A GLOBAL AMBITION ANNuAL REPORT 2006 - Dufry
A GLOBAL AMBITION ANNuAL REPORT 2006 - Dufry
A GLOBAL AMBITION ANNuAL REPORT 2006 - Dufry
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A <strong>GLOBAL</strong> <strong>AMBITION</strong><br />
<strong>ANNuAL</strong> <strong>REPORT</strong> <strong>2006</strong>
cONTENTS<br />
cOMPANY <strong>REPORT</strong><br />
Key Figures<br />
<strong>Dufry</strong> in One Minute<br />
Global Presence 1<br />
Letter from the Chairman 2<br />
Statement of the Chief Executive Officer 4<br />
Our Organization 7<br />
Business Description 8<br />
Corporate Governance 24<br />
Report of the Chief Financial Officer 48<br />
Comparison Income Statements <strong>2006</strong>/2005 51<br />
FINANcIAL <strong>REPORT</strong><br />
Contents Financial Report 53<br />
Consolidated Financial Statements 54<br />
Notes to the Consolidated Financial Statements 58<br />
Report of the Group Auditors 106<br />
Financial Statements <strong>Dufry</strong> Ltd 107<br />
Notes to the Financial Statements 109<br />
Appropriation of Available Earnings 109<br />
Report of the Auditors 110<br />
OTHER INFORMATION<br />
Information for Investors and Media 111<br />
Address Details of Headquarters 112<br />
Disclaimer and Publishing Details
kEY FIGuRES<br />
TuRNOVER<br />
in millions of CHF<br />
1500<br />
1200<br />
900<br />
600<br />
300<br />
0<br />
NET EARNINGS<br />
in millions of CHF<br />
120<br />
90<br />
60<br />
30<br />
0<br />
-30<br />
NET SALES BY REGION IN <strong>2006</strong><br />
GROSS PROFIT<br />
in millions of CHF Margin<br />
+60 %<br />
+24 % +12 % +51%<br />
750<br />
54 % 150<br />
+71 % +20 %<br />
600<br />
450<br />
300<br />
150<br />
0<br />
NuMBER OF SHOPS<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
Europe 26 %<br />
Africa 11 %<br />
Eurasia 13 %<br />
North America & Caribbean 23 %<br />
South America 27 %<br />
Airports 77 %<br />
Cruise liners and<br />
seaports 8 %<br />
Downtown, hotels<br />
and resorts 9 %<br />
Railway stations<br />
and other 6 %<br />
52 %<br />
50 %<br />
48 %<br />
46 %<br />
44 %<br />
EBITDA 1<br />
in millions of CHF<br />
2003 2004 2005 <strong>2006</strong> 2003 2004 2005 <strong>2006</strong> 2003 2004 2005 <strong>2006</strong><br />
+71 % +134 %<br />
120<br />
90<br />
60<br />
30<br />
0<br />
EMPLOYEES<br />
number of full time equivalents<br />
2003 2004 2005 <strong>2006</strong> 2003 2004 2005 <strong>2006</strong> 2003 2004 2005 <strong>2006</strong><br />
Note: 2003 and 2004 figures on a pro-forma basis<br />
1 EBITDA before other operational result<br />
NET SALES BY cHANNEL IN <strong>2006</strong><br />
227 283 320 444<br />
7500<br />
6000<br />
4500<br />
3000<br />
1500<br />
0<br />
NET SALES BY PRODucT cATEGORIES IN <strong>2006</strong><br />
SHARE PRIcE PERFORMANcE<br />
in CHF<br />
115<br />
110<br />
105<br />
100<br />
95<br />
90<br />
85<br />
80<br />
75<br />
Perfumes and Cosmetics 25 %<br />
Wine and Spirits 17 %<br />
Watches, Jewelry and<br />
Accessories 16 %<br />
Confectionery and Food 11 %<br />
Tobacco goods 11 %<br />
Electronics 7 %<br />
Fashion, Leather and<br />
Baggage 5 %<br />
Literature and Publications 4 %<br />
Other 4 %<br />
Dec 05 <strong>2006</strong> Mar May Jul Sep Nov 2007 Mar
DuFRY IN ONE MINuTE<br />
— <strong>Dufry</strong> is a global travel retailer with operations in 37 countries.<br />
— <strong>Dufry</strong> operates over 440 shops located at airports, cruise liners,<br />
seaports, and other touristic locations.<br />
— We developed a strong portfolio of long-term concessions with airport<br />
authorities and other landlords. 73% of net sales in <strong>2006</strong> were generated<br />
in contracts with more than 6 years remaining duration, 34% with<br />
more than 9 years.<br />
— <strong>Dufry</strong> provides its customers with prestigious brands from more than<br />
1,000 suppliers.<br />
— Our customers rely on the professional services of over 6,500<br />
employees.<br />
— Global and local. <strong>Dufry</strong> is globally active, with its corporate structure<br />
organized in five regions. We work with local partners and adjust our<br />
offerings to the local habits of our customers.<br />
— <strong>Dufry</strong> has a clear vision – We want to be the industry’s most innovative<br />
and profitable company.<br />
— <strong>Dufry</strong> has been pursuing a strategy of profitable growth with focus on<br />
tourist destinations in emerging markets.<br />
— <strong>Dufry</strong> Ltd is publicly listed in Switzerland. Since December <strong>2006</strong>, our<br />
subsidiary <strong>Dufry</strong> South America Ltd also has a separate listing in the<br />
Brazilian and Luxembourg stock exchanges.<br />
— The headquarters of our Group are located in Basel, Switzerland.<br />
Our company’s history goes back to its foundation in 1865.
GLobaL PRESENCE<br />
EuRoPE<br />
Italy : Bergamo, Brescia, Genoa,<br />
Milan-Malpensa, Milan-Linate,<br />
Central Milan, Naples, Palermo,<br />
Rome-Ciampino, Rome-Fiumicino,<br />
Rome-Termini, Turin, Verona,<br />
on-board several airlines<br />
France : Nice, Pointe-à-Pitre<br />
Spain : Bilbao, Palma de Mallorca,<br />
Tenerife<br />
Switzerland : Basel-Mulhouse,<br />
Samnaun<br />
Netherlands : Amsterdam<br />
Greece : Patras-Blue Star Ferries,<br />
Patras-Superfast Ferries,<br />
Piraeus-Blue Star Ferries, Eptanisos<br />
Existing operations as of March 2007<br />
Additional signed operations<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> – Global Presence<br />
aFRICa<br />
Tunisia : Djerba, Monastir, Sfax,<br />
Tabarka, Tozeur, Tunis<br />
algeria : Algiers<br />
Morocco : Agadir, Casablanca,<br />
Marrakech<br />
Ghana : Accra<br />
Ivory Coast : Abidjan<br />
EuRaSIa<br />
Russian Federation : Moscow-<br />
Domodedovo<br />
united arab Emirates : Sharjah,<br />
on-board Air Arabia<br />
Singapore : Singapore<br />
Cambodia : Phnom Penh, Siem Reap<br />
belarus: Koslovichi, Makrani, Minsk,<br />
Petschatka, Stolyn<br />
Serbia : Belgrade<br />
China: Hong Kong<br />
NoRTh aMERICa & CaRIbbEaN<br />
Mexico : Cancun, Cozumel-Puerta<br />
Maya, Cozumel-Punta Langosta,<br />
Guadalajara, Laredo, Los Cabos,<br />
Mexico City, Monterrey, Melgar,<br />
Progreso, Puerto Vallarta, Reynosa<br />
united States : Houston, Miami,<br />
Newark, New York JFK<br />
Caribbean Islands : Aruba, Antigua,<br />
Bahamas, Barbados, Bonaire, Cayman<br />
Islands, Curaçao, Dominican Republic,<br />
Grand Turk, Grenada, Jamaica, Puerto<br />
Rico, St John, St Lucia, St Maarten,<br />
St Thomas, Trinidad<br />
Nicaragua : El Espino, Guasaule,<br />
Las Manos, Managua, Sapoa, Peñas<br />
Blancas<br />
SouTh aMERICa<br />
brazil : Belo Horizonte, Brasilia,<br />
Florianopolis, Fortaleza, Porto Alegre,<br />
Recife, Rio de Janeiro, Sao Paulo<br />
bolivia : La Paz, Santa Cruz<br />
NCL: on-board Norwegian Cruise Lines
ChaIRMaN oF ThE boaRD oF DIRECToRS<br />
bEyoND DuFRy, a SoCIaL RESPoNSIbILITy<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chairman of the Board of Directors<br />
Dear Shareholders,<br />
<strong>2006</strong> was another year of strong growth and outstanding financial performance<br />
at <strong>Dufry</strong>. Since the IPO in December 2005, <strong>Dufry</strong>’s share price rose by 28% from<br />
CHF 80.00 to CHF 102.00 on December 31, <strong>2006</strong>, resulting in a market capitalization<br />
of CHF 1,434 million. <strong>Dufry</strong> has demonstrated its capability to develop<br />
business through organic growth, new projects and acquisitions. In <strong>2006</strong>, <strong>Dufry</strong><br />
successfully deployed all of these approaches: Apart from a healthy organic<br />
growth, we started new operations in all regions and also acquired new companies<br />
in Brazil and Puerto Rico. In addition, <strong>Dufry</strong> further strengthened its<br />
concession portfolio, providing a basis to increase sales growth and profitability<br />
in the years to come.<br />
In terms of projects, the highlights in <strong>2006</strong> were the acquisition of Brasif and its<br />
logistics platform Eurotrade in March <strong>2006</strong> for a total consideration of USD 503<br />
million, of which 80% was financed by <strong>Dufry</strong>, as well as the acquisition in Puerto<br />
Rico late December <strong>2006</strong>. Furthermore, in order to capture the full potential in<br />
South America, <strong>Dufry</strong> decided in autumn <strong>2006</strong> to do an Initial Public Offering<br />
(IPO) of its South American operations in the Brazilian and Luxembourg stock<br />
markets. <strong>Dufry</strong> South America Ltd, which comprises the Brazilian as well as<br />
the Bolivian operations and the Caribbean cruise line retailing business, had its<br />
first day of trading on December 20, <strong>2006</strong>. As of December 31, <strong>2006</strong>, <strong>Dufry</strong> South<br />
America had a market capitalization of USD 855 million.<br />
With these strategic moves, <strong>Dufry</strong> has secured strong positions in South America<br />
and the Caribbean, some of its strategic core markets. The IPO of <strong>Dufry</strong><br />
South America will allow us to develop the South American business in an optimal<br />
way by combining the global reach of <strong>Dufry</strong> with the support of the investor<br />
community dedicated to Latin America. Additionally, the proceeds obtained<br />
from the IPO allowed us to continue the acquisition path, the Puerto Rico transaction<br />
being the first example.<br />
In <strong>2006</strong>, there were certain changes to the Board of Directors. At the Extraordinary<br />
General Meeting on November 23, <strong>2006</strong>, the number of Board members<br />
was reduced from nine to seven and Mr Jaime Carvajal Urquijo was elected as a<br />
new member of the Board of Directors. Today, Ernest George Bachrach, Xavier<br />
Bouton, Jaime Carvajal Urquijo, Mario Fontana, Luis Andrés Holzer, Joaquin<br />
Moya-Angeler and myself form a Board of Directors that for good Corporate<br />
Governance reasons consists of non-executive members only. All seven members<br />
combine a wide range of professional backgrounds and have extensive<br />
experience in their businesses.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chairman of the Board of Directors<br />
The Board’s international structure, with five different nationalities represented,<br />
mirrors <strong>Dufry</strong>’s global culture. Sharing common values and goals as well<br />
as embracing cultural diversity is a key for <strong>Dufry</strong> and being a publicly listed<br />
company enlarges our responsibility beyond <strong>Dufry</strong> as a company. As one of the<br />
leading travel retailers in the world, <strong>Dufry</strong> is not only becoming an opinion leader<br />
within the industry but has started to shape the industry itself. Indeed, I see<br />
<strong>Dufry</strong> taking a role over and above the industry. As an international employer<br />
in many emerging markets, we have a responsibility to work together with the<br />
local entities to pursue higher levels of economic and social development in<br />
those countries. <strong>Dufry</strong> promotes exchange programs of employees within the<br />
Group and wants to actively facilitate the access to the labour market of people<br />
currently excluded from it, as <strong>Dufry</strong> is already doing in Brazil by sponsoring a<br />
program for underprivileged young people. This example shows the direction<br />
which we see <strong>Dufry</strong> evolving – as an active and responsible employer and business<br />
partner wherever it is present – today in 37 countries.<br />
On behalf of the Board of Directors, I would like to thank all our employees for<br />
their efforts and dedication. We also thank our customers for shopping in our<br />
stores and our suppliers for their loyalty towards us. To you, our valued shareholders,<br />
we would like to express our gratitude for your interest and support in<br />
our Company.<br />
Sincerely,<br />
Juan Carlos Torres Carretero
ChIEF ExECuTIvE oFFICER<br />
DuFRy, DELIvERING a SoLID STRaTEGy<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Executive Officer<br />
Dear all,<br />
Last year was another important step in <strong>Dufry</strong>’s strategy and a very successful<br />
year: With strong top-line growth of 51 % we reached a Turnover of<br />
CHF 1,436.3 million, our EBITDA 1 increased 60 % from CHF 100.1 million in<br />
2005 to CHF 160.5 million in <strong>2006</strong>. <strong>Dufry</strong> has once more improved its margins<br />
with our EBITDA 1 margin being up from 10.5 % on turnover in 2005 to 11.2 % in<br />
<strong>2006</strong>. Additionally, <strong>Dufry</strong> further broadened its global footprint by entering eight<br />
new markets and adding 140 shops, all of them in our key strategic markets.<br />
006 – a very active year<br />
In <strong>2006</strong> we continued to drive organic growth by leveraging the passenger<br />
growth through refurbishments and improvements in our operations. The result<br />
of a 8 % organic growth rate is well above the respective passenger growth<br />
for the third consecutive year and demonstrates our capabilities to develop our<br />
business over and beyond pure market growth.<br />
As announced during the IPO of <strong>Dufry</strong> Ltd in 2005, we have expanded existing<br />
operations and started new businesses across our Group. Overall, we added<br />
more than 10,000 m 2 of retail space during fiscal year of <strong>2006</strong>, an increase of<br />
