Kuoni Group Annual Report 2015 2015.kuoni-report.com

kuoni.com

2015.kuoni-report.com Content

At a Glance 04 Human Resources 100 Group CEO Movie 05 Corporate Responsibility 103 Milestones 2015 06 Financial Report Share Development 09 Kuoni Group 110 Key Figures 10 – Five-Year Summary of Key Data 111 Letter to Shareholders 11 – Statement of financial position 114 Kuoni Group Today 17 – Group Income statement 115 Our Business 18 – Statement of comprehensive income 116 Management – Statement of changes in equity 117 – Board of Directors 19 – Statement of cash flows 118 – Executive Board 26 – Main accounting principles 119 Group Report 31 – Notes to the Consolidated ­Financial Divisional Reports 48 Statements­ 131

2015.kuoni-report.com Global Travel Distribution (GTD) 49 – Principal subsidiaries, associates Global Travel Services (GTS) 53 and joint ventures 177 VFS Global 58 – Report of the statutory auditor 181 Corporate Governance 63 Financial Report Introduction 64 Kuoni Travel Holding LTD 183 Group Structure 65 – Statement of financial position 184 Capital Structure 66 – Income statement 186 Board of Directors 70 – Notes 187 The Group Executive Board 77 – Board of Directors’ Proposal for the Compensation, Shares and Loans 78 ­Appropriation of Retained Earnings 209 Shareholders’ Participation Rights 79 – Report of the statutory auditor 210 Changes of Control and Defence Measures 82 Agenda 212 Auditors 83 Terms of Use/Data Protection Policy 213 Information Policy 84 Imprint 216 Compensation Report 86 Report of the Statutory Auditor 99

Kuoni Group Annual Report 2015 03 At a Glance 2015.kuoni-report.com

Kuoni Group Annual Report 2015 04 At a Glance

Group CEO Movie

Zubin Karkaria, CEO Kuoni Group on 2015 and looking ahead 2015.kuoni-report.com

Milestones 2015

Kuoni Group Annual Report 2015 05 At a Glance Milestones 2015

14 January 2015 Following a strategic review, Kuoniʼs Board of Directors and Group Executive Board have decided to focus the companyʼs activities on its core business as a service provider to the global travel industry and to governments. In its new set-up, Kuoni Group will be structured into three divisions, Global Travel Distribution (GTD), Global Travel Services (GTS) and VFS Global.

This exit from the tour operating business includes Kuoni Switzerland, UK, Benelux, Hong Kong/China and India as well as operations in Scandinavia/Finland. This affects approximately 3,800 people in total.

“Kuoni Groupʼs new strategic direction will transform the company into a unique, clearly positioned player in the global travel industry.”

Heinz Karrer, Chairman of the Board of Directors of Kuoni Group

Kuoni Groupʼs Board of Directors appointed Ivan Walter as new member of the Executive Board. He will lead the Global Travel Distribution (GTD) Division. Ivan Walter has been with the Kuoni Group since 2001.

Ivan Walter 2015.kuoni-report.com

22 June 2015 Kuoni Group has signed an agreement with DER Touristik for it to acquire all the tour operators, specialists, travel agencies and online sales in the Switzerland, UK, Scandinavia/Finland and Benelux markets, as well as the airline Novair and the Playitas family and sports resort on Fuerteventura.

REWE Group is acquiring all of the approximately 2,350 (FTE) employees at the existing locations and will continue to run the business activities, including all the travel agencies, as part of its DER Touristik travel division.

Kuoni Group Annual Report 2015 06 At a Glance

7 August 2015 Kuoni Group has signed an agreement with Fairfax Financial Holdings Ltd through its travel provider Thomas Cook India to sell Kuoniʼs Indian travel activities and the tour operator Kuoni Hong Kong. The Indian travel activities encompass outbound tour operating, business travel, travel agencies, and inbound business (Destination Management India).

11 September 2015 The sale of European tour operating activities to REWE Group was completed on 11 September 2015 after the responsible European competition authorities gave their unconditional approval to the transaction earlier. REWE Group, and its tourism division DER Touristik, is taking over Kuoni Groupʼs tour operating activities in Switzerland, UK, Scandinavia/Finland and Benelux as well as the airline Novair and the Playitas family and sports resort on Fuerteventura. It is taking on the employees and locations, and continuing the business activities.

5 November 2015

Zubin Karkaria (left) Prisca Havranek- Kosicek (right) 2015.kuoni-report.com

The Board of Directors has appointed Zubin Karkaria as the new CEO of the Kuoni Group with immediate effect. He replaces the outgoing CEO Peter Meier and concurrently continues to run the VFS Global Division.

Zubin Karkaria founded VFS Global in 2001 and built up the company very successfully to become the global leader in visa services for governments. VFS Global Division is the fastest growing, most innovative and most profitable division in the Kuoni Group.

The Board of Directors has appointed Dr Prisca Havranek-Kosicek as the Kuoni Groupʼs new CFO, succeeding previous CFO Thomas Peyer. Prisca Havranek-Kosicek, an Austrian citizen, has many yearsʼ experience of senior operational and consultancy roles in finance, controlling, strategy development and restructurings.

Kuoni Group has entered a partnership with HNA Group of China. HNA Group is one of the leading private companies of Chinese origin, and is globally active in a number of businesses including tourism and aviation. The goal of the partnership is to jointly develop the outbound travel business in China and to partner in related strategic matters.

Kuoni Group Annual Report 2015 07 At a Glance

“Kuoni Group has been transformed from a broadly based travel company pursuing a wide range of very different activities into a focussed global service provider for the professional travel industry and governments.”

Heinz Karrer, Chairman of the Board of Directors of Kuoni Group

9 November 2015 The sale of tour operating activities in Hong Kong to Fairfax/Thomas Cook India was completed on 9 November 2015 after the responsible authorities gave their unconditional approval to the transaction earlier. Canadian group Fairfax, with its travel services provider Thomas Cook India, is taking over Kuoni Groupʼs traditional tour operating activities in Hong Kong. It is taking on the employees and locations, and continues the business activities.

15 December 2015 On 15 December 2015 Kuoni Group sold its “Neue Hard” property in Zurich to Zürcher Kantonalbank. The sale price is CHF 75 million, which matches the estimated market value.

16 December 2015 The sale of travel activities in India to Fairfax/Thomas Cook India was completed on 16 December 2015 after the responsible authorities gave their unconditional approval to the transaction. Canadian group Fairfax, with its travel services provider Thomas Cook India, is taking over Kuoni Groupʼs traditional tour operating activities and inbound business (Destination Management India) in India. It is taking on the employees and locations and continues the business activities.

2015.kuoni-report.com Share development

Kuoni Group Annual Report 2015 08 At a Glance Share development

Kuoni Group Share 2015

120

100

80

60

40 01.01.2015 16.03.2015 27.05.2015 07.08.2015 20.10.2015 31.12.2015

Kuoni Group SWISS PERFORMANCE INDEX

CHF 2015 2014 Cash flow (net cash from operating activities) per registered share A 5.78 3.31 2015.kuoni-report.com per registered share B 28.89 16.57 Net result per registered share A –15.10 3.44 per registered share B –75.51 17.20 Equity per registered share A 27.07 40.10 per registered share B 135.37 200.48 Withholding tax-free distribution against reserves from capital contributions per registered share A 0.00 1 1.50 per registered share B 0.00 1 7.50 Stock market prices per registered share B high 351 425 low 173 218 at year-end 280 301 Annual trading volume in CHF million 1,241 1,289 Stock market capitalisation as at 31 December in CHF million 1,118 1,205

1 Proposal of the Board of Directors to the next General Meeting of Shareholders. Subject to definitive approval by the General Meeting of Shareholders. Distribution to shareholders of a withholding tax-free appropriation from the capital contribution reserve. Key figures

Kuoni Group Annual Report 2015 09 At a Glance Key figures

CHF million 2015 2014 Turnover 3,348.7 3,372.0 Global Travel Distribution 1,979.3 1,933.6 Global Travel Services 1,054.8 1,169.6 VFS Global 316.5 270.8 Less turnover elimination between segments –1.9 –2.0

Earnings before interest and taxes (EBIT) 81.2 76.4 Global Travel Distribution 48.0 42.0 Global Travel Services –48.8 –6.9 VFS Global 53.9 52.5 Corporate 28.1 –11.2

Net result from continuing operations 57.9 58.2 Net result from discontinued operations, net of income taxes –352.1 9.2 Net result –294.2 67.4

Cash flow from operating activities 112.9 64.0 Free cash flow 120.3 55.1 Investments in tangible and intangible assets 38.2 66.0 Total assets 1,629.4 2,419.2 Equity 530.3 779.2 Equity ratio 32.5% 32.2%

Kuoni Economic Profit (KEP) 16.2 –8.5 Return on invested capital (ROIC) 10.0% 6.6%

Average number of employees (full-time equivalent) 7,968 7,455 2015.kuoni-report.com

Kuoni Group Annual Report 2015 10 Letter to Shareholders 2015.kuoni-report.com

Kuoni Group Annual Report 2015 11 Letter to Shareholders

Letter to shareholders

Zurich, 15 March 2016

Dear Shareholders In January 2015 we informed you about Kuoni Groupʼs new strategic direction as a service provider for the global travel industry and governments. The decision taken then to refocus Kuoni was made against a background of persistent rapid and profound change in customer habits, in technology and in the globalisation of demand. The Board of Directors and Group Executive Board came to the conclusion that in an environment characterised by economies of scale, digital applications and highly differentiated product offerings we were no longer the best owner for all the businesses we traditionally ran. This is why we sold the tour operating business last year to new owners who were in a position to develop its potential better than we could. The Rewe Group, the new owner of the European tour operating business, and Fairfax/Thomas Cook India, new owner of the units in India and Hong Kong, have the necessary size, resources and shares of the relevant markets, putting them in a better position to run the business successfully in the long term. 2015.kuoni-report.com As one of the leading global travel service providers with a strong focus on technology and innovation, Kuoni Group is publishing its complete 2015 Annual Report online exclusively – for the very first time.

Heinz Karrer (right) Zubin Karkaria (left)

Kuoni Group Annual Report 2015 12 Letter to Shareholders

The 2015 Annual Report has been designed to make the information accessible on computers, tablets and smartphones. You can go to the Download Centre to select, download and print the chapters you want.

Back then, like today, our decision was guided by the desire to identify the right strategy and means to secure Kuoniʼs long-term success and fulfil the legitimate aspirations of all of our stakeholders. The Board of Directors remains confident that the new focus initiated over a year ago is correct, and that the strategy underpinning it is the right one. In its current configuration Kuoni has three core businesses with great potential; it also has unique expertise and skill in all three areas, and an experienced and dynamic management team.

Timing plays an important role in making the most of this potential. The pace of change we are seeing in our business, driven by the markets, technology and the main market players, means that substantial investments are required to maintain and expand a strong market position. As well as posting market-beating, sustainable organic growth, a company has to be able to grow through acquisitions.

We hope you find Kuoniʼs 2015 Annual Report informative and convenient to access.

Review and evaluation of all strategic options Towards the end of 2015 the Board of Directors – with the support of the relevant experts – conducted a comprehensive review and evaluation of all strategic options. This included a rigorous evaluation of the offers received from various candidates to take over Kuoni Groupʼs business activities. In the end, the Board decided unanimously in favour of the offer made by the globally active private equity company EQT. The support shown for EQT as the new owner by the management team led by CEO Zubin Karkaria was a decisive factor.

2015.kuoni-report.com The fundamental decision taken by the Board of Directors in the light of the above considerations to transfer responsibility for the Kuoni Group to the best-qualified and most suitable new owner is entirely consistent. It is guided by the potential of the Kuoni Group and by the Boardʼs responsibility to create value for shareholders, promote the companyʼs interests and take account of the interests of all stakeholders.

The Board of Directors also welcomes the decision by the Kuoni and Hugentobler Foundation to enter into an agreement with EQT. This agreement sets out details of the joint management of Kuoni Group by EQT and the Foundation, as well as defining the key pillars of Kuoni Groupʼs future development and describing the Foundationʼs future involvement in Kuoni.

The planned takeover of Kuoni Group by EQT as the new owner brings some attractive long-term benefits to the company, its business partners and its employees. The transaction allows Kuoni Group to continue developing its position as a leading, focused and global service provider for the worldwide travel industry and for governments. This will be done through investments in technology, in a wider portfolio of services and in acquisitions of other companies, thus taking full account of the Boardʼs criteria as outlined above. EQT intends to make respective investments to develop and strengthen Kuoniʼs market position and increase its profitability.

Kuoni Group Annual Report 2015 13 Letter to Shareholders

In doing so it will be able to build on the current implementation of the strategy to strengthen and expand Kuoni Groupʼs three divisions. The relevant operational measures, announced in November 2015, are progressing on schedule and delivering the expected results.

Kuoni concluded a binding transaction agreement with EQT on 1 February 2016. EQT has made a public tender offer of CHF 370 in cash per registered B share. If and when the public tender offer is completed successfully, shares in Kuoni Travel Holding Ltd will be delisted. The company will then have the opportunity to implement its strategy outside the spotlight of the capital markets, which in this phase of the companyʼs development would undoubtedly be an advantage.

Board of Directors and Group Executive Board recommend to accept EQTʼs public offer As you will see from the public tender offer, completion of the offer is conditional on achieving a tender rate of at least 67% of the votes and of more than 50% of the share capital of Kuoni Group, as well as on the removal of the share transfer and voting right restrictions from the Articles of Incorporation. The removal of these restrictions requires the approval of an extraordinary General Meeting. Completion of the public tender offer is also subject to the approval of the competition authorities and fulfilment of other standard conditions.

Due to these developments, the Annual General Meeting of Shareholders scheduled for 26 April 2016 is deferred to a later date. The delisting of Kuoni shares should take place in the second or third quarter of 2016.

The Board of Directors and Group Executive Board recommend that you, our valued shareholders, accept EQTʼs public offer.

2015 financial year 2015.kuoni-report.com Kuoni Group generated turnover from continued activities of CHF 3,348.7 million in 2015, compared with CHF 3,372.0 million in 2014. There was significant organic growth of 6.9%, but the strong Swiss franc had a negative effect of 7.6% on the conversion into our presentation currency, resulting in a nominal net decline in turnover of 0.7%.

The high-growth divisions Global Travel Distribution (GTD) and VFS Global once again made strong contributions to overall turnover, posting organic growth of 9.8% and 23.3% respectively. Operating earnings before amortisation (EBITA) amounted to CHF 124.0 million (2014: CHF 105.7 million), while operating earnings (EBIT) came in at CHF 81.2 million (2014: CHF 76.4 million). EBIT was therefore higher than in 2014, though it was heavily influenced by one-off effects such as the sale of the “Neue Hard” property in Zurich (+CHF 52.6 million), the value adjustment on other intangible assets (CHF – 16.5 million), as well as the costs of restructuring the Global Travel Services (GTS) Division and the support and group functions (CHF –25.2 million). Excluding these items, the adjusted EBITA came to CHF 96.6 million and the adjusted EBIT was CHF 70.3 million. It should be noted that the previous yearʼs result included CHF 10.1 million from the sale of the Geroldstrasse property.

Kuoni Group Annual Report 2015 14 Letter to Shareholders

The sale of the tour operating business led to a loss of CHF –132.4 million before the reclassification of CHF –219.7 million of currency translation losses (CTA) accumulated over the years. This accounting effect had no impact on the equity or cash position. The net result after tax from discontinued operations came to CHF –352.1 million (2014: CHF 9.2 million). The net result thus came to CHF –294.2 million overall, compared with CHF 67.4 million in 2014.

The GTD Division GTD (global distribution partner for accommodation and travel services in the business-to-business sector) posted a new record of 14.5 million room nights booked. Strongest growth came from markets in Asia and the Middle East. EBIT also went up.

The GTS Division (group travel business, event management and Destination Management Specialists) reported positive organic growth, especially with customers from China and Taiwan. However, a fall in demand in the important Japanese market had a substantial negative effect on the result. The restructuring of the group travel business commenced during the year under review. At the Destination Management Specialists, geopolitical events and lower demand from Russia had an impact on turnover. Cost savings and a focus on destination services with higher margins and more profitable orders led to an improvement in operating earnings.

In 2015 the VFS Global Division (provider of outsourced visa services for governments) processed 20.1 million visa applications, which is a new record. This growth was achieved primarily in the source markets of Asia/Pacific, India, the Middle East and Africa. At the end of 2015 VFS Global was running 1,916 application centres for 48 governments in 123 countries around the world. Operating earnings (EBIT) were up slightly on the prior year.

In November 2015 Zubin Karkaria was appointed as CEO of Kuoni Group, succeeding the outgoing CEO Peter Meier, and now heads the Kuoni Group as well as the VFS

2015.kuoni-report.com Global Division. Zubin Karkaria founded VFS Global in 2001, and has been a Member of the Group Executive Board since March 2013. In November 2015 Dr. Prisca Havranek- Kosicek was appointed as the new Group CFO, succeeding previous CFO, Thomas Peyer, effective March 2016.

As stated in the public tender offer by private equity company EQT on 29 February 2016, any dividend distribution would be deducted from the offer price. The Board of Directors is therefore recommending to the forthcoming Annual General Meeting that no dividend in the form of a withholding tax-free distribution against reserves from capital contributions be paid.

The Board of Directors and the Group Executive Board would like to thank all our employees for their great commitment and professionalism during 2015. Many of them worked extremely hard and with great commitment on the major change process, and they certainly deserve our praise.

2016 will be a springboard for growth and profitability Dear shareholders, Kuoni has been through some stormy times. The internet has triggered profound changes in consumer behaviour and in the provision of travel services, and our industry has been affected more dramatically than just about any other.

Kuoni Group Annual Report 2015 15 Letter to Shareholders

Today we can say with confidence that Kuoniʼs Board has fulfilled its primary task in every way – namely to ensure the long-term success of the company even in a fundamentally altered environment.

We realised that under todayʼs completely different market conditions, a highly diverse group of shareholders are not the best owners for either the consumer or the B2B business. And without regard for either praise or censure we have simply taken the decisions that best serve the company, its shareholders and its other stakeholders. We firmly believe that these decisions will be proven right.

The Board of Directors and Group Executive Board would like to thank you, our shareholders, for the trust you have shown in us over the years. We appreciate it very much.

The Kuoni brand and the companies that stand behind it will continue to have a very strong presence in the traditional tour operating business with end customers in Europe. So does our group travel business under the Kuoni brand, especially in Asia. The year 2016 will also be a springboard for further growth and profitability for all our other activities. Our aim is to build further on our strong global market positions with innovation, quality, and reliability.

Heinz Karrer Zubin Karkaria

Chairman of the Board of Directors Chief Executive Officer (CEO) 2015.kuoni-report.com

Our Business

Kuoni Group Annual Report 2015 16 Kuoni Group Today 2015.kuoni-report.com

Kuoni Group Annual Report 2015 17 Kuoni Group Today Our Business

Kuoni Group (Zurich Stock Exchange SIX: KUNN) is a leading service provider to the global travel industry and governments with leading positions in its areas of activity and sustainable growth prospects, with a strong focus on Asia. Kuoni Group generated turnover of CHF 3.35 billion in the 2015 financial year and employed about 8,000 people (FTE) at the end of 2015. 2015.kuoni-report.com Kuoni Group focuses on three core activities: Global Travel Distribution (GTD) is an industry pioneer and a highly experienced, leading global distributor that provides travel companies with easy access to hotel accommodation and destination services. It sells approximately 40,000 room nights per day online. And approximately 40% of its turnover is sourced from fast-growing markets in Asia, the Middle East and Africa.

Divisional Report GTD

Global Travel Services (GTS) sources and coordinates destination services – from accommodation, transportation, tours and activities to venues and event management. GTS is the number one player in the growing group travel market and handles 50,000 leisure tours per year. GTS generates 60% of its turnover from Asia/Pacific source markets.

Divisional Report GTS

VFS Global, the industry pioneer and worldʼs leading visa services provider, works for 48 governments, operates 1,916 application centres in 123 countries and holds an estimated 48% of the global outsourced applications market. It generates almost 70% of its turnover from applicants from the Asia/Pacific region.

Divisional Report VFS Global KuoniBoard Group Annual of Report Directors 2015 18 Kuoni Group Today Board of Directors

Heinz Karrer, Chairman of Kuoni Group

Heinz Karrer

Heinz Karrer, who is Swiss, has been President of Economiesuisse, the Swiss business association, since 2013. Before that he was CEO of Axpo Holding AG from 2002. After studying economics at St. Gallen University (HSG), he began his career in 1985 when he was appointed General Manager of the Association of Swiss Manufacturers,

2015.kuoni-report.com Suppliers and Agents for Sports Goods. He went on to serve as Managing Director of Intersport Schweiz AG from 1987 to 1992 and as CEO of Intersport Holding AG from 1992 to 1995. He then moved to the Ringier publishing house where he remained until 1997, becoming CEO of Ringier Switzerland and a member of Ringier Ltd.ʼs Group Executive Management. From 1998 to 2002 he was a member of Swisscomʼs Group Executive Management and head of the groupʼs Marketing & Sales Division. He has served on Kuoniʼs Board of Directors since 2007. In April 2014 Heinz Karrer has been elected at the Annual General Meeting to be Chairman.

Positions outside Kuoni Group in listed companies: Member of the Bank Council of the Swiss National Bank

Positions outside Kuoni Group in non-listed companies: Member of the Board of Directors of NotensteinLaRoche Privatbank AG, Member of the Board of Directors of InfrontRingier Sports & Entertainment Switzerland AG, Member of the Board of Foundation at Hasler Stiftung

Kuoni Group Annual Report 2015 19 Kuoni Group Today

Adrianus (Adriaan) Nühn

Adrianus (Adriaan) Nühn

The Dutchman Adriaan Nühn sits on the Boards of several international consumer goods com​panies. Among his other roles, since 2009 he has been Chairman of the Board of Directors of Dutch food service and food retailer Sligro Food Group. His most recent operational role was as CEO of consumer goods company Sara Lee International from 2003 to 2008. Adriaan Nühn lives in Amsterdam/Netherlands. He holds a Bachelor of Business Adminis-tration from Hogere Economische School, Eindhoven/Netherlands, and an MBA from the University of Puget Sound, Tacoma, Washington/USA. Adriaan Nühn was elected to the Kuoni Group Board in 2012 and 2015.kuoni-report.com since April 2014 is Vice-Chairman of the Board.

Positions outside Kuoni Group in listed companies: Member of the Board of Directors of Sligro NV, Member of the Board of Directors of Cloetta AB, Member of the Board of Directors of AVI Ltd

Positions outside Kuoni Group in non-listed companies: Member of the Board of Directors of Plukon NV

Kuoni Group Annual Report 2015 20 Kuoni Group Today

Jae Hyun (Jay) Lee

Jae Hyun (Jay) Lee

Jay Lee, a South Korean citizen, has worked for eBay, the worldʼs biggest online marketplace, since 2002. He is currently in charge of eBayʼs Asia/Pacific Region Portfolio as Managing Director and Corporate Senior Vice President. Previously, Jay Lee was the CEO of eBayʼs Korean Internet Auction Company from 2002 to 2004. From 2000 to 2002 he was COO and then CEO of NASDAQ-listed multimedia company Korea Thrunet. He began his career in 1992 with Boston Consulting Group (BCG), where he was elected a partner since 1997. Jay Lee lives in Singapore and Seoul, South Korea. He holds an MBA from Harvard University Graduate School, Boston/USA, and a 2015.kuoni-report.com Bachelor of Arts Degree in International Relations from Brown University, Providence/USA. Jay Lee was elected to the Board in 2012.

Positions outside Kuoni Group in listed companies: Member of the Board of Directors of SsangYong C&B

Kuoni Group Annual Report 2015 21 Kuoni Group Today

John Lindquist

John Lindquist

John Lindquist, a US and UK citizen, is resident in London. He gained a degree in economics from Princeton University and MBA from Harvard University and then joined The Boston Consulting Group (BCG) as a consultant. He was subsequently elected a Partner and later a Senior Partner and Managing Director, where he served on the global leadership team of the travel and tourism practice. He is currently a Senior Adviser with BCG, advising on stra​tegy for clients in airlines, hotels and government tourism bodies on a global basis. He joined Kuoniʼs Board of Directors in 2007. He is a Board Director of VisitBritain, the UK government tourism promotion 2015.kuoni-report.com agency.

Positions outside Kuoni Group in non-listed companies: Senior Advisor at The Boston Consulting Group (BCG)

Management and consultancy functions for important Swiss and foreign interest groups: Member of the Board of Directors of VisitBritain

Kuoni Group Annual Report 2015 22 Kuoni Group Today

David J. Schnell

David J. Schnell

Kuoniʼs Board of Directors has benefited from the great expertise and experience of Swiss business administration graduate David Schnell since 2002. Between 1985 and 1997 he worked at ELCO Looser Holding AG, initially as Chief Financial Officer (CFO) and Member of the Executive Board, and later as Chief Operating Officer (COO) and Member of the Board of Directors. In 1997 David Schnell moved to become CFO and Member of the Executive Board of telecommunications company Swisscom AG in Bern, where he stayed until 2002. Since 2002 David Schnell has been an independent business consultant and a Member of the Board of Directors of various companies. 2015.kuoni-report.com

Positions outside Kuoni Group in listed companies: Vice Chairman of the Board of Directors of ELMA Electronic AG

Positions outside Kuoni Group in non-listed companies: Member of the Board of Trustees of the Kuoni and Hugentobler Foundation, Chairman of the Board of Directors of IFBC AG, Member of the Board of Directors of Alp-Transit Gotthard AG

Kuoni Group Annual Report 2015 23 Kuoni Group Today

Annette Schömmel

Annette Schömmel

Annette Schömmel – Swiss citizen – is a successful entrepreneur. She studied Economics at Ruprecht Karls University in Heidelberg, Film at University of Southern California and received a Masters Degree in Marketing and Communication from University of the Arts, Berlin. She is a Stanford Business School Graduate. After working in various management positions in the creative industry, she founded arthesia AG – an applied think-tank based in Zug, Los Angeles and Hong Kong – in 1994. Annette Schömmel has built a track record advising the leadership of global companies and brands on strategy, transformation and change programmes as well as long-term 2015.kuoni-report.com positioning and repositioning in various industries. She has built the arthesia cities business advising cities around the world on strategies. In 2013 arthesia sold the cities & regions practise to Publicis Groupe. She joined the Board of Kuoni Group in 2004.

Positions outside Kuoni Group in non-listed companies: Vice Chairman of the Board of Directors of arthesia AG, Chairman of the Board of Directors of Babaluba AG, Member of the Board of Directors of VitaGenes Ltd, Member of the Board of Directors of Vitargent Ltd, Member of the Board of Directors of BrandMaker Development Ltd, Member of the Board of Directors of FAT Ltd

Unpaid Positions outside Kuoni Group in non-profit organisations: Board Member of Asia Society Switzerland

Kuoni Group Annual Report 2015 24 Kuoni Group Today

Selina Neri

Selina Neri

Selina Neri an Italian citizen, has worked in the Information and Communication Technology industry for over 24 years and, most recently, in the Luxury Industry. In her most recent corporate role she served as CEO of Dadu Luxe, an innovative technology- based luxury fashion retailer based in Saudi Arabia and in the UAE. In 2009, she was appointed Vice President Consulting and Solutions by Colt Technology Group (Fidelity Investments). Between 2004 and 2009 she served as Executive Vice President Global Sales Support as well as Vice President Partner Sales Management for the Deutsche Telekom Group. In 2012, Selina Neri founded Hadaara, a Dubai-based management 2015.kuoni-report.com consultancy focused on innovation, digitalisation and business transformation through technology adoption. Selina Neri has also built a strong track record in higher education. She is Professor of Luxury Marketing, International Marketing and Innovation at HULT International Business School (Shanghai campus) and also serves as Adjunct Professor of International Marketing at HEC Business School (France). Selina Neri lives in Dubai and was elected to the Kuoni Group Board in 2015.

Positions outside Kuoni Group in non-listed companies: Partner in Hadaara FZC, Management Consultancy, registered in the UAE

Unpaid Positions outside Kuoni Group in non-profit organisations: Global Mentor for Women in Business for the Cherie Blair Foundation, London, UK

Official functions: : Senior Industry Advisor for the European Bank for Reconstruction and Development, Professor of Luxury Marketing, International Marketing and Innovation at HULT International Business School, Shanghai, China, Adjunct Professor in International Marketing at HEC Business School, Paris, France Executive Board

Kuoni Group Annual Report 2015 25 Kuoni Group Today Executive Board

Organisation as of 15 March 2016 2015.kuoni-report.com

Kuoni Group Annual Report 2015 26 Kuoni Group Today

Zubin Karkaria, Chief Executive Office Kuoni Group and VFS Global

Zubin Karkaria

Indian, born 1968

After graduating in commerce from Mumbai University and completing his Business Management studies from Mumbai, Zubin Karkaria joined Orbit Trade Fair Tours in 1989. He then moved to SOTC in 1991 and was with SOTC when it was acquired by Kuoni Group in 1996. He was appointed as the COO of the Kuoni India Tour Operating Division in 1999, and moved on to become the Deputy CEO and Head Business Development in 2003. He conceptualised and launched VFS Global in 2001. In 2005 he 2015.kuoni-report.com was appointed as the CEO and Managing Director of Kuoni India and South Asia, responsible for all units of Kuoni India – Tour Operating, Destination Management, Business Travel, and Kuoni Academy, while concurrently developing the VFS Global business into a global leader in its field (as CEO of VFS Global from 2010 onwards). In March 2013, in line with the development of VFS Global as an important Division of Kuoni Group, Zubin Karkaria was appointed on the Executive Board of Kuoni Group. On 5 November 2015 Zubin Karkaria was appointed Chief Executive Officer (CEO) of Kuoni Group. Furthermore, Zubin Karkaria is a Global Member of the WTTC (World Travel & Tourism Council).

Kuoni Group Annual Report 2015 27 Kuoni Group Today

Prisca Havranek-Kosicek, Chief Financial Officer Kuoni Group

Prisca Havranek-Kosicek

Austrian, born 1975

Before Prisca Havranek-Kosicek was appointed Chief Financial Officer at Kuoni Group on 1 March 2016, she was Group Treasurer of Royal DSM, a Dutch company globally active in health, nutrition and materials. In 2011 she took the VP Finance & Control role at the DSM Pharma Chemicals Business Unit based in Austria. One year later she was promoted to CFO of the DSM Pharmaceutical Products Business in New Jersey (USA). Prior to these appointments she was responsible for Group Controlling at Immofinanz 2015.kuoni-report.com and worked as Head of Investor Relations at Austrian Airlines Group and Head of a Business Unit of the Austrian Post. After her Master Degree from the University of Economics of Vienna she joined Roland Berger Strategy Consultants in 1998. For seven years she worked for large corporate customers in various industries across Europe and Southeast Asia focusing on strategy development, corporate restructuring and M&A. During this time she also completed her Ph.D in Business Administration. She currently holds a Board position at Allianz-Elementar Versicherungs-AG, Austria.

Kuoni Group Annual Report 2015 28 Kuoni Group Today

Ivan Walter, CEO Global Travel Distribution

Ivan Walter

Swiss, born 1974

Ivan Walter joined Kuoni Destination Management in 2001 as Head of FIT Europe (Fully Independent Traveller). In 2005 he was named Head of Kuoni Connect, Kuoni Groupʼs B2B accommodation distributor business. He was responsible for transforming the European Unit into a global organisation. When Kuoni acquired GTA in 2011, Ivan Walter was instrumental during the post-merger integration and held the role of SVP Commercial Development and later, SVP Sourcing and Product Development. As of 2015.kuoni-report.com April 2013 Ivan Walter led GTAʼs operation. In November 2014 he has been appointed Head of Global Travel Services Division on an ad-interim basis. And as of January 14 Ivan Walter is CEO of Global Travel Distribution (GTD) Division and was appointed on the Executive Board. He holds an Executive Master of Business Administration from the University of Applied Sciences of Eastern Switzerland.

Kuoni Group Annual Report 2015 29 Kuoni Group Today

Rolf Schafroth, CEO Global Travel Services

Rolf Schafroth

Swiss, born 1965

After graduating from the University of Applied Sciences (St. Gallen) with a degree in business economics, Rolf Schafroth joined Coopers & Lybrand and went on to serve as a management consultant in Switzerland and the UK. Later in his consulting career he moved to Deloitte & Touche, Switzerland, for a year before joining Kuoni Travel Switzerland as Head of Financial Controlling. And after just one year, in 1997, he was appointed to Head of Finance & IT for Kuoniʼs Strategic Business Unit Incoming 2015.kuoni-report.com Services. In 2003 he assumed overall responsibility for Incoming Europe, the biggest in​‐ coming unit of the Kuoni Group, and in 2006 he was named CEO of Destination Management, a new entity comprising all the Kuoni Groupʼs former incoming units. In 2007 he was appointed to the Group Executive Board as Head of the Strategic Business Division Destination Management. Following a restructuring of the Kuoni Group in 2009, Rolf Schafroth took over additional responsibility for the newly created division Procurement & Production for Kuoni Tour Operating, while remaining in charge of the Kuoni Destination Management Division. Following the acquisition of Gullivers Travel Associates (GTA) in May 2011 he was CEO Global Travel Services Division, which emerged from the integration of GTA and Kuoni Destination Management. Today to the GTS Division belong the business activities Group Travel and Destination Management Specialists. Furthermore, Rolf Schafroth is a Member of the Tourism Council Graubünden. Kuoni Group Report

Kuoni Group Annual Report 2015 30 Group Report 2015.kuoni-report.com

Kuoni Group Annual Report 2015 31 Group Report Kuoni Group Report

Zubin Karkaria, CEO Kuoni Group on 2015 and looking ahead

Economic environment Economic growth was subdued in 2015. Growth in developing countries was down for 2015.kuoni-report.com the fifth consecutive year. Industrialised nations recovered on the previous year and posted a slight increase in economic growth. Three key transitions dominated the economic environment in 2015. First, the continuous slowdown of economic growth in China as the result of an unexpectedly strong contraction of exports and imports and the growing uncertainty over the future performance of the Chinese market weighed on the economic environment. Second, the second six months of 2015 were characterised by a strong fall in the price of commodities. Third, the US Federal Reserve’s interest rate hike impacted on global financial markets (source: IMF World Economic Outlook, January 2016).

Economic environment The International Monetary Fund (IMF) forecasts global growth of 3.1% for 2015 (source: IMF World Economic Outlook Update, January 2016). This corresponds to a year-on-year fall in global growth by 0.3 percentage points. Despite contracting growth, the major growth drivers were again emerging markets, led by China (6.9%) and India (7.3%). Developed markets posted an economic expansion increase of 0.1 percentage points thanks to the modest recovery in the Eurozone and Japan.

The economic performance in Kuoni Group’s key source markets was mixed in 2015. Whereas Japan posted a slightly positive trend on the previous year in the Asian market, China saw a fresh fall in economic growth. In Europe, the Eurozone recovered slightly, while Great Britain posted a contraction in growth. (source: IMF World Economic Outlook, January 2016).

Kuoni Group Annual Report 2015 32 Group Report

International tourism again saw a positive performance in 2015. According to the World International tourismInternationalTourism again saw Organization, atourism positive again internationalperformance saw a positive trips in 2015. abroad performance According expanded into 2015. theby 4.Wor4%. Accordingld This is about to the 50 World Tourism Organization,Tourismmillion international in Organization, additional trips foreign abroad international tourists expanded tripsyear-on-year. by abroad 4.4%. Thisexpanded The is perfor about bymance 504.4%. variesThis is by about 50 million in additionalmilliondestination foreign in tourists additional and wasyear-on-year. foreign influenced tourists The by perforstrong year-on-year.mance exchange varies The rate perfor by fluctuatmanceions, varies oil prices, by natural destination and wasdestinationdisasters influenced and and by terrorist strong was influenced exchangeattacks. Growth by rate strong fluctuat in advancedexchangeions, oil economiesrate prices, fluctuat natural exceededions, oil prices, that of natural disasters and terroristdisastersemerging attacks. and markets. Growth terrorist Thein advanced attacks. regions Growth postingeconomies in the advanced strongestexceeded economies growththat of were exceeded Europe, that America of emerging markets. emergingandThe Asia/Pacificregions markets. posting at The5%. the Africaregions strongest was posting growththe sole the were destinationstrongest Europe, growth to America see werenegative Europe, growth. America This is and Asia/Pacific at andlargely5%. Asia/PacificAfrica due was to the the at drop sole5%. in Africadestination demand was in the to North seesole negativeAfrica. destination (Source: growth. to see UNWTO, This negative is World growth. Tourism This is largely due to the droplargelyBarometer, in demand due toJanuary the in North drop 2016). inAfrica. demand (Source: in North UNWTO, Africa. World (Source: Tourism UNWTO, World Tourism Barometer, JanuaryBarometer, 2016). January 2016). International tourism International tourism InternationalThe World Tourism tourism Organization (UNWTO) reported the following growth rates in The World Tourism OrganizationTheinternational World (UNWTO)Tourism arrivals Organization reportedper region the in (UNWTO) following2015 (source: reportedgrowth UNWTO, rates the followingin World Tourism growth Barometer,rates in international arrivals perinternationalJanuary region 2016): in 2015 arrivals (source: per region UNWTO, in 2015 World (source: Tourism UNWTO, Barometer, World Tourism Barometer, January 2016): JanuaryEurope: 2016):+5% Europe: +5% Europe:Asia/Pacific: +5% +5% Asia/Pacific: +5% Americas:Asia/Pacific: +5% +5% Americas: +5% Americas:Africa: –3% +5% Africa: –3% Africa:The Middle –3% East: +3% Worldwide: +4% The Middle East: +3% TheWorldwide: Middle East:+4% +3% Worldwide: +4% Effects of the strategic realignment on reporting Effects of the strategicEffectsThe realignment realignment of the strategic of on Kuoni reporting realignment Group announced on reporting at the start of the year resulted in major The realignment of ThechangesKuoni realignment Group to all announced financial of Kuoni key atGroup performancethe start announced of the indicators year at theresulted start at Group ofin themajor le yearvel. Theresulted IFRS inaccounting major changes to all financialchangesstandards key performance to applied all financial require indicators key that performance the at incomeGroup indicatorsle statementvel. The atIFRS present Group accounting le retvel.roactively The IFRS and accounting the standards applied requirestandardsbalance that sheet applied the prospectively income require statement that the the continuing present income retstatement operationsroactively present separateland the retyroactively from the anddiscontinued the balance sheet prospectivelybalanceoperations. sheet the Accordingly, continuing prospectively operationsthe Kuonithe continuing Group separatel Report operationsy from focuses the separateldiscontinued on the continuingy from the discontinuedoperations operations. Accordingly,operations.and presents the Kuoni Accordingly, separately Group Report targetedthe Kuoni focuses information Group on the Report continuing on focusesdiscontinued operations on the op continuingerations. operations and presents separatelyand presents targeted separately information targeted on discontinued information op erations.on discontinued operations. Kuoni Group generates organic turnover growth of 6.9% Kuoni Group generatesKuoni organic GroupGroup generated generates turnover turnovergrowth organic offrom turnover 6.9% continuing growth operations of 6.9% of CHF 3,348.7 million in 2015.kuoni-report.com Kuoni Group generatedKuonithe 2015 turnover Group financial generatedfrom year,continuing comparedturnover operations from to CHF continuing of 3,372.0 CHF 3,348.7 operationsmillion millionin the of CH previousin F 3,348.7 year. million Strong in the 2015 financial year,theorganic 2015 compared growth financial to of CHF 6.9%year, 3,372.0 comparedwas posted. million to The CHF in the strengthening 3,372.0 previous million year. of in theStrong the Swiss previous franc year. had Strongan organic growth of 6.9%organicimpact was of growth posted. –7.6% of onThe 6.9% the strengthening conversionwas posted. from ofThe the thestrengthening Swiss functional franc hadcurrencies of the an Swiss of francthe subsidiaries had an to impact of –7.6% on impactthethe presentationconversion of –7.6% from oncurrency the the conversion functional Swiss francs. fromcurrencies Inthe nominal functional of the terms, subsidiaries currencies a net turnover toof the subsidiariesdecline of to the presentation currencythe0.7% presentation was Swiss therefore francs. currency the In nominalresult. Swiss Acquisitions terms, francs. a Innet nominaland turnover divestments terms, decline a nethad of turnover no impact decline on organic of 0.7% was therefore 0.7%growththe result. was in 2015therefore Acquisitions and 2014.the result.and The divestments stronglyAcquisitions growing had and no divisionsdivestments impact on of organicGTD had (Globalno impact Travel on organic growth in 2015 and growthDistribution)2014. The in 2015 strongly and and VFS growing2014. Global, The divisions which strongly organically of growing GTD (Global divisionsgrew Travelby 9.8% of GTD an d(Global 23.3%, Travel respectively, Distribution) and VFSDistribution)made Global, an emphatic which and organically VFS contribution Global, grew which to by the organically 9.8% organic and turnover23.3%, grew by respectively, incline9.8% an performance.d 23.3%, respectively, Earnings made an emphatic contributionmadebefore an interest, emphatic to thetaxes organiccontribution and amortisation turnover to the incline organic (EBITA) performance. turnover stood at inclineCHF Earnings 124.0 performance. million (2014: Earnings CHF before interest, taxesbefore105.7 and million) amortisationinterest, and taxes the (EBITA) andearnings amortisation stood before at CHF interest (EBITA) 124.0 and stoodmillion taxes at (2014: CHF (EBIT 124.0 CHF) came million to CHF (2014: 81.2 CHF 105.7 million) and the105.7million earnings million) (2014: before andCHF the 76.4interest earnings million). and beforetaxes Earnings (EBIT interest before) came and interest to taxes CHF (EBITand 81.2 taxes) came (EBIT) to CHF were 81.2 million (2014: CHF 76.4milliontherefore million). (2014: above Earnings CHF prior-year’s 76.4 before million). level, interest Earnings but wereand beforetaxes strongly (EBIT) interest influence were and dtaxes by one-off (EBIT) effects,were such therefore above prior-year’sthereforeas the sale level, above of the but prior-year’s “Neue were stronglyHard” level, property influence but were in dZurich stronglyby one-off (+CHF influence effects, 52.6 mid such byllion), one-off the impairmenteffects, such of as the sale of the “Neueasother the Hard” intangible sale ofproperty the assets “Neue in Zurich(–CHF Hard” (+CHF16.5 property million) 52.6 in mi Zurichasllion), well (+CHF asthe the impairment 52.6cost smi ofllion), the of initiated the impairment of other intangible assetsotherrestructuring (–CHF intangible 16.5 programme million) assets (–CHFas ofwell the 16.5 as GTS the million) Division costs as of and wellthe theinitiated as thesupport costs and of the Group initiated functions (– restructuring programmerestructuringCHF 25.2 of the million). GTS programme Division However, ofand the the GTSprior-year support Division andresult and Group included the supportfunctions a CHF and (– 10.1 Group million functions proceed, (– CHF 25.2 million). However,CHFwhich 25.2 originated the million). prior-year from However, the result sale the included of prior-year the Geroldstrasse a CHF result 10.1 included million property, proceed,a CHF Zurich. 10.1 Adjusted million proceed, EBITA which originated fromwhichtherefore the originatedsale amounted of the fromGeroldstrasse to the CHF sale 96.6 of property, millionthe Geroldstrasse in Z lineurich. with Adjusted property,previous EBITA yeZurich.ar (2014: Adjusted CHF 95.6 EBITA therefore amountedthereforemillion). to CHF 96.6 amounted million toin CHFline with 96.6 previous million in ye linear (2014:with previous CHF 95.6 year (2014: CHF 95.6 million). million).

