Assets CHF Notes 31 Dec 2013 % 31 Dec 2012 % Non-current assets
Investment in subsidiaries [6] 501 623 845 27.3 527 002 016 33.3
Loans to Group companies 997 538 403 54.3 1 006 034 298 63.6
Other financial assets 198 329 0.0 226 279 0.0
Tangible fixed assets
* Land and building [2] 4 460 000 0.2 4 460 000 0.3
* Furniture, fixtures and equipment [2] 1 0.0 1 0.0
Total non-current assets 1 503 820 578 81.8 1 537 722 594 97.2
Current assets
Cash and cash equivalents 296 747 356 16.1 1 503 256 0.1
Securities [9] 18 087 000 1.0 18 902 300 1.2
Accounts receivable
* from third parties 321 396 0.0 148 901 0.0
* from Group companies 14 055 431 0.9 18 680 889 1.3
Prepaid expenses 3 107 174 0.2 3 688 206 0.2
Total current assets 332 318 357 18.2 42 923 552 2.8
Total assets 1 836 138 935 100.0 1 580 646 146 100.0
Equity and liabilities CHF Notes 31 Dec 2013 % 31 Dec 2012 %
Equity
Share capital [7] 3 998 400 0.2 3 998 400 0.3
Legal reserves
* General reserve 8 000 000 0.4 8 000 000 0.5
* Share premium reserve 58 593 491 3.2 58 631 373 3.7
* Reserve from capital contribution [8] 367 627 935 20.0 375 322 267 23.7
* Reserve for treasury shares [9] 18 087 000 1.0 18 902 300 1.2
Other reserves [7] 348 973 550 19.0 389 097 700 24.6
Retained earnings
* Profit carried forward 0 0.0 1 856 934 0.1
* Net result – 86 386 615 – 4.6 – 42 796 384 – 2.7
Total equity [7] 718 893 761 39.2 813 012 590 51.4
Liabilities
Provisions 238 971 000 13.0 238 968 000 15.1
Bond [11] 200 000 000 10.8 200 000 000 12.7
Bank loans 284 436 641 15.5 277 191 698 17.5
Accounts payable
* to third parties 18 645 868 1.0 8 515 964 0.5
* to Group companies 352 759 248 19.2 25 211 107 1.6
Accrued expenses 22 432 417 1.3 17 746 787 1.2
Total liabilities 1 117 245 174 60.8 767 633 556 48.6
Total equity and liabilities 1 836 138 935 100.0 1 580 646 146 100.0
CHF Notes 2013 2012
Income
Financial income [3] 26 933 063 14 230 274
Income from investments in subsidiaries [4] 26 712 160 47 800 994
Other operating income 707 355 767 250
Total income 54 352 578 62 798 518
Expenses
Personnel expense 25 449 413 18 680 216
Administrative expense 10 242 589 9 427 544
Expenses related to investments in subsidiaries [5] 95 157 253 66 311 401
Other expenses 0 247 050
Financial expense 9 748 467 10 738 945
Income taxes 141 471 189 746
Total expenses 140 739 193 105 594 902
Net result – 86 386 615 – 42 796 384
■■
■■ INTRODUCTION
In legal terms, Kuoni shareholders are shareholders of Kuoni Travel Holding Ltd., Zurich, which controls the subsidiaries listed at the end of the consolidated accounts. From an economic standpoint, the shareholders of Kuoni Travel Holding Ltd. are invested in the entire Group, so the consolidated accounts are of primary importance.
The accounts of Kuoni Travel Holding Ltd. are conform with Swiss company law.
■■
■■ 1. CONTINGENT LIABILITIES, ASSETS PLEDGED
CHF 31 Dec 2013 31 Dec 2012
Contingent liabilities 492 496 489 469 776 374
Assets pledged 0 0
Contingent liabilities consist of securities and guarantees for subsidiaries.
■■
■■ 2. FIRE INSURANCE VALUES
CHF 31 Dec 2013 31 Dec 2012
Buildings 10 297 000 10 346 000
Furniture, fixtures and equipment 914 000 914 000
■■
■■ 3. FINANCIAL INCOME
The financial income derives largely from interest on investments.
■■
■■ 4. INCOME FROM INVESTMENT IN SUBSIDIARIES
The income from investment in subsidiaries consists of dividends received as well as income from the sale of subsidiaries. As in the prior year, all wholly-owned subsidiaries were charged management fees to cover Group overheads.