about 20% compared to year end of 2005. Many of these projects only became<br />
fully operational in the second half of <strong>2006</strong>, so that the sales growth in <strong>2006</strong><br />
does not reflect the full potential of these new projects. We will see another<br />
growth effect in this respect during 2007, together with a number of new projects,<br />
which will be implemented in 2007. The new projects announced so far for<br />
2007 will increase the retail surface by another approx. 7,500 m 2 .<br />
Last but not least, we also have been active on M&A and capital market transactions.<br />
The acquisition of 80% of Brasif and its logistics platform Eurotrade in<br />
March <strong>2006</strong> meant another big step for our Group. Brazil has not only become<br />
the heart of our new region South America but today, it is also one of the most<br />
important countries for <strong>Dufry</strong>. In autumn <strong>2006</strong>, we decided to do an Initial Public<br />
Offering of our region South America for two reasons: On one hand, it was an<br />
opportunity to de-leverage our Group and hence to give us headroom for further<br />
growth, on the other hand and more importantly, we are convinced that through<br />
the IPO of our South American operations, we can better develop our business<br />
in this region. The very positive reaction of airport authorities, landlords, suppliers<br />
and employees to our IPO in Switzerland at the end of 2005 mirrors the<br />
potential that such a transaction can bring to <strong>Dufry</strong> South America. The valuation<br />
of <strong>Dufry</strong> South America since its IPO on December 20, <strong>2006</strong> demonstrates<br />
that also the financial community supports this view. As of December 31, <strong>2006</strong>,<br />
<strong>Dufry</strong> South America reached a market capitalization of USD 855 million. The<br />
year <strong>2006</strong> ended with another transaction, namely with the acquisition of the<br />
leading Travel Retail operator in Puerto Rico. This group operates 23 travel retail<br />
shops on the island of Puerto Rico and other Caribbean islands and will be<br />
integrated into <strong>Dufry</strong>’s North America & Caribbean region.<br />
1 EBITDA before other operational result
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Executive Officer<br />
Another important event in <strong>2006</strong> was the alleged terrorist attacks in the United<br />
Kingdom in August <strong>2006</strong> and the subsequent introduction of EU wide security<br />
measures related to liquids in November <strong>2006</strong>. Although the introduction of EU<br />
wide security measures did not have significant impact on <strong>Dufry</strong>’s business,<br />
there is still work to be done, such as harmonizing security standards on a<br />
global scale. We support ETRC, the European Travel Retail Council, in its efforts<br />
to achieve this goal.<br />
+ years of consistent strategy<br />
The growth and consolidation of our Group is a direct consequence of the implementation<br />
of the strategy defined back in early 2004: growth in 3 geographical<br />
areas comprising emerging markets and tourist destinations; combining<br />
a robust organic growth, which is one of the pillars of <strong>Dufry</strong>’s strategy, with<br />
interesting opportunities through new concession contracts and through acquisitions;<br />
and in all the cases we target to enhance our concession portfolio and<br />
keep a profitable growth.<br />
As result of this strategy turnover has doubled and the EBITDA 1 has multiplied<br />
by three from 2003 to <strong>2006</strong>.<br />
Going forward, we strongly believe that our strategy will continue to be successful;<br />
however, in order for <strong>Dufry</strong> to create substantial value also in the future,<br />
we need to reinforce <strong>Dufry</strong>’s structure and continue to work on our efficiency.<br />
By combining growth with more efficient ways to operate, we create the basis<br />
for a sustainable long-term development of <strong>Dufry</strong> and for continuous increase<br />
in shareholder value. By achieving this, we will remain the driving force in the<br />
Travel Retail Industry and we will further strengthen our position as the industry<br />
leader.<br />
Strengthening our future today<br />
In <strong>2006</strong>, <strong>Dufry</strong> delivered on its growth strategy and we expect to do so in<br />
the years to come. The Travel Retail market is still highly fragmented and<br />
<strong>Dufry</strong> is in a stronger position than ever to seize opportunities that arise. The<br />
challenges in the next three years will not only be to drive growth, but also<br />
to develop our organization capabilities to further improve <strong>Dufry</strong>’s efficiency<br />
overall. In <strong>2006</strong>, we have launched a first project to standardize and improve<br />
our procedures and processes across the Group. This project will continue in<br />
the following years to further enhance the performance of our functional and<br />
business driven processes. Furthermore, we have also launched three other<br />
projects across the whole Group aiming to further develop our organization<br />
capabilities in partnership with well renowned specialized firms: a logistics<br />
project with Miebach Logistics, an IT project with IBM and a Human Resources<br />
project with Hewitt.<br />
We are today investing in our future and leveraging the potential of our Company<br />
to the benefit of our shareholders, landlords, suppliers, employees and<br />
our customers. Our ambitious strategy, adequate structure and motivated<br />
teams are definitely the right ingredients for us to create value for our shareholders.
6<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Executive Officer<br />
Strengthening our future today means as well that our expansion strategy<br />
needs to be based on strong foundations for our business, namely the concession<br />
portfolio. <strong>Dufry</strong> is expected to generate, on a pro-forma 2007 basis, 78% of<br />
its sales with concession agreements having a remaining duration of more than<br />
six years and 34% with more than nine years.<br />
Today, <strong>Dufry</strong> is one of the leading travel retailers and we are proud of what<br />
our Company has achieved so far, thanks to its management’s and employees’<br />
commitment, professionalism and extensive expertise. <strong>Dufry</strong> has undergone<br />
an outstanding transformation from a privately held group of companies into a<br />
publicly listed Travel Retailer with a global strategy and with proven execution<br />
skills.<br />
To conclude, I would like to thank all our employees for their dedication and<br />
commitment – <strong>2006</strong> has been a very exciting and challenging year for <strong>Dufry</strong> and<br />
success has been possible only thanks to our people, who helped to make this<br />
happen.<br />
Julián Díaz
ouR oRGaNIzaTIoN<br />
Group Executive Committee<br />
Chief operating officer<br />
Region Europe<br />
Dante Marro<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Our Organization<br />
Chief Financial officer<br />
Xavier Rossinyol<br />
General Counsel<br />
Pascal C. Duclos<br />
Chief operating officer<br />
Region africa<br />
Miguel Angel Martínez<br />
Chief Executive officer<br />
Julián Díaz<br />
Chief operating officer<br />
Region Eurasia<br />
René Riedi<br />
Global Chief operating<br />
officer<br />
José Antonio Gea<br />
Chief operating officer<br />
Region North america &<br />
Caribbean<br />
José H. González<br />
Chief operating officer<br />
Region South america<br />
José Carlos Rosa<br />
From left to right: Dante Marro, Pascal C. Duclos, Miguel Angel Martínez, Xavier Rossinyol, Julián Díaz, José Antonio Gea,<br />
José H. González, René Riedi, José Carlos Rosa
uSINESS DESCRIPTIoN<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Business Description<br />
Serving customers around the world: anywhere – anytime<br />
<strong>Dufry</strong> is one of the world’s leading travel retail companies, operating over 440<br />
shops with more than 79,000 m 2 of retail space in 37 countries around the<br />
globe. Our customers are travelers from throughout the world and this makes<br />
our business something special. Our shops and assortment are designed to<br />
make our customers feel at home and at the same time give them the excitement<br />
of being abroad. Therefore, <strong>Dufry</strong> works with more than 1,000 suppliers<br />
and the list includes all global and luxury brands as well as producers of local<br />
specialties.<br />
We manage all of our operations directly and staff every shop with our own<br />
employees, in order to be as close to the customer as possible. Thanks to this,<br />
our local staff has an in-depth understanding of our customers and can provide<br />
direct customer feedback, which we use to further improve our assortment and<br />
services, not only in the respective location but across <strong>Dufry</strong>.<br />
Depending on the location, we use three different retail concepts to fully capitalize<br />
on the existing opportunities:<br />
— General Travel Retail<br />
In these shops, we offer a wide range of product categories like perfumes,<br />
cosmetics, wines, spirits, tobacco, food, watches, jewelry, accessories, and<br />
others. Our customers have access to duty-free and / or duty-paid shops,<br />
depending on their destination. We operate duty-free departure shops, located<br />
at the restricted departure area of international airports and, in certain<br />
countries and locations we also operate duty-free arrival shops, located in<br />
the restricted arrival areas of such international airports.<br />
— brand boutiques<br />
These boutiques have an assortment of one specific brand and are fully operated<br />
by <strong>Dufry</strong> with our own staff. Brand boutiques operated by <strong>Dufry</strong> include<br />
prestigious names such as Bulgari, DKNY, Dolce & Gabbana, Etro,<br />
Ferragamo, Hermès, Kenneth Cole, Mont Blanc, Versace or Zegna.<br />
— Specialized Shops<br />
These are boutiques specializing in one specific type of product, offering a<br />
variety of different brands, like cigar shops, jewelry and watch shops, chocolate<br />
stores, etc.<br />
Our sales persons are at the heart of our business and it is their contribution<br />
every day that makes the difference for our customers. However, we complement<br />
their service with additional marketing techniques, which help our customers<br />
to identify the products they want and to demonstrate new products<br />
they may not know. The range of instruments includes displays, promotions,<br />
tasting, leaflets, loyalty programs or gifts. We also give our suppliers the opportunity<br />
to position their brands in an optimal way by providing advertising<br />
space within our shops. Recognizing the fact that some travelers desire to plan<br />
their duty-free purchases in advance, <strong>Dufry</strong> South America also established an<br />
internet pre-order system on their website, which is often used by customers<br />
traveling abroad.
NuMbER oF ShoPS LoCaTED aT<br />
As of December 31, <strong>2006</strong><br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Business Description<br />
Airports 287<br />
Cruise liners and seaports 72<br />
Downtown, hotels and resorts 64<br />
Railway stations and other<br />
ToTaL<br />
21<br />
CoNCESSIoN CoNTRaCTS<br />
Breakdown of net sales <strong>2006</strong> by duration of contracts<br />
9 + years 34 %<br />
6 – 9 years 39 %<br />
3 – 5 years 20 %<br />
1 – 2 years 7 %<br />
The world of <strong>Dufry</strong><br />
We focus our development around three strategic areas, namely the Mediterranean<br />
Basin including Southern Europe and Northern Africa, Latin America &<br />
the Caribbean and the Asian Corridor reaching from Moscow to the South East<br />
Asian region. Hence, each of our five regions is part of one of these areas. This<br />
allows us to maintain our diversified portfolio and also puts all the resources to<br />
the further development of our Group.<br />
— Europe<br />
We have a strong position in Southern Europe with operations in Italy, Spain,<br />
France and Greece. Furthermore, we also operate shops in Switzerland and<br />
the Netherlands.<br />
— africa<br />
Our prime position in Northern Africa is based on our operations in Tunisia,<br />
Morocco, Algeria and, as of 2007, in Egypt. We also have shops in Ghana and<br />
Ivory Coast.<br />
— Eurasia<br />
Our most important operations in this region are located in the Russian Federation,<br />
Singapore, and the United Arab Emirates. The region also includes<br />
our operations in Cambodia, Serbia, Belarus, and since February 2007, in<br />
Hong Kong.<br />
— North america & Caribbean<br />
We are the leading travel retailer in the Caribbean with presence in all<br />
major islands including Aruba, Antigua, Bahamas, Barbados, Bonaire,<br />
Curaçao, Cayman Islands, Dominican Republic, Grand Turk, Grenada, Jamaica,<br />
St John, St Lucia, St Maarten, St Thomas and Trinidad, and since the beginning<br />
of 2007, Puerto Rico. On top of this, we have a strong presence in several<br />
Mexican airports and also operate shops in Nicaragua and the USA.<br />
— South america<br />
We are present in the major airports in Brazil, have stores in Bolivia and operate<br />
shops on-board of cruise ships of Norwegian Cruise Lines.
