Financial Report 2003 (english) PDF ⢠287.26 KB - Kuoni Group
Financial Report 2003 (english) PDF ⢠287.26 KB - Kuoni Group
Financial Report 2003 (english) PDF ⢠287.26 KB - Kuoni Group
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<strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
and Corporate Governance<br />
+++ <strong>Kuoni</strong> <strong>Group</strong> +++<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
+++ <strong>Kuoni</strong> Travel Holding<br />
<strong>Kuoni</strong> Travel<br />
Ltd.<br />
Holding Ltd.<br />
+
<strong>Kuoni</strong> <strong>Group</strong>++
<strong>Kuoni</strong> <strong>Group</strong><br />
6 <strong>Financial</strong> Statements<br />
6 Income Statement<br />
7 Balance Sheet<br />
8 Cash Flow Statement<br />
9 Changes in Shareholders’ Equity<br />
10 Annex to the <strong>Financial</strong> Statements<br />
10 <strong>Group</strong> Accounting Principles<br />
15 Notes<br />
42 Principal Subsidiaries and Associates<br />
46 <strong>Report</strong> of the <strong>Group</strong> Auditors<br />
48 Six-Year Summary of Key Data<br />
<strong>Kuoni</strong> Travel Holding Ltd.<br />
52 <strong>Financial</strong> Statements<br />
52 Income Statement<br />
53 Balance Sheet<br />
54 Board of Directors’ Proposal for the Appropriation<br />
of Retained Earnings<br />
55 Notes<br />
59 <strong>Report</strong> of the Auditors<br />
Corporate Governance<br />
62 <strong>Group</strong> Structure and Shareholders<br />
63 Capital Structure<br />
66 Board of Directors<br />
69 <strong>Group</strong> Executive Board<br />
70 Compensation, Shares, Options and Loans<br />
73 Shareholders’ Right to Participate<br />
75 Changes of Control and Defence Measures<br />
75 Auditors<br />
76 Information Policy<br />
Contents<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
3
6<br />
<strong>Financial</strong> Statements<br />
Income Statement<br />
CHF 1000 Notes <strong>2003</strong> % 2002 %<br />
Turnover (5) 3 295 436 100.0 3 739 298 100.0<br />
Direct costs –2 363 928 –71.7 –2 758 513 –73.8<br />
Gross profit (6) 931 508 28.3 980 785 26.2<br />
Personnel expense (7) –464 221 –14.1 –477 468 –12.8<br />
Marketing and advertising expense –89 750 –2.7 –105 401 –2.8<br />
Other operating expense (8) –222 901 –6.8 –220 397 –5.9<br />
Depreciation (9) –52 269 –1.6 –56 859 –1.5<br />
Earnings before interest, taxes and<br />
amortisation of goodwill (EBITA) (10) 102 367 3.1 120 660 3.2<br />
Amortisation of goodwill (11) –41 231 –1.2 –45 647 –1.2<br />
Earnings before interest and taxes (EBIT) 61 136 1.9 75 013 2.0<br />
<strong>Financial</strong> income (12) 17 952 0.5 19 080 0.5<br />
<strong>Financial</strong> expense (12) –23 324 –0.7 –30 888 –0.8<br />
Gain from sale of discontinuing operations (4) 52 798 1.6 0 0.0<br />
Result before taxes 108 562 3.3 63 205 1.7<br />
Income taxes (13) –42 621 –1.3 –34 565 –0.9<br />
Result after taxes 65 941 2.0 28 640 0.8<br />
Minority interest –1 296 –0.0 –2 419 –0.1<br />
Net result (14) 64 645 2.0 26 221 0.7<br />
Pre-goodwill earnings 105 876 3.2 71 868 1.9<br />
Basic earnings per registered share B in CHF (14) 21.86 8.90<br />
Diluted earnings per registered share B in CHF (14) 21.85 8.90
Balance Sheet<br />
Assets<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
CHF 1000 Notes 31 Dec <strong>2003</strong> % 31 Dec 2002 %<br />
Non-current assets<br />
Tangible fixed assets (15) 337 391 18.3 382 750 19.5<br />
Intangible assets (15) 6 824 0.4 7 035 0.4<br />
Goodwill (15) 342 942 18.6 467 777 23.9<br />
Investments in associates (15) 3 770 0.2 9 780 0.5<br />
Other financial assets (15) 145 931 8.0 162 122 8.3<br />
Total non-current assets 836 858 45.5 1 029 464 52.6<br />
Current assets<br />
Cash and cash equivalents (16) 557 997 30.3 544 836 27.8<br />
Time deposits and securities (17) 58 729 3.2 50 240 2.6<br />
Accounts receivable (18) 109 475 6.0 137 103 7.0<br />
Other receivables (33) 225 202 12.2 121 018 6.2<br />
Prepaid expenses and accrued income 51 311 2.8 74 092 3.8<br />
Total current assets 1 002 714 54.5 927 289 47.4<br />
Total assets 1 839 572 100.0 1 956 753 100.0<br />
Liabilities and Shareholders’ Equity<br />
CHF 1000 Notes 31 Dec <strong>2003</strong> % 31 Dec 2002 %<br />
Shareholders’ equity<br />
Share capital (19) 160 000 8.7 160 000 8.1<br />
Treasury shares (19) –11 944 –0.6 –12 541 –0.6<br />
Reserves (19) 464 842 25.2 430 153 22.0<br />
Total shareholders’ equity 612 898 33.3 577 612 29.5<br />
Minority interest 1 916 0.1 8 107 0.4<br />
Liabilities<br />
Provisions (20) 73 986 4.0 106 269 5.4<br />
Deferred taxes (21) 40 458 2.2 46 116 2.4<br />
<strong>Financial</strong> debts (22) 287 511 15.7 308 069 15.7<br />
Total long-term liabilities 401 955 21.9 460 454 23.5<br />
Bank debts (23) 8 079 0.4 2 291 0.1<br />
Accounts payable (24) 299 470 16.3 324 052 16.6<br />
Advance payments by customers 256 224 13.9 267 637 13.7<br />
Accrued expenses (24) 259 030 14.1 316 600 16.2<br />
Total short-term liabilities 822 803 44.7 910 580 46.6<br />
Total liabilities 1 224 758 66.6 1 371 034 70.1<br />
Total liabilities and shareholders’ equity 1 839 572 100.0 1 956 753 100.0<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
7
8<br />
<strong>Financial</strong> Statements<br />
Cash Flow Statement<br />
CHF 1000 Notes <strong>2003</strong> 2002<br />
Cash flow from operating activities<br />
Net result (14) 64 645 26 221<br />
Minority interest 1 296 2 419<br />
Depreciation and amortisation of goodwill (9/11) 93 500 102 506<br />
Changes in provisions and deferred taxes (20/21) –19 774 –20 839<br />
Gain from partial repurchase of convertible bond 0 –3 049<br />
Non-cash effective interest on convertible bond 4 942 5 274<br />
Gain from sale of subsidiaries (3/4/12) –52 264 0<br />
Loss from investments in associates (net) (12) 5 218 11 660<br />
Other non-cash expenses and income 2 684 –852<br />
Changes in net working capital<br />
– Accounts receivable 7 107 –12 657<br />
– Other receivables/prepaid expenses and accrued income 23 531 –2 703<br />
– Accounts payable/accrued expenses –55 111 33 703<br />
– Advance payments by customers –1 406 17 508<br />
Net cash from operating activities (cash flow) 74 368 159 191<br />
Cash flow from investing activities<br />
Purchase of tangible fixed assets and intangible assets (15) –28 047 –32 548<br />
Acquisition of subsidiaries, net of cash and cash equivalents acquired (3) –2 559 –14 751<br />
Purchase price adjustment Scandinavia (15) 29 499 0<br />
Disposal of tangible fixed assets (15) 3 380 2 267<br />
Disposal of subsidiaries, net of cash and cash equivalents transferred (3) –17 396 –835<br />
Increase in time deposits and securities (net) (17) –8 686 69 954<br />
Increase in investments in associates –90 –898<br />
Increase in other financial assets (net) –1 552 –11 125<br />
Net cash used in investing activities –25 451 12 064<br />
Cash flow from financing activities<br />
Repayment of borrowings (22/23) –18 066 –11 735<br />
Use of treasury shares (19) 2 778 1 285<br />
Contributions to minorities –2 404 –1 737<br />
Dividend payout (19) –8 874 0<br />
Net cash used in financing activities –26 566 –12 187<br />
Effects of exchange rate changes on cash and cash equivalents –9 190 –18 290<br />
Net increase in cash and cash equivalents 13 161 140 778<br />
Cash and cash equivalents at beginning of year 544 836 404 058<br />
Cash and cash equivalents at end of year 557 997 544 836<br />
For further details, see note 28.
Changes in Shareholders’ Equity<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Share Treasury Capital Retained Exchange Hedging Fair value Total sharecapital<br />
shares reserves earnings differences reserve reserve holders’<br />
CHF 1000 equity<br />
Shareholders’ equity<br />
as at 1 January 2002 160 000 –12 752 157 965 311 462 –871 –4 094 2 623 614 333<br />
Net result 26 221 26 221<br />
Profits distributed 0 0<br />
Use of treasury shares<br />
Realised gains or losses on<br />
financial instruments transferred to<br />
211 1 074 1 285<br />
income statement<br />
Recognised gains or losses<br />
4 611 –254 4 357<br />
on financial instruments –22 673 –1 740 –24 413<br />
Translation differences –44 171 –44 171<br />
Shareholders’ equity<br />
as at 31 December 2002 160 000 –12 541 159 039 337 683 –45 042 –22 156 629 577 612<br />
Net result 64 645 64 645<br />
Profits distributed –8 874 –8 874<br />
Use of treasury shares<br />
Realised gains or losses on<br />
financial instruments transferred to<br />
597 2 181 2 778<br />
income statement<br />
Recognised gains or losses<br />
23 111 –55 23 056<br />
on financial instruments –26 093 1 143 –24 950<br />
Translation differences –21 369 –21 369<br />
Shareholders’ equity<br />
as at 31 December <strong>2003</strong> 160 000 –11 944 161 220 393 454 –66 411 –25 138 1 717 612 898<br />
In the year under review, the gains and losses recognised directly in equity amounted to CHF –23.3 million (2002: CHF –64.2 million).<br />
The cumulative charges recognised directly in equity (exchange differences, hedging reserve and fair value reserve) amounted to<br />
CHF 89.8 million (2002: CHF 66.6 million).<br />
For information on the share capital see note 19.<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
9
10<br />
Annex<br />
<strong>Group</strong> Accounting Principles<br />
Basis of Accounting<br />
The consolidated financial statements of the <strong>Kuoni</strong> <strong>Group</strong> have<br />
been prepared in accordance with International <strong>Financial</strong> <strong>Report</strong>ing<br />
Standards (IFRS) and comply with Swiss law.<br />
Consolidation Principles<br />
The consolidated accounts include the accounts of <strong>Kuoni</strong> Travel<br />
Holding Ltd., Zurich, and all the companies under its direct or<br />
indirect control. Control is the power to govern the financial and<br />
operating policies of an enterprise so as to obtain benefits from<br />
its activities. This is the case where the <strong>Group</strong> holds more than<br />
50% of the voting rights of an enterprise or where it has been<br />
granted management of the enterprise contractually or is exercising<br />
such de facto. The share of minority interests in shareholders’equity<br />
and in group profit is reported separately. All intragroup<br />
transactions and balances have been eliminated in the<br />
course of the consolidation. Newly-acquired companies are consolidated<br />
with effect from the actual date of their acquisition<br />
using the purchase method. Subsidiaries that have been sold are<br />
deconsolidated as of the date on which control was transferred.<br />
Minority shareholdings in associated companies (generally speaking,<br />
stakes entailing 20% to 50% of voting rights) are accounted<br />
for using the equity method. Their net assets and profit or loss for<br />
the year are taken on the basis of the associated company’s<br />
accounting policies if it is not possible to align these with the<br />
<strong>Group</strong>’s policies.<br />
Foreign Currency Transactions<br />
Transactions in foreign currencies are translated using the exchange<br />
rate on the date of transaction. Exchange gains or losses arising<br />
on foreign currency transactions are recognised as income or<br />
expense for the period. Monetary assets and liabilities denominated<br />
in foreign currencies on 31 December are translated at<br />
year-end rates. Exchange gains or losses arising on translation of<br />
these items are taken to the income statement.<br />
Consolidation of Foreign Entities<br />
The consolidated accounts are presented in Swiss francs (CHF).<br />
Assets (including goodwill) and liabilities in balance sheets prepared<br />
in foreign currencies are translated at year-end rates,<br />
income and expenses and monetary flows at the average rate<br />
for the year. Translation differences arising from the application<br />
of different exchange rates to balance sheet and income statement<br />
positions are credited or debited to group reserves.<br />
Valuation Policies and Definitions<br />
The consolidated accounts are prepared on the basis of uniform<br />
valuation policies for all group companies, which have been<br />
applied consistently. In particular, this means that<br />
– the accounts give a true and fair view of the <strong>Group</strong>’s net<br />
assets and income.<br />
– valuation policies are applied consistently. If there is any<br />
change in valuation, the effect is reflected in the result for<br />
the period.<br />
– assets are stated at historical cost. Exceptions to this are derivative<br />
financial instruments and financial assets available for sale<br />
and/or held for trading purposes which are valued on the basis<br />
of the replacement value (fair value).<br />
– income and expenses are accrued, that is, recognised as they<br />
are earned or incurred and attributed to the period to which<br />
they relate (“accrual and matching principles”).<br />
– the reporting periods of all important subsidiaries and associates<br />
close at the end of December.
