CLUB méditerranée Group is a leader franchise in CLUB méditerranée Group is a leader franchise in leisure villages market. leisure villages market.

Its strategy is based on modes of developement that Its strategy is based on modes of developement that require low capital investment and offer flexible, require low capital investment and offer flexible,

upscale capacity.upscale capacity.

The owner and operator of a village delegates its The owner and operator of a village delegates its management to ClubMed. management to ClubMed.

The capital expenditures and operating and The capital expenditures and operating and maintanence costs of the village are the maintanence costs of the village are the responsibility of the owner. responsibility of the owner.

In some cases Club Med could decide to make an In some cases Club Med could decide to make an investment in order to turn the hotel into a Club investment in order to turn the hotel into a Club Méditerranée Resort.Méditerranée Resort.

• Club Méditerranée charges a management Club Méditerranée charges a management fee calculated as a percentage of revenue fee calculated as a percentage of revenue and a profit-sharing fee calculated as a and a profit-sharing fee calculated as a percentage of gross operating profit. percentage of gross operating profit.

• Club Med also charges a sales and marketing Club Med also charges a sales and marketing commission. commission.

• The advantage of these contracts is that they The advantage of these contracts is that they are flexible since remuneration is based on a are flexible since remuneration is based on a percentage of revenues related to the fill percentage of revenues related to the fill rate.rate.

Financial Income statement is fundamental to Financial Income statement is fundamental to understand the difference between revenues and understand the difference between revenues and

expenses during the fiscal year.expenses during the fiscal year.

CLUB MED - CONSOLIDATED STATEMENT OF INCOME 2008 % 2009 % 2010 %Revenue - Villages (Net Sales) 1484 100,00% 1344 100,00% 1336 100,00%Total income from ordinary activities 1492 100,54% 1352 100,60% 1349 100,97%EBITDAR Villages 248 16,7% 254 18,9% 264 19,8%EBITDA Villages 100 6,7% 100 7,4% 107 8,0%Operating income- Villages 35 2,4% 36 2,7% 42 3,1%Operating income -Management of assets -8 -0,5% -29 -2,2% -14 -1,0%Other operating income and expense -15 -1,0% -27 -2,0% -15 -1,1%Operating income (EBIT) 12 0,8% -20 -1,5% 13 1,0%Finance cost, net -33 -2,2% -23 -1,7% -22 -1,6%Income (loss) before tax -21 -1,4% -43 -3,2% -9 -0,7%Net income from continuing operations -31 -2,1% -43 -3,2% -14 -1,0%Net income(loss) 2 0,1% -53 -3,9% -14 -1,0%

• WE HAVE HIGH QUICK ASSETS LEVEL WITH AN INTENSIVE FLOW WE HAVE HIGH QUICK ASSETS LEVEL WITH AN INTENSIVE FLOW CASH AND LOW CONCENTRATION OF INVENTORIES.CASH AND LOW CONCENTRATION OF INVENTORIES.

• NON-CURRENT ASSETS ARE COMPOSED MAINLY OF PROPERTY . NON-CURRENT ASSETS ARE COMPOSED MAINLY OF PROPERTY .

BALANCE SHEET IS ABOUT EVALUATING INVESTMENTS OF A FIRMBALANCE SHEET IS ABOUT EVALUATING INVESTMENTS OF A FIRM

• EQUITY OF CLUB MED CONSTITUTES 1/3 OF TOTAL LIABILITIES. EQUITY OF CLUB MED CONSTITUTES 1/3 OF TOTAL LIABILITIES. • THE FINANCIAL AUTONOMY OF THE GROUP IS SECURED BY THE FINANCIAL AUTONOMY OF THE GROUP IS SECURED BY

TOTAL LIABILITIES OF FINANCIAL AND TRADE NATURE TOTAL LIABILITIES OF FINANCIAL AND TRADE NATURE

LIABILITY AND EQUITY SECTION ALLOWS TO EVALUATE LIABILITY AND EQUITY SECTION ALLOWS TO EVALUATE THE FINANCIAL SOURCES OF THE FIRM AND FINANCIAL RISKS TAKEN.THE FINANCIAL SOURCES OF THE FIRM AND FINANCIAL RISKS TAKEN.

• Financial ratios are so important because they quantify Financial ratios are so important because they quantify many aspects of a business and they are part of many aspects of a business and they are part of financial statement analysis.financial statement analysis.

