ANNUAL
REPORT
2015
STARTING
A NEW
ERA
ANNUAL
REPORT
2015
CONTENT
1 MANAGEMENT REPORT
Dufry at a Glance 4 – 5
Highlights 2015 6 – 7
Message from the Chairman of the Board of Directors 8 – 10
Statement of the Chief Executive Officer 12 – 15
Organizational Structure 16
Board of Directors 18 – 19
Group Executive Committee 20 – 21
Dufry Investment Case 22 – 23
Dufry Business Model 24 – 73
Dufry Divisions 42 – 63
2 SUSTAINABILITY REPORT
Sustainability 74
Environment 75 – 76
Employees 77 – 81
Social Responsibility 82 – 85
3 FINANCIAL REPORT
Report of the Chief Financial Officer 86 – 90
Financial Statements 91 – 212
Consolidated Financial Statements 94 – 199
Financial Statements Dufry AG 200 – 211
4 GOVERNANCE REPORT
Corporate Governance 213 – 232
Remuneration Report 233 – 245
Information for Investors and Media 246 – 247
Address Details of Headquarters 247
3
1 Management Report
DUFRY ANNUAL REPORT 2015
DUFRY
AT A GLANCE
TURNOVER
IN MILLIONS OF CHF
GROSS PROFIT
IN MILLIONS OF CHF
MARGIN
7,200
6,600
6,000
5,400
4,800
4,200
3,600
3,000
2,400
1,800
1,200
600
0
3,600
3,300
3,000
2,700
2,400
2,100
1,800
1,500
1,200
900
600
300
0
66 %
65 %
64 %
63 %
62 %
61 %
60 %
59 %
58 %
57 %
56 %
55 %
54 %
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
EBITDA¹
IN MILLIONS OF CHF
NET EARNINGS
IN MILLIONS OF CHF
720
660
600
540
480
420
360
300
240
180
120
60
0
200
180
160
140
120
100
80
60
40
20
0
– 20
– 40
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Net earnings
¹ EBITDA before other operational result
Adjusted net earnings without other operational result
4
NET SALES BY PRODUCT CATEGORY 2015
5 % TOYS, SOUVENIRS AND OTHER GOODS
31 % PERFUMES &
COSMETICS
3 % LITERATURE &
PUBLICATIONS
4 % ELECTRONICS
7 % FASHION,
LEATHER & BAGGAGE
7 % WATCHES,
JEWELRY &
ACCESSORIES
NET SALES BY REGION 2015
0 % DISTRIBUTION CENTERS
17 % EMEA
& ASIA
11 % TOBACCO
GOODS
23 % WORLD DUTY
FREE BUSINESS
22 % NUANCE
BUSINESS
13 % AMERICA I
8 % AMERICA II
17 % UNITED STATES
& CANADA
15 % WINE &
SPIRITS
17 % FOOD,
CONFECTIONERY
& CATERING
NET SALES BY CHANNEL 2015
NET SALES BY MARKET SECTOR 2015
4 % RAILWAY STATIONS & OTHER
4 % BORDER, DOWNTOWN &
HOTEL SHOPS
2 % CRUISE
LINERS & SEAPORTS
37 % DUTY-PAID
90 % AIRPORTS
63 % DUTY-FREE
5
1 Management Report
DUFRY ANNUAL REPORT 2015
HIGHLIGHTS 2015
SOLID
GROWTH IN
NORTH AMERICA
North America is one of Dufry’s best
performing divisions, posting solid growth
in the past several years.
EXPANSION
OF DUTY-PAID
IN BRAZIL
Despite the current challenges, Brazil
continues to offer substantial potential.
Dufry has opened 26 shops in the country
in 2015, of which 24 being duty-paid
ACQUISITION
OF WORLD
DUTY FREE
With the acquisition of WDF, Dufry
entered important markets, such as the
UK, Spain and several locations in
South America, Middle East and Asia
6
INTEGRATION
OF NUANCE
COMPLETED
Dufry has successfully concluded
the integration of Nuance. The expected
CHF 70 million synergies from the
acquisition will be delivered in 2016
PRESENTING
YOU THE
NEW DUFRY
The acquisitions of Nuance and World Duty
Free were transformational for Dufry in many
aspects and marked the perfect moment
for a fresh new logo and corporate identity
PLATFORM
FOR GROWTH
IN ASIA
Now present in 17 locations across
8 countries, Dufry has built a strong
platform to grow its presence in Asia
CUTTING EDGE
REFURBISHMENTS
IN EUROPE
Dufry’s refurbishment plan continues full
speed with the major modernization of
our operations in Milan Malpensa, Athens
and London Heathrow, bringing the best
of travel retail to these locations
7
13 ENVIRON-
MENTAL AWARDS
FOR NUANCE
IN HONG KONG
As part of the Environmental Recognition
Scheme of Hong Kong’s HKIA airport,
Dufry’s Hong Kong operations have been
recognized with 13 awards
8
MESSAGE FROM
THE CHAIRMAN
OF THE BOARD
OF DIRECTORS
DEAR SHARE-
HOLDERS
In my Chairman’s letter for last year’s annual report,
I wrote to you we were extremely happy to have
reached a new milestone in the development of the
company through the acquisition of Nuance. Today, I
am even more proud to introduce you with another
very successful year for Dufry and with the trans-
formational acquisition of World Duty Free (WDF),
which fosters even further our position as undisputed
leader of the industry and reshapes the landscape of
travel retail going forward.
The transaction announced on March 30, 2015, val-
ued at EUR 3.6 billion enterprise value, was closed
in two major steps; first with the acquisition of
the 50.1 % majority stake from Edizione S.p.A. on
August 7, 2015, and second with the delisting of
World Duty Free as per November 13, 2015, following
the mandatory tender offer for the minority share-
holders. We have started to consolidate WDF as per
August 2015 and we expect to generate synergies of
EUR 100 million.
The acquisition was funded with a mix of equity and
debt financing. First we raised CHF 2.2 billion in a rights
issue executed by the end of June, and complemented
financing by issuing a EUR 700 million Senior Notes,
carrying a coupon of 4.5 %, as well as with a new term
loan of EUR 800 million. I thank all our shareholders,
bondholders and the banks that supported our com-
pany to finance this strategically very important
growth step.
The new and enlarged Dufry is present in over 370
locations in 63 countries and operates over 2,200
shops on all 5 continents, representing a total market
share of 24 % in airport travel retail. Going forward
Dufry will benefit from an even stronger geographic
diversification featuring a well balanced portfolio of
emerging and mature market operations.
Following this considerable growth step we revised the
organizational structure of the company, to adapt our
business operating model to the new requirements
and to reinforce our management capacity at the ex-
ecutive level – all changes having become effective as
of January 1, 2016. Last but not least, given the trans-
formational character of the last two acquisitions we
have also refreshed our corporate identity. The new
logo combines our Swiss heritage with the travel re-
tail industry and our slogan WorldClass.WorldWide.
underlines our commitment to provide customers and
business partners with a unique service around the
globe. Most important, the new logo is a common sym-
bol for all our employees and provides the joint start-
ing point to launch a new era: The New Dufry.
Well balanced and
diversified con-
cession portfolio.
In 2015, we have successfully completed the integra-
tion of Nuance and started to deliver the synergies for
an amount of CHF 34 million. Once World Duty Free is
fully integrated, the new Dufry will continue with its
strategy of focusing on profitable growth and expand-
ing its diversified geographic footprint. Furthermore,
our strong and resilient cash generation capability will
allow us to deleverage the company while also provid-
ing us with the strategic flexibility to finance further
non-organic growth or to consider returning cash to
shareholders. In 2016 and 2017, the focus will be to
reduce our leverage ratio to below 3x Net Debt / EBITDA.
The business year 2015 has also been characterized by
a high volatility of the financial markets, which has
impacted our operations exposed to Brazilian and
Russian travelers. Thanks to our proven long-term
strategy to purchase and sell our products in hard
currencies and to actively foster natural hedging by
matching the currencies of revenues and cash flows,
FX fluctuations result mainly in a translation impact
on our financials reported in Swiss Francs, allowing us
once more to successfully navigate through these ad-
verse waters. With the well balanced and enlarged
geographic diversification and the smaller exposure
to emerging markets the impact on our business
we have seen in 2015 will be considerably reduced
going forward.
From a financial market perspective, Dufry’s market cap-
italization grew by 21 % to CHF 6.5 billion on December 31,
2015. This places Dufry among the 30 largest Swiss
9
1 Management ReportDUFRY ANNUAL REPORT 2015 410,000 m²Dufry operates
close to 410,000 m²
of retail space.
ger numbers. Our focus will be on the integration of
World Duty Free and the implementation of the new
business operating model.
In this very special year full of achievements, it is
imperative to me to thank all Dufry employees – in-
cluding the new colleagues of World Duty Free – for
their extraordinary dedication and the high degree of
motivation shown when executing the different proj-
ects and driving our existing business. I also thank our
suppliers, landlords and business partners for their
ongoing support and the longstanding relationships.
Finally, I extend my thanks again to our shareholders
and bondholders, who continue to share and strongly
support our vision of building a company that is
WorldClass.WorldWide.
Sincerely,
Juan Carlos Torres Carretero
publicly listed companies. Despite the ongoing high mar-
ket volatility, trading volumes in the year under review
grew and reached a daily average of CHF 25.1 million
exceeding the already high levels of 2014. The higher
market capitalization has attracted new investors and
we continue to see growing interest of investor groups
putting the Dufry share on their radar.
As a consequence of the World Duty Free acquisition
and the related capital increase, Dufry’s shareholder
structure has seen important changes with GIC,
Qatar Investment Authority and Temasek joining our
shareholder base. The participation of the syndicate
led by the long-term shareholder Travel Retail In-
vestments amounted to 22.4 % as per December 31,
2015. Consequently, at year-end 2015, the free float
of our shares was 77.6 %, thus providing a very good
trading liquidity.
Dufry continued to foster its social responsibility en-
gagement focusing on helping disadvantaged children
around the world with a variety of charity initiatives to
support weak members of society. Dufry has been
funding projects of SOS Children’s Villages for over
6 years now, underlining the long-term character of
our commitment. In 2015, Dufry has endorsed proj-
ects in many parts of the world as in Cambodia, Mexico
and Ivory Coast. Furthermore, we have continued to
support projects in many other countries such as in
Haiti, Greece, Serbia, Argentina, the US, the UK and
Brazil, to name a few.
Even if the 2016 start of the year has shown an on-
going emerging market currency volatility which might
still continue throughout the year, we believe, that it
will have a reduced magnitude as compared to last
year. Our organization is ready to perform well, backed
by our solid strategy and positive fundamentals of the
industry, which expect again strong growth in passen-
10
1 Management ReportDUFRY ANNUAL REPORT 2015 11
12
STATEMENT
OF THE CHIEF
EXECUTIVE
OFFICER
DEAR ALL
2015 was a transformational year for Dufry, mostly
characterized by the full integration of Nuance and
the acquisition of World Duty Free. While these ac-
quisitions allowed us to reach new levels in growing
our company, they also generated the need for im-
portant structural and organizational changes, which
lead us to adapt our organization, to review our busi-
ness operating and financial model and to create a
new corporate identity.
From a business perspective, our financial performance
continued strong: turnover increased to CHF 6,139.3 mil-
lion, resulting in a growth of 46.3 % over 2014; EBITDA
reached CHF 723.8 million and free cash flow genera-
tion, before acquisition-related cash flows, amounted to
CHF 338.4 million. Furthermore, our initiatives launched
to drive organic growth have shown good results in an
economic environment, in which the vast majority of our
operations performed well.
Dufry has become the clear market leader with
24 % of market share in airport travel retail
Our acquisition of World Duty Free (WDF) – one of the
world’s leading travel retailers, operating in 20 coun-
tries with a turnover of EUR 2,440 million and an
EBITDA of EUR 261 million in FY 2014 – marked a new
milestone for Dufry and the travel retail industry. First,
this acquisition will generate a significant amount of
synergies and has grown Dufry’s market share in air-
port retail to 24 %, which is three times bigger than the
next competitor. Second, it has allowed us to consid-
erably enhance our presence in key strategic markets
and to further refine our geographic diversification
with a good balance of emerging market exposure and
important operations in developed markets.
Going forward, we will create value by integrating WDF,
which we expect to generate total synergies of approx-
imately EUR 100 million. By more than doubling its
turnover since 2013 and by currently operating over
370 locations in 63 countries on all five continents,
Dufry has become an ever more important partner for
global brands through the unique global retail network
we can offer. This will allow us to realize gross profit
increases through improved purchasing power, and
even more so with our brands plan and joint growth
and marketing initiatives with suppliers.
Moreover, a tremendous value is generated by com-
bining all employees’ skills and know-how of Nuance,
WDF and Dufry – three of the best travel retail com-
panies. The new Dufry team will undoubtedly emerge
as the best group of travel retail professionals ever.
On the cost side, efficiencies will be generated by
integrating global functions of the enlarged company
and by streamlining regional and global headquarters.
Once the WDF integration is completed and the new
operating business model is fully operational, Dufry
should have the cost leadership in travel retail and
thus gain additional strategic flexibility to further
develop the company.
Integration of Nuance completed
The Nuance acquisition, which we completed in
September 2014, has helped us to strengthen our
presence in Europe with locations in Switzerland,
Sweden, and Turkey, as well as in North America, and
Asia. Thanks to this transaction, and including the new
World Duty Free operations, we are now present in
17 locations in Asia, which makes us the most inter-
national player in this important growth area.
In the year under review, we have completed on time
the integration of Nuance combining all Group, divi-
sional and operational functions and aligning business
models by using best practices from both companies
to adapt the related processes. A first contribution of
13
1 Management ReportDUFRY ANNUAL REPORT 2015 2,200 Dufry is a real global player
operating over 2,200 shops
throughout all continents.
Nuance synergies to the consolidated EBITDA in the
magnitude of CHF 34 million is already reflected the
2015 full year results. The remaining CHF 36 million of
synergies, adding up to the CHF 70 million we had
announced, will be fully reflected in our results in 2016.
New Group Structure, Business Operating and
Financial Model and Corporate Identity
The acquisitions of Nuance and World Duty Free
marked the start of a new development phase for
Dufry. To adapt the organization to its increased size,
geographic spread and broader complexity as well as
preparing it for future growth, we first implemented
a new business operating model. By redefining the
regional Divisions, the introduction of global functions
and the elimination of a management level we will be
able to simplify processes, increasing efficiency and
speed. The new organization is also reflected in the
Group Executive Committee – which includes exec-
utives from Nuance, World Duty Free and Dufry.
Moreover, we have started to enhance our Finance
organization to align with the requirements of the
enlarged Group. We have already introduced central-
ized finance functions to manage and coordinate the
respective activities on a group-wide basis, and we
plan to expand the concept of Financial Shared
Services Center to create efficiencies through scale
and to bundle expertise.
The full integration has considerable implications in-
ternally and externally. Three established corporate
cultures and well-recognized duty-free brands need
to be integrated and aligned. Dufry’s new corporate
logo and branding strategy provide both a common
starting point with respect to corporate culture and a
new identity for all Group employees. Moreover, it is a
consistent branding approach for the markets, allow-
ing to maintain the powerful commercial brands and
to benefit from their recognition and positive image
14
established with landlords and customers to drive fur-
ther growth. The existing portfolio of brands which are
successfully established in specific regions, such as
Hellenic Duty Free in Greece, or which represent spe-
cific commercial concepts, such as Hudson for travel
convenience stores, will be continued to be used as lo-
cal retail brands. The same applies for the three main
brands of our duty-free business Dufry, Nuance and
World Duty Free.
In 2015 we started a
new era for Dufry
and the travel retail
industry.
Operating performance driven by
expansion and efficiencies
Organic growth is a key pillar of our strategy and we
continued to work hard to drive growth in our business.
Excluding sales to Brazilian and Russian travelers oper-
ating and business performance overall saw a positive
development in the vast majority of our geographies
and resulted in an organic growth for the year of 4.0 %.
As to sales to Brazilians and Russians – which on a pro
forma basis account for about 10 % of our sales in the
combined group – the massive devaluation of their lo-
cal currencies had a significant impact on their pur-
chase power in US Dollar and Euro and consequently
impacted our sales growth in selected locations. We
therefore went through an important efficiency plan in
our Russian and Brazilian operations, which was com-
pleted in the third quarter of 2015. Our local teams did
a remarkable effort to re-size the structure of these
operations resulting in savings of CHF 20 million, which
will be fully reflected in the 2016 financials.
1 Management ReportDUFRY ANNUAL REPORT 2015 ger numbers expected to increase by 6 %. Secondly,
we will leverage and focus on capitalizing on our strong
project pipeline and on the opportunities for new con-
cessions the market continues to provide – we have
already signed projects securing additional 19,000 m²,
of new retail space to be opened in 2016. Last but not
least, we will benefit from our highly diversified geo-
graphic footprint and the large locations network,
which considerably reduces the company’s exposure
to external impacts, which are typically related to sin-
gle countries or regions.
Thank you
2015 was a truly remarkable and extraordinary year
for Dufry. I would, above all, like to thank all the col-
leagues and teams around the world for their huge ef-
forts and their commitment to the company. In 2015,
we have successfully executed important projects
and mastered some highly demanding challenges. We
will remember this year as the yet most remarkable
milestone in our development.
I also thank our suppliers, landlords and business
partners for their continuous support in an intense
year. We are absolutely confident that we have set the
base for a mutually beneficial development and growth
going forward. Finally, in the name of the senior man-
agement, I would like to thank the members of our
board of directors and our shareholders for their sup-
port, trust and contribution to make our company
WorldClass.Worldwide.
Best regards,
Julián Díaz González
Within our expansion activities we opened a total of
189 new shops representing 18,700 m² of new retail
space. In this context, we want to highlight the 7 brand
and specialized shops in Switzerland; the major exten-
sions and refurbishments in Italy and Greece and
the six shops opened in Puerto Rico. Brazil saw the
successful expansion of our convenience concept
Hudson, which accounts for 12 shops of the total
26 stores opened in the country. Worth mentioning are
also the 76 shops opened in the United States, which
include 12 brand boutiques and 17 specialized shops,
proving that the US market has strong potential
beyond our successful Hudson concept.
To further accelerate organic growth, Dufry has also
launched a wide range of initiatives, which have
shown strong results and which will be continued in
2016. The most important ones are the refurbish-
ment plan and the brands plan, which have both
proven their capacity to generate additional sales.
Furthermore, we piloted a variety of customer
oriented activities, such as the loyalty program
Dufry Red or the VIP voucher, which will be further
expanded in 2016.
Additionally, we have also completed the setup of our
world-wide logistics and procurement platform by
putting into service our distribution center in Hong
Kong, which will be serving the Asia-Pacific operations.
Together with the two other distribution centers in
Latin America and Europe they are a key instrument
to further improve our supply chain, to better manage
inventory levels and product availability at the stores
and to reduce lead times. The procurement and sup-
ply chain has thus become a true global function,
which will allow us to leverage our size by working
closer with our suppliers and generating efficiencies.
Looking forward to a promising future
In 2016 we have great challenges to tackle. The clear
priority will be the integration of WDF. We want to seize
the opportunity to build the strongest team of travel
retail experts and at the same time implement the new
business operating model identifying efficiencies and
creating value through synergies. Since the fourth
quarter of 2015 we have developed a specific action
plan for the integration and we have now started its
execution, which our teams expect to be completed by
mid 2017.
From a market perspective, 2016 started again with
very volatile financial markets, thus reducing visibility.