Turnover<br />
The <strong>Group</strong> renders a wide range of travel services. The revenue<br />
from rendering these services is recognised in the income<br />
statement at the time when the significant risks and rewards<br />
are transferred to the customer. This is generally the case on<br />
the date of departure or in the case of Incoming activities on the<br />
date of arrival.<br />
Turnover comprises net sales revenues from the Tour Operating<br />
business (after deduction of sales taxes, discounts and commis-<br />
sions) as well as commissions received from Leisure and Business<br />
Travel retailing.<br />
Retirement Benefits<br />
In the majority of countries in which the <strong>Group</strong> operates there<br />
are retirement benefits provided by the states. Additionally,<br />
the <strong>Group</strong> has set up a number of legally independent retirement<br />
benefit plans or insurance schemes in the following countries:<br />
Defined benefit plans: Switzerland, the United Kingdom<br />
and Germany<br />
Defined contribution plans: Switzerland, the United Kingdom,<br />
Germany, Italy, France, Sweden,<br />
Denmark, Norway, the Netherlands,<br />
Austria, the USA, India and Japan<br />
They are funded by the <strong>Group</strong>’s subsidiaries (employer) and<br />
the employees. Contributions to defined contribution plans are<br />
recognised as expense when incurred.<br />
The <strong>Group</strong>’s net obligation in respect of defined benefit pension<br />
plans is calculated separately for each plan by qualified actuaries<br />
using the projected unit credit method. To the extent that any<br />
cumulative unrecognised gain or loss of a plan exceeds 10% of<br />
the greater of the present value of the defined benefit obligation<br />
and the fair value of plan assets, that portion is recognised in<br />
the income statement over the expected average remaining<br />
working lives of the employees participating in the plan. Where<br />
actuarial calculations result in a surplus, this is only recognised<br />
to the extent that the <strong>Group</strong> derives a future economic benefit<br />
in the form of a reduction in plan contributions or a refund.<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Due to local regulations, the <strong>Group</strong> maintains certain unfunded<br />
retirement benefit plans. The present value of the defined<br />
benefit obligation of unfunded plans is recognised as provision<br />
for employee benefits.<br />
Income Taxes<br />
Income tax on the profit or loss for the year comprises current and<br />
deferred taxes, calculated using tax rates enacted or substantially<br />
enacted at the balance sheet date. Income tax is recognised<br />
in the income statement except to the extent that it relates to<br />
items recognised directly in equity, in which case it is recognised<br />
in equity.<br />
Current tax is the expected tax payable on the taxable income<br />
for the year and any adjustment to tax payable in respect of<br />
previous years.<br />
Deferred tax is provided using the balance sheet liability method,<br />
providing for temporary differences between the carrying<br />
amounts of assets and liabilities for financial reporting purposes<br />
and the amounts used for taxation purposes. Differences<br />
relating to investments in subsidiaries are not provided for to the<br />
extent that they will probably not reverse in the foreseeable<br />
future. Deferred tax liabilities on undistributed profits of subsidiaries<br />
are recognised, unless dividends to the ultimate <strong>Group</strong><br />
holding company are not planned for the foreseeable future. A<br />
deferred tax asset is recognised only to the extent that it is probable<br />
that future taxable profits will be available against which the<br />
asset can be utilised. Deferred tax assets are reduced to the<br />
extent that it is no longer probable that the related tax benefit<br />
will be realised.<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
11
12<br />
Annex<br />
Tangible Fixed Assets<br />
Tangible fixed assets are stated at cost less accumulated depreciation<br />
and impairment losses.<br />
Leases in terms of which the <strong>Group</strong> assumes substantially all the<br />
risks and rewards of ownership are classified as finance leases.<br />
Tangible fixed assets acquired by way of finance lease are stated<br />
at an amount equal to the lower of their fair value and the<br />
present value of the minimum lease payments at inception, less<br />
accumulated depreciation and impairment losses. The related<br />
liabilities are contained in long- or short-term financial liabilities.<br />
The interest expense component of finance lease payments<br />
is recognised in the income statement using the effective interest<br />
rate method.<br />
Expenditure incurred to replace a component of an item of<br />
tangible fixed assets that is accounted for separately, including<br />
major inspection and overhaul expenditure, is capitalised. Other<br />
subsequent expenditure is capitalised only when it increases<br />
the future economic benefits embodied in the item of tangible<br />
fixed assets. All other expenditure is recognised in the income<br />
statement as an expense as incurred.<br />
Depreciation is charged to the income statement on a straightline<br />
basis over the estimated useful lives of items of tangible<br />
fixed assets (owned assets and assets under finance lease), and<br />
major components that are accounted for separately. Land<br />
is not depreciated. The estimated useful lives are as follows:<br />
Buildings in Switzerland 50 years<br />
Buildings outside Switzerland 20 years<br />
Ships 30 years<br />
Aircraft, 10% residual value 15 years<br />
Fixtures and equipment 10 years<br />
Fixtures and equipment at points of sale 8 years<br />
EDP hardware, office equipment and vehicles 5 years<br />
Personal computers and office machines 3 years<br />
Sport equipment and aircraft installations 2 years<br />
Intangible Assets<br />
Intangible assets comprise software acquired from third parties,<br />
licences, trademarks and similar rights. These assets are stated at<br />
cost less accumulated depreciation and impairment losses. They<br />
are depreciated straight-line over their expected useful lives but<br />
not longer than five years.<br />
Goodwill<br />
Goodwill arising on an acquisition represents the excess of the<br />
cost of the acquisition over the fair value of the net identifiable<br />
assets acquired. Goodwill arising on acquisitions made after<br />
1 January 1995 is recognised as an asset and amortised on a<br />
straight-line basis over the estimated useful life, not exceeding<br />
20 years, and is reduced by impairment losses. Before 1995<br />
goodwill was written off directly against equity. In respect of associates,<br />
the carrying amount of goodwill is included in the<br />
carrying amount of the investment in the associate.<br />
<strong>Financial</strong> Assets<br />
<strong>Financial</strong> assets comprise investments in associates, long-term<br />
investments in equity securities (minority shareholdings),<br />
loans and advances as well as prepaid pension costs from defined<br />
benefit retirement plans.<br />
Investments in associates are accounted for using the equity<br />
method. Other minority shareholdings are originally stated<br />
at cost. After initial recognition they are stated at fair value in<br />
accordance with the accounting principles described hereafter<br />
for securities available for sale (see money market investments<br />
and securities). Minority shareholdings that do not have a<br />
quoted market price in an active market and whose fair value<br />
cannot be reliably measured are stated at cost less any impairment<br />
losses. Loans and advances are measured at amortised cost<br />
using the effective interest rate method.
Cash and Cash Equivalents<br />
Cash and cash equivalents contains cash balances, postal giro<br />
and bank current accounts as well as time deposits and money<br />
market investments with a term not exceeding 90 days from<br />
acquisition.<br />
Money Market Investments and Securities<br />
Securities consist of easily realisable investments in debt and<br />
equity securities for which an active market exists as well<br />
as time deposits with a term exceeding 90 days from acquisition.<br />
The <strong>Group</strong> does not hold investments for trading purposes.<br />
All securities held by the <strong>Group</strong> are classified as being availablefor-sale<br />
and any unrealised gains and losses are recognised<br />
directly in equity. When the investment is sold, collected or<br />
otherwise disposed of, or when the carrying amount of the<br />
investment is impaired, the cumulative gain or loss recognised<br />
in equity is transferred to the income statement.<br />
Accounts Receivable<br />
Accounts receivable relate to travel services provided. They are<br />
stated at their cost less impairment losses. Impairment and uncollectability<br />
is measured for individual receivables and on a portfolio<br />
basis for groups of similar receivables.<br />
Prepayments by customers for future travel services are shown<br />
separately.<br />
Impairment<br />
The carrying amounts of the <strong>Group</strong>’s assets, other than deferred<br />
tax assets and pension assets (see separate accounting policies),<br />
are reviewed at each balance sheet date to determine whether<br />
there is any indication of impairment. If any such indication<br />
exists, the asset’s recoverable amount is estimated. An impairment<br />
loss is recognised in the income statement whenever the<br />
carrying amount of an asset or its cash-generating unit exceeds<br />
its recoverable amount.<br />
Provisions<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
A provision is recognised in the balance sheet when the <strong>Group</strong> has<br />
a legal or constructive obligation as a result of a past event,<br />
when it is probable that an outflow of economic benefits will<br />
be required to settle the obligation and when a reliable estimate<br />
can be made of the amount of the obligation. If the effect is<br />
material, provisions are determined by discounting the expected<br />
future cash flows at a pre-tax rate that reflects current market<br />
assessments of the time value of money and, where appropriate,<br />
the risks specific to the liability. A provision for onerous contracts<br />
is recognised when the expected benefits to be derived by<br />
the <strong>Group</strong> from a contract are lower than the unavoidable cost<br />
of meeting its obligations under the contract.<br />
<strong>Financial</strong> Debts<br />
Interest-bearing borrowings are recognised initially at cost, less<br />
attributable transaction costs. Subsequent to initial recognition,<br />
interest-bearing borrowings are stated at amortised cost with<br />
any difference between cost and redemption value being recognised<br />
in the income statement over the period of the borrowings<br />
using the effective interest method.<br />
Convertible bonds that can be converted to share capital at the<br />
option of the holder, where the number of shares issued does not<br />
vary with changes in their fair value, are accounted for as com-<br />
pound financial instruments, net of attributable transaction costs.<br />
The equity component of the convertible bonds is calculated<br />
as the excess of the issue proceeds over the present value of the<br />
future interest and principal payments, discounted at the market<br />
rate of interest applicable to similar liabilities that do not have a<br />
conversion option. The interest expense recognised in the income<br />
statement is calculated using the effective interest rate method.<br />
In the same way, when repurchasing part of the convertible<br />
bond, the purchase price is allocated proportionally to the debt<br />
and equity components in line with market conditions.<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
13
14<br />
Annex<br />
Short-term Liabilities<br />
These are liabilities due for payment or renewal within one year<br />
at the most.<br />
Segments<br />
The segment reporting by Business Area reflects the management<br />
structure implemented within the <strong>Kuoni</strong> <strong>Group</strong>. This results in<br />
the breakdown of leisure travel activities based on the geographic<br />
location of the revenue-generating group company, which in<br />
turn largely corresponds to where customers are based. Such a<br />
geographic breakdown based on the location of the group company<br />
would be relatively meaningless for the activities Incoming<br />
(services provided at the holiday destination) and Business<br />
Travel (involving several countries/regions).<br />
Derivative <strong>Financial</strong> Instruments<br />
The <strong>Group</strong> uses derivative financial instruments, in particular to<br />
hedge its exposure to foreign exchange risks arising from<br />
operational, financing and investment activities. The following<br />
derivative financial instruments are used: forward exchange<br />
contracts, currency options and currency swaps. In accordance<br />
with its treasury policy, the <strong>Group</strong> does not hold or issue derivative<br />
financial instruments for trading purposes. However, derivatives<br />
that do not qualify for hedge accounting are accounted<br />
for as trading instruments.<br />
All derivative financial instruments are recognised initially at cost,<br />
including transaction costs. Subsequent to initial recognition,<br />
derivative financial instruments are stated at fair value and presented<br />
within other receivables or other payables, respectively.<br />
Recognition of any resultant gain or loss depends on the nature<br />
of the item being hedged (see hedging). The fair value of the<br />
instruments used is the calculated amount that the <strong>Group</strong> would<br />
receive or pay to terminate the contracts at the balance sheet<br />
date, based on quotes from independent counterparties.<br />
Hedging<br />
Where a derivative financial instrument is designated as a hedge<br />
of the variability in cash flows of a recognised liability, a firm<br />
commitment or a highly probable forecasted transaction, the<br />
effective part of any gain or loss on the derivative financial<br />
instrument is recognised directly in equity.<br />
When the firm commitment or forecasted transaction results in<br />
the recognition of an asset or liability, the cumulative gain or<br />
loss is removed from equity and included in the initial measurement<br />
of the asset or liability. Otherwise the cumulative gain<br />
or loss is removed from equity and recognised in the income<br />
statement at the same time as the hedged transaction. The<br />
ineffective part of any gain or loss is recognised in the income<br />
statement immediately.<br />
If the hedged transaction is no longer probable or the hedging<br />
instrument no longer effective, the cumulative unrealised gain<br />
or loss recognised in equity is recognised in the income statement<br />
immediately.<br />
Where a derivative financial instrument is used to economically<br />
hedge the foreign exchange exposure of a recognised monetary<br />
asset or liability, no hedge accounting is applied and any gain<br />
or loss on the hedging instrument is recognised in the income<br />
statement.<br />
Earnings per Share (EPS)<br />
Earnings per share are calculated by dividing the group result<br />
by the weighted average number of shares entitled to dividends<br />
during the year under review.<br />
Diluted earnings per share take into account any dilution effect<br />
resulting from the exercise of option or conversion rights.
