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Comment Financial Report (Group)

SUBSTANTIAL INCREASE IN TURNOVER AND EARNINGS

The Kuoni Group delivered an encouraging business performance for 2011 in a very challenging market environment. Thanks to increased turnover and despite the one-off costs associated with the acquisition and integration of Gullivers Travel Associates (GTA), the net result for the year was a clear improvement on 2010. With the depressed general economic climate and the political upheavals in the Arab world, the market environment proved far from easy in 2011, especially for European tour operating activities. Nevertheless, the Kuoni Group posted turnover for the year of CHF 5 111 million, a 28% nominal increase on 2010. The effect of a strongly appreciating Swiss franc eroded 8.3% of the Group turnover. Acquisitions raised Group turnover by 35%. Organic turnover growth amounted to 1.2%, and was driven by the continued sizeable expansion of business within Division Destinations and in the Group’s Asian and VFS Global activities. Earnings before interest and taxes (EBIT) amounted to CHF 74.2 million, a 27% improvement on the CHF 58.4 million of the previous year. EBIT net of the costs of the investment and cost-reduction programme, ordinary amortisation of acquisition-related intangible assets and the one-off costs associated with the acquisition and integration of GTA, stood at CHF 168.9 million (compared to CHF 127.1 million in 2010). The net Group result for the year amounted to CHF 33.3 million (compared to CHF 23.2 million for 2010).

RISING UNCERTAINTIES ON THE FINANCIAL MARKETS SLOWING GLOBAL ECONOMIC GROWTH

Global economic development slowed substantially in the course of 2011. The loss of momentum can be attributed to a number of negative influences in the first half-year, such as the civil unrest in North Africa and the Arabian Peninsula, the devastating earthquake and tsunami in Japan (and the ensuing critical situation at the Fukushima nuclear power plant) and the uncertainties on the financial markets deriving from Europe’s debt crisis. Fears of a possible return to recession in the world’s developed markets prompted a sizeable loss of confidence among investors and consumers. Against this background, the emerging markets continued to be the driving force of global economic growth. The uncertainties over the ramifications of the government debt crisis in Europe had a number of negative effects, including increased volatility in the exchange rates of various currencies against the Swiss franc, which reached new highs in euro and US dollar terms until the Swiss National Bank intervened on 6 September.

GLOBAL TOURIST SECTOR DEFIES MUTED ECONOMIC GROWTH

Despite a worldwide economic situation that was far from bright and despite further unforeseen unfavourable events, the global tourism sector showed largely positive trends. The United Nations World Tourism Organization (UNWTO) expects international arrivals for 2011 to show a 4.4% growth (source: UNWTO, January 2012), continuing the general recovery of the tourist sector that was first felt the previous year. The tsunami and subsequent nuclear crisis in Japan as well as the political upheavals in North Africa and the Arabian Peninsula all had a tangible effect on the tourism sector. Higher costs, meanwhile – especially through rising oil prices – weighed heavily on the already narrow margins of the fiercely competitive leisure travel segment. The political developments in North Africa also help explain the regional shifts in recent market growth, which has seen a narrowing in rates between mature and emerging markets after the latter had served as the prime mover in global tourism development over the past few years. With the exception of the Middle East and North Africa, all the world’s regions reported positive tourism growth. Arrivals in Europe saw an above-average increase, as Southern Europe attracted more tourists seeking alternative destinations in the light of the unrest in North Africa and the Arabian Peninsula. Asia, too, posted a positive overall trend, despite the Japanese disaster.