Nevertheless, for this year, the drivers of additional
growth will first be the positive global trends for travel
retail, which will continue to provide growing passen-
15
1 Management ReportDUFRY ANNUAL REPORT 2015 OUR ORGANIZATIONAL STRUCTURE – GROUP EXECUTIVE COMMITTEE
AS OF JANUARY 1, 2016
Chief Executive
Officer
Julián Díaz
González
Global Chief
Operating Officer
Chief Financial
Officer
Global Chief
Corporate Officer
José Antonio Gea
Andreas Schneiter
Luis Marin
Global Resources
Director
Jordi
Martin-Consuegra
General
Counsel
Pascal C. Duclos
SOUTHERN EUROPE
AND AFRICA
Divisional Chief
Executive Officer
UK, CENTRAL AND
EASTERN EUROPE
Divisional Chief
Executive Officer
ASIA, MIDDLE EAST
AND AUSTRALIA
Divisional Chief
Executive Officer
LATIN AMERICA
Divisional Chief
Executive Officer
NORTH AMERICA
Divisional Chief
Executive Officer
Pedro Castro
Eugenio Andrades
Andrea Belardini
René Riedi
Joseph DiDomizio
BRAZIL AND
BOLIVIA
General
Manager
Gustavo Fagundes
16
1 Management ReportDUFRY ANNUAL REPORT 2015 17
BOARD OF
DIRECTORS
MEMBERS
1
1 Juan Carlos Torres Carretero
2 Andrés Holzer Neumann
3 Jorge Born
4 Xavier Bouton
3
4
2
18
1 Management ReportDUFRY ANNUAL REPORT 2015 5
7
9
5 James S. Cohen
6 Julián Díaz González
7 José Lucas Ferreira de Melo
8 George Koutsolioutsos
9 Joaquín Moya-Angeler Cabrera
6
19
8
GROUP
EXECUTIVE
COMMITTEE
MEMBERS
2
1 Julián Díaz González
2 Andreas Schneiter
3 José Antonio Gea
4 Luis Marin
5 Pascal C. Duclos
4
5
1
3
20
1 Management ReportDUFRY ANNUAL REPORT 2015 6 Jordi Martin-Consuegra
7 Pedro Castro
8 Eugenio Andrades
9 Andrea Belardini
10 René Riedi
11 Joseph DiDomizio
12 Gustavo Magalhães Fagundes
7
9
11
6
10
8
12
21
1 Management Report
DUFRY ANNUAL REPORT 2015
DUFRY’S
INVESTMENT
CASE 24%24 % market
share in
airport retail
MARKET LEADER IN THE
TRAVEL RETAIL INDUSTRY
Dufry’s market share is three times the
size of its next competitor and reaches 24 %
in airport retail
OFFERING AIRPORT
AUTHORITIES
UNIQUE ACCESS TO
GLOBAL BRANDS
Dufry provides airports access to
an extensive portfolio of global brands,
while these benefit at the same time
from a balanced shop network in mature
and emerging markets
22
370 Over 370
UNIQUE GLOBAL
FOOTPRINT
locations
operated
by Dufry
world-wide
Average growth of 3 % for like-for-like and
2 % for new concessions p.a. since 2006
Most active player in the consolidation of
the industry with track-record of 16 %
yearly average growth through acquisitions
in the last 10 years
8 YEARS
LONG-TERM CONCES-
SION PORTFOLIO
8 years of remaining
average concession
life-time of highly
diversified portfolio
High quality concession portfolio
Biggest concession represents about 6 %
of turnover
Top 10 concessions represent less than
25 % of turnover
4%4 % p.a. average global
FAST GROWING
INDUSTRY
passenger growth expected
for the next 5 years
Average growth of 4 % p.a. in coming years
will by key driver for Dufry’s organic growth
Affluent customer base, with above average
spending power
STRONG FREE
CASH FLOW
GENERATION
Strong capability of free cash flow conversion
from EBITDA
SUBSTANTIAL
SYNERGIES
TO BE DELIVERED
IN 2016 – 2018
The acquisitions of Nuance and WDF are
expected to generate synergies of CHF 175 M
at the EBITDA level fully reached in 2018
Both transactions expected to be Cash EPS
accretive in second year after the acquisition
23
OUR
STRATEGY
PROFITABLE
GROWTH
AND GLOBAL
FOOTPRINT
Dufry’s strategy is to grow profitably by operating its
own shops in travel retail globally with a portfolio di-
versified by geographies, sectors and channels. Our
operations cover both the duty-free and the duty-paid
environments, benefiting from the large number of
passengers travelling internationally and domestically.
Through a combination of organic growth and acqui-
sitions, Dufry has become the undisputed leader in
airport retail having a market share of 24 % globally.
Undisputed market
leader with more than
2,200 shops in over
370 locations across
63 countries.
Retail excellence for customers,
landlords and suppliers
Travel retail is a fast moving and growing industry
driven by ever changing customer expectations, which
we address with a broad range of retail concepts and
continuously develop and refine (see detailed descrip-
tions of the concepts on pages 28 through 37).
We aim to offer retail solutions for landlords in ev-
ery travel location be it airports, seaports, railway
stations or border shops, in both duty-free and duty-
paid environments.
Ultimately, the goal is always the same: we want to
offer a memorable retail experience for our custom-
ers by combining the sense of place of any location
with the international appeal that any travel loca-
tions has. Hence, we ensure that our shop designs
reflect local cultural characteristics and have an
individual appearance.
In order to offer customers the right products, create
the right retail concepts and provide an excellent ser-
vice, it is crucial to understand the customer and their
buying habits. To best serve our customers, Dufry has
always set high priority on using business intelligence,
analyzing customer profiles in all its activities. This in-
formation is the basis to refine concepts, adapt as-
sortments and to structure passenger flows with a
view to achieve two goals at the same time: providing
customer satisfaction and make the available retail
space more efficient to maximize sales.
On top of Dufry’s well-known retail capabilities, the
acquisitions of Nuance and World Duty Free contrib-
ute further to enhance our skills by combining the ex-
pertise and know-how of three major players in the
industry. This excellence in retail will be an important
asset creating added value for Dufry.
These skills and know-how are also beneficial for our
landlords and our suppliers alike. Landlords benefit
from the access to a unique portfolio of renowned
global brands and Dufry’s capability to design loca-
tion specific retail areas offering great shopping ex-
perience to travelers and maximizing revenues for
landlords through a variety of retail concepts.
Global brands are first of all offered a seamless
world-wide window-display to showcase their prod-
ucts in 63 countries, representing a well-balanced
mix of over 370 locations in attractive emerging and
mature markets.
Secondly, Dufry’s brand plan opens new opportuni-
ties on how to increase sales performance, based on
24
1 Management ReportDUFRY ANNUAL REPORT 2015 brand-specific analyses of improvement potentials
and customer buying habits, which are jointly devel-
oped with our retail experts.
Geographic diversification to maximize
opportunities and mitigate risks
Geographic diversification is one of the most impor-
tant aspects of our strategy as it is the best way to
benefit from the global opportunities provided by the
ever growing number of travelers worldwide, a key
driver for growth of the travel retail industry.
Geographic
diversification
is a key pillar
of our strategy.
Dufry’s global footprint with operations on all conti-
nents allows us to better and quickly evaluate new
projects wherever they arise, as we already have local
teams almost everywhere. Having an own team on the
ground gives us a clear understanding of the local
market characteristics and to closely collaborate with
landlords and other local business partners to best
develop new opportunities.
Furthermore, Dufry is also the only true global travel
retailer, with a clear organization that links global
headquarter and central functions with divisions and
the countries where we operate. This setup grants us
a substantial efficiency potential, as we can combine
the benefits of global central functions and global
standardized process creating economies of scale,
while still keeping the proximity to the customer and
landlords at local level.
Moreover, being geographically diversified consider-
ably mitigates risks generated by external impacts in
single markets or regions. This risk mitigation effect is
best illustrated by the share any individual operation
has on the total Group. With the largest concession
accounting for about 6 % of our business, and with the
ten biggest ones representing less than 25 % of pro-
forma sales, Dufry has no significant exposure to sin-
gle operations.
The defensive nature of our business is further en-
hanced through the highly variable cost structure,
resulting in a solid and resilient business profile.
Priority on organic growth and focus on returns
In the ten years from 2006 to 2015 Dufry has grown with
an average annual top line growth of 21 %, to which or-
ganic growth contributed 5 %, while acquisitions added
16 %. While our basic strategy of profitable growth con-
tinues, organic growth will play a more important role
going forward. Supported by the increase of passenger
numbers – the most important driver of our business –,
we will focus on increasing sales on a like-for-like basis
through the implementation of attractive shop con-
cepts and new retail techniques. We also expect to grow
through additional retail space, be it by expanding in
existing locations or by winning new concessions in
further airports or new businesses.
Dufry currently generates 63 % of its revenues in duty-
free and 37 % in duty-paid operations and both sectors
continue to offer growth opportunities. Dufry tradition-
ally features a strong project pipeline, which has allowed
us to increase retail space in different channels of both
sectors. While the duty-free business at airports is ex-
pected to continue to be the largest and fastest grow-
ing part of our business, we do see additional potential
by further developing airport duty-paid business or also
in duty-free border shops, downtown duty-free as well
as the cruise ship business in selected markets.
The duty-paid sector has a considerable development
potential as well, since the expected growth of domes-
tic passengers is similar to the one for international
travelers. Furthermore, this sector is still unexplored
and even more fragmented than duty-free, thus offer-
ing attractive new expansion opportunities.
Organic growth
with increasing
importance
going forward.
One of our main initiatives is the international roll-out
of our successful retail concepts, Hudson and Dufry
Shopping, which today are implemented in specific re-
gions and which have the potential to be deployed on
a world-wide scale. Hudson is a well-established con-
venience store concept that has been very successful
in North America in the past 25 years and which we
have deployed into 15 countries so far since 2009.
Dufry Shopping is a duty-paid concept that offers a
high quality assortment of international brands in an
exclusive setting, similar to a duty-free travel retail
store, but in a duty-paid environment targeted to do-
25
1 Management ReportDUFRY ANNUAL REPORT 2015
Our strategy is supported by strong and
resilient industry fundamentals
The travel retail industry has seen strong growth and
has more than doubled its size in the past decade. The
fundamental driver of this performance is the growth
in passenger numbers, which has been showing a
steady increase year after year. Industry specialists
expect this trend to continue, thus providing a resilient
driver of growth for travel retail going forward.
As airports need to further develop their offering and
optimize their revenue mix in order to attract airlines
and passengers, the development of their commercial
offering plays a crucial role. Dufry plays an important
part in this trend as we hold the tools to maximize com-
mercial space revenues of our landlords, be it airport
operators or other facility owners.
On the supplier side, structural growth of travel retail
is a very attractive feature for global brands, which at-
tribute to travel retail an above average growth poten-
tial. Besides the pure commercial aspect of generating
additional sales, the opportunity to present their brand
products in a unique window display across the globe
generates additional value to them. Thus, positioning
themselves in the travel retail market is a priority for
many brands, and they have extended their activities
by providing special travel retail editions, and to use
travel retail to present novelties, both of which add in
turn to the attractiveness of the channel.
Overall, the travel retail industry will continue to see
a dynamic development, which will be supported by
sustained growth of passengers, and developing inno-
vative commercial concepts with landlords and brands
alike. Dufry’s ambition is twofold – capture the market
growth and also reflect the industry leader position by
excellence in execution and driving change in the way
the travel retail industry operates.
mestic passengers. We pioneered Dufry Shopping in
Brazil where we have achieved strong results and based
on this positive experience, we are convinced that it
can also be successful in other markets globally.
With respect to acquisitions, Dufry has been the in-
dustry’s most active consolidator. As a result, Dufry
Group has become the largest travel retailer, not least
because of the Nuance and WDF acquisitions done in
the last two years. For these two acquisitions the goal
is the same as to previous transactions done in the
past: create value for shareholders by improving the
business and creating synergies.
As the travel retail market is still fairly fragmented,
acquisitions will remain a growth component of Dufry’s
strategy, albeit the contribution will be more moder-
ate going forward as potential targets are likely to be
small or mid-sized businesses. We will continue to as-
sess potential targets with a focus on Asia and Middle
East or bolt-on acquisitions that complement our
presence in existing markets.
For any of its growth opportunities, be it organic or
acquisitions, Dufry applies a disciplined financial ap-
proach. We carefully analyze every project or signif-
icant investment with detailed projections and with a
view on investment returns. This implies that not only
the original investment needs to be carefully as-
sessed but also the cost structure and profitability
of the business once operational. This culture of fo-
cusing on returns and cost control has allowed us to
grow our business and to capture opportunities in
many different markets.
High free cash
flow generation.
The combination of Dufry’s solid profitability and the
low capital intensity results in our proven and strong
capability of generating free cash flows. With the
current size of the Group and post the full integra-
tion of both acquisitions, we expect to be the most
efficient travel retailer and our cash generation ca-
pability will be second to none in the industry. As a
consequence, we expect to deleverage quickly, which
will give us strategic flexibility in the future, to drive
further growth and to return value to shareholders,
who have been greatly supporting the company in the
past years.
26
1 Management ReportDUFRY ANNUAL REPORT 2015
GLOBAL PRESENCE
A full list of locations is available
on pages 62 and 63
LONG-TERM PASSENGER FORECAST
IN BILLIONS OF PASSENGERS
GLOBAL PASSENGERS 2015
BY REGION
14
12
10
8
6
4
2
0
27 % NORTH
AMERICA
30 % EUROPE
8 % LATIN
AMERICA
28 % ASIA /
PACIFIC
7 % MIDDLE EAST /
AFRICA
2015
2016
2017
2018
2021
2031
Source: ACI-DKMA
Source: ACI
27
1 Management ReportDUFRY ANNUAL REPORT 2015 GENERAL TRAVEL
RETAIL SHOPS
Dufry’s general travel retail shops carry a large selec-
tion of different items and cover a range of product
categories, such as perfumes & cosmetics, food & con-
fectionary, wine & spirits, watches & jewelry, fashion &
leather, tobacco goods, souvenirs, electronics and
other accessories.
General Travel retail shops are typically located in
central areas with high passenger flow, mostly in air-
ports, but also in seaports and other locations. Both
departure and arrival areas are fitted with this shop
concept. As of December 31, 2015, Dufry operated 710
shops under the General Travel Retail Concept. In the
duty-free segment, these shops can be recognized by
several brand names such as Dufry, Nuance, World
Duty Free, Hellenic Duty Free, Reg Staer and others.
2015 was an important year for the expansion and im-
provement of our general travel retail concept. We
have made important renovations in two of our most
important operations: Milan Malpensa Airport, in Italy,
and Athens Airport, in Greece. Our operations at Milan
Malpensa, one of the first to receive our well known
walk-through concept back in 2008, received a major
uplift. The renovation brought to the location the most
up-to-date trends in shop design, creating an evolving
experience for passengers passing through the airport.
In Athens, our retail space reached a whole new level
with the implementation of the walk-through concept
in the extra-Schengen departures area of the airport.
Passengers are now immersed in a world of global lux-
ury brands on the way to the departing gates. In both
cases the renovations resulted in a significant increase
in the spend per passenger, proving once more the
value creation of this initiatives.
28
29
30
DUFRY SHOPPING
We believe that domestic passengers deserve the same
great product offering available nowadays mainly to
international passengers. In fact, domestic passen-
gers account for the majority of global passengers,
particularly in large countries such as China, the
United States and Brazil, where it can reach 90 % of
the passenger flow.
With this thought in mind, Dufry created a new retail
concept: a general travel retail shop for domestic
passengers, which offers a product range similar to a
duty-free shop. Domestic passengers are presented
with the same retail excellence they normally find in
international terminals, with a great variety of prod-
ucts from the most prestigious brands combined with
the best customer services.
The concept, operated under the identity Dufry Shop-
ping, was first introduced in Brazil, in a pilot at Brasilia
airport. Results from this 1,600 m² shop were very en-
couraging and we are ready to roll out the concept in
other locations in Brazil and internationally. In fact,
Dufry has recently been granted a new concession to
operate a 1,300 m² Dufry Shopping at Rio de Janeiro
International Airport, a project that is expected to be
concluded ahead of the Olympic Games, starting in
August. We also plan for 2016 the opening of another
1,000 m² Dufry Shopping at Viracopos Airport in
São Paulo.
31
BRAND
BOUTIQUES
Brand boutiques enhance the traveler’s retail experi-
ence and allow to create a comprehensive and exciting
shopping mall environment. Dufry is a partner of choice
for global brands to showcase their products in a sin-
gular retail space, mirroring the image of the high
street shops of the respective brand. As of December 31,
2015, Dufry operated 220 Brand Boutiques. The brands
Dufry represents include the world’s most prestigious
luxury names like Burberry, Bally, Bvlgary, Carolina
Herrera, Chopard, Coach, Desigual, Dunhill, Emporio
Armani, Ermenegildo Zegna, Etro, GAP, Hermès, Hugo
Boss, Kiehl’s, Lacoste, L’Occitane, MAC, Marc O’Polo,
MCM, Michael Kors, Montblanc, Pandora, Paul & Shark,
Pinko, Polo Ralph Lauren, Salvatore Ferragamo, Shang
Hai Tang, Shang Xia, Superdry, Swarovski, Thomas Pink,
Tommy Hilfiger, Tumi, Versace or Victoria’s Secret.
Depending on the specific location and traveler pro-
file, we design these shops as stand-alone boutiques
or integrate them as a shop-in-shop concept within
our own general travel retail stores. Brand boutiques
can be found in both duty-free or duty-paid areas.
In 2015, we opened 35 brand boutiques in all regions,
representing over 3,245 m² of commercial space. About
half of the openings were located in the United States,
a market that continues to offer attractive opportuni-
ties in the segment. Other highlights are the opening
of several GAP & Superdry shops at Spanish airports
and the opening of three new shops at Zurich Airport.
32
33
34
CONVENIENCE
STORES
Operated under the name “Hudson”, these shops of-
fer a wide assortment of products ranging from soft
drinks, confectionary, travel accessories, electronics,
personal items or souvenirs to publications such as
newspapers, magazines and books. As “The Traveler’s
Best Friend”, our ultimate goal is to provide passen-
gers with the best range or convenience items.
Hudson is a very flexible concept for Dufry, that is suc-
cessful at airports in both international and domestic
areas, as well as in other channels such as railway sta-
tions and other transit locations.
Constantly adapting to customers needs, an important
enhancement to the concept was brought to life in
2013. Our goal was to create a more open, friendly and
welcoming environment for travelers. We have accom-
plished this mission through whimsical, color-coded
signage to attract customers’ attention to our four dis-
tinct selling areas: Media, Marketplace, Essentials and
Destination. Greatly enhanced sales of healthy snacks,
grab-and-go foods, authentic souvenirs and a wide
range of electronics gear and accessories have re-
sulted in rave reviews from customers and our land-
lords, along with improved revenue for the airport
wherever the new concept has been opened.
North America, from where the concept originates, is
home of most of our convenience stores. With 545
stores, Dufry is the leader in the segment in the region.
It is our goal to develop this great concept interna-
tionally. The number of shops outside North America
continued to grow in 2015, with the opening of 17 shops
in Brazil, Italy and Russia, with 1,000 m² of retail space.
As at year-end 2015, Hudson shops can be found in
15 countries.
35
SPECIALIZED
SHOPS /
THEME STORES
Specialized stores and theme stores is a shop concept
that offer products from a variety of different brands
belonging to one specific product category. We use this
concept often for products such as watches & jewelry,
sunglasses, spirits, food or destination merchandise
and in locations where we see a strong potential for a
shop to carry a broad product range relating to only
one specific theme. As of December 31, 2015, Dufry op-
erated 644 shops under the Specialized Shops / Theme
Stores concept.
Examples of the shop concepts names include
“ Colombian Emeralds International”, a dedicated
watches & jewelry format used in the Caribbean
market; “Dufry Do Brasil” for local Brazilian goods;
“Kids Works” with its wide selection of toys, dolls,
games, books and apparel for children; or “Tech on the
Go” focusing on the needs of the tech-oriented trav-
eler offering electronics and accessories. Further ex-
amples are “Sun Catcher” for sunglasses; “World of
Whiskies” for a selection of finest single malt or blend
whiskies; “Master of Time” for luxury watches and jew-
elries; “Sound & Visions” for multi-brand electronics;
“Temptation & time-box” for fashion watches and ac-
cessories as well as “Travel Store” for luggage and
travel aid products and finally “Atelier”, a women
leather accessories store.
These shops can be located in airports, seaports,
on-board cruise liners, as well as in hotels or down-
town locations.
36
37
BUSINESS
OPERATING
MODEL
GLOBAL
APPROACH,
LOCAL
EXECUTION
As part of the new organization, Dufry has also re-
viewed its operational and management structure and
defined a new business operating model based on three
layers: Headquarters, Division and Country. The previ-
ous organizational level of the business unit has been
eliminated with the teams being reallocated to Divi-
sion or Country activities. The new organization allows
Dufry to respond faster across all levels, given the
lighter structure. We aim to increase the coordination
efficiency of the global, divisional and country teams.
