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 

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
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: 

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 

Information by reportable segments Global Travel Distribution (GTD) Global Travel Services (GTS) VFS Global Total reportable segments Corporate Total from continuing operations Discontinued 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
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

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.

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.

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

CHF million Tangible fixed assets 31 Dec 2015 Goodwill and other intangible assets 31 Dec 2015 Total 31 Dec 2015 Tangible fixed assets 31 Dec 2014 Goodwill and other intangible assets 31 Dec 2014 Total 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 

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 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.

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). 

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.

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 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

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 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:

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: 

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%

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 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 

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 

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 

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.

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:

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:

CHF million Deferred tax assets 31 Dec 2015 Deferred tax liabilities 31 Dec 2015 Deferred tax assets 31 Dec 2014 Deferred tax liabilities 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
         
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) 

  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 

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%

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 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: 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 

CHF million Land and buildings Other tangible fixed assets Total tangible fixed 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
       
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

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: 

CHF million Growth rate Discount rate before taxes 31 Dec 2015
Cash-generating units      
Global Travel Distribution 1.5% 10.0% 531.3
Global Travel Services 2.5% 9.6% 61.3
Total     592.6
CHF million Growth rate Discount 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.

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  

CHF million Intangible assets from acquisitions Further intangible assets Total other 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
       
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 

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

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
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
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

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 

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.

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.

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.

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 :

Shareholder Number/category of shares Share in % Where of voting shares Voting rights in % Date of last 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.

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.

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. 

CHF million Translation differences Hedging reserves Remeasurement gains and losses on defined 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 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 

CHF million Provisions for personnel related costs Provisions for restructuring Provisions for 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 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 

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, 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

Average interest rates were:

  2015 2014
CHF 1.5% 1.6%
EUR 1.0% 3.8%

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        
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.

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 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. 

    Derivative financial instruments    
CHF million Loans and receivables At fair value through profit and loss Used as cash flow hedges Other liabilities Total carrying amount of financial 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, 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.

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 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.

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.

CHF million Positive fair values 31 Dec 2015 Negative fair values 31 Dec 2015 Contract values 31 Dec 2015 Positive fair values 31 Dec 2014 Negative fair values 31 Dec 2014 Contract values 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  

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:

CHF million Positive fair values 31 Dec 2015 Negative fair values 31 Dec 2015 Contract values 31 Dec 2015 Positive fair values 31 Dec 2014 Negative fair values 31 Dec 2014 Contract values 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:

CHF million Positive fair values 31 Dec 2015 Negative fair values 31 Dec 2015 Contract values 31 Dec 2015 Positive fair values 31 Dec 2014 Negative fair values 31 Dec 2014 Contract values 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.

31 Dec 2015 Nominal currency USD +/– 10% Nominal currency GBP +/– 10%
CHF million Functional currency Equity Equity Income statement Income statement Equity Equity Income statement Income 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 +/– 10% Nominal currency CHF +/– 10%
CHF million Functional currency Equity Equity Income statement Income statement Equity Equity Income statement Income statement
  +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
31 Dec 2014 Nominal currency USD +/– 10% Nominal currency GBP +/– 10%
CHF million Functional currency Equity Equity Income statement Income statement Equity Equity Income statement Income 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 +/– 10% Nominal currency CHF +/– 10%
CHF million Functional currency Equity Equity Income statement Income statement Equity Equity Income statement Income 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

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 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.

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 

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 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.