■■
■■ 5. EXPENSES RELATED TO INVESTMENT IN SUBSIDIARIES
This item relates to support given to subsidiaries as well as to currency- related value adjustments and provisions. Where necessary, losses incurred by subsidiaries were offset by direct subsidies or appropriate allocations were made to provisions earmarked for that purpose.
Expenses related to investments in subsidiaries in the year under review and in the previous year are primarily related to the withdrawal from loss-making European tour operating activities. Affected by this in 2013, the year under review, were the tour operating activities in France and Italy, and in the previous year, the tour operating activities in Spain, the Netherlands, Belgium, Russia and the Octopus-travel online hotel platform in direct customer business.
■■
■■ 6. INVESTMENT IN SUBSIDIARIES
We refer to the information on principal subsidiaries and associates on pages 184 to 187 of the Financial Report.
■■
■■ 7. EQUITY
CHF Share capital Legal reserves Other reserves Retained
earnings Total equity
Equity as at 1 January 2011 3 046 400 189 732 843 376 325 550 23 400 310 592 505 103
Net result 11 679 501 11 679 501
Appropriation of retained earnings 10 222 877 12 000 000 – 22 222 877 0
Dividends – 7 235 672 0 – 7 235 672
Use of treasury shares 7 811 079 1 176 450 8 987 529
Capital increase 952 000 266 191 861 – 12 669 750 254 474 111
Equity as at 31 December 2011 3 998 400 466 722 988 376 832 250 12 856 934 860 410 572
Net result – 42 796 384 – 42 796 384
Appropriation of retained earnings 11 000 000 – 11 000 000 0
Dividends – 11 472 696 0 – 11 472 696
Use of treasury shares 5 605 648 1 265 450 6 871 098
Equity as at 31 December 2012 3 998 400 460 855 940 389 097 700 – 40 939 450 813 012 590
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 2 972 822 815 300 3 788 122
Equity as at 31 December 2013 3 998 400 452 308 426 348 973 550 – 86 386 615 718 893 761
The share capital is composed as follows:
CHF 31 Dec 2013
1 249 500 registered shares A CHF 0.20 nominal value 249 900
3 748 500 registered shares B CHF 1.00 nominal value 3 748 500
Total share capital 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 inter - national 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
exercise of conversion and/or warrant rights and any subsequent transfer thereof are subject to the transfer and voting restrictions con tained 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 shareholders’ 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 such cases, new registered shares B may also be issued to employees at rates below the current stock mar - ket price, and existing shareholders shall have no subscription rights.
The terms and conditions for the issue of such shares shall be deter - mined 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.
■■
■■ AUTHORISED CAPITAL
Kuoni Travel Holding Ltd. has no authorised capital. Article 3ter of the Articles of Incorporation of Kuoni Travel Holding Ltd. in relation to the authorised capital was deleted upon the expiration of its validity as of 20 April 2013 with a resolution on revocation.
■■
■■ 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.
■■
■■ OPTING OUT/OPTING UP
There is no opting-out or opting-up clause in the Articles of Incorporation.
■■
■■ 8. RESERVES FROM CAPITAL CONTRIBUTIONS
CHF Total 2013 Total 2012
Capital contribution as at 1 January 2013 375 322 267 379 855 161
Distribution – 11 520 336 – 11 472 696
Increase from treasury shares 3 826 004 6 939 802
Capital contribution as at 31 December 2013 367 627 935 375 322 267
The overall amount held in reserves from capital contributions is CHF 368 million, which is made up of the various types of contribu-tions and share premiums minus distribucontribu-tions since 1 January 1997.
The Swiss Federal Tax Administration disputes reserves from capital contributions of CHF 11.5 million.
■■
■■ 9. TREASURY SHARES
number of registered
shares B Book value CHF 1 000
Held on 1 January 2012 196 885 20 168
Purchase 0 0
Use – 25 309 – 1 266
Held on 31 December 2012 171 576 18 902
Purchase 0 0
Use – 16 306 – 815
Held on 31 December 2013 155 270 18 087
The remaining treasury shares held are reserved for the share pur - chase 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.
■■
■■ 10. PRINCIPAL SHAREHOLDERS
We are aware of the following principal shareholders:
Shareholder
Number/
category of
shares Voting rights in
% Date of last disclosure
Kuoni and Hugentobler-Foundation, Zurich 1 249 500/A 25.00 3.4.1995
Previous year 1 249 500/A 25.00 3.4.1995
Silchester International Investors Ltd, London 710 042/B 14.21 31.12.2013
Previous year 757 704/B 15.16 31.12.2012
Federation of Migros Cooperatives, Zurich, together with Anlagestiftung der Migros 242 149/B
35 000 Options 4.84 10.12.2013
Previous year 284 656/B
39 000 Options 8.50 7.12.2009
Pictet Funds S.A., Geneva n.a. under 3.00 10.7.2013
Previous year 151 149/B 3.02 11.4.2012
UBS Fund Management (Switzerland) AG, Basel 156 556/B 3.13 15.11.2012
Previous year 156 556/B 3.13 15.11.2012
■■
■■ 11. BOND
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.