Kuoni Group Annual Report 2015 33 Group Report

CHF million EBITA EBIT As reported 124.0 81.2 Gain on sale of "Neue Hard", Zurich –52.6 –52.6 Restructuring cost 25.2 25.2 Impairment of other intangible assets 0.0 16.5 Underlying 96.6 70.3

Earnings before interest, taxes and amortisation (EBITA) for the full year was driven by Global Travel Distribution (GTD) and VFS Global which both posted record years with CHF 66.7 million and CHF 53.9 million, respecitvely, despite the Swiss franc strengthening on a nominal basis. In addition, Corporate – impacted by the sale of the “Neue Hard” property in Zurich – contributed a positive CHF 28.1 million to the group EBITA. On the other side Global Travel Services (GTS) posted a negative EBITA of CHF – 24.7 million, driven by CHF 18.0 million of restructuring expenses.

Net result from continuing operations amounted to CHF 57.9 million and was in line with prior year’s result (CHF 58.2 million). The sale of the tour operating activities resulted in a loss of CHF –132.4 million before reclassification of over the years accumulated currency translation losses (CTA) of CHF –219.7 million. This accounting effect had no impact on equity and cash funds. Net result from discontinued operations, net of taxes, therefore added up to CHF – 352.1 million (2014: CHF 9.2 million). Net result of the Group amounted to CHF –294.2 million compared to CHF 67.4 million in 2014. At CHF 120.3 million, the free cash flow was strongly above prior year (CHF 55.1 million) mainly due to the sale of the property.

Group turnover of CHF 3,349 million by activity and divisions 2015.kuoni-report.com

59% Global Travel Distribution 31% Global Travel Services 10% VFS Global 90% Destination & Accommondation Services 10% Visa Processing Services

Kuoni Group Annual Report 2015 34 Group Report

Turnover by divisions (CHF million)

1,934 1,979 2014 2015

1,170 1,055

317 271

Global Travel Global Travel Services VFS Global Distribution

The Visa Processing Services share of the overall turnover went up during the year under review from 8.0% to 10.0%. This, on the one hand, was due to the strong organic growth posted by VFS Global, but on the other hand because of a material decline of 9.8% in Global Travel Services’ Group Travel and Destination Management Services. 2015.kuoni-report.com Global Travel Distribution reports strong growth particularly in Asian source markets The Global Travel Distribution (GTD) segment increased turnover in the 2015 financial year further to CHF 1,979.3 million (2014: CHF 1,933.6 million). In nominal terms, this represented a growth of 2.4%, but considering the significant currency influences of – 7.4% organic growth posted was 9.8% (2014: 8.8%). The source markets in Asia and the Middle East and Africa (MEA) made the strongest contribution to the increase. The gross profit margin remained at prior-year level (2015: 11.4%; 2014: 11.4%). Overall, the growth strategy resulted in personnel costs rising by CHF 2.5 million driven by a 7.8% higher number of average full-time equivalents. Earnings before interest, taxes and amortisation (EBITA) stood at CHF 66.7 million (2014: CHF 63.2 million) and the earnings before interest and taxes (EBIT) came to CHF 48.0 million (2014: CHF 42.0 million).

Global Travel Distribution The segment generated turnover of CHF 1,979 million in 2015 (2014: CHF 1,934 million). Organic growth came to 9.8%.

The key source market for the GTD Division was again Europe with a turnover share of 40% (2014: 43%). Asia’s share rose from 29% in 2014 to 31% in 2015. The key travel destination was again Europe – in particular France, Great Britain and Italy – at 48% (2014: 51%) as well as the US.

Kuoni Group Annual Report 2015 35 Group Report

Source markets Global Travel Distribution

40% Europe 10% North America 5% Central & South America 31% Asia/Pacific 14% Middle-East/Africa

Destinations Global Travel Distribution 2015.kuoni-report.com

48% Europe 18% North America 3% Central & South America 22% Asia/Pacific 9% Middle-East/Africa

Kuoni Group Annual Report 2015 36 Group Report

Global Travel Services launches restructuring programme and focuses on profitable business areas The Global Travel Services (GTS) Division, which consists of the Group Travel business and Destination Management Specialists, posted a further decline in turnover in nominal terms by –9.8% to CHF 1,054.8 million in 2015 (2014: CHF 1,169.6 million), driven in particular by the strong appreciation of the Swiss franc compared to the functional currencies of the corresponding subsidiaries (–8.5%). In organic terms, turnover decreased only slightly (–1.3%). The Group Travel business enjoyed particularly strong growth in China and Taiwan, but continued to suffer from weak demand in Japan. The Destination Management Specialists business dropped further and continued to suffer from a lack of demand from Russia. By contrast, the business in America and Asia/Pacific posted positive growth. To respond to the continued decrease in turnover in certain regions and the narrowing gross profit margin, GTS launched a significant restructuring programme of its Group Travel business in the fourth quarter, which weighed on the 2015 result by CHF 15.0 million. The future cost base is to be reduced by more than CHF 30.0 million over the next two years with this restructuring programme. Furthermore, following a strategic review of the existing IT infrastructure and the abandoning of the targeted IT solution had a negative impact on the Division’s operating result in the amount of CHF 19.5 million (impairment of other intangible assets of CHF 16.5 million and related restructuring expenses of CHF 3.0 million). Earnings before interest, taxes and amortisation (EBITA) adjusted for the restructuring costs of the GTS segment dropped to CHF –6.7 million (2014: CHF 1.2 million). The unadjusted earnings before interest and taxes (EBIT) amounted to CHF – 48.8 million (2014: CHF –6.9 million), with the negative result mainly due to one-off restructuring costs of CHF 18.0 million and impairment of other intangible assets in connection with IT structure changes of CHF 16.5 million.

Global Travel Services GTS Division posted turnover of CHF 1,055 million (2014: CHF 1,170 million). Organic growth came to –1.3%. 2015.kuoni-report.com

Region Asia/Pacific was the key source market for the GTS Division with a turnover share of 67%. Europe was the second-largest source market at 24% of turnover. The key travel destination was again Europe, leading at considerable distance with a share of 72% in turnover. The highest overnight stays were posted by destinations in France, Italy, Switzerland, Germany and Great Britain. In regards of source market Russia’s share continued to contract compared to 2014, which was caused by the ongoing geopolitical tensions with Ukraine and the economic slowdown.

Kuoni Group Annual Report 2015 37 Group Report

Source markets Global Travel Services

24% Europe 5% North America 2% Central & South America 67% Asia/Pacific 2% Middle-East/Africa

Destinations Global Travel Services 2015.kuoni-report.com

72% Europe 8% North America 0% Central & South America 12% Asia/Pacific 8% Middle-East/Africa

Kuoni Group Annual Report 2015 38 Group Report

VFS Global with continuous strong growth The visa services provider VFS Global generated turnover in the amount of CHF 316.5 million in 2015 (2014: CHF 270.8 million). At 10.1%, the number of visa applications processed rose strongly on 2014 to more than 20 million applications. This growth was generated above all in the source markets in Asia/Pacific, India, Middle East and Africa. Visa applications in India and China for the destinations of Britain and the US rose in particular. The difficult political and economic situation in Russia, by contrast, resulted in a marked reduction of applications in this source market. Nominal and organic turnover growth compared to 2014 was 16.9% and 23.3%, respecitvely. The currency-related effects stood at –6.4%. The earnings before interest and taxes (EBIT) rose to CHF 53.9 million (2014: CHF 52.5 million). Under the joint venture agreement on the provision of visa services for the Kingdom of Saudi Arabia, the network of application offices was expanded further in 2015. The late roll-out of biometric visas continued to result in delays to business expansion. As a consequence, the result was lower than expected at CHF –1.9 million (2014: CHF –2.0 million).

VFS Global VFS Global achieved turnover of CHF 317 million (2014: CHF 271 million). Organic growth came to 23.3%.

Region Asia/Pacific remained the key source market for VFS Global with a net proceeds share of 71% (2014: 67%). Europe was again main destination with 50% of turnover compared to 56% in 2014.

Source markets VFS Global 2015.kuoni-report.com 10% Europe 0% North America 3% Central & South America 71% Asia/Pacific 16% Middle-East/Africa

Kuoni Group Annual Report 2015 39 Group Report

Destinations VFS Global

50% Europe 21% North America 0% Central & South America 16% Asia/Pacific 13% Middle-East/Africa

Stable gross profit margin in a challenging 2015 Kuoni Group generated a gross profit of CHF 609.7 million in the year under review (2014: CHF 612.2 million). This corresponded to a nominal decrease of 0.4% on 2014. Organic gross profit growth was 7.1% and currency-related effects therefore

2015.kuoni-report.com amounted to –7.5%. GTD and VFS Global posted strong increases in their organic gross profit performance with 10.0% and 15.3%, respectively, whereas GTS posted negative organic gross profit growth of 5.6%. The reduction in the gross profit of GTS was mainly caused by the currency-related fall in turnover, but also by a decline of the gross profit margin. Overall, Kuoni Group’s gross profit margin was at prior-year’s level with 18.2% (2014: 18.2%). Owing to the different volume mix, with VFS Global having a higher contribution in 2015, contracting gross profit margins of the three segments were nearly offset. In the GTD Division, the gross profit margin was retained at prior-year level (2015: 11.4%; 2014: 11.4%). In the GTS Division, the gross profit margin fell to 15.1% compared to 15.7% in the previous year. The lower gross profit margin in the Group Travel business was largely caused by the growth markets of China and Taiwan, whereas the Destination Management Specialists business substantially improved. VFS Global strongly increased its gross profit in absolute terms, the change of the business model for the Malaysian mission for India resulted in higher sales, but also led to a lower gross margin (2015: 71.2%; 2014: 76.7%).

Kuoni Group Annual Report 2015 40 Group Report

Gross profit by divisions (CHF million)

225.4 220.6 224.8 207.7

183.9 2014 2015 159.5

Global Travel Global Travel Services VFS Global Distribution

Higher operating result before amortisations (EBITA) Kuoni Group generated earnings before interest, taxes and amortisation (EBITA) of CHF 124.0 million (2014: CHF 105.7 million). The increase in EBITA was driven by the results of the Divisions GTD and VFS Global, which showed significant organic growth, and by

2015.kuoni-report.com the sale of the “Neue Hard” property in Zurich, Switzerland, which made a positive contribution to the result of CHF 52.6 million. By contrast, one-off restructuring costs of CHF 18.0 million of the GTS Division and additional costs in connection with the restructuring of support and Group functions amounting to CHF 7.2 million reduced earnings before interest, taxes and amortisation. Earnings before interest, taxes and amortisation (EBITA) 2014 also included a one-off special effect in the amount of CHF 10.1 million from the partial sale of an office building at Geroldstrasse, Zurich, Switzerland.

EBITA 2015 adjusted EBITA without restructuring costs and the one-time effect from the gain on the sale of the property in Zurich amounted to CHF 96.6 million.

The average number of employees (full-time equivalents) rose by 6.9% on the previous year to 7,968 employees (2014: 7,455). The increase in the average number of employees was caused, in particular, by the high organic sales growth of 6.9%. Personnel costs increased disproportionately by only 0.2%. Other operating costs were within the range of the previous year.

Headcount at end-2015 (FTE) was 8,117 (end 2014: 7,609).

Kuoni Group Annual Report 2015 41 Group Report

The Divisions of Kuoni Group saw a mixed performance in 2015. At EBITA level, GTD (CHF 66.7 million) strongly outperformed the prior-year result (CHF 63.2 million) despite the substantial currency influences. VFS was slightly above the previous year at CHF 53.9 million (CHF 52.5 million). GTS, by contrast, failed to offset the decline in volume and narrowing margin despite cost savings and reported a considerable contraction of its earnings before interest, taxes and amortisation (2015: CHF –24.7 million; 2014: CHF 1.2 million). The Corporate’s EBITA was, as described above, strongly influenced by the contribution from the sale of the “Neue Hard” property in Zurich and the restructuring costs. Adjusted for these effects and considering the prior- year effect from the sale of the property at Geroldstrasse in Zurich, the negative EBITA from the Corporate segment amounted to CHF –17.3 million compared to CHF –21.3 million in the previous year.

EBITA by divisions (CHF million)

66.7 63.2

52.5 53.9 2014 2015

1.2 2015.kuoni-report.com

-24.7

Global Travel Global Travel Services VFS Global Distribution

After deducting the lower amortisations of CHF 26.3 million (2014: CHF 29.3 million) and the impairment on other intangible assets of CHF 16.5 million (2014: CHF 0.0 million), the earnings before interest and taxes (EBIT) came to CHF 81.2 million (2014: CHF 76.4 million). The EBIT margin was therefore 2.4% and slightly increased compared to previous year (2014: 2.3%). The impairment on other intangible assets was caused by one-off costs as part of the IT structure adjustments of the GTS Division.

Kuoni Group Annual Report 2015 42 Group Report

Deviation earnings before interest and taxes (EBIT) versus prior year (CHF million)

8.0 -101.3 45.5

52.6 81.2 76.4

EBIT 2014 1 2 3 4 EBIT 2015

1: Impact of turnover development on EBIT 2: Impact of gross profit margin development 3: Impact of increase in operating costs 4: Impact of sale of Neue Hard and Uberlandstrasse

Net result from continuing activities at prior-year’s level 2015.kuoni-report.com Kuoni Group generated a financial result of CHF –2.3 million (2014: CHF 0.7 million). This included borrowing costs of CHF –9.0 million compared to CHF –6.0 million in 2014. The borrowing costs increased considerably in absolute terms due to higher utilisation of the syndicated credit facility as well as one-off costs due to the amortisation of capitalised costs in connection with the early refinancing of the previous credit facility. Tax expense amounted to CHF –21.0 million in the 2015 financial year (2014: CHF – 18.9 million). The effective tax rate increased from 24.5% to 26.6%. Net result from continuing operations amounted to CHF 57.9 million (2014: CHF 58.2 million). This result included a positive effect from the sale of the “Neue Hard” property in Zurich, Switzerland, as well as the negative effects from the restructuring programmes of GTS, support and Group functions and the costs from the IT structure adjustment at GTS. Net result from continuing operations per registered share B amounted to CHF 14.59 (2014: CHF 14.86).

Kuoni Group Annual Report 2015 43 Group Report

Earnings per registered share B (CHF)

17.8 17.2 9.2 2011 2012 2013 -4.2 2014 2015

-75.5

Following the completion of the sale of European tour operating activities in the third quarter the sale of the Asian tour operating activities (India/Hong Kong) was completed on 16 December 2015. The net result from discontinued operations, net of taxes, resulting from these transactions of CHF –352.1 million (2014: CHF 9.2 million) was

2015.kuoni-report.com largely influenced by the impairment on goodwill of CHF –106.4 million in connection with the sale of the European tour operating business as well as the reclassification of over the years accumulated currency translation losses (CTA) in the amount of CHF – 219.7 million. This accounting effect had no impact on equity and cash and cash equivalents. For further details on discontinued activities, see note 2 to the consolidated financial statements. Net result consisting of continuing and discontinued operations amounted to CHF – 294.2 million in 2015 compared to CHF 67.4 million in 2014. As communicated in the public offer of private equity company EQT on 29 February 2016, a dividend payment would be deducted from the offered share purchase price. The Board of Directors is therefore recommending to the forthcoming Annual General Meeting to waive the dividend in the form of withholding tax-free distribution against reserves from capital contributions.

Comprehensive income came to CHF –221.0 million (2014: CHF 26.4 million) and contained in addition to the net result currency translation losses of CHF 105.8 million (2014: CHF 27.8 million), remeasurement losses of defined benefit plans, net of taxes, of CHF 30.3 million (2014: CHF 24.0 million), and fair value losses, net of taxes, transferred to equity of CHF 10.7 million (2014: gains of CHF 10.8 million).

Kuoni Group Annual Report 2015 44 Group Report

The statement of comprehensive income contains consolidated net income and all additional value adjustments entered in the balance sheet, which are presented in the income statement in accordance with IFRS. They contain market value adjustments of financial instruments (CHF 10.7 million). The effect consists of the outstanding derivative financial instruments, which are used to hedge the foreign currency risk of the operating business. Valuation losses on defined benefit plans amounted to CHF –30.3 million and foreign exchange differences to CHF –105.8 million, mainly related to the translation of balances held in functional currency EUR to Swiss franc.

Free cash flow at CHF 120.3 million Net cash flow from operating activities – continuing operations amounted to CHF 74.1 million (2014: CHF 91.6 million). The working capital decreased slightly by CHF 0.8 million (2014: Decrease by CHF 2.3 million), in particular as a result of higher accounts receivable and prepaid expenses. The taxes paid were materially below prior year at CHF 30.5 million (2014: CHF 38.6 million) mainly due to high prepayments made in 2014. Net cash flow from operating activities – discontinued operations amounted to CHF 38.8 million compared to an outflow of CHF 27.6 million in 2014. Net cash used in investing activities – continuing operations amounted to CHF – 117.1 million (2014: CHF –28.0 million). In particular the net cash outflow from the sale of the tour operating business resulted in this strong reduction in cash funds. By contrast, the sale of the properties in Zurich resulted in a net cash inflow of CHF 84.4 million. Investments in property, plant and equipment and intangible assets amounted to CHF 38.2 million in 2015 (2014: CHF 50.1 million) and were therefore significantly below the previous year and strongly below depreciation and amortisations. CHF 20.1 million of investments were made in property, plant and equipment, which was mainly associated with the expansion of VFS Global. CHF 18.1 million was invested in intangible assets, mainly in the IT area, where GTD continued to rely on the integration of a new e-commerce platform with enhanced customer-driven functions. Net cash used in investing activities – discontinued operations amounted to CHF –5.5 million compared to an inflow of CHF 3.6 million in 2014.

2015.kuoni-report.com Net cash used in financing activities – continuing operations amounted to CHF – 29.1 million (2014: outflow of CHF –3.9 million). In particular the profit distribution of a withholding tax-free distribution against reserves from capital contributions of CHF 29.4 million to the shareholders of Kuoni Travel Holding Ltd. (2014: CHF 29.0 million) was authoritative. Free cash flow improved materially in the year under review from CHF 55.1 million to CHF 120.3 million. Overall, the cash and cash equivalents decreased by CHF 68.2 million compared to a decrease of CHF 5.9 million in 2014.

CHF million 2015 2014 Cash flow from operating activities 74.1 91.6 Purchase of tangible fixed assets –20.1 –21.1 Purchase of other intangible assets –18.1 –29.0 Disposal of assets 84.4 13.6 Free cash flow 120.3 55.1

Kuoni Group Annual Report 2015 45 Group Report

Stable equity ratio of 32.5% The balance sheet sum fell in the 2015 financial year by 32.6% to CHF 1,629.4 million (2014: CHF 2,419.2 million). This reduction was caused by the sale of the tour operating activities and had an impact on all key balance sheet items. Kuoni Group’s goodwill thereby dropped from CHF 911.1 million to CHF 592.6 million. The second key impact on the balance sheet was the significant appreciation of the reporting currency, the Swiss franc, which shrank the balance sheet sum by CHF 105.8 million (2014: CHF 27.8 million). As at the end of 2015, total equity amounted to CHF 530.3 million (2014: CHF 779.2 million). This corresponds to an equity ratio of 32.5% compared to 32.2% as at the end of 2014. Net debt was reduced in 2015 from CHF 273.8 million to CHF 54.5 million by selling the tour operating business and the “Neue Hard” property.

Kuoni Economic Profit at CHF 16.2 million The value-driven management approach of Kuoni Group aims to align the management of the company towards long-term value creation. The Kuoni Economic Profit (KEP) serves as the management key indicator. Kuoni Economic Profit improved from CHF – 8.5 million to CHF 16.2 million in the reporting year. This was predominantly caused by the improvement in the operating performance. The average invested capital fell in 2015 due to the sale of the tour operating business and the sale of the “Neue Hard” property in Zurich from CHF 958 million in 2014 to CHF 655 million.

KEP is calculated from net operating profit after tax (NOPAT) less the cost of capital invested in operations. Group-level capital costs have been set at a sustainable rate weighted average cost of capital (WACC) of 7.5%.

Kuoni economic profit (KEP) (CHF million) 2015.kuoni-report.com 52.1

2011 2012 2013 16.2 2014 2015

-8.5

-47.4 -56.6

Kuoni Group Annual Report 2015 46 Group Report

Key Figures (CHF million) 2015 2014 Net operating profit after tax (NOPAT) 65.3 63.0 Average invested capital 655 958 Return on invested capital (ROIC) 10.0% 6.6% Weighted average capital costs (WACC) 7.5% 7.5% ROIC – WACC spread 2.5% –0.9% Kuoni Economic Profit (KEP) 16.2 –8.5

The return on invested capital (ROIC) in 2015 was 10.0% compared to 6.6% in 2014.

Return on invested capital (ROIC) (%)

13.0

2011 2012 10.0 2013 2014 2015

6.6

3.3 2.8 2015.kuoni-report.com

Global Travel Distribution (GTD)

Kuoni Group Annual Report 2015 47 Divisional Reports 2015.kuoni-report.com

Kuoni Group Annual Report 2015 48 Divisional Reports Global Travel Distribution (GTD)

The activities of the globally active travel distribution partner for accommodation and destination services generated positive growth with its activities in 2015. Turnover went up to CHF 1,979.3 million (2014: CHF 1,933.6 million). Organic growth came to 9.8%. By the end of 2015, the number of full-time employees (FTE) was 1,489, which is 7.8% more than a year previously.

gta-travel.com

“A new record of close to 15 million room nights was set in 2015.”

Ivan Walter, CEO Global Travel Distribution Division (GTD)

Detailed annual results for GTD Division, 2015

Top 10 source markets Of all the overnight stays and destination services booked through GTA and the TravelCube and TravelBound travel agency sales brands in 2015, the greatest number came from the following source markets: United Kingdom, Australia, United States, Italy, Germany, Japan, South Korea, Turkey, Spain, Saudi Arabia.

As a travel distribution partner, GTA offers travel agencies, online travel agencies, tour operators and consolidators easy access to more than 50,000 hotels and apartments worldwide, as well as 15,000 destination services in 175 destinations all over the world.

The strongest growth was seen in Asian source markets with close to +30%. There was very strong growth in bookings by travellers from China (+94%), Thailand (+77%) and 2015.kuoni-report.com India (+46% each).

Global Travel Distribution (GTD) with GTA is an industry pioneer and a leading global travel distribution partner for accommodation and destination services in the business-to-business sector.

Top 10 destinations GTA offers accommodation and destination services in destinations all over the world. In 2015 the following cities attracted the most bookings: Paris, London, Dubai, Rome, New York, Istanbul, Singapore, Berlin, Barcelona, Praque.

GTA simplifies booking processes for these companies so they can make any travel bookings requested by their travellers. GTA uses modern digital technology to make booking transactions fast and easy for travel companies on the one hand, and for hotels and destination services providers on the other.

Kuoni Group Annual Report 2015 49 Divisional Reports

Paris

About a third of the destinations are in Asia/Pacific, the Middle East and Africa. 2015 saw double-digit year-on-year growth for these destinations. There was particularly strong demand for Phuket (+35%), Bangkok (+31%), Berlin (+28%), Budapest (+25%), Melbourne and Bali (+24% each). Beach destinations experienced growth of almost 40%. Bookings for destination services (transfers, city tours, excursions, reservations etc.) went up by more than 25% to more than 900,000. Train passes for travel in Japan, helicopter flights and shows in Las Vegas, amusement parks in the United States, Singapore and Hong Kong, trips to the Vatican and wine tours in Australia were particularly popular. 2015.kuoni-report.com

Around 180,000 price An average of Over 130,000 search and availability 40,000 room nights queries made every requests were were booked every day on the client received day in 2015 booking website every minute

In 2015 people made their bookings an average of 51 days ahead of travelling. The average stay at destinations was 3.02 days. People stayed longest in New York and Istanbul – more than four days on average – followed by Dubai, Prague and Barcelona. 36% of hotel bookings were in three-star hotels, and 25% in hotels with four or two stars.

Around 260 million daily availability and price requests are made every day on GTAʼs global systems. In 2015 an average of about 40,000 room nights and 2,500 destination services were booked each day.

Kuoni Group Annual Report 2015 50 Divisional Reports

New York

In 2015 an average of more than 1,200 people a day staying in Paris booked accommodation and local services through GTA systems.

GTA invested in the improvement of its digital products during the financial year. The mobile app “emutrip” was improved in 2015 and serves as a mobile travel planner that allows travel agents to integrate individually booked destination services into the app. Travellers can thus access all their travel information, tickets and vouchers on their smartphone or tablet.

At the end of 2015 a new booking website was launched for travel agencies and tour operators. This includes an integrated travel planner that can be used on mobile devices. New technical interfaces for B2B clients were also planned, tested and

2015.kuoni-report.com launched. These facilitate modern and efficient interaction between GTAʼs systems and the different client groups to suit their specific needs.

For more information on the GTD Division and its operations:

GTA is a global B2B distributor that provides travel companies with easy access to accommodation and destination services for independent travellers. 50,000 hotels and apartments and more than 15,000 transfer services, city tours and excursions, tickets and tour guide services, all of which can be booked online. GTA is an intermediary and distributes to various client types such as travel agencies, online travel agencies, tour operators and consolidators. Despite the high variety of products, it is very easy and fast for clients to make their selections and to book services. Thanks to state-of-the-art technology makes the whole booking process is efficient and dynamic – from the start right through to the automated billing at the end.

Kuoni Group Annual Report 2015 51 Divisional Reports

Employees negotiate contracts, including rates and availability, with the suppliers that provide these services at the destinations. All services are loaded automatically into the database/booking engines and offered for sale. Travel agencies, online travel agencies, tour operators and consolidators can access the contracted accommodation and destination services through GTAʼs website or through an API feed and then sell the products either online or offline to their customers. GTA thus acts as a global link between the service providers (suppliers) – hotels and airport transfer companies for example – and the sellers who have direct customer contact (clients). GTA uses modern technology and a global distribution network that gives suppliers access to travellers from markets which they would not be able to access on their own. Kuoni offers these services through three different B2B brands: GTA for wholesalers, offline and online travel agents, tour operators and consolidators, TravelCube for travel agencies in Europe, Latin America and Australasia, and TravelBound for travel agencies in North America.

Kuoni earns its money in the GTD Division either through margins built into its prices or through commissions. Margins in this area of business tend to be lower than in the traditional tour operating business, but there is much greater operational leverage. The business model is characterised by a high degree of automation, which keeps transaction costs low. As a result of “dynamic sourcing” of products, prices and therefore margins can be adjusted continuously in line with supply and demand. The use of modern technology allows bookings to be processed automatically and little manual intervention. The business model used in the GTD Division is recognised as being particularly efficient and progressive, which means that global opportunities for growth are excellent. Global Travel Services (GTS) 2015.kuoni-report.com

Kuoni Group Annual Report 2015 52 Divisional Reports Global Travel Services (GTS)

Turnover came to CHF 1,054.8 million in the 2015 financial year (2014: CHF 1,169.6 million). Organic growth came to –1.3%. The number of employees (full-time equivalents, FTE) at the end of 2015 was 2,820. The Division consists of two business activities, Group Travel and Destination Management Specialists.

kuonigrouptravel.com

Group Travel

“There was above average growth in Group Travel in 2015, especially from source markets China and Taiwan”

Rolf Schafroth, CEO Division Global Travel Services (GTS)

Detailed annual results for GTS Division, 2015

The key source markets for Group Travel in 2015 were: Japan, China, Taiwan, Indonesia, Hong Kong.

Kuoni Group Travel Experts is a leading worldwide provider of group travel. It organises and coordinates local travel services such as accommodation, restaurants and catering, as well as entertainment events, transport and event management. Tour operators, as well as online and offline travel agencies buy in these group arrangements from Kuoni and sell them under their own brand in local markets to their end customers. Employees of Kuoni Group Travel Experts look after the tour groups at the destinations. 2015.kuoni-report.com

Bangkok

Kuoni Group Annual Report 2015 53 Divisional Reports

China (+32.3%) recorded the largest year-on-year growth in bookings. The largest source market, Japan, suffered from the depreciation of the yen and a low demand for foreign travel. There is a clear difference in size of group and average age of travellers between the two biggest source markets, Japan and China. Japanese groups consist of just under 30 persons on average, while Chinese groups are larger with 35 on average. Chinese travellers, average age 40, are considerably younger than Japanese customers, whose average age is 55.

The most important destinations for Group Travel in 2015 were: Italy, France, Switzerland, Germany, Spain.

There was a clear increase in Asian tour groups travelling to destinations in Scandinavia. In 2015, Kuoni Group Travel Experts was the biggest supplier of group travel to Northern Europe.

More than 143,000 The average Japanese Chinese group guests visited travel group consists travellers are 40 years St. Peterʼs Basilica of fewer than 30 old in Rome persons on average 2015.kuoni-report.com The cities that attracted most group traveller bookings in 2015: Paris, Rome, Florence, Venice, Amsterdam, Lucerne, Milan, London, Prague, Vienna.

The most visited sights at destinations in 2015 included St Peterʼs Basilica, the Vatican Museum and the Colosseum in Rome, Neuschwanstein Castle in Germany, the Swiss mountain destination of Titlis, the Eiffel Tower, the Château de Versailles and the Louvre in Paris, Schönbrunn Castle in Vienna and the Wasa Ship Museum in Stockholm. During 2015 Kuoni continued its preparations as the official accommodation partner of the 2016 UEFA European Football Championship in France. After 2008 in Switzerland and Austria, Kuoni has again been chosen as UEFAʼs accommodation partner for 2016.

Kuoni has included around 500 hotels in the ten host cities in the programme. The online programme for team hotels for the participating football teams was launched in 2015 with 69 different offers. As the official accommodation partner, Kuoni offers its accommodation services to the football teams, officials, sponsors, journalists, tour operators and football fans.

More information about the activities of the Group Travel business within the GTS Division:

Kuoni Group Annual Report 2015 54 Divisional Reports

Kuoni Group Travel Experts is a leading worldwide provider of group travel. It organises and coordinates local travel services such as accommodation, restaurants and catering as well as entertainment events, transport and event management. Tour operators, as well as online and offline travel agencies buy in these group arrangements from Kuoni and sell them under their own brand in local markets to their end customers. Employees of Kuoni Group Travel Experts look after the tour groups locally.

The GTS Division also provides meetings, incentives, conferences and events (MICE) services. The European unit is a reliable, comprehensive service agency for organising meetings, incentives, congresses, trade fairs and exhibitions for companies, organisations, associations and institutions in the public and private sectors as well as for football clubs and other sports organisations.

Destination Management Specialists

Destination Management Specialists offer various services at their destinations, including accommodation, tours, transfers, excursions and MICE (meetings, incentives, conferences, events). These are offered to tour operators, online and offline travel agencies, companies, organisations and their end customers

The global network of Destination Management Specialists consists of six largely independent, entrepreneurially managed units that have expert knowledge of their own regions. The Destination Management Specialists operate in their markets under their own brands: AlliedTPro (USA), Asian Trails (South-East Asia), Australian Tour Management (Australia), Desert Adventures Tourism/Gulf Dunes (Middle East), Private Safaris (East Africa, Southern Africa).

kuoni-dmc.com 2015.kuoni-report.com

In the financial year 2015, the Indian Destination Management Specialists Sita and Distant Frontiers were sold to Fairfax/Thomas Cook India together with the Indian tour operating business.

The destination management specialists Asian Trails and Australian Tour Management (ATM) operate in the Asia/Pacific region. The existing product portfolio was further refined in financial 2015, and digital marketing activities were expanded. Investment was focused in particular on online channels for booking tours, transfers and excursions through specialised retail suppliers.

Myanmar and Indonesia were the destinations that saw the biggest increase in bookings in 2015. There was particular demand for private, tailor-made tours as well as for tours that offer unique special experiences. In Australia the most-booked sights and destinations included the Sydney Opera House, the Great Ocean Road in Victoria, the Great Barrier Reef in Queensland and the island of Tasmania.

Kuoni Group Annual Report 2015 55 Divisional Reports

In the Middle East, Desert Adventures Tourism (DAT) was one of the leading suppliers of travel activities, and Gulf Dunes one of the leaders for MICE business. The destination of Bahrain was added to the portfolio in 2015. The most-booked destinations were the United Arab Emirates, Oman and Jordan. The main sights and activities booked included desert safaris with barbecue dinners, the Great Mosque in Abu Dhabi, Petra and the Dead Sea in Jordan as well as Nizwa Fort and the Wahiba desert in Oman. In the MICE business, team-building activities such as a treasure hunt in Dubai, camel polo and desert experiences were the most popular options.

Las Vegas

AlliedTPro and Kuoni Destination Management are the brands operating on the market in the USA. The selection of guided tours was extended, especially for the south- eastern United States. To give tour operators greater planning security, the most

2015.kuoni-report.com popular tours were offered with a new “performance guarantee”. The booking system was enhanced to allow customers to book transfers, excursions, tickets for attractions and activities online. Favourite destinations in 2015 were New York, Las Vegas, California, Florida and Arizona. The most-booked tours were the “Western Wonders” trip through west coast states, and the “Eastern Triangle” on the east coast.

Private Safaris offers its services as a destination management specialist in East Africa and in the countries of Southern Africa. The most popular and most-booked trips in East Africa are safaris in Kenya and Tanzania. A new “World Heritage Tour” in Ethiopia was added to the product portfolio in 2015. Cross-border car tours were introduced in Southern Africa. These take travellers through various countries in the region. A new series of trips that visit local people to experience different cuisines, art and culture proved especially popular. On the technical side, new investments were made in business-to-business booking options and in systems that allow customers to put together individual itineraries. The most-booked destinations in 2015 were Cape Town, Kruger National Park, the Garden Route and Namibia.

For further information about Destination Management Specialists:

Kuoni Group Annual Report 2015 56 Divisional Reports

Destination Management Specialists are local experts with offices in the travel destinations themselves. The Kuoni Group runs a worldwide network of six Destination Management Specialists. Their local presence and networks provide substantial added value for customers. They employ local people who have great local knowledge, which they pass on both to the guests who arrive from abroad and to tour operators in Europe. These inbound specialists tend to operate in the destinations under their own well- known brand names.

AlliedTPro/Kuoni Destination Management USA This company, with offices in New York, Miami, Orlando, Las Vegas, Los Angeles and Hawaii, specialises in holidays within the USA. These include individual and group holidays, guided tours and tailored holidays in the VIP concierge sector.

Asian Trails Asian Trails operates in Thailand, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Vietnam and China. It offers a wide variety of leisure and MICE products in these countries. These include guided tours, adventure holidays, individual holidays, family holidays, tailor-made travel, incentive programs and classic beach holidays. Asian Trailsʼ main business is still leisure tours for guests from Europe, South America and India.

Australian Tours Management This company specialises in services for private and group holidays, specially themed holidays and MICE business in Australia. Its most important source markets are in Asia (India, Indonesia, China and Hong Kong, Thailand, Malaysia, Vietnam, Philippines, Korea and Japan) and Europe. Australian Tours Managementʼs services are booked by tour operators, travel agents and online platforms.

Desert Adventures Tourism Desert Adventures Tourism is one of the leading providers of destination services in the 2015.kuoni-report.com Middle East, with a particular focus on the United Arab Emirates, Oman and Jordan. The company specialises in individual and group holidays, tours and excursions, as well as arranging additional leisure activities and providing sports events packages. As per 1 January 2013 MICE specialist Reem Tours is part of the Destination Management Specialists organisation.

Gulf Dunes Gulf Dunes specialises in incentive tours and meetings (MICE) in the United Arab Emirates and Oman. The company was acquired by Kuoni in 2010.

Private Safaris The staff at Private Safaris guide and look after customers who want a taste of primeval Africa. The company, employing nearly 300 staff in 6 offices, offers services in 17 sub-Saharan countries with a focus on Kenya, Tanzania, South Africa, Namibia and Botswana. Counting on more than 35 yearsʼ experience, it specialises in land arrangements such as safaris, jeep tours, individual and group tours and MICE. VFS Global

Kuoni Group Annual Report 2015 57 Divisional Reports VFS Global

The visa services provider reported strong growth in 2015. Turnover went up to CHF 316.5 million (2014: CHF 270.8 million). Organic growth came to 23.3%. By the end of 2015, the number of full-time positions (FTE) was 3,561, an increase of 18.3% on the previous year.

VFSglobal.com

“In May 2015 we reached the milestone of 100 million visa applications processed since the founding of VFS Global in 2001.”

Zubin Karkaria, CEO of VFS Global (and CEO of Kuoni Group since November 2015)

Detailed annual results for the VFS Global Division, 2015

On 31 December 2015, VFS Global was operating 1,916 application centres in 123 countries for 48 governments. 430 new application centres were launched during the 2015 financial year. The governments of Brazil and Latvia were signed up as new customers for visa application processing. New operational services were launched in Myanmar, Poland, Surinam and Uzbekistan. In the citizen services business, VFS Global entered into a global partnership with Ghanaʼs National Identity Authority to open a centre for the identification and registration of foreigners in Ghana.

VFS Global is the market leader for industry-specific solutions in the area of visa applications, consular and citizen services and identity management. 2015.kuoni-report.com

As at 31 December In 2015 VFS Global 430 new application 2015, 1,916 application processed 20.1 million centres were opened centres were applications around in 2015, an average of operating in 123 the world 1.2 every day countries

In 2015 VFS Global processed 20.1 million applications, which is a 10% rise on the 18.2 million applications processed in 2014. The key source markets were India, China, Russia and the Ukraine. India accounted for 35% of all applications. The greatest numbers of applications were for visas for the USA, UK, Canada, Spain and India.

VFS Global is a trusted partner to governments, their diplomatic missions and official bodies. On their behalf VFS Global manages administrative processes for visa and passport applications and provides identification management and citizen services (e.g. birth and death certificates, land registry entries, planning applications).

Kuoni Group Annual Report 2015 58 Divisional Reports

Application Centre in Shanghai

VFS Globalʼs largest application centre was opened in Shanghai in August 2015. With a floor space of 8,500 square meters the centre offers and executes services for 20 governments. The centre has 173 counters for applications, 57 cabins for biometric recording and 1,600 seats for applicants.

The biggest application centre in South Asia was opened in New Delhi in December 2015. Services for 31 governments are provided in a 6,200 square meter facility. The centre has space for 153 counters. More than 12,000 applications can be accepted and processed each day. An On-Demand Mobile Visa Service was introduced for the UK government in China. Through this service, VFS Global will travel to any location in mainland China to accept visa applications from applicants at their doorstep, so they donʼt have to travel

2015.kuoni-report.com to one of VFS Globalʼs twelve fixed visa application centres in the country. This service can be availed of by individuals or larger groups.

VFS Global does not make judgements and decisions about applications. The company provides administrative help to governments and authorities so they can focus on assessing applications and making the final decisions. VFS Global uses state-of-the-art technology to ensure seamless service and highly secure processing of applications.

Kuoni Group Annual Report 2015 59 Divisional Reports

Automatic visa kiosk

The latest generation of fully automatic visa kiosks have been launched in a pilot project in Mumbai, India. These allow customers to submit their applications, biometric data, photos and payments on their own at the visa kiosk. The kiosks are VFS Globalʼs response to the increasing demand for automated “self-service” application facilities. Visa kiosks are currently being tested in India.

In 2015 VFS Global entered into two significant new strategic partnerships to help develop its business operations: The partnerships, with German company Veridos and Thai firm CSP Chan Wanich Security Printing, are helping VFS Global expand its identity management activities. VFS Globalʼs expertise in process management and outsourced services for governments and public authorities has been enhanced by the expertise provided by these partners. They offer services to governments, public

2015.kuoni-report.com authorities and private companies for the production and personalisation of passports, identity cards, driversʼ licences, health insurance certificates, credit and debit cards, cheques, visa stickers and other valuable and security-related documents and papers. These strategic partnerships enable VFS Global to add comprehensive customised solutions to its portfolio of industry management services for governments and authorities.

VFS Global continued to expand its range of citizen services. Applications are now being processed on behalf of regional and local authorities in India for birth and death certificates, land registry entries, licences and health programmes. In the second half of 2015, VFS Global successfully carried out a project for the South African government to record residency and work permits for over 200,000 people from Zimbabwe. 2015 also saw publication of the companyʼs first mobile app. This provides up-to- date information about the service and customer portfolio, as well as about VFS Globalʼs performance.

For more information about VFS Global, its business operations and its development:

Kuoni Group Annual Report 2015 60 Divisional Reports

VFS Globalʼs business model was created in India in 2001, and back then, like now, governments and their diplomatic missions were beginning to find it difficult to cope with the combination of growing demand for travel with stricter controls, increased security and all the implications these factors had for visa processing. The idea that VFS Globalʼs management had in 2001 was that it could offer to take on the tedious administrative part of the visa issuance process. This would relieve the missions of time-consuming administrative tasks and allow them to focus on the key decision- making task – i.e. whether an applicant should or should not be granted a visa.

VFS Global was established in Mumbai in 2001, when it set-up three Visa Application Centres (VACs) for its first client government – the United States of America. By 2005 VFS Global served eleven governments – including the United Kingdom, Australia and Canada – with over 100 VACs across eleven countries, and had processed over 2.4 million visa applications. In 2007 it won its first global account – that of the Home Office- UK Visas & Immigration (formerly UK Border Agency) – for operations across 33 countries. New client governments such as India and also numerous EU countries followed. In 2008 VFS Global initiated the concept of joint Visa Application Centres (JVAC) for “Schengen” client governments in India, the United Arab Emirates, the UK and Ghana. Eastern European and Asian nations, including Russia, Poland, and Japan also joined VFS Globalʼs roster of client governments.

In the past 15 years the company has developed a highly differentiated solution portfolio including dedicated visa and passport application centres, information services (contact centres), web based modules (for appointment scheduling and online payment collection), end-to-end biometrics solutions, verification and attestation services, specialised security solutions, etc. VFS Global has also developed sophisticated, technology-driven solutions which enable remote visa and other document processing – such as an integrated video interviewing hub solution, and a location independent document processing solution (LIDProTM)*.

2015.kuoni-report.com In 2014 VFS Global successfully introduced and implemented “citizen services” which focuses on delivering non-judgemental, document processing services for governments and governmental bodies within the home country. In 2015 the company set-up a separate business unit for identity management and citizen services business. This new business vertical has developed well and now serves eight client government bodies across nine countries through 69 Application Centres.

Its global operations are certified with ISO 9001:2008 for Quality Management System, ISO 27001:2013 for Information Security Management System, and ISO 14001:2004 for Environment Management System.

Processing applications requires a very high standard of security and quality. Over the last 15 years, VFS Global has invested in cutting-edge data security and quality assurance technology. As a result, it can also process passports of all types. Thanks to its state-of-the-art technology the company can even deal with biometric passports. Processing visa applications involves working with highly sensitive personal data. VFS Global has implemented processes in compliance with global data protection and privacy requirements, like UK Data Protection Act (UK DPA), EU Directive 95/46/EC, Canada PIPEDA & Generally Accepted Privacy Principles (GAPP) from AICPA/CICA to ensure utmost security of data. This has resulted in recognition through awards for the strength of its data protection. The very high priority it gives to security has been further highlighted by its investment in a state-of-the-art monitoring system. With strong experience in developing and implementing biometric solutions, VFS Global is further developing its identity management business.

Kuoni Group Annual Report 2015 61 Divisional Reports

Application Centres are run as service centres. They are situated according to the relevant governmentʼs requirements in specific city locations. They accept visa or passport or other applications directly from applicants or via travel agents, ensure all documentation is in order, complete basic administrative processing work – including data entry, appointment scheduling and biometric enrolment – and pass on the applications to the relevant diplomatic mission/client government body. They are also involved in delivery of passport and other documents back to applicants. Computers, photocopiers and passport photo machines are available at the centres if required. Many VACs also offer VIP lounges and other services to enhance the overall experience for visa applicants. VFS Global works predominantly with a user-pay revenue model where it receives its service fee directly from visa applicants, in addition to the visa fees which are remitted to the diplomatic mission.