• A ratio is just one number over another number so, in A ratio is just one number over another number so, in order to judge if it is positive or negative, we have to order to judge if it is positive or negative, we have to compare it with the company’s own ratios over time to compare it with the company’s own ratios over time to verify trends (and with other companies).verify trends (and with other companies).

• Significant changes in the financial ratios during a Significant changes in the financial ratios during a period provide information to investors and managers period provide information to investors and managers for making decisions related to a firm.for making decisions related to a firm.

1.1. LIQUIDITY RATIO (the ability of a firm to meet its short-LIQUIDITY RATIO (the ability of a firm to meet its short-term obligations):term obligations):

• QUICK RATIO (QA/CL)QUICK RATIO (QA/CL)• CURRENT RATIO (CA/CL)CURRENT RATIO (CA/CL)

2. 2. SOLVENCY RATIOS SOLVENCY RATIOS (the ability of the firm to meet long-term (the ability of the firm to meet long-term obligations)obligations)

•DEBT/EQUITY RATIO DEBT/EQUITY RATIO (the ability of a firm to be solvent)(the ability of a firm to be solvent)•EQUITY RATIO EQUITY RATIO (how many euros of T. A. are supported by each (how many euros of T. A. are supported by each euro of Shareholders Equity)euro of Shareholders Equity)

• ROA indicates the product of operative margin and the ROA indicates the product of operative margin and the sales to total asset ratio.sales to total asset ratio.

• ROE measures the company’s profitability.ROE measures the company’s profitability.• TAT measures the efficency of assets in producing sales.TAT measures the efficency of assets in producing sales.• ROS indicates the company’s abilities to earn operative ROS indicates the company’s abilities to earn operative

income from sales.income from sales.

PRODUCTIVITY 2008 2009 2010ROA N.A. -1,31% 0,92%ROE N.A. -10,73% -2,85%TAT N.A. 0,8854 0,9588ROS 0,80% -1,48% 0,96%

INCOME STATEMENT:INCOME STATEMENT:•Net loss of 53 millions in 2009 and 14 millions in 2010Net loss of 53 millions in 2009 and 14 millions in 2010•Reduction of Revenues from 2008 to 2010Reduction of Revenues from 2008 to 2010

BALANCE SHEET:BALANCE SHEET:•71% of Long Term assets, quite unusual for a franchise.71% of Long Term assets, quite unusual for a franchise.•Debts represents 65% of Total Assets, as shown by EquityDebt Debts represents 65% of Total Assets, as shown by EquityDebt RatioRatio

RATIO:RATIO:•Solvency ratios are always is superior to 1, so the firm seems Solvency ratios are always is superior to 1, so the firm seems to be unsolvent.to be unsolvent.•Bad results in 2009 Productivity, partially recovered in 2010.Bad results in 2009 Productivity, partially recovered in 2010.•Negative ROE makes the firm unappealing for new SHNegative ROE makes the firm unappealing for new SH

INCOME STATEMENT: INCOME STATEMENT: •Good work on EBIT Good work on EBIT In 2010 EBIT is again positive after the In 2010 EBIT is again positive after the fall of 2009. fall of 2009.

BALANCE SHEETBALANCE SHEET•Good management of paymentsGood management of payments Only 13% out of 40% are Only 13% out of 40% are real Current Liabilities.real Current Liabilities.

RATIORATIO• The average 0,5 in Liquidity is not so bad because it takes into The average 0,5 in Liquidity is not so bad because it takes into account also the «fake» current liabilities.account also the «fake» current liabilities.•Good management of InvestmentsGood management of Investments Very good TAT for the Very good TAT for the sector.sector.•Good work on EBITGood work on EBIT ROA and ROS recovered. ROA and ROS recovered.

• IMPROVE CUSTOMERS NUMBER AND RETENTION IMPROVE CUSTOMERS NUMBER AND RETENTION -offer special prices for packages during the low season-offer special prices for packages during the low season-creation of fidelity programs-creation of fidelity programs-offer customizable holiday packages-offer customizable holiday packages-offer long stay packages at a discounted price-offer long stay packages at a discounted price

• REDUCE OR OUTSOURCE COSTLY ACTIVITIESREDUCE OR OUTSOURCE COSTLY ACTIVITIES-reduce costs related to new buildings and structure mantainance.-reduce costs related to new buildings and structure mantainance.-sell off unprofitable structures.-sell off unprofitable structures.