Furthermore, with standardized processes, Dufry is
able to create synergies throughout the whole organi-
zation and achieve consistent and even stronger com-
mercial and financial execution.
In order to extract the most from our size, we have
created Global Functions in departments such as
Procurement, Logistics, IT and Treasury. These teams
are responsible for generating economies of scale on
functions that can be executed globally. On top of
generating efficiencies, our global teams are also
responsible for designing policies and procedures
for activities that are executed locally, ensuring the
sharing of best practices across our organization.
In our new structure the Divisions hold the link be-
tween Headquarters and Countries. They are also a
major source of efficiencies, as they will execute
tasks that are not covered by the global teams but
have potential for synergies.
Countries or locations are in turn the most important
of the layers, as they hold the knowledge of the market
and relationship with landlords and customers. Our
local teams concentrate on activities inherent to the
single businesses, while responsible for implementing
the processes and procedures previously defined.
38
1 Management ReportDUFRY ANNUAL REPORT 2015 BUSINESS OPERATING MODEL BASED ON THREE LAYERS
AS OF JANUARY 1, 2016
GROUP HEADQUARTERS
–
–
Strong HQ to own and develop one unique commercial
model with common processes and IT applications
HQ to provide selected global services to divisions
and / or countries
GLOBAL FUNCTIONS
– Global Procurement
– Global Supply Chain
– Global Customer Service
- Global IT
- Global Marketing
- Global Treasury
DIVISIONS
– Divisions to manage and supervise country execution
–
Committees to create full alignment and participation of
Divisions on commercial and financial activities
COUNTRIES
– Execute operations at local level
–
Secure actions to be aligned with the Business
Operating Model
BENEFITS AND ADDED VALUE
– Unique commercial model
– High standardization
– Functional scale effects
– Full long-term synergies across divisions
- Local execution
- Closer to customers
39
1 Management ReportDUFRY ANNUAL REPORT 2015 NEW
BRANDING
UNIQUE
IDENTITY,
COMMON
VALUES
The two transformational acquisitions of Nuance and
World Duty Free have considerably changed the foot-
print of Dufry Group in the market and at internal level
with the number of employees now reaching close to
29,000 colleagues. In order to clearly position the
“New Dufry” in the market and to create a common
new starting point for all employees of the Group, we
have developed a new corporate identity and defined
common corporate values.
The new Dufry logo incorporates our heritage
and the travel retail business
The new Dufry Logo has been created by combining
the cross of the Swiss national flag with the “D F” of
Dufry and Duty-Free. At a first sight, the newly created
icon does not immediately transmit the link to the
travel retail business, but when rotated by 90° the
“shopping basket” becomes evident.
The new logo will be implemented step-by-step at shop
level and in the different marketing and communication
channels of our Group.
WorldClass.WorldWide. – an impactful
claim for the industry leader
Our claim or slogan Worldclass.WorldWide. is short
and impactful and refers to the two pillars of Dufry,
which make us unique in the industry. It transmits
a charismatic reason of pride to be part of the one
company leading the industry, but also engages all em-
ployees in delivering world-class performance across
all the companies’ activities.
+
→
Combining the
cross of the
Swiss national
flag …
… with the letters
“D F” of Dufry and
Duty-Free …
… we obtain an inte-
grated icon. When
we rotate it by 90°,
we obtain our new
company symbol.
Its shape is that
of a shopping
basket – which
relates directly
to our business.
40
1 Management ReportDUFRY ANNUAL REPORT 2015 Established commercial brands under the umbrella
of a strong new Dufry corporate identity
In order to establish a common corporate identity for
all Dufry operations, while at the same time maintain-
ing the powerful commercial brands at local level and
benefiting from their recognition and positive image
established with landlords and customers, we have
decided to create a new strong and fresh Dufry cor-
porate brand – reflected in the new logo – and to
maintain the well-established commercial brands in
the stores.
Keeping the brands we love
The existing logos of our subsidiaries which are suc-
cessfully established in specific regions, such as for
example Hellenic Duty Free in Greece or which repre-
sent specific commercial concepts, such as Hudson
for our travel convenience stores, will be continued.
The three main brands of our traditional duty-free
business, Dufry, Nuance and World Duty Free will also
be continued and used according to their recognition
at country or regional level. Going forward, we will
therefore assess with a case-by-case approach, which
is the most suitable brand to be used for a specific
project and implement it accordingly. This will allow
us to benefit from positive local market perceptions
of the existing commercial brands and to success-
fully drive global expansion while supporting each
individual local market.
Corporate Masterbrand
– Core corporate brand defining corporate
identity and corporate values
– Owner of business operating model
Retail Concepts
– Retail brands to be used on a project
by project basis depending on their
local / regional reputation
– Maintain flexibility of offering
customers a variety of concepts
41
1 Management ReportDUFRY ANNUAL REPORT 2015 1 Management Report
DUFRY ANNUAL REPORT 2015
SOUTHERN
EUROPE
AND AFRICA
PORTION OF PRO-FORMA TURNOVER 2015
KEY REPORTED DATA 2015
LATIN
AMERICA
Number of shops
Sales area in m²
Employees in FTE
NORTH
AMERICA
419
103,763
5,527
ASIA,
MIDDLE EAST
& AUSTRALIA
22 % SOUTHERN
EUROPE
& AFRICA
42
UK,
CENTRAL
& EASTERN
EUROPE
Market leader in the world’s most
important tourist destination
Dufry has traditionally been a key player in the world’s
most important touristic region – the Mediterranean –
with its operations in Greece, Italy and France, as well
as several locations in North of Africa. With the newly
integrated operations in Spain, including important
airports such as Madrid, Barcelona and the Canary
Islands, as well as the Antalya airport serving the
Turkish tourist destinations, Dufry has considerably
consolidated its presence in this key region. The new
division with its headquarter in Madrid also includes all
African operations in Cape Verde, Egypt, Algeria, Ghana,
Ivory Coast, Kenya, Morocco and Nigeria. In total, the
division comprises over 120 locations in 14 countries
in Southern Europe and Africa.
In 2015, the division saw major refurbishments in two
important operations: Athens, Greece and Milan, Italy.
At Athens Airport, the transformation was remark-
able, as we converted all our commercial space into a
large walk-through duty-free shop, showcasing well-
known brands with special attention to typical Greek
local products. In Italy, Milan Malpensa Airport also
experienced a revamp of its operations. Home of one
of our first walk-though shops, our operations received
a uplift, showcasing new trends in terms of shop de-
sign in a rich combination of multiple shop concepts
in a single area.
43
ATHENSCASABLANCAFEZNICEGRANADABARCELONATHESSALONIKITOULOUSE VERONAKOSFLORENCEALICANTEGENOAHERAKLIONKRYSTALLOPIGILA PALMALANZAROTEMYKONOSROMENIKITURINJEREZIBIZAKALAMATAKARPATHOSCORFUBERGAMOACCRACALAISCHANIASANTIAGO DE COMPOSTELAMALTAMALAGAMARRAKECHMILANNAPLESTENERIFEFUERTEVENTURAMADRIDALGIERSMURCIAMYTILINIPIRAEUSSAMOSSANTORINILAS PALMAS DE GRAN CANARIASEVILLAKAYSERI BILBAOPROMACHONASANTALYARHODESPRAGUEVALENCIAPOINTE-À-PITREPALMA DE MALLORCA 1
2
1
ATHENS | ATHENS INTERNATIONAL AIRPORT
Located in the extra-Schengen departure area of
the airport, Dufry offers the delights of Greek food
in this newly designed shop.
2
MILAN | MILAN MALPENSA INTERNATIONAL AIRPORT
Several brand boutiques and specialized shops
complement our rich and well developed retail space
at this key Italian airport.
44
3
3
3
MILAN | MILAN MALPENSA INTERNATIONAL AIRPORT
One of the first walk-through concepts ever
implemented in travel retail, the retail space at
the airport saw a major renovation in one of
the most important projects implemented in 2015.
45
1 Management Report
DUFRY ANNUAL REPORT 2015
UK,
CENTRAL
AND
EASTERN
EUROPE
BASEL-MULHOUSE
ASTANA
EDINBURGH
BIRMINGHAM
CARDIFF
DUSSELDORF
STANSTED
JÖNKÖPING
LONDON
NORRKÖPING
GENEVA
BURGAS SUNDSVALL
YEREVAN
MANCHESTER
BELGRADE
SKELLEFTEÅ
STOCKHOLM UMEÅ
ST PETERSBURG
KALMAR
SHERWOOD FOREST
MOSCOW
HAMBURG
ZURICH
GLASGOW
WHINFELL FOREST
ÖSTERSUND
VISBY
HELSINKI
WOBURN FOREST
SAINT PETER
VARNA
46
In 2015, the division saw a major comercial develop-
ment, including shop openings and most important the
revamp of World Duty Free’s operations in Heathow,
as well as 7 new shops opened at Zurich Airport. Other
locations such as Serbia, Russia and Sweden also
contemplated shop openings.
Building a strong position in key European markets
Through the acquisitions of Nuance and World Duty
Free, Dufry has considerably expanded its footprint in
several key markets of Central and Eastern Europe.
The new operations such as in the United Kingdom,
Switzerland, Sweden, Finland and Germany as well as
Russia, Kazakhstan, Armenia, Serbia and Bulgaria per-
fectly extend Dufry’s footprint in Central and Eastern
European countries and create a strong operational
entity with a well-balanced portfolio operating in 60
locations in 11 countries.
This division is headquartered in London and benefits
from a broad variety of customer nationalities from
mature and emerging markets with both tourist and
business travelers.
PORTION OF PRO-FORMA TURNOVER 2015
KEY REPORTED DATA 2015
LATIN
AMERICA
Number of shops
Sales area in m²
Employees in FTE
NORTH
AMERICA
294
81,548
5,551
ASIA,
MIDDLE EAST
& AUSTRALIA
SOUTHERN
EUROPE
& AFRICA
28 % UK,
CENTRAL
& EASTERN
EUROPE
47
1
1
48
1
LONDON | LONDON HEATHROW AIRPORT
Our operations in the departure area of Terminal 5 offer
travelers a first-class shopping experience with a walk-
through general travel retail shop and brand boutiques.
2
3
2
EDINBURGH | EDINBURGH AIRPORT
Fascinating shop-in-shop concept in the departure
area of the airport, providing global brands with a unique
window display opportunity.
3
EDINBURGH | EDINBURGH AIRPORT
The dedicated whisky bar in the center of the Wine
& Spirits category helps drive penetration attracting
travelers inside the shop.
49
1 Management Report
DUFRY ANNUAL REPORT 2015
ASIA,
MIDDLE EAST
AND
AUSTRALIA
PORTION OF PRO-FORMA TURNOVER 2015
KEY REPORTED DATA 2015
LATIN
AMERICA
Number of shops
Sales area in m²
Employees in FTE
NORTH
AMERICA
130
28,053
2,474
10 % ASIA,
MIDDLE EAST
& AUSTRALIA
SOUTHERN
EUROPE
& AFRICA
50
UK,
CENTRAL
& EASTERN
EUROPE
High priority region for growth
with multi-channel potential
Already today, Dufry is the most international player
in the region with operations in 11 countries and 130
shops. The strong presence of Nuance in Asia and
World Duty Free’s operations in the Middle East, to-
gether with Dufry’s existing business provide the per-
fect platform to accelerate our expansion in this fast
growing region.
International forecasts on passenger growth expect
Asia to have the highest growth rates worldwide for
both international and domestic passengers. Dufry’s
portfolio of duty-paid and duty-free retail concepts is
perfectly tailored to offer any retail needs of land-
lords. The Asian markets also feature the probably
most diverse range of channels, where duty-free or
duty-paid shops can be operated. Be it traditional
airport locations, downtown duty-free shops, the
growing cruise ship business or border shops, they all
offer substantial growth opportunities.
Finally, Dufry’s footprint has now reached the neces-
sary critical mass to set up a regional distribution cen-
ter. The new logistics setup will drive efficiency in the
supply chain, improve lead times and reduce out-of-
stock situations for the whole division. The new Dufry
logistics center has become operational in early 2016
in Hong Kong, where the division is headquartered.
India, Hong Kong, Cambodia and Indonesia, to name a
few countries, saw increases of the sales area either
by shop openings or expansion of existing operations.
51
BUSANBANGALOREKUWAITHONG KONGCHENGDUBEIJINGAMMANCANBERRAHAMBANTOTASINGAPOREBALICOLOMBOMACAUMELBOURNESHANGHAISIEM REAPPHNOM PENHSHARJAHAQABAMUMBAIMARKA 1
2
1
BANGALORE | BANGALORE AIRPORT
Specialized shop offering travelers a wide range of
electronics and accessories, located at the departure
area of the airport.
2
MACAU | THE ATRIUM
After a recent renovation, this downtown duty-free
shop became a flagship operation for the further
development of the concept in Asia.
52
3
3
3
HONG KONG | HONG KONG INTERNATIONAL AIRPORT
Several specialized and brand boutiques capturing
the 68 million passengers that pass through the airport.
53
1 Management Report
DUFRY ANNUAL REPORT 2015
LATIN
AMERICA
54
BRASILIAGUADALAJARALIMABUENOS AIRESMONTERREYRECIFESÃO PAULOSANTIAGO DE GUAYAQUILCORDOBAMENDOZABELO HORIZONTEPONCESAN JUANPUERTO VALLARTAREYNOSALA PAZMAZATLANNATALCAMPINASMANAGUAPORTO ALEGREBAHAMASANTIGUACANCUNCURAÇAOLA ROMANAPUERTO PLATABELÉMCURITIBAGRENADACOZUMELFORTALEZAFLORIANOPOLISLAREDOST LUCIAGRAND TURKPUNTA DEL ESTEJAMAICAGUASAULERIO DE JANEIROPROGRESOSAMANASANTIAGO DE CHILESANTO DOMINGOSALVADORACAPULCOSANTIAGOST MAARTENORANJESTADSALVADORBARBADOSMEXICO CITYMONTEVIDEO A long-lasting stronghold of
Dufry’s global presence
The new Latin America division unifies all Central and
Southern American as well as Caribbean operations of
Dufry. By combining the existing Dufry operations and
adding businesses in Chile and Peru from World Duty
Free, the new reporting entity will further consolidate
its traditionally strong position in this region.
The division, which is headquartered in Miami, USA,
features some of the most dynamic markets for travel
retail globally. Altough being the division where Dufry
has the largest market share, there are still several
opportunities for expansion, including alternative
channels to airports.
In 2015, we expanded further our presence in Brazil,
taking advantage of the challenging economic environ-
ment and opened a total of 2,000 m² across 26 shops
ranging from all retail concepts. Other locations in
Latin America also expanded their operations, for ex-
ample in Puerto Rico, Dominican Republic, Mexico and
Argentina, among others.
Furthermore, the convenience shop concept Hudson
has been successfully introduced in Brazil with the
opening of 12 shops. This allows Dufry to even better
capture domestic passengers and to leverage the
existing infrastructure.
PORTION OF PRO-FORMA TURNOVER 2015
KEY REPORTED DATA 2015
20 % LATIN
AMERICA
Number of shops
Sales area in m²
Employees in FTE
NORTH
AMERICA
391
102,868
6,833
ASIA,
MIDDLE EAST
& AUSTRALIA
SOUTHERN
EUROPE
& AFRICA
UK,
CENTRAL
& EASTERN
EUROPE
55
1
1
56
1
SÃO PAULO | GUARULHOS INTERNATIONAL AIRPORT
The airport not only showcases the biggest duty-free
shop in the world in a beautiful walk-through environment,
but also brings together the most renowned brands in
brand boutiques and specialized shops.
2
3
2
BRASILIA | BRASILIA INTERNATIONAL AIRPORT
Our sales teams are always ready to help travelers
who pass by the first Dufry Shopping concept, located
in the domestic area of the airport.
3
SAN JOSÉ DEL CABO | LOS CABOS
INTERNATIONAL AIRPORT
Tourists visiting this well-known Mexican destination
are offered a vast array of duty-free products and local
products in this departure shop.
57
1 Management Report
DUFRY ANNUAL REPORT 2015
NORTH
AMERICA
PORTION OF PRO-FORMA TURNOVER 2015
KEY REPORTED DATA 2015
LATIN
AMERICA
Number of shops
Sales area in m²
Employees in FTE
20 % NORTH
AMERICA
974
92,709
8,124
ASIA,
MIDDLE EAST
& AUSTRALIA
SOUTHERN
EUROPE
& AFRICA
58
UK,
CENTRAL
& EASTERN
EUROPE
High opportunity potential in a resilient market
In the past years, the North American travel retail
market has shown a stable growth performance and
Dufry still has substantial potential to further develop
the division through a variety of channels.
strong existing market position and vast network of
convenience shops and seize further opportunities in
duty-free and other concepts in duty-paid, such as
brand boutiques and specialized shops.
The North American division, with headquarters in East
Rutherford, New Jersey, is the original market of one
of our most successful concepts, Hudson. We cur-
rently operate 545 convenience shops in 75 locations
in the United States and Canada. Altough being a
developed market, the region offers tremendous
potential for further expansion, not only for Hudson,
but also for other concepts. We aim to build on our
In 2015, the Minneapolis St. Paul’s airport was added to
the portfolio with a mix of convenience stores as well
as duty-free and duty-paid retail spaces. Furthermore
important stores were opened in Virginia, Las Vegas
and Los Angeles, among several other locations all
across North America. This division continues to be the
most dynamic in terms of expansion adding a total of
6,100 m² of gross retail space in 76 shops in 2015.
DENVER ATLANTIC CITY
WASHINGTON
FORT LAUDERDALE
BIRMINGHAM
DALLAS
HALIFAX
BURLINGTON
FRESNO
GREENVILLE-SPARTANBURG
GULFPORT
LAS VEGAS LOS ANGELES
HOUSTON JACKSON
HARRISBURG MOBILE OKALOOSA
MYRTLE
MIAMI
NEWPORT
NORFOLK
NASHVILLE
NEW ORLEANS
NEWARK
OMAHA
MANCHESTER
BOSTON
PHOENIX
NEW YORK
PITTSBURG RALEIGH
PHILADELPHIA
SAN DIEGO
ORLANDO
EDMONTON
RICHMOND ROANOKE
ROCHESTER
ST LOUIS SANTA ANA
ALBUQUERQUE
SEATTLE SAN JOSÉ SAN FRANCISCO
CLEVELANDTORONTO
VANCOUVER
ANCHORAGE
BALTIMORE
CALGARY
CHARLESTON
59
CHICAGO 1
1
60
1
LOS ANGELES | LOS ANGELES INTERNATIONAL AIRPORT
Dufry’s well-designed brand boutiques and innovative
specialized shops at the airport are trend-setting examples
of the recent developments seen at American airports.
1
2
2
VANCOUVER | VANCOUVER INTERNATIONAL AIRPORT
The travelers’ best friend marks its presence at
the air port with its fresh Hudson concept, providing
travelers with the best mix of convenience products
in the industry.