In some countries VFS Global operates with Facility Management Companies (FMCs) for regulatory or cultural reasons. These FMCs handle the operations under the brand name of VFS Global. Some of the staff in these countries are employed by the FMC and infrastructure is provided by the FMC, but key managers are employed by VFS Global and VFS Global maintains complete control over, and takes full responsibility for, the entire operation.

Working in a highly sensitive environment, VFS Global lays a lot of emphasis on security – data security as well as physical security – and works as per highest international security standards. Stringent controls and processes are in place to monitor and control operations across the world. VFS Global also follows strict guidelines when recruiting employees.

*Patent pending. Copyright 2012. All rights reserved by VFS Global 2015.kuoni-report.com

Kuoni Group Annual Report 2015 62 Corporate Governance 2015.kuoni-report.com

Kuoni Group Annual Report 2015 63 Corporate Governance

Introduction

This Corporate Covernance Report describes the principles of management and control as they apply to the top decision-making bodies of the Kuoni Group. To enhance transparency and thus comparability with prior years and other companies, it has been prepared in conformity with the SIX Corporate Governance Directive of 1 September 2014 implemented on 1 October 2014. Unless otherwise specified, all the information contained in the report is based on data as at 31 December 2015.

Trust, reliability and security are all basic prerequisites for a healthy and successful company. Maintaining these essential parameters of business management and control is the key task of corporate governance. Professionally implemented corporate governance is essential for any successful and responsible company that seeks to fulfil its shareholders, employees and external stakeholders.

The principles and rules of corporate governance as practiced by the Kuoni Group are set out in the companyʼs Articles of Incorporation, its Organisational Regulations and the regulations of the Board of Directors committees. The Chairman of the Board of Directors reviews the content and current relevance of the corporate governance 2015.kuoni-report.com provisions regularly, and proposes any additions or amendments required to the Board of Directors.

In view of the fulfilment of the ordinance against excessive pay at joint-stock companies (VegüV) as of 20 November 2013, some changes to the Articles of Incorporation were proposed to and approved by the Annual General Meeting of Shareholders (AGM) on 25 April 2014 and the AGM of 20 April 2015. The Kuoni Group complies with all the rules relevant to corporate governance. In particular, the Kuoni Group abides by all existing legislation, the directives of the SIX Swiss Exchange (and the remarks thereto) and the Swiss Code of Best Practice for Corporate Governance issued by economiesuisse, Switzerlandʼs umbrella business association (as updated in September 2014). This Annual Report contains the Compensation Report of the Board of Directors, which also complies with the ordinance against excessive pay at joint-stock companies (VegüV). Group structure

Kuoni Group Annual Report 2015 64 Corporate Governance Group structure

Kuoni Travel Holding Ltd is a joint-stock holding company under Swiss law, which has direct or indirect shareholdings in all the companies worldwide that belong to the Kuoni Group. While the Board of Directors devotes itself to overall management, strategic and supervisory duties, the Group Executive Board is entrusted with operational management tasks. For a diagram of the operational structure of the Kuoni Group, see organisation chart. The registered shares B of Kuoni Travel Holding Ltd, Zurich, which have a nominal value of CHF 1.00, are traded on the Main Standard of the SIX Swiss Exchange (securities number 350 485, ISIN CH 0003504856). The registered shares A of Kuoni Travel Holding Ltd, Zurich, which have a nominal value of CHF 0.20, are not listed. The companyʼs legal domicile is at Neue Hard 7, Zurich. Kuoni Travel Holding Ltd does not hold any equity interests in any stock-exchange-listed companies. For details of the unlisted companies that belong to the Kuoni Group of consolidated companies, see the following chapter of the Financial Report. A more detailed description of the global activities of the Kuoni Group is available at kuoni.com. Capital structure 2015.kuoni-report.com

Kuoni Group Annual Report 2015 65 Corporate Governance Capital structure

Principal shareholders The information on principal shareholders of Kuoni Travel Holding Ltd is provided in the respective table of the Financial Report. This shows those shareholders holding over 3% of the companyʼs shares, together with their current holdings (based on information provided by the same). The company received several notifications of significant shareholders as required under Article 20 of the Swiss Federal Act on Stock Exchanges and Securities Trading in the course of 2014. These notifications were published on the SIX Swiss Exchangeʼs notifications platform and under kuoni.com. Kuoni Travel Holding Ltd is not aware of any other shareholders holding more than 3% of the companyʼs shares as of 31 December 2015. Kuoni Travel Holding Ltd is not aware of any shareholdersʼ agreements.

Cross-shareholdings Kuoni Travel Holding Ltd has no cross-shareholdings, whether purely of a capital nature or involving voting rights.

Capital For further details and the composition of the amounts of ordinary and conditional capital of Kuoni Travel Holding Ltd, please see the respective table of the Financial Report. Further information on the capital structure is also available on kuoni.com.

Authorised and conditional capital in particular Kuoni Travel Holding Ltd has no authorised capital.

Conditional capital issuable via the exercising of conversion rights and/or warrants linked to bonds or similar debt issued by Kuoni Travel Holding Ltd or any of its subsidiaries in the domestic or international capital markets amounts to a maximum of 2015.kuoni-report.com CHF 384,000. In the case of issues of bonds or similar debt instruments to which conversion and/or warrant rights are attached, the pre-emptive rights of the existing shareholders are excluded. The holders of the said conversion and/or warrant rights are entitled to subscribe for new registered shares B. The acquisition of registered shares through the exercise of conversion and/or warrant rights and any subsequent transfer thereof are subject to the transfer and voting restrictions contained in the Articles of Incorporation. The Board of Directors is authorised to restrict or revoke the pre-emptive rights of shareholders when such bonds or similar debt instruments to which conversion and/or warrant rights are attached are issued to finance the acquisition of other companies or parts of companies. If shareholdersʼ pre-emptive rights are revoked by a decision of the Board of Directors, the conversion and/or warrant rights concerned will be issued at the prevailing market price, and the new registered shares will be issued at market rates, with due regard to the current market price of the registered shares concerned and/or of comparable financial instruments with a market price. The exercise period is limited to ten years for conversion rights and to seven years from the date of the bond issue for warrant rights.

Kuoni Group Annual Report 2015 66 Corporate Governance

Conditional capital of a maximum of CHF 96,000 also exists for use in exercising subscription or option rights granted to employees of Kuoni Travel Holding Ltd or its subsidiaries under one or more employee stock option plans (in accordance with art. 28 of the Articles of Incorporation). In such cases, new registered shares B may also be issued to employees at rates below the current stock market price, and existing shareholders shall have no subscription rights. The terms and conditions for the issue of such shares shall be determined by the Board of Directors. The acquisition of registered shares under such employee stock option plans and any subsequent transfer thereof are subject to all the relevant statutory transfer and voting right restrictions.

Changes in capital and share buyback programme For 2013, 2014 and 2015 please refer to the respective table of the Financial Report. There is no share-buy-back programme.

Shares and participation certificates The composition of the share capital of Kuoni Travel Holding Ltd is shown in the respective table of the Financial Report. At the General Meeting of Shareholders of Kuoni Travel Holding Ltd each registered share carries one vote. These voting rights can only be exercised if the shareholder is registered as a shareholder with voting rights in the Kuoni Travel Holding Ltd share register. Under the Articles of Incorporation, such registration also requires a declaration from the shareholder that they have acquired the shares concerned in their own name and for their own account. The unlisted registered shares A (nominal value CHF 0.20) have a five times lower nominal value than the listed registered shares B (nominal value CHF 1.00), and thus have five times greater voting rights in terms of the capital invested. The registered shares of Kuoni Travel Holding Ltd are uncertificated.

The shareholder may demand at any time that Kuoni Travel Holding Ltd issue a confirmation in respect of the registered shares which the shareholder currently owns. The shareholder is not entitled to the printing and delivery of certificates for registered 2015.kuoni-report.com shares. Kuoni Travel Holding Ltd, by contrast, may print and deliver certificates representing shares (single or global share certificates or certificates comprising multiple shares) at any time instead of uncertificated securities. Kuoni Travel Holding Ltd may also cancel without replacement any such previously issued share certificate or uncertificated security.

Securities held with an intermediary may only be disposed of or used as collateral in compliance with the terms of the Swiss Intermediary-Held Securities Act (“Bucheffektengesetz”). Uncertificated securities which do not qualify as securities held with an intermediary may only be transferred by assignment. Such assignment shall only be valid if Kuoni Travel Holding Ltd is notified thereof. All registered shares are entitled to a dividend. Kuoni Travel Holding Ltd waives its entitlement to a dividend on any shares held by the company as treasury shares at the time of the dividend payment. The voting rights attached to such shares are suspended by law. Kuoni Travel Holding Ltd has not issued any participation certificates.

Dividend-right certificates Kuoni Travel Holding Ltd has not issued any dividend-right certificates.

Kuoni Group Annual Report 2015 67 Corporate Governance

Restrictions on transferability and nominee registrations The following provisions apply to the registered shares A and B of Kuoni Travel Holding Ltd. The Board of Directors of Kuoni Travel Holding Ltd will deny the registration of an acquirer of registered shares subject to the provisions of the last paragraph in this chapter as the holder or usufructuary of the registered shares with voting rights concerned if, as a result of such registration, the acquirer were to acquire or collectively hold, directly or indirectly, more than 3% of the registered share capital entered in the Commercial Register. For the registered shares exceeding this 3% ceiling, the acquirer shall be registered in the share register as the holder or usufructuary of these registered shares without voting rights. On the 11 November 2015 the Board of Directors announced that it intends to ask the next General Meeting to remove statutory voting right restrictions.

Legal entities or partnerships that are interrelated through capital ownership, voting rights or uniform management or are otherwise linked with one another, as well as individual persons or legal entities or partnerships who act in concern for the purpose of circumventing the limitation for registration in the share register, shall, for the purposes of the preceding paragraph, be treated as one single acquirer. The limitation for registration in the share register set forth in paragraph 2 of this chapter subject to Article 652b, paragraph 3 of the Swiss Code of Obligations also applies to registered shares which are acquired through the exercising of pre-emptive rights, warrants and conversion rights. The limitation for registration in the share register shall not apply to an acquisition of registered shares by succession or division of estate or under marital property law.

Other than set forth above, acquirers of registered shares shall be registered in the share register as shareholders with voting rights upon their application, provided they expressly declare that they have acquired the registered shares in their own name and for their own account.

2015.kuoni-report.com The Board of Directors of Kuoni Travel Holding Ltd may register individual persons who do not expressly declare that they hold the registered shares for their own account (“nominees”) in the share register with voting rights if the nominee has entered into an agreement with the Company with respect to such status and if the nominee is subject to the supervision of a recognised bank or financial market. The Board of Directors of Kuoni Travel Holding Ltd may also, after having heard the person concerned, cancel a personʼs registration in the share register as a shareholder or nominee with voting rights with retroactive effect to the date of registration if such registration was based on incorrect information from the acquirer, and shall then in such cases register the shareholder or nominee concerned in the share register as a shareholder or nominee without voting rights. In the event of any such action, the shareholder concerned must be immediately informed. The Board of Directors of Kuoni Travel Holding Ltd shall specify the particulars and give the necessary directions to ensure compliance with the preceding provisions. It may also allow exemptions in particular cases from the regulation regarding nominees and the percentage limitation specified in paragraph 2. The Board of Directors issues regulations on this. The Board may also delegate its duties. No exemptions from the transferability and nominee registration restrictions were granted in the reporting year.

Kuoni Group Annual Report 2015 68 Corporate Governance

The vested rights of the shareholders entered in the share register on 25 February 1995 (including those of their legal successors by virtue of the devolution or partition of an estate, a matrimonial property regime or a merger with or incorporation into a directly controlled, wholly owned holding company) remain intact. The limitations outlined above shall also not apply to shares which have been or will be acquired by the shareholders entered in the share register on 25 February 1995 or their legal successors as defined above through the exercising of subscription, warrant, option or conversion rights arising from the shares entered in the share register on 25 February 1995 and any shares derived therefrom.

Convertible bonds and options Kuoni Travel Holding Ltd had no convertible bonds or options outstanding. Board of Directors 2015.kuoni-report.com

Kuoni Group Annual Report 2015 69 Corporate Governance Board of Directors

Members of the Board of Directors The Board of Directors of Kuoni Travel Holding Ltd consists of the following seven members:

Current term Name Born Nationality Function Joined expires Heinz Karrer 1959 Swiss Chairman 2007 2016 Adrianus (Adriaan) Nühn 1953 Dutch Deputy Chairman 2012 2016 Jae Hyun (Jay) Lee 1964 South Korean Member 2012 2016 John Lindquist 1950 British/US-American Member 2007 2016 Selina Neri 1968 Italian Member 2015 2016 David Schnell 1947 Swiss Member 2002 2016 Annette Schömmel 1965 Swiss Member 2004 2016

All terms expire at the next regular Annual General Meeting of Shareholders. The curricula vitae of the individual Board members can read under kuoni.com. All the members of the Board of Directors are independent directors. None of the present Board members sat on the Group Executive Board of Kuoni Travel Holding Ltd or on the executive board of any Group subsidiary of Kuoni Travel Holding Ltd within the last three years. Similarly, none of the present Board members maintains material business relationships with Kuoni Travel Holding Ltd or with any Group subsidiary of Kuoni Travel Holding Ltd.

Other activities and functions Details of other activities and functions of the members of the Board of Directors are available on the company website. 2015.kuoni-report.com

Regulation on the number of additional positions The members of the Board of Directors shall not occupy or exercise more than eight additional positions in other companies, thereof not more than four publicly listed companies and five unpaid positions in non-profit organisations. An additional position shall be deemed to be a position in the highest managing or supervising body of other entities that are obliged to be entered into the commercial register or a comparable foreign register and that are neither controlled by nor that control the company. A number of positions in several different companies that form part of the same group of companies is regarded as one position. Additional positions that are held by a member of the Board of Directors or a member of the Executive Board within the scope of functions and based on the instructions of the company or another group company are not subject to the limitation.

Election and term of office Each individual member of the Kuoni Travel Holding Ltd Board of Directors is elected separately by the Annual General Meeting of Shareholders. The latter elects the Chairman of the Board of Directors among the elected members of the Board of Directors. The Board of Directors consists of a minimum of three and a maximum of nine members. The terms of office of the members of the Board of Directors as well as the term of office of the Chairman of the Board of Directors shall end no later than the closing of the Annual General Meeting of Shareholders following their election. Re-election is permitted.

Kuoni Group Annual Report 2015 70 Corporate Governance

In the event that the position of the Chairman is vacant, the Board of Directors appoints a new Chairman for the remaining of the term of office. The Board of Directors is self- constituting. It designates from among its members one or more Vice-Chairmen. Furthermore, the Board of Directors designates a secretary who need not be a member of the Board of Directors. The organisational regulations and company bylaws also stipulate that members of the Board of Directors will automatically retire from the Board on the date of the Annual General Meeting of Shareholders following their 70th birthday.

Internal organisation The internal organisation of the Board of Directors is based on the companyʼs relevant valid Organisational Regulations, which are issued by the Board of Directors and revised regularly. The Organisational Regulations may be consulted under kuoni.com. They were reviewed in December 2015 and came into force on 1 January 2016.

Division of duties within the Board of Directors Within the Board of Directors, the Chairman has the following duties and authorities. The Deputy Chairman deputises for the Chairman in his absence, and bears the same duties and authorities when doing so. Apart from these duties and authorities, the Chairman and Deputy Chairman have no particular function within the Board of Directors. The Chairman is responsible for the formal and organisational leadership and management of the Board of Directors. In urgent cases, he shall also take the necessary decisions and precautions until the matter can be decided upon by the Board of Directors. The Chairman further monitors the observance of legal requirements, the Articles of Incorporation, regulations and directives by the companyʼs management bodies, and submits the requisite motions, requests and proposals to the Board of Directors. The Chairman also ensures, in collaboration with the Group Executive Board, that information is provided in good time on all major aspects of the company which are of

2015.kuoni-report.com relevance to the monitoring of its activities and to the corporate decision-making process. Further details of the duties and authorities of the Chairman of the Board are provided in Section 2.5 of the Organisational Regulations.

Board committees The Board of Directors has formed the following three committees to assist it in its work: the Compensation Committee, the Nomination Committee and the Audit Committee. As a rule, the committees are constituted by the Board of Directors, subject to different provisions in the Articles of Incorporation or in regulations. The chairmen of the committees inform the Board of Directors at the respective following ordinary meeting of the Board of Directors about their activities, in urgent cases also immediately. All of these committees have written regulations specifying their tasks and responsibilities.

Compensation Committee The General Meeting of Shareholders elects a Compensation Committee consisting of two to five members. The members of the Compensation Committee are elected individually. Only members of the Board of Directors are eligible for election. The term of office of the members of the Compensation Committee ends at the latest with the closing of the General Meeting of Shareholders following their election. Re-election is admissible. If the Compensation Committee is not fully staffed, the Board of Directors elects the missing members for the remainder of the term.

Kuoni Group Annual Report 2015 71 Corporate Governance

The task of the Compensation Committee is to make a proposal to the Board of Directors regarding the total compensation of the Group Executive Board for the financial year following the General Meeting of Shareholders in accordance with Article 28 of the Articles of Incorporation. In addition, based on the total amounts approved by the General Meeting of Shareholders, the Compensation Committee makes proposals to the Board of Directors regarding the effective payment of the compensation and supervises together with the Board of Directors the adherence to the total compensation and the compliance with the compensation regulations. Further, the Compensation Committee prepares the Compensation Report and submits it to the Board of Directors.

To fulfil its duties, the Compensation Committee may consult other persons and external consultants for support and have them participate in its meetings. The Board of Directors may assign further tasks to the Compensation Committee. Members of this committee are: Adrianus (Adriaan) Nühn (Chair), Jae Hyun (Jay) Lee and Annette Schömmel.

Nomination Committee The Nomination Committee makes sure that Kuoni recruits and develops experienced and qualified executives and obtains their long-term commitment. Thereby, it observes the standards of a good corporate governance and the long-term interest of the shareholders. Upon request by the Compensation Committee, the Nomination Committee may provide the necessary information in order to allow the Compensation Committee to propose an appropriate and market-conform compensation for evaluated candidates for the Board of Directors of the Group Executive Board. Members of this committee are: Adrianus (Adriaan) Nühn (Chair), Jae Hyun (Jay) Lee and Annette Schömmel.

Audit Committee The Audit Committee shall support the Board of Directors in its non-delegable duties to 2015.kuoni-report.com provide supreme supervision and financial control by forming its own opinion of the organisation and functioning of the Groupʼs internal and external control system and of the disclosed consolidated financial statements. Members of this committee are: David Schnell (Chair), John Lindquist and Selina Neri.

Working methods of the Board of Directors and its committees The Board of Directors and its committees meet as often as business requires, but a minimum of six times a year for the Board of Directors, four times a year for the Audit Committee, three times a year for the Compensation Committee and twice for the Nomination Committee. The Board of Directors and the committees met as follows in 2015: 16 times (including telephone conferences).

Kuoni Group Annual Report 2015 72 Corporate Governance

Meetings Telephone conferences Average length Average length Present absent (hours) Present absent (minutes) Board of Directors 2015 Heinz Karrer, Chairman 10 0 9 6 0 55 Adrianus (Adriaan) Nühn, Vice Chairman 10 0 9 6 0 55 Jae Hyun (Jay) Lee 9 1 9 2 4 55 John Lindquist 10 0 9 5 1 55 Selina Neri, since April 2015 7 0 9 6 0 55 David Schnell 10 0 9 4 2 55 Annette Schömmel 10 0 9 6 0 55 Raymond D. Webster, until April 2015 2 1 9 0 0 55

The Audit Committee held four meetings.

Meetings Telephone conferences Average length Average length Present absent (hours) Present absent (minutes) Audit Committee David Schnell, Presidency 4 0 7.2 0 0 0 John Lindquist 3 1 7.2 0 0 0 Selina Neri, since April 2015 3 0 7.2 0 0 0 Raymond Webster, until April 2014 0 1 7.2 0 0 0

The Compensation Committee met five times and the Nomination Committee four times.

Meetings Telephone conferences Average length Average length Present absent (hours) Present absent (minutes) 2015.kuoni-report.com Compensation Committee Adrianus (Adriaan) Nühn, Presidency 5 0 1.2 0 0 0 Jae Hyun (Jay) Lee 5 0 1.2 0 0 0 Annette Schömmel 5 0 1.2 0 0 0 Nomination Committee Adrianus (Adriaan) Nühn, Presidency 3 0 1.2 1 0 30 Jae Hyun (Jay) Lee 3 0 1.2 0 1 30 Annette Schömmel 3 0 1.2 1 0 30

The Board of Directors meets at the invitation of its Chairman. A Board meeting may also be demanded by any of its members or by the CEO. The agenda of the Board of Directorsʼ meetings is set by the Chairman. Any member of the Board of Directors may table an agenda item. The members of the Board of Directors each receive documentation prior to the meetings, which enables them to prepare for discussion of the agenda items concerned. Board meetings are chaired by the Chairman. A Board meeting shall be quorate provided the majority of Board members are present. The Board votes and passes resolutions by a simple majority. In the event of a tie, the meeting chair has the casting vote. In addition to its members, meetings of the Board of Directors are generally attended by the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), and by further members of the Group Executive Board as and when required. These attendees have only an advisory function, along with the right to table motions or agenda items. Persons who are not members of the Group Executive Board may also attend as specialists at the chairʼs invitation.

Kuoni Group Annual Report 2015 73 Corporate Governance

Minutes are kept of all meeting deliberations. Board resolutions may also be passed by written approval (letter, fax, e-mail or other written form), again by a simple majority, provided all Board members have had the opportunity to cast their vote and provided no member demands oral discussion of the matter concerned. Board committee meetings are held at the invitation of the chair. A Board committee meeting may also be demanded by any committee member or the CEO (and an Audit Committee meeting may additionally be demanded by the Chairman of the Board, the CFO or the internal or external auditors). The agenda of Board committee meetings is compiled by the chair. Any committee member may table an agenda item. The committee members each receive documentation prior to the meetings, which enables them to prepare for discussion of the agenda items concerned.

Board committee meetings are chaired by the committee chair. A committee meeting shall be quorate (and empowered to submit proposals to the Board of Directors) provided the majority of committee members are present. The meeting votes and passes resolutions by a simple majority. In the event of a tie, the meeting chair has the casting vote. In addition to its members, meetings of the Audit Committee are generally attended by the Chairman of the Board, the CEO, the CFO, the Head of Internal Audit and a representative of the external auditors. In addition to its members, meetings of the Nomination- and Compensation Committee are generally attended by the Chairman of the Board, the CEO and the Chief Human Resources Officer. Minutes are kept of all Board committee meetings. Committee resolutions may also be passed by circular written communication provided no member demands that a meeting be convened.

An annual self-assessment procedure has been established to permanently monitor and if possible enhance the performance of the Board of Directors. This evaluates how efficiently the Board and its committees are performing their functions and meeting their responsibilities, whether each Board member participates actively in Board discussions and makes contributions based on independent judgement, and whether an

2015.kuoni-report.com environment of open discussions is maintained at Board meetings.

Areas of responsibility The Board of Directors is the companyʼs supreme managing body and is responsible for supervising the management of the company and its business. It deals with all matters that are not entrusted to another body of the company under the law, the companyʼs Articles of Incorporation or its Organisational and Business Regulations. With regard to the non-transferability and inalienability of duties of the Board of Directors, reference is made to Article 716a of the Swiss Code of Obligations and Article 22 of the Articles of Incorporation.

The Board of Directors may also, subject to the relevant legal provisions, delegate all or part of its duties to manage and represent the company to one or more of its members (as managing directors) or to third parties by issuing the appropriate Organisational Regulations. In this connection, the Board of Directors has issued a set of Organisational Regulations which specify (under Section 2.3) its further duties and authorities and list (under Section 4.3) those business items which require its approval. The Board of Directors of Kuoni Travel Holding Ltd manages the subsidiaries under its legal and/or economic control as a corporate group. The responsibility for the resolutions taken by the Board of Directors therefore extends not only to the company in the legal sense but also to all the subsidiaries described above by virtue of the Boardʼs authority to issue instructions to the representatives of the company in their respective governing bodies.

Kuoni Group Annual Report 2015 74 Corporate Governance

Within the overall parameters imposed by the law and the Articles of Incorporation, the Board of Directors delegates the management of the company to the Group Executive Board by means of the relevant Organisational Regulations, which can be viewed on the company website. The Group Executive Board has the duty and the authority to manage the Kuoni Groupʼs business operations. It is responsible in particular for:

– compiling the annual and interim financial statements and providing the requisite additional information for the Board of Directors; – planning, managing and monitoring the companyʼs profitability, risk positions, balance sheet structure and liquidity within the guideline parameters laid down by the Board of Directors; – devising the business strategy, multi-year business plan and budget for the following business year, and submitting these to the Board of Directors; – preparing and submitting proposals to the Board of Directors, particularly in relation to financing policy, investment policy, asset management policy, risk management and sourcing and trading policy, and in other areas as and where required.

The Group Executive Board shall also ensure the subsequent detailed adoption of such policies and the observance of the principles laid down in connection therewith, and shall report regularly to the Board of Directors thereon:

– implementing Board resolutions; – ensuring that all legal requirements are observed and that all applicable legal provisions are familiar to and observed by the companyʼs employees (Corporate Compliance; the basic parameters here are laid down in the companyʼs Code of Conduct); – the internal organisation and the internal control system; – hiring and dismissing employees;

2015.kuoni-report.com – monitoring the performance of external service providers; – preparing meetings of the Board of Directors together with its Chairman and presenting the necessary documents; – devising proposals and requests for submission to the Board of Directors; – reporting to the Board of Directors.

The Group Executive Board is empowered to pass resolutions on all business assigned to it. The Group Executive Board may submit such business to the Board of Directors for approval. The provisions on which items of business must be submitted to the Board of Directors for approval are laid down in the Organisational Regulations.

Information and controlling instruments for supervising the group Executive Board The Management Information System (MIS) of the Kuoni Group is structured as follows: The financial statements of the individual subsidiaries are prepared on a monthly, quarterly, semi-annual and annual basis. These figures are aggregated per segment/division and consolidated for the Group. The figures are compared with the previous year and the budget. The attainability of the budget is assessed on the basis of quarterly reporting and forecasts. The heads of the divisions submit monthly written reports on the progress of business to the Group Executive Board and the Board of Directors. These reports are discussed with the Group Executive Board at the Board of Directorsʼ meetings, as are the implementation and observance of Board resolutions and the companyʼs liquidity levels.

Kuoni Group Annual Report 2015 75 Corporate Governance

Any member of the Board of Directors may demand to be informed about the companyʼs affairs. The CEO is responsible for informing the Board of Directors about the current course of business and important business transactions occurring in the company and in its subsidiaries. The CEO reports to the Chairman of the Board at regular intervals. The CEO must also inform the Chairman immediately of any unusual events, and the Chairman will in turn pass such information on to the members of the Board.

To ensure the direct information of the full Board of Directors, the CEO regularly attends meetings of the Board of Directors and its committees unless the Board or its committees need to conduct a closed meeting session. The CFO also attends all meetings of the Audit Committee and is further present for most agenda items at full Board meetings. The further members of the Group Executive Board attend Board meetings for particular agenda items as and when required. The Chairman of the Board also receives copies of the minutes of all meetings of the Group Executive Board. The companyʼs risk management function provides an established risk model for identifying, managing and monitoring strategic and operational risks throughout the Kuoni Group. The Group-wide risk profile consists of the risks identified in the Groupʼs main country organisations (adopting the bottom-up approach) and Group-wide strategic risks (adopting the top-down approach). The present risk profile and the current status of risk-reducing measures resolved are regularly monitored and are reported twice a year to the Board of Directors.

Internal Audit complements the controlling mechanisms available to the Board of Directors and reports directly to the Boardʼs Audit Committee. Internal Audit supports the Group Executive Board in special projects as requested by the CEO or other members of the Group Executive Board, and in other matters. Internal Auditʼs main task is to conduct an independent assessment of internal controls and their effectiveness with regard to potential risks. The reports prepared by Internal Audit regarding the audits carried out are submitted to the members of the Audit Committee, the Chairman

2015.kuoni-report.com of the Board, the CEO, the CFO, the Head of IT, the Head of Corporate Controlling, the Group General Counsel and the external auditor. Each report also contains comments by the Group Executive Board regarding the key findings of the audits conducted in addition to appointed improvements. The Group Executive Board

Kuoni Group Annual Report 2015 76 Corporate Governance The Group Executive Board

Members of the Group Executive Board For details of the members of the Group Executive Board, please see the respective overview.

Other activities and functions Details of other activities and any further functions of Group Executive Board members are provided on the company website. No member of the Group Executive Board holds any official function or political office.

Regulation and additional positions The members of the Executive Board shall not occupy or exercise more than four additional positions in other companies, thereof not more than two publicly listed companies and five unpaid positions in non-profit organisations. An additional position shall be deemed to be a position in the highest managing or supervising body of other entities that are obliged to be entered into the commercial register or a comparable foreign register and that are neither controlled by nor that control the company. A number of positions in several different companies that form part of the same group of companies is regarded as one position.

Additional positions that are held by a member of the Board of Directors or a member of the Executive Board within the scope of its functions and based on the instructions of the company or another Group company of the Kuoni Group and of which the compensation is passed on to the company or such Group company are not subject to the limitation. Members of the Group Executive Board shall only be permitted to assume Board of Directors mandates and public functions or to conduct other business for their own or 2015.kuoni-report.com for othersʼ account with the approval of the Board of Directors. The approval of a mandate is within the free discretion of the Board of Directors, whereby the Board of Directors considers in particular, whether the assumption of further mandates by the respective member of the Group Executive Board is in the interest of the Kuoni Group or can provide a direct or indirect benefit to the Kuoni Group.

Management contracts Kuoni Travel Holding Ltd and its Group subsidiaries have not concluded any management contracts with any third parties. Compensation, shares and

Kuoni Group Annual Report 2015 77 Corporate Governance Compensation, shares and loans

Details of the compensation, shares and loans of members of the Board of Directors and the Group Executive Board are provided in the Compensation Report. Shareholdersʼ participation 2015.kuoni-report.com

Kuoni Group Annual Report 2015 78 Corporate Governance Shareholdersʼ participation rights

Restriction and representation of voting rights Each share entitles its holder to one vote at the General Meeting of Shareholders. When exercising the right to vote, no shareholder shall be able to vote, directly or indirectly, with more than 3% of the registered share capital entered in the Commercial Register; this 3% includes their own shares and shares represented by proxy. This limitation on voting rights does not apply to the independent proxy or to shareholders registered in the share register as shareholders with voting rights for more than 3% of the registered share capital entered in the commercial register in accordance with articles 5 paragraph 9 of the Articles of Incorporation. Legal entities or partnerships that are interrelated through capital ownership, voting rights or uniform management or that are otherwise linked with one another, as well as individual persons or legal entities or partnerships acting in concert for the purpose of circumventing the limitation on registration in the share register are regarded as one single shareholder for the purposes of the preceding paragraph.

The Board of Directors of Kuoni Travel Holding Ltd issues procedural rules regarding participation in and representation at the General Meeting of Shareholders. A shareholder may be represented at the General Meeting of Shareholders by his legal representative, by representatives acting under written proxies that need not be shareholders, or the independent proxy. All the shares held by a shareholder may be represented by one person only. The members of the Board of Directors of Kuoni Travel Holding Ltd who are present at the General Meeting of Shareholders decide whether powers of attorney are to be recognised. The vested rights of the shareholders entered in the share register on 25 February 2015.kuoni-report.com 1995 (including those of their legal successors by virtue of the devolution or partition of an estate, a matrimonial property regime or merger with or incorporation into a directly controlled, wholly owned holding company) remain intact. Neither do the limitations outlined above apply to shares which have been or will be acquired by the shareholders entered in the share register on 25 February 1995 or their legal successors as defined above through the exercise of subscription, warrant, option or conversion rights arising from the shares entered in the share register on 25 February 1995 and any shares derived therefrom. Based on article 14 of the Articles of Incorporation the General Meeting of Shareholders elects an independent proxy. Private individuals, legal entities and partnerships are eligible for election. The independent proxy must be independent in fact and in appearance; article 728 para. 2–6 CO is applicable. The term of office of the independent proxy ends with the closing of the Annual General Meeting of Shareholders following the election of the independent proxy. Re- election is admissible.

Kuoni Group Annual Report 2015 79 Corporate Governance

If Kuoni Travel Holding Ltd has no independent proxy, the Board of Directors designates an independent proxy for the next General Meeting of Shareholders. The General Meeting of Shareholders may dismiss the independent proxy with effect as from the end of the General Meeting of Shareholders. The independent proxy exercises his or her duties in accordance with the applicable legal provisions. The Board of Directors makes sure that the shareholders may give to the independent proxy 1. instructions with respect to each motion contained in the invitation concerning agenda items; and 2. general instructions with respect to unannounced motions to agenda items as well as to new agenda items pursuant to article 700 para. 3 CO. Kuoni Travel Holding Ltd further makes sure that the shareholders may submit their proxies and their instructions, also by electronic means, to the independent proxy at the latest until 4 p.m. on the second working day prior to the date of the General Meeting of Shareholders. Compliance with this term is determined based on the receipt of the proxy and the instructions by the independent proxy. The Board of Directors determines the procedures for giving proxies and instructions by electronic means. The independent proxy is obligated to vote the shares for which it received proxies in accordance with the instructions given. If he or she has not received any instructions with respect to votes, he or she abstains from voting the respective shares.

Granting a proxy to the independent proxy does not constitute a violation of the limitation of voting rights according to Article 13 paragraph 1 of the Articles of Incorporation and not formation of a group in the sense of paragraph 2 of the mentioned provision. Each shareholder remains to be bound unconditionally to the provisions about the limitation of voting rights, also in the case of a proxy to the independent proxy. If the independent proxy is not in a position to act or if Kuoni Travel Holding Ltd has no independent proxy, the proxies and instructions given are regarded as given to the independent proxy determined by the Board of Directors pursuant to paragraph 8.

2015.kuoni-report.com Statutory quorums As a general principle, the General Meeting of Shareholders votes and passes resolutions by an absolute majority of the votes in favour and votes against cast (excluding abstentions). In the event of a tie, the Chairman shall have the casting vote. The following resolutions of the General Meeting of Shareholders require at least two- thirds of the votes represented and an absolute majority of the nominal value of the shares represented to be passed:

– amendments to the Articles of Incorporation, including the change to the companyʼs purpose, except for the Articles in Section IV of the Articles of Incorporation. These articles 25–28 can be modified by absolute majority in accordance with Article 15 of the Articles of Incorporation; – the creation of shares with privileged voting rights; – limiting or relaxing the transferability of registered shares; – an authorised or conditional capital increase; – a capital increase through the conversion of capital surplus, in return for a non-cash contribution or for the purposes of acquiring property and granting special rights; – limiting or revoking pre-emptive rights; – changes to the location of the companyʼs registered office; – the dissolution of the company through liquidation or by merger.

Kuoni Group Annual Report 2015 80 Corporate Governance

Voting on resolutions and elections shall be made electronically unless the Chairman orders otherwise. Electronic elections and resolutions shall be legally on a par with written resolutions and elections.

Convening the annual general meeting of shareholders The General Meeting of Shareholders is convened in accordance with the relevant legal requirements. The Annual General Meeting of Shareholders is generally convened in April and must be held within six months of the end of the financial year to which it relates. An Extraordinary General Meeting of Shareholders can be convened if necessary by the Board of Directors or the external auditors. The convention of an Extraordinary General Meeting of Shareholders may also be demanded by shareholders representing at least 3% of share capital, provided this is done jointly and in writing stating the items to be discussed and the corresponding proposals or, in the event of elections, the names of the candidates proposed. The Meeting is convened by a single announcement in the official publication. Registered shareholders may also be informed in writing. No later than 20 days before the Annual General Meeting of Shareholders the Annual Business Report and the Auditorsʼ Report as well as the Compensation Report including the examination report by the auditors are made available for inspection by the shareholders at the registered office of the company. Shareholders shall be informed in writing of their right of inspection in the convening notice. The agenda is also published in various Swiss newspapers and on the Kuoni Group website.

Agenda Shareholders representing shares with a nominal value of CHF 20 000 or more can demand that an item be included on the agenda of a General Meeting of Shareholders up to 30 days before the meeting concerned. This request must be submitted in writing, and must also specify the motions to be put to the meeting. The submission deadline is published on the website.

2015.kuoni-report.com Entry in the share register All shareholders entered in the share register as shareholders with voting rights up to three working days before a General Meeting of Shareholders may vote at the meeting concerned. Shareholders who sell their shares before the General Meeting of Shareholders takes place are no longer entitled to vote. Shareholders who buy additional shares or sell part of their shareholding after their meeting admission card has been issued must exchange the card sent to them at the information desk on arriving at the meeting concerned. Changes of control and defence

Kuoni Group Annual Report 2015 81 Corporate Governance Changes of control and defence measures

Duty to make an offer There are no opting-up or opting-out clauses in the Articles of Incorporation of Kuoni Travel Holding Ltd. In view of this, any person owning more than one-third of the voting rights of Kuoni Travel Holding Ltd must make an offer for all the companyʼs listed shares.

Change-of-control clauses The following change-of-control clauses apply:

Board of Directors There are no change-of-control clauses in any agreements or plans to the benefit of members of the Board of Directors.

Members of the Group Executive Board and Group-wide senior management In the event of a change of control, the current three-year vesting period under the relevant long-term incentive plans shall end immediately and the corresponding shares shall be assigned. Apart from this, there are no change-of-control clauses in any agreements or plans to the benefit of members of the Group Executive Board or Group- wide Senior Management.

Bondholders In the event of a change of control, bondholders are entitled to demand the premature repayment of their bond amount.

2015.kuoni-report.com Syndicated credit facility lenders In the event of a change of control, the banks participating in the syndicated credit facility are entitled to demand the premature repayment of any current loan amounts thereunder and/or to terminate the facility. Auditors

Kuoni Group Annual Report 2015 82 Corporate Governance Auditors

Duration of mandate and term of office of the auditor-in-charge The auditing mandates issued to KPMG Ltd, Zurich have a duration of one year each. KPMG Ltd, Zurich, has been the auditor of Kuoni Travel Holding Ltd since 1970. The auditor-in-charge, Martin Schaad, has been in office since April 2009. The auditor-in- charge is changed at least every seven years.

Audit fees KPMG charged the Kuoni Group fees amounting to CHF 1.7 million during the 2015 financial year for services in connection with the auditing of the annual accounts of Kuoni Travel Holding Ltd and its Group subsidiaries, as well as the consolidated financial statements of the Kuoni Group. An additional CHF 0.4 million was charged by other audit companies.

Additional fees KPMG also charged the Kuoni Group fees totalling CHF 0.1 million for additional services, i. e. accountancy and tax compliance. No other significant fees were charged by other audit companies for any other services.

Supervisory and controlling instruments with regard to the external auditors Each year, the Audit Committee of the Board of Directors evaluates the performance, remuneration and independence of the statutory auditor and proposes an external auditor to the Board of Directors who will be put forward for election at the General Meeting of Shareholders. The Audit Committee also annually examines the scope of external auditing, the auditing plans and the relevant processes, and discusses the audit results with the external auditors. Representatives of the external auditors also regularly attend Audit Committee meetings, and attended all such meetings in 2014. 2015.kuoni-report.com Information policy

Kuoni Group Annual Report 2015 83 Corporate Governance Information policy

Kuoni Travel Holding Ltd maintains an open and transparent communication policy towards its shareholders, current and potential investors, financial analysts, customers, business partners and other stakeholder groups. Kuoni Travel Holding Ltd provides prompt and comprehensive information on the Groupʼs business activities, while paying due and full regard to all the applicable provisions and directives of the SIX Swiss Exchange. In its endeavours to present details of its business development to its stakeholders, Kuoni Travel Holding Ltd also makes forward-looking statements. These statements are assessments by the management about the present and future situation and performance of the company as they appear at the time the statement is made.

Key dates for 2016 Financial year close: 31 December 2015 2015 annual results published: 15 March Annual Report published: 15 March General Meeting of Shareholders: to be determined 1 Dividend paid to banks (value date): no dividend First half-year close: 30 June Half-year results announced: 19 August Nine-month business update announced: 10 November

1 In view of the public tender offer for the B shares of Kuoni Travel Holding Ltd.

The latest key dates are always available on the website. Kuoni Travel Holding Ltd publishes a comprehensive Annual Report each year informing its shareholders about business developments and the companyʼs annual results. The Annual Report of 2015 is the first one to be published in an online version

2015.kuoni-report.com only. Of particular importance are the Corporate Governance Report integrated into the Annual Report and the Financial Report on the past business year. All of Kuoniʼs consolidated financial statements are compiled in compliance with International Financial Reporting Standards (IFRS).

The reports on half-year results and the nine-month business update are published and distributed in the same way as the companyʼs media releases. These reports contain unaudited financial results which are compiled in compliance with IFRS guidelines. Kuoni Travel Holding Ltd occasionally publishes information on current developments within its various business units or on other Group activities. In compliance with the relevant listing regulations of the SIX Swiss Exchange, these communications are always issued simultaneously to a broad circle of recipients. An archive containing the companyʼs Annual Reports, half-year reports, nine-month business updates and further information and presentations is available on the website. Kuoni Travel Holding Ltd also maintains an archive of all its published ad-hoc disclosures and other communications on the website. All this information is publicly available. Interested parties may also register on the website to receive ad-hoc disclosures and other published communications by e-mail. The information contained in these reports and communications is considered correct at the time of its publication. Kuoni Travel Holding Ltd does not update media releases issued in the past in the light of subsequent market or business developments.

As part of its investor relations function, Kuoni Travel Holding Ltd organises:

Kuoni Group Annual Report 2015 84 Corporate Governance

– the presentation of its annual results; – conference calls around the publication of its half-year results, the nine-month business update or other information; – meetings with investors and analysts, either individually or in groups at roadshows in key financial centres; – analystsʼ and investorsʼ events on specific topics or issues; – presentations at brokersʼ/banksʼ events.

These activities are conducted with a focus on recently announced developments or financial results, and in full compliance with SIX Exchange Regulationʼs Directive on ad- hoc publicity. The presentations for financial analysts and investors are regularly archived on the Kuoni Group website. These presentations are not constantly updated, but document long-term developments within the company. Details of the relevant contacts and the Kuoni Investor Relations mailbox are available on the website. Interested parties may also add their name to the Investor Relations e-mail list on the website.

Subject Link Share capital and capital structure www.kuoni.com/investor-relations/share/share-capital-structure Information on Kuoni’s shares http://www.kuoni.com/investor-relations/share/facts-per-share Board of Directors http://www.kuoni.com/group/organisation/board-of-directors Group Executive Board http://www.kuoni.com/group/organisation/group-executive-board Organisational Regulations https://www.kuoni.com/docs/organizational_regulations_2016_0.pdf Corporate governance (including Compensation Report) http://www.kuoni.com/corporate-governance Key dates http://www.kuoni.com/investor-relations/financial-calendar Compensation Report 2015.kuoni-report.com

Kuoni Group Annual Report 2015 85 Corporate Governance Compensation Report

Introduction The Kuoni Group constantly strives to recruit, motivate and retain the best professionals and executives to ensure the Companyʼs continued success. Kuoni Groupʼs compensation policy is an integral part of its strategy and has been designed so that all employees are motivated to put the Company in a position to outperform its competitors and create value for shareholders over the long term. This Compensation Report provides a summary of the compensation structure and amounts paid to the Group Executive Board (GEB) and the Board of Directors (BoD) and will be put to a consultative vote at the 2016 Annual General Meeting. This Compensation Report contains all information required under the Swiss Code of Obligations (Article 663b bis and Article 663c, Paragraph 3) and Section 5.1 of the Annex to the Corporate Governance Directive issued by SIX Exchange Regulation. The Kuoni Group has also observed the Swiss Code of Best Practice issued by economiesuisse, the umbrella association for Swiss business and industry.