Notes<br />
1. Exchange Rates<br />
The following exchange rates were used for the most important currencies of the <strong>Group</strong>:<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Year-end rates Average rates for the year<br />
Currency Unit <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />
USD 1 1.236 1.393 1.345 1.555<br />
GBP 1 2.202 2.232 2.199 2.333<br />
EUR 1 1.559 1.457 1.521 1.467<br />
DKK 100 20.94 19.62 20.47 19.74<br />
NOK 100 18.51 19.99 19.01 19.55<br />
SEK 100 17.17 15.91 16.69 16.01<br />
HKD 1 0.159 0.179 0.173 0.199<br />
INR 1 0.027 0.029 0.029 0.032<br />
KES 1 0.016 0.018 0.018 0.020<br />
2. Changes in the <strong>Group</strong> of Consolidated Companies<br />
The group of consolidated companies has changed in the year under review as a result of acquisitions and disposals.<br />
The most important of these were the following:<br />
– Allround Travel International Ges.m.b.H., Vienna (100% sold 1 January <strong>2003</strong>)<br />
– Select Tours AS, Oslo (100% acquired 1 July <strong>2003</strong>)<br />
– Stop Over AB, Gothenburg (100% acquired 1 July <strong>2003</strong>)<br />
– Vacances Fabuleuses SA, Paris (100% acquired 1 July <strong>2003</strong>)<br />
– P&O Travel (Singapore) Pte Ltd., Singapore (100% sold 31October <strong>2003</strong>)<br />
– Intens Travel AG, Cham (100% acquired 1November <strong>2003</strong>)<br />
– Sale of discontinuing segment Business Travel (sold 31December <strong>2003</strong>, see note 4):<br />
<strong>Kuoni</strong> Geschäftsreisen AG, Urdorf (100%)<br />
<strong>Kuoni</strong> Beteiligungsgesellschaft mbH, Cologne (100%)<br />
Euro Lloyd Reisebüro GmbH & Co KG, Cologne (100%)<br />
Euro Lloyd MAN Reisebüro GmbH, Oberhausen (50%)<br />
Euro Lloyd DFB Reisebüro GmbH, Frankfurt a. M. (51%)<br />
Reisebüro A.L.R. Atlantik-Luft-Reederei GmbH, Bonn (90%)<br />
Euro Lloyd Breuninger Reisebüro GmbH & Co KG, Stuttgart (51%)<br />
Euro Lloyd Reisebüro GmbH, Augsburg (100%)<br />
BTO24 GmbH, Hamburg (100%)<br />
Bavaria-Lloyd Reisebüro GmbH, Munich (49%)<br />
W.E.L.T. Reisebüro GmbH, Munich (49%)<br />
<strong>Kuoni</strong> Geschäftsreisen GmbH, Vienna (100%)<br />
<strong>Kuoni</strong> Utazási Iroda Kft., Budapest (100%)<br />
In addition, we increased our equity holding in the following company during the year under review:<br />
– P&O Travel Ltd., Hong Kong (from 50% to 100%)<br />
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3. Acquisition / Sale of Consolidated Companies<br />
<strong>2003</strong> <strong>2003</strong> <strong>2003</strong> 2002<br />
CHF million acquired sold net net<br />
Cash and cash equivalents 2.2 –18.2 –16.0 1.7<br />
Time deposits and securities 0.2 –0.1 0.1 0.0<br />
Other current assets 10.2 –66.1 –55.9 9.8<br />
Tangible fixed assets 0.1 –8.3 –8.2 –1.6<br />
Intangible assets 0.0 –0.8 –0.8 0.7<br />
Goodwill 4.1 –45.0 –40.9 22.8<br />
<strong>Financial</strong> assets 0.2 –17.2 –17.0 0.1<br />
Short-term liabilities –14.7 58.5 43.8 –23.7<br />
Long-term liabilities –0.3 17.9 17.6 4.7<br />
Minority interest 0.0 1.1 1.1 –1.4<br />
Gain from sale of subsidiaries –52.3 –52.3 0.0<br />
Transfer to investments in associates 0.0 0.0 –1.5<br />
Acquisition / Sales price 2.0 –130.5 –128.5 11.6<br />
Cash and cash equivalents acquired / transferred –2.2 18.2 16.0 –1.7<br />
Increase in equity holdings 2.8 2.8 5.7<br />
Sales price not received yet 129.7 129.7 0<br />
Net cash outflow 2.6 17.4 20.0 15.6<br />
The increase in equity interests held in already fully consolidated companies did not result in any goodwill<br />
(2002: CHF 4.4 million).<br />
4. Information on Sale of Discontinuing Operations (BTI Central Europe)<br />
Income Statement of Ordinary Activity<br />
CHF 1000 <strong>2003</strong> 2002<br />
Turnover / Gross profit 153 771 178 973<br />
Personnel expense –105 469 –109 343<br />
Marketing and advertising expense –2 157 –2 247<br />
Other operating expense –34 035 –36 042<br />
Depreciation –5 862 –6 310<br />
Earnings before interest, taxes and amortisation of goodwill (EBITA) 6 248 25 031<br />
Amortisation of goodwill –9 364 –9 070<br />
<strong>Financial</strong> result –2 574 –2 349<br />
Income taxes –3 337 –5 818<br />
Minority interest –1 661 –1 938<br />
Result after taxes –10 688 5 856<br />
Sales Profit<br />
CHF 1000 <strong>2003</strong> 2002<br />
Gain from sale of discontinuing operations 52 798 0<br />
Income taxes thereon –8 729 0<br />
Gain from sale of BTI Central Europe, net of tax 44 069 0
5. Turnover<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
<strong>Kuoni</strong> Travel Holding Ltd. sold its division Business Travel – BTI Central Europe to Hogg Robinson plc. of the UK in<br />
December <strong>2003</strong> and deconsolidated the division as of 31 December <strong>2003</strong>. The division includes <strong>Kuoni</strong> Geschäftsreisen<br />
AG in Switzerland (plus Liechtenstein), Euro Lloyd Reisebüro GmbH & Co. KG in Germany and its subsidiaries, <strong>Kuoni</strong><br />
Geschäftsreisen Ges.m.b.H. in Austria and <strong>Kuoni</strong> Utazási Iroda Kft. in Hungary. The effective selling price may be subject<br />
to change under the terms of the contract and agreed warranties. The German leisure travel activity, which trades under<br />
the name Euro Lloyd Urlaubsreisen, will remain with the <strong>Kuoni</strong> <strong>Group</strong>.<br />
The results of the business travel division, which is qualified above as a discontinuing operation, are included in the<br />
<strong>Group</strong>’s income statement for the entire year. However, its assets and liabilities no longer appear on the consolidated<br />
balance sheet as at 31 December <strong>2003</strong> (note 3). The prior-year figures essentially correspond to the assets and liabilities<br />
of Business Travel as reported in note 25.<br />
The net cash from operating activities (cash flow) at BTI Central Europe amounted to CHF 2.6 million in <strong>2003</strong>, while net<br />
cash used in investing activities was CHF 0.6 million and in financing activities CHF 14.9 million.<br />
Turnover is down CHF 444 million or –11.9% on the prior year. The negative exchange rate impact was –1.5% and<br />
acquisitions accounted for +0.5%.<br />
The Novair Airbus A330 decommissioned in 2001 was leased occasionally to third parties. The resulting turnover amounted<br />
to CHF 9.6 million.<br />
Breakdown of Turnover by Business Area<br />
<strong>2003</strong> % 2002 % Change<br />
CHF million of total CHF million of total in %<br />
Switzerland 870 26.4 1 005 26.9 –13.4<br />
Scandinavia 501 15.2 554 14.8 –9.6<br />
Europe 488 14.8 486 13.0 +0.4<br />
United Kingdom & North America 756 23.0 893 23.9 –15.3<br />
Incoming & Asia 551 16.7 647 17.3 –14.8<br />
Business Travel 167 5.1 193 5.2 –13.5<br />
Less revenues generated between segments –38 –1.2 –39 –1.1 +2.6<br />
Total 3 295 100.0 3 739 100.0 –11.9<br />
Breakdown of Turnover by Activity<br />
<strong>2003</strong> % 2002 % Change<br />
CHF million of total CHF million of total in %<br />
Leisure Travel 2 711 82.3 3 066 82.0 –11.6<br />
Incoming 469 14.2 539 14.4 –13.0<br />
Business Travel 167 5.1 193 5.2 –13.5<br />
Less revenues generated between segments –52 –1.6 –59 –1.6 +11.9<br />
Total 3 295 100.0 3 739 100.0 –11.9<br />
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6. Gross Profit<br />
Gross profit comprises turnover less all directly allocable airline, ship, rail, hotel and car rental costs etc. In addition,<br />
gross profit includes the currency gains or losses realised by the individual subsidiaries in the course of the operations.<br />
In this particularly challenging business year, the gross profit margin was 28.3% compared with 26.2% in the previous<br />
year. This increase was due to the rigorous pricing policies we applied in numerous markets as well as to the renegotiation<br />
of contracts with our suppliers.<br />
Breakdown of Gross Profit by Business Area<br />
<strong>2003</strong> % of % 2002 % of %<br />
CHF million turnover of total CHF million turnover of total<br />
Switzerland 248.1 28.5 26.7 274.2 27.3 28.0<br />
Scandinavia 145.1 29.0 15.6 116.7 21.1 11.9<br />
Europe 99.8 20.5 10.7 88.2 18.1 9.0<br />
United Kingdom & North America 159.3 21.1 17.1 191.5 21.4 19.5<br />
Incoming & Asia 112.1 20.3 12.0 117.0 18.1 11.9<br />
Business Travel 167.1 100.0 17.9 193.2 100.0 19.7<br />
Total 931.5 28.3 100.0 980.8 26.2 100.0<br />
Breakdown of Gross Profit by Activity<br />
<strong>2003</strong> % of % 2002 % of %<br />
CHF million turnover of total CHF million turnover of total<br />
Leisure Travel 681.8 25.1 73.2 701.8 22.9 71.6<br />
Incoming 82.6 17.6 8.9 85.8 15.9 8.7<br />
Business Travel 167.1 100.0 17.9 193.2 100.0 19.7<br />
Total 931.5 28.3 100.0 980.8 26.2 100.0
7. Personnel Expense<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Personnel expense fell by a total of – 2.8%, with – 0.1% due to currency movements and +0.3% attributable to<br />
acquisitions.<br />
<strong>2003</strong> 2002 Change<br />
CHF 1000 CHF 1000 in %<br />
Salaries 365 156 380 317 –4.0<br />
Pension costs 43 392 40 547 +7.0<br />
Other social security costs 34 943 35 444 –1.4<br />
Other personnel costs 20 730 21 160 –2.0<br />
Total 464 221 477 468 –2.8<br />
Number of Staff (full-time equivalents) by Business Area<br />
Average number Number of staff<br />
of staff Change at year-end Change<br />
<strong>2003</strong> 2002 in % <strong>2003</strong> 2002 in %<br />
Switzerland 1 610 1 680 –4.2 1 531 1 634 –6.3<br />
Scandinavia 652 687 –5.1 648 678 –4.4<br />
Europe 886 921 –3.8 902 925 –2.5<br />
United Kingdom & North America 830 823 +0.8 849 847 +0.2<br />
Incoming & Asia 2 283 2 115 +7.9 2 312 2 147 +7.7<br />
Business Travel 1 645 1 654 –0.5 158 1 679 –90.6<br />
Corporate 25 27 –7.4 25 28 –10.7<br />
Total 7 931 7 907 +0.3 6 425 7 938 –19.1<br />
Average number of staff: average number of full-time and part-time staff converted to full-time equivalents.<br />
Number of staff at year-end: number of full-time and part-time staff at year-end converted to full-time equivalents.<br />
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Annex<br />
Defined Benefit Retirement Plans<br />
The <strong>Group</strong> incurs costs for retirement benefit plans in accordance with prevailing regulations in the countries in which<br />
it operates. The benefits paid to insured employees are generally calculated as a percentage of their expected final salary<br />
prior to retirement.<br />
The following assumptions (weighted averages) used in actuarial calculations were adjusted to take account of the<br />
economic situation in the country concerned:<br />
<strong>2003</strong> 2002<br />
Discount rate 3.80% 3.70%<br />
Return on investment 4.60% 4.50%<br />
Salary increases 1.70% 1.80%<br />
Where funded retirement plans exist, the costs of occupational pension coverage are transferred in accordance<br />
with the legislation in force in the respective country. The surpluses/deficits of the major defined benefit plans are<br />
shown below:<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Plan assets of independent retirement plans at fair value 317 567 309 165<br />
Projected benefit obligations (PBO) of the funded pension plans –290 153 –303 264<br />
Surplus 27 414 5 901<br />
Projected benefit obligations (PBO) of the unfunded pension plans –1 698 –9 374<br />
Cumulative, unrecognised actuarial and investment loss (net) 24 548 63 242<br />
Balance sheet amount 50 264 59 769<br />
The projected benefit obligations of the unfunded pension plans relate to German companies. The retirement plans do<br />
not hold shares of <strong>Kuoni</strong> Travel Holding Ltd., Zurich.<br />
The balance sheet amount (prepaid pension cost and long-term provisions recognised in the balance sheet; net) has<br />
developed as follows:<br />
CHF 1000 <strong>2003</strong> 2002<br />
Balance sheet amount (net) 1 January 59 769 58 584<br />
Translation differences –723 –80<br />
Pension expenses –13 465 –6 741<br />
Employer’s contributions 11 451 11 690<br />
Benefits paid out 182 157<br />
Unrecognised additional employer contributions –119 –3 841<br />
Changes in the group of consolidated companies –6 831 0<br />
Balance sheet amount (net) 31 December 50 264 59 769<br />
The above stated actuarially determined retirement benefit costs are set against the <strong>Group</strong>’s contributions to retirement<br />
benefit plans.