0<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Business Description<br />
Local implementation for global success<br />
Our organization is based on a simple concept: combining the advantages of a<br />
global group with extensive knowledge of the local markets. Therefore, we have<br />
organized our Group into three levels:<br />
— Local operations<br />
Our over 440 shops are at the foundation of our business. Our local teams<br />
serve customers and are also responsible for the day-to-day tasks of managing<br />
our operations. They also collect valuable information on customer<br />
preferences, which is then aggregated at Group level.<br />
— Regions<br />
The regions oversee all aspects of our business within the respective area.<br />
They are in constant contact with the local teams and advise them in their<br />
daily work. Furthermore, they coordinate all projects within the respective<br />
region and are also responsible for the monitoring of the performance. At<br />
the same time, they are important points of contact for the Group as they<br />
have an in-depth understanding of the markets in their respective area.<br />
— Group<br />
This team is responsible for the overall coordination of <strong>Dufry</strong> and is organized<br />
along the various functions of our Group. Our specialists are responsible<br />
for the coordination and implementation of the overall strategy for the<br />
whole Group in their respective area. Globally managed and locally executed,<br />
our activities are performed in a successful matrix organization leading to<br />
significant operational improvements and value creation through generated<br />
synergies and know-how transfer across the Group.<br />
our concession portfolio – an intangible asset<br />
Like any other retailer, the locations of our shops are fundamental to our performance,<br />
and in the case of <strong>Dufry</strong>, we normally get them based on concession<br />
contracts. We are very proud of our high-quality concessions portfolio for several<br />
reasons:<br />
— Diversification<br />
We have more than 220 concessions in 37 countries.<br />
— Duration<br />
The concession portfolio has a long remaining duration. Based on net sales<br />
<strong>2006</strong>, about 73% of our revenues were generated in locations where the concession<br />
contracts have a duration of more than 6 years, and 34 % of our<br />
revenues in locations with contracts of more than 9 years.<br />
The above parameters are in our view important to run our business successfully<br />
in the long-term. Therefore we consider it important to establish longterm<br />
partnerships with airport authorities and other landlords. This means that<br />
we work closely with our partners to develop the facilities in the most optimal<br />
way for the owner, the customer and us. Our retail know-how adds substantial<br />
value, resulting in a more attractive facility and at the same time giving us a<br />
better performance – a win-win situation for all partners involved.
huMaN RESouRCES<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Human Resources<br />
Employing the right staff<br />
<strong>Dufry</strong> considers the employment of qualified and highly motivated employees<br />
as one of the most important factors to the success of the company’s business<br />
strategy. Our employees serve our customers from different parts of the world<br />
every day and make them feel welcome in our shops. We employ people with<br />
more than 50 nationalities, and we consider this cultural diversity as one of the<br />
strong pillars of <strong>Dufry</strong>.<br />
Serving our international customers requires some specific skills: Apart from<br />
language skills, our employees also need to be adaptive to the various cultural<br />
backgrounds of our customers; and the opening hours of our shops may<br />
require to work outside of normal business hours. Therefore, each of our five<br />
regional headquarters runs employee training courses particularly in the area<br />
of customer care. We train our staff to have the knowledge, skills and attitude<br />
for them to handle and perform their services and responsibilities in the most<br />
professional way. Additionally, we also organize specific local or regional training<br />
programs, which include sales trainings for our staff, particular product<br />
trainings, ad-hoc training on new procedures of work or on other topics such<br />
as new security measures at airports.<br />
Talent management<br />
With over 6,500 employees, <strong>Dufry</strong> has an almost inexhaustible pool of professional<br />
people at hand. We intend to use this potential more efficiently and have<br />
defined a talent pool, to which we select talents with high development potential.<br />
The initiative includes an international exchange program as well as giving<br />
the participants exposure to responsibilities outside of their core functions. The<br />
aim of the pool is to spread the specific expertise across the Group, leverage<br />
the know-how on all levels and to fill new or vacant management and specialists<br />
functions with internal people whenever possible. As for the participants,<br />
they can build a diversified and international career within the leading Travel<br />
Retailer.
EMPLoyEES<br />
number of full time equivalents as of December 31<br />
7,500<br />
6,000<br />
4,500<br />
3,000<br />
1,500<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Human Resources<br />
0<br />
2003 2004 2005 <strong>2006</strong><br />
EMPLoyEES by REGIoN IN 006<br />
Europe 15 %<br />
Africa 11 %<br />
Eurasia 12 %<br />
North America & Caribbean 36%<br />
South America 26%<br />
Developing the organization<br />
With the rapid growth and expansion of <strong>Dufry</strong>’s global operations during the last<br />
three years, our total workforce increased by over 106% compared to year end<br />
2003. In fiscal year <strong>2006</strong> alone, with the acquisitions in Brazil and Puerto Rico<br />
and the opening of new locations, our number of employees has grown by over<br />
2,100 people to a total of 6,526 worldwide. With this impressive expansion and<br />
with our corporate strategy of further growth over the next years, leveraging our<br />
local expertise becomes ever more important. To capture these benefits, we will<br />
develop a new global Human Resources strategy along 2007.<br />
In a first step, we already rolled out in <strong>2006</strong> our standard processes and procedures<br />
in four regions and nine sites bringing our company a step forward<br />
towards our globalization strategy. About 350 employees have been specially<br />
trained to coordinate and re-train our employees periodically.<br />
Social projects<br />
<strong>Dufry</strong> has projects that support poor children in different parts of the world. The<br />
largest of these projects is a social assistance program in Brazil, which offers<br />
professional education to twenty five disadvantaged young people every year.<br />
The program, which is offered free of charge, is aimed at making them competitive<br />
in the job market and integrating them in society. The classes can be attended<br />
by 14 to 17 years old people. They receive education in human relations,<br />
IT, retailing and basic English. They will also get medical and dental assistance,<br />
life insurance, outfits, food and education material. As a result, more than 550<br />
young people have been trained in this long-term project of which more than<br />
90% have been able to find employment in the regional job market, including<br />
<strong>Dufry</strong> Duty-Free shops in Brazil.
a SELECTIoN oF bRaND NaMES<br />
abSoLuT | aCTIoN MaN | aIWa | aPPLE | aRaMIS | aRMaNI | aRTE MoDEL |<br />
azzaRRo | babaR | baCaRDI | baILEyS | baLLaNTINE’S | baN DaL | baRbIE |<br />
bENSoN&hEDGES | bIJoux TERNER | bIoThERM | boMbay SaPPhIRE | bouChERoN |<br />
bRauN | bREITLING | buRaGo | buRbERRy | bvLGaRI | CaDbuRy | CaILLER | CaMEL |<br />
CaNoN | CaPTaIN MoRGaN | CaRaN D’aChE | CaRoLINa hERRERa | CaRTIER |<br />
CaSIo | ChaNEL | ChIvaS REGaL | ChRISTIaN DIoR | ChoPaRD | CK | CLaRINS |<br />
CLINIQuE | CohIba | CoINTREau | CoLoMbIaN EMERaLDS | CoMPaQ | CRayoLa |<br />
DavIDoFF | DELSEy | DIGIMoN | DISNEy | DKNy | DoLCE &GabbaNa | DuNhILL |<br />
ELIzabETh aRDEN | ELLE | ESCaDa | ESTÉE LauDER | ETRo | ExCaLIbuR |<br />
FaMouS GRouSE | FERRaGaMo | FERRaRINI | FERRERo | FINLaNDIa | FIShER PRICE |<br />
FLIK FLaK | GauLoISES | GEDDES | GIaNFRaNCo FERRÉ | GIoRGIo bEvERLy hILLS |<br />
GIvENChy | GoDIva | GoRDoN’S | GRaND MaRNIER | GuCCI | GuERLaIN |<br />
havaNa CLub | hENNESSy | hERMÈS | hERRaDuRa | hoT DIaMoNDS | h.STERN |<br />
huGo boSS | IL CaNESTRo | INJuSa | ISSEy MIyaKE | IWC | JaCK DaNIEL’S |<br />
JEaN PauL GauLTIER | JohNNIE WaLKER | JoSÉ CuERvo | JvC | KENNETh CoLE |<br />
KENzo | KIT KaT | KoDaK | LaCoSTE | LaNCaSTER | LaNCEL | LaNCÔME | LaRIoS |<br />
LEGo | LINDT & SPRÜNGLI | LoNGChaMP | LoNGINES | L’oREaL | LuCKy STRIKE |<br />
MaJoRICa | MaLIbÚ | MaLo | MaRLboRo | MaRS | MaRTELL | MaRTINI | MaTTEL |<br />
MauRICE LaCRoIx | MILKa | MINoLTa | MISaKI | M&M’S | MoET&ChaNDoN |<br />
MoNT bLaNC | MoNTECRISTo | NESTLÉ | NIKKo | NINa RICCI | NINTENDo | NIvaDa |<br />
NoKIa | oLyMPuS | oMEGa | PaCo RabaNNE | PaLoMa PICaSSo | PaNaSoNIC |<br />
PaRTaGaS | PhILIP MoRRIS | PhILIPS | PLayMobIL | PoWER RaNGER | PRaDa |<br />
RaDo | RaLPh LauREN | Ray baN | RayMoND WEIL | REMy MaRTIN | RobaINa |<br />
RoThMaNS | RubINSTEIN | RuSS bERRIE | SaMSoNITE | SaMSuNG | Sauza |<br />
SChaFFER | ShISEIDo | SMaRTIES | SMIRNoFF | SoNy | SToLIChNaya | SWaRovSKI |<br />
SWaTCh | SWISS DELICE | TaG hEuER | ThIERRy MuGLER | TIa MaRIa | TISSoT |<br />
TobLERoNE | ToMMy hILFIGER | ToMy | ToShIba | TRuDI | TuMI | vERa WaNG |<br />
vERSaCE |WINNIE ThE Pooh | WINSToN | yvES SaINT-LauRENT | zEGNa |
am am pm pm pm<br />
shop open ×<br />
shop open ×<br />
× shop open<br />
× shop open<br />
× shop open<br />
EuRoPE<br />
— PRESENCE IN ITALY, FRANCE, SPAIN,<br />
SWITZERLAND, NETHERLANDS, GREECE<br />
— 83 SHOPS<br />
— OVER 16,300 M 2 SALES AREA<br />
— NET SALES <strong>2006</strong> CHF 370.5 MILLION<br />
— 983 EMPLOYEES<br />
MILaN-MaLPENSa aIRPoRT, ITaLy<br />
— DUTY-FREE EURO-SCHENGEN SHOP LOCATED AT<br />
DEPARTURE GATES OF MILAN-MALPENSA AIRPORT<br />
— OPENING HOURS FROM 06.00 AM TO 11.00 PM<br />
— 1,650 M 2 SALES AREA<br />
— VARIETY OF FOOD, CHOCOLATE, PERFUMERY, SPIRITS<br />
AND FASHION PRODUCTS<br />
— 60 EMPLOYEES
am am pm pm pm<br />
shop open ×<br />
shop open ×<br />
× shop open<br />
× shop open<br />
× shop open<br />
aFRICa<br />
— PRESENCE IN TUNISIA, ALGERIA,<br />
MOROCCO, GHANA, IVORY COAST<br />
— 37 SHOPS<br />
— OVER 6,500 M 2 SALES AREA<br />
— NET SALES <strong>2006</strong> CHF 146.4 MILLION<br />
— 734 EMPLOYEES<br />
TuNIS aIRPoRT, TuNISIa<br />
— DUTY-FREE SHOP LOCATED AT INTERNATIONAL<br />
DEPARTURE GATES OF TUNIS AIRPORT<br />
— OPENING HOURS FROM 02.00 AM TO MIDNIGHT<br />
— 1,758 M 2 SALES AREA<br />
— VARIETY OF LEATHER GOODS, CLOTHING BRANDS,<br />
JEWELRY, SUNGLASSES, ELECTRONICS AS WELL AS<br />
LOCAL AND REGIONAL FOOD SPECIALITIES<br />
— 181 EMPLOYEES
am am am am pm<br />
shop closed ×<br />
shop open ×<br />
× shop open<br />
× shop open<br />
× shop open<br />
EuRaSIa<br />
— PRESENCE IN RUSSIAN FEDERATION,<br />
UNITED ARAB EMIRATES, SINGAPORE,<br />
CAMBODIA, BELARUS, SERBIA, CHINA<br />
— 32 SHOPS<br />
— OVER 4,900 M 2 SALES AREA<br />
— NET SALES <strong>2006</strong> CHF 187.2 MILLION<br />
— 787 EMPLOYEES<br />
SIEM REaP INTERNaTIoNaL aIRPoRT, CaMboDIa<br />
— DUTY-FREE SHOP LOCATED AT DEPARTURE GATES OF<br />
SIEM REAP INTERNATIONAL AIRPORT<br />
— OPENING HOURS FROM 06.30 AM TO MIDNIGHT<br />
— 160 M 2 SALES AREA<br />
— LOCAL HAND CRAFT SOUVENIRS (SAND STONE, SILK,<br />
POLYCHROME AND SPICES)<br />
— 12 EMPLOYEES
pm pm pm pm am<br />
shop open ×<br />
shop open ×<br />
× shop open<br />
× shop open<br />
× shop closed<br />
NoRTh aMERICa & CaRIbbEaN<br />
— PRESENCE IN MEXICO, UNITED STATES,<br />
CARIBBEAN ISLANDS, NICARAGUA<br />
— 205 SHOPS<br />
— OVER 37,700 M 2 SALES AREA<br />
— NET SALES <strong>2006</strong> CHF 328.0 MILLION<br />
— 2,345 EMPLOYEES<br />
SEaPoRT, GRaND TuRK<br />
— DUTY-FREE SHOP LOCATED AT SEAPORT<br />
OF GRAND TURK ISLAND<br />
— OPENING HOURS DEPEND ON DOCKING OF SHIPS<br />
— 930 M 2 SALES AREA<br />
— TRADITIONAL DUTY-FREE ARTICLES LIKE FOOD,<br />
SPIRITS, JEWELRY, WATCHES, PERFUMES, TOBACCO<br />
AND ACCESSORIES<br />
— 27 EMPLOYEES
pm pm pm pm am<br />
shop open ×<br />
shop open ×<br />
× shop open<br />
× shop open<br />
× shop closed<br />
SouTh aMERICa<br />
— PRESENCE IN BRAZIL, BOLIVIA, AND ON-<br />
BOARD NORWEGIAN CRUISE LINE SHIPS<br />
— 87 SHOPS<br />
— OVER 13,900 M 2 SALES AREA<br />
— NET SALES <strong>2006</strong> CHF 371.6 MILLION<br />
— 1,677 EMPLOYEES<br />
São PauLo, INTERNaTIoNaL aIRPoRT GuaRuLhoS<br />
— DUTY-FREE SHOP LOCATED AT ARRIVAL AREA<br />
TERMINAL 2 OF SãO PAULO, INTERNATIONAL<br />
AIRPORT GUARULHOS<br />
— OPEN 24 HOURS EVERY DAY<br />
— 1,600 M 2 SALES AREA<br />
— VARIETY OF BEVERAGES, FOOD, TOBACCO, PERFUMERY,<br />
COSMETICS, SPORTS, LEISURE AND GIFTS. SEVERAL<br />
STORE-IN-STORES FROM DIFFERENT BRANDS<br />
— 220 EMPLOYEES
CoRPoRaTE GovERNaNCE<br />
DuFRy IS CoMMITTED To GooD<br />
CoRPoRaTE GovERNaNCE<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. GRouP STRuCTuRE aND ShaREhoLDERS<br />
. Group structure<br />
For an overview of the management organizational chart and operational group<br />
structure, please refer to page 7 of this Annual Report.<br />
Listed companies<br />
Company <strong>Dufry</strong> Ltd., hardstrasse , 0 basel, Switzerland<br />
(hereinafter “<strong>Dufry</strong> Ltd.” or the “Company”)<br />
Listing SWX Swiss Exchange<br />
Market capitalization CHF 1’434’375’000 as of December 31, <strong>2006</strong><br />
Percentage of shares No shares held as of December 31, <strong>2006</strong><br />
held by <strong>Dufry</strong><br />
Security number ISIN-Code CH0023405456, Swiss Security-No. 2340545<br />
SWX Swiss Exchange Ticker Symbol DUFN<br />
Company <strong>Dufry</strong> South america Ltd., Clarendon house,<br />
Church Street, hamilton hM, , bermuda<br />
(hereinafter “<strong>Dufry</strong> South america Ltd.” or “DSa”)<br />
Listings Brazilian Depositary Receipts (BDR) on São Paulo<br />
Stock Exchange (BOVESPA – Bolsa de Valores de São<br />
Paulo), Brazil and Common Shares (“Shares”) on<br />
Luxembourg Stock Exchange, Luxembourg (officially<br />
listed on Euro MTF market)<br />
Market capitalization R$ 1,820,000,000. USD 854,750,000<br />
as of December 31, <strong>2006</strong><br />
Percentage of shares <strong>Dufry</strong> Ltd. held 57.4% as of December 31, <strong>2006</strong><br />
held by <strong>Dufry</strong><br />
Security numbers ISIN-Code for BDRs: BRDUFBBDR008<br />