Compensation governance The Compensation Committee (CC) of the BoD consists of two to five independent members. The current members are Adrianus (Adriaan) Nühn, Jae Hyun (Jay) Lee and Annette Schömmel. All members of the CC are suitably experienced and familiar with regulatory requirements, compensation practices and trends. The CC has its own regulations, which have been approved by the BoD. They meet at least three times a year. Additional meetings can also be convened at any time. In 2015, the Chairman of the BoD attended all CC meetings. The main duty of the CC is to prepare and monitor the implementation of the compensation policy for the GEB and BoD, to ensure they are compensated fairly, appropriately and competitively in keeping with the strategic goals of the Kuoni Group and the long-term interests of the shareholders. 2015.kuoni-report.com

The CC annually reviews the structure and the amounts of compensation to be paid to members of the GEB and BoD and recommends modifications to the full BoD for approval. This includes (but is not limited to) reviewing basic salaries and benefits, performance-based short-term compensation and share purchase plans. The CC is also responsible for issuing the Compensation Report. GEB members do not participate in the determination of their own compensation. The Chief Executive Officer (CEO) is, however, consulted on the compensation proposed for the other GEB members.

Recommendations regarding compensation for the BoD must comply with the Companyʼs regulations and be approved by all the members of the BoD. In any vote on the compensation to be paid to a particular member of the BoD, the Board member concerned must observe the relevant general withdrawal/abstention procedures. The CC utilises independent external consultants when required. External consultants are generally utilised to benchmark compensation and assist with the design of compensation plans. In 2015, Mercer and PricewaterhouseCoopers provided benchmark data for the GEB and BoD respectively. The Target Setting Committee (TSC) consists of the Chairman of the BoD, the Chairman of the CC and the Chairman of the Audit Committee (AC). The duties of the TSC are to assess and propose the long-term incentive performance targets for the long-term incentive plan annually. The table below summarises the roles of the CC, TSC, BoD and certain members of the GEB in proposing and approving compensation for the GEB and BoD

Kuoni Group Annual Report 2015 86 Corporate Governance

Proposed Consulted Approved Decisions on payout levels Basic salary and deferred fixed compensation for the GEB CC CEO 1 BoD Target payout level for short-term incentives for the GEB CC CEO 1 BoD Target payout level for long-term incentives for the GEB CC CEO 1 BoD Compensation for the BoD CC BoD 1

Decisions on performance targets Short-term incentive performance targets for the GEB (excl. CEO) CEO CC BoD Short-term incentive performance targets for the CEO Chairman of the BoD CC BoD Long-term incentive performance targets for the GEB (incl. CEO) TSC CEO, CFO BoD

1 In accordance with the general withdrawal / abstention procedures.

Key changes implemented during 2015 Apart from the changes to the Swiss pension fund system described below, the compensation system for the GEB did not change in 2015. Other changes, such as the new composition of the GEB, are also outlined below.

Swiss pension scheme The Kuoni Group has modified the supplementary pension plan, which offers employees in Switzerland at management level or higher retirement and risk benefits in addition to the pension schemeʼs basic pension plan. From January 2015, the short-term incentive target instead of the basic salary is insured. With this change, the benefits under the pension plans are better aligned to the compensation earned by the insured. Although total employer contributions remain unchanged for all employees insured under the pension plan, the change to the insured basis means that these contributions are higher 2015.kuoni-report.com in specific instances under the new plan.

Composition of the Group Executive Board The employment relationship with the CEO of the Kuoni Group, Peter Meier, was terminated in November 2015. His employment contract with the Kuoni Group will end as per the contractual notice period on 30 November 2016. The BoD appointed Zubin Karkaria as Chief Executive Officer (CEO) of the Kuoni Group with effect from 5 November 2015. Zubin Karkaria will remain directly responsible for the VFS Global Division, which he headed as CEO until this date. The compensation package for his function was benchmarked against similar functions in international companies of similar size to Kuoni and adjusted accordingly.

The employment relationship with the CFO of the Kuoni Group, Thomas Peyer, was terminated in August 2015. His employment contract with the Kuoni Group will end as per the contractual notice period on 31 August 2016. The BoD appointed Dr Prisca Havranek-Kosicek as the new Chief Financial Officer (CFO) of the Kuoni Group. She will take up her new function on 1 March 2016.

Kuoni Group Annual Report 2015 87 Corporate Governance

Key changes expected during 2016 Following the benchmark comparison of the compensation of the BoD carried out by PricewaterhouseCoopers in October 2015, the BoD decided to reduce the total compensation by around 38% for the period after the General Meeting. This adjustment to the compensation also takes account of the Groupʼs new size following the sale of the tour operating business. At its meeting in December 2015, the BoD decided to discontinue the restricted share plan (RSP) for members of the GEB from 31 March 2016 and for the senior management (Senior Vice President/Vice President) from 31 March 2017. The members of the GEB will therefore no longer be granted any new shares from this plan for the 2016 financial year. The full individual component of this compensation feature will be divided between the short-term incentive (STI) and the performance share plan (PSP). This is meant to improve the alignment between the interests of the employees and those of the shareholders.

Compensation principles

Kuoni Groupʼs compensation approach is based on the following principles:

– Alignment of interests: Rewarding employees for their contribution to the future development of the Kuoni Group in performance and profitability terms, thereby ensuring that employee and shareholder interests are aligned. – External competitiveness: Compensation should be comparable to compensation at companies of a similar size and complexity, enabling Kuoni Group to recruit, motivate and retain professionals who are essential to the Companyʼs continued success. – internal consistency: Compensation should reflect the impact, communication requirements, innovation and knowledge level of the relevant position. Kuoni Group uses Mercerʼs International Position Evaluation (IPE) system to carry out this assessment. 2015.kuoni-report.com Compensation principles for the Group Executive Board Total compensation for GEB members consists of a fixed component and a performance-based component. The fixed component is comprised of basic salary, benefits and deferred compensation (in the form of restricted shares). The performance-based component is comprised of a short-term incentive and a long-term incentive (in the form of performance-based shares). The chart below illustrates the general compensation mix for GEB members in 2015 and outlines the split between cash and share-based compensation.

Compensation mix for the GEB in 2015

The table below provides an overview of the GEB compensation components in 2015.

Kuoni Group Annual Report 2015 88 Corporate Governance

Deferred compensation Short-term incentive Long-term incentive Participants GEB 1 GEB 1 GEB 2 To link compensation to shareholder value To reward for the achievement of annual To reward for significantly impacting long- Purpose creation and retain key talent targets term company performance Grants Annual grant Annual grant Annual grant Vests in 3 equal tranches over a period of 3 Vesting years Annually Vests after 3 years Achievement of Group EBIT / Divisional Achievement of free cash flow and turnover Conditions for vesting Continued employment EBIT and personal targets targets General target as a % of basic salary 40% 50% 60% Payout Shares Cash Shares

1 Other participants include members of the senior management, i.e. Senior Vice Presidents/Vice Presidents (approximately 80 participants). For these participants, different conditions under each plan may apply. 2 Other participants include the members of the senior management, i.e. Senior Vice Presidents (approximately 20 participants). For these participants, different conditions under the plan may apply.

Compensation principles for the Board of Directors Total compensation for the BoD consists of fixed compensation and social security contributions in accordance with the respective Swiss regulations. BoD members receive a portion of their fixed compensation in cash and a portion in shares, which are blocked for a period of three years.

Compensation of the Group Executive Board The compensation of the GEB is periodically benchmarked to ensure that compensation is comparable and competitive relative to the market. Compensation, in terms of both structure and levels, is benchmarked against comparable roles in international and Swiss companies of a similar size and complexity, which can be in all sectors. Kuoni Groupʼs policy is to position GEB compensation at the market median. GEB members have the opportunity to be rewarded for sustained outperformance under the Companyʼs share-based incentive systems to an extent commensurate to the level of their outperformance.

2015.kuoni-report.com The benchmarking of GEB membersʼ compensation is carried out by independent external consultants. During 2015, Mercer was commissioned to benchmark the compensation level against comparable roles in international corporations of a similar size. The benchmarking confirmed that the compensation of the GEB members is largely competitive in the market. The GEB compensation components for 2015 are summarised below.

Basic salary Basic salary levels for GEB members are proposed by the CC and approved by the BoD. When considering changes to basic salary levels, benchmarking data as well as the individualʼs performance during the previous year are taken into account.

Deferred compensation In 2015, GEB members were granted deferred compensation under the Restricted Share Plan (RSP) 2015 as part of the fixed component of their total compensation. The deferred compensation links executive compensation to shareholder value creation and supports the retention of GEB members. There was no increase in the total value of this compensation element in 2015.

Kuoni Group Annual Report 2015 89 Corporate Governance

The restricted shares awarded to GEB members in April 2015 represent a percentage of their basic salary. The value of the restricted shares granted is generally equivalent to 40% of the basic salary, calculated on the basis of the volume-weighted average price of shares from mid-February to mid-March prior to allocation of the shares. The shares are restricted for three years: a third of the shares are converted into Kuoni shares after one year, the next third after two years and the final third after the third year. The payout value of the compensation is based on the share price at the time of conversion, thereby linking this portion of compensation to shareholder value creation and the development of Kuoniʼs share price.

2015 Restricted Share Plan: Example*

The Kuoni Group uses treasury shares or shares bought at market price on the open market to grant shares to the employees participating in the plan. This does not dilute the value of the shares of existing shareholders. Under a clawback clause, the BoD may determine that some or all of a GEB memberʼs restricted shares should be forfeited in certain circumstances, such as where the executive has failed to comply with the Kuoni Groupʼs Code of Conduct or caused or contributed to the need for a material restatement of financial results. This

2015.kuoni-report.com compensation component therefore remains recoverable for an extended period, thereby further strengthening the sustainability of the compensation system. Upon termination by the employer (for good cause) or termination by the employee, unvested shares lapse. In other cases, for example ordinary termination by the employer, death, disability or retirement, allocations which have not yet vested are partially converted based on the relevant length of service.

Short-Term Incentive The short-term incentive plan is designed to reward GEB members for the achievement of annual performance measures that are specific, quantifiable and challenging. The performance measures for all GEB members include financial targets at Group and Divisional level plus strategic targets aimed at promoting growth and the development of consumer-oriented and innovative approaches. Other agreed targets relate to Kuoniʼs transformational objectives, people and talent development targets and stakeholder targets that are specific to key markets and the individualʼs role. The mix of targets is appropriate for Kuoniʼs business model, which must be tailored to consumer and market influences, and are aligned with the Groupʼs business strategy and annual targets for 2015. All performance measures and targets were predefined in advance and there was no discretion involved when determining payouts under the 2015 short-term incentive plan. The performance measures and their respective weightings are as follows:

Kuoni Group Annual Report 2015 90 Corporate Governance

Performance measure Weighting Possible payout Financial goals (EBIT compared to Budget): Group CEO and Group CFO 75% Group Divisional CEOs 50% Group and 25% Divisional Between 0% and 200% of target Personal targets related to: Strategy Transformation People Stakeholders 25% Between 0% and 120% of target

The general short-term incentive opportunity for each GEB member is outlined in the diagram below. Each GEB memberʼs target short-term incentive is generally equivalent to 50% of basic salary. Underperformance can result in a lower payout, or none at all, if performance is below a certain threshold. Outperformance can result in a greater payout, up to a maximum of 90% of basic salary.

In 2015, the EBIT targets of the Kuoni Group, the Global Travel Distribution Division and VFS Global were exceeded. The Global Travel Services Division has not met its

2015.kuoni-report.com financial target. Personal performance on average fell short of the target.

As a result, Peter Meier received 116% of the target payout and the other GEB members an average payment of 109% of the targeted amount. This corresponds to 69% of the basic salary for Peter Meier and 50% for the other GEB members. The short-term incentive relating to the 2015 financial year will be paid to each GEB member in cash in 2016.

Long-Term Incentive In 2015, the GEB members received allocations under the Performance Share Plan (PSP) 2015. The PSP is designed to reward the GEB for its contribution to the Companyʼs long-term success and the creation of shareholder value. In April 2015, GEB members were allocated performance-based restricted shares linked to a percentage of their basic salary. This target percentage came to 60% of the overall basic salary. The calculation of the restricted awards was made on the basis of the volume-weighted average price of shares from mid-February to mid-March prior to allocation of the shares. The performance shares will vest based on the extent to which the performance targets are actually achieved after a three-year period.

The performance measures and the weightings that apply to the 2015 allocations are as follows:

– Free cash flow – weighting of 2/3 of the performance targets – Turnover – weighting of 1/3 of the performance targets

Kuoni Group Annual Report 2015 91 Corporate Governance

These performance measures are designed to align the long-term incentive with the Kuoni Groupʼs business strategy. Each performance measure has a threshold, target, stretch and maximum achievement level that is set by the TSC. These levels are set stringently and are designed to reward outstanding performance. Based on the achievement of the performance measures, the actual number of shares that vest at the end of the three-year performance period is between 0 and a maximum of 2.5 times the number of performance shares initially granted.

Performance Share Plan: Example

The BoD may determine under a clawback policy, that some or all of a GEB memberʼs performance-based restricted shares should be forfeited in certain circumstances, such as where the executive has failed to comply with the Kuoni Group Code of Conduct or caused or contributed to the need for a material restatement of financial results. This compensation component therefore remains recoverable for an extended period after the allocation, thereby further strengthening the sustainability of the compensation system. 2015.kuoni-report.com Upon termination by the employer (for good cause) or termination by the employee, unvested performance-based shares will lapse. In other cases, for example ordinary termination by the employer, death, disability or retirement, allocations which have not yet vested are partially converted based on the relevant length of service. There are different ongoing performance share plans with the following performance measures and performance factors:

Award year Performace measures Measuring/vesting period Payout performance factor 0.0-2.5 times the number of shares initially 2015 PSP Free cash flow, Turnover Three years granted 0.0-2.5 times the number of shares initially 2014 PSP Free cash flow, Turnover Three years granted 0.0-2.5 times the number of shares initially 2013 PSP Free cash flow, Turnover Three years granted

The Kuoni Group uses treasury shares or shares bought at market price on the open market to grant shares to the employees participating in the plan. This does not dilute the value of the shares of existing shareholders. The following table provides an overview of the total value of the restricted shares allocated to GEB members from 2009 to 2012, the performance factors achieved after three years, the value of the shares at time of vesting and the relevant share prices.

Kuoni Group Annual Report 2015 92 Corporate Governance

Value of shares Performance Share value at Share price at allocated on Share price at CHF 1'000 factor applied grant 1 grant vesting 2 vesting 2012 PSP grant / 2015 PSP vesting 1.2 3,227 CHF 273 4,534 CHF 319.5 2011 PSP grant / 2014 PSP vesting 0.8 3,680 CHF 410 2,850 CHF 397 2010 PSP grant / 2013 PSP vesting 0.5 3 2,441 CHF 272 1,567 CHF 297 2009 PSP grant / 2012 PSP vesting 1.0 2,133 CHF 272 2,600 CHF 331.5

1 These values differ from the allocation values disclosed in the 2009, 2010, 2011 and 2012 Annual Reports, as the 16% discount in view of the shares' restricted availability at the time of allocation is no longer applied. 2 This value reflects allocated shares and includes lapsed share awards following the departure of a GEB member from the Company. 3 For one GEB member a performance factor of 1.0 has been applied according to the applicable exit rules.

Pension payments The Kuoni Group has various forms of retirement benefit schemes that cover a large majority of the Companyʼs personnel according to the local regulations in each country. GEB members receive pension benefits.

Compensation to the Group Executive Board The tables in this section provide an overview of the total compensation of the GEB in 2014 and 2015, including basic salary, short-term incentive compensation for the respective financial year (paid out in April of the following year) and pension benefits. The value upon allocation from the RSP and PSP is also listed. It was calculated on the basis of the volume-weighted average price of shares from mid-February to mid- March prior to allocation of the shares.

The aggregate compensation of the GEB in 2015 amounted to CHF 11.8 million (2014: CHF 9.6 million). CEO Peter Meier was the GEB member with the highest total compensation in both 2015 and 2014 (aggregate compensation of CHF 3.0 million in 2015 and CHF 2.5 million in 2014).

2015.kuoni-report.com 2015 Group Executive Of which: Peter CHF 1'000 Board 1 2 Meier (CEO) Basic salary 4,103 944 Short-term incentive 2,300 654 Shares Award (RSP) 3 1,291 392 Shares Award (PSP) 4 2,106 548 Pension scheme contributions 1,104 329 Social security contributions 595 170 Other compensation amounts 5 293 6 Total 11,792 3,043

2014 Group Executive Of which: Peter CHF 1'000 Board 6 Meier (CEO) Basic salary 3,653 944 Short-term incentive 830 178 Shares Award (RSP) 7 1,273 392 Shares Award (PSP) 8 1,866 548 Pension scheme contributions 993 268 Social security contributions 541 140 Other compensation amounts 5 399 6 Total 9,555 2,476

Kuoni Group Annual Report 2015 93 Corporate Governance

1 Five members. Peter Meier left the GEB in November 2015. His compensation until the end of 2015 is included in the figures. Zubin Karkaria was appointed to the Kuoni Group CEO in November 2015. The compensation increase paid to him from the day of his appointment to the GEB up to the end of 2015 is therefore included in the figures. Ivan Walter was appointed to the GEB in January 2015. The compensation paid to him from the day of his appointment to the GEB up to the end of 2015 is therefore included in the figures. The figures also include the contractual compensation of Stefan Leser up to the end of his employment contract in November 2015. 2 Amounts owed to former GEB members are outlined in the “Description of termination arrangements for Group Executive Board members” of this report. 3 Members of the GEB were granted a total of 3 833 shares under the RSP in 2015. The shares were assigned a market value of CHF 336.72, which corresponds to the volume- weighted average value of the shares from mid-February to mid-March 2015. 4 Members of the GEB were granted a total of 6 255 shares under the PSP in 2015. The shares were assigned a market value of CHF 336.72, which corresponds to the volume- weighted average value of the shares from mid-February to mid-March 2015. 5 Allowances and other benefits including compensation in connection with company car entitlements. 6 Five members 7 Members of the GEB were granted a total of 3 336 shares under the RSP in 2013. The shares were assigned a market value of CHF381.45, which corresponds to the volume- weighted average value of the shares from mid-February to mid-March 2014. 8 Members of the GEB were granted a total of 4 892 shares under the PSP in 2013. The shares were assigned a market value of CHF 381.45. The market value corresponds to the volume-weighted average value of the shares from mid-February to mid-March 2014.

Contractual termination clauses of Group Executive Board members Employment contracts for GEB members contain a notice period of 12 months. There is no entitlement to severance payments. No additional compensation or benefits are provided in the event of a change of corporate control. Special rules apply for vesting equity-based compensation if there is a change of control, such that allocations will not vest at a rate greater than 100% of the original allocation.

Description of termination arrangements for Group Executive Board members Peter Meierʼs employment relationship with the Kuoni Group was terminated in November 2015. His employment contract ends on 30 November 2016. The terms of Mr Meierʼs contract include a twelve-month notice period, during which a non- competition clause applies with no extra compensation. In addition to the amounts shown in the compensation table above, Mr Meier shall receive the following benefits in accordance with his employment contract:

– Basic salary of CHF 80 192 paid monthly from January to November 2016 and other compensation amounts (allowances and other benefits including compensation in relation to company car entitlements), in total CHF 917 612.

2015.kuoni-report.com – Payment of the short-term incentive for the period from January to November 2016. The amount is calculated based on the prorated target value for this period and the average payout ratio of the last three years, which equals an amount of CHF 438 000. – Grants under the PSP in 2013, 2014 and 2015 will be exchanged for shares as per the respective plan rules for 2016, 2017 and 2018. – Grants under the RSP in 2013, 2014 and 2015 will be exchanged for shares as per the respective plan rules.

Thomas Peyerʼs employment relationship with the Kuoni Group was terminated in August 2015. His employment contract ends on 31 August 2016. The terms of Mr Peyerʼs contract include a twelve-month notice period, during which a non-competition clause applies with no extra compensation. In addition to the amounts shown in the compensation table above, Mr Peyer shall receive the following benefits in accordance with his employment contract:

Kuoni Group Annual Report 2015 94 Corporate Governance

– Basic salary of CHF 46 667 paid monthly from January to August 2016 and other compensation amounts (allowances and other benefits including compensation in relation to company car entitlements), in total CHF 408 336. – Payment of the short-term incentive for the period from January to August 2016. The amount is calculated based on the prorated target value for this period and the average payout ratio of the last three years, which equals an amount of CHF 157 000. – Grants under the PSP in 2013, 2014 and 2015 will be exchanged for shares as per the respective plan rules for 2016, 2017 and 2018. – Grants under the RSP in 2013, 2014 and 2015 will be exchanged for shares as per the respective plan rules.

Other Group Executive Board compensation, fees and loans as well as persons associated with them No other compensation or fees were accrued for or paid to any current or former member of the GEB during 2015. As at 31 December 2015, the Kuoni Group had not granted any collateral, loans, advances or credits to Executive Board members or to persons associated with them, nor are there any outstanding. Furthermore, no compensation was granted to persons associated with Group Executive Board members that was not comparable and competitive to the market. No options were allocated during the year under review.

Compensation of Board of Directors Compensation of members of the BoD consists of fixed compensation and social security contributions in accordance with Swiss regulations. Half of the fixed compensation is paid in cash, and half in shares, which are subject to a three-year blocking period. The issue price of the shares concerned is determined again each year and corresponds to the final share price on the trading day before the grant date. The shares are allocated one day after the distribution of the dividend.

2015.kuoni-report.com The members of the BoD are also entitled to travel concessions, which primarily correspond to those for employees in Switzerland. The amount per Board member and role is specified in the “Compensation Elements of the Board of Directors of Kuoni Travel Holding” regulations of 20 August 2014. The respective compensation of the individual functions on the BoD is outlined in the table below (actual compensation paid differs, for example, due to mandatory social security contribution calculations).

Total compensation CHF 1'000 (net) Role Chairman of the Board of Directors 500 Chairman of the Audit Committee 250 Chairman of the Nomination Committee 100 1 Chairman of the Compensation Committee 100 1 Member of the Board of Directors 150

1 Under the assumption that the Nomination and the Compensation Committee is headed by the same person.

The compensation of Kuoni Groupʼs BoD is periodically benchmarked to ensure that compensation is comparable and competitive relative to the market. In 2015, PricewaterhouseCoopers was commissioned to conduct a comparison and analysis of the structure and amount of the compensation of the BoD. The compensation awarded to members of the BoD is confirmed annually by the BoD.

Kuoni Group Annual Report 2015 95 Corporate Governance

The aggregate compensation of the BoD members in 2015 amounted to CHF 1.7 million (2014: CHF 1.7 million). The Board member with the highest compensation in both 2015 and 2014 was the Chairman Heinz Karrer (CHF 0.6 million in 2015 and CHF 0.6 million in 2014).

Fixed Fixed compensation net compensation net Social security (cash) (shares) 1 contributions 2 Total CHF 1'000 CHF 1'000 Number of shares CHF 1'000 CHF 1'000 2015 Heinz Karrer, Chairman 250 250 806 60 560 Jae Hyun (Jay) Lee 75 75 242 19 169 John Lindquist 75 75 242 15 165 Selina Neri 75 75 242 19 169 Adrianus (Adriaan) Nühn 100 100 323 25 225 David Schnell 125 125 403 25 275 Annette Schömmel 75 75 242 19 169 Total 775 775 2,500 182 1,732

2014 3 Heinz Karrer, Chairman 4 250 250 625 60 560 Jae Hyun (Jay) Lee 75 75 188 19 169 John Lindquist 75 75 188 19 169 Adrianus (Adriaan) Nühn 5 100 100 250 25 225 David Schnell 125 125 313 28 278 Annette Schömmel 75 75 188 19 169 Raymond D. Webster 75 75 188 14 164 Total 775 775 1,940 184 1,734

1 These shares were valued at a market price of CHF 310.5 (2014: CHF 400.4). This corresponds to the average share price of the last ten trading days in March 2014. Further, the values shown in the table do not include any accrued value for allocations made and reported in previous financial years. 2 The social security contributions in the table include both employer and employee contributions.

2015.kuoni-report.com 3 In March 2014, the BoD decided to distribute the fixed compensation component, which is normally paid out in January following the Annual General Meeting of Shareholders, henceforth in December following the Annual General Meeting of Shareholders. As a result, the members of the BoD received their fixed compensation for the period AGM 2013 to AGM 2014 (distributed in January 2014) as well as their compensation for the period AGM 2014 to AGM 2015 (distributed in December 2014). The compensation paid in January 2014 totalling CHF 0.865 million and the corresponding employee and employer contributions of CHF 0.1 million are not included in the table. 4 Elected Chairman at the Annual General Meeting of 25 April 2014. 5 Appointed Chairman of the Nomination and the Compensation Committee on 25 April 2014.

Other Board of Directors compensation, fees and loans as well as persons associated with them No compensation was paid in 2015 to any member of the BoD who had left in the prior period or earlier. As at 31 December 2015, the Kuoni Group had not granted any collateral, loans, advances or credits to members of the BoD or to persons associated with them, nor are there any outstanding. Furthermore, no compensation was granted to persons associated with members of the BoD that was not comparable and competitive to the market. No options were allocated in the year under review.

Kuoni Group Annual Report 2015 96 Corporate Governance

Ownership of shares Group Executive Board As at 31 December 2015, the members of the GEB held Kuoni shares and the conditional right to receive shares under deferred compensation and/or long-term incentive plans, as shown in the table below. The total number of shares held amounts to less than 0.5% of Kuoniʼs total shares outstanding. The total number of unvested shares held amounts to less than 1.0% of Kuoniʼs total shares outstanding (assuming GEB members receive their target amount of shares under the PSP and RSP). No other equity instruments are held by GEB members other than those outlined in the table below.

Unvested as at 31 Dec 2015 Performance Restricted Performance Restricted Performance Restricted shares shares shares shares shares shares conditionally conditionally conditionally conditionally conditionally conditionally Total number granted under granted under granted under granted under granted under granted under of shares held Voting rights the 2013 PSP the 2013 RSP the 2014 PSP the 2014 RSP the 2015 PSP the 2015 RSP As at 31 Dec 2015 Peter Meier 1 1,000 0.03% 1,790 422 1,437 685 1,628 1,165 Zubin Karkaria 2 2,655 0.07% 903 193 720 319 1,304 444 Stefan Leser 3 n.a. n.a. 1,286 0 974 435 0 0 Thomas Peyer 1,000 0.03% 176 67 787 350 995 669 Rolf Schafroth 3,308 0.08% 1,286 287 974 434 1,104 739 Ivan Walter 4 800 0.02% 311 69 551 257 1,224 816 Total 8,763 0.23% 5,752 1,038 5,443 2,480 6,255 3,833

Unvested as at 31 Dec 2014 Performance Performance Restricted Performance Restricted shares shares shares shares shares conditionally conditionally conditionally conditionally conditionally Total number granted under granted under granted under granted under granted under of shares held Voting rights the 2012 PSP the 2013 PSP the 2013 RSP the 2014 PSP the 2014 RSP As at 31 Dec 2014 Peter Meier 2,202 0.04% 2,491 1,790 843 1,437 1,028 Zubin Karkaria 2,284 0.05% 764 903 387 720 479 2015.kuoni-report.com Leif Vase Larsen 5 n.a. n.a. 1,346 0 0 0 0 Stefan Leser 3 1,000 0.02% 2,271 1,286 287 974 652 Thomas Peyer 6 361 0.01% 330 176 135 787 525 Peter Rothwell 5 n.a. n.a. 3,443 1,898 0 0 0 Rolf Schafroth 1,277 0.03% 2,271 1,286 574 974 652 Total 7,124 0.15% 12,916 7,339 2,226 4,892 3,336

1 Member of the GEB who left the Company during 2015. 2 Appointed to CEO Kuoni Group in November 2015. 3 Member of the GEB who left the Company during 2014. 4 New member of the GEB since January 2015 5 Member of the GEB who left the Company during 2013. 6 New member of the GEB since 2014. The 2014 number shows the full-year allocation.

Board of Directors As at 31 December 2015, the Chairman and other members of the BoD held 11 713 Kuoni shares. This amounts to less than 0.5% of Kuoniʼs total shares outstanding. The table below shows the number of Kuoni shares held by each member of the BoD. No party related to a member of the Board held any Kuoni shares. In case of a change of control, all blocking periods will be suspended. No other share instruments are held by members of the BoD other than those outlined in the table below.

Kuoni Group Annual Report 2015 97 Corporate Governance

Total number of shares Blocking periods for total number of shares held As at 31 Dec As at 31 Dec Blocking Blocking Blocking 2015 Voting rights 2014 Voting rights Unblocked period 2016 period 2017 period 2018 Heinz Karrer, Chairman 1 3,349 0.08% 2,543 0.05% 1,514 404 625 806 Jae Hyun (Jay) Lee 921 0.02% 679 0.01% 227 264 188 242 John Lindquist 1,280 0.03% 1,038 0.02% 586 264 188 242 Selina Neri 2 242 0.00% 0 0.00% 0 n.a. n.a. 242 Adrianus (Adriaan) Nühn 1,064 0.03% 741 0.01% 227 264 250 323 David Schnell 3,210 0.08% 2,807 0.06% 2,055 439 313 403 Annette Schömmel 1,647 0.04% 1,405 0.03% 953 264 188 242 Raymond D. Webster 3 n.a. n.a. 2,025 0.04% n.a. 264 188 n.a. Total 11,713 0.28% 11,238 0.22% 5,562 2,163 1,940 2,500

1 Elected Chairman of the BoD at the Annual General Meeting in April 2014. 2 Elected member of the BoD at the Annual General Meeting in April 2015. 3 Was member of the BoD until the Annual General Meeting in April 2015 Report of the Statutory Auditor 2015.kuoni-report.com

Kuoni Group Annual Report 2015 98 Corporate Governance Report of the Statutory Auditor

ReportReport of of thethe Statutory Statutory Auditor to the General Auditor Meeting of Shareholders of Kuoni Travel Holding Ltd., Zurich. Report of the Statutory Auditor to the General Meeting of Shareholders of Kuoni Travel Holding Ltd., Zurich. Report of the statutory auditor on the remuneration report We have audited the remuneration report dated 8 March 2016 of Kuoni Travel Holding Report of the statutory auditor on the remuneration report Ltd. for the year ended 31 December 2015. The audit was limited to the information We have audited the remuneration report dated 8 March 2016 of Kuoni Travel Holding according to articles 14 – 16 of the Ordinance against Excessive compensation in Stock Ltd. for the year ended 31 December 2015. The audit was limited to the information Exchange Listed Companies contained in the sections of the compensation report according to articles 14 – 16 of the Ordinance against Excessive compensation in Stock marked blue. Exchange Listed Companies contained in the sections of the compensation report marked blue. Responsibility of the Board of Directors The Board of Directors is responsible for the preparation and overall fair presentation Responsibility of the Board of Directors Theof the Board remuneration of Directors report is responsible in accordance for the with preparation Swiss law and theoverall Ordinance fair presentation against ofExcessive the remuneration compensation report in in Stock accordance Exchange with Listed Swiss Companies law and the (Ordi Ordinancenance). The against Board Excessiveof Directors compensation is also responsible in Stock for Exchangedesigning Listedthe remuneration Companies system(Ordinance). and defining The Board ofindividual Directors remuneration is also responsible packages. for designing the remuneration system and defining individual remuneration packages. Auditorʼs Responsibility AuditorʼsOur responsibility Responsibility is to express an opinion on the accompanying remuneration report. OurWe conductedresponsibility our is audit to express in accordance an opinion with on Swiss the accompanying Auditing Standa remunerationrds. Those report. Westandards conducted require our that audit we in comply accordance with ethicalwith Swiss requirements Auditing Standa and planrds. and Those perform the standardsaudit to obtain require reasonable that we complyassurance with about ethical whether requirements the remuneration and plan and report perform complies the auditwith Swiss to obtain law reasonableand articles assurance 14 – 16 of aboutthe Ordinance. whether the remuneration report complies withAn Swiss audit law involves and articles performing 14 – 16procedures of the Ordinance. to obtain audit evidence on the disclosuresAn audit madeinvolves in theperforming remuneration procedures report towith obtain regard audit to evidenccompensation,e on the loans and disclosurescredits in accordance made in the with remuneration articles 14 –report 16 of withthe Ordinance. regard to comp The proceduresensation, loans selected and creditsdepend in on accordance the auditorʼs with judgment, articles including14 – 16 of the the assessment Ordinance. ofThe the procedures risks of material selected dependmisstatements on the auditorʼsin the remuneration judgment, including report, whether the assessment due to fraud of the or riskserror. of This material audit also includes evaluating the reasonableness of the methods applied to value 2015.kuoni-report.com misstatements in the remuneration report, whether due to fraud or error. This audit alsocomponents includes ofevaluating remuneration, the reasonableness as well as assessing of the methodsthe overall appl presentationied to value of the componentsremuneration of report. remuneration, as well as assessing the overall presentation of the remunerationWe believe report. that the audit evidence we have obtained is sufficient and appropriate to provideWe believe a basis thatfor our the opinion. audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion OpinionIn our opinion, the remuneration report for the year ended 31 December 2015 of Kuoni InTravel our opinion,Holding theLtd. remuneration complies with report Swiss for law the and year articles ended 14 31 – D16ecember of the Ordinance. 2015 of Kuoni Travel Holding Ltd. complies with Swiss law and articles 14 – 16 of the Ordinance. KPMG AG KPMG AG

Martin Schaad Martin Schaad Tobias Wölfle Licensed Audit Expert Tobias Wölfle AuditorLicensed in Audit Charge Expert Licensed Audit Expert Auditor in Charge Licensed Audit Expert

Zurich, 8 March 2016

Kuoni Group Annual Report 2015 99 Human Resources 2015.kuoni-report.com

Kuoni Group Annual Report 2015 100 Human Resources

Human Resources

Focus on core business demands rethinking For Kuoni Group, with all the major changes that have taken place, 2015 was a milestone year. Kuoni focused its activities on its global businesses, each with leading positions. For Human Resources Management, supporting these organisational changes has been one of the greatest challenges of 2015.

Efficiency improvements in corporate functions Following the completion of the sale of its traditional tour operating activities, Kuoni Groupʼs Board of Directors has given intensive consideration to the future of the Group. It is now focused on services for the global travel industry and governments. Since Kuoni Group is now significantly smaller, support and corporate functions are being rightsized to optimise operational costs without compromising expected service delivery. Supporting this initiative on efficiency improvements, for support and corporate functions, will continue to remain in focus for HR in 2016.

Restructuring of the Global Travel Services (GTS) Division

2015.kuoni-report.com Supporting the ongoing restructuring of Kuoniʼs Global Travel Services (GTS) Division, with the aim of rapidly adjusting it to changed market conditions has been another important topic on Kuoni Groupʼs 2015 Human Resources agenda.

Organisational design principles and guidelines which were aligned to the business strategy and vision in the current and future context were designed and applied. Structure complexities were reduced by reviewing of spans of control, grade levels, roles, interdependency of functions. Outsourcing and relocating of activities, focusing on key and profitable market segments all formed integral part of the process.

The communicated goal of reducing 350 full-time equivalents at the Global Travel Services Division is being achieved through natural attrition and redundancies. All reductions are being made in a socially and statutorily responsible and compliant manner and in close consultation with the relevant employee representatives.

Over all the aim is to deliver a focused and accountable organisation that delivers cost- saving targets without losing crucial knowledge and skills.

Further development of the Global HR Shared Services function While there is a strong demand for Human Resources to support restructuring activities in the divisions, as well as in the remaining corporate support functions, the Human Resources function itself continued to work on improving its own efficiency.

Kuoni Group Annual Report 2015 101 Human Resources

Cross-divisional synergies are leveraged by migrating administrative support for employees of additional units into the Global HR Shared Service Centre organisation.

In 2015 HR employee services for KDM Middle East, VFS Australasia, VFS Africa and VFS Europe have been successfully migrated to the HR Shared Service Centre organisation in India. By the end of 2015, 18 employees in the HR Shared Service Centre organisation India were supporting a total of 5,790 employees across different divisions worldwide.

2015 2014 2013 2012 2011 Total HC covered by HR SSC India 5,790 4,985 4,242 4,317 4,315 Total HC of HR SSC India 18 15 15 16 18

Talent management remains the abiding focus

2014 Empower Survey: Kuoni Group is always interested in learning employeesʼ thoughts and opinions regarding further development of the company, its corporate culture and employeesʼ working environment. The global employee survey conducted regularly for this purpose had a response rate of 85% in 2014 (2012: 78%, 2010: 71%).In order to increase employee satisfaction and consequently also the competitiveness of Kuoni Group, department-specific measures based on the 2014 survey results were developed in conjunction with employees and implemented in 2015.

Talent management as a component of strategic management becomes increasingly important in order to ensure a companyʼs long-term success. At Kuoni Group, the yearly

2015.kuoni-report.com process where talent reviews are performed and risks assessed, is the Individual Potential Discussion (IPD) process. In general it offers a good visibility of talent and risk within the Organisation, Division and Function. 2014ʼs EMPOWER Survey results suggested that while we may have a good process, there is not sufficient follow-through in terms of talent development. As a result Kuoni has decided to implement talent reviews covering both Organisational Talent Risk reviews (OTR), and talent discussions, “Talking Talents.”

2014 Empower Survey:

The purpose of the OTR is to enable the organisation to reach its strategic objectives and to mitigate operational risks by ensuring a ready, credible and high-quality internal talent pipeline. This will fill both expected and unexpected vacancies. In the OTR reviews the focus is on positions where we do not have sufficient succession plans in place. The divisions/functions pro-actively drive their succession plans together with HR through individual career development of identified successors.

Effective talent discussions and assessments enable us to identify the talents and their potential. This ensures a clear fit between skills, capabilities, aspirations and roles. Effective and efficient development of employee talent keeps the organisationʼs employee base engaged and ensures long-term retention.

Kuoni Group Annual Report 2015 102 Corporate Responsibility 2015.kuoni-report.com

Kuoni Group Annual Report 2015 103 Corporate Responsibility

Corporate Responsibility

Statement from the CEO

“Kuoni Group is committed to the United Nations Global Compact, now and in the future; we support its philosophy, values and principles. In Switzerland, Kuoni is engaged in the United Nations Global Compact Network. As part of our due diligence, we are dedicated to delivering our services in a manner that respects people and the environment. In light of the new company structure, Kuoni reassessed the materiality of CR topics for the Group as well as for each Division in 2015 through a broad internal and external stakeholder survey.”

Zubin Karkaria, CEO Kuoni Group 2015.kuoni-report.com Introduction In this chapter, Kuoni informs its stakeholders about its continued engagement during 2015 in the four areas of commitment defined by the United Nations Global Compact: human rights, labour, environment and anti-corruption. This is Kuoni Groupʼs eighth official report on Corporate Responsibility (CR). The last one was published as part of the 2014 Annual Report. All CR reporting, key performance indicators and targets are based on the latest guidelines of the Global Reporting Initiative (GRI G4). Kuoniʼs GRI Index 2015 is available online.

Oekom Research, one of the worldʼs leading rating agencies in the field of sustainable investments with an investment volume of 600 billion Euro, has re-evaluated Kuoni Groupʼs sustainability performance in January 2016. The Kuoni Group has again been awarded the rating C+ in February 2016, which puts Kuoni in the “Prime” category. This means that Kuoni in its new structure still qualifies as an investment from an ecological and social point of view. Only three of the 49 analysed companies in the leisure sector belong to the “Prime” category. Of the “Prime”, Kuoni was rated as the “most sustainable travel company”.

Human rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights. As declared in its Statement of Commitment on Human Rights, Kuoni strives to ensure human rights criteria are properly fulfilled in line with the United Nations Guiding Principles on Business and Human Rights (UNGP).

Kuoni Group Annual Report 2015 104 Corporate Responsibility

Global Giving programme: The money raised through Kuoniʼs Global Giving programme in 2015 has been matched by the company with 25,000 EUR, bringing the total amount raised to 53,215 EUR. Kuoni has donated these funds to its global charity partner – ECPAT International – and local charities. ECPAT International was selected to be Kuoniʼs global charity partner after a worldwide employee vote in 2014. ECPAT International comprises a global network of organisations working together in 75 countries to eliminate child sexual exploitation including child sex tourism.

Recognising the importance of sector-wide collaboration, Kuoni is co-founder and active board member of the open multi-stakeholder platform, the Roundtable Human Rights in Tourism. In 2015, Kuoni helped develop recommendations for implementation of labour and social standards for driving personnel in the tourism sector. Kuoni is also part of a working group of the Roundtable Human Rights in Tourism which focuses on communities affected by tourism development in Sri Lanka.

Principle 2: Businesses should make sure that they are not complicit in human rights abuses. Kuoni has been appointed as the official UEFA EURO 2016 Accommodation Agency in order to handle accommodation and other services for a selected number of key target groups related to UEFA EURO 2016. In a joint effort, the Kuoni/UEFA Supplier Code of Conduct was introduced to all accommodation suppliers of the UEFA EURO 2016 in 2015. A monitoring system was set up to assess the sustainability performance of Kuoni/UEFA EURO 2016 suppliers by way of an online self-assessment.

Statemen of Commitment on Human Rights

Statement of Commitment on the environment 2015.kuoni-report.com

Kuoniʼs e-learning course for product and procurement staff has been launched in 2015 with the aim to raise internal awareness and understanding of the Kuoni Supplier Code of Conduct and the Sustainable Excursion Guidelines and to provide guidance on how to source ethically, how to consider human rights aspects and how to develop sustainable excursions.

Kuoni Supplier Code of Conduct

Sustainable Excursion Guidelines

Labour Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. In its Statement of Commitment on Human Rights, Kuoni acknowledges the right to collective bargaining and freedom of association as outlined in the ILO (International Labour Organisation) Declaration on Fundamental Principles and Rights at Work. Through its Supplier Code of Conduct, Kuoni expects its suppliers to recognise the freedom of association and the right to collective bargaining.

Kuoni Group Annual Report 2015 105 Corporate Responsibility

Principle 4: Businesses should uphold the elimination of all forms of forced and compulsory labour. Kuoniʼs Supplier Code of Conduct forbids all forms of forced labour. Through its human rights due diligence process, Kuoni assesses where forced and compulsory labour occurs in the locations it operates and if there is any risk for Kuoni to be contributing or complicit in cases of modern slavery. Kuoni identifies preventive measures to protect especially those groups that are particularly vulnerable. Special attention is paid to protecting children from sexual exploitation in tourism, and fights child prostitution as a specific form of forced labour and modern slavery.

The Code: Kuoni has been an active member of The Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism (The Code) since 2006 and is represented on its board. As a member, Kuoni must inform its customers about child protection, contractually oblige its partners to comply with ethical guidelines, and show its partner hotels and their employees how to respond if they come across any cases of sexual exploitation of children in the course of their work.

Principle 5: Business should uphold the effective abolition of child labour. The prohibition of child labour is a prerequisite for business relationships between Kuoni and its suppliers. This is set out clearly in the Supplier Code of Conduct. In 2015, Kuoni initiated a collaborative initiative with UNICEF and other businesses to assess the impact travel and tourism might have on childrenʼs rights in Vietnam. Through meaningful consultations on the ground, this pilot project assessed potential impacts, including also child labour. Based on the findings, recommendations will be provided to the industry in 2016.

