 44.43 38.57 40.67 41.74 41.33Per registered share B 222.14 192.84 203.37 208.70 206.67

Dividend Per registered share A 0.6045 0.505 1.60 2.00 3.40Per registered share B 3.0045 2.505 8.00 10.00 17.00

Total dividend payout 11 995 2006 7 235 672 22 956 088 28 631 310 48 737 640

Nominal value reduction 0 0 0 0 0

Payout ratio 34.2% 31.2% >100% 19.0% 35.9%

Yield (at year end rate) 1.33% 0.55% 2.29% 2.78% 2.88%

Registered share A (Nominal value CHF 0.20) Number outstanding 1 249 500 952 000 952 000 952 000 985 600Number entitled to dividend 1 249 500 952 000 952 000 952 000 985 600Stock 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 2 856 000 2 856 000 2 856 000 2 956 800Number entitled to dividend 3 551 6387 2 682 529 2 679 111 2 672 731 2 669 800Stock market prices high 439 459 387 616 784low 213 294 253 290 517at year-end 225 454 349 360 590Annual trading volume in CHF million 839 787 697 1 447 1 931

Stock market capitalisation as at 31 December in CHF million 900 1 383 1 063 1 097 1 861

160 | 161 K u o n i A n n u A l R e p o R t # 2 0 1 1fig. 2: The monsoon-eroded ridges of the Makran Coast along the Indian Ocean in Iran at the Pakistani border.

heeDing the calloF the great wiDe oPen.


K u o n i G R o u p


02_03_

> Pro Forma FiguresPro Forma Figures

CHF Mio. 2011 2010 2009 2008 2007

Nettoerls 5 111.3 3 983.6 3 893.6 4 855.0 4 698.6Outbound Europe 2 098.7 2 285.1 2 320.7 2 930.1 2 948.5Outbound Nordic 929.5 978.7 957.1 1 092.1 979.0Outbound Kuoni Europe 1 169.8 1 307.0 1 364.2 1 838.6 1 970.9

Global Travel Services 1 843.8 489.6 415.2 601.1 526.0Groups 788.9 n.a. n.a. n.a. n.a.FIT (Fully Independent Traveller) 1 070.1 n.a. n.a. n.a. n.a.

Emerging Markets & Specialists 1 286.0 1 323.6 1 264.1 1 463.5 1 364.5Specialists 900.4 954.6 949.6 1 067.2 1 046.3Emerging Markets 221.9 226.2 192.7 281.3 247.1VFS Global 176.4 156.2 129.3 123.4 74.8

Corporate 0.0 0.0 0.0 0.0 0.0

EBITA 113.0 72.2 30.3 162.8 152.0Outbound Europe 24.4 55.8 25.2 115.1 107.4Outbound Nordic 35.2 55.8 21.7 45.8 42.4Outbound Kuoni Europe 10.8 0.0 3.5 69.3 65.0

Global Travel Services 62.1 6.5 5.1 18.2 16.7Groups 19.0 n.a. n.a. n.a. n.a.FIT (Fully Independent Traveller) 63.3 n.a. n.a. n.a. n.a.Acquisition and integration cost 20.2 0.0 0.0 0.0 0.0

Emerging Markets & Specialists 79.1 70.9 48.4 59.6 60.6Specialists 35.4 38.8 37.1 52.0 46.3Emerging Markets 1.8 4.3 9.7 10.6 0.5VFS Global 41.9 36.4 21.0 18.2 13.8

Corporate 52.6 61.0 48.4 30.1 32.7

EBIT 74.2 58.4 15.1 150.4 139.5Outbound Europe 20.3 53.0 22.4 112.6 106.0Outbound Nordic 33.9 54.7 20.5 44.6 41.5Outbound Kuoni Europe 13.6 1.7 1.9 68.0 64.5

Global Travel Services 36.7 6.1 4.9 17.8 16.7Groups 13.4 n.a. n.a. n.a. n.a.FIT (Fully Independent Traveller) 43.5 n.a. n.a. n.a. n.a.Acquisition and integration cost 20.2 0.0 0.0 0.0 0.0

Emerging Markets & Specialists 69.8 60.3 36.2 50.1 49.5Specialists 26.6 28.9 25.5 43.3 35.5Emerging Markets 1.3 5.0 10.3 11.4 0.2VFS Global 41.9 36.4 21.0 18.2 13.8

Corporate 52.6 61.0 48.4 30.1 32.7


in the lightoF the unKnown.

fig. 3: The limestone hills along the Li River downstream from Guilin epitomise the beauty of the Chinese landscape.