ISIN-Code for Shares: BMG286001075<br />
Ticker Symbol for BDRs: DUFB<br />
Non-listed companies<br />
For a table of the operational non-listed consolidated entities please refer to<br />
page 105 in section Financial Reporting of this Annual Report 1 .<br />
. Significant shareholders<br />
The following significant shareholders held more than 5% of the share capital<br />
as of December 31, <strong>2006</strong>:<br />
Travel Retail Investments SCA, 76 Grand Rue, L-1660 Luxembourg 53.02 %<br />
Areas SA, Via Augusta 21-23, Barcelona, Spain 18.02%<br />
Wellington Management Company LLP, 75 State Street, Boston MA 02109, USA 5.03%<br />
1 including the company names, locations, percentage of shares held, share capital
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
As part of the restructuring of their interests in <strong>Dufry</strong> Ltd that the following<br />
investors held prior to the Initial Public Offering at SWX Swiss Exchange, funds<br />
managed by Advent International Corporation, 75 State Street, Boston, Massachusetts<br />
/ USA, Petrus PTE Ltd, 8 Cross Street, #11-00 PWC Building, Singapore<br />
048424 and Witherspoon Investments LLC, 1209 Orange Street, Wilmington,<br />
Delaware 19801 / USA, entered into a shareholders agreement to govern their<br />
relationship as shareholders of Travel Retail Investments SCA. This agreement<br />
provides that the funds managed by Advent International Corporation shall<br />
have a right of first refusal should either Petrus PTE Ltd or Witherspoon Investments<br />
LLC wish to transfer their holdings in Travel Retail Investments SCA.<br />
In addition, if a third party offers to acquire all the interests in Travel Retail<br />
Investments SCA and the funds managed by Advent International Corporation<br />
in Travel Retail Investments SCA decide to transfer their entire interest in Travel<br />
Retail Investments SCA to that third party, then the funds managed by Advent<br />
International Corporation shall have the right to compel the other shareholders<br />
to transfer their entire holding in Travel Retail Investments SCA to that third<br />
party by exercising their drag-along rights.<br />
Advent International Corporation, Petrus PTE Ltd and Witherspoon Investments<br />
LLC are a group of shareholders acting in concert within the meaning of Art. 20<br />
para 3 of the Federal Act on Stock Exchanges and Securities Trading (thereinafter<br />
SESTA) in relation to their indirect holdings in the Company held through<br />
Travel Retail Investments SCA.<br />
In an announcement dated May 17, <strong>2006</strong>, and published in compliance with Art.<br />
20 of SESTA, Wellington Management Company LLP, Boston, disclosed that it<br />
held shares of <strong>Dufry</strong> Ltd accounting for 5.03% of voting rights (publication in<br />
Swiss Official Gazette of Commerce of May 24, <strong>2006</strong>).<br />
. Cross-shareholdings<br />
<strong>Dufry</strong> Ltd has not entered into cross-shareholdings with other companies in<br />
terms of capital shareholdings or voting rights in excess of 5%.
6<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. CaPITaL STRuCTuRE<br />
. Share capital as of December , 006<br />
Ordinary share capital CHF 70,312,500<br />
14,062,500 fully paid registered shares with nominal value of<br />
CHF 5 each<br />
Conditional share capital CHF 7,500,000<br />
1,500,000 fully paid registered shares with nominal value of<br />
CHF 5 each ( in connection with convertible debentures,<br />
debentures with option rights and similar obligations )<br />
Authorized share capital CHF 21,093,750<br />
4,218,750 fully paid registered shares with nominal value of<br />
CHF 5 each (issuance possible until November 23, 2008)<br />
. Details to conditional and authorized share capital<br />
Conditional share capital<br />
Pursuant to Art. 3bis of the Articles of Incorporation the share capital of <strong>Dufry</strong><br />
Ltd may be increased in an amount not to exceed CHF 7,500,000 by the issuance<br />
of up to 1,500,000 fully paid registered shares with a nominal value of<br />
CHF 5 each through the exercise of conversion and / or option rights granted<br />
in connection with the issuance of newly or already issued convertible debentures,<br />
debentures with option rights or other financial market instruments by<br />
the Company or one of its subsidiaries.<br />
The preferential subscription rights of the shareholders shall be excluded in<br />
connection with the issuance of convertible debentures, debentures with option<br />
rights or other financial market instruments. The then current owners<br />
of conversion and / or option rights shall be entitled to subscribe for the new<br />
shares. The acquisition of shares through the exercise of conversion and / or<br />
option rights and each subsequent transfer of the shares shall be subject to the<br />
restrictions set forth in Art. 5 of the Articles of Incorporation of the Company (in<br />
reference to the share register and nominees).<br />
The Board of Directors may limit or withdraw the right of the shareholders to<br />
subscribe in priority to convertible debentures, debentures with option rights or<br />
similar financial market instruments when they are issued, if:<br />
a) an issue by firm underwriting by a consortium of banks with subsequent<br />
offering to the public without preferential subscription rights seems to be<br />
the most appropriate form of issue at the time, particularly in terms of the<br />
conditions or the time plan of the issue; or<br />
b) the financial market instruments with conversion or option rights are issued<br />
in connection with the financing or refinancing of the acquisition of an enterprise<br />
or parts of an enterprise or with participations or new investments of<br />
the Company.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
If advance subscription rights are denied by the Board of Directors, the following<br />
shall apply:<br />
a) conversion rights may be exercised only for up to 15 years; and the option<br />
rights only for up to 7 years from the date of the respective issuance.<br />
b) the respective financial instruments must be issued at the relevant market<br />
conditions.<br />
authorized share capital<br />
Pursuant to Art. 3ter of the Articles of Incorporation the Board of Directors shall<br />
be authorized to increase the share capital in an amount not to exceed CHF<br />
21,093,750 through the issuance of up to 4,218,750 fully paid registered shares<br />
with a nominal value of CHF 5 per share by not later than November 23, 2008.<br />
Increases in partial amounts shall be permitted.<br />
The subscription and acquisition of the new shares, as well as subsequent<br />
transfer of the shares shall be subject to the restrictions set forth in Art. 5 of<br />
the Articles of Incorporation (in reference to the share register and nominees).<br />
The Board of Directors shall determine the issue price, the type of payment,<br />
the date of issue of new shares, the conditions for the exercise of the preferential<br />
subscription rights, and the beginning date for dividend entitlement.<br />
In this regard, the Board of Directors may issue new shares by means of a<br />
firm underwriting through a banking institution, a syndicate or another third<br />
party and a subsequent offer of these shares to the current shareholders. The<br />
Board of Directors may permit preferential subscription rights that have not<br />
been exercised to expire or it may place these rights and / or shares as to which<br />
preferential subscription rights have been granted but not exercised, at market<br />
conditions or use them for other purposes in the interest of the Company.<br />
The Board of Directors is further authorized to restrict or deny the preferential<br />
subscription rights of shareholders or allocate such rights to third parties if the<br />
shares are to be used:<br />
a) for the acquisition of an enterprise, parts of an enterprise, or participations,<br />
or for new investments, or, in case of a share placement, for the financing or<br />
refinancing of such transactions; or<br />
b) for the purpose of broadening the shareholder constituency in connection<br />
with a listing of shares on domestic or foreign stock exchanges, including<br />
in connection with the grant of an over-allotment option to a consortium of<br />
banks.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. Changes in capital of <strong>Dufry</strong> Ltd<br />
Nominal share capital December 31, 2004 CHF 45,000,000<br />
December 31, 2005 CHF 70,312,500<br />
December 31, <strong>2006</strong> CHF 70,312,500<br />
Conditional share capital December 31, 2004 CHF –<br />
December 31, 2005 CHF 7,500,000<br />
December 31, <strong>2006</strong> CHF 7,500,000<br />
Authorized share capital December 31, 2004 CHF –<br />
December 31, 2005 CHF 10,187,500<br />
December 31, <strong>2006</strong> CHF 21,093,750<br />
The Company was formed as a stock corporation, organized with limited liability<br />
under the laws of Switzerland and was established on November 3, 2003<br />
and registered on November 4, 2003, under the name Sintres Holding Ltd. The<br />
period for the first statutory income statement of Sintres Holding Ltd was from<br />
November 4, 2003 to December 31, 2004. Consequently, the first statutory balance<br />
sheet date for the Company was December 31, 2004. On November 17,<br />
2005 the Company changed its name to <strong>Dufry</strong> AG (<strong>Dufry</strong> Ltd).<br />
Changes in capital in 00 / 00<br />
From November 3, 2003 to February 19, 2004, the nominal share capital of the<br />
Company was CHF 100,000, divided into 10,000 fully paid in registered shares<br />
with a nominal value of CHF 10 each. From February 19, 2004 to July 25, 2005,<br />
the nominal share capital of the Company was CHF 45 million, divided into 4.5<br />
million fully paid in registered shares with a nominal value of CHF 10 each.<br />
From July 25, 2005 to November 17, 2005, the nominal share capital of the Company<br />
was CHF 60 million, divided into 6 million fully paid in registered shares<br />
with a nominal value of CHF 10 each. At an Extraordinary Shareholders’ Meeting<br />
on November 17, 2005, the existing shares were split with a ratio of 1:2<br />
and the new nominal value was set at CHF 5 per registered share, resulting in<br />
a nominal share capital of CHF 60 million, divided into 12 million fully paid in<br />
shares. At the same Extraordinary Shareholders’ Meeting, an authorized capital<br />
in the amount of CHF 20,500,000 and a conditional capital in the amount of CHF<br />
7,500,000 was created. On December 5, 2005, the nominal share capital was<br />
increased out of the existing authorized share capital in the amount of CHF<br />
10,312,500 to CHF 70,312,500, divided into 14,062,500 fully paid in registered<br />
shares with a nominal value of CHF 5 each – as a result of the issuance of<br />
2,062,500 new shares, which were sold by the Company in the Initial Public Offering.<br />
The authorized share capital was reduced accordingly.<br />
Changes in capital in 006<br />
At an Extraordinary General Meeting on November 23, <strong>2006</strong>, shareholders approved<br />
the Board of Directors proposal to increase the amount of the previously<br />
existing authorized share capital from CHF 10,187,500 to CHF 21,093,750 and to<br />
set the duration of such authorized capital until November 23, 2008.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. Shares<br />
The share capital of <strong>Dufry</strong> Ltd is divided into 14,062,500 fully paid in registered<br />
shares with a nominal value of CHF 5 each. All shares are entitled to dividends.<br />
Each share entitles to one vote. The Company maintains a share register showing<br />
the name and address of the shareholders or usufructuaries. Only persons<br />
registered as shareholders or usufructuaries of registered shares in the share<br />
register shall be recognized as such by the Company.<br />
Limitation on transferability and nominee registration of registered shares<br />
— The Articles of Incorporation of <strong>Dufry</strong> Ltd contain no transfer restrictions<br />
(Vinkulierung) with regard to the shares.<br />
— However, only persons registered as shareholders or usufructuaries of registered<br />
shares in the share register shall be recognized as such by the Company.<br />
In the share register the name and address of the shareholders or<br />
usufructuaries is recorded. Changes must be reported to the Company.<br />
— Acquirers of registered shares shall be registered as shareholders with the<br />
right to vote, provided that they expressly declare that they acquired the registered<br />
shares in their own name and for their own account.<br />
— The Board of Directors may register nominees with the right to vote in the<br />
share register to the extent of up to 0.2 % of the registered share capital as<br />
set forth in the commercial register. Registered shares held by a nominee<br />
that exceed this limit may be registered in the share register with the right to<br />
vote if the nominee discloses the names, addresses and number of shares of<br />
the persons for whose account it holds 0.2 % or more of the registered share<br />
capital as set forth in the commercial register. Nominees within the meaning<br />
of this provision are persons who do not explicitly declare in the request<br />
for registration to hold the shares for their own account and with whom the<br />
Board of Directors has entered into a corresponding agreement (see also<br />
Art. 5 of the Articles of Incorporation).<br />
— Corporate bodies and partnerships or other groups of persons or joint owners<br />
who are interrelated to one another through capital ownership, voting<br />
rights, uniform management or otherwise linked as well as individuals or<br />
corporate bodies and partnerships who act in concert to circumvent the regulations<br />
concerning the nominees (esp. as syndicates), shall be treated as<br />
one single nominee within the meaning of the above mentioned regulation in<br />
terms of nominees.<br />
— The Board of Directors may cancel the registration, with retroactive effect<br />
if appropriate, if the registration was effected based on false information or<br />
in case of breach of the agreement between the nominee and the Board of<br />
Directors.<br />
— After consulting the party involved, the Company may delete entries in the<br />
share register if such entries occurred in consequence of false statements<br />
by the purchaser. The purchaser must be informed immediately of the deletion.<br />
With reference to transferability and nominee registrations, no exceptions have<br />
been granted during the year under review.
