Legally, Kuoni shareholders are shareholders of Kuoni Travel Holding Ltd., Zurich. As announced in the annual report 2014, the Kuoni Group has introduced a double holding structure in the business year 2015. With the introduction of the double holding structure, Kuoni Travel Holding Ltd. transferred all shareholdings in its subsidiaries (including related provisions) to the newly incorporated Kuoni Travel Investments Ltd. Excluded from this transfer was its shareholding in Kuoni Travel (China) Ltd. As a result of the introduction of the double holding structure, Kuoni Travel Holding Ltd. directly controls Kuoni Travel Investments Ltd. and indirectly controls all other subsidiaries through Kuoni Travel Investments Ltd. From an economic standpoint, the shareholders of Kuoni Travel Holding Ltd. will continue to be invested in the entire Group. The relevant shareholdings are set forth in the following note 2 (Investment in subsidiaries).
These financial statements were prepared according to the provisions of the Swiss Law on Accounting and Financial Reporting, the “New Swiss Accounting Law” (32nd title of the Swiss Code of Obligations) for the first time. These provisions were effective as of 1 January 2013 and require companies to adapt them as of 1 January 2015. Therefore, the presentation of the Financial Statements differs compared to those published in 2014. The prior-year presentation was adjusted to follow the new requirements. The positions affected by the change are marked with a footnote. Where not prescribed by law, the significant accounting and valuation principles applied are described below.
Financial assets include interest-bearing long-term loans to Group companies. Loans granted in foreign currency are translated at the rate at the balance sheet date, whereby unrealised losses are recorded and unrealised profits are not recognised in the income statement.
Treasury shares are recognised at acquisition cost and deducted from shareholdersʼ equity at the time of acquisition. In case of a resale, the gain is recognised through reserves from capital contribution and the loss is recognised through voluntary retained earnings.
Should treasury shares be used for share-based payment programmes for the Board of Directors, the acquisition cost is recognised as personnel expenses.
Long-term interest-bearing liabilities
Interest-bearing liabilities are recognised in the balance sheet at nominal value. Issue costs for bonds are recognised as prepaid expenses and amortised on a straight-line basis over the bondʼs maturity period.
Income from investment in subsidiaries
The income from investment in subsidiaries consists of dividends received as well as income from the sale of subsidiaries.
Foregoing a cash flow statement and additional disclosure in the notes
As Kuoni Travel Holding Ltd. prepared its consolidated financial statements in accordance with a recognised accounting standard (International Financial Reporting Standards as issued by IASB, IFRS), it has decided to forego presenting additional information on interest-bearing liabilities and audit fees in the notes as well as in the cash flow statement in accordance with the law.
2. Investment in subsidiaries
The investment in Kuoni Travel (China) Ltd. was sold in 2015 as part of the sale of Kuoniʼs Tour Operating Business. The investment was sold for HKD 250.0 million (CHF 32.1 million) which resulted in a gain of CHF 17.3 million.
The following table shows Kuoni Travel Holding Ltd.ʼs directly held subsidiary as of 31 December 2015:
The following are Kuoni Travel Holding Ltd.ʼs material indirectly held subsidiaries, associates and joint ventures as of 31 December 2015 as well as its directly held and material indirectly held subsidiaries, associates and joint ventures as of 31 December 2014. For 2014, material indirectly held subsidiaries, associates and joint ventures are marked with a “*”; all others were directly held subsidiaries, associates or joint ventures.
Discontinued operations (tour operating business and inbound business in India)
3. Bond and revolving credit facility
Kuoni Travel Holding Ltd. issued a CHF 200-million 1.5%-bond in October 2013. The bond has a duration of six years and matures on 28 October 2019.
Kuoni Travel Holding Ltd initiated early refinancing of the existing revolving credit facility of CHF 209 million. The new revolving credit facility of CHF 200 million replaced the existing agreement on 21 September 2015 and runs until June 2020. As at 31 December 2015, the facility was used to an amount of CHF 20 million.
The new credit facility includes a financial covenant relating to the degree of indebtedness. The maximum degree of indebtedness must not exceed 3.0 times, measured as the ratio between net debt and EBITDA of Kuoni Group. The interest to be paid is calculated on Libor plus a margin of between 0.75% and 1.75%.