Principle 6: Businesses should uphold the elimination of discrimination in respect of employment and occupation. The Kuoni Code of Conduct outlines the companyʼs commitment to ensuring that within 2015.kuoni-report.com its multicultural teams and working environment nobody is discriminated against because of their race, religion, beliefs, nationality, sexual orientation, gender, age or disability. Kuoni believes that diversity and inclusion are business-critical to build the right talent pool. Thus, Kuoni bases the employment relationship – including recruitment and hiring, compensation, working conditions and terms of employment, access to training, promotion, and termination of employment or retirement – on the principle of equal opportunity and fair treatment. Kuoni is proud to already have a very diverse workforce, particularly in terms of nationality and is continuously working on improving gender diversity in senior leadership positions.

Code of Conduct EN Code of Conduct DE

Environment Principle 7: Businesses should support a precautionary approach to environmental challenges. Kuoniʼs Statement of Commitment on the Environment is based on its own Code of Conduct and the precautionary principle. The company has therein committed that where there are threats of serious or irreversible environmental damage; lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. This is also applied in business, especially related to animals featured in excursions as further outlined in the companyʼs Sustainable Excursion Guidelines, which rely on the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Kuoni Group Annual Report 2015 106 Corporate Responsibility

Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility. Kuoni reports its environmental impact and carbon footprint to the Carbon Disclosure Project (CDP) each year. The CDP is an international initiative, which is led by 822 institutional investors with a combined value of USD 95 trillion. Kuoni was named by the CDP as Sector Leader in the Germany, Austria and Switzerland region in 2015. A Sector Leader company is one that displays a high level of transparency on climate protection (carbon footprint, target setting, and emission reductions etc.) through its actions, and/or reported data, compared to other companies within the industry. It also shows a companyʼs commitment to combatting climate change and increasing the accuracy of its environmental data.

Environmental management system processes have enabled VFS Global Services reduce its environmental impacts and increase its operating efficiency with the help of organisation-wide initiatives and drive. VFS Global Services has successfully completed three years of ISO 14001 certification and will undergo recertification in year 2016. At the 17th World Congress on Environment Management held in New Delhi, India on 11 July 2015, VFS Global garnered the prestigious Golden Peacock Environment Management Award within the services category. Environment-friendly practices and processes imbibed by the company, which included efforts such as optimal energy usage at the workplace, investment in carbon offsetting projects and various social outreach endeavours that comprised awareness campaigns and volunteering efforts, contributed to this win.

Principle 9: Businesses should encourage the development and diffusion of environmentally friendly technologies. Kuoni aims to implement technical solutions and operational improvements that help reduce water consumption by suppliers. A comprehensive handbook and award system was previously developed for Thai hotels, giving them the tools they need to promote

2015.kuoni-report.com efficient water management. Once participants successfully implemented the processes described in the handbook, they could apply for the Water Champion Award. The award recognises hotels that have implemented a sound sustainable water management system and have supported local communities through access-to-water projects. Eleven from seventeen participating hotels were recognised in November 2015 with the prestigious award. The participating hotels saved a total amount of water equivalent to 58 Olympic-sized swimming pools, equivalent to average water needs of 32,200 people for a month. One hotel in Phuket managed to save enough water through the installation of rainwater harvesting tanks that it no longer required freshwater delivery by 35 trucks each month.

Anti-corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. Commitment and policy: Kuoni is committed to doing business ethically and believes that bribery and corruption are wrong and not acceptable. Kuoniʼs Code of Conduct obliges all employees to comply with all applicable laws, rules and regulations as well as with all internal directives and guidelines. The Code of Conduct states that gifts and hospitality may not be given, offered or received with the intent or prospect of influencing decision-making or other conduct. The Code also refers to Kuoniʼs Group Anti-Corruption Regulation for further guidance, which has been issued by Kuoniʼs Board of Directors. The VFS Global Services Division has issued its own Anti- Corruption Regulation in line with the Group Regulation.

Kuoni Group Annual Report 2015 107 Corporate Responsibility

Following an external analysis, Kuoni introduced additional anti-corruption measures in 2015. Previously, the General Counsel was responsible for the Group compliance functions, but Kuoni recently created a new Group Compliance Officer (GCO) function. The GCO is responsible for drafting and revising the corporate compliance concepts and regulations relating to the Group Code of Conduct, anti-corruption, sanctions, money laundering and the fight against fraud as well as for designing training documents, presenting training courses and monitoring compliance through spot checks. The GCO maintains a whistle-blower hotline and is responsible for the Group- wide fight against fraud. Corresponding regulations approved by the Board of Directors were issued to centrally regulate the fraud combating processes and provide a comprehensive definition of fraud that also includes all cases of corruption.

Controls: All business units must monitor compliance with the internal directive in a suitable manner. Internal Audit and the GCO carry out spot checks to monitor the effectiveness and observance of the directive. The findings are reported to the Audit Committee and, if the GCO did not participate in the audits, to the GCO. Kuoni encourages all employees to report breaches of the internal directives. Reports can be submitted to the GCO confidentially or anonymously (whistle-blowing). 2015.kuoni-report.com

Kuoni Group Annual Report 2015 108 Kuoni Group Financial Report 2015 2015.kuoni-report.com

kuoni.com Financial Report Kuoni Group 2015.kuoni-report.com

Kuoni Group Annual Report 2015 110 Financial Report Kuoni Group

Five-year summary of key data

CHF million 2015 2014 1 2013 2 2012 2 2011 2 Turnover Global Travel Distribution 1,979.3 1,933.6 1,801.9 1,702.5 1,070.1 Global Travel Services 1,054.8 1,169.6 1,284.4 1,280.5 1,244.9 VFS Global 316.5 270.8 244.1 205.2 176.4 Less turnover elimination between segments –1.9 –2.0 n.a. n.a. n.a. Total 3,348.7 3,372.0 n.a. n.a. n.a.

EBITA Global Travel Distribution 66.7 63.2 74.5 68.4 63.3 Global Travel Services –24.7 1.2 29.0 29.7 32.6 Acquisition and integration cost 0.0 0.0 –4.7 –5.3 –20.2 VFS Global 53.9 52.5 40.2 35.5 41.9 Corporate 28.1 –11.2 –23.7 –21.8 –52.6 Total 124.0 105.7 115.3 106.5 65.0

EBIT 2015.kuoni-report.com Global Travel Distribution 48.0 42.0 53.0 47.3 43.5 Global Travel Services –48.8 –6.9 20.7 21.4 23.6 Acquisition and integration cost 0.0 0.0 –4.7 –5.3 –20.2 VFS Global 53.9 52.5 40.2 35.5 41.9 Corporate 28.1 –11.2 –23.7 –21.8 –52.6 Total 81.2 76.4 85.5 77.1 36.2

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 2 Presentation according to the new management structure due to the disposal of all outbound tour operating activities and the inbound business activities in India.

Kuoni Group Annual Report 2015 111 Financial Report Kuoni Group

CHF million 2015 2014 2013 2012 2011 Net result –294.2 67.4 69.2 –14.4 33.3 Investments in tangible fixed assets and intangible assets 38.2 66.0 46.1 58.4 57.2 Depreciation 28.9 49.0 48.4 51.5 54.1 Amortisation 26.3 36.5 37.3 38.8 38.7 Cash flow from operating activities 112.9 64.0 160.4 106.4 110.5 Net debts 54.5 273.8 240.5 291.2 306.4

Current assets 773 1,038 971 927 923 Non-current assets 856 1,381 1,422 1,475 1,576 Current liabilities 808 1,340 1,313 1,539 1,309 Non-current liabilities 291 300 301 164 415 Equity 530 779 779 699 775 Equity ratio 32.5% 32.2% 32.6% 29.1% 31.0% Total assets 1,629 2,419 2,393 2,402 2,499

Invested capital 1 655 958 950 984 1,233 Return on invested capital (ROIC) 2 10.0% 6.6% 13.0% 2.8% 3.3% Weighted average cost of capital (WACC) 7.5% 7.5% 7.5% 8.5% 8.5% Kuoni Economic Profit (KEP) 3 16.2 –8.5 52.1 –56.6 –47.4

Average number of personnel (FTE) 7,968 11,728 11,621 12,279 11,048 Global Travel Distribution 1,489 1,381 1,332 1,338 883 Global Travel Services 2,820 2,973 2,092 2,178 1,395 VFS Global 3,561 3,009 2,666 2,573 2,155 Corporate 98 92 131 115 149 Discontinued Operations n/a 4,273 5,400 6,075 6,466

The data presented are based on the respective consolidated financial statements. Any changes made to Kuoni Group accounting policies as a result of changes to International Financial Reporting Standards are not retroactively applied. 1 Invested capital is the average annual total of all net current assets, tangible fixed assets, goodwill, other intangible assets and other net assets (excluding interest-bearing assets and liabilities). 2 Return on Invested Capital (ROIC) is defined as net operating profit after tax (NOPAT) as a proportion of average invested capital. NOPAT is defined as earnings before interest and taxes (EBIT) less income dependent taxes. 3 Kuoni Economic Profit or KEP is defined as net operating profit after tax (NOPAT) less the cost of capital invested in operations. The cost of capital invested in operations is determined by multiplying the average invested capital by the weighted average cost of capital (WACC) of the Kuoni Group. The cost of capital invested for GTA was calculated in 2011 for the eight-month period following its acquisition on 1 May 2011. 2015.kuoni-report.com

Kuoni Group Annual Report 2015 112 Financial Report Kuoni Group

CHF 2015 2014 2013 2012 2011 Cash flow (net cash from operating activities) Per registered share A 5.78 3.31 8.37 5.57 6.41 Per registered share B 28.89 16.57 41.83 27.86 32.05

Net result Per registered share A –15.10 3.44 3.55 –0.84 1.84 Per registered share B –75.51 17.20 17.77 –4.19 9.22

Equity Per registered share A 27.07 40.10 40.39 36.17 44.43 Per registered share B 135.37 200.48 201.96 180.84 222.14

Withholding tax-free distribution against reserves from capital contributions Per registered share A 5 0.00 4 1.50 1.50 0.60 0.60 Per registered share B 5 0.00 4 7.50 7.50 3.00 3.00

Total distribution 5 0 4 6 7 29,379,000 29,006,520 11,520,336 11,472,696

Pay-out ratio 0.0% 7 43.7% 42.3% n.a. 34.4%

Yield (at year-end rate) 0.00% 2.49% 1.86% 1.09% 1.33%

Registered share A (nominal value CHF 0.20) Number outstanding 1,249,500 1,249,500 1,249,500 1,249,500 1,249,500 Number entitled to dividend 1,249,500 1,249,500 1,249,500 1,249,500 1,249,500 Stock market prices not listed not listed not listed not listed not listed

Registered share B (nominal value CHF 1.00) Number outstanding 3,748,500 3,748,500 3,748,500 3,748,500 3,748,500 Number entitled to dividend 3,669,868 7 3,619,553 3,593,253 3,590,212 3,574,332 Stock market prices high 351 425 410 341 439 low 173 218 263 217 213 at year-end 280 301 403 274 225 2015.kuoni-report.com Annual trading volume in CHF million 1,241 1,289 892 758 839

Stock market capitalisation as at 31 December in CHF million 1,118 1,205 1,610 1,096 900

4 Proposal of the Board of Directors to the General Meeting of Shareholders. Subject to definitive approval by the General Meeting of Shareholders. 5 Distribution to shareholders of a withholding tax-free appropriation from the capital contribution reserve. 6 The company will waive its entitlement to such payments from the capital contribution reserve for the treasury shares held on the distribution date which are reserved for use in its employee share plan. 7 As at 31 December 2015 Statement of financial position

Kuoni Group Annual Report 2015 113 Financial Report Kuoni Group Statement of financial position

Assets CHF million Notes 31 Dec 2015 % 31 Dec 2014 %

Cash and cash equivalents [10] 271.1 16.6 339.3 14.0 Time deposits [11] 0.1 0.0 10.7 0.4 Accounts receivable and other receivables [12] 372.5 22.8 441.9 18.3 Prepaid expenses 113.4 7.0 221.3 9.2 Current tax receivables 15.8 1.0 25.3 1.0 Total current assets 772.9 47.4 1,038.5 42.9

Tangible fixed assets [13] 43.8 2.7 146.0 6.0 Goodwill [14] 592.6 36.4 911.1 37.7 Other intangible assets [15] 151.9 9.3 243.5 10.1 Investments in associates [16] 0.0 0.0 2.4 0.1 Other financial assets [18] 53.4 3.3 50.6 2.1 Deferred tax assets [8] 14.8 0.9 27.1 1.1 Total non-current assets 856.5 52.6 1,380.7 57.1

Total assets 1,629.4 100.0 2,419.2 100.0

Equity and liabilities CHF million Notes 31 Dec 2015 % 31 Dec 2014 %

Current financial debts [21] 37.3 2.3 33.4 1.4 Current tax liabilities 18.2 1.1 25.8 1.1 Accounts payable and other payables 230.9 14.2 329.8 13.6 Advance payments by customers 68.8 4.2 373.1 15.4 Current provisions [20] 57.5 3.5 43.6 1.8 Accrued expenses 395.2 24.3 534.2 22.1 Total current liabilities 807.9 49.6 1,339.9 55.4

2015.kuoni-report.com Non-current financial debts [21] 219.6 13.6 217.3 8.9 Non-current provisions [20] 38.2 2.3 25.6 1.1 Deferred tax liabilities [8] 33.4 2.0 57.2 2.4 Total non-current liabilities 291.2 17.9 300.1 12.4

Total liabilities 1,099.1 67.5 1,640.0 67.8

Share capital [19] 4.0 0.2 4.0 0.2 Treasury shares –10.7 –0.7 –11.8 –0.5 Reserves 535.6 32.9 782.2 32.3 Equity attributable to shareholders of Kuoni Travel Holding Ltd [19] 528.9 32.4 774.4 32.0 Non-controlling interests [19] 1.4 0.1 4.8 0.2 Total equity [19] 530.3 32.5 779.2 32.2

Total equity and liabilities 1,629.4 100.0 2,419.2 100.0 Income statement

Kuoni Group Annual Report 2015 114 Financial Report Kuoni Group Income statement

CHF million Notes 2015 % 2014 1 %

Continuing operations

Turnover [3] 3,348.7 100.0 3,372.0 100.0 Direct costs –2,739.0 –81.8 –2,759.8 –81.8 Gross profit [3] 609.7 18.2 612.2 18.2

Personnel expenses [4] –324.3 –9.7 –323.8 –9.6 Marketing and advertising expenses –9.2 –0.3 –8.1 –0.2 Other operating expenses [5] –149.4 –4.4 –150.9 –4.5 Other operating income [5] 53.2 1.6 10.1 0.3 Share in result from joint ventures [3/17] –1.9 –0.1 –2.0 –0.1 Depreciation [3/6] –28.9 –0.8 –31.8 –1.0 Restructuring expenses [3/20] –25.2 –0.8 0.0 0.0 Earnings before interest, taxes and amortisation (EBITA) [3] 124.0 3.7 105.7 3.1 Amortisation [3] –26.3 –0.8 –29.3 –0.8 Impairment of other intangible assets [15] –16.5 –0.5 0.0 0.0 Earnings before interest and taxes (EBIT) [3] 81.2 2.4 76.4 2.3

Financial income [7] 6.7 0.2 6.7 0.2 Financial expenses [7] –9.0 –0.2 –6.0 –0.2 Result before taxes 78.9 2.4 77.1 2.3

Income taxes [8] –21.0 –0.7 –18.9 –0.6 Net result from continuing operations 57.9 1.7 58.2 1.7

Discontinued operations

2015.kuoni-report.com Net result from discontinued operations, net of income taxes 2 [2] –352.1 –10.5 9.2 0.3 Net result –294.2 –8.8 67.4 2.0

Attributable to non-controlling interests 0.9 0.0 1.0 0.0 Attributable to shareholders of Kuoni Travel Holding Ltd –295.1 –8.8 66.4 2.0

Net result from continuing operations: Attributable to non-controlling interests 0.9 0.0 0.8 0.0 Attributable to shareholders of Kuoni Travel Holding Ltd 57.0 1.7 57.4 1.7

Earnings per share (in CHF) Basic/diluted earnings per registered share A [9] –15.10 3.44 Basic/diluted earnings per registered share B [9] –75.51 17.20

Earnings per share (in CHF) from continuing operations: Basic/diluted earnings per registered share A 2.92 2.97 Basic/diluted earnings per registered share B 14.59 14.86

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 2 For further details on discontinued operations, refer to note 2 of the financial report. Statement of comprehensive

Kuoni Group Annual Report 2015 115 Financial Report Kuoni Group Statement of comprehensive income

CHF million Notes 2015 2014

Net result –294.2 67.4

Other comprehensive income Cash flow hedges: – Effective portion of changes in fair value (net) 0.0 4.2 – Reclassified to income statement –14.8 10.4 – Income taxes [8] 4.1 –3.8 Translation differences: – Currency translation differences –105.8 –27.8 – Reclassified to the income statement [2] 219.7 0.0 Equity-accounted investees share of OCI 0.3 0.0 Total of items that were or may subsequently be reclassified to profit or loss 103.5 –17.0 Defined benefit pension plans: – Remeasurement of pension plans [4] –38.3 –30.4 – Income taxes [8/19] 8.0 6.4 Total of items that will not be reclassified to profit or loss [19] –30.3 –24.0

Other comprehensive income for the period, net of taxes 73.2 –41.0

Total comprehensive income for the period –221.0 26.4

Of which: Attributable to non-controlling interests 1.5 1.2 Attributable to shareholders of Kuoni Travel Holding Ltd. –222.5 25.2 2015.kuoni-report.com Statement of changes in equity

Kuoni Group Annual Report 2015 116 Financial Report Kuoni Group Statement of changes in equity

Reserves Total equity Non- Share Treasury Capital Retained Other of Kuoni controlling Total CHF million Notes capital shares reserves earnings reserves 1 shareholders interests equity

Equity as at 1 January 2014 4.0 –12.9 453.2 623.8 –293.8 774.3 4.8 779.1

Net result 66.4 66.4 1.0 67.4 Other comprehensive income –41.2 –41.2 0.2 –41.0 Total comprehensive income 66.4 –41.2 25.2 1.2 26.4 Dividends [19] –29.0 –29.0 –1.2 –30.2 Share-based compensation 1.1 2.8 3.9 3.9 Total contribution and distributions 1.1 –26.2 –25.1 –1.2 –26.3

Equity as at 31 December 2014 4.0 –11.8 453.2 664.0 –335.0 774.4 4.8 779.2

Net result –295.1 –295.1 0.9 –294.2 Other comprehensive income 72.6 72.6 0.6 73.2 Total comprehensive income –295.1 72.6 –222.5 1.5 –221.0 Dividends [19] –29.4 –29.4 –2.0 –31.4 Share-based compensation 1.1 5.3 6.4 6.4 Total contribution and distributions 1.1 –24.1 –23.0 –2.0 –25.0 Change in scope of consolidation [2] 0.0 –2.9 –2.9

Equity as at 31 December 2015 4.0 –10.7 453.2 344.8 –262.4 528.9 1.4 530.3

1 For further details see note 19. Statement of cash flows 2015.kuoni-report.com

Kuoni Group Annual Report 2015 117 Financial Report Kuoni Group Statement of cash flows

CHF million Notes 2015 2014 1 Cash flow from operating activities Net result from continuing operations 57.9 58.2 Income tax expenses [8] 21.0 18.9 Net financial result [7] 2.3 –0.7 Earnings before interest and taxes (EBIT) [3] 81.2 76.4 Depreciation and amortisation 55.2 61.1 Impairment of other intangible assets [15] 16.5 0.0 Other non-cash expenses 4.1 0.5 Profit from sale of properties [5] –53.2 –10.1 Changes in net working capital – Accounts receivable/other receivables –46.0 –35.1 – Prepaid expenses –26.0 –20.5 – Accounts payable/accrued expenses 78.2 51.6 – Advance payments by customers –5.4 6.3 Income taxes paid –30.5 –38.6 Net cash from operating activities – continuing operations 74.1 91.6 Net cash from/(used in) operating activities – discontinued operations 38.8 –27.6 Net cash from operating activities 112.9 64.0

Cash flow from investing activities Purchase of tangible fixed assets –20.1 –21.1 Purchase of other intangible assets –18.1 –29.0 Disposal of tangible assets and other intangible assets 84.4 13.6 Sales of subsidiaries, net of cash and cash equivalents disposed of [2] –172.7 0.0 Decrease in time deposits 7.7 12.8 Increase in other financial assets –2.9 –9.3 Interest received 3.1 3.9 Other financial income received 1.5 1.1 2015.kuoni-report.com Net cash used in investing activities – continuing operations –117.1 –28.0 Net cash (used in)/from investing activities – discontinued operations –5.5 3.6 Net cash used in investing activities –122.6 –24.4

Cash flow from financing activities Repayment of mortgage –15.0 0.0 Increase of financial debts 24.7 30.5 Interest paid –8.5 –4.6 Distributions to non-controlling interests –0.9 –0.8 Distributions to shareholders of Kuoni Travel Holding Ltd [19] –29.4 –29.0 Net cash used in financing activities – continuing operations –29.1 –3.9 Net cash used in financing activities – discontinued operations –2.5 –12.0 Net cash used in financing activities –31.6 –15.9

Effects of exchange rate fluctuations on cash and cash equivalents –26.9 –29.6 Net decrease in cash and cash equivalents –68.2 –5.9

Cash and cash equivalents at beginning of year 339.3 345.2

Cash and cash equivalents at end of year [10] 271.1 339.3

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. Main accounting principles

Kuoni Group Annual Report 2015 118 Financial Report Kuoni Group Main accounting principles

Kuoni Travel Holding Ltd. (the company) is domiciled in Zurich, Neue Hard 7. The consolidated financial statements for the year ended 31 December 2015 cover the company and all its subsidiaries (Kuoni Group), associates and joint ventures. Kuoni Group is a service provider to the global travel industry and to governments. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis of preparation The consolidated financial statements are presented in Swiss francs (CHF). The amounts are rounded to the nearest hundred thousand and are shown in CHF million. The German version is considered to be legally binding. The consolidated financial statements are prepared on the historical cost basis except for derivative financial instruments. Non-current assets and disposal groups held for sale are stated at the lower of the carrying amount and fair value less costs to sell. Due to the new Swiss law in accounting and financial reporting, current assets and liabilities are shown prior to non-current assets and liabilities. In addition, current provisions, previously disclosed within accrued expenses, are shown separately in the balance sheet. The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Critical judgements made by management in the application of IFRS that have a significant effect on the financial statements and key sources of estimation uncertainties are discussed separately. The accounting policies have been applied consistently to all periods presented in these consolidated financial statements, with the exceptions described below. The accounting principles used for the consolidated financial statements and the presentation of the consolidated financial statements are in accordance with those

2015.kuoni-report.com used for the 2014 consolidated accounts, with the exception of the changes listed below.

Adoption of new accounting provisions Kuoni Group has applied the following new or amended International Financial Reporting Standards (IFRS) and new interpretations with effect from 1 January 2015:

– Defined Benefit Plans: Employee Contribution (Amendments to IAS 19) – Annual Improvements to IFRSs 2010–2012 Cycle – Annual Improvements to IFRSs 2011–2013 Cycle

None of these changes had any relevant effect on these consolidated financial statements in their application.

Future IFRS changes Kuoni Group is currently examining the possible effects of the revised and new standards and interpretations that have been published but which have not yet entered into effect in accordance with the below overview. Kuoni Group does not expect any significant impacts on accounting from the new and revised standards and interpretations. The impact of IFRS 15 is yet to be analysed.

Kuoni Group Annual Report 2015 119 Financial Report Kuoni Group

Effective date Planned application New standards and interpretations IFRS 15 Revenue from Contracts with Customers 1 January 2018 Reporting year 2018 IFRS 9 Financial Instruments 1 January 2018 Reporting year 2018 Revisions and amendments of standards and interpretations Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) 1 January 2016 Reporting year 2016 Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38) 1 January 2016 Reporting year 2016 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Tbd Tbd

Annual Improvements to IFRSs 2012 – 2014 Cycle 1 January 2016 Reporting year 2016 Disclosure initiative (amendments to IAS 1) 1 January 2016 Reporting year 2016 Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) 1 January 2016 Reporting year 2016

Subsidiaries Subsidiaries are entities controlled by Kuoni Travel Holding Ltd. Kuoni Group controls a subsidiary if it is exposed to the fluctuating returns of the investment or if it holds rights to these returns and has the ability to influence these returns given its power over the subsidiary. This is the case where the Kuoni Group holds more than 50% of the voting rights of an entity or where the Kuoni Group has been granted management of an entity contractually or is exercising control by other means. Subsidiaries acquired in the course of the accounting year are consolidated from the date the control effectively commences. Subsidiaries sold in the course of the accounting year are deconsolidated as of the date on which control ceases. Sales and purchases of non-controlling interests are recognised directly in equity. The gain or loss from the sale of subsidiaries is recorded in the financial result. Subsidiaries which are classified as discontinued operations are excluded. The full consolidation method is used, under which all assets, liabilities, income and expenses of the subsidiaries are included in the consolidated financial statements. The 2015.kuoni-report.com share of net assets and net profit or loss attributable to minority shareholders is presented separately as non-controlling interest on the consolidated statement of financial position, and separately as non-controlling interest in the consolidated income statement.

Discontinued operation A discontinued operation is a component of the Groupʼs business for which the operations and cash flows can clearly be distinguished from the rest of the group and which:

– represents a major line of business – is part of a single coordinated plan to dispose of a separate major line of business or – is a subsidiary acquired exclusively with a view to resell.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as discontinued operation, the comparative statement of profit or loss is represented as if the operation had been discontinued from the start of the comparative year. The gain or loss on sale of discontinued operations is included in the net result from discontinued operations. All disclosures in the notes to the consolidated financial statements refer to continuing operations, except where otherwise indicated.

Kuoni Group Annual Report 2015 120 Financial Report Kuoni Group

Associates Associates are entities in which Kuoni Group is able to exercise significant influence, but not control, over the financial and operating policies. The consolidated financial statements include in the financial result the Groupʼs share of the total recognised gains and losses of associates on an equity accounting basis, from the date significant influence commences until the date it ceases. When the Groupʼs share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has incurred further obligation in respect of the associate.

Joint ventures Joint ventures are entities which Kuoni Group jointly controls with a joint venture partner, and whereby Kuoni Group is heavily involved in the management. The consolidated financial statements include in the operating result the Groupʼs share of the total recognised gains and losses of joint ventures on an equity accounting basis, from the date joint management commences until the date it ceases. When the Groupʼs share of losses exceeds the carrying amount of the joint venture, the carrying amount is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has incurred further obligations in respect of the joint venture.

Intragroup transactions and balances All intragroup transactions and balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated in the consolidation process.

Foreign currency transactions Transactions in foreign currencies are translated at the exchange rate on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at year-end rates. Non-monetary assets and liabilities in foreign currencies that are stated at historical cost are translated at the exchange rate on the date of the transaction. 2015.kuoni-report.com Non-monetary assets and liabilities in foreign currencies that are stated at fair value are translated at the exchange rate at the date the values were determined. Foreign exchange gains or losses arising from translation are recognised in the income statement.

Consolidation of foreign subsidiaries The consolidated financial statements are presented in Swiss francs (CHF). The financial statements of foreign subsidiaries are prepared in their functional currency. Assets and liabilities (including goodwill and fair-value adjustments) of foreign subsidiaries are translated to CHF at year-end exchange rates. Revenue, expenses and cash flow amounts are translated at weighted average exchange rates. Foreign exchange differences arising from the translation of foreign subsidiaries are recognised in other comprehensive income as a translation difference. Cumulative foreign exchange differences with regard to foreign subsidiaries are reclassified from equity to the income statement when the foreign subsidiary is disposed of.

Kuoni Group Annual Report 2015 121 Financial Report Kuoni Group

Turnover The Group renders a wide range of services to the travel industry and to governments. The turnover from rendering these services to the travel industry is generally recognised on the date of the customerʼs departure or, in case of destination and accommodation services, on the date of arrival. In the Visa Processing Services business, turnover is recognised when the visa application is made or the value-added service is rendered. Turnover comprises net sales revenues (after deduction of sales tax or value-added tax, discounts and commission) from the Destination & Accommodation Services and the service fee received from visa applicants.

Direct costs Direct costs include all directly allocable airline, ship, rail, hotel, car rental and similar costs, as well as visa fees which are remitted to the diplomatic mission. Direct costs also include the currency gains or losses from exchange rate differences realised or incurred by individual subsidiaries in the course of their operations.

Employee benefits Wages, salaries, social security contributions, paid vacation and sickness-related absences, bonuses and non-monetary benefits are allocated to and shown in the year in which the employee provided the service concerned for Kuoni Group. Where Kuoni Group provides long-term employee benefits, the costs are accrued to match the service to be provided by the employee, and the liabilities of Kuoni Group are discounted to take into account the time value of money where the effects are significant.

Share-based compensation Certain employees participate in share-based employee participation plans, i.e. programmes based on equity instruments of Kuoni Travel Holding Ltd. For all share- based employee compensation, the current market value of the shares concerned is 2015.kuoni-report.com determined on the date the entitlement is granted, and is debited to personnel expense on the corresponding income statements throughout the period until the entitlement is awarded. Equity-settled employee compensation is recognised with a corresponding increase in equity. Further amounts resulting from the exercising of such benefits are as well shown as increase in equity.

Retirement benefits State retirement benefits are provided in the majority of countries in which Kuoni Group operates. The Group has additionally set up a number of legally independent retirement benefit plans or insurance schemes in the following countries, which are generally funded by the employee and the employer: Defined benefit plans: Switzerland Defined contribution plans: The United Kingdom, the USA, India and Japan.

Kuoni Group Annual Report 2015 122 Financial Report Kuoni Group

Defined benefit plans The plans are funded by the Groupʼs subsidiaries (employer) and the employees. Employerʼs contributions to defined benefit plans are recognised as an expense in the income statement when incurred. The Groupʼs net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefits employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets as net liabilities or net assets in the consolidated financial statement. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of reductions in future contributions to the benefit plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses on a defined benefit liability, the return on plan assets (excluding interest) and the effect of the asset ceiling (excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the income statement. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised in income statement. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Defined contribution plans 2015.kuoni-report.com Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Operating lease payments Leases where all the major risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Depreciation Depreciation includes the periodic consumption of tangible fixed assets and the other intangible assets. It includes depreciation on buildings and other tangible fixed assets as well as on the other intangible assets.

Earnings before interest, taxes and amortisation (EBITA) EBITA represents earnings before financial income and expense, income taxes, amortisation as well as impairment charges on intangible and tangible fixed assets.

Amortisation Amortisation includes the periodic consumption of intangible assets capitalised in the course of acquisitions.

Kuoni Group Annual Report 2015 123 Financial Report Kuoni Group

Income taxes Income tax on the profit or loss for the year comprises current and deferred taxes, based on the local tax rates expected to apply for each Group subsidiary. Income tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income in which case it is recognised in other comprehensive income. Current income tax is the expected tax payable on the taxable income for the year, calculated using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences relating to investments in subsidiaries are not provided for to the extent that they will probably not reverse in the foreseeable future. Deferred tax liabilities on undistributed profits of subsidiaries are recognised, unless dividend payments to the ultimate Group holding company are not planned for the foreseeable future. The amount of deferred tax recognised is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Tangible fixed assets Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses. Where an item of tangible fixed assets comprises major components having different useful lives, they are accounted for as separate tangible fixed asset items. The capitalisation of subsequent costs is evaluated under the general recognition principle for such assets at the time they are incurred. Long-term leases of tangible fixed assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Tangible fixed assets acquired by way of finance lease are stated at

2015.kuoni-report.com an amount equal to the lower of their fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and any impairment losses. The related liabilities are recognised as non-current or current liabilities. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method. Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the items of tangible fixed assets (owned assets and assets under finance leases and/or components thereof) concerned. Land is not depreciated.

The estimated useful lives are as follows:

Years

Buildings 20 – 50 Other tangible fixed assets: Fixtures and equipment 10 Fixtures and equipment at point of sale 8 IT hardware, office equipment and vehicles 5 Personal computers and office machines 3

Kuoni Group Annual Report 2015 124 Financial Report Kuoni Group

Other intangible assets Other intangible assets comprise acquired and self-developed software, licences as well as trademark rights and similar rights acquired in a business combination. Intangible assets acquired in a business combination are recognised separately from goodwill if they are subject to contractual or legal rights or are separately transferable and their fair value can be reliably estimated. Intangible assets are stated at cost less accumulated depreciation and impairment losses. They are depreciated on a straight- line basis over their expected useful lives of three to ten years. The Group does not have any intangible assets with indefinite useful lives.

Goodwill All business combinations are accounted for by applying the acquisition method. Goodwill arising from the acquisition of a subsidiary represents the excess of the cost of the acquisition over the fair value of the net identifiable assets acquired, and is allocated to cash-generating units. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate/joint venture. Goodwill is stated at cost less accumulated impairment losses. Goodwill is tested at least annually for impairment.

Financial investments Time deposits (with a maturity exceeding 12 months from the date of acquisition), long- term loans and other long-term receivables are stated at their amortised cost less impairment losses. Interest is recognised using the effective interest rate method. The Group does not have any instruments classified as “at fair value through profit and loss” (trading), with the exception of derivative financial instruments (see the accounting policy on derivative financial instruments)

Time deposits, loans and accounts receivable Time deposits (with a maturity between three and 12 months from the date of acquisition), short-term loans and accounts receivable are stated at their nominal value 2015.kuoni-report.com less impairment losses. Impairment losses are recognised on an individual basis, or on a portfolio basis (for accounts receivable), where there is objective evidence that impairment losses have been incurred. The allowance on bad debt and the receivable is written off if there are clear indicators (such as a certificate of unpaid debts) that the receivable is not collectable.

Cash and cash equivalents Cash and cash equivalents contain cash balances, postal giro accounts and bank current accounts as well as time deposits and money market investments with a maturity not exceeding three months at the date of acquisition.

Impairment The carrying amounts of the Groupʼs assets (other than deferred tax assets and pension assets, for which separate accounting policies apply) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assetʼs recoverable amount is estimated. Goodwill is tested at least annually for impairment.

Kuoni Group Annual Report 2015 125 Financial Report Kuoni Group

An impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of loans and other receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration carried at cost are not discounted. The recoverable amount of other assets is the greater of their fair value less costs of disposal and their value in use. An impairment loss in respect of goodwill is not reversed. An impairment loss in respect of other assets is reversed if there has been a change in the estimates used to determine the recoverable amount. Reversals of impairment losses are recognised in the income statement.

Treasury shares When the company or its subsidiaries purchase the companyʼs own shares, the consideration paid, including any directly attributable costs, is presented as treasury shares and deducted from equity. Where such shares are subsequently sold or reissued, any gain or loss is included in equity.

Financial debts Financial debts are initially recognised at fair value, less attributable transaction costs. Thereafter, financial debts are stated at amortised cost using the effective interest method, with any difference between cost and redemption value being recognised in the income statement under financial expense over the borrowing period.

Provisions A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax 2015.kuoni-report.com rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Accrued expenses An accrued expense is recognised in the statement of financial position when there is an expense without having received the corresponding invoice. Such expenses relate to direct costs, i.e. airline, ship, rail, hotel, car rental and similar costs, where the amount is known but no invoice has been received. Furthermore such expenses contain as well accruals for overtime, vacation and similar expenses.

Contingent liabilities Contingent liabilities are possible obligations arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the Groupʼs control. They may also be present obligations that are unrecognised because the future outflow of resources is not probable or the amount concerned cannot be reliably determined. Contingent liabilities are not recognised in the statement of financial position, but are disclosed.

Accounts payable Accounts payable are stated at nominal value.

Kuoni Group Annual Report 2015 126 Financial Report Kuoni Group

Derivative financial instruments The Group uses derivative financial instruments primarily to hedge its exposure to foreign exchange risks arising from operational, financing and investment activities. The Group largely uses forward-exchange contracts, currency options and aviation fuel options for this purpose. In accordance with internal Group accounting principles, derivative financial instruments are not used for trading purposes. However, derivatives used for hedging purposes that do not qualify as hedge accounting are accounted for as trading instruments. All derivative financial instruments were initially recognised at fair value. After initial recognition, the derivative financial instruments are recognised at their fair value and reported under accounts receivable/other receivables or accounts payable/other payables. Any gains or losses on the remeasurement of the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised immediately in the income statement. The fair value of the instruments used is the calculated amount that the Group would receive or pay to terminate the contracts at the balance sheet date, based on quotes from independent counterparties.

Hedging Cash flow hedges Where a derivative financial instrument is designated as a foreign currency hedge of the variability in cash flows of a firm commitment or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in other comprehensive income. Contracts of this kind are classified as cash flow hedges. When the firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, the cumulative gain or loss is removed from other comprehensive income and included in the initial cost of the non-financial asset or liability. Otherwise, the cumulative gain or loss is removed from equity and recognised in the income statement at the same time as the hedged transaction. The ineffective

2015.kuoni-report.com part of any gain or loss is recognised immediately in the income statement. When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes the designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in other comprehensive income and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in other comprehensive income is recognised immediately in the income statement.

Hedging of monetary assets and liabilities Where a derivative financial instrument is used to economically hedge the foreign exchange exposure of a recognised monetary asset or liability, no hedge accounting is applied, and any gain or loss on the hedging instrument is recognised in the income statement. Related foreign exchange gains and losses are also recognised in the income statement as incurred.

Kuoni Group Annual Report 2015 127 Financial Report Kuoni Group

Non-current assets held for sale and disposal groups Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than from continuing use. The asset (or disposal group) must be available for immediate sale in its present condition and the sale must be highly probable. Immediately before reclassification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up to date in accordance with the applicable accounting standards. On initial reclassification as held for sale, non-current assets and disposal groups are recognised at the lower of their carrying amount or fair value less costs to sell. Any impairment losses on initial classification as held for sale are recognised in the income statement.

Segment reporting A segment is a distinguishable component of the Group which provides products and/or services in a particular geographical area or a particular business segment and for which separate financial information is available. The results of the Groupʼs operating segments are regularly reviewed by the Board of Directors (as the Groupʼs chief operating decision-maker) to determine how resources should be distributed and performance potential assessed. Segments are managed at the EBIT level. Following a strategic review, Kuoni Groupʼs Board of Directors and Group Executive Board decided to focus the companyʼs activities on its core business as a service provider to the global travel industry and to governments. Following this new structure, Kuoni Group consists of the three divisions: Global Travel Distribution (GTD), previously FIT (Fully Independent Traveller); Global Travel Services (GTS), previously Group Travel and Destination Management Specialists; and VFS Global. Furthermore, all tour operating activities which were previously reported as Outbound Nordic and Outbound Europe/Asia have been sold. The segment reporting reflects the management structure implemented within the Kuoni Group. GTD (Global Travel Distribution) populates Kuoni Groupʼs own worldwide databases

2015.kuoni-report.com with a wide range of different travel services. The majority of these services are overnight hotel stays, but they also include individual and regular transfer services, city tours and excursions, tickets, tour guide services and restaurants, all of which can be booked online. The business models in GTD are based on B2B relationships with various business partners like tour operators, online and offline travel agents as well as aggregators. GTS includes B2B group travel business and the Destination Management business. These activities within the Group Travel business focus on creating individual, tailor- made group travel for tour operators as well as online and offline travel agents. These business partners buy these group arrangements from Kuoni Group and then offer them to their own customers in local source markets. The Destination Management Specialists focus on their core destinations and core styles of travel, and they pride themselves on being able to meet the most exacting customer requirements. Destination Management Specialists are local experts with offices in the holiday destinations themselves. Kuoni Group runs a worldwide network of destination management companies in the USA, Africa, Middle East and Asia/Pacific. VFS Global takes over the external, non-judgmental, administrative parts of the visa application and other consular processes for diplomatic missions and governments worldwide.

Kuoni Group Annual Report 2015 128 Financial Report Kuoni Group

The sold tour operating business of Outbound Nordic and Outbound Europe/Asia included the Sweden, Norway, Denmark and Finland markets with its brand Apollo and Falk Lauritsen (only in Denmark), the Scandinavian airline Novair and the “Playitas” sports and family holiday resort on Fuerteventura, Spain, as well as all the markets in Europe and Asia that are operated under the Kuoni brand, its sub-brands and specialist brands, i.e. the markets of Switzerland, United Kingdom, Benelux (Netherlands and Belgium), India and China/Hong Kong. Most of the products sold in Scandinavia and Finland are easy-to-book package holidays to beach destinations. Most of the business done in Outbound Europe/Asia falls into the category of premium- sector tour operating, and is focused on individual and tailor-made holiday travel. Interdivisional revenues are accounted for at armʼs length. The reportable segments apply the same accounting principles as the Group. All operational assets and liabilities which can be directly or reasonably assigned to a reportable segment are shown within the divisions concerned.

Earnings per share (EPS) Earnings per share are calculated by dividing the net result attributable to Kuoni Travel Holding Ltd. shareholders by the weighted average number of registered shares entitled to dividends during the year under review.

Key judgements, management estimates and assumptions When preparing the consolidated financial statements, management must make decisions, assessments and assumptions that have an impact on income, expenses, assets and liabilities. The actual results may differ from these management assessments. Estimates and underlying assumptions are reviewed on an ongoing basis and are based on past findings and various other factors. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based, or as a result of new information or additional experience. Such changes are recognised in the period in which the estimate is revised. The key assumptions about the future and key sources of estimation uncertainty 2015.kuoni-report.com that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next twelve months are described below. On the basis of the information currently available, they are considered to be appropriate.

Employee pension plans Some employees of Kuoni Group are insured with pension plans with defined benefits. The calculation of the recognised net assets (31 Dec 2015: CHF 15.8 million) is based on statistical and insurance-mathematical calculations of the actuaries. In doing so, the present value of the defined benefit obligation relating to changing the discount rate, salary development and expected mortality rate are very sensitive in particular. In addition, the independent actuaries, appointed by Kuoni Group, use statistical data, such as the likelihood of withdrawals and life expectancy of the plan participants. Deviations from the assumptions can have an influence on the future reporting periods of recognised balances and liabilities with the defined benefit pension plans. When measuring the pension liabilities, the Kuoni Group does not consider the so-called risk sharing between employer and employees as much as possible.

Kuoni Group Annual Report 2015 129 Financial Report Kuoni Group

Tangible fixed assets, goodwill and other intangible assets Kuoni Group has as at 31 December 2015 tangible fixed assets with a carrying value of CHF 43.8 million (see note 13), other intangible assets with a carrying value of CHF 151.9 million (see note 15) and goodwill with a carrying value of CHF 592.6 million (see note 14). Goodwill is reviewed at least annually for impairment. The impairment of tangible fixed assets and other intangible assets are reviewed if there is any indication of impairment. To assess if any impairment exists, estimates are made of the future cash flows expected to result from the use of the asset and its eventual disposal. Actual outcomes could vary significantly from such estimates of discounted future cash flows. Factors such as changes in the planned use of buildings, the presence or absence of competition, technical obsolescence or lower than anticipated turnover from cash- generating units with capitalised goodwill could result in shortened useful lives or impairment.