61
OVER 370 LOCATIONS WORLDWIDE
SOUTHERN EUROPE
AND AFRICA
Algeria
Algiers
Cape Verde
Sal
Santiago
Cote d’Ivoire
Abidjan
Czech Republic
Prague
Egypt
Borg El Arab
France
Calais
Fort-de-France
Nice
Pointe-à-Pitre
Toulouse
Ghana
Accra
Greece
Aktio
Alexandroupoli
Anchialos
Araxos
Athens
Blue Galaxy
Blue Horizon
Blue Star I, II
Blue Star Delos
Blue Star Diagoras
Blue Star Naxos
Blue Star Paros
Chania
Corfu
Doirani
Elyros
Evzonoi
Forza
Hellenic Spirit
Heraklion
Igoumenitsa
Kafalonia
Kakavia
Kalamata
Karpathos
Kastanies
Kastelorizo
Katakolo
Kavala
Kipoi
Kos
Kriti I Ship
Krystallopigi
Kydon Ship
Limnos
Mertziani
Mykonos
Mytilini
62
Niki
Olympic Champion
Ormenio
Patmos
Patras
Piraeus
Promachonas
Rhodes
Sagiada
Samos
Santorini
Superfast I, II, XI, XII
Symi
Thessaloniki
Zante
Italy
Bergamo
Genoa
Milan Central
Milan Linate
Milan Malpensa
Naples
Roma Fiumicino
Turin
Verona
Kenya
Nairobi
Malta
Malta
Morocco
Agadir
Casablanca
Dakhla
Essaouira
Fez
Marrakech
Nador
Oujda
Rabat
Tanger
Nigeria
Lagos
Spain
Alicante
Almeria
Asturias
Barcelona
Bilbao
Fuerteventura
Gerona
Granada
Ibiza
Jerez
La Coruna
La Palma (SPC)
Lanzarote
Las Palmas de
Gran Canaria (LPA)
Madrid
Mahon
Malaga
Murcia
Palma de Mallorca (PMI)
Reus
Santander
Santiago de
Compostela
Sevilla
Tenerife Norte
Tenerife Sur
Valencia
Turkey
Antalya
Kayseri
Kutahya
UK, CENTRAL AND
EASTERN EUROPE
Armenia
Yerevan
Bulgaria
Burgas
Varna
Finland
Helsinki
Germany
Dusseldorf
Hamburg
Jersey
Saint Peter
Kazakhstan
Astana
Russia
United Kingdom
Aberdeen
Belfast
Birmingham
Bournemouth
Bristol
Cardiff
Doncaster
East Midlands
Edinburgh
Elvedon Forest
Center Parks
Exeter
Folkestone
Glasgow Airport
Glasgow Prestwick
Kirmington
Leeds
Liverpool
London Gatwick
London Heathrow
London Luton
Longleat Forest
Center Parks
Manchester
Newcastle
Sherwood Forest
Center Parks
Southampton
Stansted
Whinfell Forest
Center Parks
Windsor
Woburn Forest
Center Parks
Moscow Domodedovo
Moscow Sheremetyevo
St Petersburg Pulkovo
ASIA, MIDDLE EAST
AND AUSTRALIA
Serbia
Belgrade
Sweden
Jönköping
Kalmar
Karlstad
Landvetter
Luleå
Norrköping
Östersund
Skellefteå
Stockholm Arlanda
Stockholm Bromma
Sturup
Sundsvall
Umeå
Visby
Switzerland
Basel-Mulhouse
Geneva
Samnaun
Zurich
Australia
Canberra
Melbourne
Cambodia
Phnom Penh
Siem Reap
China
Beijing
Chengdu
Hong Kong
Macau
Shanghai
India
Bangalore
Mumbai
Indonesia
Bali
Jordan
Amman
Aqaba
Marka
1 Management ReportDUFRY ANNUAL REPORT 2015
Kuwait
Kuwait City
Singapore
Changi
South Korea
Busan
Sri Lanka
Colombo
Hambantota
United Arab Emirates
Sharjah
Dominican Republic
La Romana
Puerto Plata
Samana
Santiago
Santo Domingo
Ecuador
Santiago de Guayaquil
Grenada
Grenada
Honduras
Roatan
Jamaica
Jamaica
Cruise Ships
Dawn
Escape
Gem
Jade
Jewel
Pearl
Sky
Spirit
Star
Sun
NORTH AMERICA
LATIN AMERICA
Montego Bay
Antigua
Antigua
Argentina
Bariloche
Buenos Aires
Buenos Aires Ezeiza
Cordoba
Mendoza
Aruba
Oranjestad
Bahamas
Bahamas
Freeport
Barbados
Barbados
Bolivia
La Paz
Santa Cruz
Brazil
Belém
Belo Horizonte
Brasilia
Campinas
Curitiba
Florianopolis
Fortaleza
Goiania
Natal
Porto Alegre
Recife
Rio de Janeiro
Rio de Janeiro Galeão
Rio de Janeiro
Santos Dumont
Salvador
São Paulo Congonhas
São Paulo Guarulhos
Vitoria
Chile
Santiago de Chile
Curaçao
Willemstad
Mexico
Acapulco
Cancun
Cozumel
Guadalajara
Guanajuato
Ixtapa
Laredo
Los Cabos
Mazatlan
Mexico City
Monterrey
Progreso
Puerto Vallarta
Reynosa
San José del Cabo
Netherlands
Bonaire
Nicaragua
El Espino
Guasaule
Managua
Peñas Blancas
Peru
Lima
Puerto Rico
Ponce
San Juan
St Kitts & Nevis
St Kitts
St Lucia
St Lucia
St Maarten
St Maarten
Trinidad & Tobago
Port of Spain
Turks & Caicos Islands
Grand Turk
Turks & Caicos Islands
Uruguay
Montevideo
Punta del Este
Canada
Calgary
Edmonton
Halifax
Toronto
Vancouver
USA
Albuquerque
Anchorage
Atlanta
Atlantic City
Baltimore-Washington
Birmingham
Boston
Burbank
Burlington
Charleston
Chicago
Chicago Midway
Chicago O'Hare
Cincinnati
Cleveland
Corpus Christi
Dallas Fort Worth
Dallas Love Field
Denver
Detroit
Fort Lauderdale
Hollywood
Fresno
Grand Rapids
Greater Rochester
Greenville-Spartanburg
Gulfport-Biloxi
Harrisburg
Houston
Houston George Bush
Houston William
P. Hobby
Jackson
Santa Ana
Las Vegas
Little Rock
Los Angeles
Lubbock
Manchester Boston
Miami
Minneapolis
Mobile Bates Field
Myrtle Beach
Nashville
New Orleans
New York City
New York JFK
New York LaGuardia
Newark
Newark Liberty
Newport News
Williamsburg
Norfolk
Oakland
Okaloosa
Omaha
Ontario
Orlando
Orlando Sanford
Philadelphia
Phoenix
Pittsburgh
Portland
Raleigh
Richmond
Roanoke
Salt Lake City
San Antonio
San Diego
San Francisco
San José
Seattle
St Louis
Stewart Newburgh
Tampa
Washington DC
Washington Dulles
CHANNELS
Airports
Border, Downtown &
Hotel Shops
Railway Stations & Other
Cruise Liners & Ferries
Seaports
63
CUSTOMERS
DELIGHTED BY
A THRILLING
SHOPPING
EXPERIENCE
Dufry – Part of your travel experience
Traveling is one of the most enjoyable experiences and
we are thrilled to be part of your adventure! Our pri-
mary goal is to provide travelers with the best shop-
ping experience during their journey. With a presence
in over 370 locations in 63 countries all around the
world, Dufry will most likely be part of your next trip!
Dufry is the world’s biggest retailer specialized in travel
locations. This gives us a unique understanding of trav-
elers’ needs. From a simple bottle of water to a sophis-
ticated fashion accessory, Dufry is there with the best
shops, the most prestigious brands and most impor-
tantly, the best customer service to make traveling a
pleasant and memorable experience.
True global customer service
Customer service is a key priority for Dufry and our
efforts to better attend our clients go beyond our
shops. At our website, dufry.com, the travel experi-
ence starts even before a trip, with travel tips for over
50 destinations, including tourist attractions, accom-
modation and shopping locations.
We also offer the convenience of a pre-order system
through our website. It allows customers to select their
favorite products and collect them directly at our shops
once they travel. Our pre-order service is currently
available in Argentina, Brazil, Greece, India, Russia as
well as in Uruguay, Sweden and Switzerland.
Full customer satisfaction is of upmost importance to
us. For this reason we operate a unique and truly global
30 days replacement or refund guarantee. When shop-
ping at Dufry, customers are assured they will have full
support, whenever and wherever they made their pur-
chase. Our representatives can be reached online, by
email or by phone, in several languages.
64
Dufry Red
At Dufry shops travelers experience the best cus-
tomer service in travel retail, but this doesn’t stop us
from doing more. Dufry Red is the Group’s first ap-
proach to a loyalty program, which had its first pilot
launched in Brazil in 2014. After its successful start,
the program has also been rolled out in Switzerland
and is expected to be launched in Spain and Sweden in
the first half of 2016. The program offers exclusive
advantages for its participants such as discounts and
exclusive gifts.
Awards that confirm our retail excellence
In 2015 as in previous years, Dufry was recognized as
a leading travel retailer, providing cutting edge retail
concepts. Several operations saw their efforts recog-
nized, such as in Canada, where we received the “Best
Canadian Airport Duty Free Company” award from the
Frontier Duty Free Association. In the Caribbean,
Colombian Emeralds won the prize “JIS Retailer of the
Year Award”, for its Galleria Lounge located in the
Miami Beach Convention Center. Among many others,
Hudson has also received the “OYA Top Award in Cus-
tomer Service Excellence”, by the Customer Service
Experts (CSE) together with Miami Airport.
World Dufry Free, which joined the Group in 2015, is
also recognized as a top travel retailer. Among the
awards received in 2015, is the “Best Marketing of
Sunglasses”, for the activities developed in several
Spanish Airports in summer and the first ever “Haba-
nos Specialist” accreditation granted by Habanos S.A.
for the high quality features of the stores, as well as
the world-class service, extensive product knowledge
and specialist advice that customers receive from
World Duty Free’s expert staff.
1 Management ReportDUFRY ANNUAL REPORT 2015 MORE THAN
50,000
items are available
in our portfolio
that our customers
can choose from
NET SALES BY PRODUCT CATEGORY 2015
5 % TOYS, SOUVENIRS
AND OTHER GOODS
31 % PERFUMES &
COSMETICS
3 % LITERATURE &
PUBLICATIONS
4 % ELECTRONICS
7 % FASHION,
LEATHER &
BAGGAGE
7 % WATCHES,
JEWELRY &
ACCESSORIES
11 % TOBACCO
GOODS
15 % WINE &
SPIRITS
17 % FOOD,
CONFECTIONERY
& CATERING
30 DAYS
replacement or refund
guarantee offered by
Dufry is unique in the
travel retail industry
65
SUPPLIERS
TRUST DUFRY
Dufry offers suppliers the largest network of travel re-
tail locations with over 370 locations and the oppor-
tunity to benefit from the growing customer potential
generated by the constantly increasing passenger num-
bers on a world-wide scale. In 2015, close to one billion
passengers passed in front of our shops, making Dufry
the perfect window display for global brands.
Partnering with suppliers to increase sales
Travel retail is one of the most important channels
for global brands. It is one of the retail formats which
provides the fastest growth profile, given the nature
of increasing passenger numbers, and it is also the
channel that concentrates the most affluent con-
sumer groups of society – the ones who can afford
to travel.
Dufry as the largest company in the industry plays an
important part in this process, not only due to our 24 %
market share in airport retail, but most importantly
due to our global reach of operations, spanning more
than 370 locations in 63 countries. This presence cre-
ates a unique window display available for global brands
to market, promote and sell their products. For sup-
pliers, Dufry is the one-stop shop in travel retail, as
they benefit from our scale to access this fast grow-
ing industry and market.
New performance levels with individual Brand Plans
The Brand Plan is an innovative way of engaging with
suppliers, offering a complete new dimension of ini-
tiatives for achieving common goals. The plan com-
prises a deep analysis of medium-term initiatives for
the development of certain brands in our business.
Once set, the strategy will be implemented by Dufry
with a close evaluation of the results achieved. The
plan creates a win-win situation whereby suppliers
can implement their strategy inside our shop on a
longer horizon and Dufry is compensated by achiev-
66
ing the targets defined in the plan. Currently Dufry
has developed brand plans with its most important
global brands.
Suppliers benefit from Dufry’s
centralized purchasing and logistics
The world-wide footprint and the centralization of
global functions generating efficiencies are two core
elements of Dufry’s business model. Our suppliers also
benefit from the centralization of certain functions, es-
pecially procurement and logistics, which brings more
operational efficiencies from the entire supply chain,
by offering higher service levels for suppliers and
customers alike.
Dufry’s Brand
Plan generates
value for
brand partners
and Dufry.
The centralization of our procurement functions allows
our Global Category Managers to coordinate the ma-
jor activities centrally, thus facilitating the inter actions
with suppliers. The definition of the Brand Plan as well
as other contractual parameters are largely coordi-
nated centrally. This also includes the ordering process
itself, where Dufry transmits one consolidated order
to suppliers, after having internally aggregated the or-
ders of the individual locations. An approach that con-
siderably simplifies the order process and reduces
costs overall.
A similar concept, which generates additional effi-
ciencies for both partners, is applied to logistics. In
order to support our activities in 63 countries and still
benefit from being a single group, Dufry has set up
three distribution centers: One in Uruguay attending
the Americas, one in Switzerland serving Europe (ex-
cluding Spain and the UK), North of Africa and the
Middle East, as well as one in Hong Kong supplying
Asia and the Pacific region. Suppliers can thus effi-
ciently ship larger units to single Dufry distribution
centers, while Dufry can better manage individual
shop supply, ensuring improved product availability
for customers and thus ultimately improving sales.
1 Management ReportDUFRY ANNUAL REPORT 2015 BRAND UNIVERSE
1,000
Dufry works with over
1,000 of the most renowned
global and local brands.
67
1 Management ReportDUFRY ANNUAL REPORT 2015
AIRPORT
AUTHORITIES &
LANDLORDS
CAPITALIZING
ON STRONG
REVENUE
GENERATION
With the acquisition of Nuance and World Duty Free,
Dufry has become by far the world’s largest airport
retailer with a market share of 24 % in airport travel
retail, thus combining the retail know-how and expe-
rience of three major industry players and putting
them at the service of airport authorities and land-
lords across the globe. Dufry’s portfolio of over 2,200
shops in 63 countries includes airports, seaports, rail-
way stations, downtown areas, border crossings, cruise
liners, hotels and other locations.
Strong partnerships and common
goals with facility owners
Dufry has traditionally been partnering with land-
lords of larger and smaller airports in emerging and
developed markets, providing the same level of ex-
pertise on how to best develop retail space in order
to maximize revenues, independently from the size of
a given project. We always try to develop a partner-
ship approach with common goals with the landlord,
which has proven to be a successful working relation-
ship for the airport operator and for Dufry alike.
Examples of such successful cooperation are the de-
velopments realized over time at the airports of
Milan, Athens, Phnom Penh, Siem Reap, São Paulo,
Brasilia, London Heathrow and many others, where
the design of passenger flows, retail space exten-
sions and shop refurbishments have considerably in-
creased sales growth.
retail environments that fit travelers’ expectations in
any given location. Following this approach, we create
win-win partnerships as landlords benefit by maximiz-
ing their commercial revenues and by increasing the
overall attractiveness of their facilities. At the same
time we foster our reputation as an innovative and re-
liable designer and operator of retail space, which we
have built over many years.
Customized shop concepts with local touch
Every airport deserves a unique retail environment
that combines local traditions and cultural aspects,
while acting as window display for global products.
With its world-wide footprint, Dufry knows how to
perfectly match customized shop design with effi-
cient retail concepts to best serve travelers’ needs
and to generate value for landlords. For this purpose,
Dufry features an extensive portfolio of shop con-
cepts for duty-free and duty-paid environments,
which allow tailoring available retail space to the
individual needs of any given airport – be it a smaller
airport or major hubs.
Broad concession
portfolio covering
around 410,000 m².
Offering landlords the largest industry experience
Dufry shares a common goal with the facility owners,
which is to maximize returns on the available space
and to create an innovative and attractive shopping
experience for the traveler. Since for any traveler
shopping is about fun, pleasure, convenience and feel-
ing comfortable within the shops, we constantly re-
search customer behavior and provide landlords with
our global experience in order to create customized
First-class and broadly diversified
concession portfolio
Over the years, Dufry has consistently built a high
quality and diversified concession portfolio. In 2015,
the group added over 133,000 m² of net retail space
to the existing portfolio through the acquisition of
World Duty Free. Further 18,700 m² were opened
through new concessions such as in several locations
in the United States, Brazil and Europe and through
68
1 Management ReportDUFRY ANNUAL REPORT 2015 Getting attractive new concessions
There are different ways to enhance the concession
portfolio: They can be won in a tender process or
negotiated directly with airport authorities, be struc-
tured as joint ventures with the airport operator or be
bought through acquisitions. Dufry has a clear policy
whenever looking at expanding the concession port-
folio: We will analyze the opportunity, with concession
fee levels and duration of the contract being key fac-
tors. We will also factor in the investments required
for the project and assess the development potential
of the location from retail as well as travel perspec-
tives. Through a strict evaluation of these criteria and
our discipline to focus on returns, we ensure that our
concession portfolio remains of the highest quality
and that each concession offers attractive returns
for our Group.
important expansions such as at Milan Malpensa and
Athens airports. At December 31, 2015, the entire con-
cession portfolio of the group included retail space of
around 410,000 m².
A major effect of the World Duty Free acquisition and
our own new concessions was the additional diversifi-
cation of the overall concession portfolio during 2015.
From a risk management perspective, the exposure to
any single concession has been reduced significantly,
with the largest concession representing about 6 % of
pro-forma turnover in 2015, and the biggest 10 con-
cessions representing less than 25 %.
Our concession portfolio also includes a large num-
ber of long-term contracts with durations of ten or
more years. For example, our operations at Milan air-
ports in Italy have concession contracts until 2041 and
our operations in Greece are based on a duty-free
license until 2048. Other long-term contracts include
airports in the United Kingdom, Sharjah, Puerto Rico,
Dominican Republic, Brazil and Argentina, to name a
few. The overall average consolidated contract dura-
tion is 8 years. Approximately 20 % of the portfolio
have a remaining life-time of two years; close to a third
have a duration of three to five years, while another
20 % have a life-time of between six and nine years, and
the remaining third of the concessions has a duration
of ten years or more.
On average, Dufry renews every year existing con-
tracts that generate between 8 % to 10 % of our sales,
and we add new contracts every year. In 2015, 2.4 % of
sales growth were related to new concessions.
NET SALES BY CHANNEL 2015
4 % RAILWAY
STATIONS, OTHER
4 % BORDER,
DOWNTOWN,
HOTEL SHOPS
2 % CRUISE
LINERS,
SEAPORTS
90 % AIRPORTS
69
1 Management ReportDUFRY ANNUAL REPORT 2015 INVESTORS
PARTICIPATING
IN A GROWING
INDUSTRY
Dufry’s long-term strategy of profitable growth and
its clear focus on returns and cash generation are
designed to create sustainable value for shareholders
and bondholders.
Reaching new levels with a market
capitalization of CHF 6.5 billion
Over the past year Dufry has seen an increasing
importance of the company in the market. With a
market capitalization of CHF 6.5 million, Dufry has en-
tered the radar of new investors. This is evidenced by
our inclusion in the Swiss Leader Index (SLI) at the
Swiss stock exchange as of March 21, 2016. Dufry is
now among the 30 biggest publicly listed companies
in Switzerland.
Our size isn’t the only factor that attracted new inves-
tors to the equity story. The strong fundamentals of
the travel retail industry are also a strong argument
for investing in Dufry. Combined with our track record
and the increasingly lower risk profile, due to our con-
stant geographical diversification, this altogether cre-
ates attractive factors to the Dufry case.
The acquisitions of Nuance and World Duty Free
Dufry financed the Nuance acquisition through a mix
of debt and equity. On the debt side, Dufry launched
senior notes in the amount of EUR 500 million, which
expire in 2022 with a coupon of 4.5 %. On the equity
side the transaction was financed by an equity increase
of CHF 810 million, complemented by the launch of
Mandatory Convertible Notes of CHF 275 million in
aggregate, which have been converted into shares in
late 2015.
issuance of EUR 700 million, expiring in 2023 with a
coupon of 4.5 %. Dufry has also performed a capital in-
crease of CHF 2.2 billion, which was partially supported
by the investors GIC (the Sovereign Wealth Fund for
the Government of Singapore), Qatar Investment
Authority and Temasek Holdings (Private) Limited, each
concluding the process with holdings of 4.1 % of
Dufry’s shares.
Market capitalization
of CHF 6.5 billion.
Diversified shareholder base
In addition to the continuous commitment of our long-
term anchor shareholders’ group which holds 22.4 %
of our share capital at year-end 2015, Dufry has been
able to secure strong support for its strategy from
investors worldwide.