<strong>Kuoni</strong> <strong>Group</strong><br />
In previous years, the <strong>Group</strong> had considerable surpluses at its disposal. The net pension assets of CHF 50.3 million<br />
(2002: CHF 59.8 million) recorded in the balance sheet pursuant to IAS 19 are carried as other financial assets<br />
(CHF 52.0 million, 2002: CHF 69.2 million) or as long-term provisions (CHF 1.7 million, 2002: CHF 9.4 million).<br />
Gains were made on the investment of plan assets primarily due to the improved stock market performance last year,<br />
increasing the surplus of the funded retirement plans to CHF 27.4 million as of 31 December <strong>2003</strong>. The recorded pension<br />
assets of CHF 52.0 million are nevertheless only partially covered by the corresponding surpluses. To the extent that<br />
the cumulative, actuarial losses exceed 10% of the pension benefit obligations or the plan assets, they are charged to the<br />
income statement on a straight-line basis over the residual period of service pursuant to the provisions of IAS 19. In the<br />
<strong>2003</strong> financial year, the amortisation of actuarial losses amounted to CHF 6.7 million.<br />
The following table gives a calculation of the pension costs of the <strong>Group</strong>’s major defined benefit plans:<br />
CHF 1000 <strong>2003</strong> 2002<br />
Current service cost 16 435 15 136<br />
Interest on obligation 12 640 12 800<br />
Expected return on plan assets –15 951 –17 474<br />
Amortisation of actuarial losses 6 746 2 429<br />
Employees’ contributions –6 405 –6 150<br />
Pension expenses 13 465 6 741<br />
Unrecognised additional employer contributions 119 3 841<br />
Recognised defined benefit plan costs 13 584 10 582<br />
Other pension costs (defined contribution plans) 29 808 29 965<br />
Total pension costs 43 392 40 547<br />
In <strong>2003</strong>, the actual return on plan assets amounted to CHF 29.5 million (2002: CHF –42.2 million).<br />
8. Other Operating Expense<br />
<strong>2003</strong> 2002 Change<br />
CHF 1000 CHF 1000 in %<br />
Rent and utilities 49 374 46 240 +6.8<br />
Aircraft leasing 52 230 50 544 +3.3<br />
Administrative and other expenses 121 297 123 613 –1.9<br />
Total other operating expense 222 901 220 397 +1.1<br />
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9. Depreciation<br />
10. EBITA<br />
Depreciation by Type of Asset<br />
<strong>2003</strong> 2002 Change<br />
CHF 1000 CHF 1000 in %<br />
On buildings 4 031 4 641 –13.1<br />
On aircraft and ships 16 273 17 382 –6.4<br />
On other tangible fixed assets 27 017 28 932 –6.6<br />
On intangible assets 4 948 5 904 –16.2<br />
Total 52 269 56 859 –8.1<br />
Depreciation by Business Area<br />
<strong>2003</strong> 2002 Change<br />
CHF 1000 CHF 1000 in %<br />
Switzerland 28 509 31 953 –10.8<br />
Scandinavia 1 351 1 317 +2.6<br />
Europe 4 143 4 036 +2.7<br />
United Kingdom & North America 6 072 6 545 –7.2<br />
Incoming & Asia 5 240 5 618 –6.7<br />
Business Travel 6 132 6 573 –6.7<br />
Corporate 822 817 +0.6<br />
Total 52 269 56 859 –8.1<br />
Breakdown of EBITA by Business Area<br />
<strong>2003</strong> % of 2002 % of Change<br />
CHF 1000 turnover CHF 1000 turnover in %<br />
Switzerland 29 717 3.4 40 501 4.0 –26.7<br />
Scandinavia 9 048 1.8 –14 192 –2.6 +163.4<br />
Europe 8 288 1.7 3 859 0.8 +112.8<br />
United Kingdom & North America 70 363 9.3 82 093 9.2 –14.3<br />
Incoming & Asia 2 604 0.5 4 977 0.8 –48.0<br />
Business Travel 1 921 1.1 21 852 11.3 –91.3<br />
Corporate –19 574 n. a. –18 430 n. a. –5.4<br />
Total 102 367 3.1 120 660 3.2 –15.2
Breakdown of EBITA by Activity<br />
<strong>2003</strong> % of 2002 % of Change<br />
CHF 1000 turnover CHF 1000 turnover in %<br />
Leisure Travel 117 598 4.3 114 881 3.7 +2.4<br />
Incoming 2 422 0.5 2 357 0.4 +2.8<br />
Business Travel 1 921 1.1 21 852 11.3 –91.3<br />
Corporate –19 574 n. a. –18 430 n. a. –5.4<br />
Total 102 367 3.1 120 660 3.2 –15.2<br />
11. Amortisation of Goodwill<br />
12. <strong>Financial</strong> Result<br />
<strong>2003</strong> 2002 Change<br />
CHF 1000 CHF 1000 in %<br />
Switzerland 2 954 2 719 +8.6<br />
Scandinavia 9 339 12 669 –26.3<br />
Europe 3 489 3 295 +5.9<br />
United Kingdom & North America 9 074 9 740 –6.8<br />
Incoming & Asia 7 011 8 154 –14.0<br />
Business Travel 9 364 9 070 +3.2<br />
Total 41 231 45 647 –9.7<br />
<strong>Financial</strong> Income<br />
<strong>Financial</strong> income comprises income from securities amounting to CHF 1.0 million (2002: CHF 4.1 million), interest<br />
income in the amount of CHF 15.4 million (2002: CHF 14.9 million), non-operational exchange differences of<br />
CH 1.1 million (2002: CHF 2.5 million debit) as well as investment income from associates and third parties amounting<br />
to CHF 0.5 million (2002: CHF 0.1 million).<br />
<strong>Financial</strong> Expense<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
This position contains interest expense, the financial costs of the convertible bond and finance lease costs in the amount<br />
of CHF 17.1 million (2002: CHF 16.7 million) as well as investment expenses relating to associates and third parties of<br />
CHF 6.2 million (2002: CHF 11.7 million).<br />
The financial costs of the convertible bond include the additional interest charge of CHF 4.9 million (2002: CHF 5.3 million)<br />
and the reversal of the discount effect on the provision for onerous contracts (aircraft leasing) of CHF 2.5 million<br />
(2002: CHF 3.3 million). Neither of these positions has an effect on cash.<br />
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13. Income Taxes<br />
CHF 1000 <strong>2003</strong> 2002<br />
Current taxes 40 440 34 801<br />
Deferred taxes 2 181 –236<br />
Total 42 621 34 565<br />
Tax expense can be broken down as follows:<br />
CHF 1000 <strong>2003</strong> 2002<br />
Tax expense at the average weighted group tax rate (net) 18 320 14 312<br />
Non-tax-deductible expenses 6 978 7 949<br />
Tax-free income –820 –4 839<br />
Utilisation of tax loss carry-forwards, not recognised in the balance sheet –2 919 –1 979<br />
Tax effect from current losses, not eligible for recognition as assets 21 675 27 228<br />
Effect of changes in tax legislation 648 –4 617<br />
Tax income for earlier periods –1 261 –3 489<br />
Tax expense reported 42 621 34 565<br />
Given the different taxable profits and losses reported by the subsidiaries, the weighted average tax rate of the <strong>Group</strong><br />
for the year under review is 17%. Non-tax-deductible expenses consist mainly of goodwill amortisation. The positive<br />
effect last year of changes in tax legislation resulted primarily from tax relief at our US subsidiaries.<br />
Depending on the country involved, distributions have varying tax consequences, the extent of which cannot be<br />
estimated.<br />
The <strong>Group</strong> has the following tax loss carry-forwards.Their positive tax effect is not recognised as an asset because the<br />
probability of it being realised in the future is uncertain:<br />
<strong>2003</strong> 2002<br />
Expiring CHF 1000 CHF 1000<br />
Up to 1 year 225 1 118<br />
1 to 5 years 16 283 36 001<br />
Over 5 years 37 907 31 376<br />
Unlimited 232 147 263 800<br />
Total 286 562 332 295<br />
Positive tax effect (maximum) 91 581 115 365
14. Earnings per Share (EPS)<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
<strong>2003</strong> 2002<br />
Basic earnings per registered share B in CHF 21.86 8.90<br />
Net result in CHF million 64.6 26.2<br />
Weighted average number of shares outstanding 2 957 496 2 946 926<br />
Diluted earnings per registered share B in CHF 21.85 8.90<br />
Theoretical net result assuming all options and conversion rights were exercised 64.6 n. a.<br />
Weighted average number of shares after dilution 2 958 668 n. a.<br />
The dilution effect is solely attributable to the outstanding options with a strike price below the average share price. The<br />
convertible bond is not taken into account as its impact would be anti-dilutive.<br />
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Annex<br />
15. Schedule of Fixed Assets/Investments<br />
Other Total Intan- Other<br />
Land and Aircraft tangible tangible gible Investments financial<br />
CHF 1000<br />
Purchase cost<br />
buildings and ships fixed assets fixed assets assets Goodwill in associates assets Total<br />
1 January 2002 161 184 310 486 207 932 679 602 30 278 888 406 20 829 165 216 1 784 331<br />
Additions 766 5 937 22 584 29 287 4 734 27 239 2 008 27 987 91 255<br />
Disposals –128 –156 –28 471 –28 755 –7 332 0 –12 770 –21 482 –70 339<br />
Translation differences<br />
Changes in the group of<br />
–3 491 –22 843 –8 412 –34 746 –1 270 –64 427 –287 –1 192 –101 922<br />
consolidated companies<br />
Purchase cost<br />
0 0 2 006 2 006 3 879 0 0 93 5 978<br />
31 December 2002 158 331 293 424 195 639 647 394 30 289 851 218 9 780 170 622 1 709 303<br />
Whereof leasing 0 41 612 4 450 46 062 0 46 062<br />
Purchase cost<br />
1 January <strong>2003</strong> 158 331 293 424 195 639 647 394 30 289 851 218 9 780 170 622 1 709 303<br />
Additions 218 4 731 17 555 22 504 5 543 4 147 496 16 878 49 568<br />
Disposals –1 525 –2 823 –22 434 –26 782 –5 619 –29 499 –5 624 –17 021 –84 545<br />
Translation differences<br />
Changes in the group of<br />
–1 013 –13 011 1 013 –13 011 273 –25 217 –127 223 –37 859<br />
consolidated companies<br />
Purchase cost<br />
0 0 –28 561 –28 561 –2 906 –104 174 –755 –16 271 –152 667<br />
31 December <strong>2003</strong> 156 011 282 321 163 212 601 544 27 580 696 475 3 770 154 431 1 483 800<br />
Whereof leasing 0 36 922 0 36 922 0 36 922<br />
The tangible fixed assets at present include non-cash-effective finance leases and capitalised lease incentives.<br />
Following the conclusion of arbitration proceedings, the previous owner of Apollo Resor (since renamed <strong>Kuoni</strong> Scandinavia AB) granted<br />
a backdated discount on the purchase price. This resulted in a CHF 29.5 million decrease in goodwill for <strong>2003</strong>.