0<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. Participation certificates and profit sharing certificates<br />
The Company has not issued any non-voting equity securities, such as participation<br />
certificates (Partizipationsscheine) or profit sharing certificates<br />
(Genussscheine).<br />
.6 Convertible bonds and options<br />
There are no outstanding bonds that are convertible into, or warrants or options<br />
to acquire, shares issued by or on behalf of the Company. <strong>Dufry</strong> does<br />
not have any traditional option plans, but a Restricted Stock Unit (RSU) plan,<br />
the essentials of which are disclosed under “compensation, shareholdings<br />
and loans” in this Corporate Governance section of the Annual Report.
NaME<br />
Juan Carlos Torres Carretero<br />
Ernest George Bachrach<br />
Xavier Bouton<br />
Jaime Carvajal Urquijo<br />
Mario Fontana<br />
Luis Andrés Holzer Neumann<br />
Joaquin Moya-Angeler Cabrera<br />
Juan Carlos<br />
Torres Carretero<br />
Chairman<br />
born 1949<br />
Ernest George<br />
bachrach<br />
Vice Chairman<br />
born 1952<br />
. boaRD oF DIRECToRS<br />
NaTIoNaLITy<br />
Spanish<br />
American<br />
French<br />
Spanish<br />
Swiss<br />
Mexican<br />
Spanish<br />
PoSITIoN<br />
Chairman<br />
Vice Chairman<br />
Member<br />
Member<br />
Member<br />
Member<br />
Member<br />
FIRST<br />
ELECTED<br />
2003<br />
2004<br />
2005<br />
<strong>2006</strong><br />
2005<br />
2004<br />
2005<br />
ELECTED<br />
uNTIL aGM<br />
1 = Member of Audit Committee<br />
2 = Member of Nomination Committee All members of the Board of Directors are non-executive members.<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. Members of the board of Directors<br />
2011<br />
2011<br />
2009<br />
2011<br />
2010<br />
2010<br />
2010<br />
CoMMITTEES<br />
1, 2<br />
2<br />
. Education, professional background, other activities and functions<br />
Education MS in physics from Universidad Complutense de Madrid and MS in<br />
management from MIT’s Sloan School of Management.<br />
Professional Background Many years of private equity and senior management<br />
operating experience. 1988 Joined Advent International, a private equity firm,<br />
in Boston as a partner. 1991 – 1995 Partner at Advent International in Madrid.<br />
Since 1995 Managing Director and senior partner in charge of Advent International<br />
Corporation’s investment activities in Mexico.<br />
Current Board Mandates <strong>Dufry</strong> Ltd., <strong>Dufry</strong> South America Ltd., Aeroplazas de<br />
Mexico SA de CV, Arabela Holding SA de CV, Hipotecaria Casa Mexicana SA de<br />
CV, Inmobiliaria Fumisa SA de CV (president), Impactos Frecuencia y Cobertura<br />
en Medicos SA de CV and Procorp SA de CV.<br />
Education BS in chemical engineering from Lehigh University and MBA from<br />
Harvard Business School.<br />
Professional Background More than 22 years of experience in international private<br />
equity investing. 1990 Joined Advent International offices in London as a<br />
partner. Since 1995 Managing Advent’s Latin American investment program as<br />
Chief Executive Latin America. Senior partner and member of the executive<br />
committee of Advent International Corporation.<br />
Current Board Mandates <strong>Dufry</strong> Ltd., <strong>Dufry</strong> South America Ltd., Aeroplazas SA<br />
de CV, Arabela Holding SA de CV, the Bunge Group, Impactos, Frecuencia y<br />
Cobertura en Medios SA de CV, Aerocomidas SA de CV, Hildebrando Fumisa SA<br />
de CV and Hipotecaria Casa Mexicana.<br />
1<br />
2<br />
1
xavier bouton<br />
Member<br />
born 1950<br />
Jaime<br />
Carvajal urquijo<br />
Member<br />
born 1939<br />
Mario Fontana<br />
Member<br />
born 1946<br />
Luis andrés<br />
holzer Neumann<br />
Member<br />
born 1950<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
Education Diploma in economics and finance from l’Institut d’Etudes Politiques<br />
de Bordeaux and doctorate in economics and business administration from the<br />
University of Bordeaux.<br />
Professional Background 1978 – 1984 Director of C.N.I.L. (Commission Nationale<br />
de l’Informatique et des Libertés). 1985 – 1994 General Secretary of Reader’s<br />
Digest Foundation. 1990 – 2005 Board member of Laboratoires Chemineaux.<br />
Since 1999 Chairman of the Supervisory Board of FSDV (Fayenceries de Sarreguemines<br />
Digoin & Vitry le François) based in Paris, France.<br />
Current Board Mandates <strong>Dufry</strong> Ltd., ADL Partners since 1997, Stroer France<br />
since 1999.<br />
Education Master in law from the University of Madrid and master of Arts (Economics)<br />
from Cambridge University.<br />
Professional Background Over 20 years of private equity and M&A experience.<br />
Prior to 1996 Chairman of Iberfomento, an independent Spanish M&A and private<br />
equity firm. Chief Executive Officer of Banco Hispano Industrial (1983 – 1988)<br />
and Chairman of Ford of Spain (1981 – 2003). 1996 – 2002 Chairman at Dresdner<br />
Kleinwort Capital Spain. Whilst at DrKC, Mr Carvajal Urquijo worked with Advent<br />
International, through a joint venture. 2002 Joined Advent International<br />
and acts as Partner and Chairman of its office in Spain since.<br />
Current Board Mandates <strong>Dufry</strong> Ltd., Ericsson Espãna S.A., Asea Brown Boveri<br />
S.A. (Spain), Grupo Ferrovial, Lafarge-Asland, Aviva (Spain) and Solvay Iberica.<br />
Education Engineering studies at ETH Zurich and Georgia Institute of Technology,<br />
Master of Science Degree.<br />
Professional Background 1970 – 1977 IBM Switzerland, sales representative<br />
and international account manager. 1977 – 1980 Brown Boveri Brazil, Chief<br />
of staff and CIO. 1981 – 1983 Storage Technology Switzerland, General Manager.<br />
1984 – 1993 Hewlett-Packard Switzerland, General Manager. 1993 – 1995<br />
Hewlett-Packard Germany, General Manager. 1995 – 1997 Hewlett-Packard Europe,<br />
General Manager. 1997 – 1999 Hewlett-Packard USA, General Manager.<br />
Since 1998 Independent Board member at various companies (served previously<br />
also on the Board of Directors of AC-Service [Germany], Amazys, Bon<br />
appétit Group, Büro Fürrer, Leica Geosystems and Sulzer).<br />
Current Board Mandates <strong>Dufry</strong> Ltd., Hexagon (Sweden), Inficon, Itopia, SBB<br />
Swiss Railways, Swissquote and X-Rite (USA).<br />
Education Graduate of Boston University, holds an MBA from Columbia University.<br />
Professional Background Since 1973 President of Grupo Industrial Omega, the<br />
holding company of Holzer and Company, Industria Nacional de Relojes Suizos,<br />
Inmobiliara Coapa Larca SA de CV, and Inmobiliara Castellanos SA de CV.<br />
Current Board Mandates <strong>Dufry</strong> Ltd., Aeroplazas SA de CV, Inmobiliaria Fumisa<br />
SA de CV, Consorcio Industrial SA de CV, Opequimar, Consorcio Metropolitano<br />
Inmobiliario, the Mexican Council of Foreign Affairs, Grupo Domit and Lideres<br />
Mexicanos Magazine.
Joaquin<br />
Moya-angeler Cabrera<br />
Member<br />
born 1949<br />
NaME oF ThE boaRD MEMbER<br />
Juan Carlos Torres Carretero<br />
Ernest George Bachrach<br />
Xavier Bouton<br />
Jaime Carvajal Urquijo<br />
Mario Fontana<br />
Luis Andrés Holzer Neumann<br />
Joaquin Moya-Angeler Cabrera<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
Education Master’s degree in mathematics from the University of Madrid, diploma<br />
in economics and forecasting from the London School of Economics and<br />
Political Science and MBA from MIT’s Sloan School of Management.<br />
Professional Background Mr Moya-Angeler has focused his career on the technology<br />
and real estate industries, including having founded a number of companies.<br />
1990 – 1994 Chairman of IBM Spain and Europe. 1994 – 1997 Chairman<br />
of Leche Pascual. 1997 – 2002 Chairman of Meta4 and TIASA (1996 – 1998). To<br />
date Chairman of Redsa since 1997, Hildebrando since 2003, as well as Presenzia<br />
and Pulsar Technologies since 2002, La Quinta Real Estate since 2003,<br />
Inmoan since 1989 and Avalon Private Equity since 1999.<br />
Current Board Mandates <strong>Dufry</strong> Ltd., Indra Sistemas SA, Palamon Capital Partners,<br />
MCH, Grupo Leche Pascual and Bety Byte SL. Also Chairman of several<br />
non profit organizations: Corporación Tecnológica de Andalucia, Board of trustees<br />
of the University of Almeria and La Fundación Mediterránea.<br />
None of the non-executive members of the Board of Directors has ever been in<br />
a management position at <strong>Dufry</strong> Ltd or any of its subsidiaries. Neither has any<br />
of the non-executive members of the Board of Directors significant business<br />
connections with <strong>Dufry</strong> Ltd or any of its subsidiaries.<br />
. Cross-involvement<br />
There are no cross-involvements between the Board of Directors of <strong>Dufry</strong> Ltd<br />
and any other listed company. The table below shows the functions of the Board<br />
members in other listed companies.<br />
LISTED CoMPaNy<br />
— <strong>Dufry</strong> South America Ltd, Board member<br />
— Bunge Group Ltd, Board member<br />
— <strong>Dufry</strong> South America Ltd, Board member<br />
— F.S.D.V. (Fayenceries de Sarreguemines Digoin & Vitry le François),<br />
Chairman of Supervisory Board<br />
— ADL Partners, Board member<br />
— Grupo Ferrovial, Vice Chairman<br />
— Swissquote Group, Chairman<br />
— X-Rite Inc, Board member<br />
— Hexagon AB, Board member<br />
— Inficon AG, Board member<br />
— None<br />
— Indra Sistemas SA, Board member
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. Election and terms of office<br />
— The Board of Directors shall consist of at least three and at most seven<br />
members.<br />
— Members of the Board of Directors shall be elected for a maximum term<br />
of five years. A year shall mean the period running between one Ordinary<br />
Meeting of Shareholders and the next. Previous resignation and dismissal<br />
may change the terms of office. New members elected during the year shall<br />
continue in office until the end of their predecessor’s term.<br />
— Each year the Board of Directors shall be renewed by rotation, to the extent<br />
possible in equal numbers and in such manner that, after a period of five<br />
years, all members will have been subject to re-election.<br />
— In its Extraordinary General Meeting held on November 23, <strong>2006</strong>, <strong>Dufry</strong> Ltd<br />
established staggered terms of office for the members of the Board of Directors<br />
(see also details in table “Members of the Board of Directors”). At<br />
this Meeting, Mr Carvajal Urquijo was newly elected (individually) into the<br />
Board and the other members of the Board of Directors were re-elected (as<br />
a group) with new terms of office.<br />
— The members of the Board of Directors may be re-elected without limitation.<br />
. Internal organizational structure<br />
The Board of Directors determines its own organization. It shall elect its Chairman<br />
and one or two Vice Chairmen. It shall appoint a Secretary and his substitute,<br />
neither of whom need to be members of the Board of Directors.<br />
The Board of Directors has established the following committees to further<br />
strengthen the corporate governance structure of the Company:<br />
audit Committee<br />
Members: Joaquin Moya-Angeler Cabrera (Chairman), Juan Carlos Torres Carretero,<br />
Mario Fontana.<br />
The Audit Committee assists the Board of Directors in fulfilling its duties of<br />
supervision of management. It is responsible for the review of the performance<br />
and independence of the external auditors, the review of the audit plan and the<br />
audit results and the monitoring of the implementation of the findings by management,<br />
the review of the internal audit function and concept, the assessment<br />
of the risk management, the review of the compliance with the internal audit<br />
and risk management, as well as the review to propose whether the Board of<br />
Directors should accept the Company’s accounts. The Audit Committee regularly<br />
reports to the Board of Directors on its proposals, assessments, findings<br />
and proposes appropriate actions. The Audit Committee generally meets at the<br />
same dates the Board of Directors meetings take place, although the Chairman<br />
may call meetings as often as business requires. The length of the meetings<br />
depends on the issues, but usually lasts for about 3 to 4 hours. The Audit Committee<br />
held 4 meetings during fiscal year <strong>2006</strong>.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
Nomination and Remuneration Committee<br />
Members: Ernest George Bachrach (Chairman), Luis Andrés Holzer Neumann,<br />
Juan Carlos Torres Carretero.<br />
The Nomination and Remuneration Committee assists the Board of Directors<br />
in fulfilling its nomination and remuneration related matters. It is responsible<br />