At year-end 2015, the free float of our shares stood
at 77.6 %, translating into nominal free float of over
CHF 5.0 billion (CHF 3.8 billion at year-end 2014). The
largest amounts of shares are currently held by the
following nationalities: UK, US, Switzerland, Singapore,
Qatar and Brazil.
Important investors
added to the
shareholder base.
A similar format was implemented on the World Duty
Free acquisition. Dufry financed the acquisition par-
tially through debt, with the structuring of a new bank
facility of EUR 800 million expiring in 2019 and a bond
Dufry’s share price started the year 2015 at CHF 149.20
and fluctuated between a high of CHF 151.30 and a low
of CHF 111.00. After the share price low at the end of
September 2015, the shares recovered to close at
70
1 Management ReportDUFRY ANNUAL REPORT 2015 78%
free float of our
shares at
year-end 2015
DAILY AVERAGE VOLUME
MILLIONS OF CHF
25.2
24.9
25.1
27
24
21
18
15
12
9
6
3
0
15.6
11.3
2011
2012
2013
2014
2015
Note: Since April 2011 including trading volumes of Dufry AG BDR
SHAREHOLDER STRUCTURE
AT DECEMBER 31, 2015
51.2 % OTHER
SHAREHOLDERS
22.4 % GROUP
OF SHARE HOLDERS
LED BY TRAVEL
RETAIL INVEST-
MENTS SCA
8.6 % TEMASEK
HOLDINGS
7.8 % GOVERN-
MENT OF
SINGAPORE
6.9 % STATE OF QATAR
3.1 % BLACKROCK, INC.
71
DUFRY AG SHARE PRICE AND TRADING VOLUME
SHARE PRICE
IN CHF
TRADING VOLUME
MILLIONS OF CHF
200
180
160
140
120
100
80
60
40
20
0
300
270
240
210
180
150
120
90
60
30
0
Q1/12
Q2/12
Q3/12
Q4/12
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
Dufry
SPI
Volume
Source: Bloomberg
Note: SPI Index has been rebased to Dufry’s share price
MARKET CAPITALIZATION AND FREE FLOAT
BILLIONS OF CHF
8
7
6
5
4
3
2
1
0
72
6.5
4.8
5.3
5.1
3.5
2.7
3.8
3.8
2.3
1.7
2011
2012
2013
2014
2015
Free Float
Average Market Capitalization
1 Management ReportDUFRY ANNUAL REPORT 2015
CHF 120.00 by year-end 2015. Our market capitalization
reached CHF 6.5 billion at the end of 2015, compared
with CHF 5.3 billion at the end of 2014.
Strong fundamentals – solidity for bond holders
Dufry has a well-established presence in the senior
notes market. Since the first launch in 2012, this has
been an important source of financing for the com-
pany. Dufry’s strong cash flow generation and solid
balance sheet are characteristics welcomed by the
fixed income market.
With bank credit facilities for a total amount of
CHF 2,430 million maturing in 2019 (denominated in
USD, CHF and EUR); the existing USD 500 million 5.5 %
Senior Notes maturing in October 2020; the EUR 500
million 4.5 % Senior Notes maturing in July 2022 and
the EUR 700 million 4.5 % Senior Notes maturing in
August 2023, Dufry has a well-balanced financing
structure with a net debt / adjusted EBITDA ratio of
3.92 times as at December 31, 2015. All maturity dates
of the financial debt are spread across a time horizon
between 2019 and 2023.
Dufry’s Senior Notes are currently rated by Standard
& Poors (BB), Fitch (BB-) and Moody’s (Ba3).
Committed to a fair and comprehensive
market communication
As the world’s leading travel retailer, we aim to present
our investment story and market opportunities by pro-
viding transparent and consistent up-to-date informa-
tion to all our stakeholders. We pursue a constant,
open dialogue with investors, analysts and the media
through direct phone and email exchanges, regular
roadshows and one-to-one meetings.
We communicate our financial performance quarterly,
which senior management discusses with the financial
and media communities through press and analysts
conferences, conference calls and webcasts. All price-
sensitive information, whenever it occurs during the
year, is published through ad hoc press releases avail-
able to everyone. As part of our 2015 Investor Relations
activities, senior management and the investor rela-
tions team devoted 41 days to meet investors directly
through roadshows in Europe, North and South
America, during which we held over 800 one-to-one or
group meetings with investors, and we further pre-
sented at several large broker conferences in Switzer-
land, France, United States, United Kingdom and Brazil.
For contact details of our Investor Relations team,
located in Switzerland and Brazil, please see page 247
of this Annual Report.
73
1 Management ReportDUFRY ANNUAL REPORT 2015
SUSTAINABILITY
REPORT
STRONG
COMMITMENT TO
STAKEHOLDERS
Dufry considers sustainability as one of the corner-
stones of corporate culture to increase its long-term
value and minimize risks for the company’s future
development.
With the acquisitions of Nuance in 2014 and World
Duty Free in 2015, Dufry has started a new era in its
history that today involves close to 29,000 employees
and more than 370 locations worldwide. The first pri-
ority of the Group in the next 18 months will be on the
complete integration of World Duty Free and the im-
plementation of the new business operating model.
Dufry is strongly committed to sustainability and plans
to expand its sustainability reporting step-by-step in
the coming years with more detailed analysis of the
impact it has on society and the environment.
Dufry companies operate in all countries according to
local legislation and regulations. We have incorporated
across the Group an “Integrity in Business Transac-
tion Policy” that sets guidelines in the fair dealings with
business partners and particularly prohibits any kind
of passive or active bribery or corruption. The policy
is applicable to all employees, including the Group
Executive Committee and the Board of Directors. In
case of any question regarding the Policy or suspicion
of a violation of the Policy, any Dufry employee can
connect with a centralized contact point through a
dedicated Dufry email address or follow the hierarchi-
cal reporting line. Any wrongdoing concerns can also
be reported directly to the CEO. The identity of an em-
ployee reporting such concerns or possible violations
against the Policy will be kept confidential, unless the
disclosure of the identity is required by law. Insider
information and security trading policies are also in
place and signed by all employees concerned.
STAKEHOLDER VALUE ALLOCATION BY DUFRY IN 2015
The stakeholder value allocation of Dufry corresponds
to corporate output less third-party inputs. The cal-
culation is based on Dufry’s EBIT plus personnel costs.
It does not comprise of values allocated to business
stakeholders, such as suppliers and landlords.
The value allocated reached CHF 988.9 million in 2015
(CHF 876.2 million in 2014). Of this amount, CHF 856.2
million was accrued to our employees in form of re-
muneration and social security payments. CHF 200.7
million were for interest payments to our bondholders
and financing banks. Current income taxes to public
authorities and communities in which the group com-
panies are located were CHF 69.9 million, net of de-
ferred income taxes, a tax income of CHF 10.1 million
was reflected in the income statement.
74
Dufry employees
are the most
important stakeholder
value contributors.
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 ENVIRONMENT
Dufry operates over 2,200 retail stores worldwide,
where it sells products sourced from over 1,000 sup-
pliers. Following the acquisitions of Nuance and
World Duty Free, the company has restructured its
operations into five well-balanced, geographical Di-
visions as of January 1, 2016. For information on the
new Divisions please refer to pages 42 to 63. All the
stores operated can be categorized into one of five
major retail concepts, which are explained on pages
28 to 37.
As a pure retailer, the company does not have any pro-
duction sites. The main logistics operations (Global
Distribution Centers) are centralized in three plat-
forms: Basel / Switzerland, Montevideo / Uruguay and
Hong Kong / China. The latter has been set up and be-
come operational in late 2015 and will be ramped up
during 2016. These main distribution centers receive
the long-haul and major shipments and secure the fur-
ther dispatch of the goods into the local entities at
country and single shop level. High efficiency in our
logistics chain enables us to keep the environmental
impact of transporting the goods at a minimum level.
Energy consumption
Our travel retail shops are mostly operated in prem-
ises and buildings such as airports or seaports and
downtown resorts, which are owned by third party
landlords. Thus, a large portion of the utilities con-
sumption, such as energy or water in the shops cannot
be directly influenced by Dufry as these factors are
predetermined by the landlords and the building con-
struction. The highest influence in energy efficiency
can be taken when Dufry is designing or refurbishing
stores. The main focus thereby is on substituting
traditional lighting for more energy-efficient lighting
systems (e.g. LED) on ceiling and furniture displays,
and on using A-rated electronic devices (e.g. air
conditioning, refrigerators) in our stores. The same
concept of using latest energy-efficient technologies
also applies for our Basel head office and the local
operations centers.
One example of our environmental management have
been the 13 awards that Nuance received in June
2015 amongst a total of 23 winning retail stores at
the Hong Kong International Airport Environmental
Management Recognition Scheme 2014 / 2015. The
HKIA recognized environmental performance and
commitment based on six aspects: waste manage-
ment, energy efficiency, waste water management, air
pollution control, noise pollution control and overall
environmental management.
Dufry’s environmental
managememt
schemes recognized
by Hong Kong
International Airport.
CO2 emission
Reducing CO2 emissions is one of Dufry’s concerns.
Whenever possible, transports of goods are done by
shipping containers on sea-ships, thereby choosing
the most CO2-efficient way of transportation. Through
reconfiguration of goods in our Global Distribution
Centers and regional logistics stations, we minimize
intercompany transportation of the goods to a mini-
mum. The distribution to the individual shop locations
is usually done by road whereby Dufry outsources the
transportation to specialized national or international
logistics partners, who partly have their own world-
wide environmental strategies in place.
75
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 Further actions to reduce the CO2 emissions are in the
area of business travel by advising employees to
consider alternatives to traveling such as the use of
virtual meeting systems (video conferencing, confer-
ence calls, computer live-meetings) or reducing travel
frequencies by optimizing each trip. In addition, Dufry
employees are also encouraged to use public trans-
port systems not only for business trips but also for
their daily journeys to and from work. In specific loca-
tions, the company grants contributions to employees
using public transport for commuting.
The reduction in the consumption of shopping bags is
another area where Dufry is seeking sustainable solu-
tions by replacing traditional plastic bags with reusable
bags and / or advising its retail staff to ask customers
if they need a bag.
All shops in the UK as well as the operations in
Guarulhos Airport, São Paulo, are ISO 14001 certified
(environment certification).
Employees are
advised to minimize
business travel and
encouraged to use
public transport
to and from work.
Waste and recycling
Avoiding any waste in the first place or recycling it if
it occurs is an effective way to save valuable re-
sources. The Distribution Center in Switzerland is out-
sourced and run by a specialized logistics company
and packaging material which mainly consists of card-
board, paper, plastic film, wood as well as electronic
and plastic consumables such as neon lamps and PET
are sorted out in different containers and sent for
recycling. The recycling process is then further out-
sourced to specialized service providers. If these pro-
viders have a climate program in place, Dufry’s Swiss
logistics provider supports their program by paying a
surcharge on the transports, which is devolved to
“myclimate” ( www. myclimate.org).
Guarulhos Airport
and all UK shops
granted ISO 14001
certification.
In the shops, the waste produced by our operations is
mostly packing material handled through the land-
lord’s waste disposal system and recycled accordingly
where possible.
76
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 EMPLOYEES
Dufry’s employees are the heart and pulse of our op-
erations. Throughout the business, it is our teams, who
with their friendliness, team spirit and commitment on
first-class service to our customers and close collab-
oration with our business partners, make Dufry the
successful company it has become over the years.
WorldClass.WorldWide. – The new Dufry slogan is
lived by our employees every day and we thank them
for their outstanding commitment. As a Group we
strive to offer our employees attractive working en-
vironments, interesting tasks, fair and competitive
wages, and a general working atmosphere that is
characterized by mutual respect and appreciation
for each individual. We also systematically invest in
our people’s development by supporting a broad
range of in-house as well as external training and
development opportunities.
Constructive dialogue between the individual em-
ployee and her / his manager on goals, priorities and
development is an important part of our human re-
sources policy. Each employee receives an annual
performance review aimed at evaluating the perfor-
mance and identifying further personal development
potentials for next career steps.
Growing to almost 29,000 employees worldwide
Following the acquisition of World Duty Free in 2015,
our total workforce grew by 44.7 % to reach 28,853
people (FTE) as at December 31, 2015 compared to
19,946 at the year-end 2014. Organically, the number
of employees declined by 0.8 %, the World Duty Free
acquisition added 45.5 %.
At the end of 2015, our total workforce comprises col-
leagues from more than 70 nationalities across all
functions. We continue to believe that this broad cul-
tural diversity represents a unique competitive advan-
tage and that it is a key element in the successful
development of the Group and the implementation of
our long-term growth strategy. But aside from stra-
tegic issues, the diversity factor also creates a truly
international working environment within the entire
Group, which gives interesting career perspectives to
many of our employees.
Over 70 nationalities
create a unique
cultural diversity.
The staff in our local shops of each country are to a
high extent local people. Dufry’s know-how on oper-
ating local businesses in 63 countries around the world
make us a strong job creator in a large number of cit-
ies, many of them being located in emerging markets.
New HR information system launched
In December 2015, Dufry launched a new, standard-
ized Human Resources information system “Dufry
Connect” which will support the HR and line manag-
ers to place additional focus on people management
activities, enabling greater automation and solid inter-
face to manage people, development and careers at
Dufry. For example, the yearly performance manage-
ment reviews will be administrated online, which leaves
more time to the managers and the employees to fo-
cus on feedback and development plans and increase
visibility of outcomes, challenges and progress. An-
other key improvement will be related to the learning
management platform: The new learning platform will
store all Dufry learning programs and enable training
paths by employee role, easily accessible worldwide.
The global Headquarters in Basel and the Swiss oper-
ations have been the first entities to pilot the system
at the end of 2015. This starting phase of implementa-
tion also included about 2,000 employees – from
Divisional CEOs to Shop Managers. The global roll-out
to the majority of Dufry operations is planned to take
place during 2016 and 2017.
Learning and professional development during 2015
We are developing and growing the management po-
tential within our Group through job enrichment,
coaching and targeted management learnings. The aim
is to fill as many new or open management positions
as possible with internal people and talents. Through
tailored learning programs we ensure that our profes-
sionals have the leadership and managerial skills as
well as the knowledge necessary to operate our busi-
ness successfully.
77
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 28,853 Dufry employed 28,853
people (FTE) at December
31, 2015, an increase of
44.7 % to year-end 2014
As part of our new Group structure for example, we
have been able to promote all new members of the
Group Executive Committee from internal sources and
expect to fill above 90 % of managerial positions within
the new Dufry organization with internal personnel.
Dufry Sales Academy
Dufry Sales Academy is the first of our important
learning programs and includes: Out in Front and
Dufry + 1.
Starting in 2012, we introduced the Out in Front pro-
gram for our shop managers and supervisors on the
shop floor. After having trained a total of 691 retail
managers as of year-end 2014, further 227 managers
received this specific learning during 2015. By the end
of 2015, Out in Front is running in 35 countries and cov-
ers over 70 locations, which make up more than 60 %
of Group sales in 2015 (including the Nuance business,
excluding World Duty Free).
The Dufry + 1 program will be expanded in 2016 to also
reach out to the newly acquired WDF locations and is
expected to provide training to over 5,800 sales pro-
fessionals. Under the Dufry + 1 program we trained a
total of 6,680 new shop floor hires on our foundational
sales and service course as of year-end 2015. Dufry + 1
courses are taught in 63 countries. The learning of
both programs is given by Dufry Certified Trainers,
with the number of training certifications having in-
creased to 1,551 at year-end 2015 compared to 800 in
the previous year.
Step Ahead Retail Management Training Program
Managers running important segments in our value
chain, such as commercial, logistics, procurement, mar-
keting or retail functions, require specific learning in or-
der to be successful in their roles, and run the company
according to the Group’s performance expectations.
78
The Step Ahead program was launched in 2013 to
ensure that new and potential retail managers are for-
mally educated on Dufry’s business model and pro-
cesses, as well as on critical people management skills.
Also in this program, all education is delivered by other
Dufry managers, ensuring that best practices are ex-
changed among peers and know-how remains within
the company.
During 2015 in the Step Ahead Management Skills pro-
gram, we organized several courses and had a number
of 1,905 in attendance. In the Step Ahead Retail Oper-
ations learning we have educated 72 team members in
various roles. Since 2013, the total numbers educated
in these two programs are 2,646 in attendance for
Step Ahead Management Skills and 142 managers for
Step Ahead Retail Operations.
Talent Management
Our future and long-term management needs are
getting addressed by an optimal balance of promot-
ing internal high-level personnel and hiring external
talents (for example in new countries where we start
operations). In 2013, Dufry started piloting a global,
systematic integrated process to identify high-po-
tential talents in our organization and develop them
toward the key roles in our business model. Since
then, the program has been continuously developed
and expanded.
We believe talent management and succession plan-
ning are ongoing processes, all the more so as we as-
sess and leverage the high-quality pool of employees
who have joined the company through our acquisition-
intense transformation phase. Accordingly, we carry
out a yearly review of the quality of our talent pipeline
at two levels:
2 Sustainability ReportDUFRY ANNUAL REPORT 2015
DUFRY SALES TRAINING PROGRAMS
SALES TRAINING
PROGRAMS COVERAGE
(IN TOTAL AT YEAR-END)
Out in Front
Dufry + 1
2015
2014
2013
2012
918 retail managers
6,931 sales professionals
35 countries
691 retail managers
5,500 sales professionals
29 countries
313 retail managers
3,534 sales professionals
24 countries
303 retail managers
2,142 sales professionals
6 countries
6,680 sales professionals
63 countries
3,191 sales professionals
46 countries
2,437 sales professionals
32 countries
684 sales professionals
27 countries
Trainer Certificates
1,551 trainer certificates
800 trainer certificates
626 trainer certificates
408 trainer certificates
– On the first level, each year we select a limited num-
ber of candidates to occupy one of our pre-defined
key positions in our organizational structure. To
date, we have selected and focused on developing
57 high-potential managers (as of year-end 2015),
addressing and safeguarding the succession in spe-
cific key management positions at the top.
– The second level focuses on the stores. Within our
top-performing stores’ personnel and supervisors,
we have identified 300 people on whose develop-
ment we will focus in order to ensure a quality store
management succession pipeline.
Equal employment
Dufry fosters a culture of equal opportunity. Our HR
policy is to provide equal employment conditions and
to offer career opportunities without discrimination
to all our employees. The company fulfills local leg-
islation and regulations of each country where it
operates. We offer and promote a work environment
where everyone receives equal treatment, regardless
of gender, color, ethnic or national origins, disability,
age, marital status, sexual orientation or religion. Any
kind of child labor or forced labor is strictly rejected
and we have clear recruitment procedures and work-
place control in place to ensure full compliance with
this regulation.
In terms of remuneration, we provide our employees
with fair and competitive wages based on the individ-
ual’s background and experience, the particular job
within our organization, the appropriate market bench-
mark in the respective countries and locations, as well
as her / his performance.
Dufry World – Our internal news magazine
Dufry regularly reports on important news in its cor-
porate E-magazine “Dufry World”, which is published
in 5 languages. This ensures that important trends in
our industry and developments of our Group are com-
municated to our staff members in full. Furthermore,
the magazine also aims at providing news “from the
people for the people” and covering all 5 divisions, to
reflect the different cultures and promote the global
reach of the company. The magazine is issued 4 times
per year.
In addition, all internal and external information are
also made available in Dufry’s intranet “Dufry Gate”,
which can also be accessed via the “Dufry Cloud”. The
Dufry Cloud is an online platform which allows employ-
ees to connect remotely to the company’s internal
communication channels. The Cloud is continuously
improved to maximize connectivity, thus improving
employee’s reachability around the world. In addition,
the reach of the Dufry Gate will be further extended by
the end of the second quarter 2016 by allowing direct
access for group employees through any kind of mobile
device by the use of adaptive design technology.
Recognizing outstanding performances –
Our Awards programs
Dufry Group runs various global and regional recog-
nition programs that award teams within the organi-
zation, who go the extra mile. The announcement of
the winners of the awards usually takes place by mid-
year and reflects the achievements of the previous
year. In 2014, Dufry and Nuance were still recognizing
employees achievements based on the two entities
award systems, while in 2015 World Duty Free was
using locally based recognition plans.
Going forward, the Dufry One Award system will be
enhanced and extended to all the close to 29,000
employees, thus creating a unique award system based
on identical criteria.
