ANNUAL REPORT 2002 / 2003 Contents
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ANNUAL REPORT 2002 / 2003 Contents Understanding • Group profile and key figures P.2 the Group • The European leader in tourist residences P.4 • A European footprint P.7 • Background an highlights P.8 • Pierre & Vacances on the stock market P.10 Understanding • The Group brands: Pierre & Vacances, Maeva, Résidences MGM, Center Parcs P. 1 4 the Challenges • The marketing policy P.22 • Property development P.24 • Sustainable devopment P.28 Financial • Group management report P.35 Report • Consolidated financial statements P.55 • Parent company financial statements P.107 • Legal and administrative information P.123 Chairman’s message 1 In 2002/2003, the Pierre & Vacances Group pursued its growth and development, consolidating its position as a major player in European tourism. The Group’s results improved again this year. Turnover climbed by 16.4% on a like-for-like basis compared with 2001/2002, reflecting sustained growth in all the Group's activities, notably property development. The Group’s tourism business held up well and even strengthened its presence in Europe - a remarkable performance given the challenges faced by the industry as a whole. The net income before extraordinary items increased by 25.7%.The efforts of all 36 years after Group teams paid off with the continued streamlining of tourism activities producing operational and functional synergies which markedly reduced certain costs. its inception, the Pierre & Vacances The Pierre & Vacances model demonstrated its capacity to weather challenges Group, the and confirmed its ideal positioning to meet current and future trends in the tourism industry. European leader in tourist residences, Continuing its policy of expanding via acquisitions,in 2002/2003 the Pierre & Vacances Group notably acquired 100% of the capital in Center Parcs Continental Europe. is more confident This strategic acquisition affords the Group newfound momentum and an entirely new than ever in dimension, reinforcing its position as European leader in tourist residences.The deal its future, incurred no operational risk and had a positive financial impact. the success of its The Group aims to continue to improve its performance and results in business model 2003/2004. In addition to the expansion of the property development business, with the and the pertinence scheduled delivery of new apartments and holiday homes and the purchase of existing of its offer based residences for renovation and resale to individual investors, three priorities have been on the freedom set for the current financial year: to choose one’s - improve the operating performances by optimising the management of tourism holidays. activities while continuing to cut costs; - take full advantage of the opportunities arising from the integration of Center Parcs by developing synergies within the Group and opening new Center Parcs villages; - step up organic growth notably in France. Gérard BREMOND 2 UNDERSTANDING THE GROUP “Freedom to choose your holidays” Set up in 1967 by Gérard Brémond, the Pierre & Vacances Group is the European leader in tourist residences. It serves 6.6 million European customers each year, 48% of whom are French. The Group’s success is first and foremost based on the originality of its concept: holiday lets with à la carte services (“you only pay for what you use”).The Group also responds to its customers’ evolving economic and sociological needs such as the emphasis on the family, proximity of holiday destinations and flexible short or long stays. Lastly, the Group has a complementary offer built on its four brands (Pierre & Vacances, Maeva, Résidences MGM and Center Parcs): holidays should be suited to the holidaymaker, and each brand corresponds to a certain style of taylor made holidays. Group profile and key figures 3 CUSTOMERS TURNOVER BY COUNTRY OF ORIGIN BY COUNTRY 4% 3% 5% 2% 7% 48% 6% France 68% Netherlands France 14% Germany Netherlands 19% Belgium Belgium UK Germany Other Italy 24% BREAKDOWN OF SITES BREAKDOWN OF SITES BY LOCATION (France) BY COUNTRY 3% 4% 3% 5% 10% 52% 4% Seaside 77% France (including French West Indies) Mountains 11% Netherlands Cities Germany French West Indies Belgium Countryside 31% Other TURNOVER OPERATING MARGIN NET ATTRIBUTABLE INCOME (in euro millions) (in euro millions) (in euro millions) 47.3 82.5 882 900 80 45 14.2 795 189 73.2 800 40 70 5.0 37.8 71 700 35 60 605 30.9 600 51.3 30 50 515 124 7.6 25.3 500 724 68.2 68.3 25 693 40 400 198 32.0 20 30 300 8.1 15 481 43.7 20 200 10 317 100 10 23.9 5 0 0 0 1999/2000 2000/2001 2001/2002 2002/2003 1999/2000 2000/2001 2001/2002 2002/2003 1999/2000 2000/2001 2001/2002 2002/2003 Tourism Tourism Property development Property development 4 UNDERSTANDING THE GROUP The European leader in tourist residences The European tourism market is essentially shared between tour operators and accommodation specialists. The tour operator market is becoming increasingly concentrated with the emergence of giant players. The majority of these giants