Income taxes As at 31 December 2015, the net receivable for current income taxes amounts to CHF 15.8 million, the net payable for current income taxes amounts to CHF 18.2 million and the net payable for deferred income taxes amounts to CHF 18.6 million (see note 8). Significant estimates are required in determining the current and deferred tax assets and liabilities. Some of these estimates are based on interpretations of existing tax laws and regulations. Management believes that these estimates are reasonable and that the recognised liabilities for income-tax-related uncertainties are adequate. Various internal and external factors may have favourable or unfavourable effects on income tax assets and liabilities. These factors include, but are not limited to, changes in tax laws and regulations or their interpretation, and changes in tax rates. Any such changes that arise could impact the current and deferred income tax assets and liabilities recognised in the statement of financial position in future periods. Furthermore, in order to determine whether tax loss carry forwards may be carried as assets, it is first necessary to critically assess the probability of future taxable profits against which to offset them. Such profits depend themselves on a variety of

2015.kuoni-report.com influencing factors and developments. 1. Exchange rates

Kuoni Group Annual Report 2015 130 Financial Report Kuoni Group 1. Exchange rates

The following exchange rates were used for the Groupʼs most important currencies:

Year-end rates in CHF Average rates in CHF Currency Unit 2015 2014 2015 2014 AED 100 26.920 26.940 26.220 24.910 AUD 1 0.722 0.811 0.725 0.825 DKK 100 14.480 16.150 14.340 16.290 EUR 1 1.081 1.203 1.069 1.215 GBP 1 1.466 1.541 1.472 1.507 HKD 100 12.760 12.760 12.420 11.800 INR 100 1.491 1.565 1.502 1.500 NOK 100 11.260 13.350 11.960 14.540 SEK 100 11.760 12.820 11.430 13.360 THB 100 2.740 3.009 2.815 2.818 USD 1 0.989 0.989 0.963 0.915 2. Discontinued operations 2015.kuoni-report.com

Kuoni Group Annual Report 2015 131 Financial Report Kuoni Group 2. Discontinued operations

On 19 June 2015, Kuoni Group signed an agreement with the REWE Group for the sale of the European tour operating businesses. This agreement included all of the tour operators, specialists and travel agencies run by Kuoni Groupʼs units in Switzerland, the United Kingdom, Scandinavia/Finland and Benelux. The purchase price amounted to CHF 125.1 million. The transaction was completed on 11 September 2015 (closing). On 7 August 2015, Kuoni Group signed an agreement with Fairfax/Thomas Cook for the sale of the tour operating business in Hong Kong and India as well as the inbound business activities in India. The transaction relating to the tour operating in Hong Kong was completed on 9 November 2015 and relating to the activities in India on 16 December 2015. The purchase price amounted to CHF 80.1 million. When the transactions were closed, the respective currency translation losses (CTA) were also reclassified from equity to net result from discontinued operations. For the Year 2015, the reclassified currency translation losses from discontinued operations came to CHF 219.7 million.

The comparative figures of the consolidated income statement were restated to show the discontinued operations separately from the continuing operations.

Net result from discontinued operations:

CHF million Notes 2015 2014 Turnover 1,408.0 2,253.6 Expenses –1,454.4 –2,233.5 Impairment loss recognised on goodwill on remeasurement to fair value less cost to sell [14] –106.4 0.0 Impairment loss recognised on investments in associates on remeasurement to fair value less cost to sell [16] –1.5 0.0 Amortisation –0.1 –7.1 Result before taxes –154.4 13.0 2015.kuoni-report.com Income taxes –1.5 –3.8 Result of discontinued operations –155.9 9.2

Loss on disposal of the tour operating activities and the inbound business activities in India –196.2 0.0

Net result from discontinued operations, net of income taxes –352.1 9.2 Attributable to non-controlling interests 0.0 0.2 Attributable to shareholders of Kuoni Travel Holding Ltd –352.1 9.0

Earnings per share (in CHF) Basic/diluted earnings per registered share A –18.02 0.47 Basic/diluted earnings per registered share B –90.10 2.34

Effects from the disposal of the tour operating business and the inbound business activities in India on the statement of financial position and the statement of cash flows:

Kuoni Group Annual Report 2015 132 Financial Report Kuoni Group

CHF million 2015 Cash and cash equivalents –377.9 Time deposit –3.0 Accounts receivable/other receivables –84.7 Prepaid expenses –155.0 Current tax receivables –24.1 Tangible fixed assets –66.4 Goodwill –135.2 Other intangible assets –34.7 Other financial assets –16.2 Deferred tax assets –18.4 Other current liabilities 313.4 Advance payments by customers 337.6 Net pension liabilities 68.0 Other non-current liabilities 12.0 Net assets disposed of –184.6 Consideration received (cash) 205.2 Non-controlling interests 2.9 Reclassification of currency translation differences to the income statement –219.7 Loss on disposal of the tour operating activities and the inbound business activities in India –196.2 Consideration received (cash) 205.2 Cash and cash equivalents disposed of –377.9 Net cash outflow –172.7 3. Segment reporting 2015.kuoni-report.com

Kuoni Group Annual Report 2015 133 Financial Report Kuoni Group 3. Segment reporting

Information by Total from reportable Global Travel Global Travel Total reportable continuing Discontinued segments Distribution (GTD) Services (GTS) VFS Global segments Corporate operations operations 2 CHF million 2015 2014 1 2015 2014 1 2015 2014 1 2015 2014 1 2015 2014 1 2015 2014 1 2015 2014 1

Turnover of segments 1,979.3 1,933.6 1,054.8 1,169.6 316.5 270.8 3,350.6 3,374.0 3,350.6 3,374.0 1,408.0 2,253.6 Turnover with other segments 0.0 –0.2 –1.9 –1.8 0.0 0.0 –1.9 –2.0 –1.9 –2.0 0.0 0.0 External turnover 1,979.3 1,933.4 1,052.9 1,167.8 316.5 270.8 3,348.7 3,372.0 3,348.7 3,372.0 1,408.0 2,253.6

GOP 224.8 220.6 159.5 183.9 225.4 207.7 609.7 612.2 609.7 3 612.2 3 252.3 412.9 GOP – margin 11.4% 11.4% 15.1% 15.7% 71.2% 76.7% 18.2% 18.2% 17.9% 18.3%

Share in result from joint ventures –1.9 –2.0 –1.9 –2.0 –1.9 –2.0 Depreciation –7.4 –9.2 –2.4 –3.0 –11.8 –12.3 –21.6 –24.5 –7.3 –7.3 –28.9 –31.8 –2.0 –17.2 Restructuring expense 0.0 0.0 –18.0 0.0 0.0 0.0 –18.0 0.0 –7.2 0.0 –25.2 0.0 0.0 0.0

Earnings before interest, tax and amortisation (EBITA) 66.7 63.2 –24.7 1.2 53.9 52.5 95.9 116.9 28.1 –11.2 4 124.0 4 105.7 4 –44.0 16.4 EBITA – margin 3.4% 3.3% –2.3% 0.1% 17.0% 19.4% 3.7% 3.1% –3.1% 0.7%

Amortisation –18.7 –21.2 –7.6 –8.1 0.0 0.0 –26.3 –29.3 0.0 0.0 –26.3 –29.3 –0.1 –7.1 Impairment of Goodwill and other intangible assets 0.0 0.0 –16.5 0.0 0.0 0.0 –16.5 0.0 0.0 0.0 –16.5 0.0 –106.4 0.0

Earnings before interest and taxes (EBIT) 48.0 42.0 –48.8 –6.9 53.9 52.5 53.1 87.6 28.1 4 –11.2 4 81.2 4 76.4 4 –150.5 9.3 2015.kuoni-report.com EBIT – margin 2.4% 2.2% –4.6% –0.6% 17.0% 19.4% 2.4% 2.3% –10.7% 0.4%

Share in result from associates 0.0 0.2 0.0 0.2 –1.7 0.1 Other financial result –2.3 0.5 –2.3 0.5 –2.2 3.6 Result before taxes 78.9 77.1 –154.4 13.0

Assets 1,058.5 1,027.1 379.9 437.2 164.7 175.0 1,603.1 1,639.3 206.6 5 208.6 5 1,809.7 6 1,847.9 6 0.0 6 719.7 6 Liabilities 485.1 440.8 302.3 288.7 94.1 96.4 881.5 825.9 397.9 5 382.8 5 1,279.4 6 1,208.7 6 0.0 6 579.7 6

Capital expenditure 15.9 13.3 3.2 9.4 18.0 20.7 37.1 43.4 1.1 6.7 38.2 50.1 7.1 15.8 Investments in joint ventures and associates 0.0 0.0 0.0 0.0 0.0 0.0 0 0 Total assets of joint ventures and associates 0.0 0.0 0.0 0.0 35.9 24.6 35.9 24.6 0.0 0.9

Number of staff (full-time equivalents): – annual average 1,489 1,381 2,820 2,973 3,561 3,009 7,870 7,363 98 92 7,968 7,455 4,174 4,273 – at year-end 1,535 1,414 2,708 2,893 3,776 3,209 8,019 7,516 98 93 8,117 7,609 0 4,325

Kuoni Group Annual Report 2015 134 Financial Report Kuoni Group

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 2 For further details on discontinued operations, refer to note 2. 3 The GOP includes operational exchange differences of CHF 2.5 million (2014: CHF 1.3 million). 4 Including gain from the disposals of properties in Zurich in the amount of CHF 53.2 million in 2015 (2014: CHF 10.1 million). 5 The assets and liabilities shown under “Corporate” include the corporate items from the statement of financial position and the financial assets/liabilities which are not segment specific and tax assets/liabilities of the Kuoni Group. 6 Total assets (liabilities) from continuing and discontinued operations of CHF1,809.7 million (CHF 1,279.4 million) less IC eliminations of CHF 180.3 million (2014: CHF 148.4 million) equals assets (liabilities) of CHF 1,629.4 million (CHF 1,099.1 million) as per statement of financial positions.

Following a strategic review, Kuoni Groupʼs Board of Directors and Group Executive Board decided to focus the companyʼs activities on its core business as a service provider to the global travel industry and to governments. In January 2015, the Kuoni Group announced the plan to sell its tour operating activities. Kuoni Group will focus on the three divisions:

– Global Travel Distribution (GTD), previously FIT (Fully Independent Traveller) – Global Travel Services (GTS), previously Group Travel and Destination Management Specialists – VFS Global

At the same time, Kuoni Group announced the intention to find new owners for all tour operating activities which were previously classified as Outbound Nordic and Outbound Europe/Asia. All respective transactions were executed as per reporting date (see note 2).

As a result of this reorganisation and segment composition, the Group has changed its internal management reporting to the entityʼs chief operating decision makers (CODM). The segment reporting was adjusted in order to reflect the new operational structure, effective from 1 January 2015. Accordingly, Kuoni Group has restated the operating segment information for 2014.

2015.kuoni-report.com Breakdown of turnover of continuing operations by location of legal entity

CHF million 2015 2014 1 China/Hong Kong 684.8 597.4 United Kingdom 437.3 872.3 Switzerland 428.3 136.2 United Arab Emirates 385.5 400.9 USA 343.4 260.1 Other 1,069.4 1,105.1 Total 3,348.7 3,372.0

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report.

Kuoni Group Annual Report 2015 135 Financial Report Kuoni Group

Breakdown of turnover of continuing operations by activity

CHF million 2015 2014 1 Accommodation and Destination Services 3,032.2 3,101.2 Visa Processing Services 316.5 270.8 Total 3,348.7 3,372.0

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report.

Breakdown of EBIT

CHF million 2015 2014 1 Total EBIT of reportable segments 53.1 87.6 Corporate – Corporate cost –25.1 –21.3 – Gain from sale of properties 53.2 10.1 Total 81.2 76.4

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report.

Breakdown of assets by geographical area 2015.kuoni-report.com

Goodwill and Goodwill and Tangible fixed other intangible Tangible fixed other intangible assets assets Total assets assets Total CHF million 31 Dec 2015 31 Dec 2015 31 Dec 2015 31 Dec 2014 31 Dec 2014 31 Dec 2014 United Kingdom 9.4 634.7 644.1 12.6 826.2 838.8 United Arab Emirates 4.6 37.1 41.7 4.8 38.4 43.2 USA 0.4 39.6 40.0 0.7 39.7 40.4 Sweden 0.0 0.0 0.0 1.2 101.4 102.6 Switzerland 6.0 3.7 9.7 45.6 62.3 107.9 Other 23.4 29.4 52.8 81.1 86.6 167.7 Total 43.8 744.5 788.3 146.0 1,154.6 1,300.6

As per 31 December 2014 the tangible fixed assets, goodwill and other intangible assets included the continuing operations as well as the discontinued operations, which were sold in 2015. 4. Personnel expenses

Kuoni Group Annual Report 2015 136 Financial Report Kuoni Group 4. Personnel expenses

CHF million 2015 2014 1 Wages and salaries 248.9 249.5 Pension costs 15.6 18.3 Other social security costs 15.6 16.0 Other personnel costs 44.2 40.0 Total 324.3 323.8

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report.

Share-based compensation Compensation of members of the Board of Directors consists of fixed compensation and social security contributions in accordance with Swiss regulations. Half of the fixed compensation is paid in cash, and half in shares, which are subject to a three-year blocking period. The issue price of the shares concerned is determined again each year and corresponds to the final share price on the trading day before the grant date. The shares are allocated one day after the distribution of the dividend. Total compensation for the Executive Board consists of a fixed and a variable component. The fixed component consists of a base salary, social contributions and a deferred benefit (in the form of share awards). The variable component contains a short- and a long-term incentive (performance share awards). The short-term incentive plan is designed to reward Group Executive Board (GEB) members for the achievement of annual performance measures that are specific, quantifiable and challenging. The performance measures for all GEB members include 2015.kuoni-report.com financial targets at Group and Divisional level plus strategic targets aimed at promoting growth and the development of consumer-oriented and innovative approaches. Other agreed targets relate to Kuoni Groupʼs transformational objectives, people and talent development targets and stakeholder targets that are specific to key markets and the individualʼs role. The mix of targets is appropriate for Kuoni Groupʼs business model, which must be tailored to consumer and market influences, and are aligned with the Groupʼs business strategy and annual targets for 2015. In 2015, GEB members were granted deferred compensation under the Restricted Share Plan (RSP) 2015 as part of the fixed component of their total compensation. The deferred compensation links executive compensation more closely to shareholder value creation and supports the retention of GEB members. There was no increase in the total value of this compensation element in 2015. The restricted shares awarded to GEB members in April 2015 represent a percentage of their basic salary. The value of the restricted shares granted is generally equivalent to 40% of the basic salary (2014: 40%), calculated on the basis of the volume-weighted average price of shares from mid-February to mid-March prior to allocation of the shares. The shares are restricted for three years: a third of the shares are converted after one year, the next third after two years and the final third after the third year. The pay-out value of the compensation is based on the share price at the time of conversion, thereby linking this portion of compensation to shareholder value creation and the development of Kuoni Groupʼs share price. In 2015, the GEB members received allocations under the Performance Share Plan (PSP) 2015. The PSP is designed to reward the GEB for its contribution to the companyʼs long-term success and for the creation of shareholder value.

Kuoni Group Annual Report 2015 137 Financial Report Kuoni Group

In April 2015, GEB members were allocated performance-based restricted shares linked to a percentage of their basic salary. This target percentage came to 60% of the overall basic salary (2014: 60%). The calculation of the restricted awards was made on the basis of the volume-weighted average price of shares from mid-February to mid- March prior to allocation of the shares. The performance shares will vest based on the extent to which the performance targets are actually achieved after a three-year period.

The performance measures and the weightings that apply to the 2015 allocations are as follows:

– Free cash flow – weighting of 2/3 of the performance targets – Turnover – weighting of 1/3 of the performance targets

These performance measures are designed to align the long-term incentive with the Kuoni Groupʼs business strategy. Each performance measure has a threshold, target, stretch and maximum achievement level that is set by the Target Setting Committee. These levels are set stringently and are designed to reward outstanding performance. Based on the achievement of the performance measures, the actual number of shares that vest at the end of the three-year performance period is between 0 and a maximum of 2.5 times the number of performance shares initially granted. In the reporting period, RSP and PSP share awards have been granted to the senior management. The average price of the 19,551 shares used for such purposes in 2015 amounted to CHF 297 (2014: 17,667 shares used; average price CHF 332). The price of each share is determined by its average stock market price on assignment, less a discount for the corresponding measurement period. An adjustment of the performance factor for current plans from previous years increased share-based compensation costs by CHF 0.5 million or 1,903 shares (2014: increase of CHF 1.9 million, or 10,564 shares). The costs for the share-based compensation amounted to CHF 6.9 million (2014: CHF 3.3 million). 2015.kuoni-report.com

Defined benefit retirement plans The Group incurs costs for retirement benefit plans in accordance with prevailing regulations in the countries in which it operates. The defined benefit plans of Kuoni Group are managed in Switzerland. They constitute 100% (2014: 91%).

Swiss pension plans Kuoni Group organises the occupational pension provisions of its employees against the consequences of old age, disability and death within the framework of pension funds that are legally and financially separated from the employer. The pension assets are entirely separated from the assets of the relevant employing company, but also from the assets of the policyholders. The Swiss Occupational Retirement, Survivorsʼ and Disability Pensions Act (BVG) and its implementation provisions as well as the Act on Vesting in Pension Plans specify a minimum benefit in the area of compulsory and partly also in the area of supplementary occupational pension provisions. The relevant pension plan is specified in the pensions regulations of the foundations. The foundation board of the pension fund is the most senior management body and consists on a parity basis of the same number of employer and employee representatives. It takes decisions on the content of the pension regulations (e.g. the insured benefits), the financing of the pension (e.g. employer and employee premiums) and on the management of the assets (e.g. investing the pension funds). The pension fund is entered in the register for occupational pension plans and is subject to a cantonal supervisory authority or the Federal Social Insurance Office directly for supervisory purposes depending on their geographical area of activity.

Kuoni Group Annual Report 2015 138 Financial Report Kuoni Group

The occupational pension plan operates in accordance with the capital cover method. This means that over the professional life an individual, retirement credit balance is accumulated, taking into account the annual salary insured and annual retirement credit entries plus interest. The annual retirement credit entries are calculated in percent of the insured salary and are staggered depending on the age of the policyholder. The final pension benefit depends on the contributions and has certain minimum guarantees. On the basis of these minimum guarantees, retirement plans in Switzerland are assigned to the defined benefit plans despite possessing many characteristics of defined contribution-oriented plans. The employee has the option to withdraw the retirement benefits in part or in full as capital. In addition to the retirement benefits, the pension benefits also include disability and survivorsʼ benefits, which are calculated as a percentage of the insured annual salary or of the expected retirement pension. To finance the benefits, savings and risk contributions are collected from employees and employer as a percentage of the insured annual salary in accordance with the pension regulations. At least half of the financing is covered by the employer here. Autonomous pension funds have risks from the savings process, the asset management and bear the demographic risks (long life, death, disability) themselves. The relevant pension fund can change its financing system (premiums and future benefits) at any time. During the period of a shortfall and if other measures do not result in the financial situation improving, the pension fund can collect restructuring contributions from the employer and the policyholders on a parity basis.

International pension plans In 2014, smaller defined benefit plans in UK and Norway existed. Such plans have been deconsolidated at closing of the sale of the tour operating activities and the inbound business activities in India.

The following assumptions (weighted averages) used in actuarial calculations were adjusted to take account of the economic situation in the country concerned: 2015.kuoni-report.com

2015 2014 Discount rate 0.70% 1.40% Salary increases 1.00% 1.20% Rate of pension increase 0.00% 0.30% Expected average remaining working lives in years 10.6 9.8 Interest rate credited to account balance 2.25% 2.25%

The cover ratio of the benefit plans are shown below:

CHF million 31 Dec 2015 31 Dec 2014 Assets of independent retirement plans at fair value 268.5 419.9 Defined benefit obligations (DBO) of the funded pension plans –238.2 –435.5 Debit/Credit balance 30.3 –15.6

Effect of asset ceiling –14.5 0.0 Defined benefit assets/liabilities recognised in the statement of financial position (net) 15.8 –15.6

Pension assets 15.8 0.0 Pension obligations 0.0 –15.6

Kuoni Group Annual Report 2015 139 Financial Report Kuoni Group

The assets of the independent retirement plans were as follows:

CHF million 2015 2014 Fair value of assets as at 1 January 419.9 381.5

Interest income on assets 5.0 9.5 Employer contributions 9.5 10.8 Employee contributions 4.9 5.7 Benefits paid –16.9 –2.0 Administration expenses –0.4 –0.7 Return on plan assets excluding amounts included in interest income –9.0 13.5 Change in scope of consolidation –142.6 0.0 Translation differences –1.9 1.6 Fair value of assets as at 31 December 268.5 419.9

Employersʼ contributions for 2016 are expected to be CHF 3.1 million. Actual loss from investments for 2015 amounted to CHF 4.0 million (2014: gain of CHF 23.0 million). The assets of the retirement plans were invested in the following asset categories at year- end.

31 Dec 2015 31 Dec 2014 Listed shares 29% 31% Listed bonds 52% 51% Listed indirect investments in real estate 15% 14% Other assets 4% 4% Total assets 100% 100%

The retirement plans hold no shares or other equity instruments of Kuoni Travel Holding 2015.kuoni-report.com Ltd., Zurich. The assets were invested in stock-exchange-listed securities only. Part of the foreign-currency risks in securities investments was hedged with rolling foreign exchange futures transactions. The purpose was solely to hedge the foreign currency exposure and not to achieve an additional return by actively trading in foreign currency.

Retirement plan obligation was as follows:

CHF million 2015 2014 Present value of obligation as at 1 January 435.5 356.0

Current employer service cost 11.4 10.9 Interest cost 5.0 8.9 Employee contributions 4.9 5.7 Benefits paid –16.9 –2.0 Actuarial losses on obligation 14.8 54.7 Negative past service cost –3.5 –0.4 Change in scope of consolidation –210.6 0.0 Translation differences –2.4 1.7 Present value of obligation as at 31 December 238.2 435.5

The actuarially determined retirement benefit costs stated above were set against the Groupʼs contributions to retirement benefit plans. The following table gives a calculation of the pension costs of the Groupʼs major pension plans:

Kuoni Group Annual Report 2015 140 Financial Report Kuoni Group

CHF million 2015 2014 Current employer service cost 11.4 10.9 Net interest return on the net asset 0.0 –0.4 Administration expenses 0.4 0.7 Negative past service cost –3.5 –0.5 Pension cost recognised in income statement in personnel expense 8.3 10.7

Other pension cost (defined contribution plans and state retirement benefits) 22.9 29.7 Total pension costs 31.2 40.4 * Whereof continuing operations 15.6 18.3 * Whereof discontinued operations 15.6 22.1

The negative past service costs in 2015 contained mainly a curtailment gain attributable to the restructuring programme in Switzerland (see note 20). The following table illustrates the remeasurement gains and losses that were recognised in other comprehensive income:

CHF million 2015 2014 Return on plan assets excluding amounts included in interest income –9.0 13.6 Experience-based adjustments to DBO 2.6 5.2 DBO change due to financial assumptions –17.4 –59.9 Effect of asset ceiling –14.5 10.7 Total amount of remeasurement losses on defined benefit plan recognised in other comprehensive income –38.3 –30.4

The following table illustrates the reconciliation of effect of asset ceiling: 2015.kuoni-report.com CHF million 2015 2014 Adjustment to asset ceiling at 1 January 0.0 –10.5 Interest expense on effect of assets ceiling 0.0 –0.2 Change in effect of assets ceiling excl. interest expense –14.5 10.7 Currency translation adjustment 0.0 0.0 Adjustment to asset ceiling at 31 December –14.5 0.0

The valuation of the pension benefit obligations is particularly sensitive with regard to changes to the discount rate and the assumptions of the salary rises and the expected mortality rates. The following table shows the percentage change of the pension payment obligation on the basis of a change to these actuarial assumptions:

Sensitivity impact on DBO to actuarial assumptions 2015 2014 Increase in discount rate by 0.25% –3.2% –3.7% Decrease in discount rate by 0.25% 3.2% 3.7% Increase in salary rise by 0.25% 0.2% 0.4% Increase in mortality rate by 1 year 3.9% 2.7% Increase of the interest rate credited to account balance by 0.25% 0.5% 0.5%

Kuoni Group Annual Report 2015 141 Financial Report Kuoni Group

Every sensitivity analysis considers the change of one assumption, while all other assumptions remain the same. This approach shows the isolating effect if an individual assumption is changed, but does not consider that some assumptions are mutually dependent.

The weighted average duration of the defined benefit obligation was 14.2 years (2014: 16.2 years). 5. Other operating 2015.kuoni-report.com

Kuoni Group Annual Report 2015 142 Financial Report Kuoni Group 5. Other operating expenses/other operating income

Other operating expenses

CHF million 2015 2014 1 Rent and utilities 46.3 43.0 Administration expenses 63.5 67.2 Other expenses 39.6 40.7 Total other operating expenses 149.4 150.9

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report.

Other operating income Other operating income included the gain from the disposals of the properties in Zurich of CHF 53.2 million in 2015. In 2014, other operating income contained the gain of CHF 10.1 million from the disposal of the property on Geroldstrasse, Zurich. 6. Depreciation 2015.kuoni-report.com

Kuoni Group Annual Report 2015 143 Financial Report Kuoni Group 6. Depreciation

CHF million 2015 2014 1 On buildings 1.3 0.0 On other tangible fixed assets 15.1 15.5 On other intangible assets 12.5 16.3 Total 28.9 31.8

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 7. Financial result 2015.kuoni-report.com

Kuoni Group Annual Report 2015 144 Financial Report Kuoni Group 7. Financial result

CHF million 2015 2014 1 Interest income 4.2 3.2 Share in profits from associates 0.0 0.2 Non-operational exchange gain (net) 0.5 1.9 Other financial income 2.0 1.4 Financial income 6.7 6.7

Interest expenses –9.0 –6.0 Financial expense –9.0 –6.0

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 8. Income taxes 2015.kuoni-report.com

Kuoni Group Annual Report 2015 145 Financial Report Kuoni Group 8. Income taxes

CHF million 2015 2014 1 Current tax expenses 22.7 23.5 Deferred tax expenses –1.7 –4.6 Total 21.0 18.9

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report.

Tax expense can be analysed as follows:

CHF million 2015 2014 1 Result before taxes 78.9 77.1 Weighted average Group tax rate 27.6% 38.3%

Tax expense at the weighted average Group tax rate (net) 21.8 29.5 Non-tax-deductible expenses 1.5 2.6 Tax-free income –15.2 –7.7 Capitalised deferred tax assets from previously not recognised tax loss carryforwards –0.3 –7.8 Utilisation of tax loss carryforwards, not recognised in the statement of financial position –0.1 –0.5 Tax effect from current losses, not eligible for recognition as assets 15.7 10.0 Effect of changes in tax legislation 0.0 –4.1 Tax income for earlier periods –2.4 –3.1 Tax expense reported 21.0 18.9 Effective Group tax rate 26.6% 24.5%

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 2015.kuoni-report.com

The weighted average tax rate of the Kuoni Group for the year under review was 27.6% (2014: 38.3%). The reduction of the weighted average tax rate is mainly due to the various tax rates applicable to the Group subsidiariesʼ positive and negative results. Depending on the country involved, profit distributions have varying tax consequences, the extent of which cannot be estimated. The Group has the following unrecognised tax loss carryforwards:

Expiring CHF million 2015 2014 Up to 1 year 0.1 2.0 1 to 5 years 32.0 21.0 Over 5 years 124.8 89.6 Unlimited 195.4 244.1 Total 352.3 356.7

Not capitalised maximum positive tax effect 98.9 108.2

Deferred taxes changed as follows:

Kuoni Group Annual Report 2015 146 Financial Report Kuoni Group

CHF million 2015 2014 Deferred tax assets 27.1 30.0 Deferred tax liabilities 57.2 68.2 Deferred tax liabilities as at 1 January (net) 30.1 38.2

Changes recognised in the income statement –9.6 –5.2 Changes recognised in other comprehensive income –12.1 –2.6 Change in scope of consolidation 11.3 0.0 Translation differences –1.1 –0.3 Deferred tax liabilities as at 31 December (net) 18.6 30.1

Deferred tax assets 14.8 27.1 Deferred tax liabilities 33.4 57.2

At year-end the cumulative deferred taxes recognised in equity amounted to CHF –12.1 million (2014: CHF –2.6 million). They arise largely from the positive and negative current market values of the currency classified as cash flow hedges and remeasurement gains and losses on net pension assets. Deferred taxes are derived from the following statement of financial position items:

Deferred tax Deferred tax Deferred tax assets liabilities Deferred tax assets liabilities CHF million 31 Dec 2015 31 Dec 2015 31 Dec 2014 31 Dec 2014 Current assets 0.6 0.6 11.5 0.4 Tangible fixed assets 4.4 0.0 12.8 0.1 Other non-current assets 2.4 22.8 2.9 43.2 Accrued expenses and provisions 2.6 2.7 5.5 8.9 Deferred taxes deriving from timing differences 10.0 26.1 32.7 52.6

Netting of deferred taxes within each Group company –0.6 –0.6 –9.5 –9.5 Deferred taxes deriving from timing differences (net) 9.4 25.5 23.2 43.1

2015.kuoni-report.com Tax effect on undistributed retained earnings of subsidiaries 0.0 7.9 0.0 14.1 Deferred taxes on recognised tax loss carryforwards 5.4 0.0 3.9 0.0 Total 14.8 33.4 27.1 57.2 9. Earnings per share (EPS)

Kuoni Group Annual Report 2015 147 Financial Report Kuoni Group 9. Earnings per share (EPS)

2015 2014 Basic earnings per registered share B in CHF –75.51 17.20 Net result attributable to nominal shareholders B of Kuoni Travel Holding Ltd. in CHF 1,000 –276,218 62,137 Weighted average number of nominal shares B outstanding 3,658,013 3,613,103

Basic earnings per registered share A in CHF –15.10 3.44 Net result attributable to nominal shareholders A of Kuoni Travel Holding Ltd. in CHF 1,000 –18,867 4,298 Weighted average number of nominal shares A 1,249,500 1,249,500

There were no dilutive effects. 10. Cash and cash equivalents 2015.kuoni-report.com

Kuoni Group Annual Report 2015 148 Financial Report Kuoni Group 10. Cash and cash equivalents

CHF million 31 Dec 2015 31 Dec 2014 Cash and bank current accounts 258.4 281.9 Time deposits and money market investments with original term of up to 90 days from the date of acquisition 12.7 57.4 Total 271.1 339.3

Cash and cash equivalents were denominated in the following currencies:

CHF million 31 Dec 2015 31 Dec 2014 CHF 30.3 28.8 GBP 40.6 74.5 EUR 44.7 70.9 USD 42.3 61.3 Other 113.2 103.8 Total 271.1 339.3

The average interest rates were:

2015 2014 CHF 0.0% 0.0% GBP 0.3% 0.0% EUR 0.0% 0.5% USD 0.0% 0.5%

2015.kuoni-report.com 11. Time deposits

Kuoni Group Annual Report 2015 149 Financial Report Kuoni Group 11. Time deposits

This position contained time deposits originally maturing in more than 90 days from the date of acquisition.

Time deposits were denominated in the following currencies:

CHF million 31 Dec 2015 31 Dec 2014 GBP 0.0 0.1 USD 0.0 0.1 CNY 0.0 2.5 INR 0.0 3.1 Other 0.1 4.9 Total 0.1 10.7

The average interest rates were:

2015 2014 CNY n.a. 3.0% INR n.a. 7.5% 12. Accounts receivable and 2015.kuoni-report.com

Kuoni Group Annual Report 2015 150 Financial Report Kuoni Group 12. Accounts receivable and other receivables

CHF million 31 Dec 2015 31 Dec 2014 Accounts receivable 345.0 361.4 Other receivables 39.7 63.5 Allowance for doubtful accounts receivable –26.6 –25.0 Positive fair values of derivative financial instruments 14.4 42.0 Total 372.5 441.9

Accounts receivable and other receivables showed the following payment maturities:

CHF million 31 Dec 2015 31 Dec 2014 Payment not yet due 219.4 225.6 Payment overdue 1 to 30 days 107.5 134.5 Payment overdue 31 to 60 days 29.7 28.6 Payment overdue 61 to 90 days 12.1 15.1 Payment overdue by more than 90 days 16.0 21.1 384.7 424.9 Allowance for doubtful accounts receivable –26.6 –25.0 Positive fair values of derivative financial instruments 14.4 42.0 Total 372.5 441.9

Allowance for doubtful accounts receivable totalled to CHF 11.0 million (2014: CHF 4.5 million) for receivables between 61 and 90 days overdue and CHF 15.6 million (2014: 2015.kuoni-report.com CHF 20.5 million) for receivables by more than 90 days overdue. Some of the underlying receivables are expected to be paid. The receivables with payment date not yet due relate largely to long-term customer relations with agents or processing companies. Allowance for doubtful accounts receivable showed the following developments:

CHF million 2015 2014 Allowance for doubtful accounts receivable 1 January 25.0 30.5

Change (net) 7.5 –6.6 Change in scope of consolidation –4.7 0.0 Translation differences –1.2 1.1 Allowance for doubtful accounts receivable 31 December 26.6 25.0 13. Tangible fixed assets

Kuoni Group Annual Report 2015 151 Financial Report Kuoni Group 13. Tangible fixed assets

Other tangible fixed Total tangible fixed CHF million Land and buildings assets assets Cost as at 1 January 2014 189.5 153.1 342.6

Additions 0.9 25.2 26.1 Disposals –24.8 –17.6 –42.4 Reclassification 0.5 –0.5 0.0 Translation differences –0.8 5.0 4.2 Cost as at 31 December 2014 165.3 165.2 330.5

Accumulated depreciation as at 1 January 2014 78.1 98.6 176.7

Depreciation 3.9 23.1 27.0 Disposals –8.4 –14.1 –22.5 Translation differences 0.1 3.2 3.3 Accumulated depreciation as at 31 December 2014 73.7 110.8 184.5

Net book value as at 31 December 2014 91.6 54.4 146.0

Cost as at 1 January 2015 165.3 165.2 330.5

Additions 0.5 22.4 22.9 Disposals –80.8 –13.2 –94.0 Change in scope of consolidation –59.6 –59.2 –118.8 Translation differences –8.1 –10.4 –18.5 Cost as at 31 December 2015 17.3 104.8 122.1

Accumulated depreciation as at 1 January 2015 73.7 110.8 184.5

2015.kuoni-report.com Depreciation 1.3 15.6 16.9 Disposals –53.1 –9.5 –62.6 Change in scope of consolidation –10.7 –41.7 –52.4 Translation differences –1.8 –6.3 –8.1 Accumulated depreciation as at 31 December 2015 9.4 68.9 78.3

Net book value as at 31 December 2015 7.9 35.9 43.8 14. Goodwill

Kuoni Group Annual Report 2015 152 Financial Report Kuoni Group 14. Goodwill

CHF million 2015 2014 Cost as at 1 January 916.6 920.6

Change in scope of consolidation –247.1 0.0 Translation differences –76.9 –4.0 Cost as at 31 December 592.6 916.6

Accumulated impairment as at 1 January 5.5 5.5

Impairment 1 106.4 0.0 Change in scope of consolidation –111.9 0.0 Accumulated impairment as at 31 December 0.0 5.5

Net book value as at 31 December 592.6 911.1

1 For further details on discontinued operations, refer to note 2 of the financial report.

The cash-generating units of the Kuoni Group are considered to be its operating, reportable segments Global Travel Distribution, Global Travel Services and VFS Global. They are used to assess the value-in-use of goodwill recognised in the balance sheet. Goodwill is allocated to the cash-generating units of the Kuoni Group as follows:

Discount rate CHF million Growth rate before taxes 31 Dec 2015 Cash-generating units Global Travel Distribution 1.5% 10.0% 531.3

2015.kuoni-report.com Global Travel Services 2.5% 9.6% 61.3 Total 592.6

Discount rate CHF million Growth rate before taxes 31 Dec 2014 Cash-generating units Global Travel Services Group Travel 1.5% 10.8% 3.4 FIT (Fully Independent Traveller) 1.5% 10.8% 587.9 Outbound & Specialists Outbound Nordic (discontinued operation) 1.0% 10.8% 107.8 Outbound Europe/Asia (discontinued operation) 0.5% 10.5% 142.6 Destination Management Specialists 2.0% 14.0% 69.4 Total 911.1

Following the announced strategic review Kuoni Group has changed the management structure accordingly. Starting 1 January 2015, Kuoni Group consists of the three divisions: Global Travel Distribution (GTD) previously FIT (Fully Independent Traveller); Global Travel Services (GTS), previously Group Travel and Destination Management Specialists; and VFS Global. The value of goodwill is tested at least annually for impairment, or if indicators or conditions suggest that its carrying amount can no longer be recovered.

Kuoni Group Annual Report 2015 153 Financial Report Kuoni Group

The Kuoni Group applies a standard method to assess goodwill values. The basic amount which should be recovered by any goodwill reappraised is based on the value- in-use, which is determined from cash flow projections that are themselves based on the latest approved business plan by the Board of Directors. This plan includes the latest management estimates on turnover and margin trends and on projected operating costs. The business plan also pays due regard to historic values based on past experience and includes projections for the next five years. Subsequent years are considered on a perpetual annuity basis, using growth rates from 1.5% to 2.5%. The discount rates have been calculated on the basis of the weighted average capital costs of the Kuoni Group, with due and full regard to country- and currency-specific risks relating to cash flows. Management conducted sensitivity analyses for all cash-generating units, which assumed an increase of discount rates of 1% in connection with a reduction of the expected cash flow by 5%. In addition, individual valuations of all divisions have been conducted in connection with the announced takeover . These valuations were executed in the first quarter of 2016 by independent third parties. The results of the sensitivity analyses and the individual valuations confirmed that no impairment charge was needed. 15. Other intangible assets 2015.kuoni-report.com

Kuoni Group Annual Report 2015 154 Financial Report Kuoni Group 15. Other intangible assets

Intangible assets Further Total other CHF million from acquisitions intangible assets intangible assets Cost as at 1 January 2014 377.7 105.4 483.1

Additions 0.0 39.8 39.8 Disposals –4.9 –12.7 –17.6 Translation differences 0.5 0.0 0.5 Cost as at 31 December 2014 373.3 132.5 505.8

Accumulated depreciation and amortisation as at 1 January 2014 159.6 59.4 219.0

Amortisation 36.4 0.0 36.4 Depreciation 0.0 22.0 22.0 Disposals –4.8 –12.5 –17.3 Translation differences 1.8 0.4 2.2 Accumulated depreciation and amortisation as at 31 December 2014 193.0 69.3 262.3

Net book value as at 31 December 2014 180.3 63.2 243.5

Cost as at 1 January 2015 373.3 132.5 505.8

Additions 0.0 22.4 22.4 Disposals 0.0 –10.7 –10.7 Change in scope of consolidation –79.3 –31.7 –111.0 Translation differences –30.5 –8.7 –39.2 Cost as at 31 December 2015 263.5 103.8 367.3

Accumulated depreciation, amortisation and impairment as at 1 January 2015 193.0 69.3 262.3

2015.kuoni-report.com Amortisation 26.4 0.0 26.4 Depreciation 0.0 14.0 14.0 Impairment 0.0 16.5 16.5 Disposals 0.0 –9.7 –9.7 Change in scope of consolidation –62.2 –14.1 –76.3 Translation differences –13.8 –4.0 –17.8 Accumulated depreciation, amortisation and impairment as at 31 December 2015 143.4 72.0 215.4

Net book value as at 31 December 2015 120.1 31.8 151.9

The impairment loss of CHF 16.5 million on further intangible assets relates to the IT architecture of the division GTS. This IT architecture has been reviewed and adapted to cater for this. The planned new, end-to-end IT solution was no longer deemed fit for purpose and as a result had been terminated.

Intangible assets from acquisitions consisted largely of capitalised trademark rights, while other intangible assets included software acquired as well as costs for software projects. The costs for software projects in the course of construction amounted to CHF 15.0 million (2014: CHF 6.3 million). 16. Investments in associates

Kuoni Group Annual Report 2015 155 Financial Report Kuoni Group 16. Investments in associates

CHF million 2015 2014 Net book value as at 1 January 2.4 2.1

Share in profits 0.0 0.3 Share in losses –0.2 0.0 Impairment 1 –1.5 0.0 Sale of Associates –0.7 0.0 Net book value as at 31 December 0.0 2.4

1 For further details on discontinued operations, refer to note 2 of the financial report. 17. Investments in joint ventures 2015.kuoni-report.com

Kuoni Group Annual Report 2015 156 Financial Report Kuoni Group 17. Investments in joint ventures

VFS TasHeel and Vasco Worldwide are joint ventures in which Kuoni Group participates. Both are as strategic partners of Kuoni Group principally engaged in visa application processing for the Saudi Arabian Government, based in Dubai, U.A.E. VFS TasHeel and Vasco Worldwide are structured as separate vehicles and Kuoni Group has residual interests in the net assets of both companies. Accordingly, Kuoni Group has classified its interests in VFS TasHeel and Vasco Worldwide as joint ventures. In accordance with the agreement under which VFS TasHeel and Vasco Worldwide are established, Kuoni Group and the joint venture partner TasHeel have agreed to make additional contributions in proportion to their interests to make up any losses, if required. The following table summarises the consolidated financial information of VFS TasHeel and Vasco Worldwide as included in its own financial statements, adjusted to the accounting principles of Kuoni Group. The table also reconciles the summarised financial information to the carrying amount of the Kuoni Groupʼs interest in VFS TasHeel and Vasco Worldwide.

2015 2014 Share of voting rights and in capital 50% 50%

CHF million 2015 2014 Net book value as at 1 January 0.0 0.2

Share in losses –1.6 –1.8 Adjustment of prior year share in result –0.3 –0.2 Share in OCI 0.3 0.0 Reclassification 1 1.6 1.8 2015.kuoni-report.com Translation differences 0.0 0.0 Net book value as at 31 December 0.0 0.0

1 The reclassification to short-term provisions is mainly due to the contractual loss cover (obligation to make additional payments).

CHF million 2015 2014 Current assets 32.9 41.2 Non-current assets 44.9 21.0 Current liabilities 33.5 21.3 Non-current liabilities 51.2 44.5 Net assets –6.9 –3.6

Kuoni Group Annual Report 2015 157 Financial Report Kuoni Group

CHF million 2015 2014 Turnover 63.0 41.1 Direct costs –12.4 –5.4 Other operating expenses –46.1 –35.5 Depreciation and amortisation –7.2 –3.8 EBIT –2.7 –3.6 Financial result 0.0 0 Income taxes –0.6 0 Net result –3.3 –3.6 Share in result –1.6 –1.8

Dividends received 0.0 0.0 18. Other financial assets 2015.kuoni-report.com

Kuoni Group Annual Report 2015 158 Financial Report Kuoni Group 18. Other financial assets

CHF million 2015 2014 Net book value as at 1 January 50.6 44.2

Additions 23.9 27.1 Disposals –1.9 –21.6 Change in scope of consolidation –16.2 0.0 Translation differences –3.0 0.9 Net book value as at 31 December 53.4 50.6

Other financial assets mainly comprised pension assets from funded pension plans totalling CHF 15.8 million (2014: CHF 0.0 million) – see note 4 – and loans to joint ventures amounting to CHF 22.0 million (2014: CHF 23.1 million). 19. Equity 2015.kuoni-report.com

Kuoni Group Annual Report 2015 159 Financial Report Kuoni Group 19. Equity

The capital administered by the Kuoni Group corresponds to the consolidated equity. Kuoniʼs aims in administering this capital are:

– to maintain the sound structure of its statement of financial position based on going- concern values; – to maintain the financial scope required for future investments and acquisitions; – to ensure a return for investors that is commensurate with their investment risk.

The Kuoni Group administers its equity by means of its statement of financial position equity ratio, i. e. the proportion of equity to total assets. The equity ratio amounted to 32.5% on 31 December 2015 (2014: 32.2%). The Kuoni Group is not subject to any legal covenants relating to minimum equity requirements. For covenants relating to financial indebtedness, see note 21.