<strong>Kuoni</strong> <strong>Group</strong><br />
Other Total Intan- Other<br />
Land and Aircraft tangible tangible gible Investments financial<br />
CHF 1000<br />
Accrued depreciation<br />
buildings and ships fixed assets fixed assets assets Goodwill in associates assets Total<br />
1 January 2002 52 384 70 907 127 639 250 930 22 303 366 033 0 8 500 647 766<br />
Depreciation 4 641 17 382 28 932 50 955 5 904 45 647 0 0 102 506<br />
Disposals –76 –156 –27 018 –27 250 –7 168 0 0 0 –34 418<br />
Translation differences<br />
Changes in the group of<br />
–1 820 –5 904 –5 888 –13 612 –1 034 –28 239 0 0 –42 885<br />
consolidated companies<br />
Accrued depreciation<br />
0 0 3 621 3 621 3 249 0 0 0 6 870<br />
31 December 2002 55 129 82 229 127 286 264 644 23 254 383 441 0 8 500 679 839<br />
Whereof leasing 0 21 140 1 654 22 794 0 22 794<br />
Accrued depreciation<br />
1 January <strong>2003</strong> 55 129 82 229 127 286 264 644 23 254 383 441 0 8 500 679 839<br />
Depreciation 4 031 16 273 27 017 47 321 4 948 41 231 0 0 93 500<br />
Disposals –76 –2 823 –20 765 –23 664 –5 449 0 0 0 –29 113<br />
Translation differences<br />
Changes in the group of<br />
–716 –3 509 503 –3 722 124 –11 979 0 0 –15 577<br />
consolidated companies<br />
Accrued depreciation<br />
0 0 –20 426 –20 426 –2 121 –59 160 0 0 –81 707<br />
31 December <strong>2003</strong> 58 368 92 170 113 615 264 153 20 756 353 533 0 8 500 646 942<br />
Whereof leasing 0 19 444 0 19 444 0 19 444<br />
Net book value<br />
31 December 2002 103 202 211 195 68 353 382 750 7 035 467 777 9 780 162 122 1 029 464<br />
Whereof leasing 0 20 472 2 796 23 268 0 23 268<br />
Net book value<br />
31 December <strong>2003</strong> 97 643 190 151 49 597 337 391 6 824 342 942 3 770 145 931 836 858<br />
Whereof leasing 0 17 478 0 17 478 0 17 478<br />
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Fire Insurance Values<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Buildings 170 386 169 733<br />
Furniture, fixtures and equipment 147 948 200 969<br />
Other <strong>Financial</strong> Assets<br />
Other financial assets comprise minority shareholdings, loans and advances as well as prepaid pension cost of funded<br />
pension plans (see note 7). Loans in the amount of CHF 31.6 million were made to associates (2002: CHF 30.7 million).<br />
Capital Expenditure by Business Area<br />
CHF 1000 <strong>2003</strong> 2002<br />
Switzerland 12 822 11 056<br />
Scandinavia 3 127 1 884<br />
Europe 6 052 8 557<br />
United Kingdom &North America 6 545 12 085<br />
Incoming & Asia 4 417 24 855<br />
Business Travel 704 5 308<br />
Corporate and unallocated investments 15 901 27 510<br />
Total 49 568 91 255<br />
Investment Obligations<br />
There are no significant investment obligations.<br />
16. Cash and Cash Equivalents<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Cash holdings and bank current accounts 264 040 216 681<br />
Time deposits and money market investments 293 957 328 155<br />
Total 557 997 544 836<br />
Cash and cash equivalents are mainly denominated in the following currencies:<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
CHF 169 001 149 529<br />
GBP 187 105 222 350<br />
EUR 46 896 37 175<br />
USD 95 463 74 076<br />
Other 59 532 61 706<br />
Total 557 997 544 836
17. Time Deposits and Securities<br />
18. Accounts Receivable<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Money market investments and time deposits with a term exceeding 90 days 58 729 50 240<br />
Bonds 0 0<br />
Equities 0 0<br />
Total 58 729 50 240<br />
Time deposits are mainly denominated in the following currencies:<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
CHF 0 30 000<br />
GBP 15 418 0<br />
EUR 402 957<br />
USD 30 471 6 036<br />
Other 12 438 13 247<br />
Total 58 729 50 240<br />
The average interest rates were:<br />
<strong>2003</strong> 2002<br />
CHF 0.7% 2.4%<br />
GBP 3.7% 4.0%<br />
EUR 2.2% 3.4%<br />
USD 1.2% 1.6%<br />
Accounts receivable contain open amounts due from clients with departure dates either before or on 31 December.<br />
This balance includes a provision for doubtful debts amounting to CHF 19.2 million (2002: CHF 19.3 million).<br />
No receivables are due from associates (2002: CHF 0.3 million).<br />
19. Shareholders’ Equity<br />
Composition of Share Capital<br />
Type of share Registered share A Registered share B Total<br />
Number 1000 000 3 000 000 4 000 000<br />
Par value in CHF 10 50 –<br />
Share capital<br />
CHF 10 000 000 150 000 000 160 000 000<br />
in% 6.25 93.75 100.00<br />
Voting rights<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Number 1000 000 3 000 000 4 000 000<br />
in% 25.00 75.00 100.00<br />
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Conditional Capital<br />
Conditional capital issuable via the exercise of conversion rights and/or warrants linked to bonds or similar debt issued<br />
by <strong>Kuoni</strong> Travel Holding Ltd. or any of its subsidiaries in the domestic or international capital markets and/or via the<br />
exercise of options granted to shareholders amounts to a maximum of CHF 19.2 million, with a further maximum of<br />
CHF 4.8 million reserved for employee stock option plans.<br />
Authorised Capital<br />
There is no authorised capital.<br />
Principal Shareholders<br />
The following principal shareholders are known to us:<br />
<strong>Kuoni</strong> and Hugentobler Foundation, Zurich<br />
31 December <strong>2003</strong>: 1000 000 registered shares A = 25.00% of the voting rights<br />
13 600 registered shares B = 0.34% of the voting rights<br />
31 December 2002: 1000 000 registered shares A = 25.00% of the voting rights<br />
13 600 registered shares B = 0.34% of the voting rights<br />
Silchester International Investors Limited, London<br />
31 December <strong>2003</strong>: 302 072 registered shares B = 7.55% of the voting rights<br />
31 December 2002: 262 471 registered shares B = 6.56% of the voting rights<br />
Treasury Shares<br />
CHF Book value<br />
Held on 1 January 2002 255 043 registered shares B at par value CHF 50 12 752 150<br />
Sold 4 225 registered shares B at par value CHF 50 –211 250<br />
Held on 31 December 2002 250 818 registered shares B at par value CHF 50 12 540 900<br />
Sold 11 928 registered shares B at par value CHF 50 –596 400<br />
Held on 31 December <strong>2003</strong> 238 890 registered shares B at par value CHF 50 11 944 500<br />
Of these, 216 462 registered shares B are set aside as cover for the 1% convertible bond 2000–2005. The remaining<br />
treasury shares are reserved for the share purchase and stock option plans of the Executive Board and Management. The<br />
treasury shares sold in <strong>2003</strong> and 2002 consist of the registered shares B received by the Board of Directors, Executive<br />
Board and Management.
Options<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
A performance-related bonus plan exists for the members of the <strong>Group</strong> Executive Board. In addition to a cash payment<br />
component of 50% to 58% of the bonus, 40% of the bonus must be taken in shares, using the taxable value of the<br />
share at the close of the financial year, while 2% to 10% of the bonus must be taken in options. The combined option<br />
and exercise price is also equal to the taxable value of the share at the close of the financial year. The taxable value is<br />
charged to personnel expense. Options are financed by the members of the <strong>Group</strong> Executive Board themselves.<br />
Number of options 1999 2000 2001 2002 <strong>2003</strong> Total<br />
Held on 1 January 2002 9 329 6 244 4 734 20 307<br />
Issued 2 089 2 089<br />
Exercised 0<br />
Lapsed 0<br />
Held on 31 December 2002 9 329 6 244 4 734 2 089 22 396<br />
Issued 6 326 6 326<br />
Exercised –1 494 –1 494<br />
Lapsed –1 882 –1 882<br />
Held on 31 December <strong>2003</strong> 7 447 6 244 4 734 2 089 4 832 25 346<br />
Type of options 1) 2) Blockage period Exercise price Exercise period<br />
Issued 1999 no blockage period CHF 507.79 until 31 December 2005<br />
Issued 2000 no blockage period CHF 600.55 until 31 December 2006<br />
Issued 2001 no blockage period CHF 621.90 until 31 December 2007<br />
Issued 2002 no blockage period CHF 400.05 until 31 December 2006<br />
Issued <strong>2003</strong> no resp. 1–2 years CHF 234.90 until 31 December 2007<br />
1) Secured by treasury shares of <strong>Kuoni</strong> Travel Holding Ltd.<br />
2) Subscription ratio one-for-one.<br />
The conversion periods for options issued in the years 1999 to 2001 were extended by two years. To compensate for<br />
this theoretical added value, all the options of the respective holders were capped. If the options are exercised at<br />
a higher share price, the exercise price increases accordingly.<br />
Retained Earnings<br />
Only a limited amount of retained earnings are available for distribution:<br />
– the free reserves of the holding company subsequent to the approval of a resolution to this effect;<br />
– the reserves of subsidiaries in accordance with local fiscal and legal provisions provided they are distributed<br />
first to the parent company.<br />
Translation Differences<br />
Translation differences in the year under review resulted in a charge of CHF 21.4 million (2002: CHF 44.2 million)<br />
against shareholders’ equity. The largest translation differences in <strong>2003</strong> came from the conversion of the assets and<br />
liabilities of group companies reporting in USD and from intra-group loans of an equity capital nature denominated<br />
in USD.<br />
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Hedging Reserve<br />
The hedging reserve corresponds to the positive or negative fair value of currency and fuel contracts classified as a<br />
cash flow hedge. In the year under review, CHF 26.1 million (2002: CHF 22.7 million) was charged to the hedging<br />
reserve, while the amount of CHF 23.1 million (2002: CHF 4.6 million) was taken out of equity.<br />
Fair Value Reserve<br />
Fair value adjustments of CHF 1.2 million (2002: CHF 1.7 million debit) were charged to the fair value reserve for financial<br />
assets available for sale in the year under review, while realised gains in the amount of CHF 0.1 million (2002:<br />
CHF 0.3 million) were taken out of equity and credited to the income statement.<br />
20. Long-term Provisions<br />
Long-term provisions have changed as follows:<br />
Income Employee Direct Onerous<br />
CHF 1000 taxes benefits costs contracts Other Total<br />
Provisions as at 1 January <strong>2003</strong> 2 632 20 491 15 493 64 457 3 196 106 269<br />
Additions 1 082 3 535 174 2 451 703 7 945<br />
Used –2 010 –1 497 –3 905 –17 447 –1 276 – 26 135<br />
Released 0 –2 465 –1 291 0 –9 –3 765<br />
Translation differences 9 1 341 17 0 218 1 585<br />
Changes in the group of consolidated companies –25 –12 033 145 0 0 –11 913<br />
Provisions as at 31 December <strong>2003</strong> 1 688 9 372 10 633 49 461 2 832 73 986<br />
The provisions for retirement benefit obligations relate to retirement benefit obligations for unfunded plans<br />
(CHF 1.7 million, 2002: CHF 9.4 million) as well as to termination benefits to be paid out in accordance with the law<br />
and other retirement benefit obligations (CHF 7.7 million, 2002: CHF 11.1 million).<br />
Provisions for direct costs include amounts payable to service providers which are uncertain as to their due dates or size.<br />
They also include litigation.<br />
The provision for onerous contracts covers the loss anticipated in connection with excess flight capacity at the<br />
Scandinavian charter airline Novair resulting from the leasing agreement for an Airbus A330. The aircraft could only be<br />
leased occasionally to other airlines for certain periods and at the current low rates prevailing in the market. The<br />
leasing agreement runs until autumn 2007.<br />
Fixed costs of CHF 17.4 million (2002: CHF 19.4 million) for this aircraft were charged to the provision for onerous contracts<br />
in the year under review. The reversal of the discount effect resulted in an increase of the provision, which was charged<br />
to financial expense.
21. Deferred Taxes<br />
22. <strong>Financial</strong> Debts<br />
The provisions for deferred taxes have changed as follows:<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
CHF 1000 <strong>2003</strong> 2002<br />
Deferred taxes as at 1 January 46 116 54 470<br />
Changes recognised in the income statement 2 181 –236<br />
Changes not recognised in the income statement –1 334 –6 519<br />
Translation differences –837 –1 599<br />
Changes in the group of consolidated companies –5 668 0<br />
Deferred taxes as at 31 December 40 458 46 116<br />
On the balance sheet date, cumulative deferred taxes recognised directly in shareholders’ equity amounted to<br />
CHF –9.1 million (2002: CHF –7.7 million).<br />
The deferred taxes derive from revaluations of the following balance sheet items:<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002 Change<br />
Current assets 90 2 767 –2 677<br />
Tangible fixed assets 13 542 18 493 –4 951<br />
Other financial assets 20 677 22 547 –1 870<br />
Prepaid expenses and provisions 1 520 –830 +2 350<br />
35 829 42 977 –7 148<br />
Tax effect on retained earnings of subsidiary companies 4 629 3 139 +1 490<br />
Total 40 458 46 116 –5 658<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Bank debts 93 630 109 419<br />
Convertible bond 173 034 168 092<br />
<strong>Financial</strong> leases 19 406 23 191<br />
Other 1 441 7 367<br />
Total 287 511 308 069<br />
The financial debts are due as follows:<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
<strong>2003</strong> 19 263<br />
2004 14 632 16 159<br />
2005 232 838 227 879<br />
2006 81 0<br />
Thereafter or with no defined repayment date 39 960 44 768<br />
Total 287 511 308 069<br />
The figures quoted above for financial debts must be interpreted with caution due to the early repayment of bank debts<br />
totalling CHF 70.2 million in February 2004.<br />
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23. Bank Debts<br />
The financial debts are denominated in the following currencies:<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
CHF 263 234 272 297<br />
EUR 4 074 9 866<br />
USD 19 405 22 079<br />
Other 798 3 827<br />
Total 287 511 308 069<br />
The average interest rates were:<br />
<strong>2003</strong> 2002<br />
CHF 3.8% 3.9%<br />
EUR 3.0% 3.6%<br />
USD 2.4% 2.6%<br />
The bank debts primarily comprise loans to finance two Airbus A320-200 for Edelweiss Air. In this aircraft financing<br />
transaction, <strong>Kuoni</strong> has agreed loan covenants with the bank (undertaking to maintain certain key financial data). The<br />
financial debts also include the finance lease for two ships chartered by Intrav and the debt component of the convertible<br />
bond. In February 2000, <strong>Kuoni</strong> Travel Holding Ltd. issued a 1% convertible bond in the amount of CHF 204.8 million,<br />
convertible into registered shares B. The bond will run for 5 years until 2 February 2005. The conversion price is<br />
CHF 946.19 per registered share B, resulting in a conversion ratio of 5.2843 registered shares per convertible bond of<br />
par value CHF 5 000. The effective rate of interest applied remains unchanged at 3.52%.<br />
In the year 2002, <strong>Kuoni</strong> bought back part of the convertible bond in the market for a nominal CHF 26.2 million. The<br />
amount outstanding is thus nominal CHF 178.6 million.<br />
Bank debts consist of the debit balances on the bank accounts of subsidiaries on the balance sheet date.<br />
24. Accounts Payable and Accrued Expenses<br />
The reported amount contains taxes owed but not yet paid amounting to CHF 41.5 million (2002: CHF 53.9 million)<br />
and finance lease liabilities amounting to CHF 0.2 million (2002: CHF 1.9 million).