■■
■■ 12. RELATED PARTIES
The Kuoni and Hugentobler Foundation received a withholding tax- exempt distribution from capital contribution reserves in the amount of CHF 0.75 million (gross) on the basis of their shareholdings.
■■
■■ 13. COMPENSATION PAID
■■
■■ COMPENSATION PAID TO THE GROUP EXECUTIVE BOARD
The tables in this section provide an overview of the total compensation of the (Group Executive Board) GEB in 2013 and 2012, including basic salary, short-term incentive compensation for the respective financial year (paid out in April of the following year) and pension benefits. They also outline the undiscounted value at grant of awards under the RSP and PSP, using the Kuoni share price at grant. These amounts will be modified and awarded based on actual performance in the subsequent three year period.
The aggregate compensation of the GEB in 2013 amounted to
CHF 10.8 million (2012: CHF 10.2 million). CEO Peter Rothwell was the GEB member with the highest total compensation in both 2013 and 2012 (aggre-gate compensation of CHF 2.7 million in 2013 and CHF 2.8 million in 2012).
2013 CHF 1 000
Group Executive
Board 12 Of which:
Peter Rothwell 2
Basic salary 3 897 944
Short-term incentive 3 2 153 573
Shares Award (RSP) 4 1 378 392
Shares Award (PSP) 5 2 002 548
Pension scheme contributions 6 423 111
Social security contributions 760 120
Other compensation amounts 7 216 6
Total 10 829 2 694
Basic salary 3 397 940
Short-term incentive 9 2 134 670
Shares Award (PSP) 1011 3 227 940
Pension scheme contributions 6 655 111
Social security contributions 791 151
Other compensation amounts 7 39 6
Total 10 243 2 818
1 Six members. Leif Vase Larsen has left the GEB at the end of March 2013 and Peter Rothwell at the end of June 2013. Zubin Karkaria joined the GEB on 21 March 2013, so the amounts include the compensation paid to him from the day of his appointment to the GEB up to the end of the year 2013.
2 Amounts owing to former GEB members are outlined in the “Description of termination arrangements for GEB members” section of this report.
3 The members of the GEB were paid STI variable compensation in cash of CHF 2.1 million in 2013 for the prior-year period. The STI variable compensation paid to CEO Peter Rothwell amounted to CHF 0.7 million.
4 Members of the GEB were granted 4 765 shares under the RSP in 2013. These shares were valued at a market price of CHF 289.
5 Members of the GEB were granted 6 928 shares under the PSP in 2013. These shares were valued at a market price of CHF 289. A total of 3 699 registered shares B with a value of CHF 1.1 million were delivered to members of the present GEB in 2013 from the Share Awards (PSP) assigned in 2010. Thereof, 1 111 registered shares B with a value of CHF 0.3 million were delivered to Peter Rothwell. The shares were valued at a market price of CHF 297.
6 One member of the GEB was entitled to an early retirement at the age 58 in accordance with the regula - tions of the Fürsorgestiftung. This early retirement provision was eliminated as of 31 December 2013 and the retirement age was put on par with that of the other members of the GEB in Switzerland, who retire regularly at the age of 62. The non-contribution-base costs of the corresponding benefits are included in the pension fund contributions shown.
7 Allowances and other benefits including compensation in relation to company car entitlements.
8 Five members
9 The members of the GEB were paid STI variable compensation in cash of CHF 0.7 million in 2012 for the prior-year period. The cash-form variable compensation paid to CEO Peter Rothwell amounted to CHF 0.2 million.
10 Members of the GEB were granted 11 822 shares under the PSP in 2012. These shares were valued at a market price of CHF 273.
11 In the 2012 Compensation Report the market value calculated included a 16% discount in view of the shares restricted availability at the time of grant. The discount has not been applied in the above table.
■■
■■ CONTRACTUAL TERMINATION CLAUSES OF GROUP
EXECUTIVE BOARD MEMBERS
Employment contracts for the GEB contain notice periods of 12 months. The employment contract of Stefan Leser was amended in 2013 without compensation in order to be aligned with all other members of the GEB and to ensure there are no entitlements to sever - ance payments.