CHF million 31 Dec 2015 31 Dec 2014 Equity attributable to shareholders of Kuoni Travel Holding Ltd. 528.9 774.4 Non-controlling interests 1.4 4.8 Total equity 530.3 779.2

Total assets 1,629.4 2,419.2 Equity ratio 32.5% 32.2%

The Board of Directors proposes to the annual general meeting not to distribute a dividend. 2015.kuoni-report.com On 20 April 2015 the shareholders approved the appropriation from the capital contribution reserve of CHF 1.50 per registered share A (2014: CHF 1.50) and CHF 7.50 per registered share B (2014: CHF 7.50) in respect of the 2014 business year. The distribution to holders of shares entitled totalled CHF 29.4 million (2014: 29.0 million).

Composition of share capital

Type of share Registered share A Registered share B Total Number 1,249,500 3,748,500 4,998,000 Nominal value in CHF 0.20 1.00 -

Share capital CHF 249,900 3,748,500 3,998,400 in % 6.25 93.75 100.00

Voting rights Number 1,249,500 3,748,500 4,998,000 in % 25.00 75.00 100.00

All registered shares A and B are fully paid up.

Kuoni Group Annual Report 2015 160 Financial Report Kuoni Group

Conditional capital Conditional capital issuable via the exercising of conversion rights and/or warrants linked to bonds or similar debt issued by Kuoni Travel Holding Ltd or any of its subsidiaries in the domestic or international capital markets amounts to a maximum of CHF 384,000. In the case of issues of bonds or similar debt instruments to which conversion and/or warrant rights are attached, the pre-emptive rights of the existing shareholders are excluded. The holders of the said conversion and/or warrant rights are entitled to subscribe for new registered shares B. The acquisition of registered shares through the exercise of conversion and/or warrant rights and any subsequent transfer thereof are subject to the transfer and voting restrictions contained in the Articles of Incorporation. The Board of Directors is authorised to restrict or revoke the pre-emptive rights of shareholders when such bonds or similar debt instruments to which conversion and/or warrant rights are attached are issued to finance the acquisition of other companies or parts of companies. If shareholdersʼ pre-emptive rights are revoked by a decision of the Board of Directors, the conversion and/or warrant rights concerned will be issued at the prevailing market price, and the new registered shares will be issued at market rates, with due regard to the current market price of the registered shares concerned and/or of comparable financial instruments with a market price. The exercise period is limited to ten years for conversion rights and to seven years from the date of the bond issue for warrant rights. Conditional capital of a maximum of CHF 96,000 also exists for use in exercising subscription or option rights granted to employees of Kuoni Travel Holding Ltd or its subsidiaries under one or more employee stock option plans (in accordance with art. 28 of the Articles of Incorporation). In such cases, new registered shares B may also be issued to employees at rates below the current stock market price, and existing shareholders shall have no subscription rights. The terms and conditions for the issue of such shares shall be determined by the Board of Directors. The acquisition of registered shares under such employee stock option plans and any subsequent transfer thereof are subject to all the relevant statutory transfer and voting right restrictions.

2015.kuoni-report.com Restricted transferability provisions The Articles of Incorporation stipulate that no more than 3% of total voting rights may be entered in the name of any one shareholder.

Principal shareholders As at 31 December 2015 the following largest shareholders are known to the Kuoni Group :

Kuoni Group Annual Report 2015 161 Financial Report Kuoni Group

Number/category Where of Date of last Shareholder of shares Share in % voting shares Voting rights in % disclosure 2 Kuoni and Hugentobler-Foundation, Stans 1,249,500/A 1 6.25 1,249,500 25.00 3.4.1995 Previous year 1,249,500/A 1 6.25 1,249,500 25.00 3.4.1995

Silchester International Investors LLP, London 702,719/B 1 14.06 119,952 3.00 31.12.2015 Previous year 687,702/B 1 13.76 119,952 3.00 31.12.2014

Veraison Capital AG, Zurich 167,138/B 1 3.34 119,952 3.00 31.12.2015 Previous year n.a. n.a. n.a. n.a. n.a.

Schroders plc, London 192,592/B 1 3.85 119,952 3.00 31.12.2015 Previous year 248,651/B 1 4.98 119,952 3.00 31.12.2014

UBS Fund Management (Switzerland) AG, Basel 166,427/B 1 3.33 119,952 3.00 31.12.2015 Previous year 156,556/B 1 3.13 119,952 3.00 15.11.2012

Classic Fund Management AG, Triesen 191,529/B 1 3.83 119,952 3.00 31.12.2015 Previous year n.a. n.a. n.a. n.a. n.a.

Go Investment Partners LLP, London 211,966/B 1 4.24 119,952 3.00 31.12.2015 Previous year n.a. n.a. n.a. n.a. n.a.

1 The nominal value of share A is CHF 0.20, of share B CHF 1.00. 2 2015: disclosure to Kuoni.

SIX Swiss Exchange Regulations

All movements that crossed a threshold between 1 January 2015 and 31 December 2015 were disclosed and duly published on the website of SIX Swiss Exchange Regulations as well as on the company website.

kuoni.com 2015.kuoni-report.com Treasury shares The number of treasury shares is 78,632 (2014: 128,947). These are reserved for the employee share plans of the Board of Directors, the Group Executive Board and senior management. The changes to the number of treasury shares reflect the registered shares B issued to the Board of Directors, the Group Executive Board and management.

Retained earnings: Only a limited amount of retained earnings is available for distribution

– the free reserves of Kuoni Travel Holding Ltd. subsequent to the approval of an appropriate resolution by the General Meeting of Shareholders; – the reserves of subsidiaries in accordance with local fiscal and legal provisions, provided they are distributed first to the parent company.

Other reserves Other reserves contain translation differences (CTA) as well as gains or losses from remeasurement of defined benefit plans, net of taxes, and fair-value gains or losses, net of taxes, from hedging activities recognised in equity.

Kuoni Group Annual Report 2015 162 Financial Report Kuoni Group

Remeasurement gains Translation Hedging and losses on defined CHF million differences reserves benefits pension plans Total Other reserves as at 1 January 2014 –265.5 1.4 –29.7 –293.8

Recognised remeasurement gain or loss on defined benefits pension plans –24.0 –24.0 Realised gains or losses from cash flow hedges transferred to income statement 7.7 7.7 Recognised gains or losses from cash flow hedges 3.1 3.1 Translation differences –28.0 –28.0 Other reserves as at 31 December 2014 –293.5 12.2 –53.7 –335.0

Recognised remeasurement gain or loss on defined benefits pension plans –30.3 –30.3 Realised gains or losses from cash flow hedges transferred to income statement –10.8 –10.8 Recognised gains or losses from cash flow hedges 0.0 Translation differences –106.0 –106.0 Reclassification to the income statement of currency translation differences relating to the disposal of tour operating business and the inbound activities in India 219.7 219.7 Other reserves as at 31 December 2015 –179.8 1.4 –84.0 –262.4

Translation differences The biggest translation differences derived from the translation of the assets and liabilities of Group subsidiaries reporting in GBP or EUR and of USD-denominated intragroup loans of an equity nature/CHF-dominated intragroup loans to subsidiaries with a different currency.

Hedging reserves The hedging reserves correspond to the positive or negative fair value of currency and fuel price hedging contracts classified as cash flow hedges. They are expected to be

2015.kuoni-report.com removed from equity within twelve months.

Remeasurement gains and losses on defined benefits pension plans The reserve includes remeasurement gains and losses on defined benefits pension plans on pension plan assets and pension plan liabilities as well as the effect of asset ceiling. The income taxes on the remeasurement of pension plans amounted to CHF 8.0 million (2014: CHF 6.4 million). 20. Provisions

Kuoni Group Annual Report 2015 163 Financial Report Kuoni Group 20. Provisions

Provisions for personnel related Provisions for Provisions for CHF million costs restructuring joint ventures Other Total Provisions as at 1 January 2015 57.7 0.2 2.2 9.1 69.2

Additions 94.7 23.5 1.6 27.7 147.5 Used –17.1 –0.2 0.0 –1.1 –18.4 Released –11.5 –0.6 0.0 –1.8 –13.9 Sale of subsidiaries –81.2 0.0 0.0 –3.9 –85.1 Translation differences –3.3 0.2 –0.1 –0.4 –3.6 Provisions as at 31 December 2015 39.3 23.1 3.7 29.6 95.7

Of which: Current provisions 30.1 20.9 3.7 2.8 57.5 Non-current provisions 9.2 2.2 0.0 26.8 38.2

Restructuring provisions comprised lease termination penalties and employee termination payments. No provisions were recognised for future operating losses. In 2015 CHF 18.0 million restructuring costs relating to division GTS and CHF 7.2 million relating to corporate and support functions were recognised (2014: CHF 0.0 million). Thereof, CHF 2.1 million were already expensed as incurred. The aim of restructuring the GTS division is to rapidly adjust to changed market conditions through more flexible and cost-efficient structures. Management structures will be adapted, complexity reduced, operational back-office activities outsourced and services that do not add value will be discontinued. Sales activities will be streamlined, simplified and focused on more profitable customer segments. The increase in other provisions was mainly related to the disposal of subsidiaries in 2015. Although Kuoni Group expects a large 2015.kuoni-report.com part of provisions to be settled in 2016, by their nature, the amounts and timing of cash outflow of non-current provisions are difficult to predict but expected to happen within two-to-three years. 21. Financial debts

Kuoni Group Annual Report 2015 164 Financial Report Kuoni Group 21. Financial debts

CHF million 31 Dec 2015 31 Dec 2014 Bond 199.2 199.0 Bank debts 57.2 51.7 Liabilities towards third parties 0.5 0.0 Total 256.9 250.7

Of which: Current financial debts 37.3 33.4 Non-current financial debts 219.6 217.3

Kuoni Travel Holding Ltd. issued a CHF 200 million bond at an annual interest rate of 1.5% in October 2013. The bond was issued at 100.194%. The bond has a duration of six years and matures on 28 October 2019. The effective interest rate applied is 1.62%. The proceeds of the bond were used to redeem the previous CHF 200 million bond on 28 October 2013. The bond had a market value of 100.5% at year-end (stock exchange price on 31 December 2015). Liabilities towards credit institutions include bank accounts of subsidiaries with a negative balance on the balance sheet date.

Syndicated credit facility Kuoni Group initiated early refinancing of the existing revolving credit facility of CHF 209 million. The new revolving credit facility of CHF 200 million replaced the existing agreement on 21 September 2015 and runs until June 2020. As at 31 December 2015, the drawn amount of the credit facility was CHF 20 million. The new credit facility includes a financial covenant relating to the degree of indebtedness. The maximum degree of indebtedness must not exceed 3.0 times,

2015.kuoni-report.com measured as the ratio between net debt and EBITDA. The interest to be paid is calculated on LIBOR plus a margin of between 0.75% and 1.75%.

Financial debts were due as follows:

CHF million 31 Dec 2015 31 Dec 2014 Statement of financial position value 256.9 250.7 Contractual cash flows (undiscounted) 269.9 268.2 Up to 6 months 38.4 32.9

7 to 12 months 2.4 4.0 1 to 2 years 3.0 4.9 2 to 5 years 226.1 226.4 Over 5 years 0.0 0.0

Financial debts were denominated in the following currencies:

CHF million 31 Dec 2015 31 Dec 2014 CHF 266.2 263.0 EUR –0.6 5.0 AUD 3.8 0.0 Other 0.5 0.2 Total 269.9 268.2

Kuoni Group Annual Report 2015 165 Financial Report Kuoni Group

Average interest rates were:

2015 2014 CHF 1.5% 1.6% EUR 1.0% 3.8% 22. Financial risk management 2015.kuoni-report.com

Kuoni Group Annual Report 2015 166 Financial Report Kuoni Group 22. Financial risk management and derivative financial instruments

Carrying amounts and fair values of financial assets and liabilities as at 31 December 2015.

CHF million Carrying amount Fair value Level 1 Level 2 Level 3

Derivative financial assets at fair value through profit or loss 10.7 10.7 10.7 Derivative financial assets used as cash flow hedges 3.7 3.7 3.7 Total financial assets measured at fair value 14.4 14.4 0.0 14.4 0.0

Other financial assets 2 37.6 Cash and cash equivalents 271.1 Time deposits 0.1 Accounts receivable and other receivables (excluding derivative financial assets) 358.1 Total financial assets not measured at fair value 666.9 1 0.0 0.0 0.0 0.0

Derivative financial liabilities at fair value through profit or loss 6.4 6.4 6.4 Derivative financial liabilities used as cash flow hedges 2.2 2.2 2.2 Total financial liabilities measured at fair value 8.6 8.6 0.0 8.6 0.0

Bond 199.2 201.0 201.0 Other financial debts 57.7 57.7 57.7 Accounts payables and other payables (excluding derivative financial liabilities) 222.3 1 Accrued expenses 395.2 1

2015.kuoni-report.com Total financial liabilities not measured at fair value 874.4 258.7 258.7 0.0 0.0

1 The fair values of the financial instruments do not deviate substantially from their carrying amounts. 2 Excluding pension assets capitalised in the other financial assets.

Carrying amounts and fair values of financial assets and liabilities as at 31 December 2014.

Kuoni Group Annual Report 2015 167 Financial Report Kuoni Group

CHF million Carrying amount Fair value Level 1 Level 2 Level 3

Derivative financial assets at fair value through profit or loss 2.2 2.2 2.2 Derivative financial assets used as cash flow hedges 39.8 39.8 39.8 Total financial assets measured at fair value 42.0 42.0 0.0 42.0 0.0

Other financial assets 50.6 Cash and cash equivalents 339.3 Time deposits 10.7 Accounts receivable and other receivables (excluding derivative financial assets) 399.9 Total financial assets not measured at fair value 800.5 1 0.0 0.0 0.0 0.0

Derivative financial liabilities at fair value through profit or loss 2.3 2.3 2.3 Derivative financial liabilities used as cash flow hedges 23.3 23.3 23.3 Total financial liabilities measured at fair value 25.6 25.6 0.0 25.6 0.0

Bond 199.0 205.4 205.4 Other financial debts 51.7 51.7 51.7 Accounts payables and other payables (excluding derivative financial liabilities) 304.2 1 Accrued expenses 534.2 1 Total financial liabilities not measured at fair value 1,089.1 257.1 257.1 0.0 0.0

1 The fair values of the financial instruments do not deviate substantially from their carrying amounts.

The measurement of the market values of active and passive financial instruments is based on observable market data where possible. The determination of the market values depends on the inputs used of the following levels 1 to 3:

Level 1: quoted market value in an active market of an identical financial instrument. Level 2: current market value in an active market of a similar financial instrument or a valuation method whose prime input factors are based on direct or indirect observable 2015.kuoni-report.com market data. Level 3: valuation method whose prime input factors are not based on observable market data.

The calculation of fair value level 2 is subject to the following valuation principles: Foreign currency-related futures and swaps based on valuation principles from external financial service providers that use observable market data for interest rates, yield curves, exchange rates and implied volatilities for similar instruments on the measurement date. This is the present-value method. In the past financial year, there were no transfers between the different levels.

The table below shows the financial instruments held by the Kuoni Group.

Kuoni Group Annual Report 2015 168 Financial Report Kuoni Group

Derivative financial instruments Total carrying At fair value amount Loans and through profit and Used as Other of financial CHF million receivables loss cash flow hedges liabilities instruments 1 31 Dec 2015 Other financial assets 2 37.6 37.6 Cash and cash equivalents 271.1 271.1 Time deposits 0.1 0.1 Accounts receivable and other receivables 358.1 10.7 3.7 372.5 Total financial instruments – assets 666.9 10.7 3.7 0.0 681.3

Financial debts 256.9 256.9 Accounts payable and other payables 6.4 2.2 222.3 230.9 Accrued expenses 395.2 395.2 Total financial instruments – liabilities 0.0 6.4 2.2 874.4 883.0

31 Dec 2014 Other financial assets 50.6 50.6 Cash and cash equivalents 339.3 339.3 Time deposits 10.7 10.7 Accounts receivable and other receivables 399.9 2.2 39.8 441.9 Total financial instruments – assets 800.5 2.2 39.8 0.0 842.5

Financial debts 250.7 250.7 Accounts payable and other payables 2.3 23.3 304.2 329.8 Accrued expenses 534.2 534.2 Total financial instruments – liabilities 0.0 2.3 23.3 1,089.1 1,114.7

1 The fair values of the financial instruments do not deviate substantially from their carrying amounts. 2 Excluding pension assets capitalised in the other financial assets.

In the normal course of its business, the Kuoni Group is exposed to liquidity, credit and market risks (essentially interest rate and currency risks). To manage these risks, 2015.kuoni-report.com various derivative financial instruments are used. While these are subject to the risk of market rates changing subsequent to their acquisition, such changes are generally offset by opposite effects on the items being hedged.

Liquidity risk Liquidity risk is the risk that the Kuoni Group may be unable to meet its financial obligations when these become due for payment. The liquidity position of the Kuoni Group is significantly influenced by the booking and payment pattern of customers. As a result, liquidity is at its lowest in the winter months and at its highest in the summer months. Kuoni permanently monitors its liquidity to keep it at adequate levels, with monthly reports to the Group Executive Board and the Board of Directors. This is done partly by maintaining liquidity reserves, to even out the usual fluctuations in liquidity levels and needs. Kuoni also has unutilised credit facilities to cope with any major liquidity fluctuations. These unused credit facilities totalled CHF 180 million on 31 December 2015 and are available for loans, overdrafts and hedging activities. The facilities are spread among several banks, to avoid excessive dependence on a single banking institution. The due dates of the financial debts held are shown in note 21. The other financial instruments held (accounts payable and accrued expenses) are all payable within six months.

Kuoni Group Annual Report 2015 169 Financial Report Kuoni Group

Credit risk Exposure to credit risk is monitored on an ongoing basis and covered by appropriate value adjustments on accounts receivable and prepayments made. Credit risks are limited because the customer base of the Kuoni Group consists of a large number of customers spread over a wide range of geographical regions. There are no risk concentrations. The counterparties to derivative financial instruments and cash are carefully selected financial institutions. Given their high credit ratings, the Kuoni Group does not expect any counterparty to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying amount of each financial asset. Furthermore, the Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements with the respective counterparties in order to mitigate counterparty risk. Under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding are aggregated into a single net amount that is payable by one party to the other. The ISDA agreements do not meet the criteria for off-setting in the balance sheet as the Group does not have a currently enforceable right to offset recognised amounts. As per 31 December 2015 the amount subject to such netting arrangements was CHF 7.4 million (2014: CHF 11.5 million). Considering the effect of these agreements, the amount of derivative assets and derivative liabilities would decrease.

Interest rate risk The Kuoni Group is exposed to interest rate risk as a result of movements in interest rates in the capital market. Generally, all non-current financial liabilities have fixed interest rates. Consequently, changes in interest rates can result in fluctuations in the fair value of such financial liabilities. This would not have any impact on the net result or future cash flows, however. No corresponding derivatives are outstanding on the balance sheet date. Cash flow sensitivity analysis for financial instruments with all variable interest 2015.kuoni-report.com rates: a one percentage-point increase in the interest rate applicable would have increased the net result by CHF 2.5 million (2014: CHF 3.2 million). This analysis is based on the assumption that all other influencing factors remain unchanged.

Foreign currency risk The Kuoni Group incurs foreign currency risk primarily on purchases and borrowings denominated in a currency other than the functional currency of the subsidiary concerned. A further foreign currency risk of smaller significance derives from the amount of turnover denominated in a currency other than the functional currency of the subsidiary concerned. On a consolidated basis, the Group is also exposed to currency fluctuations between the Swiss franc and the functional currencies of its subsidiaries. The major currencies giving rise to currency risk for the Kuoni Group are the euro, pound sterling and US dollar. Foreign currency risks are monitored within the Kuoni Group in accordance with specified guidelines. These guidelines contain principles on risk limits, the forms of hedging instruments permitted and the relevant risk monitoring processes. The guidelines prohibit on principle the use of derivative financial instruments for speculative purposes. The enforcement of these guidelines and general risk management are provided by the Kuoni Groupʼs treasury units in the form of a hedging strategy. Monthly reports are submitted to the Group Executive Board on the current risk situation.

Kuoni Group Annual Report 2015 170 Financial Report Kuoni Group

The Kuoni Group uses forward exchange contracts to hedge its foreign currency risk. Most hedging contracts have maturities of up to 12 months. Where necessary, the forward exchange contracts are rolled over at maturity. The Kuoni Group does not hedge against the foreign currency risks associated with its net investment in foreign entities or the related foreign currency translation of local earnings. The currency hedging contracts outstanding at year-end are summarised in the following table. The market value volatility from hedging contracts, which qualify as cash flow hedges, will likely be reclassified from the other comprehensive income to the income statement within a year. Changes in the fair value of forward exchange contracts, currency options and swaps that economically hedge monetary assets and liabilities in foreign currencies and for which no hedge accounting is applied are recognised in the income statement. Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the monetary items are reported under direct costs.

Positive fair Negative fair Positive fair Negative fair values values Contract values values values Contract values CHF million 31 Dec 2015 31 Dec 2015 31 Dec 2015 31 Dec 2014 31 Dec 2014 31 Dec 2014 Cash flow hedges Options 0.0 0.0 0.0 29.0 –6.0 502.3 Currency-related forward contracts and swaps 3.7 –2.2 349.2 10.8 –3.3 476.0 Commodity options (aviation fuel) 0.0 0.0 0.0 0.0 –14.0 40.5 Other derivative financial instruments Currency-related forward contracts, swaps and options 10.7 –6.4 1,031.8 2.2 –2.3 205.4 Total 14.4 –8.6 1,381.0 42.0 –25.6 1,224.2

Of which: Derivatives subject to master netting agreements –7.4 7.4 –11.5 11.5 Net amount 7.0 –1.2 30.5 –14.1

2015.kuoni-report.com The fair value is the (higher or lower) value at which a derivative contract could be concluded on the balance sheet date. The fair values calculated on the balance sheet date should be looked at not in isolation but together with the calculated value of anticipated future transactions and hence in the context of the aggregate reduction in the Groupʼs exposure to currency movements. Positive or negative fair values of derivative financial instruments are carried on the statement of financial position under accounts receivable/other receivables or accounts payable/other payables. The contractual cash flows are pitted against flows from underlying transactions that roughly offset the contractual cash flows. Derivative financial instruments by currency:

Positive fair Negative fair Positive fair Negative fair values values Contract values values values Contract values CHF million 31 Dec 2015 31 Dec 2015 31 Dec 2015 31 Dec 2014 31 Dec 2014 31 Dec 2014 AUD 2.7 0.0 73.0 0.1 –0.2 20.4 EUR 3.8 –5.2 677.1 9.6 –2.9 474.1 USD 5.6 –0.8 238.4 22.0 0.0 272.7 Other currencies 2.3 –2.6 392.5 10.3 –8.5 416.5 Commodities-related futures 0.0 0.0 0.0 0.0 –14.0 40.5 Total 14.4 –8.6 1,381.0 42.0 –25.6 1,224.2

Maturities of derivative financial instruments:

Kuoni Group Annual Report 2015 171 Financial Report Kuoni Group

Positive fair Negative fair Positive fair Negative fair values values Contract values values values Contract values CHF million 31 Dec 2015 31 Dec 2015 31 Dec 2015 31 Dec 2014 31 Dec 2014 31 Dec 2014 Up to 6 months 14.0 –8.3 1,307.5 26.7 –13.3 743.5 7 to 12 months 0.4 –0.3 73.5 12.1 –9.0 347.8 1 to 2 years 0.0 0.0 0.0 3.2 –3.3 132.9 Total 14.4 –8.6 1,381.0 42.0 –25.6 1,224.2

Foreign-currency sensitivity analysis A change in the foreign-currency positions shown at year-end as a result of a +10% or – 10% change in currency exchange rates would have increased or decreased consolidated equity and the Group net result by the amounts shown below. This analysis is based on the assumption that all other variables (and interest rates in particular) remained unchanged. The consolidated income statement may also be substantially affected by any changes in currency exchange rates relating to financial instruments bought and sold within the business year to which the provisions of IFRS 7 do not apply.

Nominal currency USD Nominal currency GBP 31 Dec 2015 +/– 10% +/– 10% CHF million Income Income Income Income Functional currency Equity Equity statement statement Equity Equity statement statement +10% -10% +10% -10% +10% -10% +10% -10% CHF 0.0 0.0 –10.3 12.6 0.0 0.0 –9.0 11.0 GBP 0.0 0.0 –1.6 1.9 n.a. n.a. n.a. n.a. USD n.a. n.a. n.a. n.a. 0.0 0.0 –0.5 0.5 EUR 2.4 –2.9 –4.7 5.8 4.0 –4.9 0.1 –0.1

Nominal currency EUR Nominal currency CHF +/– 10% +/– 10% CHF million Income Income Income Income Functional currency Equity Equity statement statement Equity Equity statement statement

2015.kuoni-report.com +10% -10% +10% -10% +10% -10% +10% -10% CHF –0.9 0.9 –9.2 12.1 n.a. n.a. n.a. n.a. GBP –4.0 4.9 –0.6 0.7 0.0 0.0 0.5 –0.6 USD –2.6 2.6 10.0 –10.4 0.0 0.0 0.0 0.0 EUR n.a. n.a. n.a. n.a. 39.5 –48.2 0.5 –0.6

Nominal currency USD Nominal currency GBP 31 Dec 2014 +/– 10% +/– 10% CHF million Income Income Income Income Functional currency Equity Equity statement statement Equity Equity statement statement +10% -10% +10% -10% +10% -10% +10% -10% CHF 3.6 –3.4 –12.1 14.8 0.4 –0.6 –0.8 0.9 GBP 2.1 –2.0 –4.0 4.8 n.a. n.a. n.a. n.a. USD n.a. n.a. n.a. n.a. –1.9 1.7 –9.6 11.4 EUR –0.9 1.9 6.4 –7.7 –3.0 6.1 0.6 –0.7

Nominal currency EUR Nominal currency CHF +/– 10% +/– 10% CHF million Income Income Income Income Functional currency Equity Equity statement statement Equity Equity statement statement +10% -10% +10% -10% +10% -10% +10% -10% CHF 6.3 –5.8 –6.4 7.8 n.a. n.a. n.a. n.a. GBP 1.6 –1.9 0.0 0.0 –0.3 0.3 0.0 0.0 USD 0.6 –0.6 3.2 –3.7 –1.9 2.0 –0.6 0.6 EUR n.a. n.a. n.a. n.a. 31.0 –38.2 0.2 –0.7 23. Related parties

Kuoni Group Annual Report 2015 172 Financial Report Kuoni Group 23. Related parties

Related parties are directors and Group Executive Board members (together with members of their families), associates, joint ventures as well as major shareholders and companies controlled by these parties and pension plans. Apart from the compensation paid to the Board of Directors and the Group Executive Board and the ordinary contributions to occupational pension plans, there were no significant transactions with related parties in 2015.

Kuoni and Hugentobler-Foundation, Stans The Kuoni and Hugentobler-Foundation received a (gross) distribution of capital contribution reserve of CHF 1.9 million (2014: CHF 1.9 million) on the basis of its shareholding.

Associates All transactions with associates are priced on an armʼs length basis. The Kuoni Group made no sales to associates in 2015 (2014: CHF 0.0 million), while no purchases were made from associates (2014: CHF 5.1). In 2015, no profit was distributed by associates (2014: CHF 0.1 million).

Joint ventures All transactions with joint ventures are priced on an armʼs length basis. The Kuoni Group made no sales to joint ventures, while no purchases were made from joint ventures. There are loans/receivables to joint ventures amounting to CHF 22.0 million and CHF 13.9 million (2014: CHF 23.1 million and CHF 0.0 million). No profits were distributed by joint ventures in 2015.

Pension plans The transactions between the Kuoni Group and the various defined benefits pension 2015.kuoni-report.com plans for its employees are shown in note 4 and amounted to CHF 0.4 million (2014: CHF 0.7 million). As in the previous year, the Kuoni Group currently has neither liabilities nor assets towards these pension plans.

Group Executive Board and Board of Directors compensation The total compensation (including employerʼs contributions to social security and pension funds) paid to members of the Group Executive Board and the Board of Directors, which is included in personnel expense, consisted of:

Group Executive Board Board of Directors Total CHF million 2015 2014 2015 2014 2015 2014

Short-term employee benefits 5.9 3.9 1.0 0.9 6.9 4.8 Post-employment benefits 1.2 1.0 0.0 0.0 1.2 1.0 Termination benefits 2.8 2.0 0.0 0.0 2.8 2.0 Share-based payments 3.9 2.0 0.7 0.7 4.6 2.7 Total 13.8 8.9 1.7 1.6 15.5 10.5

The compensation paid to and shares held by members of the Board of Directors and the Group Executive Board are shown in detail of the financial statements of Kuoni Travel Holding Ltd., in compliance with Swiss law.

Kuoni Group Annual Report 2015 173 Financial Report Kuoni Group 24. Contingent liabilities, assets pledged

CHF million 31 Dec 2015 31 Dec 2014 Assets pledged 0.0 50.2

The assets pledged in prior year were used to secure bank loans with mortgage collateral. 25. Leasing liabilities 2015.kuoni-report.com

Kuoni Group Annual Report 2015 174 Financial Report Kuoni Group 25. Leasing liabilities

Operating leases This position mainly contained lease contracts for buildings.

CHF million 2015 2014 1 Liabilities payable up to 1 year 27.9 26.3 Liabilities payable 1 to 5 years 47.3 47.8 Liabilities payable over 5 years 8.1 5.0 Total leasing liabilities not recognised in the statement of financial position 83.3 79.1

Amount recognised in the income statement in respective year 31.7 31.4

1 Restatement of comparative period figures due to the disposal of all outbound tour operating activities and the inbound business activities in India, see note 2 of the financial report. 26. Events after balance sheet 2015.kuoni-report.com

Kuoni Group Annual Report 2015 175 Financial Report Kuoni Group 26. Events after balance sheet date

On 2 February 2016 private equity company EQT announced an all-cash public tender offer for all publicly held registered shares of Kuoni Travel Holding Ltd. (SIX:KUNN) for a price of CHF 370.00 per share. On 29 February 2016 EQTʼs subsidiary, Kiwi Holding IV S.à r.l., published the corresponding prospectus. Kuoni Groupʼs Board of Directors unanimously supports the offer and considers the valuation as fair and adequate. Should the offer succeed, the creditors of the bond and the syndicated loan have the right to claim repayment of such financial debts classified as non-current. The consolidated financial statements were approved by the Board of Directors and released for publication on 8 March 2016. No further events after 31 December 2015 occurred that would result in an adjustment to the carrying amounts of the Groupʼs assets and liabilities. Principal subsidiaries, 2015.kuoni-report.com

Kuoni Group Annual Report 2015 176 Financial Report Kuoni Group Principal subsidiaries, associates and joint ventures

Europe

2015 2014 Paid-in share Investment Paid-in share Investment Activity Currency capital in % capital in % Consolidation Switzerland KIT Solution AG, Zurich CO CHF 1,000,000 100 1,000,000 100 C Kuoni Global Travel Services AG, Zurich D CHF 100,000 100 100,000 100 C

Austria Kuoni Destination Management GmbH, Vienna D EUR 253,000 100 253,000 100 C

Denmark Kuoni Destination Management A/S, Copenhagen D DKK 600,000 100 600,000 100 C

France Gullivers Travel Associates SAS, Paris D EUR 37,000 100 37,000 100 C

Hungary Kuoni Destination Management Kft., Budapest D HUF 3,000,000 100 3,000,000 100 C

Italy Kuoni Destination Management S.p.A., Rome D EUR 1,548,000 100 1,548,000 100 C GTA ( Italia) SRL, Rome D EUR 20,000 100 20,000 100 C 2015.kuoni-report.com

The Netherlands Kuoni Destination Management B.V., Amsterdam D EUR 55,815 100 55,815 100 C

Spain Kuoni Destination Management S.L., Madrid D EUR 150,000 100 150,000 100 C Gullivers Travel Associates S.A., Madrid D EUR 420,708 100 420,708 100 C

United Kingdom Donvand Ltd., London D GBP 177,194 100 177,194 100 C GTA (Retail) Limited, London D GBP 50,000 100 50,000 100 C VF Services (UK) Ltd., London V GBP 25,001 100 25,001 100 C

Activity: D = Destination & Accommodation Services V = Visa Processing Services CO = Corporate Consolidation: C = Consolidated E = Valuation according to equity method

Kuoni Group Annual Report 2015 177 Financial Report Kuoni Group

Overseas

2015 2014 Paid-in share Investment Paid-in share Investment Activity Currency capital in % capital in % Consolidation Australia Australian Tours Management Pty Ltd., Melbourne D AUD 500,000 100 500,000 100 C GTA Australasia Pty Limited, Sydney D AUD 100,000 100 100,000 100 C Travelcube Pacific Pty Limited, Sydney D AUD 50,000 100 50,000 100 C

China S.K.Y. Business Consultancy Co. Ltd., Shanghai D CNY 1,198,115 100 1,198,115 100 C Kuoni Destination Management (Beijing) Ltd., Beijing D CNY 4,000,000 100 4,000,000 100 C Gullivers Travel Associates (Hong Kong) Limited, Kowloon D HKD 3,064,000 100 3,064,000 100 C Gullivers (Beijing) Commercial Consulting Services (China), Beijing D USD 250,000 100 250,000 100 C Gullivers Travel Associates (China) Limited, Beijing D CNY 4,000,000 100 4,000,000 100 C VFS Business Information Consulting Co. Ltd., Shanghai V CNY 1,127,862 100 1,127,862 100 C

India VFS Global Services Pvt. Ltd., Mumbai V INR 373,670,000 100 373,670,000 100 C

Japan Kuoni Travel (Japan) Ltd., Tokyo D JPY 50,000,000 100 50,000,000 100 C Gullivers Travel Agency Co. Ltd (Japan), Tokyo D JPY 40,000,000 100 40,000,000 100 C Octopus Travel.com Japan KK, Tokyo D JPY 10,000,000 100 10,000,000 100 C 2015.kuoni-report.com

Kenya Private Safaris (E.A.) Ltd., Nairobi D KES 62,500,000 100 62,500,000 100 C

Mauritius Kuoni Asian Investments (Mauritius) Ltd., Port Louis CO USD 1,000,000 100 1,000,000 100 C

Singapore Kuoni Travel (S) PTE Ltd., Singapore D SGD 100,000 100 100,000 100 C Kuoni GTS (Singapore) Pte. Ltd., Singapore D SGD 100,000 100 100,000 100 C

South Africa Kuoni Private Safaris (Pty) Ltd., Cape Town D ZAR 500,000 100 500,000 100 C VFS Visa Processing (South Africa) Pty Ltd., Pretoria V ZAR 300,000 100 300,000 100 C

South Korea Kuoni Travel (Korea) Ltd., Seoul D KRW 100,000,000 100 100,000,000 100 C Kuoni GTS (Korea) Ltd., Seoul D KRW 350,000,000 100 350,000,000 100 C

Taiwan Kuoni GTS (Taiwan) Ltd., Taipei D TWD 6,000,000 100 6,000,000 100 C

Thailand

Kuoni Group Annual Report 2015 178 Financial Report Kuoni Group

Asian Trails Ltd., Bangkok D THB 24,000,000 49 24,000,000 49 C Kuonissimo (Thailand) Ltd., Bangkok D THB 2,000,000 49 2,000,000 49 C

United Arab Emirates Desert Adventures Tourism LLC, Dubai D AED 300,000 100 300,000 100 C Gulf Dunes LLC, Dubai D AED 300,000 100 300,000 100 C GTA (Middle East) FZ LLC, Dubai D AED 50,000 100 50,000 100 C VFS TasHeel International JLT, Dubai V USD 5,000,000 50 5,000,000 50 E Vasco Worldwide JLT, Dubai V USD 5,000,000 50 5,000,000 50 E Octopus Travel (Middle East) FZ LLC, Dubai D AED 50,000 100 50,000 100 C

USA AlliedTPro, Inc., New York D USD 170,000 100 170,000 100 C Kuoni Travel (Atlanta) Inc., Atlanta D USD 50,000 100 50,000 100 C Kuoni Holding Delaware, Inc., Wilmington CO USD 1 100 1 100 C GTA Americas LLC, Delaware D USD 29,700,000 100 29,700,000 100 C Octopus Travel.com (USA) Limited, Delaware D USD 1,000 100 1,000 100 C

Activity: D = Destination & Accommodation Services V = Visa Processing Services CO = Corporate Consolidation: C = Consolidated E = Valuation according to equity method 2015.kuoni-report.com

Kuoni Group Annual Report 2015 179 Financial Report Kuoni Group

Discontinued operations (tour operating business and inbound business India)

2015 2014 Paid-in share Investment Paid-in share Investment Activity Currency capital in % capital in % Consolidation Switzerland Kuoni Reisen AG, Zurich T/D CHF 0 0 7,000,000 100 DE Railtour Suisse SA, Berne T CHF 0 0 1,600,000 93 DE

Belgium Kuoni Travel Belgium B.V. B.A., Gent T EUR 0 0 7,335,000 100 DE

Denmark Falk Lauritsen Rejser A/S, Herning T DKK 0 0 500,000 100 DE

The Netherlands Kuoni Specialists B.V., Amsterdam T EUR 0 0 20,418 100 DE

Spain Sotavento S.A., Fuerteventura T EUR 0 0 3,060,000 100 DE

Sweden Kuoni Nordic AB, Stockholm T SEK 0 0 23,000,000 100 DE Nova Airlines AB, Stockholm T SEK 0 0 15,000,000 100 DE

United Kingdom Kuoni Travel Ltd., Dorking T/D GBP 0 0 1,500,000 100 DE CV Travel Holdings Ltd., London T GBP 0 0 100,000 100 DE Kirker Holdings Ltd., London T GBP 0 0 100,000 100 DE Carrier Ltd., Cheshire T GBP 0 0 139,000 100 DE

2015.kuoni-report.com China Kuoni Travel (China) Ltd., Hong Kong T HKD 0 0 4,800,000 100 DE

India Kuoni Travel (India) Pvt. Ltd., Mumbai T/D INR 0 0 80,230,500 100 DE Kuoni Business Travel India Pvt. Ltd., Mumbai T INR 0 0 8,450,000 100 DE

Activity: T = Tour Operating D = Destination & Accommodation Services Consolidation: DE = Deconsolidated Report of the statutory auditor

Kuoni Group Annual Report 2015 180 Financial Report Kuoni Group Report of the statutory auditor

Report of the statutory auditor to the General Meeting of Shareholders of Kuoni Travel Holding Ltd., Zurich.

Report of the statutory auditor on the consolidated financial statements As statutory auditor, we have audited the accompanying consolidated financial statements of Kuoni Travel Holding Ltd., which comprise the statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes for the year ended 31 December 2015.

Board of Directorsʼ responsibility The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditorʼs responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the 2015.kuoni-report.com amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditorʼs judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entityʼs preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entityʼs internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2015 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.

Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

Kuoni Group Annual Report 2015 181 Financial Report Kuoni Group In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing StandardIn accordance 890, we confirmwith article that 728a an internal paragraph control 1 item system 3 CO exists and ,Swiss which Auditing has been designedStandard 890,for the we preparation confirm that of an consolidated internal control financial system statemen exists,ts which according has been to the instructionsdesigned for of the the preparation Board of Directors. of consolidated financial statements according to the instructionsWe recommend of the Board that the of Directors.consolidated financial statements submitted to you be approved.We recommend that the consolidated financial statements submitted to you be approved. KPMG AG KPMG AG

Martin Schaad Martin Schaad Tobias Wölfle Licensed Audit Expert Tobias Wölfle AuditorLicensed in Audit Charge Expert Licensed Audit Expert Auditor in Charge Licensed Audit Expert

Zurich, 8 March 2016 Zurich, 8 March 2016 2015.kuoni-report.com

Kuoni Group Annual Report 2015 182 Financial Report Kuoni Travel Holding LTD 2015.kuoni-report.com

Kuoni Group Annual Report 2015 183 Financial Report Kuoni Travel Holding LTD

Statement of financial position

Assets CHF Notes 31 Dec 2015 % 31 Dec 2014 % Current assets Cash and cash equivalents 76,849,617 6.2 258,153,369 14.1 Accounts receivable 1 – from third parties 54,050 0.0 0 0.0 – from subsidiaries 178,147,307 14.5 71,969,900 4.0 Other receivables 1 – from third parties 14,208,640 1.2 1,992 0.0 – from subsidiaries 8,547,847 0.6 0 0.0 Prepaid expenses 951,964 0.1 1,704,458 0.1 Total current assets 278,759,425 22.6 331,829,719 18.2

Non-current assets Financial assets – Loans to subsidiaries 948,978,905 77.0 986,518,554 54.1 – Other financial assets 0 0.0 344,986 0.0 Investments in subsidiaries [2] 100,000 0.0 501,696,025 27.5 2015.kuoni-report.com Tangible fixed assets – Land and building 4,460,000 0.4 4,460,000 0.2 – Furniture, fixtures and equipment – Hardware, PC's, Installations 185,382 0.0 1 0.0 Total non-current assets 953,724,287 77.4 1,493,019,566 81.8

Total assets 1,232,483,712 100.0 1,824,849,285 100.0

1 Adjusted to follow the new presentation rules, please refer to explanatory notes.

Kuoni Group Annual Report 2015 184 Financial Report Kuoni Travel Holding LTD

Equity and liabilities CHF Notes 31 Dec 2015 % 31 Dec 2014 %

Current liabilities Accounts payable 1 – to third parties 472,585 0.0 9,190,515 0.5 – to subsidiaries 115,012,203 9.3 369,152,850 20.2 Bank overdrafts 1 157,595,322 12.8 174,643,094 9.6 Other payables 1 – to third parties 9,493,602 0.8 1,625,319 0.1 – to subsidiaries 14,202,389 1.2 0 0.0 Accrued expenses 1,781,011 0.1 20,097,999 1.1 Total current liabilities 298,557,112 24.2 574,709,777 31.5

Non-current liabilities Long-term interest bearing liabilities – Bond [3] 200,000,000 16.2 200,000,000 11.0 – Bank loans 1 [3] 20,000,000 1.6 15,000,000 0.8 – Loans from subsidiaries 9,797,510 0.8 18,196,800 1.0 Long-term non-interest bearing liabilities – Provisions 1,843,284 0.2 238,974,000 13.1 Total non-current liabilities 231,640,794 18.8 472,170,800 25.9

Total liabilities 530,197,906 43.0 1,046,880,577 57.4

Equity 1 [4] Share capital 3,998,400 0.3 3,998,400 0.2 Legal capital reserves [4] – Reserve from capital contribution [4] 331,841,427 26.9 347,666,062 19.0 – Other capital reserves 58,369,715 4.7 58,503,934 3.2 Legal retained earnings 8,000,000 0.6 8,000,000 0.4 Voluntary retained earnings – Retained earnings based on decision by annual meeting 376,566,962 30.6 280,673,935 15.4 – Net result –62,239,798 –5.0 95,893,027 5.3 Treasury shares [5] –14,250,900 –1.1 –16,766,650 –0.9

2015.kuoni-report.com Total equity 702,285,806 57.0 777,968,708 42.6

Total equity and liabilities 1,232,483,712 100.0 1,824,849,285 100.0

1 Adjusted to follow the new presentation rules, please refer to explanatory notes. Income statement

Kuoni Group Annual Report 2015 185 Financial Report Kuoni Travel Holding LTD Income statement

CHF Notes 2015 2014 Income Income from investments in subsidiaries [6] 17,283,204 105,702,198 Other financial income [7] 28,859,053 28,350,717 Other operating income 515,286 742,500 Total income 46,657,543 134,795,415

Expenses Personnel expenses 1,927,580 20,216,088 Administrative expenses 1 3,263,817 10,028,284 Depreciation 61,794 0 Financial expenses 22,850,625 8,427,288 Extraordinary, non-recurring or prior period expenses [8] 80,494,662 0 Direct taxes 1 298,863 230,728 Total expenses 108,897,341 38,902,388

Net result –62,239,798 95,893,027

1 Adjusted to follow the new presentation rules, please refer to explanatory notes. Notes 2015.kuoni-report.com

Kuoni Group Annual Report 2015 186 Financial Report Kuoni Travel Holding LTD Notes

Introduction Legally, Kuoni shareholders are shareholders of Kuoni Travel Holding Ltd., Zurich. As announced in the annual report 2014, the Kuoni Group has introduced a double holding structure in the business year 2015. With the introduction of the double holding structure, Kuoni Travel Holding Ltd. transferred all shareholdings in its subsidiaries (including related provisions) to the newly incorporated Kuoni Travel Investments Ltd. Excluded from this transfer was its shareholding in Kuoni Travel (China) Ltd. As a result of the introduction of the double holding structure, Kuoni Travel Holding Ltd. directly controls Kuoni Travel Investments Ltd. and indirectly controls all other subsidiaries through Kuoni Travel Investments Ltd. From an economic standpoint, the shareholders of Kuoni Travel Holding Ltd. will continue to be invested in the entire Group. The relevant shareholdings are set forth in the following note 2 (Investment in subsidiaries). 1. Principles 2015.kuoni-report.com

Kuoni Group Annual Report 2015 187 Financial Report Kuoni Travel Holding LTD 1. Principles

General aspects These financial statements were prepared according to the provisions of the Swiss Law on Accounting and Financial Reporting, the “New Swiss Accounting Law” (32nd title of the Swiss Code of Obligations) for the first time. These provisions were effective as of 1 January 2013 and require companies to adapt them as of 1 January 2015. Therefore, the presentation of the Financial Statements differs compared to those published in 2014. The prior-year presentation was adjusted to follow the new requirements. The positions affected by the change are marked with a footnote. Where not prescribed by law, the significant accounting and valuation principles applied are described below.

