Main accounting principles 

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

Basis of preparation

The consolidated financial statements are presented in Swiss francs (CHF). The amounts are rounded to the nearest hundred thousand and are shown in CHF million. The German version is considered to be legally binding. The consolidated financial statements are prepared on the historical cost basis except for derivative financial instruments. Non-current assets and disposal groups held for sale are stated at the lower of the carrying amount and fair value less costs to sell. Due to the new Swiss law in accounting and financial reporting, current assets and liabilities are shown prior to non-current assets and liabilities. In addition, current provisions, previously disclosed within accrued expenses, are shown separately in the balance sheet. 

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Critical judgements made by management in the application of IFRS that have a significant effect on the financial statements and key sources of estimation uncertainties are discussed separately. The accounting policies have been applied consistently to all periods presented in these consolidated financial statements, with the exceptions described below.

The accounting principles used for the consolidated financial statements and the presentation of the consolidated financial statements are in accordance with those used for the 2014 consolidated accounts, with the exception of the changes listed below.

Adoption of new accounting provisions

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

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

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

Future IFRS changes

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

  Effective date Planned application
New standards and interpretations    
IFRS 15 Revenue from Contracts with Customers 1 January 2018 Reporting year 2018
IFRS 9 Financial Instruments 1 January 2018 Reporting year 2018
Revisions and amendments of standards and interpretations    
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) 1 January 2016 Reporting year 2016
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38) 1 January 2016 Reporting year 2016
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Tbd Tbd
Annual Improvements to IFRSs 2012 – 2014 Cycle 1 January 2016 Reporting year 2016
Disclosure initiative (amendments to IAS 1) 1 January 2016 Reporting year 2016
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) 1 January 2016 Reporting year 2016

Subsidiaries

Subsidiaries are entities controlled by Kuoni Travel Holding Ltd. Kuoni Group controls a subsidiary if it is exposed to the fluctuating returns of the investment or if it holds rights to these returns and has the ability to influence these returns given its power over the subsidiary. This is the case where the Kuoni Group holds more than 50% of the voting rights of an entity or where the Kuoni Group has been granted management of an entity contractually or is exercising control by other means. Subsidiaries acquired in the course of the accounting year are consolidated from the date the control effectively commences. Subsidiaries sold in the course of the accounting year are deconsolidated as of the date on which control ceases. Sales and purchases of non-controlling interests are recognised directly in equity. The gain or loss from the sale of subsidiaries is recorded in the financial result. Subsidiaries which are classified as discontinued operations are excluded. 

The full consolidation method is used, under which all assets, liabilities, income and expenses of the subsidiaries are included in the consolidated financial statements. The share of net assets and net profit or loss attributable to minority shareholders is presented separately as non-controlling interest on the consolidated statement of financial position, and separately as non-controlling interest in the consolidated income statement.

Discontinued operation

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

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

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

Associates

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

Joint ventures

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

Intragroup transactions and balances

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

Foreign currency transactions 

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

Consolidation of foreign subsidiaries 

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

Turnover

The Group renders a wide range of services to the travel industry and to governments. The turnover from rendering these services to the travel industry is generally recognised on the date of the customerʼs departure or, in case of destination and accommodation services, on the date of arrival. In the Visa Processing Services business, turnover is recognised when the visa application is made or the value-added service is rendered. 

Turnover comprises net sales revenues (after deduction of sales tax or value-added tax, discounts and commission) from the Destination & Accommodation Services and the service fee received from visa applicants. 

Direct costs

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

Employee benefits

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

Share-based compensation 

Certain employees participate in share-based employee participation plans, i.e. programmes based on equity instruments of Kuoni Travel Holding Ltd. For all share-based employee compensation, the current market value of the shares concerned is determined on the date the entitlement is granted, and is debited to personnel expense on the corresponding income statements throughout the period until the entitlement is awarded. 

Equity-settled employee compensation is recognised with a corresponding increase in equity. Further amounts resulting from the exercising of such benefits are as well shown as increase in equity.

Retirement benefits

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

Defined benefit plans: Switzerland

Defined contribution plans: The United Kingdom, the USA, India and Japan.

Defined benefit plans

The plans are funded by the Groupʼs subsidiaries (employer) and the employees. Employerʼs contributions to defined benefit plans are recognised as an expense in the income statement when incurred. The Groupʼs net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefits employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets as net liabilities or net assets in the consolidated financial statement.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of reductions in future contributions to the benefit plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses on a defined benefit liability, the return on plan assets (excluding interest) and the effect of the asset ceiling (excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in the income statement.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised in income statement. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Defined contribution plans

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

Operating lease payments

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

Depreciation 

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

Earnings before interest, taxes and amortisation (EBITA)

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

Amortisation 

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

Income taxes

Income tax on the profit or loss for the year comprises current and deferred taxes, based on the local tax rates expected to apply for each Group subsidiary. Income tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income in which case it is recognised in other comprehensive income.