02_04_ Kuoni grouP

K u o n i A n n u A l R e p o R t # 2 0 1 1

K u o n i G R o u p

166 | 167

Assets CHF 1 000 Notes 31 Dec 2011 % 31 Dec 2010 %

Non-current assets Tangible fixed assets (13) 200 799 8.0 180 108 9.9Goodwill (14) 939 778 37.6 383 064 21.0Other intangible assets (15) 347 336 13.9 114 160 6.3Investments in associates (16) 11 562 0.5 13 077 0.7Other financial assets (17) 42 273 1.7 42 269 2.3Deferred taxes (23) 34 146 1.4 39 861 2.2

Total non-current assets 1 575 894 63.1 772 539 42.4

Current assets Cash and cash equivalents (18) 288 861 11.6 587 898 32.3Time deposits (19) 86 874 3.5 86 368 4.8Accounts receivable / other receivables (20) 366 934 14.7 210 094 11.5Prepaid expenses 180 349 7.1 164 042 9.0

Total current assets 923 018 36.9 1 048 402 57.6

Total assets 2 498 912 100.0 1 820 941 100.0

02_04_01_

Statement of financial PoSition

Equity and liabilities CHF 1 000 Notes 31 Dec 2011 % 31 Dec 2010 %

Equity Share capital (21) 3 998 0.2 3 046 0.2Treasury shares (21) 17 163 0.7 3 943 0.2Reserves 779 047 31.1 554 417 30.4

Equity attributable to shareholders of Kuoni Travel Holding Ltd. 765 882 30.6 553 520 30.4

Non-controlling interests (21) 8 728 0.4 8 874 0.5Total equity 774 610 31.0 562 394 30.9

Liabilities Provisions (22) 19 819 0.8 18 208 1.0Deferred taxes (23) 97 118 3.9 39 438 2.2Financial debts (24) 298 068 11.9 243 897 13.4

Total non-current liabilities 415 005 16.6 301 543 16.6

Financial debts (24) 11 391 0.4 11 761 0.6Accounts payable (25) 306 881 12.3 234 566 12.9Advance payments by customers 372 718 14.9 352 006 19.3Accrued expenses (25) 618 307 24.8 358 671 19.7

Total current liabilities 1 309 297 52.4 957 004 52.5

Total liabilities 1 724 302 69.0 1 258 547 69.1

Total equity and liabilities 2 498 912 100.0 1 820 941 100.0


K u o n i G R o u p


02_04_03_

statement oF comPrehensive income

CHF 1 000 Notes 2011 2010

Net result 33 345 23 178

Other comprehensive income

Realised gains or losses from cash flow hedges transferred to income statement (21) 10 599 4 930Recognised gains or losses from cash flow hedges (21) 14 396 12 208Translation differences (21) 64 162 35 285Income taxes on other comprehensive income (21) 6 499 1 893

Total other comprehensive income 45 666 40 670

Total comprehensive income 12 321 17 492

Of which: Attributable to non-controlling interests 1 574 1 955Attributable to shareholders of Kuoni Travel Holding Ltd. 13 895 19 447

02_04_02_

income statement

CHF 1 000 Notes 2011 % 2010 %

Turnover (3/4) 5 111 325 100 3 983 645 100.0

Direct costs 4 085 654 79.9 3 110 494 78.1Gross profit (3/5) 1 025 671 20.1 873 151 21.9

Personnel expense (6) 524 675 10.3 459 553 11.5Marketing and advertising expense 82 560 1.6 91 788 2.3Other operating expense (7) 251 443 4.9 208 578 5.2Depreciation and amortisation (8) 92 807 1.8 54 869 1.4

Earnings before interest and taxes (EBIT) (3/9) 74 186 1.5 58 363 1.5

Financial income (10) 6 673 0.1 4 591 0.1Financial expense (10) 16 068 0.3 22 926 0.6

Result before taxes 64 791 1.3 40 028 1.0

Income taxes (11) 31 446 0.6 16 850 0.4Net result 33 345 0.7 23 178 0.6

Of which: Attributable to non-controlling interests 1 550 0.0 1 863 0.0Attributable to shareholders of Kuoni Travel Holding Ltd. 31 795 0.7 21 315 0.6

Basic earnings per registered share B in CHF (12) 9.22 7.43 Diluted earnings per registered share B in CHF (12) 9.22 7.43

Basic earnings per registered share A in CHF (12) 1.84 1.49 Diluted earnings per registered share A in CHF (12) 1.84 1.49


K u o n i G R o u p


02_04_05_

statement oF cash Flows

For further details see notes 28 and 29.