No additional compensation or benefits are provided in the event of a change of control. Special rules apply for vesting of equity based compensation on change of control, such that awards will not vest at a rate greater than 100% of the original grant.
■■
■■ DESCRIPTION OF TERMINATION ARRANGEMENTS FOR
GROUP EXECUTIVE BOARD MEMBERS
In June 2013, Peter Rothwell ceased employment with Kuoni Group and his employment contract will end in June 2014. The terms of Mr Rothwell’s contract include a twelve-month notice period, during which a non-competition clause applies with no extra compensation.
In addition to the amounts disclosed in the above compensation tables, Mr Rothwell will receive termination payments in accordance with his contractual employment terms and is entitled to:
* Basic salary of CHF 78 644 paid monthly from January to June 2014 and other compensation amounts (allowances and other benefits including compensation in relation to company car entitlements), in total CHF 494 864.
* Short-term incentive payment in April 2014 in the amount of CHF 282 000 (a pro-rated amount on target level relating to the 2014 performance year).
* Grants under the PSP in 2011, 2012 and 2013 will vest as per the Plan rules in 2014, 2015 and 2016 respectively
* One-third of the grant under the RSP in 2013 will vest in April 2014, the remaining two-thirds will lapse
In March 2013, Leif Vase Larsen ceased employment with Kuoni Group and his employment contract will end in March 2014. The terms of Mr Larsen’s contract include a twelve-month notice period. In addi tion to the amounts disclosed in the above compensation tables, Mr Larsen will receive termination payments in accordance with his contractual employment terms and is entitled to:
* Basic salary of CHF 42 690 paid monthly from January to March 2014 and other compensation amounts (allowances and other benefits including compensation in relation to company car entitlements), in total CHF 167 985.
* Short-term incentive payment in April 2015 up to a maximum of CHF 64 035 (a pro-rated amount relating to the 2014 performance year). As agreed a portion of the 2014 performance year short-term incentive amounting to CHF 32 018 has already been paid at target level in 2013.
* Grants under the PSP in 2011 and 2012 will vest as per the Plan rules in 2014 and 2015 respectively.
No further compensation will be paid to the former GEB members other than what is detailed above.
■■
■■ OTHER COMPENSATION, FEES AND LOANS
No other compensation or fees were accrued for or paid to any mem ber or former member of the GEB during 2013. Kuoni Group had not granted any collateral, loans, advances or credits to any member or former member of the GEB as at 31 December 2013.
No options were allocated in the year under review.
■■
■■ COMPENSATION PAID TO THE MEMBER OF THE BOARD
OF DIRECTORS
The compensation of Kuoni Group’s Board of Directors (BoD) is peri - odically benchmarked to ensure that compensation is comparable and competitive in the market. In 2013, PricewaterhouseCoopers was commissioned with conducting a benchmark and analysis of the structure and amount of the compensation of the BoD. The compen-sation awarded to members of the BoD is being confirmed annually by the BoD.
The aggregate compensation of the BoD in 2013 amounted to CHF 1.9 million (2012: CHF 1.9 million). The Board member with the highest compensation in both 2013 and 2012 was Henning Boysen, Chairman (CHF 0.6 million in 2013 and CHF 0.6 million in 2012).
Fixed Compensation net (cash)
Fixed Compensation
net (shares) 1 Social security
Contributions 2 Total CHF 1 000 CHF 1 000 Number of
shares CHF 1 000 CHF 1 000
2013
Henning Boysen, Chairman 250 250 878 52 552
Heinz Karrer 115 115 404 29 259
Jae Hyun (Jay) Lee 75 75 264 19 169
John Lindquist 75 75 264 19 169
Adrianus (Adriaan) Nühn 75 75 264 19 169
David Schnell 125 125 439 32 282
Annette Schömmel 75 75 264 19 169
Raymond D. Webster 75 75 264 14 164
Total 865 865 3 041 203 1 933
2012
Henning Boysen, Chairman 250 250 755 52 552
Heinz Karrer 3 115 115 347 28 258
Jae Hyun (Jay) Lee 4 75 75 227 19 169
John Lindquist 75 75 227 19 169
Adrianus (Adriaan) Nühn 4 75 75 227 19 169
David Schnell 125 125 378 32 282
Annette Schömmel 75 75 227 19 169
Raymond D. Webster 75 75 227 14 164
Total 865 865 2 615 202 1 932
1 The shares were valued at a market price of CHF 285 (2012: CHF 331.5), representing the full fair value of grants made in the relevant financial year. Note, in the 2012 Compensation Report the market value calculated included a 16% discount in view of the shares’ restrict - ed availability at the time of grant. This discount has not been applied in the above table anymore. Further, the values shown in the table do not include any accrued
value for grants made and reported in previous financial year(s).