Current income tax is the expected tax payable on the taxable income for the year, calculated using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences relating to investments in subsidiaries are not provided for to the extent that they will probably not reverse in the foreseeable future. Deferred tax liabilities on undistributed profits of subsidiaries are recognised, unless dividend payments to the ultimate Group holding company are not planned for the foreseeable future. The amount of deferred tax recognised is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Tangible fixed assets 

Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses. Where an item of tangible fixed assets comprises major components having different useful lives, they are accounted for as separate tangible fixed asset items. The capitalisation of subsequent costs is evaluated under the general recognition principle for such assets at the time they are incurred. Long-term leases of tangible fixed assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Tangible fixed assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and any impairment losses. The related liabilities are recognised as non-current or current liabilities. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the items of tangible fixed assets (owned assets and assets under finance leases and/or components thereof) concerned. Land is not depreciated.

The estimated useful lives are as follows:

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

Other intangible assets 

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

Goodwill 

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

Financial investments

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

Time deposits, loans and accounts receivable 

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

Cash and cash equivalents

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

Impairment 

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

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

An impairment loss in respect of goodwill is not reversed. An impairment loss in respect of other assets is reversed if there has been a change in the estimates used to determine the recoverable amount. Reversals of impairment losses are recognised in the income statement.

Treasury shares 

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

Financial debts

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

Provisions 

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. 

Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Accrued expenses

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

Contingent liabilities 

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

Accounts payable 

Accounts payable are stated at nominal value.

Derivative financial instruments 

The Group uses derivative financial instruments primarily to hedge its exposure to foreign exchange risks arising from operational, financing and investment activities. The Group largely uses forward-exchange contracts, currency options and aviation fuel options for this purpose. In accordance with internal Group accounting principles, derivative financial instruments are not used for trading purposes. However, derivatives used for hedging purposes that do not qualify as hedge accounting are accounted for as trading instruments.

All derivative financial instruments were initially recognised at fair value. After initial recognition, the derivative financial instruments are recognised at their fair value and reported under accounts receivable/other receivables or accounts payable/other payables. Any gains or losses on the remeasurement of the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised immediately in the income statement. The fair value of the instruments used is the calculated amount that the Group would receive or pay to terminate the contracts at the balance sheet date, based on quotes from independent counterparties.

Hedging

Cash flow hedges

Where a derivative financial instrument is designated as a foreign currency hedge of the variability in cash flows of a firm commitment or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in other comprehensive income. Contracts of this kind are classified as cash flow hedges.

When the firm commitment or forecast transaction results in the recognition of a non-financial asset or liability, the cumulative gain or loss is removed from other comprehensive income and included in the initial cost of the non-financial asset or liability. Otherwise, the cumulative gain or loss is removed from equity and recognised in the income statement at the same time as the hedged transaction. The ineffective part of any gain or loss is recognised immediately in the income statement.

When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes the designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in other comprehensive income and is recognised in accordance with the above policy when the transaction occurs.

If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in other comprehensive income is recognised immediately in the income statement.

Hedging of monetary assets and liabilities

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

Non-current assets held for sale and disposal groups 

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

Segment reporting 

A segment is a distinguishable component of the Group which provides products and/or services in a particular geographical area or a particular business segment and for which separate financial information is available.

The results of the Groupʼs operating segments are regularly reviewed by the Board of Directors (as the Groupʼs chief operating decision-maker) to determine how resources should be distributed and performance potential assessed. Segments are managed at the EBIT level.

Following a strategic review, Kuoni Groupʼs Board of Directors and Group Executive Board decided to focus the companyʼs activities on its core business as a service provider to the global travel industry and to governments. Following this new structure, Kuoni Group consists of the three divisions: Global Travel Distribution (GTD), previously FIT (Fully Independent Traveller); Global Travel Services (GTS), previously Group Travel and Destination Management Specialists; and VFS Global. Furthermore, all tour operating activities which were previously reported as Outbound Nordic and Outbound Europe/Asia have been sold. The segment reporting reflects the management structure implemented within the Kuoni Group.

GTD (Global Travel Distribution) populates Kuoni Groupʼs own worldwide databases with a wide range of different travel services. The majority of these services are overnight hotel stays, but they also include individual and regular transfer services, city tours and excursions, tickets, tour guide services and restaurants, all of which can be booked online. The business models in GTD are based on B2B relationships with various business partners like tour operators, online and offline travel agents as well as aggregators.

GTS includes B2B group travel business and the Destination Management business. These activities within the Group Travel business focus on creating individual, tailor-made group travel for tour operators as well as online and offline travel agents. These business partners buy these group arrangements from Kuoni Group and then offer them to their own customers in local source markets. The Destination Management Specialists focus on their core destinations and core styles of travel, and they pride themselves on being able to meet the most exacting customer requirements. Destination Management Specialists are local experts with offices in the holiday destinations themselves. Kuoni Group runs a worldwide network of destination management companies in the USA, Africa, Middle East and Asia/Pacific.

VFS Global takes over the external, non-judgmental, administrative parts of the visa application and other consular processes for diplomatic missions and governments worldwide.

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

Earnings per share (EPS)

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

Key judgements, management estimates and assumptions 

When preparing the consolidated financial statements, management must make decisions, assessments and assumptions that have an impact on income, expenses, assets and liabilities. The actual results may differ from these management assessments. Estimates and underlying assumptions are reviewed on an ongoing basis and are based on past findings and various other factors. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based, or as a result of new information or additional experience. Such changes are recognised in the period in which the estimate is revised.

The key assumptions about the future and key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next twelve months are described below. On the basis of the information currently available, they are considered to be appropriate.

Employee pension plans

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

Tangible fixed assets, goodwill and other intangible assets

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

Income taxes

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