CHF 1 000 Notes 2011 2010

Cash flow from operating activities Net result 33 345 23 178Depreciation and amortisation (8) 92 807 54 869Changes in provisions and deferred taxes 5 293 1 755Other non-cash expenses and income 1 610 14 369Changes in net working capital Accountsreceivable/otherreceivables 26 146 11 934 Prepaidexpenses 2 9 863 Accountspayable/accruedexpenses 1 001 14 371 Advancepaymentsbycustomers 46 487 33 773

Net cash from operating activities (cash flow) 101 125 117 008

Cash flow from investing activities Purchase of tangible fixed assets (13) 36 035 25 414Purchase of other intangible assets (15) 21 157 17 930Acquisition of subsidiaries, net of cash and cash equivalents acquired (2) 607 591 15 230Disposal of tangible fixed assets 1 889 1 907Increase in time deposits (net) 792 90 756Investment in associates (16) 402 1 958Decrease in other financial assets (net) 629 2 522

Net cash used in investing activities 663 459 146 859

Cash flow from financing activities Decrease of borrowings (net) 51 032 5 428Sale of treasury shares 0 1 143Share capital increase 234 513 0Changes in ownership interests 0 910Dividend to non-controlling interests 1 720 1 360Dividend to shareholders of Kuoni Travel Holding Ltd. 7 236 22 956

Net cash from financing activities 276 589 29 511

Effects of exchange rate changes on cash and cash equivalents 13 292 13 119

Net decrease in cash and cash equivalents 299 037 72 481

Cash and cash equivalents at beginning of year 587 898 660 379

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

02_04_04_

statement oF changes in equity

1 For further details see note 21.

CHF 1 000Share

capitalTreasury

sharesCapital

reservesRetained earnings

Other reserves1

Total equity of Kuoni

shareholders

Non- controlling

interestsTotal

equity

Equity as at 1 January 2010 3 046 6 775 196 120 562 567 172 293 582 665 9 067 591 732

Net result 21 315 21 315 1 863 23 178Other comprehensive income: Realisedgainsorlosses

from cash flow hedges transferred to income statement 4 930 4 930 4 930

Recognisedgainsorlosses from cash flow hedges 12 208 12 208 12 208

Translationdifferences 35 377 35 377 92 35 285 Incometaxesonother

comprehensive income 1 893 1 893 1 893Total comprehensive income 21 315 40 762 19 447 1 955 17 492

Dividends 22 956 22 956 1 360 24 316Sale of treasury shares 140 1 003 1 143 1 143Use of treasury shares 2 692 9 545 12 237 12 237Changes in ownership interests 122 122 788 910

Equity as at 31 December 2010 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: Realisedgainsorlosses

from cash flow hedges transferred to income statement 10 599 10 599 10 599

Recognisedgainsorlosses from cash flow hedges 14 396 14 396 14 396

Translationdifferences 64 186 64 186 24 64 162 Incometaxesonother

comprehensive income 6 499 6 499 6 499Total 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


K u o n i G R o u p


historical cost are translated at the ex-change rate on the date of the transac-tion. Non-monetary assets and liabili-ties in foreign currencies that are stated at fair value are translated at the ex-change 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 financial statements of foreign subsidiaries are prepared in their func-tional currency. Assets and liabilities (including goodwill and fair-value adjustments) of foreign subsidiaries are translated to CHF at year-end ex-change rates. Revenue, expenses and cash flow amounts are translated at weighted average ex change rates. For-eign exchange differences arising from the translation of foreign subsidiaries are recognised directly in equity as a translation difference.

tuRnoVeR

The Group renders a wide range of trav-el services. The revenue from render-ing these services is recognised in the income statement at the time when the significant risks and rewards are trans-ferred to the customer. This is gener-ally the case on the date of departure or, in the case of destination manage-ment 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 lei-sure travel retailing.

employee BeneFitS

Wages, salaries, social security con-tributions, paid vacation and sick-ness-related absences, bonuses and

The full consolidation method is used, under which all assets, liabilities, in-come and expenses of the subsidiar-ies are included in the consolidated finan cial statements. The share of net assets and net profit or loss attributable to minority shareholders is presented separately as non-controlling inter-est on the consolidated statement of financial position, and separately as non-controlling interest in the con-solidated income statement.