The below table shows the changes to the opening balance of equity as of 1 January 2013, applying the new Swiss Accounting Law. The grey-shadowed positions have been split to reflect the required structure of the New Swiss Accounting Law:
Statement of changes in equity
The share capital is composed as follows:
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 share register in the name of any one shareholder.
Reserves from capital contributions
The overall amount held in reserves from capital contributions is CHF 331.8 million, which is made up of the various types of contributions and share premiums minus distributions since 1 January 1997. The Swiss Federal Tax Administration disputes reserves from capital contributions of CHF 21.1 million.
5. Treasury shares
The remaining treasury shares held are reserved for the share purchase plan of the Group Executive Board and senior management. The changes to treasury shares reflect the registered shares B issued to the Board of Directors, the Group Executive Board and management.
6. Income from investments in subsidiaries
In the reporting year, income from subsidiaries amounted to CHF 17.3 million (2014: CHF 105.7 million). This amount represented the gain on sale of Kuoni Travel (China) Ltd. Due to the introduction of the double holding structure in the business year 2015, Kuoni Travel Investments Ltd. is Kuoni Travel Holding Ltd.ʼs only directly held subsidiary. All other shareholdings are directly or indirectly held by Kuoni Travel Investments Ltd. Dividends from Kuoni Travel Investments Ltd. may be distributed to Kuoni Travel Holding Ltd. for the first time in 2016.
7. Other financial income
Other financial income amounted to CHF 28.9 million (2014: CHF 28.4 million) and consisted mainly of interest income from loans to subsidiaries.
8. Extraordinary, non-recurring or prior period expense
In the reporting period, Kuoni Travel Holding Ltd. has recognised an exchange loss of CHF 80.5 million on its loans to and from subsidiaries. This exchange loss has been accumulated over the years, and has been derived mainly from a US-dollar-denominated loan to a subsidiary. In previous years this loss was covered by provisions. However, with the introduction of the double holding structure in the reporting year, these provisions were transferred to Kuoni Travel Investments Ltd., Kuoni Travel Holdingʼs directly held subsidiary.
9. Full-time equivalents
Kuoni Travel Holding Ltd. does not have any employees.
10. Contingent liabilities
In 2015 contingent liabilities consisted of bank guarantees related to indirect subsidiaries of Kuoni Travel Holding Ltd. The decrease compared to prior year is due to the sale of the tour operating business and the inbound business in India.
11. Principal shareholders
We are aware of the following principal shareholders as of 31 December 2015:
12. Related parties
The Kuoni and Hugentobler-Foundation received a withholding tax exempt distribution from capital contribution reserve in the amount of CHF 1.9 million (gross) on the basis of their shareholdings.
13. Ownership of shares
Group Executive Board
As at 31 December 2015, the members of the GEB held Kuoni shares and the conditional right to receive shares under deferred compensation and/or long-term incentive plans, as shown in the table below. The total number of shares held amounts to less than 0.5% of Kuoniʼs total shares outstanding. The total number of unvested shares held amounts to less than 1.0% of Kuoniʼs total shares outstanding (assuming GEB members receive their target amount of shares under the PSP and RSP).
No other equity instruments are held by GEB members other than those outlined in the table below.
Board of Directors
As at 31 December 2015, the Chairman and other members of the BoD held 11 713 Kuoni shares. This amounts to less than 0.5% of Kuoniʼs total shares outstanding.
The table below shows the number of Kuoni shares held by each member of the BoD. No party related to a member of the Board held any Kuoni shares. No other share instruments are held by members of the BoD other than those outlined in the table below.
14. Significant events after the balance sheet date
On 2 February 2016 private equity company EQT has announced an all cash public tender offer for all publicly held registered shares of Kuoni Travel Holding Ltd. (SIX:KUNN) for a price of CHF 370.00 per share. On 29 February 2016 EQTʼs subsidiary, Kiwi Holding IV S.à r.l., published the corresponding prospectus. Kuoni Travel Holding Ltd.ʼs Board of Directors unanimously supports the offer and considers the valuation as fair and adequate. Should the offer succeed, then, the creditors of the bond and the syndicated loan have the right to claim repayment of such financial debts classified as non-current.
The financial statements were approved by the Board of Directors and released for publication on 8 March 2016. No further events after 31 December 2015 occurred that would result in an adjustment to the carrying amounts of Kuoni Travel Holding Ltd.ʼs assets and liabilities.