25. Segment Assets and Liabilities by Business Area<br />
31 Dec <strong>2003</strong> 31 Dec 2002 Change<br />
Assets CHF 1000 % CHF 1000 % in %<br />
Switzerland 466 347 30.5 468 545 25.9 –0.5<br />
Scandinavia 202 129 13.2 272 606 15.0 –25.9<br />
Europe 113 905 7.4 116 997 6.4 –2.6<br />
United Kingdom & North America 507 507 33.2 520 964 28.8 –2.6<br />
Incoming & Asia 233 810 15.3 251 887 13.9 –7.2<br />
Business Travel 5 817 0.4 180 443 10.0 –96.8<br />
1 529 515 100.0 1 811 442 100.0 –15.6<br />
Corporate and unallocated assets 310 057 145 311<br />
Total assets 1 839 572 1 956 753<br />
31 Dec <strong>2003</strong> 31 Dec 2002 Change<br />
Liabilities CHF 1000 % CHF 1000 % in %<br />
Switzerland 176 294 22.2 184 396 20.1 –4.4<br />
Scandinavia 156 803 19.8 194 488 21.2 –19.4<br />
Europe 118 796 15.0 116 703 12.7 +1.8<br />
United Kingdom & North America 203 411 25.7 214 750 23.5 –5.3<br />
Incoming & Asia 122 704 15.5 124 853 13.6 –1.7<br />
Business Travel 14 341 1.8 81 187 8.9 –82.3<br />
792 349 100.0 916 377 100.0 –13.5<br />
Corporate and unallocated liabilities 432 409 454 657<br />
Total liabilities 1 224 758 1 371 034<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
The reported assets and liabilities of Business Travel as at 31 December <strong>2003</strong> include those of the German leisure travel<br />
activity, which remains with the <strong>Group</strong> after the sale of BTI Central Europe.<br />
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26. Derivative <strong>Financial</strong> Instruments<br />
In the normal course of its business, the <strong>Group</strong> is exposed to market, credit, interest rate, currency and fuel price risks.<br />
To manage these risks, various derivative financial instruments are used. While these are subject to the risk of<br />
market rates changing subsequent to acquisition, such changes are generally offset by opposite effects on the items<br />
being hedged.<br />
Credit Risk<br />
Exposure to credit risk is monitored on an ongoing basis and covered by appropriate value adjustments on accounts<br />
receivable and prepayments made.<br />
The counterparties to transactions in securities, derivative financial instruments and cash are carefully selected financial<br />
institutions. Given their high credit ratings, management does not expect any counterparty to fail to meet its obliga-<br />
tions. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, except for<br />
foreign currency options.<br />
Interest Rate Risk<br />
The <strong>Group</strong> is exposed to interest rate risk as a result of movements in interest rates in the capital market. Generally, all<br />
long-term financial liabilities are fixed-interest bearing liabilities. Consequently, changes in interest rates can result in fluc-<br />
tuations in the fair value of such financial liabilities. This would not have any impact on net result or future cash flow,<br />
however. No such derivatives were outstanding as at the balance sheet date.<br />
Foreign Currency Risk<br />
The <strong>Group</strong> incurs foreign currency risk primarily on purchases and borrowings denominated in a currency other than<br />
the measurement currency of the respective subsidiary. Significantly smaller is the amount of sales denominated in<br />
a currency other than the measurement currency of the respective subsidiary. On a consolidated basis, the <strong>Group</strong> is also<br />
exposed to currency fluctuations between the Swiss franc and the local measurement currencies of its subsidiaries.<br />
The major currencies giving rise to currency risk are the euro, pound sterling and US dollar.<br />
The <strong>Group</strong> uses forward exchange contracts, currency options and swaps to hedge its foreign currency risk. Most hedging<br />
contracts have maturities of up to 12 months. Where necessary, the forward exchange contracts are rolled over at<br />
maturity. The <strong>Group</strong> does not hedge for its net investment in foreign entities and the related foreign currency translation<br />
of local earnings.<br />
The currency hedging contracts outstanding on the balance sheet date are summarised in the following table. Gains and<br />
losses on hedge contracts qualifying as cash flow hedges are expected to be removed from shareholders’ equity within<br />
12 months. Changes in the fair value of forward exchange contracts, currency options and swaps that economically<br />
hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognised<br />
in the income statement. Both the changes in fair value of the forward contracts and the foreign exchange gains and<br />
losses relating to the monetary items are reported under direct costs.
Fuel Price Changes<br />
The <strong>Group</strong>’s two airlines, Edelweiss and Novair, are exposed to changes in fuel prices. They use standardised forward<br />
fuel contracts, which are to be settled net. Accordingly, these contracts qualify as cash flow hedges and are summarised<br />
in the table below.<br />
Derivative <strong>Financial</strong> Instruments<br />
Positive Negative Fair<br />
fair fair Contract values Contract<br />
values values values (net) values<br />
CHF 1000<br />
Cash flow hedges<br />
Currency-related forward contracts,<br />
31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec 2002 31 Dec 2002<br />
swaps and options 9 575 –47 630 1 076 089 –33 562 797 543<br />
Commodity options (aviation fuel) 3 702 0 24 335 3 622 31 961<br />
Other derivative financial instruments<br />
Currency-related forward contracts,<br />
swaps and options 1 346 –12 948 85 012 –4 168 117 677<br />
Total 14 623 –60 578 1 185 436 –34 108 947 181<br />
The fair value is the (higher or lower) value at which a derivative contract could be concluded on the balance sheet date.<br />
The fair values calculated on the balance sheet date should not be looked at in isolation but together with the calculated<br />
value of anticipated future transactions and hence in the context of the aggregate reduction in the <strong>Group</strong>’s exposure to<br />
currency movements. Positive or negative fair values of derivative financial instruments are carried on the balance sheet<br />
under other receivables or accounts payable.<br />
Derivative financial instruments by currency:<br />
Positive Negative Fair<br />
fair fair Contract values Contract<br />
values values values (net) values<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec 2002 31 Dec 2002<br />
EUR 5 904 –1 768 340 002 289 253 407<br />
USD 2 334 –49 063 656 274 –34 687 499 122<br />
THB 54 –934 21 052 –2 641 26 992<br />
Other currencies 2 629 –8 813 143 773 –691 135 699<br />
Commodity options (aviation fuel) 3 702 0 24 335 3 622 31 961<br />
Total 14 623 –60 578 1 185 436 –34 108 947 181<br />
Maturities of the derivative financial instruments:<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Positive Negative Fair<br />
fair fair Contract values Contract<br />
values values values (net) values<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec 2002 31 Dec 2002<br />
<strong>2003</strong> –34 113 938 839<br />
2004 14 240 –56 639 1 146 553 5 8 342<br />
2005 383 –3 939 38 883 0 0<br />
2006 0 0 0<br />
Total 14 623 –60 578 1 185 436 –34 108 947 181<br />
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27. Free Cash Flow<br />
CHF 1000 <strong>2003</strong> 2002<br />
Cash flow from operating activities 74 368 159 191<br />
Purchase of tangible fixed assets –22 504 –27 814<br />
Purchase of intangible assets –5 543 –4 734<br />
Disposal of tangible fixed assets 3 380 2 267<br />
Free cash flow 49 701 128 910<br />
28. Additional Information on Cash Flow Statement<br />
29. Related Parties<br />
CHF 1000 <strong>2003</strong> 2002<br />
Interest and dividends received 15 637 14 966<br />
Interest paid –9 800 –8 242<br />
Income taxes paid –50 148 –24 749<br />
The term “related parties” refers to Directors, members of the <strong>Group</strong> Executive Board and major shareholders as well as<br />
companies controlled by these parties. Transactions with related parties are priced on an arm’s length basis.<br />
<strong>Kuoni</strong> and Hugentobler Foundation, Zurich<br />
In the interest of the company, <strong>Kuoni</strong> Travel Holding Ltd. has pledged time deposits as security to the bank in the<br />
amount of CHF 15.4 million to cover a bank loan to the <strong>Kuoni</strong> and Hugentobler Foundation. Pursuant to an agreement<br />
between the parties, which remains in effect until 30 December 2005, the following assets of the <strong>Kuoni</strong> and Hugentobler<br />
Foundation serve as collateral for this business transaction:<br />
1000 000 registered shares A of <strong>Kuoni</strong> Travel Holding Ltd., Zurich, with a par value of CHF 10 per share<br />
13 600 registered shares B of <strong>Kuoni</strong> Travel Holding Ltd., Zurich, with a par value of CHF 50 per share<br />
These shares pledged as security to <strong>Kuoni</strong> Travel Holding Ltd. have been deposited with the bank. In the event that the<br />
closing quotation of the registered share B on the SWX Swiss Exchange (or a successor exchange) falls below CHF 100<br />
per registered share B, <strong>Kuoni</strong> Travel Holding Ltd. shall be authorised to exercise a call option on this pledge and to<br />
realise the pledged shares in the open market (placement or share repurchase). The exercise of the call option as well<br />
as the realisation of the pledged shares lie within the authority of the Board of Directors of <strong>Kuoni</strong> Travel Holding Ltd.<br />
At a stock market price of CHF 100 per registered share B and an assumed proportional price of CHF 20 per registered<br />
share A (without any surplus value for voting rights), the value of the shares pledged as security amounts to a total<br />
of CHF 21.4 million. For providing the pledged collateral, <strong>Kuoni</strong> Travel Holding Ltd. receives a commission at market rate<br />
of 0.2% p.a.
On the basis of the share price of CHF 414 for the registered share B at the end of <strong>2003</strong>, the theoretical value (registered<br />
share A converted at the proportional price of registered share B) of the pledged shares totals CHF 88.4 million. The<br />
pledged shares equal 25.3% of the voting rights and 6.7% of the share capital. The pledging of the shares does not in<br />
any way impact the shareholder rights (voting right, dividend right, etc.) of the <strong>Kuoni</strong> and Hugentobler Foundation.<br />
Other Related Parties<br />
Transactions with related parties are priced on an arm’s length basis. In the year under review the sales volume of the<br />
<strong>Kuoni</strong> <strong>Group</strong> to associated companies amounted to CHF 52.0 million (2002: CHF 48.9 million), while purchases from<br />
associated companies came to CHF 12.9 million (2002: CHF 16.5 million). Accounts receivable and payable and loans<br />
are reported in the relevant balance sheet positions. Interest on loans is charged at market rates. Profits distributed by<br />
associates amounted to CHF 0.2 million (2002: CHF 0.1 million).<br />
30. Contingent Liabilities, Assets Pledged<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Contingent liabilities to associates 233 3 507<br />
Contingent liabilities to third parties 42 309 9 243<br />
Assets pledged 194 920 212 952<br />
The contingent liabilites to third parties consist of exclusive rights held by subsidiaries and secured via bank guarantees<br />
(CHF 6.2 million, 2002: CHF 9.2 million), as well as sureties and guarantees for the sold business division BTI Central<br />
Europe (CHF 36.1 million). The former liabilities will cease to apply in 2006 at the latest, the latter have in the meantime<br />
been transferred.<br />
The amount of assets pledged was primarily used to secure a bank loan for two of the Edelweiss Airbus A320-200 as<br />
well as the finance lease of two ships chartered by Intrav. This item also contains a time deposit in the amount of<br />
CHF 15.4 million pledged to the bank as security for a bank loan to the <strong>Kuoni</strong> and Hugentobler Foundation (see note 29).<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
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40<br />
Annex<br />
31. Leasing Liabilities<br />
Finance Lease<br />
Principal Interest<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Liabilities payable up to 1 year 185 391 576 2 515<br />
Liabilities payable 1 to 5 years 742 1 525 2 267 3 429<br />
Liabilities payable over 5 years 18 664 6 935 25 599 34 630<br />
Total 19 591 8 851 28 442 40 574<br />
Interest –8 851 –15 469<br />
Total leasing liabilites recognised<br />
in the balance sheet at present value 19 591 25 105<br />
The above leasing liabilities primarily relate to two ships chartered by Intrav. The leasing agreements are denominated<br />
in USD, with the bulk of capital being repaid upon expiry of the agreements.<br />
Operating Lease<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Liabilities payable up to 1 year 77 240 88 230<br />
Liabilities payable 1 to 5 years 220 667 212 354<br />
Liabilities payable over 5 years 38 556 57 961<br />
Total leasing liabilites recognised in the balance sheet 336 463 358 545<br />
Amount recognised in the income statement in current year 89 858<br />
This position mainly relates to leasing liabilities of Edelweiss and Novair for certain aircraft and to lease contracts for<br />
buildings.<br />
32. Liabilities to Pension Funds<br />
CHF 1000 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Total liabilities of the <strong>Group</strong> to pension funds 162 155<br />
33. Post-Balance-Sheet Events<br />
The consolidated financial statements of the <strong>Kuoni</strong> <strong>Group</strong> were approved by the Board of Directors on 17 March 2004.<br />
Final approval is subject to acceptance by the General Meeting of Shareholders, which will take place on 28 April 2004.<br />
The selling price for BTI Central Europe, recognised in the balance sheet under other assets, was paid in full on<br />
30 January 2004.<br />
The <strong>Kuoni</strong> <strong>Group</strong> prematurely repaid bank debts amounting to CHF 70.2 million on 17 February 2004.<br />
No events have occurred since 31 December <strong>2003</strong> that would either necessitate an adjustment to the carrying values of<br />
the <strong>Group</strong>’s assets and liabilities or need to be disclosed here.