ASSociAteS

Associates are entities in which the Group is able to exercise significant influence, but not control, over the fi-nancial and operating policies. The consolidated financial statements in-clude the Groups share of the total rec-ognised gains and losses of associates on an equity accounting basis, from the date significant influence com-mences until the date it ceases. When the Groups 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.

intRAGRoup tRAnSActionS And BAlAnceS

All intragroup transactions and bal-ances and any unrealised gains and losses or income and expenses arising from intragroup transactions are elim-inated in the consolidation process.

FoReiGn cuRRency tRAnSActionS

Transactions in foreign currencies are translated at the exchange rate on the date of the transaction. Monetary as-sets and liabilities in foreign curren-cies are translated at year-end rates. Non-monetary assets and liabilities in foreign currencies that are stated at

In future, actuarial gains and losses will be recognised immediately in

Other comprehensive income. The previous option of deferring such rec-ognition 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 exceeded 10% of the higher of the prior years fund assets or pension obliga-tions amount. As of 31 December 2011, unrecognised actuarial losses amount-ed to CHF 47 million. The adoption of the amendments 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 adop-tion of the amendments to IAS 19, in-terest on plan assets will no longer be estimated based on expected asset returns under current asset alloca-tions. In future, such interest will be based on the discount rate. The net periodic pension cost of the Kuoni Group would have been around CHF 2.7 million higher if the new provi-sions had been adopted for the 2011 business year.

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 accounting year are de-consolidated as of the date on which control ceases.

> Accounting Principles

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new interpretations:

IFRIC14:Prepaymentsofamini- mum funding requirement IFRIC19:Extinguishingfinancial liabilities with equity instruments improvementstoIFRSs(May2010)

The adoption and application of the above standards and interpretations had no effect on these consolidated fi-nancial 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 re-sults and financial situation to date. They will, however, have an impact on transactions effected on or after 1 Janu-ary 2012. This applies in particular to:

The amendments to IAS 19 Employ-ee Benefits must be adopted from 1 January 2013. From its corresponding analyses to date, the Kuoni Group ex-pects such adoption to have the follow-ing impact on its consolidated results:

with IFRS requires management to make judgements, estimates and as-sumptions that affect the application of policies and reported amounts of as-sets, liabilities, income and expenses. Actual results 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 discussed separately. The accounting policies have been applied consistently to all periods presented in these con-solidated financial statements, with the exceptions described below.

Adoption oF neW And ReViSed StAndARdS

The Kuoni Group adopted the follow-ing new and revised standards and new interpretations with effect from 1 January 2011:

Revised standards:

IAS24:RelatedPartyDisclosures IAS32:FinancialInstruments: Presentation (classifications of rights issues) IAS27:Consolidatedand Separate Financial Statements

Kuoni Travel Holding Ltd. (the Com-pany) is domiciled in Zurich. The con-solidated financial statements for the year ended 31 December 2011 cover the Company and all its subsidiaries (Kuoni Group) and associates. The Com-pany is one of Europes leading tourism companies, active in the leisure travel and destination management field. The consolidated financial statements are prepared in accordance with Interna-tional 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 instru-ments, financial assets and financial instruments available for sale, which are stated at their fair value. Non-current assets and discontinued op-erations 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

accounting PrinciPles

Effective datePlanned

applicationNew Standards or Interpretations IFRS 10 Consolidated Financial Statements 1 January 2013 Reporting year 2013IFRS 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 1 January 2015 Reporting year 2015

Revisions and amendments of Standards and Interpretations Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12) 1 January 2012 Reporting year 2012Presentation 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 2013

Disclosures Netting of Financial Assets (Amendments to IFRS 7) 1 January 2013 Reporting year 2013Netting of Financial Assets and Liabilities (Amendments to IAS 32) 1 January 2014 Reporting year 2014


K u o n i G R o u p



investments are derecognised, the cu-mulative gain or loss previously recog-nised 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 esti-mated using valuation techniques.