Financial assets Financial assets include interest-bearing long-term loans to Group companies. Loans granted in foreign currency are translated at the rate at the balance sheet date, whereby unrealised losses are recorded and unrealised profits are not recognised in the income statement.

Treasury shares Treasury shares are recognised at acquisition cost and deducted from shareholdersʼ equity at the time of acquisition. In case of a resale, the gain is recognised through reserves from capital contribution and the loss is recognised through voluntary retained earnings.

Share-based payments Should treasury shares be used for share-based payment programmes for the Board of Directors, the acquisition cost is recognised as personnel expenses. 2015.kuoni-report.com Long-term interest-bearing liabilities Interest-bearing liabilities are recognised in the balance sheet at nominal value. Issue costs for bonds are recognised as prepaid expenses and amortised on a straight-line basis over the bondʼs maturity period.

Income from investment in subsidiaries The income from investment in subsidiaries consists of dividends received as well as income from the sale of subsidiaries.

Foregoing a cash flow statement and additional disclosure in the notes As Kuoni Travel Holding Ltd. prepared its consolidated financial statements in accordance with a recognised accounting standard (International Financial Reporting Standards as issued by IASB, IFRS), it has decided to forego presenting additional information on interest-bearing liabilities and audit fees in the notes as well as in the cash flow statement in accordance with the law. 2. Investment in subsidiaries

Kuoni Group Annual Report 2015 188 Financial Report Kuoni Travel Holding LTD 2. Investment in subsidiaries

The investment in Kuoni Travel (China) Ltd. was sold in 2015 as part of the sale of Kuoniʼs Tour Operating Business. The investment was sold for HKD 250.0 million (CHF 32.1 million) which resulted in a gain of CHF 17.3 million.

The following table shows Kuoni Travel Holding Ltd.ʼs directly held subsidiary as of 31 December 2015:

Investment Paid-in Company Currency share capital in % Switzerland Kuoni Travel Investments Ltd., Zurich CHF 100,000 100

The following are Kuoni Travel Holding Ltd.ʼs material indirectly held subsidiaries, associates and joint ventures as of 31 December 2015 as well as its directly held and material indirectly held subsidiaries, associates and joint ventures as of 31 December 2014. For 2014, material indirectly held subsidiaries, associates and joint ventures are marked with a “*”; all others were directly held subsidiaries, associates or joint ventures. 2015.kuoni-report.com

Kuoni Group Annual Report 2015 189 Financial Report Kuoni Travel Holding LTD

Europe

2015 2014 Investment in % Investment in % Paid-in share and Paid-in share and Activity Currency capital voting rights in % capital voting rights in % Consolidation Switzerland KIT Solution AG, Zurich CO CHF 1,000,000 100 1,000,000 100 C Kuoni Global Travel Services AG, Zurich D CHF 100,000 100 100,000 100 C

Austria Kuoni Destination Management GmbH, Vienna D EUR 253,000 100 253,000 100 C

Denmark Kuoni Destination Management A/S, Copenhagen D DKK 600,000 100 600,000 100 C

France Gullivers Travel Associates SAS, Paris D EUR 37,000 100 37,000 100* C

Hungary Kuoni Destination Management Kft., Budapest D HUF 3,000,000 100 3,000,000 100 C

Italy Kuoni Destination Management S.p.A., Rome D EUR 1,548,000 100 1,548,000 100 C GTA ( Italia) SRL, Rome D EUR 20,000 100 20,000 100* C

The Netherlands Kuoni Destination Management B.V., Amsterdam D EUR 55,815 100 55,815 100 C

2015.kuoni-report.com Spain Kuoni Destination Management S.L., Madrid D EUR 150,000 100 150,000 100 C Gullivers Travel Associates S.A., Madrid D EUR 420,708 100 420,708 100* C

United Kingdom Donvand Ltd., London D GBP 177,194 100 177,194 100* C GTA (Retail) Limited, London D GBP 50,000 100 50,000 100* C VF Services (UK) Ltd., London V GBP 25,001 100 25,001 100* C

Activity: D = Destination & Accommodation Services V = Visa Processing Services CO = Corporate Consolidation: C = Consolidated E = Valuation according to equity method

Overseas

2015 2014 Investment in % Investment in % Paid-in share and Paid-in share and Activity Currency capital voting rights in % capital voting rights in % Consolidation

Kuoni Group Annual Report 2015 190 Europe

2015 2014 Investment in % Investment in % Paid-in share and Paid-in share and Activity Currency capital voting rights in % capital voting rights in % Consolidation Switzerland KIT Solution AG, Zurich CO CHF 1,000,000 100 1,000,000 100 C Kuoni Global Travel Services AG, Zurich D CHF 100,000 100 100,000 100 C

Austria Kuoni Destination Management GmbH, Vienna D EUR 253,000 100 253,000 100 C

Denmark Kuoni Destination Management A/S, Copenhagen D DKK 600,000 100 600,000 100 C

France Gullivers Travel Associates SAS, Paris D EUR 37,000 100 37,000 100* C

Hungary Kuoni Destination Management Kft., Budapest D HUF 3,000,000 100 3,000,000 100 C

Italy Kuoni Destination Management S.p.A., Rome D EUR 1,548,000 100 1,548,000 100 C GTA ( Italia) SRL, Rome D EUR 20,000 100 20,000 100* C

The Netherlands Kuoni Destination Management B.V., Amsterdam D EUR 55,815 100 55,815 100 C

Spain Kuoni Destination Management S.L., Madrid D EUR 150,000 100 150,000 100 C Gullivers Travel Associates S.A., Madrid D EUR 420,708 100 420,708 100* C

United Kingdom Donvand Ltd., London D GBP 177,194 100 177,194 100* C GTA (Retail) Limited, London D GBP 50,000 100 50,000 100* C VF Services (UK) Ltd., London V GBP 25,001 100 25,001 100* C

Activity: D = Destination & Accommodation Services V = Visa Processing Services CO = Corporate Consolidation: C = Consolidated E = Valuation according to equity method

Financial Report Kuoni Travel Holding LTD

Overseas

2015 2014 Investment in % Investment in % Paid-in share and Paid-in share and Activity Currency capital voting rights in % capital voting rights in % Consolidation Australia Australian Tours Management Pty Ltd., Melbourne D AUD 500,000 100 500,000 100* C GTA Australasia Pty Limited, Sydney D AUD 100,000 100 100,000 100* C Travelcube Pacific Pty Limited, Sydney D AUD 50,000 100 50,000 100* C

China S.K.Y. Business Consultancy Co. Ltd., Shanghai D CNY 1,198,115 100 1,198,115 100* C Kuoni Destination Management (Beijing) Ltd., Beijing D CNY 4,000,000 100 4,000,000 100* C Gullivers Travel Associates (Hong Kong) Limited, Kowloon D HKD 3,064,000 100 3,064,000 100* C Gullivers (Beijing) Commercial Consulting Services (China), Beijing D USD 250,000 100 250,000 100* C Gullivers Travel Associates (China) Limited, Beijing D CNY 4,000,000 100 4,000,000 100* C VFS Business Information Consulting Co. Ltd., Shanghai V CNY 1,127,862 100 1,127,862 100* C

India VFS Global Services Pvt. Ltd., Mumbai V INR 373,670,000 100 373,670,000 100* C

Japan Kuoni Travel (Japan) Ltd., Tokyo D JPY 50,000,000 100 50,000,000 100 C Gullivers Travel Agency Co. Ltd (Japan), Tokyo D JPY 40,000,000 100 40,000,000 100* C Octopus Travel.com Japan

2015.kuoni-report.com KK, Tokyo D JPY 10,000,000 100 10,000,000 100* C

Kenya Private Safaris (E.A.) Ltd., Nairobi D KES 62,500,000 100 62,500,000 100* C

Mauritius Kuoni Asian Investments (Mauritius) Ltd., Port Louis CO USD 1,000,000 100 1,000,000 100 C

Singapore Kuoni Travel (S) PTE Ltd., Singapore D SGD 100,000 100 100,000 100* C Kuoni GTS (Singapore) Pte. Ltd., Singapore D SGD 100,000 100 100,000 100* C

South Africa Kuoni Private Safaris (Pty) Ltd., Cape Town D ZAR 500,000 100 500,000 100 C VFS Visa Processing (South Africa) Pty Ltd., Pretoria V ZAR 300,000 100 300,000 100* C

South Korea Kuoni Travel (Korea) Ltd., Seoul D KRW 100,000,000 100 100,000,000 100 C Kuoni GTS (Korea) Ltd., Seoul D KRW 350,000,000 100 350,000,000 100* C

Taiwan Kuoni GTS (Taiwan) Ltd., Taipei D TWD 6,000,000 100 6,000,000 100* C

Thailand Asian Trails Ltd., Bangkok D THB 24,000,000 49 24,000,000 49* C Kuonissimo (Thailand) Ltd., Bangkok D THB 2,000,000 49 2,000,000 49 C Kuoni Group Annual Report 2015 191

United Arab Emirates Desert Adventures Tourism LLC, Dubai D AED 300,000 100 300,000 100 C Gulf Dunes LLC, Dubai D AED 300,000 100 300,000 100 C Australia Australian Tours Management Pty Ltd., Melbourne D AUD 500,000 100 500,000 100* C GTA Australasia Pty Limited, Sydney D AUD 100,000 100 100,000 100* C Travelcube Pacific Pty Limited, Sydney D AUD 50,000 100 50,000 100* C

China S.K.Y. Business Consultancy Co. Ltd., Shanghai D CNY 1,198,115 100 1,198,115 100* C Kuoni Destination Management (Beijing) Ltd., Beijing D CNY 4,000,000 100 4,000,000 100* C Gullivers Travel Associates (Hong Kong) Limited, Kowloon D HKD 3,064,000 100 3,064,000 100* C Gullivers (Beijing) Commercial Consulting Services (China), Beijing D USD 250,000 100 250,000 100* C Gullivers Travel Associates (China) Limited, Beijing D CNY 4,000,000 100 4,000,000 100* C VFS Business Information Consulting Co. Ltd., Shanghai V CNY 1,127,862 100 1,127,862 100* C

India VFS Global Services Pvt. Ltd., Mumbai V INR 373,670,000 100 373,670,000 100* C

Japan Kuoni Travel (Japan) Ltd., Tokyo D JPY 50,000,000 100 50,000,000 100 C Gullivers Travel Agency Co. Ltd (Japan), Tokyo D JPY 40,000,000 100 40,000,000 100* C Octopus Travel.com Japan KK, Tokyo D JPY 10,000,000 100 10,000,000 100* C

Kenya Private Safaris (E.A.) Ltd., Nairobi D KES 62,500,000 100 62,500,000 100* C

Mauritius Kuoni Asian Investments (Mauritius) Ltd., Port Louis CO USD 1,000,000 100 1,000,000 100 C

Singapore Kuoni Travel (S) PTE Ltd., Singapore D SGD 100,000 100 100,000 100* C Kuoni GTS (Singapore) Pte. Ltd., Singapore D SGD 100,000 100 100,000 100* C

South Africa Kuoni Private Safaris (Pty) Ltd., Cape Town D ZAR 500,000 100 500,000 100 C VFS Visa Processing (South Africa) Pty Ltd., Pretoria V ZAR 300,000 100 300,000 100* C

South Korea Kuoni Travel (Korea) Ltd., Seoul D KRW 100,000,000 100 100,000,000 100 C Kuoni GTS (Korea) Ltd., Seoul D KRW 350,000,000 100 350,000,000 100* C

Taiwan Kuoni GTS (Taiwan) Ltd., Taipei D TWD 6,000,000 100 Financial6,000,000 Report Kuoni100* Travel Holding LTDC

Thailand Asian Trails Ltd., Bangkok D THB 24,000,000 49 24,000,000 49* C Kuonissimo (Thailand) Ltd., Bangkok D THB 2,000,000 49 2,000,000 49 C

United Arab Emirates Desert Adventures Tourism LLC, Dubai D AED 300,000 100 300,000 100 C Gulf Dunes LLC, Dubai D AED 300,000 100 300,000 100 C GTA (Middle East) FZ LLC, Dubai D AED 50,000 100 50,000 100* C VFS TasHeel International JLT, Dubai V USD 5,000,000 50 5,000,000 50* E Vasco Worldwide JLT, Dubai V USD 5,000,000 50 5,000,000 50* E Octopus Travel (Middle East) FZ LLC, Dubai D AED 50,000 100 50,000 100* C

USA AlliedTPro, Inc., New York D USD 170,000 100 170,000 100* C Kuoni Travel (Atlanta) Inc., Atlanta D USD 50,000 100 50,000 100 C Kuoni Holding Delaware, Inc., Wilmington CO USD 1 100 1 100 C GTA Americas LLC, Delaware D USD 29,700,000 100 29,700,000 100* C Octopus Travel.com (USA) Limited, Delaware D USD 1,000 100 1,000 100* C

Activity: D = Destination & Accommodation Services V = Visa Processing Services CO = Corporate Consolidation: C = Consolidated E = Valuation according to equity method 2015.kuoni-report.com

Kuoni Group Annual Report 2015 192 Financial Report Kuoni Travel Holding LTD

Discontinued operations (tour operating business and inbound business in India)

2015 2014 Investment in % Investment in % Paid-in share and Paid-in share and Activity Currency capital voting rights in % capital voting rights in % Consolidation Switzerland Kuoni Reisen AG, Zurich T/D CHF 0 0 7,000,000 100 DE Railtour Suisse SA, Berne T CHF 0 0 1,600,000 93 DE

Belgium Kuoni Travel Belgium B.V. B.A., Gent T EUR 0 0 7,335,000 100 DE

Denmark Falk Lauritsen Rejser A/S, Herning T DKK 0 0 500,000 100* DE

The Netherlands Kuoni Specialists B.V., Amsterdam T EUR 0 0 20,418 100 DE

Spain Sotavento S.A., Fuerteventura T EUR 0 0 3,060,000 100* DE

Sweden Kuoni Nordic AB, Stockholm T SEK 0 0 23,000,000 100 DE Nova Airlines AB, Stockholm T SEK 0 0 15,000,000 100* DE

United Kingdom Kuoni Travel Ltd., Dorking T/D GBP 0 0 1,500,000 100 DE CV Travel Holdings Ltd., London T GBP 0 0 100,000 100* DE Kirker Holdings Ltd., London T GBP 0 0 100,000 100* DE Carrier Ltd., Cheshire T GBP 0 0 139,000 100* DE

2015.kuoni-report.com China Kuoni Travel (China) Ltd., Hong Kong T HKD 0 0 4,800,000 100 DE

India Kuoni Travel (India) Pvt. Ltd., Mumbai T/D INR 0 0 80,230,500 100 DE Kuoni Business Travel India Pvt. Ltd., Mumbai T INR 0 0 8,450,000 100* DE

Activity: T = Tour Operating D = Destination & Accommodation Services Consolidation: DE = Deconsolidated 3. Bond and revolving credit

Kuoni Group Annual Report 2015 193 Financial Report Kuoni Travel Holding LTD 3. Bond and revolving credit facility

Kuoni Travel Holding Ltd. issued a CHF 200-million 1.5%-bond in October 2013. The bond has a duration of six years and matures on 28 October 2019. Kuoni Travel Holding Ltd initiated early refinancing of the existing revolving credit facility of CHF 209 million. The new revolving credit facility of CHF 200 million replaced the existing agreement on 21 September 2015 and runs until June 2020. As at 31 December 2015, the facility was used to an amount of CHF 20 million. The new credit facility includes a financial covenant relating to the degree of indebtedness. The maximum degree of indebtedness must not exceed 3.0 times, measured as the ratio between net debt and EBITDA of Kuoni Group. The interest to be paid is calculated on Libor plus a margin of between 0.75% and 1.75%. 4. Equity 2015.kuoni-report.com

Kuoni Group Annual Report 2015 194 Financial Report Kuoni Travel Holding LTD 4. Equity

The below table shows the changes to the opening balance of equity as of 1 January 2013, applying the new Swiss Accounting Law. The grey-shadowed positions have been split to reflect the required structure of the New Swiss Accounting Law:

Legal Share Legal retained Other Treasury Total CHF capital reserves Legal capital reserves earnings reserves Voluntary Retained earnings Shares equity Retained earnings based on Reserves from Other capital decision by capital annual Net Result contribution reserves meeting of the year Equity as at 31 December 2012 3,998,400 460,855,940 389,097,700 –40,939,450 813,012,590 Reclassification –460,855,940 375,322,267 77,533,673 8,000,000 –389,097,700 389,097,700 0 Transfer –18,902,300 18,902,300 0 Reclassification of Treasury Shares –18,902,300 –18,902,300 Equity as at 1 January 2013 adjusted 3,998,400 0 375,322,267 58,631,373 8,000,000 0 408,000,000 –40,939,450 –18,902,300 794,110,290

Statement of changes in equity

Share Legal retained Treasury CHF capital Legal capital reserves earnings Voluntary retained earnings Shares Total equity Retained

2015.kuoni-report.com earnings based on Reserves from decision by capital Other capital annual Net Result contribution reserves meeting of the year Equity as at 1 January 2013 3,998,400 375,322,267 58,631,373 8,000,000 408,000,000 –40,939,450 –18,902,300 794,110,290

Net result –86,386,615 –86,386,615 Appropriation of retained earnings –40,939,450 40,939,450 0 Dividends –11,520,336 –11,520,336 Use of treasury shares 3,826,004 –37,882 815,300 4,603,422 Equity as at 31 December 2013 3,998,400 367,627,935 58,593,491 8,000,000 367,060,550 –86,386,615 –18,087,000 700,806,761

Net result 95,893,027 95,893,027 Appropriation of retained earnings –86,386,615 86,386,615 0 Dividends –29,006,520 –29,006,520 Use of treasury shares 9,044,647 –89,557 1,320,350 10,275,440 Equity as at 31 December 2014 3,998,400 347,666,062 58,503,934 8,000,000 280,673,935 95,893,027 –16,766,650 777,968,708

Net result –62,239,798 –62,239,798 Appropriation of retained earnings 95,893,027 –95,893,027 0 Dividends –29,378,925 –29,378,925 Use of treasury shares 13,554,290 –134,219 2,515,750 15,935,821 Equity as at 31 December 2015 3,998,400 331,841,427 58,369,715 8,000,000 376,566,962 –62,239,798 –14,250,900 702,285,806

The share capital is composed as follows:

Kuoni Group Annual Report 2015 195 Financial Report Kuoni Travel Holding LTD

Nominal value Number of registered shares Book value 31 Dec 2015 31 Dec 2014 31 Dec 2015 31 Dec 2014 CHF 0.20 share A 1,249,500 1,249,500 249,900 249,900 CHF 1.00 Share B 3,748,500 3,748,500 3,748,500 3,748,500 Total share capital 3,998,400 3,998,400

Conditional capital Conditional capital issuable via the exercising of conversion rights and/or warrants linked to bonds or similar debt issued by Kuoni Travel Holding Ltd or any of its subsidiaries in the domestic or international capital markets amounts to a maximum of CHF 384 000. In the case of issues of bonds or similar debt instruments to which conversion and/or warrant rights are attached, the pre-emptive rights of the existing shareholders are excluded. The holders of the said conversion and/or warrant rights are entitled to subscribe for new registered shares B. The acquisition of registered shares through the exercise of conversion and/or warrant rights and any subsequent transfer thereof are subject to the transfer and voting restrictions contained in the Articles of Incorporation. The Board of Directors is authorised to restrict or revoke the pre-emptive rights of shareholders when such bonds or similar debt instruments to which conversion and/or warrant rights are attached are issued to finance the acquisition of other companies or parts of companies. If shareholdersʼ pre-emptive rights are revoked by a decision of the Board of Directors, the conversion and/or warrant rights concerned will be issued at the prevailing market price, and the new registered shares will be issued at market rates, with due regard to the current market price of the registered shares concerned and/or of comparable financial instruments with a market price. The exercise period is limited to ten years for conversion rights and to seven years from the date of the bond issue for warrant rights. Conditional capital of a maximum of CHF 96 000 also exists for use in exercising 2015.kuoni-report.com subscription or option rights granted to employees of Kuoni Travel Holding Ltd or its subsidiaries under one or more employee stock option plans (in accordance with art. 28 of the Articles of Incorporation). In such cases, new registered shares B may also be issued to employees at rates below the current stock market price, and existing shareholders shall have no subscription rights. The terms and conditions for the issue of such shares shall be determined by the Board of Directors. The acquisition of registered shares under such employee stock option plans and any subsequent transfer thereof are subject to all the relevant statutory transfer and voting right restrictions.

Restricted transferability provisions The Articles of Incorporation stipulate that no more than 3% of total voting rights may be entered in the share register in the name of any one shareholder.

Reserves from capital contributions

CHF 2015 2014 Capital contribution as at 1 January 347,666,062 367,627,935 Distribution –29,378,925 –29,006,520 Increase from treasury shares 13,554,290 9,044,647 Capital contribution as at 31 December 331,841,427 347,666,062

Kuoni Group Annual Report 2015 196 Financial Report Kuoni Travel Holding LTD

The overall amount held in reserves from capital contributions is CHF 331.8 million, which is made up of the various types of contributions and share premiums minus distributions since 1 January 1997. The Swiss Federal Tax Administration disputes reserves from capital contributions of CHF 21.1 million. 5. Treasury shares 2015.kuoni-report.com

Kuoni Group Annual Report 2015 197 Financial Report Kuoni Travel Holding LTD 5. Treasury shares

Number of Book value CHF registered shares B 1'000 Held on 1 January 2014 155,270 18,087

Purchase 0 0 Use –26,323 –1,320 Held on 31 December 2014 128,947 16,767

Purchase 0 0 Use –50,315 –2,516 Held on 31 December 2015 78,632 14,251

The remaining treasury shares held are reserved for the share purchase plan of the Group Executive Board and senior management. The changes to treasury shares reflect the registered shares B issued to the Board of Directors, the Group Executive Board and management. 6. Income from investments in 2015.kuoni-report.com

Kuoni Group Annual Report 2015 198 Financial Report Kuoni Travel Holding LTD 6. Income from investments in subsidiaries

In the reporting year, income from subsidiaries amounted to CHF 17.3 million (2014: CHF 105.7 million). This amount represented the gain on sale of Kuoni Travel (China) Ltd. Due to the introduction of the double holding structure in the business year 2015, Kuoni Travel Investments Ltd. is Kuoni Travel Holding Ltd.ʼs only directly held subsidiary. All other shareholdings are directly or indirectly held by Kuoni Travel Investments Ltd. Dividends from Kuoni Travel Investments Ltd. may be distributed to Kuoni Travel Holding Ltd. for the first time in 2016. 7. Other financial income 2015.kuoni-report.com

Kuoni Group Annual Report 2015 199 Financial Report Kuoni Travel Holding LTD 7. Other financial income

Other financial income amounted to CHF 28.9 million (2014: CHF 28.4 million) and consisted mainly of interest income from loans to subsidiaries. 8. Extraordinary, non-recurring 2015.kuoni-report.com

Kuoni Group Annual Report 2015 200 Financial Report Kuoni Travel Holding LTD 8. Extraordinary, non-recurring or prior period expense

In the reporting period, Kuoni Travel Holding Ltd. has recognised an exchange loss of CHF 80.5 million on its loans to and from subsidiaries. This exchange loss has been accumulated over the years, and has been derived mainly from a US-dollar- denominated loan to a subsidiary. In previous years this loss was covered by provisions. However, with the introduction of the double holding structure in the reporting year, these provisions were transferred to Kuoni Travel Investments Ltd., Kuoni Travel Holdingʼs directly held subsidiary. 9. Full-time equivalents 2015.kuoni-report.com

Kuoni Group Annual Report 2015 201 Financial Report Kuoni Travel Holding LTD 9. Full-time equivalents

Kuoni Travel Holding Ltd. does not have any employees. 10. Contingent liabilities 2015.kuoni-report.com

Kuoni Group Annual Report 2015 202 Financial Report Kuoni Travel Holding LTD 10. Contingent liabilities

CHF 31 Dec 2015 31 Dec 2014 Contingent liabilities 33,270,951 699,195,973

In 2015 contingent liabilities consisted of bank guarantees related to indirect subsidiaries of Kuoni Travel Holding Ltd. The decrease compared to prior year is due to the sale of the tour operating business and the inbound business in India. 11. Principal shareholders 2015.kuoni-report.com

Kuoni Group Annual Report 2015 203 Financial Report Kuoni Travel Holding LTD 11. Principal shareholders

We are aware of the following principal shareholders as of 31 December 2015:

Number/category Where of Date of last Shareholder of shares Share in % voting shares Voting rights in % disclosure 2 Kuoni and Hugentobler-Foundation, Stans 1,249,500/A 1 6.25 1,249,500 25.00 3.4.1995 Previous year 1,249,500/A 1 6.25 1,249,500 25.00 3.4.1995

Silchester International Investors LLP, London 702,719/B 1 14.06 119,952 3.00 31.12.2015 Previous year 687,702/B 1 13.76 119,952 3.00 31.12.2014

Veraison Capital AG, Zurich 167,138/B 1 3.34 119,952 3.00 31.12.2015 Previous year n.a. n.a. n.a. n.a. n.a.

Schroders plc, London 192,592/B 1 3.85 119,952 3.00 31.12.2015 Previous year 248,651/B 1 4.98 119,952 3.00 31.12.2014

UBS Fund Management (Switzerland) AG, Basel 166,427/B 1 3.33 119,952 3.00 31.12.2015 Previous year 156,556/B 1 3.13 119,952 3.00 15.11.2012

Classic Fund Management AG, Triesen 191,529/B 1 3.83 119,952 3.00 31.12.2015 Previous year n.a. n.a. n.a. n.a. n.a.

Go Investment Partners LLP, London 211,966/B 1 4.24 119,952 3.00 31.12.2015 Previous year n.a. n.a. n.a. n.a. n.a.

1 The nominal value of share A is CHF 0.20, of share B CHF 1.00. 2 2015: disclosure to Kuoni. 12. Related parties 2015.kuoni-report.com

Kuoni Group Annual Report 2015 204 Financial Report Kuoni Travel Holding LTD 12. Related parties

The Kuoni and Hugentobler-Foundation received a withholding tax exempt distribution from capital contribution reserve in the amount of CHF 1.9 million (gross) on the basis of their shareholdings. 13. Ownership of shares 2015.kuoni-report.com

Kuoni Group Annual Report 2015 205 Financial Report Kuoni Travel Holding LTD 13. Ownership of shares

Group Executive Board As at 31 December 2015, the members of the GEB held Kuoni shares and the conditional right to receive shares under deferred compensation and/or long-term incentive plans, as shown in the table below. The total number of shares held amounts to less than 0.5% of Kuoniʼs total shares outstanding. The total number of unvested shares held amounts to less than 1.0% of Kuoniʼs total shares outstanding (assuming GEB members receive their target amount of shares under the PSP and RSP). No other equity instruments are held by GEB members other than those outlined in the table below.

Unvested as at 31 Dec 2015 Performance Restricted Performance Restricted Performance Restricted shares shares shares shares shares shares conditionally conditionally conditionally conditionally conditionally conditionally granted under granted under Total number granted under granted under granted under granted under the 2015 PSP the 2015 RSP of shares held Voting rights the 2013 PSP the 2013 RSP the 2014 PSP the 2014 RSP 7 8 As at 31 Dec 2015 Peter Meier 1 1,000 0.03% 1,790 422 1,437 685 1,628 1,165 Zubin Karkaria 2 2,655 0.07% 903 193 720 319 1,304 444 Stefan Leser 3 n.a. n.a. 1,286 0 974 435 0 0 Thomas Peyer 1,000 0.03% 176 67 787 350 995 669 Rolf Schafroth 3,308 0.08% 1,286 287 974 434 1,104 739 Ivan Walter 4 800 0.02% 311 69 551 257 1,224 816 Total 8,763 0.23% 5,752 1,038 5,443 2,480 6,255 3,833

Unvested as at 31 Dec 2014 Performance Performance Restricted Performance Restricted shares shares shares shares shares Total number conditionally conditionally conditionally conditionally conditionally

2015.kuoni-report.com of granted under granted under granted under granted under granted under shares held Voting rights the 2012 PSP the 2013 PSP the 2013 RSP the 2014 PSP the 2014 RSP As at 31 Dec 2014 Peter Meier 2,202 0.04% 2,491 1,790 843 1,437 1,028 Zubin Karkaria 2,284 0.05% 764 903 387 720 479 Leif Vase Larsen 5 n.a. n.a. 1,346 0 0 0 0 Stefan Leser 3 1,000 0.02% 2,271 1,286 287 974 652 Thomas Peyer 6 361 0.01% 330 176 135 787 525 Peter Rothwell 5 n.a. n.a. 3,443 1,898 0 0 0 Rolf Schafroth 1,277 0.03% 2,271 1,286 574 974 652 Total 7,124 0.15% 12,916 7,339 2,226 4,892 3,336

1 Member of the GEB who left the Company during 2015. 2 Appointed to CEO Kuoni Group in November 2015. 3 Member of the GEB who left the Company during 2014. 4 New member of the GEB since January 2015. 5 Member of the GEB who left the Company during 2013. 6 New member of the GEB since 2014. The 2014 number shows the full-year allocation. 7 The total value of the conditionally granted shares under the PSP for the year 2015 amounted to CHF 2.1 million. 8 The total value of the conditionally granted shares under the RSP for the year 2015 amounted to CHF 1.3. million.

Kuoni Group Annual Report 2015 206 Financial Report Kuoni Travel Holding LTD

Board of Directors As at 31 December 2015, the Chairman and other members of the BoD held 11 713 Kuoni shares. This amounts to less than 0.5% of Kuoniʼs total shares outstanding. The table below shows the number of Kuoni shares held by each member of the BoD. No party related to a member of the Board held any Kuoni shares. No other share instruments are held by members of the BoD other than those outlined in the table below.

Total number of shares Blocking periods for total number of shares held Blocking Blocking Blocking As at 31 Dec As at 31 Dec period period period 2015 Voting rights 2014 Voting rights Unblocked 2016 2017 2018 4 Heinz Karrer, Chairman 1 3,349 0.08% 2,543 0.05% 1,514 404 625 806 Jae Hyun (Jay) Lee 921 0.02% 679 0.01% 227 264 188 242 John Lindquist 1,280 0.03% 1,038 0.02% 586 264 188 242 Selina Neri 2 242 0.00% 0 0.00% 0 n.a. n.a. 242 Adrianus (Adriaan) Nühn 1,064 0.03% 741 0.01% 227 264 250 323 David Schnell 3,210 0.08% 2,807 0.06% 2,055 439 313 403 Annette Schömmel 1,647 0.04% 1,405 0.03% 953 264 188 242 Raymond D. Webster 3 n.a. n.a. 2,025 0.04% n.a. 264 188 n.a. Total 11,713 0.28% 11,238 0.22% 5,562 2,163 1,940 2,500

1 Elected Chairman of the BoD at the Annual General Meeting in April 2014. 2 Elected member of the BoD at the Annual General Meeting in April 2015. 3 Was member of the BoD until the Annual General Meeting in April 2015. 4 The shares with blocking period 2018 were allocated in 2015. The total value of the allocated shares amounted to CHF 0.8 million. 14. Significant events after the 2015.kuoni-report.com

Kuoni Group Annual Report 2015 207 Financial Report Kuoni Travel Holding LTD 14. Significant events after the balance sheet date

On 2 February 2016 private equity company EQT has announced an all cash public tender offer for all publicly held registered shares of Kuoni Travel Holding Ltd. (SIX:KUNN) for a price of CHF 370.00 per share. On 29 February 2016 EQTʼs subsidiary, Kiwi Holding IV S.à r.l., published the corresponding prospectus. Kuoni Travel Holding Ltd.ʼs Board of Directors unanimously supports the offer and considers the valuation as fair and adequate. Should the offer succeed, then, the creditors of the bond and the syndicated loan have the right to claim repayment of such financial debts classified as non-current. The financial statements were approved by the Board of Directors and released for publication on 8 March 2016. No further events after 31 December 2015 occurred that would result in an adjustment to the carrying amounts of Kuoni Travel Holding Ltd.ʼs assets and liabilities. Board of Directorsʼ proposal for 2015.kuoni-report.com

Kuoni Group Annual Report 2015 208 Financial Report Kuoni Travel Holding LTD Board of Directorsʼ proposal for the appropriation of retained earnings

CHF 2015 2014 Profit carried forward 0 0 Net result for the year –62,239,798 95,893,027 Retained earnings –62,239,798 95,893,027

Dividends:

Per registered share A 0 0 Per registered share B 0 0 Total dividends 0 0

Allocation to retained earnings based on decision by annual meeting –62,239,798 95,893,027 Appropriation of profit –62,239,798 95,893,027

Profit carried forward to new account 0 0 Retained earnings –62,239,798 95,893,027

The Board of Directors proposes to the Annual General Meeting not to distribute a dividend.

CHF 2015 2014 2015.kuoni-report.com Legal reserve from capital contribution 331,841,427 347,666,062 Distribution from legal reserve from capital contribution 0 29,988,000

Distribution 1 Per registered share A CHF 0.00 (2014: CHF 1.50) 0 1,874,250 Per registered share B CHF 0.00 (2014: CHF 7.50) – on 3,619,553 shares entitled to distribution at 31 December 2015 0 27,146,648 – on 128,947 treasury shares set aside for the employee share plan at 31 December 2015 0 967,102 Total request for distribution 0 29,988,000

1 The company will waive its entitlement to such payments from the capital contribution reserve for the treasury shares held on the distribution date which are reserved for use in its employee share plan. The amount due on these shares will be taken to the legal reserve from capital contributions. Report of the statutory auditor

Kuoni Group Annual Report 2015 209 Financial Report Kuoni Travel Holding LTD Report of the statutory auditor

Report of the Statutory Auditor to the General Meeting of Shareholders of Kuoni Travel Holding Ltd, Zurich

Report of the statutory auditor on the financial statements As statutory auditor, we have audited the accompanying financial statements of Kuoni Travel Holding Ltd, which comprise the balance sheet, income statement and notes for the year ended 31 December 2015.

Board of Directorsʼ responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the Companyʼs articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditorʼs responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorʼs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making 2015.kuoni-report.com those risk assessments, the auditor considers the internal control system relevant to the entityʼs preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entityʼs internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements for the year ended 31 December 2015 comply with Swiss law and the Companyʼs articles of incorporation.

Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Companyʼs articles of incorporation. We recommend that the financial statements submitted to you be approved.

Kuoni Group Annual Report 2015 210 Financial Report Kuoni Travel Holding LTD

KPMG AG KPMG AG

Martin Schaad Martin Schaad Tobias Wölfle Licensed Audit Expert Tobias Wölfle LicensedAuditor in Audit Charge Expert Licensed Audit Expert Auditor in Charge Licensed Audit Expert

Zurich, 8 March 2016 Zurich, 8 March 2016 2015.kuoni-report.com

Kuoni Group Annual Report 2015 211 Agenda

The Financial Report and the information on Corporate Governance constitute an integral part of the Kuoni Group Annual Report.

This Annual Report is also available in German. The German original shall prevail.

Der Geschäftsbericht ist auch in deutscher Sprache erhältlich. Massgebend ist der deutsche Originaltext.

Agenda 2016 Kuoni Group will be providing information on its further business performance on the following dates:

19 August 2016 | Half-Year Results 2016

10 November 2016 | Q3/9 months Results 2016 2015.kuoni-report.com The date for an extraordinary General Meeting will be communicated in due time. The ordinary Annual General Meeting, announced for 26 April 2016, will not take place and has been postponed to a later date. Terms of Use/Data Protection

Kuoni Group Annual Report 2015 212 Terms of Use/Data Protection Policy

By accessing the website of Kuoni Travel Holding Ltd (the “Website”) the user accepts the Terms of Use set out herein. Throughout these Terms of Use the term “Kuoni” refers to Kuoni Travel Holding Ltd. and “Kuoni Group” refers to Kuoni and all companies worldwide directly or indirectly controlled by Kuoni. Any special agreements with respect to individual services or products provided by Kuoni other companies belonging to the Kuoni Group shall be complementary to these Terms of Use. In the event of any conflict the provisions contained in any such special agreement shall prevail.

1. Limitation of Liability Kuoni disclaims, without limitation, all liability for any loss of profits and for any direct, indirect, special, consequential or punitive damages, costs, losses or liabilities whatsoever arising out of the access to and use of (including inability to use) the Website. The information published on the Website is subject to change without notice and Kuoni makes not representation (neither express nor implied) that the information is accurate, up to date or complete. In particular, Kuoni shall have no responsibility to update, revise or remove any outdated information from the Website or to mark it as being outdated.

2. Disclaimer regarding forward looking statements The Website or any documents provided on the Website may contain statements that constitute forward-looking statements, which may include, without limitation, statements relating to Kuoniʼs financial condition, results of operations, business and certain of Kuoniʼs strategic plans and objectives.

Because these forward-looking statements are subject to risks and uncertainties, 2015.kuoni-report.com actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors which are beyond Kuoniʼs ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors detailed in Kuoniʼs past and future filings and reports, including media releases, reports and other information posted on the Website or in other form.

Users are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. Kuoni disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.

3. Links to other websites Links on the Website may lead to third-party websites, which are beyond Kuoniʼs control. Accordingly, Kuoni does not accept any responsibility for the accuracy, completeness and legality of such third-party websites.

4. Intellectual Property rights The entire content of the Website is subject to copyright with all rights reserved. The trademarks displayed on the Website belong to Kuoni. Nothing contained on the Website should be construed as granting any license or right to use any of such trademarks or other intellectual property (such as photographs etc.).

Kuoni Group Annual Report 2015 213 5. Data Protection 5.1 Collecting Information (a) Website Data When the Website is accessed, various data is automatically collected from the computerʼs log files. Kuoni distinguishes between master data (e.g. IP address, date and time of access, etc.) and transaction data (e.g. name of file accessed, click path, etc.). Such data is analysed in anonymized form for statistical purposes, for example to see how many times the portal is accessed in one day.

Furthermore, all the data sent by the User (e.g. name, search data, booking requests, form data, etc.) is stored, even if it is not part of a completed transaction (e.g. an order). Such data is deleted after a maximum of 30 days.

(b) Cookies Kuoni, like most internet services, may use cookies to make the Website easier for Users to use. Cookies are a component of the browser software and save information on the computer of the User about his/her use of the Website. This lets Kuoni recognise the computer of the User as one on which has already used the Website.

Most browsers accept cookies automatically. However, the User can change the browser settings so that cookies are not accepted or only accepted with his/her approval. The Website can also be used without cookies, but it is easier to use if cookies are switched on. Users can delete all the cookies from their hard disk at any time, or deactivate them in their browser settings to prevent the data about your use of the Website being transmitted to Google.

(c) Google Analytics data The Website uses Google Analytics, a web analytics service provided by Google, Inc. (“Google”). Google Analytics also uses cookies. Anonymous data (including the Users IP address) about the use of the Website is transmitted to and stored on a Google server.

2015.kuoni-report.com Google uses this information to prepare reports for Kuoni about website activity. By using the Website, the User consents to Google processing the data recorded about him/her. More about how Google Analytics protects data at: http://www.google.com/intl/de_ALL/privacy.html.

5.2 Third Parties In compliance with data protection laws, the Users data may be passed on to third parties that process this data on behalf of Kuoni or other companies of the Kuoni Group. This may involve transferring the data abroad.

The Users data may be passed on within the Kuoni Group and used by the other companies of the Kuoni to the same extent as Kuoni is entitled to use it. It is treated confidentially and not made accessible to other third parties unless this is required by the applicable law and especially by the responsible authorities, or if this becomes necessary to protect or enforce the legitimate interests of Kuoni or other companies of the Kuoni Group.

5.3 Usind the Data The collected data is treated in good faith and used by the Kuoni Group to carry out business transaction, to improve the functions on the Website, to offer competitive services, and for purposes of analysis, marketing and consultancy.

Kuoni Group Annual Report 2015 214 In particular, the Users data may be used to offer the User a personalised service and to facilitate optimum use of the Website. In addition, Kuoni may send the User offers and information that are of personal interest to the User (though the User can tell Kuoni at any time that he/she does not or no longer want to receive information).

5.4 Personality Profile Kuoni draws the Users attention to the fact that the consolidation of collected data may constitute a “personality profile” (depending on the type and amount of data available). A personality profile is created when a collection of data enables significant aspects of the Users personality to be evaluated. Kuoni is the owner of the collected data and may pass this data on to third parties that process it on behalf of Kuoni or other companies of the Kuoni Group. This may involve transferring the data abroad.

6. Modifications of these termes of use Kuoni reserves the right to revise these Terms of Use at any time. The user is responsible for regularly reviewing these Terms of Use. Continued use of the Website following any such changes shall constitute the userʼs acceptance of such changes.

© Copyright by Kuoni Travel Management Ltd, 2016 – all rights reserved. Imprint 2015.kuoni-report.com

Kuoni Group Annual Report 2015 215 Imprint

Publisher Kuoni Travel Management Ltd Corporate Communications Neue Hard 7, CH-8005 Zürich tel +41 (0)44 277 48 28 www.kuoni.com 2015.kuoni-report.com Twitter: www.twitter.com/kuonigroup Facebook: www.facebook.com/KuoniGroup

Concept and Design Noord, Swiss Graphic Design Agency Roger Mazzucchelli, Markus Reichenbach, Katja Rüfenacht

Kuoni Group Peter Brun, Nina Frey

Authors Sibylle Baumgartner, Peter Brun, Daniel Eberhard, Christoph Frank, Nina Frey, Julia Lange, Ricardo Riva, Antonio Sacco, Susanne Trier, Livia Würth

Project Manager Nina Frey

Photography Kilian Kessler 2015.kuoni-report.com Translations James Knight, Madoc Skinner and Apostroph AG

Publishing System ns.wow by Multimedia Solutions AG (Neidhart+Schön)

Kuoni Group Annual Report 2015 216 with compliments 2015.kuoni-report.com thank youthank for reading

Kuoni Travel Management Ltd Neue Hard 7 8005 Zurich, Switzerland Phone +41 44 277 44 44 [email protected] [email protected] kuoni.com