79
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 EMPLOYEES BY FUNCTION
3 % PROCUREMENT,
BUSINESS DEVELOPMENT
AND MARKETING
1 % CORPORATE AND
SUPPORT FUNCTIONS, OTHERS
4 % FINANCE, IT, HR
3 % LOGISTICS
89 % RETAIL
OPERATIONS
EMPLOYEES BY DIVISION
NORTH
AMERICA
28%
SOUTHERN
EUROPE
AND AFRICA
UK,
CENTRAL
AND
EASTERN
EUROPE
19%
LATIN
AMERICA
24%
9%
ASIA,
MIDDLE EAST
AND
AUSTRALIA
19%
1%
HEADQUARTERS
AND DISTRIBUTION
CENTERS
80
The 2014 award winners have been announced in spring
2015 and published in the July 2015 issue of the corpo-
rate magazine Dufry World as well as in the Dufry Gate.
– Implementing anti-theft inventory check list at
Stockholm-Arlanda Airport, Sweden
– Introducing iPads to sell sunglasses at Zurich
Dufry One Awards
1. The One Productivity Award – A global program rec-
ognizing year on year measurable improvement
across sales, number of tickets, organic growth and
average spend per ticket. The 2014 Awards went to:
– Dufry Argentina – Ezeiza Airport,
Arrivals, Argentina
– Hudson News – San Francisco Airport,
News Discover, USA
– Hellenic Duty Free Shops – Evzonoi border
shop, Greece
2. The One Customer Award – Open to all shops par-
ticipating in the global Mystery Shopper program,
recognizes individual shop performance across the
specific customer impact segments of the Mystery
Shop. The winners of the 2014 Awards were:
– Teams of Dominican Republic and Puerto
Rico operations
– Hellenic Duty Free Shops – Kos Airport, Greece
– Dufry Newark Airport, USA
Awards programs to
recognize excellence
in travel retail.
Nuance Star Awards
Star Awards recognize teams and individuals for
outstanding service and excellent team work in the
Nuance’s former EMEA organization. In autumn 2014,
the countries were asked to nominate candidates for
the following categories: Service Stars, Team Stars
and Proactivity Award.
1. Service Stars
– 10 professionals selected for outstanding ser-
vices in their roles. Their names were individually
published in the internal corporate magazine.
2. Team Stars
– Terminal 2 Team, Lisbon Airport, Portugal
– Travel Star Team, Geneva Airport, Switzerland
– Temptation T1 Team, Manchester Airport, UK
3. Proactivity Award
– 4 professionals selected who proactively improved
the shop floor experience (with names individually
published in the internal corporate magazine) for:
Airport, Switzerland
– Launching the online rota system at Cardiff Air-
port (UK) allowing to plan staff allocation to shifts
according to expected passenger flow
Employee engagement surveys
Measuring employee engagement and satisfaction
through regular surveys is an important tool to recog-
nize potential for improvements across the Group. With
close to 29,000 employees, Dufry does its employee
surveys systematically over defined cycles, always in-
volving a substantial part of its employees across the
world in each survey, and ensuring that over the times-
pan of the entire cycle, all employees have been in-
volved in a survey. This system results in more frequent
surveys, a better quality of the responses and a higher
engagement rate (compared to doing surveys with the
entire workforce on a yearly basis).
In 2015, Dufry carried out an employee survey which
concentrated on areas like compensation and benefits,
working environment, manager and co-worker rela-
tionships, learning and development, rewards, culture,
job engagement and organizational engagement. More
than 20 countries have completed the 2015 survey cov-
ering four different divisions. The overall response rate
was 76 %, the engagement rate 60 %, which are excel-
lent rates compared to the overall benchmark of the
survey system we used.
For 2016, Dufry is organizing another global employee
engagement survey, which is the same for all employ-
ees in every location. Running in several phases, the
first one already started in September 2015 with the
aim to be fully completed by May 2016. The survey will
be 100 % confidential and will include over 13,000 em-
ployees. The results of the survey will be discussed at
the level of the single operation as well as aggregated
at divisional and at Group level and corrective measures
will be initiated where necessary.
Health and safety at the work place
Health and safety at the work place is essential to en-
sure employee welfare. The majority of Dufry’s work-
force operates in airport and cruise-ship environ-
ments, where employees have to comply and follow
the respective airport’s, seaport’s or vessel’s safety
regulations. Regular learning courses, among others
in fire safety and first aid, are provided to our employ-
ees for the prevention and quick, correct reaction in
cases of emergencies.
81
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 SOCIAL
RESPONSIBILITY
Dufry remains strongly committed to social and cul-
tural involvement and engages in many countries in
which it operates through charitable sponsoring and
partnerships. The main focus of our programs is on
disadvantaged children, young people and their fami-
lies. The Group also supports various cultural and
sports events and contributes to charitable organiza-
tions to help victims of natural disasters. The most im-
portant non-profit organizations that we currently
work with are:
SOS Children’s Villages programs in Brazil,
Cambodia, Mexico, Ivory Coast and Russia
Dufry initiated its successful partnership with the
SOS Children’s Villages organization back in 2009,
when it started to sponsor a social center in Igarassu,
Brazil. At that time, the Group funded the construc-
tion of the center and has continued to support its
running costs and training classes ever since. In
2015, 520 infants, young children and teenagers with
their mothers in 130 families profited from family
strengthening programs with child-minding and day
care centers.
In Cambodia, Dufry supports the running costs of the
SOS Children’s Villages youth facility in Battambang.
When young people are ready to move out of the SOS
families, they can join the SOS Youth Program, where
they start vocational training or go on to higher educa-
tion. Dufry’s funding in 2015 supports ten adolescents
on their way to shape their own future.
The SOS Children’s Villages Family strengthening pro-
gram in Tehuacan, Mexico, focuses on the work with
families to enlarge the potential for a quality life inside
their families or in groups. Mothers for example are
given the opportunity to leave their children in the SOS
child day care center during the day so that they can
go to work and earn an income. The Dufry donations
82
support the running costs of the social center in
Tehuacan since 2013. In 2015, this program covered
570 beneficiaries in 150 families.
In the Ivory Coast (Abobo-Gare, Abidjan), we support
a SOS Children’s Villages Youth Facility project, by
covering the running costs of this facility, which pro-
vides housing, education and support programs for
vulnerable young people in the Abidjan area. The
donations help to support 34 young people.
In 2015, we expanded our social engagement with SOS
Children’s Village with a new project in Lavrovo, Russia.
Dufry provides community support to improve the
quality of public schools and kindergartens by offering
training to teachers and educators.
Disadvantaged
children and their
families benefit
from our support.
Since 2013, Dufry runs an additional financing chan-
nel in favor of the worldwide work of SOS Children’s
Villages by installing coin collection boxes in many
Dufry shops all over the world. This gives customers
and business partners an opportunity to also partic-
ipate in the various valuable support programs of
this organization.
A twenty year project in Rio de Janeiro, Brazil
2015 marked the twenty year anniversary of Dufry
Brazil’s sponsorship of a social promotion program in
Rio de Janeiro. This program offers free professional
education to 30 young people every year. The program
2 Sustainability ReportDUFRY ANNUAL REPORT 2015 1
2
1
SAINT MARC | HAITI
Participating in a student sponsorship program
by the Hand in Hand for Haiti Foundation.
2
IGARASSU | BRAZIL
A SOS Children’s Villages project supported
by Dufry since 2009.
83
3
3
TEHUACAN | MEXICO
Supporting the SOS Children’s Villages Family
strengthening program.
can be attended by 16 to 18 year-old female or male
teenagers and covers subjects, such as English, com-
puter classes, retail operations, professional orien-
tation, teamwork, leadership, ethics and citizenship
modules. Students also receive free meals, medical
and dental care, life insurance, uniforms, educational
material and transportation assistance.
Dufry employees regularly participate in the program
as volunteers, serving as mentors to these teenagers.
Hand in Hand for Haiti
Dufry became a sponsor in the Student Sponsorship
Program launched by the Hand in Hand for Haiti Foun-
dation and supported in 2015 an entire class of 25 stu-
dents at the school complex in Saint Marc, north of
Port-au-Prince, Haiti’s capital. This donation enables
the sponsored students to receive free trilingual edu-
cation in French, English and Creole. It also provides
them with meals, health services, uniforms and school
supplies as well as bus transportation to and from
school. In addition, after-school programs are orga-
nized daily for all children as well as day-camps during
the Easter and summer breaks.
Street Child United
Since 2014, Dufry is also a main sponsor of Street
Child United, a charity and global campaign for street
children to receive protection, support and oppor-
tunities to realize their potential. Street Child United
works to challenge the negative perceptions of
street children by transforming the way they are
treated. The charity does this by using the power of
sports, arts and children’s voices to deliver interna-
tional sporting events for street children where they
can powerfully demonstrate their potential and bring
the challenges and injustices they face onto the
global agenda.
Street Child United’s international events take place
ahead of the world’s biggest sporting events such as
FIFA World Cups or Olympic Games. Following the
successful 2014 Street Child World Cup football event
(also sponsored by Dufry), Street Child United will host
the first-ever Street Child Games in March 2016, just
ahead of the Olympic and Paralympic Games. Former
street children from up to 18 countries will come to-
gether in Rio de Janeiro, Brazil, for a week of Olympic-
themed sports, a festival of arts and a congress for
street children’s rights.
84
rated with various local foundations, putting items
they produce on sale in the Hellenic Duty Free shops.
All revenues achieved from such sales go directly to
the foundations involved, without Dufry making a
profit on these transactions.
Duty Free Uruguay organized one of the most recog-
nized golf tournaments in Uruguay, with over a thou-
sand golf players participating, in aid of the Cimientos
Foundation. Cimientos is an Argentinian NGO founded
in 1997 with operations in Uruguay since 2011. Their
goal is to enable more children to finish high school.
Duty Free Shop Argentina also collaborates with
Cimientos and another Argentinian NGO – Programa
de Reciclado de la Fundación hospital de Pediatria
Garrahan. The Garrahan Pediatrics Hospital Founda-
tion gives social and emotional assistance to poor chil-
dren being hospitalized at Garrahan Hospital.
The sponsorship of cultural events included many local
community events for example in the US or in Greece
as well as the Swiss Indoors tennis tournament in Basel
or the Baloîse Session, a three week music festival
in Switzerland.
The great number of shops we operate worldwide
enables us to encourage many customers globally to
participate in support activities for specific or local
programs or for victims of natural disasters by main-
taining donation boxes in our shops. The amounts that
we are able to collect in this way are always surprising
and we would like to express our deepest gratitude to
our customers for having participated so generously.
The donations have been greatly welcomed by the
different charities that were supported.
Major projects supported by World Duty Free
Since 2006, WDF has worked together with The One
Foundation. This charity set up the bottled water
brand “One Water” in 2005 to help people who do not
have access to clean drinking water. All profits gen-
erated from the sale of this water are donated by the
foundation to the construction of infrastructure to
provide sub-Saharan African regions with drinking
water. WDF sells the “One” brand water bottles and
reusable jute bags in its UK stores and has thereby
helped to raise funds for clean water and nutrition
projects, and also financed other water projects in
sub-Saharan countries.
The Rainbow Trust Children’s Charity – committed to
offering emotional and practical support to children
with a life-threatening or terminal illness, and to their
families. World Duty Free started to collaborate with
the Rainbow Trust in 2013 and its employees across
different WDF UK regions have organized several fun-
draising events such as half marathons, Santa and
10 kilometers dash runs or skydives since then to raise
money in support of these children and their families.
In 2015, charity activities included WDF employee par-
ticipation at the London Marathon, quiz nights, spon-
sored walks, golf event, and participations on 10 kilo-
meters urban courses in different UK cities. Since
2013, WDF has raised money for the Rainbow Trust
Children’s Charity for providing nearly 7,000 hours of
support for families in crisis.
WDF also supports the Touchstone Family Associa-
tion through its Vancouver operation since 2012. This
association is a non-profit, community-based social
service agency whose aim is to preserve and enhance
family relationships which have been affected by
times of financial crisis.
Further donations and cultural events
Dufry is involved in many other social projects with
local activities in countries where it operates. In
2015, these included for example Dufry employees in
Belgrade who worked together with volunteers of the
Asylum Protection Center to hand out food and
hygiene products to Syrian refugees. In Northern
Greece, donations were made to several schools and
municipalities to cover the fuel costs for the heating
of school premises.
The operations in Greece also supported charities such
as the Mitera Infant Center, Pentelis Convalescent
Home, Agios Andreas Children’s Home, Agia Varvara
Children’s Home, the Western and Eastern Attica
Chronic Diseases Foundation or the Greek Red Cross
refugees program just to name a few. It also collabo-
85
2 Sustainability ReportDUFRY ANNUAL REPORT 2015
86
STRONG
PERFORMANCE
IN A HISTORIC
YEAR
DEAR ALL
2015 was an eventful year: it started with the integra
tion of Nuance, which we acquired in 2014, and con
tinued with the acquisition of World Duty Free (WDF),
which we announced in March 2015. The complexities
of the integration of Nuance and the WDF transaction
didn’t take our focus from the daytoday activities of
our business, which required ongoing fine tuning: there
was a volatile environment for a number of emerging
markets, and events like the Swiss National Bank aban
doning the floor against the Euro in January 2015, and
resulting in an appreciation of the Swiss Franc by 19 %,
also required attention. In this context, Dufry achieved
solid operational and financial performance: Turnover
increased by 46.3 % and reached CHF 6,139.3 million
and EBITDA amounted to CHF 723.8 million, with EBITDA
margin reaching 11.8 %. Also in 2015, we continued to
generate free cash flow, which before acquisitions
related cash outflows increased to CHF 338.4 million.
Our primary focus in 2015 was the integration of Nuance
and we were able to conclude the process by yearend
as planned. The expected synergies of CHF 70 million
are confirmed for 2016, of which CHF 34 million are
already reflected in the results of 2015.
In March 2015, Dufry announced what would be the
biggest transaction in the history of the Group: the
acquisition of World Duty Free (WDF) for an enterprise
value of EUR 3.6 billion. The transaction was struc
tured in two steps with the first being the acquisition
of the 50.1 % stake from Edizione S.p.A. in August 2015,
following clearance of antitrust authorities in several
countries. The second step was the execution of a
Mandatory Tender Offer according to Italian law,
which we concluded in November, 2015, resulting in
the delisting of WDF and a 100 % Dufry ownership of
the business.
The acquisition of World Duty Free, one of our key
competitors with a reported turnover of EUR 2,440
million and EBITDA of EUR 261 million for FY 2014, is
transformational in many aspects. From an efficiency
point of view, we have identified EUR 100 million as
potential synergies, stemming from gross margin
improvements and cost savings. Strategically, the
acquisition is even more important, as it reinforces
our global leadership in airport retail with 24 %
market share.
The World Duty Free
acquisition reinforces
Dufry’s leadership
in travel retail.
Dufry financed the WDF transaction through a com
bination of equity and debt, in line with our longterm
financing strategy. In June 2015, we performed a cap
ital increase of CHF 2.2 billion. On the debt side, we
structured a new bank facility of EUR 800 million and
issued EUR 700 million Senior Notes.
The combination of Dufry, Nuance and World Duty
Free is expected to generate a total of CHF 175 million
of synergies, which will substantially increase our effi
ciency and generate value for our shareholder going
forward. Dufry’s resilient and strong cash generation
capability will allow us to reduce debt levels quickly
over the next 18 – 24 months to our target leverage
level of 2 – 3x Net Debt / EBITDA.
On the operations side, 2015 was a mixed year. Emerg
ing markets showed a wide range of performances,
many of them influenced by strong volatility in the
currency markets and also negatively impacted in cer
tain locations by political events. On the other hand
developed markets showed in general solid trends,
namely the United States and Europe. A common fac
tor across regions was the continuous passenger
growth, which reached 6 % in the year and is expected
to continue in a similar trend in 2016.
STRONG TURNOVER GROWTH OF 46.3 % IN 2015
Turnover grew by 46.3 % and reached CHF 6,139.3 mil
lion in 2015, from CHF 4,196.6 million one year earlier.
Organic growth was – 5.3 %, a result of likeforlike
growth of – 5.6 % and a contribution of (net) new conces
sions of 0.3 %. Organic growth for the year was signif
87
3 Financial ReportDUFRY ANNUAL REPORT 2015 icantly impacted by the volatility in emerging market
currencies, which reduced the purchasing power of
certain emerging market consumers, most notably
Brazilians and Russians. Organic growth excluding
these two customer groups was 4.0 %, thus underlin
ing the positive performance of the vast majority of
our business. Changes in scope, which includes the
consolidation of Nuance and WDF added 51.8 %, to the
turnover growth, while the FX translation impact was
– 0.2 %, as a result of opposing factors: the Swiss Franc
appreciation versus the Euro in January 2015; and the
appreciation of the US Dollar in the period.
Turnover in Region EMEA & Asia reached CHF 1,010.8
million in 2015, from CHF 1,194.5 million in 2014. In con
stant exchange rates (CER), growth was – 8.1 %.
Europe performed positively in general. In locations
where Russians are a relevant customer base, the neg
ative impact of the Russian Ruble was felt, most nota
bly in Russia, and to a lesser extent in Greece. On the
other hand, refurbishments implemented at Milan
Malpensa and Bergamo airports drove growth in Italy,
as did the revamp of our ExtraSchengen retail space
at Athens airport. Other operations such as France
and Czech Republic also showed good results.
Performance continued to be weak in Africa, affected
by the instability especially in Northern Africa, which
has directed tourist flows to nearby destinations like
Greece and Spain. In Middle East and Asia, growth
was seen in most of the operations, benefiting from
the structurally higher passenger growth in the region.
Highlights were our operations in Cambodia, Indonesia
and South Korea, among others.
Region America I’s turnover grew by 6.0 % to
CHF 808.4 million in 2015, versus CHF 763.0 million
in the previous year. In CER, turnover grew by 0.8 %
in the period. Performance was positive in Central
America, both in the Caribbean and in Mexico. In South
America, our operations held up well, considering the
currency volatility seen in the year, which impacts pur
chasing power of local consumers.
Turnover in Region America II went to CHF 487.8 mil
lion in 2015, against CHF 683.3 million in 2014. Turnover
measured in CER declined by – 32.1 %, directly reflect
ing the devaluation of the Brazilian Real against the
US Dollar of 42 % for the year. In the second half of
2015, the weakening of the local currency even reached
53 %. Because the region’s most important consum
ers are Brazilians, the devaluation of the Brazilian Real
reduces their purchasing. When measured in local
currencies, sales in the region declined by – 5 %.
Region United States & Canada’s turnover grew by
8.3 % in 2015 (3.6 % in CER) and reached CHF 1,043.2
million compared to CHF 963.1 million in 2014. Hudson
continues to post sustained growth, both from a like
forlike and new concessions perspective. Other for
mats like dutyfree shops and brand boutiques have
increasing importance in the region.
Nuance’s turnover reached CHF 1,337.9 million from
a four months consolidated turnover of CHF 536.6 mil
lion in 2014. Most operations performed well resulting
in a slightly positive proforma organic growth, when
excluding the lower number and reduced spending
of Russians, which particularly impacted Turkey
and Russia.
Turnover in World Duty Free was CHF 1,410.0 million,
from August to December of 2015. On a proforma
basis, organic growth in the period reached 9.6 %.
While performance in the UK was flat due to the
strengthening of the British Pound, Spain posted
strong growth through a strong passenger increase
including higher inflow of tourists going to other
destinations in previous years, such as Tunisia or Egypt.
CONSOLIDATION OF NUANCE AND WDF
INFLUENCES COST STRUCTURE
Gross profit
Gross profit reached CHF 3,574.7 million in 2015 (2014:
CHF 2,463.6 million, representing a growth of 45.1 %.
Gross margin moved to 58.2 % from 58.7 % in 2014, due
to the consolidation of Nuance and World Duty Free.
Selling expenses
Selling expenses reached CHF 1,684.0 million in 2015,
(2014: CHF 1,023.3 million). As a percentage of turnover,
in 2015 they went to 27.4 %, from 24.4 % in 2014. The
change is due to the consolidation of Nuance and WDF.