for assuring the long-term planning of appropriate appointments to the positions<br />
of the Chief Executive Officer and the Board of Directors, as well as for<br />
the review of the remuneration system of the Company, to make proposals in<br />
relation to the remuneration of the CEO and of the members of the Board of<br />
Directors, as well as on the grant of options or other securities under employee<br />
participation plans of the Company, if any. The Nomination and Remuneration<br />
Committee meets as often as business requires. The length of the meetings<br />
depends on the issues, but usually lasts for about 2 to 3 hours. The Nomination<br />
and Remuneration Committee held 1 meeting during fiscal year <strong>2006</strong>.<br />
Work method of the board of Directors<br />
As a rule, the Board of Directors meets about five to six times a year. Additional<br />
meetings or conference calls are held as and when necessary. The Board of<br />
Directors held 8 meetings during fiscal year <strong>2006</strong>. The meetings of the Board<br />
of Directors usually last half a day. The Chairman determines the agenda and<br />
items to be discussed at the Board meetings. All members of the Board of Directors<br />
can request to add further items on the agenda.<br />
The Chief Executive Officer, the Chief Financial Officer, the Global Chief Operating<br />
Officer and the General Counsel, also acting as Secretary to the Board,<br />
attend the meetings of the Board of Directors. Other members of the Group<br />
Executive Committee attend meetings of the Board of Directors as and when<br />
required. The Board of Directors also engages external consultants and specialised<br />
attorneys to address specific topics when required.<br />
.6 Definition of areas of responsibility<br />
The Board of Directors is the ultimate corporate body of <strong>Dufry</strong> Ltd. It further<br />
represents the Company towards third parties and shall manage all matters<br />
which by law, Articles of Incorporation or regulation have not been delegated to<br />
another body of the Company.<br />
In accordance with the Board regulations (Organisationsreglement), the Board<br />
of Directors has delegated the operational management of the Company to the<br />
Chief Executive Officer who is responsible for overall management of the <strong>Dufry</strong><br />
Group. The following responsibilities remain with the Board of Directors:<br />
— ultimate direction of the business of the Company and the power to give the<br />
necessary directives<br />
— determination of the organization of the Company<br />
— administration of the accounting system, financial control and financial planning<br />
— appointment and removal of the persons entrusted with the management<br />
and representation of the Company, as well as the determination of their<br />
signatory power
6<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
— ultimate supervision of the persons entrusted with the management of the<br />
Company, in particular with respect to their compliance with the law, the<br />
Articles of Incorporation, regulations and directives<br />
— preparation of the business report and the Meetings of Shareholders and to<br />
carry out the resolutions adopted by the Meeting of Shareholders<br />
— notification of the judge if liabilities exceed assets<br />
— passing of resolutions regarding the subsequent payment of capital with respect<br />
to non-fully paid in shares<br />
— passing of resolutions confirming increases in share capital and the amendments<br />
of the Articles of Incorporation entailed thereby<br />
— examination of the professional qualifications of the specially qualified Auditors<br />
in the cases in which the law foresees the use of such Auditors<br />
— non-delegable and inalienable duties and powers of the Board of Directors<br />
pursuant to the Swiss Merger Act<br />
— to examine, if required, the professional qualifications of the specially qualified<br />
auditor<br />
— to approve any non-operational or non-recurring transaction not included in<br />
the annual budget and exceeding the amount of CHF 2,000,000;<br />
— to issue convertible debentures, debentures with option rights or other financial<br />
market instruments<br />
— to approve the annual investment and operating budgets of the Company and<br />
the <strong>Dufry</strong> Group.<br />
Except for the Chairman of the Board of Directors, who has single signature<br />
authority, the members of the Board have joint signature authority, if any.<br />
. Information and control instruments vis-à-vis the senior management<br />
The Board ensures that it receives sufficient information from the management<br />
to perform its supervisory duty and to make the decisions that are reserved to<br />
the Board through several means.<br />
— <strong>Dufry</strong> Group has an internal management information system that consists<br />
of financial statements, performance indicators and risk management. Management<br />
information is provided on a regular basis according to the cycles of<br />
the business: sales on a weekly basis; income statement, cash management<br />
and key performance indicator (KPI) on a monthly basis; balance sheet and<br />
other financial statements on a quarterly basis, including customer, margins<br />
and investment information. The management information is prepared<br />
on a consolidated basis as well as per business unit. Financial reports are<br />
submitted to the Board of Directors on a quarterly basis.<br />
— During Board meetings, each member of the Board may request information<br />
from the other members of the Board, as well as from the members of the<br />
management present on all affairs of the Company and the Group.<br />
— Outside of Board meetings, each member of the Board may request from the<br />
CEO information concerning the course of business of the Company and the<br />
Group and, with the authorization of the Chairman, about specific matters.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
— The CEO reports at each meeting of the Board on the course of business<br />
of the Company and the Group in a manner agreed upon from time to time<br />
between the Board and the CEO. Apart from the meetings, the CEO reports<br />
immediately any extraordinary event and any change within the Company<br />
and within the <strong>Dufry</strong> Group to the Chairman.<br />
— Board committees, in particular the Audit Committee, regularly meet with<br />
management and outside consultants to review the business, better understand<br />
all laws and policies impacting the <strong>Dufry</strong> Group and support the management<br />
in meeting the requirement and expectations of stakeholders. In<br />
meetings of the Audit Committee, the CFO acts as Secretary to the Committee.<br />
The external auditors are invited to the meeting of the Audit Committee.<br />
— The Internal Audit provides the senior management and Audit Committee<br />
with independent and objective assessments of the effectiveness of the internal<br />
control and risk management systems. The selection of Internal Audit<br />
projects is based on risk assessment, with a focus on operational processes,<br />
throughout the <strong>Dufry</strong> Group. The results of Internal Audit are communicated<br />
to management in charge, the Company’s senior management and the Audit<br />
Committee. Regular follow-up is performed to ensure that risk mitigation<br />
and control improvement measures are implemented on a timely basis.
NaME<br />
Julián Díaz González<br />
Xavier Rossinyol<br />
José Antonio Gea<br />
Pascal C. Duclos<br />
Dante Marro<br />
Miguel Ángel Martínez<br />
René Riedi<br />
José H. González<br />
José Carlos Costa da Silva Rosa<br />
Julián Díaz González<br />
Chief Executive Officer<br />
born 1958<br />
xavier Rossinyol<br />
Chief Financial Officer<br />
born 1970<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. GRouP ExECuTIvE CoMMITTEE<br />
. Members of the Group Executive Committee<br />
NaTIoNaLITy<br />
Spanish<br />
Spanish<br />
Spanish<br />
Swiss<br />
Italian<br />
Spanish<br />
Swiss<br />
American<br />
Portuguese<br />
PoSITIoN<br />
Chief Executive Officer<br />
Chief Financial Officer<br />
Global Chief Operating Officer<br />
General Counsel<br />
Chief Operating Officer<br />
Region Europe<br />
Chief Operating Officer<br />
Region Africa<br />
Chief Operating Officer<br />
Region Eurasia<br />
Chief Operating Officer<br />
Region America & Caribbean<br />
Chief Operating Officer<br />
Region South America<br />
aPPoINTED IN yEaR<br />
2004<br />
2004<br />
2004<br />
2005<br />
2002<br />
2004<br />
2001<br />
2002<br />
<strong>2006</strong><br />
. Education, professional background, other activities and vested interests<br />
Education Degree in business administration from Universidad Pontificia Comillas<br />
de Madrid.<br />
Professional Background 1989 – 1993 General Manager at TNT Leisure SA.<br />
1993 – 1997 Division Director at Aldeasa. 1997 – 2000 Various managerial and<br />
business positions at Aeroboutiques de Mexico SA de CV and Deor SA de CV.<br />
2000 – 2003 General Manager of Latinoamericana Duty-Free, SA de CV. Since<br />
2004 Chief Executive Officer at <strong>Dufry</strong> Ltd.<br />
Education Bachelor’s degree in Business Administration at ESADE (Spain), MBA<br />
at ESADE and at the University of British Columbia (Canada and Hong Kong),<br />
Master’s degree in business law from Universidad Pompeu Fabra (Spain).<br />
Professional Background 1995 – 2003 Various positions at Areas (member of the<br />
French group Elior) with responsibility for finance, controlling, strategic planning.<br />
Left Areas as its Corporate Development Director. Since 2004 Chief Financial<br />
Officer at <strong>Dufry</strong> Ltd.
José antonio Gea<br />
Global COO<br />
born 1963<br />
Pascal C. Duclos<br />
General Counsel<br />
born 1967<br />
Dante Marro<br />
COO Region Europe<br />
born 1944<br />
Miguel Ángel Martínez<br />
COO Region Africa<br />
born 1961<br />
René Riedi<br />
COO Region Eurasia<br />
born 1960<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
Education Degree in economics and business sciences from Colegio Universitario<br />
de Estudios Financieros.<br />
Professional Background 1989 – 1995 Various positions at TNT Express Espana,<br />
SA. Director of its Blue Cow Division (1993 – 1995). 1995 – 2003 Various managerial<br />
positions at Aldeasa. Left Aldeasa as its Director of Operations. Since 2004<br />
Global Chief Operating Officer at <strong>Dufry</strong> Ltd.<br />
Education Licence en droit from Geneva University School of Law, LL.M. from<br />
Duke University School of Law. Licensed to practice law in Switzerland and admitted<br />
to the New York Bar.<br />
Professional Background 1991 – 1997 Senior attorney at law at Geneva law firm<br />
Davidoff & Partners. Also academic assistant at the University of Geneva School<br />
of Law (1994 – 1996). 1999 – 2001 Attorney at law at New York law firm Kreindler<br />
& Kreindler. 2001 – 2002 Financial planner at UBS AG in New York. 2003 – 2004<br />
Senior foreign attorney at law at the Buenos Aires law firm Beretta Kahale Godoy.<br />
Since 2005 General Counsel and Secretary to the Board of Directors at<br />
<strong>Dufry</strong> Ltd.<br />
Education Graduate degrees in architecture and business administration.<br />
Professional Background Prior to 1981 Served as public administrator and as<br />
an administrator of the Airport Milano and the Association Airports Italia. 1981<br />
Joined <strong>Dufry</strong>. He held various managerial positions at Dufrital S.p.A. as General<br />
Manager and Chairman of the Board (1987 –1992) and acted as General Manager<br />
and Board Delegate of all Italian companies belonging to the Group from<br />
1992 – 2002. Since 2002 Chief Operating Officer Region Europe at <strong>Dufry</strong> Ltd.<br />
Education Bachelor’s of science degree in economics and business administration<br />
from the Universidad de León.<br />
Professional Background 1986 – 1991 Store Manager at C&A Valencia and Mallorca.<br />
1991 – 1998 Various managerial positions at Aldeasa SA. 1998 – 2003 General<br />
Manager at Select Service Partner’s subsidiary Madrid Trade Fair Center.<br />
Since 2004 Chief Operating Officer Region Africa at <strong>Dufry</strong> Ltd.<br />
Education Degree in business administration from the School of Economy and<br />
Business Administration Zurich.<br />
Professional Background Prior to 1993 Worked in product marketing and international<br />
sales of the multinational FMCG (Fast Moving Consumer Goods)<br />
company Unilever. 1993 – 2000 Joined <strong>Dufry</strong> in 1993 as Sales Manager Eastern<br />
Europe. Product Category Manager Spirits & Tobacco (1995 – 1996). Head of<br />
Product Marketing (1996 – 1997). Director Division Spirits & Tobacco (Weitnauer<br />
Distribution Ltd 1998 – 2000). Since 2001 Chief Operating Officer Region Eurasia<br />
at <strong>Dufry</strong> Ltd.
