DUFRY AG Listing of 4,218,750 Registered Shares

Seasonality
Further, and irrespective of the prevailing economic climate, passenger flows and the Dufry Group’s sales
are seasonal. Such seasonality, however, varies from region to region. In Europe, for example, the highest levels
of sales and profits are during the months of July and August, while in the Central and South Americas and the
Caribbean the highest levels of sales and profits are during December and in the USA from June to August. In
addition, certain seasonal events affecting sales, such as Easter or Ramadan, occur on different dates each year.
As Dufry increases its working capital prior to these peak sales periods to carry higher inventory levels and
increase its sales staff levels to meet anticipated demands, its results of operations would be affected negatively
by any substantial decrease in sales during the traditional peak selling periods.
Currency Fluctuations
The Dufry Group benefits from natural hedging to a large extent, as its sales are primarily in Euros or US
dollars and its cost of goods and concession payments are also primarily denominated in Euros or US dollars. In
addition, concession fees are largely linked to sales. The Dufry Group’s results may, however, be positively or
negatively affected by currency fluctuations as it reports in Swiss Francs. However, the impact on profitability is
generally limited. See, further, “—Risk Management—Foreign Exchange Risk.”
Depreciation and Amortization
Dufry’s depreciation and amortization policies may also affect its profitability. The Dufry Group
depreciates property, plant and equipment on a straight line basis over the shorter of the useful life of the asset
(eg, four years for furniture and 10 years for fittings and other leasehold improvements) or the life of the
concession to which the assets relate. Intangible assets with finite lives are amortized over the useful economic
life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cashgenerating
unit level and are also reviewed annually to determine whether indefinite life assessment continues to
be supportable. If not, the change in useful life assessment from indefinite to finite is made on a prospective
basis. Intangibles with indefinite useful lives are not amortized.
Financial Result
The Dufry Group’s profitability may be affected by the net amount of interest paid, interest earned, foreign
exchange gains or losses from foreign exchange translation effects and gains or losses from the sale of
subsidiaries.
Income Taxes
Tax expense is based on the operating profit and net financial income and expenses of the Dufry Group on a
separate return basis, ie, each subsidiary is taxed in its jurisdiction of operation, including financial income and
expenses arising from inter-company financing in the Dufry Group. Tax losses carried from one tax period to
the next may also influence the Dufry Group’s tax expense. As a result, there are substantial differences in tax
rates across the Dufry Group. However, Dufry has put in place a standardized tax planning system across the
Dufry Group whereby certain Dufry Group costs may be charged back to the Dufry Group’s operating
subsidiaries based on clearly defined parameters through management fees, logistics costs and franchise fees
determined on an arm’s length basis.
Minorities
Dufry’s business model places importance on the involvement of local partners in its concessions. See
“Business—Business Strategy—Position Dufry as preferred partner for long-term business relationships.” While
the Dufry Group benefits from the contribution that a local partner brings to the operation of a concession, the
involvement of such partners in the ownership of the Company’s operating subsidiaries reduces the net earnings
of the Dufry Group. For example, 40 percent of one of the Company’s main European operating subsidiaries,
Dufrital, is owned by Milan’s airport authority, the Società Esercizi Aeroportuali SpA; 49 percent of the Dufry
Group’s operating subsidiary at Sharjah is owned by the Sharjah Civil Aviation Authority; 49 percent of DSA is
publicly held; and 40 percent of the Company’s subsidiary, Duty Free Caribbean, is owned by its local partner
Cave Shepherd & Co, one of the longest established trading companies in Barbados. The Dufry Group’s interest
in the earnings of these operating subsidiaries is therefore significantly reduced.
25