Personnel and general expenses
Personnel expenses as a percentage of turnover
reached 13.9 %, 60 basis points lower versus 2014. Gen
eral expenses also saw a reduction as a percentage of
turnover, declining by 100 basis points to 5.1 %. For
both lines the improvement is a consequence of the
consolidation of Nuance and WDF.
EBITDA
EBITDA reached CHF 723.8 million, 25.6 % higher ver
sus the CHF 576.5 million reported in 2014. The EBITDA
margin was 11.8 % in 2015, compared to 13.7 % in 2014.
In 2015, a first tranche of around CHF 34 million of Nu
ance synergies were already included in the results.
88
3 Financial ReportDUFRY ANNUAL REPORT 2015 CONSOLIDATED INCOME STATEMENT
IN MILLIONS OF
CHF
2015
IN %
IN MILLIONS OF
CHF
2014
IN %
CONTINUING OPERATIONS
Net sales
Advertising income
Turnover
Cost of sales
Gross profit
Selling expenses
Personnel expenses
General expenses
Share of result of associates
EBITDA 1
Depreciation, amortization and impairment
Linearization
Other operational result
Earnings before interest and taxes (EBIT)
Interest expenses
Interest income
Foreign exchange gain / (loss)
Earnings before taxes (EBT)
Income tax
Net earnings from continuing operations
DISCONTINUED OPERATIONS
Net earnings from discontinued operations
Net earnings
ATTRIBUTABLE TO
Equity holders of the parent
Noncontrolling interests
Net earnings to equity holders adjusted for amortization
in respect of acquisitions
Basic earnings per share from continuing operations
Cash earnings per share 2
Weighted average number of outstanding shares in thousands
5,961.7
177.6
6,139.3
(2,564.6)
3,574.7
(1,684.0)
(856.2)
(314.7)
4.0
723.8
(444.8)
(29.2)
(117.1)
132.7
(200.7)
16.0
5.2
(46.8)
10.1
(36.7)
(0.2)
(36.9)
(79.3)
42.4
182.8
(1.73)
3.99
45,810
100.0 %
41.8 %
58.2 %
27.4 %
13.9 %
5.1 %
(0.1 %)
11.8 %
7.2 %
0.5 %
1.9 %
2.2 %
3.3 %
(0.3 %)
(0.1 %)
(0.8 %)
(0.2 %)
(0.6 %)
0.0 %
(0.6 %)
4,063.1
133.5
4,196.6
(1,733.0)
2,463.6
(1,023.3)
(609.7)
(256.4)
2.3
576.5
(248.9)
–
(61.1)
266.5
(154.1)
5.7
(11.1)
107.0
(20.4)
86.6
(0.8)
85.8
51.6
34.2
174.4
1.57
5.24
33,307
1 EBITDA is earnings before interest, taxes, depreciation, amortization, linearization and
other operational result
2 Adjusted for amortization in respect of acquisitions
100.0 %
41.3 %
58.7 %
24.4 %
14.5 %
6.1 %
(0.1 %)
13.7 %
5.9 %
0.0 %
1.5 %
6.4 %
3.7 %
(0.1 %)
0.3 %
2.5 %
0.5 %
2.1 %
0.0 %
2.0 %
89
3 Financial ReportDUFRY ANNUAL REPORT 2015
Depreciation, amortization, impairment
and linearization
Depreciation as a percentage of turnover, remained
nearly stable at 2.2 % compared to 2.1 % in 2014. In
absolute terms it reached CHF 135.8 million in 2015
from CHF 88.2 million in the previous year. Amortiza
tion was CHF 148.3 million higher when compared to
2014 and reached CHF 309.0 million in 2015, as a result
of the additional amortization generated by the acqui
sitions of Nuance and WDF.
Linearization amounted to CHF – 29.2 million in 2015.
Linearization is a noncash item related to the Spanish
business. It originates by the difference between the
average minimum guarantee (MAG) over the full con
cession period and the MAG payable in the period. This
item also includes the reduction in concession pay
ments granted based on an upfront payment (prepaid
lease) related to some Spanish contracts.
EBIT
EBIT stood at CHF 132.7 million in 2015 from CHF 266.5
million in the last year. Other operational result (net)
reached CHF – 117.1 million, of which CHF – 77.4 million
are due to one off restructuring costs of Nuance and
transaction costs related to the WDF acquisition.
Financial result
Net financial results increased by CHF 20 million and
reached CHF 179.5 million in 2015 from CHF 159.5 mil
lion in 2014. The increase is a result of the higher net
debt level related to the acquisition of WDF, as well as
transaction costs also related to the acquisition of
CHF 31.9 million.
Taxes
Income taxes was positive by CHF 10.1 million in 2015,
versus an expense of CHF 20.4 million one year before.
Net earnings
Net earnings reached CHF – 36.9 million in 2015. Exclud
ing transaction and restructuring costs related to the
acquisitions of Nuance and WDF, net earnings reached
CHF 72.4 million. Reported Cash EPS in 2015 stood at
CHF 3.99. When excluding the beforehand mentioned
oneoffs, Cash EPS reached 6.38, compared to CHF 6.60
in 2014 (also excluding oneoffs).
to CHF 197.6 million in 2014. As a result, free cash
flow reached CHF 250.2 million, 29.0 % higher than
in 2014. Before acquisition related cash outflows of
the Nuance and WDF acquisition, free cash flow was
CHF 338.4 million.
Net debt was CHF 3,957.9 million in December 2015
(2014: CHF 2,354.4 million). Our main covenant, Net
Debt / adjusted EBITDA was 3.92x at yearend 2015.
Dufry’s share price started the year 2015 at CHF 149.20
and fluctuated between a high of CHF 151.30 and a low
of CHF 111.00. At yearend it closed at CHF 120.00
resulting in a market capitalization of CHF 6.5 billion.
2016, FOCUS ON THE INTEGRATION OF WDF
AND DELEVERAGING
By having completed the integration of Nuance in our
organization, we now expect to see the full impact of
the CHF 70 million synergies in 2016. Our focus for this
year will be the integration of WDF. After doing a
detailed analysis, the action plans to be deployed by
the integration teams are now ready and we expect the
integration to be concluded by mid2017.
As after other acquisitions, deleveraging is a priority
for us. Apart from the integration and the related syn
ergies, we will be monitoring costs, net working capi
tal and investments closely to drive cash generation.
From a macroeconomic perspective, 2016 started in
a similar fashion as the previous year and we expect
the volatility of the financial markets to continue –
even if at a reduced level. We are ready to face the
challenges of managing the business with regional dif
ferences, while benefitting from a geographically well
balanced concession portfolio, where the exposure to
single concessions was drastically reduced.
After a strong support during 2015, we thank our share
and bondholders, banks, analysts and key advisors for
their confidence and contribution for the building of a
much stronger company, the new Dufry.
Kind regards,
SOLID FINANCIAL STRUCTURE
Cash flow and debt
Net cash flow from operating activities reached
CHF 414.8 million in 2015, from CHF 391.5 million in
2014. In 2015, CAPEX was CHF 164.6 million compared
Andreas Schneiter
90
3 Financial ReportDUFRY ANNUAL REPORT 2015 Financial
Statements
2015
FINANCIAL
STATEMENTS
2015
CONTENT
Consolidated income statement 94
Consolidated statement of comprehensive income 95
Consolidated statement of financial position 96
Consolidated statement of changes in equity 97–98
Consolidated statement of cash flows 99–100
Notes to the consolidated financial statements 101–195
Most important subsidiaries 196–197
Report of the statutory auditor 198–199
Income statement 200
Statement of financial position 201
Notes to the financial statements 202–209
Report of the statutory auditor 210–211
93
3 Financial ReportDUFRY ANNUAL REPORT 201593 943 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2015IN MILLIONS OF CHFNOTE2015RESTATED* 2014CONTINUING OPERATIONSNet sales7 5,961.7 4,063.1 Advertising income 177.6 133.5 Turnover 6,139.3 4,196.6 Cost of sales(2,564.6)(1,733.0)Gross profit 3,574.7 2,463.6 Selling expenses8(1,684.0)(1,023.3)Personnel expenses9(856.2)(609.7)General expenses10(314.7)(256.4)Share of result of associates11 4.0 2.3 EBITDA 1 723.8 576.5 Depreciation, amortization and impairment12(444.8)(248.9)Linearization13(29.2)–Other operational result13(117.1)(61.1)Earnings before interest and taxes (EBIT) 132.7 266.5 Interest expenses14(200.7)(154.1)Interest income14 16.0 5.7 Foreign exchange gain / (loss) 5.2 (11.1)Earnings before taxes (EBT)(46.8) 107.0 Income tax15 10.1 (20.4)Net earnings from continuing operations(36.7) 86.6 DISCONTINUED OPERATIONSNet earnings from discontinued operations(0.2)(0.8)Net earnings(36.9) 85.8 ATTRIBUTABLE TOEquity holders of the parent(79.3) 51.6 Non-controlling interests 42.4 34.2 EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTBasic earnings per share 16(1.73) 1.55 Diluted earnings per share 16(1.73) 1.50 Weighted average number of outstanding shares in thousands1645,810 33,307 EARNINGS PER SHARE FOR CONTINUING OPERATIONSBasic earnings per share attributable to equity holders of the parent16(1.73) 1.57 Diluted earnings per share attributable to equity holders of the parent16(1.73) 1.53 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 EBITDA is earnings before interest, taxes, depreciation, amortization, linearization and other operational result 953 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015IN MILLIONS OF CHFNOTE2015RESTATED* 2014Net earnings(36.9) 85.8 OTHER COMPREHENSIVE INCOMEActuarial gains / (losses) on post-employment benefits17 12.8 (37.9)Income tax15, 17(1.2) 4.5 Items not being reclassified to net income in subsequent periods, net of tax 11.6 (33.4)Exchange differences on translating foreign operations17(83.7) 223.9 Net gain / (loss) on hedge of net investment in foreign operations17 2.2 (102.4)Changes in the fair value of interest rate swaps held as cash flow hedges17 1.0 –Income tax on above positions15, 17(0.3) 3.2 Items to be reclassified to net income in subsequent periods, net of tax(80.8) 124.7 Total other comprehensive income, net of tax(69.2) 91.3 Total comprehensive income, net of tax(106.1) 177.1 ATTRIBUTABLE TOEquity holders of the parent(140.6) 130.7 Non-controlling interests 34.5 46.4 Total comprehensive income attributable to equity holders of the parent(140.6) 130.7 ATTRIBUTABLE TOContinuing operations(140.3) 131.5 Discontinued operations(0.3)(0.8)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED DECEMBER 31, 2015 963 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAT DECEMBER 31, 2015IN MILLIONS OF CHFNOTE 31.12.2015RESTATED * 31.12.2014ASSETSProperty, plant and equipment18 604.6 435.4 Intangible assets20 7,308.2 4,733.2 Investments in associates11 41.4 72.9 Deferred tax assets22 203.9 195.9 Other non-current assets23 347.4 106.6 Non-current assets 8,505.5 5,544.0 Inventories24 907.3 741.2 Trade and credit card receivables25 132.8 118.7 Other accounts receivable26 336.0 227.2 Income tax receivables 27.8 11.0 Financial instruments at fair value through profit and loss38.5.3 17.7 –Cash and cash equivalents 432.5 513.0 Current assets 1,854.1 1,611.1 Assets of discontinued operations held for sale40– 1.8 Total assets 10,359.6 7,156.9 LIABILITIES AND SHAREHOLDERS’ EQUITYEquity attributable to equity holders of the parent27 3,149.1 2,293.6 Non-controlling interests29, 30 183.6 159.5 Total equity 3,332.7 2,453.1 Financial debt31 4,313.1 2,821.8 Deferred tax liabilities22 693.1 419.1 Provisions32 183.9 109.2 Post-employment benefit obligations33 55.3 37.7 Other non-current liabilities34 64.9 3.3 Non-current liabilities 5,310.3 3,391.1 Trade payables 546.8 418.3 Financial debt31 77.3 45.6 Income tax payables 44.1 33.8 Provisions32 153.7 54.8 Other liabilities34 894.7 760.2 Current liabilities 1,716.6 1,312.7 Total liabilities 7,026.9 4,703.8 Total liabilities and shareholders’ equity 10,359.6 7,156.9 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 973 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2015ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT2015 IN MILLIONS OF CHFNOTEShare capitalShare premium Treasury sharesCapital reserve for mandatory convertible notesEmployee benefit reserveHedging & revalu-ation reservesTrans- lation reservesRetained earningsTOTALNON-CON-TROLLING INTERESTSTOTAL EQUITYRestated* Balance at January 1 179.5 1,964.7 (14.3) 262.8 (32.9)–(112.2) 46.0 2,293.6 159.5 2,453.1 Net earnings / (loss)–––––––(79.3)(79.3) 42.4 (36.9)Other comprehensive income / (loss)17–––– 11.6 0.7 (73.6)–(61.3)(7.9)(69.2)Total comprehensive income / (loss) for the period–––– 11.6 0.7 (73.6)(79.3)(140.6) 34.5 (106.1)TRANSACTIONS WITH OR DISTRIBUTIONS TO SHAREHOLDERS:Dividends to non-controlling interests–––––––––(43.3)(43.3)Rights issue27 80.8 2,119.2 –––––– 2,200.0 – 2,200.0 Conversion of mandatory convertible notes27 9.1 253.7 –(262.8)–––––––Transactions costs for equity instruments27–(78.3)––––––(78.3)–(78.3)Share-based payment28––––––– 2.8 2.8 – 2.8 Tax effect on equity transactions15–––––––(0.2)(0.2)–(0.2)Total transactions with or distributions to owners 89.9 2,294.6 –(262.8)––– 2.6 2,124.3 (43.3) 2,081.0 CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES:Changes in participation of non-controlling interests6.3, 29–––––––(1,128.2)(1,128.2) 32.9 (1,095.3)Balance at December 31 269.4 4,259.3 (14.3)–(21.3) 0.7 (185.8)(1,158.9) 3,149.1 183.6 3,332.7 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 983 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2015ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT2014 IN MILLIONS OF CHFNOTEShare capitalShare premiumTreasury sharesCapital reserve for mandatory convertible notesEmployee benefit reserveHedging & revalu-ation reservesTrans- lation reservesRetained earningsTOTALNON-CON-TROLLING INTERESTSTOTAL EQUITYBalance at January 1 154.5 1,207.0 (18.1)– 0.3 –(224.5) 18.3 1,137.5 129.9 1,267.4 Restated* net earnings / (loss)6.4––––––– 51.6 51.6 34.2 85.8 Other comprehensive income / (loss)17––––(33.2)– 112.3 – 79.1 12.2 91.3 Total comprehensive income for the period––––(33.2)– 112.3 51.6 130.7 46.4 177.1 TRANSACTIONS WITH OR DISTRIBUTIONS TO SHAREHOLDERS:Dividends to non-controlling interests–––––––––(39.5)(39.5)Issuance of equity instruments27 25.0 785.0 – 269.6 –––– 1,079.6 – 1,079.6 Transaction costs for equity instruments27–(27.3)–(6.8)––––(34.1)–(34.1)Net purchase of treasury shares28.2––(13.8)––(13.8)–(13.8)Assignment of treasury shares28.2–– 17.6 ––––(17.6)–––Share-based payment28––––––– 2.4 2.4 – 2.4 Tax effect on equity transactions15––––––– 0.1 0.1 – 0.1 Total transactions with or distributions to owners 25.0 757.7 3.8 262.8 –––(15.1) 1,034.2 (39.5) 994.7 CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES:Changes in participation of non-controlling interests–––––––(8.8)(8.8) 22.7 13.9 Restated * Balance at December 31 179.5 1,964.7 (14.3) 262.8 (32.9)–(112.2) 46.0 2,293.6 159.5 2,453.1 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 993 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2015IN MILLIONS OF CHFNOTE2015RESTATED* 2014CASH FLOWS FROM OPERATING ACTIVITIESEarnings before taxes (EBT)(46.8) 107.0 Net earnings from discontinued operations40(0.2)(0.8)Total earnings before taxes (EBT)(47.0) 106.2 ADJUSTMENTS FORDepreciation, amortization and impairment12 444.8 248.9 Loss / (gain) on sale of non-current assets 0.9 (0.9)Increase / (decrease) in allowances and provisions 53.1 (16.0)Loss / (gain) on unrealized foreign exchange differences 1.5 9.1 Other non-cash items 14.3 2.4 Share of result of associates11(4.0)(2.3)Interest expense14 200.7 154.1 Interest income14(16.0)(5.7)Cash flow before working capital changes 648.3 495.8 Decrease / (increase) in trade and other accounts receivable 63.5 (32.0)Decrease / (increase) in inventories24 15.3 36.0 Increase / (decrease) in trade and other accounts payable(221.9)(43.5)Dividends received from associates11 4.8 0.4 Cash generated from operations 510.0 456.7 Income taxes paid(95.2)(65.2)Net cash flows from operating activities 414.8 391.5 CASH FLOW FROM INVESTING ACTIVITIESPurchase of property, plant and equipment 18, 19(134.8)(143.7)Purchase of intangible assets20, 21(179.7)(57.0)Purchase of financial assets(11.7)–Proceeds from sale of property, plant and equipment 4.9 3.1 Interest received 11.4 4.9 Business combinations, net of cash6(1,366.7)(1,124.6)Proceeds from sale of interests in subsidiaries and associates11 28.6 0.2 Net cash flows used in investing activities(1,648.0)(1,317.1) 1003 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015IN MILLIONS OF CHFNOTE2015RESTATED* 2014CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of new shares27 2,200.0 810.0 Proceeds from mandatory convertible notes27– 275.0 Transaction costs for issuance of financial instruments(110.8)(75.9)Proceeds from bank loans31 824.0 1,570.8 Proceeds from issuance of notes31 734.6 606.8 Repayment of bank loans and senior notes31(981.9)(1,821.7)Repayment of 3rd party loans 31(5.1)(5.7)Dividends paid to non-controlling interest29(43.3)(39.5)Net purchase of treasury shares28–(13.8)Net contributions from / (purchase of) non-controlling interests(1,413.3) 31.1 Interest paid (135.2)(107.8)Net cash flows (used in) / from financing activities 1,069.0 1,229.3 Currency translation on cash 83.7 (37.1)(Decrease) / increase in cash and cash equivalents(80.5) 266.6 CASH AND CASH EQUIVALENTS AT THE– beginning of the period 513.0 246.4 – end of the period 432.5 513.0 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)FOR THE YEAR ENDED DECEMBER 31, 2015 NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2015
1.
CORPORATE INFORMATION
Dufry AG (the Company) is a publicly listed company with headquarters in Basel,
Switzerland. The Company is the world’s leading travel retail company. It operates
around 2,200 shops worldwide. The shares of the Company are listed on the Swiss
Stock Exchange (SIX) in Zurich and its Brazilian Depository receipts on the
BM&FBOVESPA in São Paulo.
The consolidated financial statements of Dufry AG and its subsidiaries (Dufry or
the group) for the year ended December 31, 2015 were authorized for public dis-
closure in accordance with a resolution of the Board of Directors of the Company
dated March 8, 2016, and are subject to the approval of the Annual General meet-
ing to be held on April 28, 2016.
2.
ACCOUNTING POLICIES
2.1
BASIS OF PREPARATION
The consolidated financial statements of Dufry AG and its subsidiaries have been
prepared in accordance with International Financial Reporting Standards (IFRS).
Dufry AG’s consolidated financial statements have been prepared on the histori-
cal cost basis, except for financial instruments that are measured at fair values, as
explained in the accounting policies below. Historical cost is generally based on
the fair value of the consideration given in exchange for assets. The carrying val-
ues of recognized assets and liabilities that are hedged items in fair value hedges,
and are otherwise carried at amortized cost, are adjusted to record changes in the
fair values attributable to the risks that are being hedged.
The consolidated financial statements are presented in millions of Swiss Francs
(CHF) and all values are rounded to the nearest one hundred thousand, except when
otherwise indicated.
2.2 BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of
Dufry AG and entities controlled by Dufry (its subsidiaries) as at December 31, 2015
and the respective comparative information. Certain comparative figures were
restated due to the revision of the values of the purchase price analysis of the
Nuance Group (see notes 6.5 and 39).