are German, such as TUI and Thomas Cook, which currently control almost half of the European market. However, the accommodation market is more fragmented.The tourist residence activity is driven by the Pierre & Vacances Group, which is now the leader in Europe with its four main brands: Pierre & Vacances, Maeva, Résidences MGM and Center Parcs. Unique market positioning through four main brands Since its inception, the Pierre & Vacances Group has based its strategy on creating and developing the notion of the freedom to choose one’s holidays via tourist residences and à la carte services. In addition to this concept, its complementary offer based on its four brands (Pierre & Vacances, Maeva, Résidences MGM and Center Parcs) and its ability to respond to evolving economic and sociological needs, have built the Group’s success and strengthened its position as European leader in tourist residences. 5 An original product option of more traditional long-stay holidays.Today, 48% of the Pierre & Vacances Group's apartments are located Although distinct from holiday lets and hotels, tourist at the seaside, 25% at mountain resorts, 19% in the residences combine the advantages of both and provide countryside and 8% in city centres. a unique guarantee of comfort and quality of environment. Pierre & Vacances Group tourist residences mainly A diversified customer mix include two types of product: The Group served 6.6 million customers in 2002/2003 • residences: they generally feature between 50 and – most of whom are families. However, with the recent 500 apartments, and are located in internationally- diversification of its product offering (e.g. short stay renowned resorts or major cities. Residences are holidays, Sunday-to-Sunday holidays, pre-reservation primarily chosen by independent customers who wish of ski lift passes), the Group has been able to extend its to discover a particular region; customer base to include senior citizens, young people, groups and couples without children, primarily in Europe. • villages: they feature between 500 and 1,500 holiday apartments or homes located in 25-200 hectare greenfield sites.These pedestrian villages boast a wide range of activities and also offer à la carte services and children’s activity clubs. The Pierre & Vacances Group also runs a number of hotels offering a traditional range of full- or half-board services.This is a marginal activity for the Group, only representing around 2,770 rooms. Short-distance tourism CUSTOMERS BY COUNTRY OF ORIGIN encouraged by the Group's 4% 3% pan-European presence 7% 48% France The diversity of the Pierre & Vacances Group's Netherlands destinations and geographical locations are among the 14% Germany keys to its success. For example, 95% of Pierre & Vacances' Belgium customers travel to their holiday destination by car. UK The aim is to have locations near major urban areas to Other facilitate access for short stays as well as providing the 24% 6 UNDERSTANDING THE GROUP An original development strategy A fragmented competitive The Group’s growth model is based on a combination of environment increasing the number of sites and continually optimising France has 1,180 tourist residences, comprising the product mix, particularly with regard to geographical 97,300 apartments and homes and 410,000 beds (source: diversity and type of stay.The Group's tourist residence SNRT).The Pierre & Vacances Group currently manages strategy immediately benefited from the unique nearly half of these residences (33,000 accommodation combination of Pierre & Vacances' expertise as a property units and 146,000 beds). developer and tourist operator. This carefully-managed quantitative and qualitative growth Pierre & Vacances' major competitors on the tourist is underpinned by two complementary areas of residence market in mainland France include VVF development: (65,000 beds), Lagrange (29,000 beds), Odalys • the design and sale off-plan of tourist residences (20,000 beds), France Location (15,000 beds) and to individual investors, prior to their construction; Citadines (10,872 beds) (source: SNRT). • a selective mergers and acquisitions strategy and a In Northern Europe, the Center Parcs brand is the policy of systematically selling the properties acquired market leader in holiday residence villages in terms under these transactions to institutional or individual of accommodation capacity. Its main competitors are investors. Landal Greenparks, Sunparks and Zilverberk. Downstream, the Group's strategic model is based Nearly 80% of the Group's turnover are generated by on a diversified distribution policy. Holidays are sold tourism activities in France, the Netherlands, Germany, via two complementary distribution channels: Belgium and most recently Italy. • direct marketing (68%) through the Group's own sales network in France, the Netherlands, Germany, Belgium and Italy.This solution offers the advantage of low costs; • indirect marketing (32%) through travel agencies and tour operators across France and Europe, which has helped enlarge the target customer base.