42<br />
Annex<br />
Principal Subsidiaries and Associates<br />
Europe<br />
Switzerland<br />
Paid-in Investment Consoli-<br />
Activity Currency share capital in % dation<br />
<strong>Kuoni</strong> Reisen AG, Zurich L/I CHF 7 000 000 100 C<br />
Edelweiss Air AG, Zurich-Airport L CHF 3 500 000 100 C<br />
Manta Reisen AG, Zurich L CHF 50 000 100 C<br />
PRZ AG, Zurich L CHF 200 000 100 C<br />
Railtour Suisse SA, Berne L CHF 1 600 000 93 C<br />
TUI (Suisse) Holding AG, Zurich L CHF 3 600 000 49 E<br />
Brava Holiday-Club AG, Berne L CHF 1 500 000 35 E<br />
Austria<br />
Reisebüro <strong>Kuoni</strong> Ges.m.b.H., Vienna L EUR 36 336 100 C<br />
<strong>Kuoni</strong> Incoming Services Ges.m.b.H.& Co. KG, Vienna I EUR 218 382 100 C<br />
Restplatzbörse Ges.m.b.H., Vienna L EUR 36 336 100 C<br />
Denmark<br />
<strong>Kuoni</strong> Danmark A/S, Virum L DKK 6 000 000 100 C<br />
<strong>Kuoni</strong> Scandinavia AB, Copenhagen L DKK 0 100 C<br />
<strong>Kuoni</strong> Travel (Scandinavia) A/S, Copenhagen I DKK 600 000 100 C<br />
France<br />
Voyages <strong>Kuoni</strong> SA, Paris L/I EUR 507 000 100 C<br />
Vacances Fabuleuses SA, Paris L EUR 457 000 100 C<br />
Germany<br />
<strong>Kuoni</strong> Reisen GmbH, Friedrichshafen L EUR 511 292 100 C<br />
Greece<br />
Hellenic Tours SA, Athens I EUR 1 660 000 100 C<br />
Hellenic Island Services Heraklion Ltd., Heraklion I EUR 240 000 50 C<br />
Hellenic Island Services Rhodos Ltd., Rhodes I EUR 88 041 55 C
Europe<br />
Hungary<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Paid-in Investment Consoli-<br />
Activity Currency share capital in % dation<br />
<strong>Kuoni</strong> Incoming Services Utazási Iroda Kft., Budapest I HUF 3 000 000 100 C<br />
Italy<br />
<strong>Kuoni</strong> Gastaldi Tours S.p.A., Genoa L EUR 1 200 000 100 C<br />
<strong>Kuoni</strong> Incoming S.p.A., Rome I EUR 1 548 000 100 C<br />
Netherlands<br />
<strong>Kuoni</strong> Travel Nederland BV, Amsterdam L EUR 226 890 100 C<br />
Travel Keys BV, Amsterdam L EUR 18 303 100 C<br />
<strong>Kuoni</strong> Incoming (Benelux) BV, Amsterdam I EUR 55 815 100 C<br />
<strong>Kuoni</strong> Finance BV, Amsterdam EUR 20 000 100 C<br />
Norway<br />
<strong>Kuoni</strong> Scandinavia AB, Oslo L NOK 0 100 C<br />
Spain<br />
Viajes <strong>Kuoni</strong> SA, Madrid L/I EUR 2 764 600 100 C<br />
Sweden<br />
<strong>Kuoni</strong> Scandinavia AB, Stockholm L SEK 23 000 000 100 C<br />
Nova Airlines AB, Stockholm L SEK 15 000 000 100 C<br />
United Kingdom<br />
<strong>Kuoni</strong> Travel Ltd., Dorking L/I GBP 1 500 000 100 C<br />
The House of Specialists, London L GBP 5 000 000 100 C<br />
Voyages Jules Verne Ltd., London L GBP 100 100 C<br />
Alp Air Holdings Ltd., Jersey CHF 95 000 000 100 C<br />
Activities:<br />
L = Leisure<br />
I = Incoming<br />
Consolidation:<br />
C = consolidated<br />
E = consolidated using the equity method<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
43
44<br />
Annex<br />
Overseas<br />
British Virgin Islands/Caribbean<br />
Paid-in Investment Consoli-<br />
Activity Currency share capital in % dation<br />
<strong>Kuoni</strong> (Caribbean Hotels) Ltd., Tortola L USD 2 000 000 100 C<br />
Hawksbill Ltd., Antigua L XCD 6 730 839 100 C<br />
Discovery Bay Beach Hotel, Barbados L BSD 50 000 100 C<br />
Hong Kong<br />
P&O Travel Ltd., Hong Kong L HKD 4 800 000 100 C<br />
India<br />
<strong>Kuoni</strong> Travel (India) Ltd., Mumbai L/I INR 83 500 000 100 C<br />
Fastrack Visa Facilitation Services Pvt. Ltd., Mumbai L INR 5 000 000 100 C<br />
Japan<br />
<strong>Kuoni</strong> Japan Kabushika Kaisha, Tokyo I JPY 50 000 000 100 C<br />
Kenya<br />
Private Safaris (E.A.) Ltd., Nairobi I KES 62 500 000 80 C<br />
Korea<br />
<strong>Kuoni</strong> Travel (Korea) Ltd., Seoul I KRW 100 000 000 100 C<br />
Mauritius<br />
<strong>Kuoni</strong> Asian Investments (Mauritius) Ltd., Port Louis USD 1 000 000 100 C<br />
Nepal<br />
Sita World Travel (Nepal) Pvt. Ltd., Kathmandu I NPR 2 250 000 50 E<br />
Singapore<br />
<strong>Kuoni</strong> Travel (Singapore) Ltd., Singapore I SGD 100 000 100 C
Overseas<br />
South Africa<br />
<strong>Kuoni</strong> <strong>Group</strong><br />
Paid-in Investment Consoli-<br />
Activity Currency share capital in % dation<br />
<strong>Kuoni</strong> Private Safaris (Pty) Ltd., Cape Town I ZAR 500 000 100 C<br />
Thailand<br />
P&O Regale Travel Co Ltd., Bangkok L THB 2 000 000 25 E<br />
<strong>Kuoni</strong>ssimo (Thailand) Ltd., Bangkok I THB 2 000 000 49 C<br />
USA<br />
<strong>Kuoni</strong> Holding Delaware, Inc., Wilmington USD 1 100 C<br />
Intrav, Inc., St. Louis I USD 0.01 100 C<br />
AlliedTPro, Inc., New York I USD 50 000 100 C<br />
<strong>Kuoni</strong> Travel (Atlanta) Inc., Atlanta I USD 50 000 100 C<br />
Activities:<br />
L = Leisure<br />
I = Incoming<br />
Consolidation:<br />
C = consolidated<br />
E = consolidated using the equity method<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
45
46<br />
<strong>Report</strong> of the <strong>Group</strong> Auditors<br />
<strong>Report</strong> of the <strong>Group</strong> Auditors to the General Meeting of Shareholders of <strong>Kuoni</strong> Travel Holding Ltd., Zurich.<br />
As auditors of the <strong>Group</strong>, we have audited the consolidated financial statements of <strong>Kuoni</strong> Travel Holding Ltd., Zurich for the year ended<br />
31 December <strong>2003</strong>, as set out on pages 6 to 45 of this report. The financial statements of the UK and certain other subsidiaries included<br />
in the consolidated financial statements were audited by other auditors.<br />
These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on<br />
these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional<br />
qualification and independence.<br />
Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession and with the International Standards<br />
on Auditing (ISA), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated<br />
financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts<br />
and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates<br />
made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.<br />
In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the<br />
cash flows in accordance with International <strong>Financial</strong> <strong>Report</strong>ing Standards (IFRS) and comply with Swiss law.<br />
We recommend that the consolidated financial statements submitted to you be approved.<br />
KPMG Fides Peat<br />
Günter Haag Lukas Marty<br />
Swiss Certified Accountant Swiss Certified Accountant<br />
Auditor in Charge<br />
Zurich, 17 March 2004
48<br />
Six-Year Summary of Key Data<br />
CHF million <strong>2003</strong> 2002 2001 2000 1999 1998<br />
Turnover 3 295 3 739 4 065 4 113 3 515 2 896<br />
Switzerland 870 1 005 1 058 1 035 937 1) 869 1)<br />
Scandinavia 501 554 623 191 153 1) 40 1)<br />
Europe 488 486 569 970 914 1) 863 1)<br />
United Kingdom & North America 756 893 1 030 1 091 918 1) 599 1)<br />
Incoming & Asia 551 647 642 675 425 1) 367 1)<br />
Business Travel 167 193 186 184 168 1) 158 1)<br />
EBITA 102.4 120.7 –19.1 174.7 152.8 118.4<br />
Switzerland 29.7 40.5 46.2 47.6 38.5 31.9<br />
Scandinavia 9.0 –14.2 –130.9 –8.8 –1.1 1.1<br />
Europe 8.3 3.9 –18.3 5.5 18.2 15.6<br />
United Kingdom & North America 70.4 82.1 86.0 106.7 92.2 72.6<br />
Incoming & Asia 2.6 5.0 8.9 21.7 4.5 1.3<br />
Business Travel 1.9 21.9 10.6 19.2 15.5 9.6<br />
Corporate –19.5 –18.5 –21.6 –17.2 –15.0 –13.7<br />
EBIT 61.1 75.0 –279.5 134.4 122.7 100.6<br />
Net result 64.6 26.2 –281.7 115.1 87.1 99.8<br />
Investments in tangible and intangible assets 28.0 34.0 47.7 87.2 168.9 111.9<br />
Depreciation 52.3 56.9 66.4 54.7 42.5 28.2<br />
Cash flow (net cash from operating activities) 74.4 159.2 43.8 189.9 99.3 159.4<br />
Non-current assets 837 1 030 1 137 1 242 922 537<br />
Current assets 1 003 927 843 1 009 884 866<br />
Shareholders’ equity 613 578 614 920 700 558<br />
Equity ratio in % 33.3 29.5 31.1 40.9 38.8 39.8<br />
Long-term liabilities 402 460 497 407 284 147<br />
Short-term liabilities 823 911 860 913 799 677<br />
Total assets 1 840 1 957 1 980 2 251 1 806 1 403<br />
Invested capital 2) 1 194.3 1 197.7 1 254.9 913.7 526.8 320.0<br />
ROIC in % 3) 5.6 7.1 –2.3 14.5 21.1 30.3<br />
Average number of personnel (FTE) 7 931 7 907 8 301 7 669 6 528 6 008<br />
Switzerland 1 610 1 680 1 820 1 839 1 714 1 690<br />
Scandinavia 652 687 751 218 140 132<br />
Europe 886 921 995 1 235 1 100 1 062<br />
United Kingdom & North America 830 823 919 952 964 742<br />
Incoming & Asia 2 283 2 115 2 143 1 848 1 101 991<br />
Business Travel 1 645 1 654 1 647 1 550 1 484 1 366<br />
Corporate 25 27 26 27 25 25
<strong>Kuoni</strong> <strong>Group</strong><br />
CHF <strong>2003</strong> 2002 2001 2000 1999 1998<br />
Cash flow (net cash<br />
from operating activities)<br />
Per registered share A 5.03 10.80 2.98 12.94 6.93 4) 9.96 4)<br />
Per registered share B 25.15 54.02 14.88 64.72 34.66 4) 49.82 4)<br />
Net result<br />
Per registered share A 4.37 1.78 –19.15 7.85 6.08 4) 6.24 4)<br />
Per registered share B 21.86 8.90 –95.74 39.24 30.42 4 ) 31.19 4 )<br />
Shareholders’ equity<br />
Per registered share A 41.45 39.20 41.76 62.73 48.92 4) 34.91 4)<br />
Per registered share B 207.24 196.00 208.78 313.65 244.59 4) 174.54 4)<br />
Dividend<br />
Per registered share A 1.40 5) 0.60 0 2.40 2.20 4) 2.20 4)<br />
Per registered share B 7.00 5 ) 3.00 0 12.00 11.00 4 ) 11.00 4 )<br />
Total dividend payout 20 727 770 6) 8 873 376 0 35 339 484 32 293 030 35 200 000<br />
Payout ratio 32.1% 6) 33.8% 0 30.7% 35.7% 34.1%<br />
Dividend yield 1.69% 1.15% 0 1.71% 1.57% 1.90%<br />
Registered share A<br />
(Nominal value CHF 10)<br />
Number outstanding 1 000 000 1 000 000 1 000 000 1 000 000 100 000 100 000<br />
Number entitled to dividend 1 000 000 1 000 000 1 000 000 1 000 000 100 000 100 000<br />
Stock market prices not listed not listed not listed not listed not listed not listed<br />
Registered share B<br />
(Nominal value CHF 50)<br />
Number outstanding 3 000 000 3 000 000 3 000 000 3 000 000 300 000 300 000<br />
Number entitled to dividend 2 761 110 6) 2 757 792 2 747 403 2 744 957 273 573 300 000<br />
Stock market prices high 448 580 795 970 721 4) 945 4)<br />
low 220 175 205 645 537 4) 391 4)<br />
at year-end 414 261 441 700 702 4 ) 579 4 )<br />
Annual trading volume 558 million 619 million 1 299 million 2 083 million 1 330 million 1 331 million<br />
Stock market capitalisation<br />
31 December 1 325 million 835 million 1 411 million 2 240 million 2 115 million 1 744 million<br />
1) Figures for 1998–1999 are after intersegmental eliminations.<br />
2) Invested capital is the sum of all net current assets, fixed assets, goodwill and other net assets (not including interest-bearing assets) at the beginning of the period<br />
under review and includes goodwill actually paid (gross). Goodwill amortisation is not taken into account in operating profit.<br />
3) ROIC is defined as follows: the ratio of NOPLAT to invested capital.<br />
NOPLAT represents after-tax operating profit (EBITA) after adjusting taxes to a cash basis.<br />
4) Adapted in line with the new capital structure.<br />
5) Proposal of the Board of Directors to the General Meeting of Shareholders.<br />
6) As at 31 December <strong>2003</strong>. Subject to definitive approval by the General Meeting of Shareholders.<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
49
<strong>Kuoni</strong> <strong>Group</strong><br />
+ <strong>Kuoni</strong> Travel<br />
Holding Ltd. +++<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
51
52<br />
<strong>Financial</strong> Statements<br />
Income Statement<br />
CHF Notes <strong>2003</strong> 2002<br />
Income<br />
<strong>Financial</strong> income (8) 9 993 610 10 414 100<br />
Income from investments in subsidiaries (9) 83 841 369 68 118 198<br />
Other operating income 1 083 060 1 255 275<br />
Total income 94 918 039 79 787 573<br />
Expenses<br />
Personnel expense 10 751 803 11 434 436<br />
Administrative expense 8 276 853 7 812 713<br />
Expenses related to investments in subsidiaries (10) 19 685 490 26 037 909<br />
Other expenses 4 965 293 3 390 336<br />
Depreciation 832 815 709 129<br />
<strong>Financial</strong> expense 2 708 075 2 881 979<br />
Income taxes 339 530 674 544<br />
Total expenses 47 559 859 52 941 046<br />
Net result 47 358 180 26 846 527
Balance Sheet<br />
Assets<br />
<strong>Kuoni</strong> Travel Holding Ltd.<br />
CHF Notes 31 Dec <strong>2003</strong> % 31 Dec 2002 %<br />
Non-current assets<br />
<strong>Financial</strong> assets<br />
