A GLOBAL AMBITION ANNuAL REPORT 2006 - Dufry

ChIEF ExECuTIvE oFFICER
DuFRy, DELIvERING a SoLID STRaTEGy
Dufry Annual Report 2006 — Chief Executive Officer
Dear all,
Last year was another important step in Dufry’s strategy and a very successful
year: With strong top-line growth of 51 % we reached a Turnover of
CHF 1,436.3 million, our EBITDA 1 increased 60 % from CHF 100.1 million in
2005 to CHF 160.5 million in 2006. Dufry has once more improved its margins
with our EBITDA 1 margin being up from 10.5 % on turnover in 2005 to 11.2 % in
2006. Additionally, Dufry further broadened its global footprint by entering eight
new markets and adding 140 shops, all of them in our key strategic markets.
006 – a very active year
In 2006 we continued to drive organic growth by leveraging the passenger
growth through refurbishments and improvements in our operations. The result
of a 8 % organic growth rate is well above the respective passenger growth
for the third consecutive year and demonstrates our capabilities to develop our
business over and beyond pure market growth.
As announced during the IPO of Dufry Ltd in 2005, we have expanded existing
operations and started new businesses across our Group. Overall, we added
more than 10,000 m 2 of retail space during fiscal year of 2006, an increase of
about 20% compared to year end of 2005. Many of these projects only became
fully operational in the second half of 2006, so that the sales growth in 2006
does not reflect the full potential of these new projects. We will see another
growth effect in this respect during 2007, together with a number of new projects,
which will be implemented in 2007. The new projects announced so far for
2007 will increase the retail surface by another approx. 7,500 m 2 .
Last but not least, we also have been active on M&A and capital market transactions.
The acquisition of 80% of Brasif and its logistics platform Eurotrade in
March 2006 meant another big step for our Group. Brazil has not only become
the heart of our new region South America but today, it is also one of the most
important countries for Dufry. In autumn 2006, we decided to do an Initial Public
Offering of our region South America for two reasons: On one hand, it was an
opportunity to de-leverage our Group and hence to give us headroom for further
growth, on the other hand and more importantly, we are convinced that through
the IPO of our South American operations, we can better develop our business
in this region. The very positive reaction of airport authorities, landlords, suppliers
and employees to our IPO in Switzerland at the end of 2005 mirrors the
potential that such a transaction can bring to Dufry South America. The valuation
of Dufry South America since its IPO on December 20, 2006 demonstrates
that also the financial community supports this view. As of December 31, 2006,
Dufry South America reached a market capitalization of USD 855 million. The
year 2006 ended with another transaction, namely with the acquisition of the
leading Travel Retail operator in Puerto Rico. This group operates 23 travel retail
shops on the island of Puerto Rico and other Caribbean islands and will be
integrated into Dufry’s North America & Caribbean region.
1 EBITDA before other operational result