Kuoni Travel Holding Ltd. Half-year report 2005 - Kuoni Group

Kuoni half-year report 2005
Notes to the interim consolidated
financial statements
The unaudited interim consolidated financial statements at 30
June 2005 have been prepared in accordance with the accounting
principles set out in International Accounting Standard 34 (IAS 34)
“Interim Financial Reporting” and, being an updated version of
previously-published information, should be read in connection
with the consolidated financial statements for the business year
ended 31 December 2004. These interim consolidated financial
statements were approved for publication by the Board of Directors
on 18 August 2005.
With the exception of the changes listed below, the accounting
principles applied to and the presentation of these interim consolidated
financial statements are unchanged from those of the consolidated
financial statements for 2004. Comparable figures have
been reclassified or expanded where necessary to reflect changes
in the presentation of the interim consolidated financial statements.
The International Accounting Standards Board (IASB) issued a revised
version of IAS 32 “Financial Instruments: Disclosure and Presentation”,
a revised version of IAS 39 “Financial Instruments:
Recognition and Measurement” and a general revision of its International
Accounting Standards (IAS) which included revisions of
14 existing standards in 2003. In 2004 the IASB published standards
IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations”,
IFRS 4 “Insurance Contracts”, IFRS 5 “Non-current Assets
Held for Sale and Discontinued Operations”, revised versions of
IAS 36 “Impairment of Assets” and IAS 38 “Intangible Assets”
and further additions to IAS 39. The Kuoni Group has applied
these standards with effect from 1 January 2005. The effects of
these changes on the interim consolidated financial statements of
the Kuoni Group are presented below.
IFRS 3 “Business Combinations”: The new standard requires, inter
alia, the cessation of the systematic straight-line amortisation of
goodwill from 1 January 2005. Such amortisation of goodwill
amounted to CHF 16.3 million in the first half of 2004. In the case
of new acquisitions, identifiable intangible assets must now be
recognised separately from goodwill and must be amortised over
their expected useful lives.
The Kuoni Group has assessed the impact of the other revised and
newly-applicable standards, and has concluded that they have no
significant effect on the consolidated financial statements.
The scope of consolidation changed as a result of acquisitions and
disposals in the first six months of 2005. The most significant of
these are:
– the disposal of Kuoni Reisen GmbH, Friedrichshafen,
Germany effective 1 January 2005 and
– the acquisition of the business activities of CIT-Frantour SA,
Geneva effective 30 April 2005.
Kuoni Reisen GmbH, Friedrichshafen, Germany: Kuoni Travel
Holding Ltd. sold its German-based Kuoni Reisen GmbH subsidiary
to Otto Freizeit und Touristik GmbH. Results for of this subsidiary
were previously included within Business Area Europe.
Business activities of CIT-Frantour SA, Geneva: Kuoni Travel Holding
Ltd. acquired the business activities and the workforce consisting
of around 100 employees of CIT-Frantour SA after the company
sought “Nachlassstundung” administration and protection
from creditors under Swiss law as a result of liquidity problems.
If the creditors’ meeting (scheduled for spring 2006) approves the
proposed brand transfer, the total purchase price will amount to
approximately CHF 9 million. The company’s net assets were
acquired in May 2005.
The Kuoni Group repaid the 1% convertible bond with a nominal
value of CHF 178.6 million shown under short-term liabilities in
the first half of 2005. Although seasonal trends tend to make the
first six months the weaker half of the year in business terms, and
despite the negative net result, equity showed a positive trend
thanks to translation differences and net recognised gains on
financial instruments. No dividend was distributed to Kuoni shareholders;
but the nominal value of the Kuoni share was reduced
with a corresponding repayment to shareholders, as approved by
the 2005 Annual General Meeting. Since this was not effected
until 8 July 2005, however, the resulting change in equity is not
reflected in the first-half financial statements.
No subsequent events have occurred since 30 June 2005 which
would require adjustments to the carrying amounts of the Kuoni
Group’s assets or liabilities or would have to be disclosed here.