– Investments in subsidiaries (4) 583 739 191 49.7 675 088 309 56.9<br />
– Loans to group companies 279 519 104 23.8 280 275 963 23.6<br />
– Loans to associates and third parties 22 837 823 1.9 25 271 085 2.1<br />
– Other financial assets 22 515 707 1.9 31 765 169 2.7<br />
Tangible fixed assets<br />
– Land and buildings (2) 8 060 001 0.7 8 760 001 0.8<br />
– Furniture, fixtures and equipment (2) 1 0.0 1 0.0<br />
Total non-current assets 916 671 827 78.0 1 021 160 528 86.1<br />
Current assets<br />
Cash and cash equivalents 137 639 482 11.7 128 908 806 10.9<br />
Securities (3) 33 364 145 2.8 33 960 545 2.9<br />
Accounts receivable<br />
– from third parties (12) 86 312 595 7.3 418 058 0.0<br />
– from group companies 696 000 0.1 514 000 0.0<br />
Prepaid expenses 717 830 0.1 1 538 320 0.1<br />
Total current assets 258 730 052 22.0 165 339 729 13.9<br />
Total assets 1 175 401 879 100.0 1 186 500 257 100.0<br />
Liabilities and Shareholders’ Equity<br />
CHF Notes 31 Dec <strong>2003</strong> % 31 Dec 2002 %<br />
Shareholders’ equity<br />
Share capital (11) 160 000 000 13.6 160 000 000 13.4<br />
Legal reserves<br />
– General reserves 8 000 000 0.7 8 000 000 0.7<br />
– Share premium reserve 146 295 416 12.5 144 115 274 12.1<br />
– Reserve for treasury shares (6) 11 944 500 1.0 12 540 900 1.1<br />
Other reserves 242 596 400 20.6 225 603 127 19.0<br />
Retained earnings<br />
– Profit carried forward 1 576 278 0.1 0 0.0<br />
– Net result 47 358 180 4.1 26 846 527 2.3<br />
Total shareholders’ equity 617 770 774 52.6 577 105 828 48.6<br />
Liabilities<br />
Provisions 265 606 443 22.6 257 987 007 21.7<br />
Convertible bond (3) 204 815 000 17.4 204 815 000 17.3<br />
Accounts payable<br />
– to third parties 2 690 794 0.2 701 372 0.1<br />
– to group companies 49 606 143 4.2 110 158 026 9.3<br />
Accrued expenses 34 912 725 3.0 35 733 024 3.0<br />
Total liabilities 557 631 105 47.4 609 394 429 51.4<br />
Total liabilities and shareholders’ equity 1 175 401 879 100.0 1 186 500 257 100.0<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong> 53
54<br />
<strong>Financial</strong> Statements<br />
Board of Directors’ Proposal for the Appropriation<br />
of Retained Earnings<br />
CHF <strong>2003</strong> 2002<br />
Profit carried forward from previous year 1 576 278 0<br />
Net result for the year 47 358 180 26 846 527<br />
Retained earnings 48 934 458 26 846 527<br />
Dividends:<br />
Per registered share A gross CHF 1.40 1 400 000 600 000<br />
Per registered share B gross CHF 7.00<br />
– on 2 761 110 shares entitled to dividends as at 31 December <strong>2003</strong><br />
– on 216 462 treasury shares, set aside for the exercise of<br />
19 327 770 8 273 376<br />
conversion rights from the 1% convertible bond 1 515 234 1) – on 22 428 treasury shares, set aside for the share and stock<br />
0<br />
option plans of the Executive Board and Management 156 996 2) 0<br />
Total dividends 22 400 000 8 873 376<br />
Allocation to other reserves 26 403 600 16 396 873<br />
Appropriation of profit 48 803 600 25 270 249<br />
To be carried forward to new account 130 858 1 576 278<br />
Retained earnings 48 934 458 26 846 527<br />
1) Dividends on treasury shares in respect of which the conversion rights have not been exercised on the date of the dividend payment will be added<br />
to retained earnings.<br />
2) Dividends on treasury shares which have been set aside for the executive and management share purchase and stock option plans and which are in<br />
our possession on the date of the dividend payment will also be added to retained earnings.
Notes<br />
Introduction<br />
In legal terms, <strong>Kuoni</strong> shareholders are shareholders of <strong>Kuoni</strong> Travel Holding Ltd., which controls the companies listed<br />
at the end of the consolidated accounts. From an economic standpoint, the shareholders of <strong>Kuoni</strong> Travel Holding Ltd.<br />
are invested in the entire <strong>Group</strong>, and for this reason the consolidated accounts are of primary importance.<br />
The accounts of <strong>Kuoni</strong> Travel Holding Ltd. are drawn up in conformity with Swiss company law.<br />
1. Contingent Liabilities, Assets Pledged<br />
2. Fire Insurance Values<br />
3. Convertible Bond<br />
CHF 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Contingent liabilities 685 096 000 794 066 000<br />
Assets pledged 15 400 000 15 400 000<br />
Contingent liabilities consist of sureties and guarantees for consolidated subsidiaries, associates and BTI Central Europe.<br />
The latter have in the meantime been transferred.<br />
In the interests of the company, <strong>Kuoni</strong> Travel Holding Ltd. has pledged time deposits as security to the bank in the amount<br />
of CHF 15.4 million to cover a bank loan of <strong>Kuoni</strong> and Hugentobler Foundation, Zurich. For further details, see note 29<br />
(pages 38 / 39) of the financial accounts.<br />
CHF 31 Dec <strong>2003</strong> 31 Dec 2002<br />
Buildings 8 222 000 8 327 000<br />
Furniture, fixtures and equipment 600 000 600 000<br />
In February 2000, <strong>Kuoni</strong> Travel Holding Ltd. issued a 1% convertible bond in the amount of CHF 204.8 million,<br />
convertible into registered shares B. The bond will run for 5 years until 2 February 2005. The conversion price is<br />
CHF 946.19 per registered share B, resulting in a conversion ratio of 5.2843 registered shares per convertible<br />
bond of par value CHF 5 000.<br />
The repurchased securities of the convertible bond in a nominal amount of CHF 26.2 million are carried as securities<br />
in the balance sheet.<br />
4. Investments in Subsidiaries<br />
We refer to the information on principal subsidiaries and associates on pages 42–45.<br />
<strong>Kuoni</strong> Travel Holding Ltd.<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
55
56<br />
Annex<br />
5. Principal Shareholders<br />
6. Treasury Shares<br />
7. Related Parties<br />
The following principal shareholders are known to us:<br />
<strong>Kuoni</strong> and Hugentobler Foundation, Zurich<br />
31 December <strong>2003</strong>: 1000 000 registered shares A = 25.00% of the voting rights<br />
13 600 registered shares B = 0.34% of the voting rights<br />
31 December 2002: 1000 000 registered shares A = 25.00% of the voting rights<br />
13 600 registered shares B = 0.34% of the voting rights<br />
Silchester International Investors Limited, London<br />
31 December <strong>2003</strong>: 302 072 registered shares B = 7.55% of the voting rights<br />
31 December 2002: 262 471 registered shares B = 6.56% of the voting rights<br />
CHF Book value<br />
Held on 1 January 2002 255 043 registered shares B at par value CHF 50 12 752 150<br />
Sold 4 225 registered shares B at par value CHF 50 –211 250<br />
Held on 31 December 2002 250 818 registered shares B at par value CHF 50 12 540 900<br />
Sold 11 928 registered shares B at par value CHF 50 –596 400<br />
Held on 31 December <strong>2003</strong> 238 890 registered shares B at par value CHF 50 11 944 500<br />
Of these, 216 462 registered shares B are set aside as cover for the 1% convertible bond 2000–2005. The remaining<br />
treasury shares are reserved for the share purchase and stock option plans of the Executive Board and Management.<br />
The <strong>Kuoni</strong> and Hugentobler Foundation received a dividend payment of CHF 0.6 million from <strong>Kuoni</strong> Travel Holding Ltd.<br />
in the year under review.<br />
Please refer to the agreement with the <strong>Kuoni</strong> and Hugentobler Foundation described in note 29 (pages 38 / 39) of the<br />
consolidated financial statements.
8. <strong>Financial</strong> Income<br />
<strong>Financial</strong> income comprises interest income of CHF 7.9 million (2002: CHF 10.0 million), securities income of<br />
CHF 0.4 million (2002: CHF 0.2 million) as well as foreign exchange gains of CHF 1.7 million (2002: CHF 0.2 million).<br />
9. Income from Investments in Subsidiaries<br />
Income from investments in subsidiaries consists of dividends received as well as income from the disposal of subsidiaries.<br />
As in the preceding year, all wholly-owned subsidiaries were charged management fees to cover <strong>Group</strong><br />
overheads.<br />
10. Expenses Relating to Investments in Subsidiaries<br />
This item relates to support given to subsidiaries as well as to currency-related value adjustments and provisions. Where<br />
necessary, losses incurred by subsidiaries were either offset by direct subsidies from the holding company or appropriate<br />
allocations were made to provisions earmarked for that purpose.<br />
11. Shareholders’ Equity<br />
<strong>Kuoni</strong> Travel Holding Ltd.<br />
Share Legal Other Retained<br />
Total<br />
shareholders’<br />
CHF<br />
Shareholders’ equity<br />
capital reserves reserves earnings equity<br />
as at 1 January 2001 160 000 000 159 759 353 345 757 870 103 700 872 769 218 095<br />
Net result –189 124 331 –189 124 331<br />
Appropriation of retained earnings 67 153 545 –102 493 029 –35 339 484<br />
Use of treasury shares 4 033 193 396 951 4 430 144<br />
Shareholders’ equity<br />
as at 31 December 2001 160 000 000 163 792 546 413 308 366 –187 916 488 549 184 424<br />
Net result 26 846 527 26 846 527<br />
Appropriation of retained earnings –187 916 488 187 916 488 0<br />
Use of treasury shares 863 628 211 249 1 074 877<br />
Shareholders’ equity<br />
as at 31 December 2002 160 000 000 164 656 174 225 603 127 26 846 527 577 105 828<br />
Net result 47 358 180 47 358 180<br />
Appropriation of retained earnings 16 396 873 –25 270 249 –8 873 376<br />
Use of treasury shares 1 583 742 596 400 2 180 142<br />
Shareholders’ equity<br />
as at 31 December <strong>2003</strong> 160 000 000 166 239 916 242 596 400 48 934 458 617 770 774<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
57
58<br />
Annex<br />
The share capital is composed of the following:<br />
1 000 000 registered shares A at par value CHF 10 CHF 10 000 000<br />
3 000 000 registered shares B at par value CHF 50 CHF 150 000 000<br />
Total share capital CHF 160 000 000<br />
Conditional Capital<br />
Conditional capital amounts issuable via the exercise of conversion rights and/or warrants linked to bonds or similar debt<br />
issued by <strong>Kuoni</strong> Travel Holding Ltd. or any of its subsidiaries in the domestic or international capital markets, and/or via<br />
the exercise of options granted to shareholders amounts to a maximum of CHF 19.2 million, with a further maximum of<br />
CHF 4.8 million reserved for employee stock option plans.<br />
Authorised Capital<br />
There is no authorised capital.<br />
Restricted Transferability Provisions<br />
The articles of association stipulate that no more than 3% of the total share capital and voting rights may be entered<br />
in the name of any one shareholder.<br />
Opting Out/Opting Up<br />
12. Accounts Receivable<br />
There is no opting out or opting up clause in the articles of association.<br />
This position includes the selling price for BTI Central Europe which was paid in full in January 2004.
<strong>Report</strong> of the Auditors<br />
<strong>Report</strong> of the Auditors to the General Meeting of Shareholders of <strong>Kuoni</strong> Travel Holding Ltd., Zurich.<br />
<strong>Kuoni</strong> Travel Holding Ltd.<br />
As statutory auditors, we have audited the accounting records and the financial statements of <strong>Kuoni</strong> Travel Holding Ltd. for the year<br />
ended 31 December <strong>2003</strong>, as set out on pages 52 to 58 of this report.<br />
The financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on the financial<br />
statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.<br />
Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be<br />
planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement.<br />
We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed<br />
the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit<br />
provides a reasonable basis for our opinion.<br />
In our opinion, the accounting records, the financial statements and the proposed appropriation of retained earnings comply with<br />
Swiss law and the company’s articles of incorporation.<br />
We recommend that the financial statements submitted to you be approved.<br />
KPMG Fides Peat<br />
Günter Haag Lukas Marty<br />
Swiss Certified Accountant Swiss Certified Accountant<br />
Auditor in Charge<br />
Zurich, 17 March 2004<br />
KUONI <strong>Financial</strong> <strong>Report</strong> <strong>2003</strong><br />
59
<strong>Kuoni</strong> Travel Holding Ltd. · Neue Hard 7 · CH-8010 Zurich · www.kuoni.com