0<br />
José h. González<br />
COO Region North<br />
America & Caribbean<br />
born 1946<br />
José Carlos<br />
Costa da Silva Rosa<br />
COO Region South America<br />
born 1955<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
Education Bachelor’s of arts degree from Prieto University, Cuba.<br />
Professional Background Prior to 1992 Active in retail and wholesale industry<br />
in North, Central and South America for more than 25 years. 1992 – 2002 Joined<br />
<strong>Dufry</strong> in 1992 and held various managerial and business positions. Since 2002<br />
Chief Operating Officer Region North America & Caribbean at <strong>Dufry</strong> Ltd.<br />
Education Military and Civil Engineer’s degree from the Academia Militar of<br />
Portugal.<br />
Professional Background 1993 – 1994 Director of Property Management of Richard<br />
Ellis Portugal. 1994 – 2000 General Director of AmoreirasGest. 2000 – <strong>2006</strong><br />
Retail Director at ANA-Aeropuertos de Portugal AS. Since <strong>2006</strong> Chief Operating<br />
Officer Region South America at <strong>Dufry</strong> Ltd.<br />
other activities and vested interests<br />
Messrs Julian Díaz and Xavier Rossinyol are members of the Board of Directors<br />
and of the Executive Committee of <strong>Dufry</strong> South America Ltd, the Company’s<br />
subsidiary listed in Luxembourg and Brazil. Messrs Pascal Duclos, José Antonio<br />
Gea and José Carlos Rosa are members of the Executive Committee of<br />
<strong>Dufry</strong> South America Ltd.<br />
With the exception of their role in <strong>Dufry</strong> South America Ltd, none of the members<br />
of the Group Executive Committee of <strong>Dufry</strong> Ltd has other activities in governing<br />
and supervisory bodies of important Swiss and foreign organizations,<br />
institutions and foundations under private and public law. No member of the<br />
Group Executive Committee has permanent management and consultancy<br />
functions for important Swiss and foreign interest groups, or holds any official<br />
functions and political posts.<br />
In addition to his employment relationship with the <strong>Dufry</strong> Group, Mr Dante Marro,<br />
the Chief Operating Officer for Region Europe and member of the Group<br />
Executive Committee, acting through GSA Srl Gestione Spazi Attrezzati (GSAS),<br />
was granted rights of usufruct over 10 percent of the Company’s shareholding<br />
in both its 60 percent majority owned operating subsidiary Dufrital SpA and its<br />
wholly owned subsidiary <strong>Dufry</strong> Shop Finance Limited Srl in 2002. The rights of<br />
usufruct granted to GSAS, which will expire on December 31, 2020 at the latest,<br />
permit it to enjoy the benefits of share ownership, including the receipt of<br />
dividends, even though the shares remain vested in a Group company. Upon<br />
expiration of the rights of usufruct, provided that the total profits of the afore<br />
mentioned companies shall not have been declared as dividends, GSAS shall be<br />
entitled to receive 6 percent and 10 percent, respectively, of all withheld profits<br />
accumulated as reserves on the balance sheets of Dufrital SpA and <strong>Dufry</strong> Shop<br />
Finance Limited Srl as at December 31, 2020.<br />
. Management contracts<br />
<strong>Dufry</strong> Group does not have management contracts with companies or natural<br />
persons not belonging to the Group.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. CoMPENSaTIoN, ShaREhoLDINGS aND LoaNS<br />
. Content and method of determining the compensation and the shareholding<br />
programmes<br />
board of Directors<br />
The Board determines the amount of the fixed remuneration of its members,<br />
taking into account their responsibilities, experience, and the time which they<br />
invest in their activity as members of the Board. The Nomination and Remuneration<br />
Committee makes proposals in relation to the compensation of the<br />
members of the Board. Extraordinary assignments or work which a member of<br />
the Board accomplishes outside of his / her activity as a Board member shall be<br />
specifically remunerated. Such remuneration shall be approved by the Board.<br />
In addition, the Board shall be reimbursed all reasonable cash expenses properly<br />
incurred by them in the discharge of their duties.<br />
Group Executive Committee<br />
Members of the Group Executive Committee receive compensation packages,<br />
which consist of a basic salary in cash and a performance related cash bonus,<br />
as well as other cash compensation. The bonus is defined once per year and<br />
depends on the overall financial result of the Group and of specific sub-divisions<br />
thereof, as well as on achieving defined goals by each individual person.<br />
The Nomination and Remuneration Committee makes proposals in relation to<br />
the compensation of the CEO. The Board of Directors has the ultimate authority<br />
to approve such proposals.<br />
In addition, the Company has a Restricted Stock Unit (RSU) plan for certain<br />
members of the <strong>Dufry</strong> Group management (RSU plan participants). Under the<br />
RSU plan, the Company granted the RSU plan participants in <strong>2006</strong> a right to receive<br />
on January 1, 2008, free of charge, 100’000 shares of <strong>Dufry</strong> Ltd on aggregate,<br />
provided that the average price per share on the SWX Swiss Exchange for<br />
the ten trading days immediately preceding the vesting date is equal or higher<br />
than 101 percent of the share price at grant date. The rights granted to the RSU<br />
participants in <strong>2006</strong> vested on January 1, 2007. From an economic point of view,<br />
the Restricted Stock Units are stock options with an exercise price of nil.<br />
The RSU plan is designed to provide its participants with an incentive equal to<br />
100 percent of their base salary in case of a 20 percent increase in the price per<br />
share during each respective vesting period. Any Restricted Stock Units granted<br />
will be forfeited should the RSU plan participant cease to be an employee of<br />
the <strong>Dufry</strong> Group during the vesting period.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. Compensation for acting members of governing bodies<br />
The following compensations were paid in <strong>2006</strong>:<br />
board of Directors<br />
The members of the Board of Directors (all non-executive) received aggregate<br />
compensation including bonuses amounting to a total of CHF 300,000 in fiscal<br />
year <strong>2006</strong>. Three of the current members of the Board of Directors receive no<br />
compensation. The compensation during fiscal year <strong>2006</strong> to three members of<br />
the Board of Directors, who ended their function as an active member during<br />
<strong>2006</strong>, amounted to CHF 89,672.<br />
Group Executive Committee<br />
The members of the Group Executive Committee received an aggregate compensation<br />
amounting to CHF 8,722,917 in fiscal year <strong>2006</strong>, of which CHF 549,256<br />
correspond to post-employment pension and other benefits. In addition, the<br />
expense in the fiscal year <strong>2006</strong> related to the Restricted Share Unit plan of<br />
members of the Group Executive Committee amounted to CHF 1,488,000.<br />
No additional severance payments were made during fiscal year <strong>2006</strong> to members<br />
of governing bodies, who ended their functions during <strong>2006</strong>.<br />
. Compensations for former members of governing bodies<br />
During fiscal year <strong>2006</strong>, no compensation was paid to any members of governing<br />
bodies, who ended their function in 2005 or at an earlier date.<br />
. Share allotment in the year under review<br />
No shares were allotted in fiscal year <strong>2006</strong>.<br />
. Share ownership<br />
As of December 31, <strong>2006</strong>, non-executive Board members and parties closely<br />
linked to them held a total of 58,133 shares in <strong>Dufry</strong> Ltd. Mr Luis Andrés Holzer<br />
Neumann, and certain of his family members are also the beneficiaries of a<br />
trust that controls Petrus PTE Ltd.<br />
The members of the Group Executive Committee and parties closely linked to<br />
such persons, held no shares in <strong>Dufry</strong> Ltd as of December 31, <strong>2006</strong>.<br />
.6 options<br />
The Company has no traditional option plans outstanding. However, it has approved<br />
a Restricted Stock Unit (RSU) plan. Beneficiaries of this plan are certain<br />
members of the <strong>Dufry</strong> Group management. From an economic point of view, the<br />
Restricted Stock Units are stock options with an exercise price of nil.
aLLoTMENT yEaR<br />
RSu hELD aS oF DECEMbER , 006<br />
vESTING DaTE<br />
vESTING CoNDITIoN<br />
ExERCISE DaTE<br />
SubSCRIPTIoN RaTIo<br />
ExERCICE PRICE IN ChF<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
RSus or options held by board members<br />
None<br />
RSus or options held by members of the Group Executive Committee<br />
<strong>2006</strong><br />
100,000<br />
January 1, 2007<br />
Share price at vesting date is equal or higher than CHF 80.80<br />
(average share price of 10 trading days preceding vesting date)<br />
January 1, 2008<br />
1:1<br />
0<br />
The 100,000 RSUs would, if vested, represent 100,000 shares, i.e. 0.71% of the<br />
total current ordinary share capital of <strong>Dufry</strong> Ltd.<br />
. additional fees and remuneration<br />
At the exception of Mr. Xavier Bouton who received CHF 250,000 for strategic<br />
consulting services provided to the Company during the year <strong>2006</strong>, there are no<br />
additional fees or remunerations billed to <strong>Dufry</strong> Ltd or one of its subsidiaries by<br />
members of the Board of Directors and the Group Executive Committee or parties<br />
closely linked to such persons as defined in the SWX directive.<br />
. Loans granted to governing bodies<br />
Neither <strong>Dufry</strong> Ltd nor any of its subsidiaries have granted any guarantees or<br />
outstanding loans, advances or credits to members of the Board of Directors or<br />
to members of the Group Executive Committee.<br />
. highest total compensation<br />
The highest total compensation paid to a member of the Board of Directors in<br />
<strong>2006</strong> was CHF 100,000 gross. No shares and no options were allocated.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
6. ShaREhoLDERS’ PaRTICIPaTIoN RIGhTS<br />
6. voting rights and representation<br />
Each share recorded as share with voting rights in the share register confers<br />
one vote on its registered holder. Every shareholder may be represented at the<br />
Meeting of Shareholders by any person who is authorized to do so by a written<br />
proxy. A proxy does not need to be a shareholder. Shareholders entered in the<br />
share register as shareholders with voting rights on a specific qualifying date<br />
designated by the Board of Directors shall be entitled to vote at the Meeting of<br />
Shareholders and to exercise their votes at the Meeting of Shareholders.<br />
6. Quorums<br />
The Meeting of Shareholders shall be duly constituted irrespective of the number<br />
of shareholders present or of the shares represented. Unless the law or<br />
Articles of Incorporation provide for a qualified majority, an absolute majority of<br />
the votes represented at a Meeting of Shareholders is required for the adoption<br />
of resolutions or for elections, with abstentions, blank and invalid votes having<br />
the effect of “no” votes. The Chairman of the Meeting shall have a casting vote.<br />
A resolution of the Meeting of Shareholders passed by at least two thirds of<br />
the votes represented and the absolute majority of the nominal value of shares<br />
represented, shall be required for:<br />
1. a modification of the purpose of the Company<br />
2. the creation of shares with increased voting powers<br />
3. restrictions on the transfer of registered shares and the removal of such<br />
restrictions<br />
4. restrictions on the exercise of the right to vote and the removal of such<br />
restrictions<br />
5. an authorized or conditional increase in share capital<br />
6. an increase in share capital through the conversion of capital surplus,<br />
through a contribution in kind or in exchange for an acquisition of assets,<br />
or a grant of special benefits upon a capital increase<br />
7. the restriction or denial of pre-emptive rights<br />
8. the change of the place of incorporation of the Company<br />
9. the dismissal of a member of the Board of Directors<br />
10. an increase in the maximum number of members of the Board of Directors<br />
11. other matters where statutory law provides for a corresponding quorum<br />
6. Convocation of the Meeting of Shareholders<br />
The Meeting of Shareholders shall be called by the Board of Directors or, if<br />
necessary, by the Auditors. One or more shareholders with voting rights representing<br />
in aggregate not less than 10% of the share capital can request, in<br />
writing, that a Meeting of Shareholders shall be convened. Such request must<br />
be submitted to the Board of Directors, specifying the items and proposals to<br />
appear on the agenda.<br />
The Meeting of Shareholders shall be convened by notice in the Swiss Official<br />
Gazette of Commerce (SOGC) not less than 20 days before the date fixed for the<br />
Meeting. Registered shareholders will also be informed by ordinary mail.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
6. agenda<br />
The invitation for the Meeting of Shareholders shall state the day, time and<br />
place of the Meeting, and the items and proposals of the Board of Directors and<br />
the shareholders who demand that the Meeting of Shareholders be called or<br />
that items be included in the agenda.<br />
One or more shareholders with voting rights whose combined holdings represent<br />
an aggregate nominal value of at least CHF 1,000,000 may request that an<br />
item be included in the agenda of a Meeting of Shareholders. Such a request<br />
must be made in writing to the Board of Directors at the latest 60 days before<br />
the Meeting and shall specify the agenda items and the proposals made.<br />
6. Registration in the share register<br />
The record date for the inscription of registered shareholders into the share<br />
register in view of their participation in the Meeting of Shareholders is defined<br />
by the Board of Directors. It is usually 19 days before the Meeting. Shareholders<br />
who dispose of their shares before the Meeting of Shareholders are no longer<br />
entitled to vote.<br />
. ChaNGE oF CoNTRoL aND DEFENCE MEaSuRES<br />
. Duty to make an offer<br />
The Articles of Incorporation of the Company contain neither an opting-out nor<br />
an opting-up provision (Art. 22 SESTA).<br />
. Clauses on change of control<br />
In case of change of control or in any event which would trigger a mandatory<br />
offer pursuant to the Stock Exchange and Securities Trading Act (SESTA) with<br />
respect to the Company, the Restricted Stock Units awarded to the RSU plan<br />
participants shall vest immediately.
6<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. auDIToRS<br />
. Group auditors and Statutory auditors, duration of mandate and term of<br />
office of lead auditor<br />
Pursuant to the Articles of Incorporation, the Statutory and Group Auditors shall<br />
be elected every year. The Statutory and the Group Auditors may be re-elected.<br />
Ernst & Young Ltd acted as Statutory and Group Auditors of the Company and<br />
has held the mandate of external auditor of the Company since its inception<br />
in 2004. Bruno Chiomento has been the auditor in charge for the consolidated<br />
financial statements of the Company and the statutory financial statements as<br />
of December 31, <strong>2006</strong>. He took the existing auditing mandate in 2005.<br />
. auditing fee<br />
During fiscal year <strong>2006</strong>, <strong>Dufry</strong> agreed with Ernst & Young Ltd to pay a fee of CHF<br />
1,100,000 for services in connection with auditing the statutory annual financial<br />
statements of <strong>Dufry</strong> Ltd and the consolidated statements of the <strong>Dufry</strong> Group.<br />
. additional fees<br />
Additional fees amounting to CHF 590,000 were paid to Ernst & Young Ltd for<br />
audit related services.<br />
. Supervisory and control instruments pertaining to the audit<br />
The Audit Committee as a committee of the Board of Directors reviews and<br />
evaluates the performance and independence of the Group and Statutory Auditors<br />
each year. The Audit Committee determines the scope of the external audit,<br />
audit plans and relevant processes with the auditors and discusses the results<br />
of the respective audits with the external auditors. Representatives of the Group<br />
Auditors are regularly invited to meetings of the Audit Committee, namely to<br />
attend during those agenda points that dealt with accounting, financial reporting<br />
or auditing matters. In addition, the Audit Committee reviews regularly the<br />
internal audit scope, the audit plans and the results of the internal audits. During<br />
the fiscal year <strong>2006</strong>, the Audit Committee held 4 meetings. The Group and<br />
Statutory Auditors were present at 2 of those meetings.
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Corporate Governance<br />
. INFoRMaTIoN PoLICy<br />
<strong>Dufry</strong> is committed to open and transparent communication with its shareholders,<br />
financial analysts, potential investors, the media, customers, suppliers and<br />
other interested parties.<br />
<strong>Dufry</strong> Ltd publishes its financial reports on an annual and half-year basis. <strong>Dufry</strong><br />
also publishes by media release condensed financial information for the<br />
first and third quarter of each fiscal year. The annual and half-year reports and<br />
media releases containing financial information are available on the Company<br />
website.<br />
In addition, <strong>Dufry</strong> organizes presentations and conference calls with the financial<br />
community and media to further discuss details of the reported earnings or<br />
on any other matters of importance. The Company undertakes roadshows for<br />
institutional investors on a regular basis.<br />
Details and information on the business activities, company structure, financial<br />
reports, media releases and investor relations are available on the <strong>Dufry</strong> website<br />
www.dufry.com.<br />
Web-links regarding the SWX push- / pull-regulations concerning ad-hoc publicity<br />
issues are http://www.dufry.ch/new-index/new-mediarelease.htm and<br />
http://www.dufry.ch/new-index/new-latest.htm, respectively.<br />
For the Investor Relations and Corporate Communications contacts as well<br />
as a summary of anticipated key dates in 2007 please refer to page 111 of this<br />
Annual Report.