Time deposits (with a maturity ex-ceeding 12 months from the date of acquisition), long-term loans and other long-term receivables are stated at their amortised cost less impairment losses. Interest is recognised using the effec-tive interest rate method. The Group does not have any instruments classi-fied 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 12months from the date of acquisition), short-term loans and accounts receivable are stated at their cost less impairment losses. Impair-ment losses are recognised on an in-dividual basis, or on a portfolio basis (for accounts receivable), where there is objective evidence that impairment losses have been incurred. The allow-ance 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 in-vestments with a maturity not exceed-ing 3 months from the date of acqui-sition.

rights acquired from third parties or in a business combination. Intangible assets acquired in a business combina-tion are recognised separately from goodwill if they are subject to contrac-tual or legal rights or are separately transferable and their fair value can be reliably estimated. Intangible as-sets 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 intangi-ble assets with indefinite useful lives, except for goodwill.

GoodWill

All business combinations are ac-counted for by applying the acquisition method. Goodwill arising from the ac-quisition of a subsidiary represents the excess of the cost of the acquisition over the fair value of the net identifi-able 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 as-sociate. Purchase price adjustments prior to 1 January 2010 are still effected via goodwill.

Goodwill is stated at cost less accumu-lated impairment losses. Goodwill is tested at least annually for impairment.

FinAnciAl inVeStmentS

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

Available-for-sale investments are stat-ed 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

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 capitali-sation of subsequent costs is evaluated under the general recognition princi-ple for such assets at the time they are incurred.

Long-term leases of tangible fixed as-sets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Tan-gible 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 minimum lease payments at the inception of the lease, less accumulated depreciation and any impairment losses. The related liabilities are recognised as non-cur-rent 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 statement on a straight-line basis over the estimated useful lives of the items of tangible fixed assets (owned assets and assets under finance leases and/or components thereof) concerned. Land is not depreciated. The estimated use-ful 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, licences, trademark rights and similar

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income tAXeS

Income tax on the profit or loss for the year comprises current and deferred taxes, based on the local tax rates ex-pected to apply for each Group com-pany. Income tax is recognised in the income statement except to the extent that it relates to items recognised di-rectly in equity, in which case it is rec-ognised in equity.

Current income tax is the expected tax payable 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 lia-bility method, providing for tempo-rary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences relating to in-vestments in subsidiaries are not pro-vided for to the extent that they will probably not reverse in the foresee-able future. Deferred tax liabilities on undistributed profits of subsidiaries are recognised, unless dividend pay-ments to the ultimate Group holding company are not planned for the fore-seeable future. 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 substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that fu-ture taxable 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

Defined contribution plans: Swit-zerland, the United Kingdom, Italy, France, Sweden, Denmark, Norway, the Netherlands, Austria, the USA, India and Japan.

The plans are funded by the Groups subsidiaries (employer) and the em-ployees. Employers contributions to defined contribution plans are rec-ognised as an expense in the income statement when incurred. The Groups net obligation in respect of defined benefit pension plans is calculated separately for each plan by qualified actuaries using the projected unit cred-it method. To the extent that any cumu-lative unrecognised actuarial gain or loss of a plan exceeds 10% of the greater of the present value of the defined ben-efit obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected av-erage remaining working lives of the employees participating in the plan. Where actuarial calculations result in a sur plus, this is only recognised 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 retire-ment benefit plans. The present value of the defined benefit obligation of un-funded plans is recognised as a provi-sion 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 leas-es are provided under the accounting policy for tangible fixed assets.

non-monetary benefits are allocated to and shown in the year in which the employee provided the service con-cerned for the Kuoni Group. Where Kuoni provides long-term employee benefits, the costs are accrued to match the service to be provided by the em-ployee, 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 com-pensation, 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 corresponding income statements throughout the period until the enti-tlement 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 participa-tion plans, the compensation awarded is shown as a liability 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 retirement 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, Netherlands and Norway.


K u o n i G R o u p



The results of the Groups operating segments are regularly reviewed by the Board of Directors (as the Groups chief operating decision-maker) to de-termine how resources should be dis-tributed and performance potential assessed. Segments are managed at the EBIT level.

The segment reporting reflects the management 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 Groups six reportable segments are Scandinavia, the United Kingdom & Benelux, Switzerland, Southern Eu-rope, Asia and Destinations. These are organised into three divisions, with Destinations forming both a division and a reportable segment.

Interdivisional revenues are account-ed 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 dividing the net result attributable to Kuoni Travel Holding Ltd. sharehold-ers by the weighted average number of registered shares entitled to dividends during the year under review.

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 in-come statement as incurred.

non-cuRRent ASSetS Held FoR SAle And diScontinued opeRAtionS

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 continuing use. The asset (or disposal group) must be avail-able for immediate sale in its present condition and the sale must be highly probab

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