2 The 2012 Social Security Contributions shown in the table have been updated to include both employee and employer contributions. Employee contributions had previously been included in column “Fixed compensation net (cash)”.
3 Appointed as Vice-President on 17 April 2012 4 Elected as member of the BoD at the AGM 2012
■■
■■ OTHER COMPENSATION, FEES AND LOANS
No compensation was paid in 2013 to any member of the BoD who had left in the prior period or earlier.
As at 31 December 2013, Kuoni Group had not granted any collateral, loans, advances or credits to members of the BoD or to persons associated with them. No options were allocated in the year under review.
■■
■■ 14. OWNERSHIP OF SHARES
■■
■■ GROUP EXECUTIVE BOARD
As at 31 December 2013, the members of the GEB held Kuoni shares and the conditional right to receive shares under deferred compensa-tion or long-term incentive plans, as shown in the table below.
The total number of shares held amounts to less than 0.5% of Kuoni’s total shares outstanding. The total number of unvested shares held amounts to less than 1.0% of Kuoni’s total shares outstanding (assum-ing GEB members receive their target amount of shares under the PSP and RSP).
No other equity instruments are held by members of the GEB other than those outlined in the table below.
Unvested as at 31 Dec 2013
Total number of
shares held Voting rights
Performance
Zubin Karkaria 2 1 584 0.03% 632 764 903 581
Leif Vase Larsen 1 0 0.00% 1 051 1 346 0 0
Stefan Leser 3 998 0.08% 1 809 2 271 1 286 861
Rolf Schafroth 1 793 0.03% 1 809 2 271 1 286 861
Total 9 497 0.19% 9 607 12 586 7 041 3 916
Unvested as at 31 Dec 2012
Total number of
shares held Voting rights
Performance
1 Members of the Executive Board who have left the company during 2013. 2 Member of the Executive Board who has joined during 2013. The 2013 value shows the full-year grant.
■■
■■ BOARD OF DIRECTORS
As at 31 December 2013, the Chairman and other members of the BoD held 15 731 Kuoni shares. This amounts to less than 0.5%
of Kuoni’s total shares outstanding.
The table below shows the number of Kuoni shares held by each mem ber of the BoD. No person closely linked to a member of the Board held any shares of Kuoni. No other equity 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 As at 31
Dec 2013 Voting
rights As at 31
Dec 2012 Voting
rights Unblocked Blocking
period 2014 Blocking
period 2015 Blocking period 2016
Henning Boysen, Chairman 5 916 0.12% 5 038 0.10% 3 690 593 755 878
Heinz Karrer 1 918 0.04% 1 514 0.03% 930 237 347 404
Wolfgang Beeser 1 n.a. n.a. 1 052 0.02% n.a. n.a. n.a. n.a.
Jae Hyun (Jay) Lee 491 0.01% 227 0.00% 0 0 227 264
John Lindquist 1 367 0.03% 1 373 0.03% 698 178 227 264
Adrianus (Adriaan) Nühn 491 0.01% 227 0.00% 0 0 227 264
David Schnell 2 494 0.05% 2 805 0.06% 1 380 297 378 439
Annette Schömmel 1 217 0.02% 953 0.02% 548 178 227 264
Raymond D. Webster 1 837 0.04% 1 573 0.03% 1 168 178 227 264
Total 15 731 0.32% 14 762 0.29% 8 414 1 661 2 615 3 041
1 Member of the BoD who has left the company during 2012
■■
■■ 15. RISK MANAGEMENT
The Board of Directors and the management use a risk management process under which a report is compiled every six months detail- ing Kuoni’s present risk exposure and the current status of defined risk-reducing actions and activities. The probabilities of such risks occurring and the anticipated impact of the risk scenarios analysed also form part of this semi-annual risk management reporting.
The Kuoni risk management process further extends to quarterly reporting on any newly identified risk scenario or changed risk assessment.
Risks are assessed by conducting interviews with management mem bers and further key personnel. The associated risk scenarios are then developed on the basis of these and further considerations, including corporate goals and strategies. Kuoni’s Group-wide risk management covers ten top Group-level risks and three to five specific top risks for each of the divisions and the most important business units.
Within the Internal Control System (ICS), the corresponding pro -
Within the Internal Control System (ICS), the corresponding pro -