ChIEF FINaNCIaL oFFICER<br />
MaNaGEMENT DISCuSSIoN aND<br />
aNaLySIS oF RESuLTS<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Financial Officer<br />
Dear all,<br />
Fiscal year <strong>2006</strong> was another period of strong growth and outstanding financial<br />
results for <strong>Dufry</strong> Group. Apart from organic growth, we started a series of new<br />
activities and made an important acquisition in Brazil in March <strong>2006</strong>, which has<br />
been included in the consolidated results for nine months. <strong>Dufry</strong> also did some<br />
major capital market transactions. The following comments outline the main<br />
elements of our performance in <strong>2006</strong>:<br />
Turnover. In <strong>2006</strong>, turnover increased by 51% to CHF 1,436.3 million from CHF<br />
949.8 million in 2005. Of this increase, 8% is based on organic growth, 10%<br />
on new concessions and 33% is due to acquisitions. Net sales amounted to<br />
CHF 1,403.8 million and accounted for 97.7% of turnover in <strong>2006</strong> compared to<br />
98.2% in 2005. The balance was generated through advertising income from<br />
suppliers.<br />
We grew organically, with new concessions and with acquisitions in all our three<br />
strategic areas (Mediterranean basin, Latin America and Caribbean, and Asia)<br />
across our five Regions.<br />
Europe increased its net sales by 13.1% to CHF 370.5 million in <strong>2006</strong> from CHF<br />
327.5 million in 2005. Italy, our main market in this region grew by 14.7% due to<br />
solid organic growth and the full year impact of our Rome operations. During<br />
<strong>2006</strong>, we also started operations in Spain, where we opened shops in Tenerife,<br />
Mallorca and Bilbao; other changes in the concession portfolio of this region<br />
include the closing of shops in Paris and Marseille as well as the sale of our<br />
operations in Israel.<br />
Net sales in Region Africa rose by 14.4% to CHF 146.4 million from CHF 127.9<br />
million in 2005. We experienced very dynamic growth in Morocco, with the full<br />
year consolidation of operations started during 2005 and additional shops<br />
opened during <strong>2006</strong>, mainly in Marrakech airport. In <strong>2006</strong>, we also started our<br />
activity in Algier airport with two duty free shops and signed a new contract to<br />
operate in Sharm–El Sheik airport, Egypt.<br />
Region Eurasia generated net sales of CHF 187.2 million, 24.9% growth compared<br />
to CHF 149.9 million in 2005. This increase was mainly due to the performance<br />
of our business in Moscow, new shops in Singapore and in Sharjah<br />
(United Arab Emirates), where we opened two new shops and the refurbishment<br />
of our main shops in 2005 also boosted sales. In addition, we also started<br />
activities in Belgrade, and we signed new contracts to start operating in Hong<br />
Kong during 2007 and to operate more than 3,300 m 2 in Moscow Sheremetyevo<br />
airport.<br />
Region North America & Caribbean increased net sales by 17.0% to CHF 328.0<br />
million from CHF 280.4 million in 2005, excluding the cruise line operations<br />
and Bolivia, which were transferred to region South America. Apart from this,<br />
North America & Caribbean had other important changes in scope and also
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Financial Officer<br />
experienced one-off effects. Our operation in Dominican Republic, which we<br />
started in late 2005, increased its contribution due to the full year effect and<br />
opening of new shops in <strong>2006</strong>. Net sales also increased due to the start up of<br />
the operations in Turks & Caicos and the full year consolidation of the Young<br />
Caribbean Group, which we acquired in the last quarter of 2005. On the other<br />
side, the increase was partially absorbed by the reduction of the activity in<br />
some Caribbean areas, mainly the Mexican Riviera, due to the devastating<br />
effects of Hurricane Wilma in late 2005, which continued to impact on most<br />
of <strong>2006</strong>.<br />
Region South America, which includes the newly acquired Brazilian operations,<br />
the Bolivian and cruise line operations that were transferred from region North<br />
America & Caribbean to region South America in <strong>2006</strong>, achieved net sales of<br />
CHF 371.6 million in <strong>2006</strong> compared to CHF 47.1 million in 2005.<br />
Gross Profit. Gross profit jumped 57.6% to CHF 744.4 million in <strong>2006</strong> from CHF<br />
472.2 million in 2005. The gross margin increased by 2.1 percentage points to<br />
51.8% in <strong>2006</strong> from 49.7% in 2005. In the last three years the gross margin has<br />
increased from 46.4% in 2003 to the current 51.8%. These improvements are<br />
the result of the strategic focus on the most profitable product categories, like<br />
perfumes & cosmetics and luxury products, strengthened presence in emerging<br />
markets, and improved supplier partnerships, thanks to increased presence<br />
in airports worldwide.<br />
Selling Expenses. Selling expenses, net amounted to CHF 286.0 million or<br />
19.9% of turnover compared to CHF 171.7 million or 18.1% in 2005. The increase<br />
of the selling expenses as a percentage of turnover is mainly due to<br />
higher concession fees of new shop locations.<br />
Personnel Expenses. In <strong>2006</strong>, Personnel expenses were CHF 179.5 million<br />
compared to CHF 123.2 million in 2005. This increase reflects the higher number<br />
of employees within our Group, as a result of our expansion through acquisitions<br />
and new concessions. As of December 31, <strong>2006</strong>, the number of employees<br />
was at 6,526 compared to 4,419 at year end of 2005. Personnel expenses<br />
as a percentage of turnover decreased to 12.5% for <strong>2006</strong> compared to 13.0%<br />
for 2005.<br />
General expenses. General expenses, net amounted to CHF 118.4 million in<br />
<strong>2006</strong>, compared to CHF 77.2 million in 2005, mainly due to the new activities;<br />
expressed as percentage of turnover, the ratio slightly increased from 8.1% in<br />
2005 to 8.2% in <strong>2006</strong>.<br />
EbITDa. In <strong>2006</strong>, EBITDA (before other operational income / expenses) increased<br />
by 60.2% to CHF 160.5 million, compared to CHF 100.1 million in 2005.<br />
The EBITDA-margin improved by 0.7 percentage points to 11.2% in <strong>2006</strong> from<br />
10.5% in 2005. The improvement in the margin is mainly attributable to the<br />
increase in Gross Profit, combined with a slight reduction on the weight of personnel<br />
expenses. These improvements more than compensate the increase in<br />
selling expenses.
0<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Financial Officer<br />
Depreciation & amortization. Depreciation & amortization rose to CHF 50.0<br />
million in <strong>2006</strong> from CHF 23.7 million in 2005. The increase is in part due to<br />
higher depreciation related to capital expenditure for new projects (CHF 26.2<br />
million in <strong>2006</strong>, compared to CHF 17.1 million in 2005), but predominantly attributable<br />
to the amortization of concession rights generated after the acquisitions<br />
of new businesses, particularly the Brazilian operations.<br />
EbIT. EBIT for <strong>2006</strong> increased to CHF 169.2 million compared to CHF 71.5 million<br />
for 2005. EBIT in <strong>2006</strong> includes CHF 58.7 million profit of “Other operating<br />
income / expenses” related to several transactions and events. The most important<br />
of which, was the sale of the shares of <strong>Dufry</strong> South America Ltd in the<br />
course of the IPO in Brazil and Luxembourg. Also included are the losses and<br />
subsequent insurance compensation related to Hurricane Wilma, costs related<br />
to one-off restructuring, especially in Europe, and initial costs related to new<br />
projects in North America and Caribbean, the region with the most changes in<br />
scope.<br />
Financial Result. The net financial expenses were CHF 30.7 million in <strong>2006</strong>,<br />
compared to CHF 5.7 million in 2005. As a result of our acquisitions during<br />
<strong>2006</strong>, which were largely financed through debt, the interest expenses rose to<br />
CHF 35.7 million, compared with CHF 7.9 million in 2005.<br />
Taxes. The tax rate of the Group is affected by the mix of the profitable operating<br />
companies, which have a wide range of taxation regimes from 0% to about 40%.<br />
In <strong>2006</strong>, total taxes amounted to CHF 13.9 million, compared to CHF 13.4 million<br />
in 2005. Expressed as percentage of EBT, the tax rate decreased to 10.0%<br />
from 20.3%. The improvement was mainly due to the one-off effects, materially<br />
the net gain resulting from the sale of shares in <strong>Dufry</strong> South America (DSA) and<br />
restructuring costs. Without those effects, the tax rate would have remained at<br />
a similar level to 2005, supported by the tax optimization initiatives started in<br />
previous years.<br />
Net Earnings. Net earnings for the Group more than doubled to CHF 124.6<br />
million in <strong>2006</strong> from CHF 52.7 million in 2005. The earnings attributable to the<br />
equity holders of the parent rose to CHF 107.7 million in <strong>2006</strong> from CHF 41.6<br />
million in 2005. Minority interest was at CHF 16.9 million in <strong>2006</strong>, compared to<br />
CHF 11.1 million in 2005. The increase in minority interest is mainly due to the<br />
integration of the Brazilian activities in <strong>2006</strong> at 20%, and it will change substantially<br />
in 2007, as minority interest will represent 49% in <strong>Dufry</strong> South America<br />
(DSA) going forward.
CoNSoLIDaTED INCoME STaTEMENTS<br />
In thousands of CHF<br />
Net sales<br />
Advertising income<br />
Turnover<br />
Cost of sales<br />
GRoSS PRoFIT<br />
Selling expenses, net<br />
Personnel expenses<br />
General expenses, net<br />
EbITDa<br />
Depreciation and amortization<br />
Other operational profit / (loss)<br />
EbIT<br />
Income from associates<br />
Financial expenses<br />
EbT<br />
Income taxes, net<br />
NET EaRNINGS<br />
Attributable to :<br />
Equity holders of the parent<br />
Minority interest<br />
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Financial Officer<br />
006<br />
auDITED<br />
1,403,758<br />
32,537<br />
, 6,<br />
691,925<br />
, 0<br />
285,989<br />
179,469<br />
118,413<br />
60,<br />
50,046<br />
58,749<br />
6 , 0<br />
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30,739<br />
, 6<br />
13,883<br />
, 0<br />
107,714<br />
16,866<br />
%<br />
00.0 %<br />
. %<br />
19.9 %<br />
12.5 %<br />
8.2 %<br />
. %<br />
3.5 %<br />
. %<br />
.6 %<br />
. %<br />
00<br />
auDITED<br />
932,892<br />
16,938<br />
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477,615<br />
,<br />
171,691<br />
123,214<br />
77,165<br />
00,<br />
23,665<br />
(5,005)<br />
,<br />
398<br />
5,748<br />
66,<br />
13,439<br />
,6 6<br />
41,560<br />
11,126<br />
00.0 %<br />
Liquidity and Capital Resources. As of December 31, <strong>2006</strong>, <strong>Dufry</strong> had a net debt<br />
of CHF 513.4 million compared to CHF 47.0 million by year end of 2005. During<br />
<strong>2006</strong>, the Company successfully negotiated new credit facilities with improved<br />
conditions, extended duration and higher credit lines available. The increase in<br />
net debt is due to the acquisitions executed during fiscal year <strong>2006</strong>, Brazil (CHF<br />
505 million) and Puerto Rico (CHF 175 million), and was partially mitigated by<br />
the DSA IPO proceeds (CHF 228 million).<br />
The equity increased to CHF 655.1 million as of December 31, <strong>2006</strong> from CHF<br />
446.0 million at December 31, 2005.<br />
Net Cash from operating activities. Net cash from operating activities increased<br />
to CHF 122.5 million from CHF 56.9 million in 2005. The increase is<br />
mainly due to the improved profitability of the Group and new operations.<br />
%<br />
. %<br />
18.1 %<br />
13.0 %<br />
8.1 %<br />
0. %<br />
2.5 %<br />
. %<br />
.0 %<br />
. %
<strong>Dufry</strong> Annual Report <strong>2006</strong> — Chief Financial Officer<br />
From a financial perspective, <strong>2006</strong> has been another exciting year: We have<br />
continued our expansion into new markets, like Brazil, Spain, Belgrade, Algeria,<br />
Hong Kong and Puerto Rico and at the same time we have reinforced <strong>Dufry</strong>´s<br />
concession portfolio, especially improving its duration and diversification. The<br />
strong performance of our business, based on organic growth and refurbishments<br />
done in 2005, the growth into new activities and our diversified basis, allowed<br />
us to absorb the costs incurred for the restructuring and for the starting<br />
of several operations during the year. In addition to this, we have continued with<br />
projects on IT systems, HR policies and financial procedures to generate synergies<br />
and to improve the control.<br />
In <strong>2006</strong> <strong>Dufry</strong> has continued to deliver on its strategy of combining a strong<br />
operational focus in travel retail (organic growth of 8%, further improvements<br />
in the gross margins and enhancement of our concession portfolio) with an<br />
excellent track record of financial transactions (two major acquisitions in Brazil<br />
and Puerto Rico, IPO of <strong>Dufry</strong> South America Ltd in Brazil and Luxemburg, and<br />
a full restructuring of debt).<br />
I would like to thank our shareholders and investors, the analysts covering us,<br />
our financial institutions, professional services providers, and particularly our<br />
team, for their support and contribution to what has been an amazing <strong>2006</strong>.<br />
Xavier Rossinyol
This Annual Report contains certain forward-looking statements, which can be<br />
identified by terms like “believe”, “assume”, “expect” or similar expressions, or<br />
implied discussions regarding potential new projects or potential future revenues,<br />
or discussions of strategy, plans or intentions. Such forward-looking state-<br />
ments involve known and unknown risks, uncertainties and other factors that<br />
may cause actual results to be materially different from any future results, performance<br />
or achievements expressed or implied by such statements. All forward-looking<br />
statements are based only on data available to <strong>Dufry</strong> at the time<br />
of preparation of this Annual Report. <strong>Dufry</strong> does not undertake any obligation<br />
to update any forward-looking statements contained in this Annual Report as a<br />
result of new information, future events or otherwise.<br />
PuBLISHER <strong>Dufry</strong> Ltd, Basel<br />
cONcEPT, PRODucTION Tolxdorff & Eicher Consulting, Horgen<br />
DESIGN MetaDesign, Zurich<br />
PRINT Printlink, Zurich<br />
© <strong>Dufry</strong> Ltd 2007
A TRAVEL RETAILER MORE THAN 440 SHOPS WORLDWIDE / OVER 300 MILLION TRAVELLERS<br />
EVERY YEAR. A <strong>GLOBAL</strong> <strong>AMBITION</strong>