101
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 Subsidiaries are fully consolidated from the date of acquisition, being the date on
which Dufry obtains control, and continue to be consolidated until the date when
such control is lost. The group controls an entity when Dufry is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. The financial statements
of the subsidiaries are prepared for the same reporting period as the parent com-
pany, using uniform accounting policies. All intra group balances, transactions,
unrealized gains and losses resulting from intragroup transactions and dividends
are eliminated in full.
A change in the ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction. If the group loses control over a subsid-
iary, it
– derecognizes the assets (including goodwill) and liabilities of the subsidiary,
derecognizes the carrying amount of any non-controlling interest as well as
derecognizes the cumulative translation differences recorded in equity
– recognizes the fair value of the consideration received, recognizes the fair
value of any investment retained as well as recognizes any surplus or deficit
in the consolidated income statement and
– reclassifies the parent’s share of components previously recognized in
other comprehensive income to the consolidated income statement or
retained earnings, as appropriate.
For the accounting treatment of associated companies see 2.3 p).
2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration transferred,
measured at acquisition date fair value and the amount of any non-controlling
interest in the acquiree. For each business combination, Dufry selects whether it
measures the non-controlling interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition related
transaction costs are expensed and included in other operational result. When
Dufry acquires a business, it assesses the financial assets and liabilities assumed
for appropriate classification and designation in accordance with the contractual
terms, economic circumstances and pertinent conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognized
at fair value at the acquisition date. Contingent consideration classified as an asset
or liability that is a financial instrument and within the scope of IAS 39 Financial
Instruments: Recognition and Measurement, is measured at fair value with the
changes in contingent considerations recognized in the income statement.
Dufry measures goodwill at the acquisition date as:
– The fair value of the consideration transferred;
– plus the recognized amount of any non-controlling interests in the acquiree;
– plus if the business combination is achieved in stages, the fair value of the
pre-existing equity interest in the acquiree;
– less the net recognized amount of the identifiable assets acquired and
liabilities assumed.
When the excess is negative, a bargain purchase gain is recognized immediately in
the consolidated income statement.
102
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 After initial recognition, goodwill is measured at cost less any accumulated impair-
ment losses. For the purpose of impairment testing, goodwill acquired in a busi-
ness combination is, from the acquisition date, allocated to each of the group’s
cash-generating units that are expected to benefit from the combination.
Where goodwill forms part of a cash-generating unit and part of the operation
within that unit is disposed of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation when determining the gain
or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the por-
tion of the cash-generating unit retained, unless there are specific allocations.
b) Turnover
Sales are measured at the fair value of the consideration received, excluding sales
taxes or duties. Retail sales are settled in cash or by credit card, whereas adver-
tising income is recognized when the services have been rendered.
c) Cost of sales
Cost of sales are recognized when the company sells a product and comprise
the purchase price and the cost incurred until the product arrives at the
warehouse, i.e. import duties, transport, inventory valuation adjustments and
inventory differences.
d) Foreign currency translation
The consolidated financial statements are expressed in millions of Swiss francs
(CHF). Each company in the group uses its corresponding functional currency and
items included in the financial statements of each entity are measured using that
functional currency. Transactions in foreign currencies are initially recorded in the
functional currency using the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are re-measured
to their fair value in the functional currency using the exchange rate at the report-
ing date and recorded as unrealized foreign exchange gains / losses. Exchange dif-
ferences arising on the settlement or on the translation of derivative financial
instruments are recognized through the consolidated income statement, except
where the hedges on net investments allow the recognition in other comprehen-
sive income, until the respective investments are disposed of. Any related deferred
tax is also accounted through other comprehensive income. Non-monetary items
are measured at historical cost in the respective functional currency.
At the reporting date, the assets and liabilities of all subsidiaries reporting in for-
eign currency are translated into the presentation currency of Dufry (CHF) using
the exchange rate at the reporting date. The income statements of the subsidiar-
ies are translated using the average exchange rates of the respective month in
which the transactions occurred. The net translation differences are recognized
in other comprehensive income. On disposal of a foreign entity or when control is
lost, the deferred cumulative translation difference recognized within equity relat-
ing to that particular operation is recognized in the consolidated income state-
ment as gain or loss on sale of subsidiaries.
Intangible assets and fair value adjustments identified during a business combina-
tion (purchase price allocation) are treated as assets and liabilities in the functional
currency of such operation.
103
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 104
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Principal foreign exchange rates applied for valuation and translation:AVERAGE RATECLOSING RATERATES AT ACQUISITION DATEIN CHF2015201431.12.201531.12.201407.08.201509.09.20141 USD0.96250.91550.99970.99390.98220.93421 EUR1.06801.21441.08631.20271.07661.20671 GBP1.47071.50681.47301.54841.5202e) Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the group are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in the consolidated income statement on the purchase, sale, issue or cancellation of the Company’s own equity instruments.f) Share capitalOrdinary shares are classified as equity. Mandatory convertible notes are classi-fied as compound financial instruments (see 2.3 g) below.Costs directly attributable to the issuance of shares or options are shown in the statement of changes in equity as transaction costs for equity instruments, net of tax.When any subsidiary purchases Dufry shares (treasury shares), the consideration paid, including any directly attributable expenses, net of income taxes, is deducted from equity until the shares are cancelled, assigned or sold. Where such ordinary shares are subsequently sold, any consideration received, net of any direct trans-action expenses and income tax, is included in equity.g) Compound financial instrumentsCompound financial instruments issued by Dufry comprise convertible notes that can be converted to share capital. The number of shares to be issued is dependent on the changes in their fair value.The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component and is represented in equity for the date of inception. The directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured except on conversion or expiry.The liability component is classified as current liabilities unless Dufry has an unconditional right to defer settlement for at least 12 months after the end of the reporting period. 105
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015h) LinearizationIn cases where fees for the concession are based on fix or determinable amounts of money, the expenses paid are treated as operational lease. For these operational leases when the amounts are increasing or decreasing over the time Dufry accrues the difference between the amount paid and the respective straight-line expenses for the period calculated over the overall duration of the contract, as linearization. In addition, this line item includes the reduction in concession payments granted based on an upfront payment (see prepaid lease in note 26) done at the inception of two Spanish contracts (Madrid and Barcelona as main airports), acquired as part of the World Duty Free acquisition (see note 6.1). i) Pension and other post-employment benefit obligationsThe employees of the subsidiaries are eligible for retirement, invalidity and death benefits under local social security schemes prevailing in the countries concerned and defined benefit or defined contribution plans provided through separate funds, insurance plans, or unfunded arrangements. The pension plans are either funded through regular contributions made by the employer or the employee or unfunded.The cost of providing benefits under defined benefit plans is determined using the projected unit credit method.Re-measurements, the effect of the asset ceiling (excluding net interest) and the return on plan assets (excluding net interest), are recognized in the statement of financial position with a corresponding debit or credit to other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.Past service costs are recognized in profit or loss on the earlier of: –The date of the plan amendment or curtailment, and –the date that Dufry recognizes restructuring related costsNet interest is calculated by applying the discount rate to the net defined benefit obligation (asset). Dufry recognizes the following changes in the net defined benefit obligation in the income statement: –Service costs comprising current service costs, past service costs, gains and losses on curtailments and non-routine settlements under “personnel expenses” –Net interest expense or income under “interest expenses or income”j) Share-based paymentsEquity settled share based payments to employees and other third parties provid-ing services are measured at the fair value of the equity instruments at grant date. The fair value determined at grant date of the equity-settled share-based pay-ments is expensed on a pro rata basis over the vesting period, based on the esti-mated number of equity instruments that will eventually vest. At the end of each reporting period, Dufry revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the income statement such that the cumulative expense reflects the revised estimate. Where the terms of an equity settled award are modified, the minimum expense
recognized is the expense as if the terms had not been modified. An additional
expense is recognized for any modification, which increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the holder of
the option as measured at the date of modification.
k) Taxation
Income tax expense represents the sum of the current income tax and deferred tax.
Income tax positions not relating to items recognized in the income statement, are
recognized in correlation to the underlying transaction either in other comprehen-
sive income or equity.
Current income tax
Income tax receivables or payables are measured at the amount expected to
be recovered from or paid to the tax authorities. The tax rates and tax laws
used to compute the amount are those that are enacted or substantially enacted
at the reporting date in the countries where Dufry operates and generates
taxable income.
Income tax relating to items recognized in other comprehensive income is recog-
nized in the same statement.
Deferred tax
Deferred tax is provided using the liability method on temporary differences
between the tax basis of assets or liabilities and their carrying amounts for finan-
cial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
– When the deferred tax liability arises from the initial recognition of goodwill or
an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss
– In respect of taxable temporary differences associated with investments in
subsidiaries, when the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future
Deferred tax assets are recognized for all deductible temporary differences, the
carry forward of unused tax credits or tax losses. Deferred tax assets are recog-
nized to the extent that it is probable that taxable profit will be available, against
which the deductible temporary differences and the carry forward of unused tax
credits and unused tax losses can be utilized, except:
– When the deferred tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss
– In respect of deductible temporary differences associated with investments in
subsidiaries, deferred tax assets are recognized only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences
can be utilized.
106
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will
be available to allow the deferred tax asset to be utilized. Unrecognized deferred
tax assets are reassessed at each reporting date and are recognized to the extent
that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected
to apply in the year when the asset is realized or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantially enacted at the
reporting date applicable for each respective company.
l) Property, plant and equipment
These are stated at cost less accumulated depreciation and any impairment in fair
value. Depreciation is computed on a straight-line basis over the shorter of the
estimated useful life of the asset or the lease term. The useful lives applied are
as follows:
– Real estate (buildings) 20 to 40 years
– Leasehold improvements the shorter of 10 years
– Furniture and fixtures the shorter of 5 years
– Motor vehicles the shorter of 5 years
– Computer hardware the shorter of 5 years
m) Intangible assets
These assets mainly comprise of concession rights and brands. Dufry considers
that these assets have indefinite useful live, when concession rights are granted
by one of the non-controlling interests holder of the company, or for brands when
the company considers to use the brand for the foreseable future. Intangible assets
acquired separately are capitalized at cost and those from a business acquisition
are capitalized at fair value as at the date of acquisition. Following initial recogni-
tion, the cost model is applied to intangible assets. The useful lives of these intan-
gible assets are assessed to be either finite or indefinite. Intangible assets with
finite lives are amortized over the useful economic life. Intangible assets with an
indefinite useful life are reviewed annually to determine whether the indefinite life
assessment continues to be supportable. If not, any changes are made on a pro-
spective basis.
n) Impairment of non-financial assets
Intangible assets with indefinite useful life are not subject to amortization and are
tested annually for impairment. Assets that are subject to depreciation and amor-
tization are reviewed for impairment whenever events or circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recog-
nized when the carrying amount of an asset or cash generating unit exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value
less cost of disposal and its value in use. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable
cash inflows (cash generating units).
o) Non-current assets held for sale or for distribution to equity holders
of the parent and discontinued operations
Dufry classifies investments as held for sale or for distribution to equity holders
of the parent if their carrying amounts will be recovered principally through a sale
or distribution rather than through continuing use. Dufry measures these at the
lower of their carrying amount or fair value less costs to sell or to distribute.
107
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 Assets and liabilities classified as held for sale or for distribution are presented
separately in the statement of financial position.
A disposal group qualifies as discontinued operation if it is:
– A major line of business or major geographical area;
– part of a single coordinated plan for disposal; or
– a subsidiary acquired exclusively with a view to resale
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount as net earnings after tax from discontinued
operations in the consolidated statement of income.
Additional disclosures are provided in note 40. All other notes to the financial
statements mainly include amounts for continuing operations, unless otherwise
mentioned.
p) Associates
Associates are all entities over which Dufry has significant influence but not con-
trol, generally accompanying a shareholding of more than 20 % of the voting rights.
Investments in associates are accounted for using the equity method of account-
ing. Under the equity method, the investment is initially recognized at cost. The
carrying amount is increased or decreased to recognize the investor’s share of the
net earnings of the investee after the date of acquisition and decreased by divi-
dends declared. Dufry’s investment in associates includes goodwill identified
on acquisition.
Dufry’s share of post-acquisition net earnings is recognized in the income state-
ment, and its share of post-acquisition movements in other comprehensive income
is recognized in the statement of comprehensive income with a corresponding
adjustment to the carrying amount of the investment. When Dufry’s share of losses
in an associate equals or exceeds its interest in the associate, Dufry does not rec-
ognize further losses, unless it has incurred legal or constructive obligations or
made payments on behalf of the associate. If the ownership interest in an asso-
ciate is reduced but significant influence is retained, only a proportionate share of
the amounts previously recognized in other comprehensive income is reclassified
to net earnings where appropriate.
Dufry determines at each reporting date whether there is any objective evidence
that the investment in the associate is impaired. If this is the case, Dufry calcu-
lates the amount of impairment as the difference between the recoverable amount
of the associate and its carrying value and recognizes the amount adjacent to share
of result of associates in the income statement.
Profits and losses resulting from upstream and downstream transactions between
Dufry and its associate are recognized in the group’s financial statements only to
the extent of unrelated investor’s interests in the associates. Unrealized losses are
eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been changed where neces-
sary to ensure consistency with the policies adopted by Dufry.
Dilution gains and losses arising in investments in associates are recognized in the
income statement.
108
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 q) Inventories
Inventories are valued at the lower of historical cost or net realizable value. The
historical costs are determined using the FIFO method. Historical cost includes all
expenses incurred in bringing the inventories to their present location and condi-
tion. This includes mainly import duties and transport cost. Purchase discounts
and rebates are deducted in determining the cost of inventories. The net realizable
value is the estimated selling price in the ordinary course of business less
the estimated costs necessary to make the sale. Inventory allowances are set up
in the case of slow-moving and obsolete stock. Expired items are fully written off.
r) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand or current bank accounts as
well as short-term deposits at banks with initial maturity below 91 days. Short-term
investments are included in this position if they are highly liquid, readily convert-
ible into known amounts of cash and subject to insignificant risk of changes in value.
Bullet bonds amounting to CHF 29.5 (2014: 23.9) million, due within 90 days are dis-
closed here.
s) Provisions
Provisions are recognized when the group has a present obligation (legal or con-
structive) as a result of a past event, it is probable that Dufry will be required
to settle the obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognized as a provision is the best estimate at the end of the report-
ing period of the consideration required to settle the present obligation, taking into
account the risks and uncertainties surrounding the obligation. When a provision
is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (where the effect of the
time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognized as an asset
if it is virtually certain that the reimbursement will be received and the amount of
the receivable can be measured reliably.
Contingent liabilities acquired in a business combination
Contingent liabilities acquired in a business combination are initially measured at
fair value at the acquisition date. At the end of subsequent reporting periods, such
contingent liabilities are measured at the higher of the amount that would be rec-
ognized in accordance with IAS 37 Provisions, contingent liabilities and contingent
assets and the amount initially recognized less cumulative amortization recognized
in accordance with IAS 18 Revenue.
Onerous contracts
Present obligations arising under onerous contracts are recognized and measured
as provisions. An onerous contract is considered to exist if Dufry has a contract
under which the unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received from the contract.
109
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 Restructurings
A restructuring provision is recognized when Dufry has developed a detailed for-
mal plan for the restructuring and has raised a valid expectation in those affected
that it will carry out the restructuring by starting to implement the plan or announc-
ing its main features to those affected by it. The measurement of a restructuring
provision includes only the direct expenditures arising from the restructuring,
which are those amounts that are both necessarily entailed by the restructuring
and not associated with the ongoing activities of the entity.
t) Financial instruments
Financial assets and financial liabilities are recognized when Dufry becomes a party
to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Trans-
action costs that are directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are deducted from or added to the fair value of
the financial assets or financial liabilities on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognized immediately in the income
statement.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a
debt instrument and of allocating interest income over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash
flows (including all fees and points paid or received that form an integral part of
the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
u) Financial assets
Financial assets are classified into the following categories: financial assets at fair
value through profit or loss (FVTPL), Held to maturity financial assets, available for
sale (AFS) financial assets and loans and receivables. The categorization depends
on the nature and purpose of the financial assets and is determined at the time of
initial recognition. All regular purchases or sales of financial assets are recognized
and derecognized on a trade date basis. Regular purchases or sales of financial
assets are those that require delivery of assets within the time frame established
by regulation or convention in the marketplace.
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held
for trading or it is designated as at FVTPL.
A financial asset is classified as held for trading if:
– It has been acquired principally for the purpose of selling it in the near term; or
– on initial recognition it is part of a portfolio of identified financial instruments
that Dufry manages together and has a recent actual pattern of short-term
profit taking; or
– it is a derivative that is not designated and effective as a hedging instrument.
110
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 A financial asset other than a financial asset held for trading may be designated
as at FVTPL upon initial recognition if:
– Such designation eliminates or significantly reduces a measurement or
recognition inconsistency that would otherwise arise; or
– the financial asset forms part of a group of financial assets or financial
liabilities or both, which is managed and its performance is evaluated on a fair
value basis, in accordance with Dufry’s documented risk management or
investment strategy, and information about the grouping is provided internally
on that basis; or
– it forms part of a contract containing one or more embedded derivatives, and
IAS 39 Financial instruments: recognition and measurement permits the entire
combined contract (asset or liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising
on re-measurement recognized in the income statement. The net gain or loss rec-
ognized in the income statement incorporates any dividend or interest earned on
the financial asset and is included in the other operating result line item in the
income statement. Fair value is determined in the manner described in note 37.
Trade and other accounts receivable
Trade and other receivables (including credit cards receivables, other accounts
receivable, cash and cash equivalents) are measured at amortized cost using the
effective interest method, less any impairment.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impair-
ment at the end of each reporting period. Financial assets are considered to be
impaired when there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the financial asset have been affected.
Certain categories of financial assets, such as trade receivables, are assessed for
impairment individually.
Subsequent recoveries of amounts previously written off are credited against the
allowance accounts for these categories. Changes in the carrying amount of the
allowance account are recognized in the income statement in the lines selling
expenses or other operational result.
Derecognition of financial assets
Dufry derecognizes a financial asset only when the contractual rights to the cash
flows from the asset expire, or when it transfers the financial asset and substan-
tially all the risks and rewards of ownership of the asset to another entity. If Dufry
neither transfers nor retains substantially all the risks and rewards of ownership
and continues to control the transferred as set, Dufry recognizes its retained
interest in the asset and an associated liability for amounts it may have to pay. If
Dufry retains substantially all the risks and rewards of ownership of a transferred
financial asset, Dufry continues to recognize the financial asset and also recog-
nizes a collateralized borrowing for the proceeds received.
111
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 v) Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or other
financial liabilities.
Financial liabilities at FVTPL
These financial liabilities are either held for trading or have been designated as
at FVTPL.
A financial liability is classified as held for trading if:
– It has been acquired principally for the purpose of re purchasing it in the near
term; or
– on initial recognition it is part of a portfolio of identified financial instruments
that the group manages together and has a recent actual pattern of short-term
profit taking; or
– it is a derivative that is not designated and effective as a hedging instrument.
Other financial liabilities, not held for trading may be designated as at FVTPL upon
initial recognition if:
– Such designation eliminates or significantly reduces a measurement or
recognition inconsistency that would otherwise arise; or
– the financial liability forms part of a group of financial assets or financial
liabilities or both, which is managed together and its performance is evaluated
on a fair value basis, in accordance with the group’s documented risk
management or investment strategy, and information about the grouping
is provided internally on that basis; or
– it forms part of a contract containing one or more embedded derivatives, and
IAS 39 Financial instruments: recognition and measurement permits the entire
combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses aris-
ing on re-measurement recognized in the income statement. The net gain or loss
recognized in the consolidated income statement incorporates any interest paid
on the financial liability and is included in the financial result in the income state-
ment. Fair value is determined in the manner described in note 37.
Other financial liabilities
Other financial liabilities (including borrowings) are subsequently measured at
amortized cost using the effective interest method (see 2.3 t).
Derecognition of financial liabilities
Dufry derecognizes financial liabilities only when the obligations are discharged,
cancelled or they expired. The difference between the carrying amount of the
financial liability derecognized and the consideration paid or payable is recognized
in the consolidated income statement.
w) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported
in the consolidated statement of financial position if there is a currently enforce-
able legal right to offset the recognized amounts and there is an intention to settle
on a net basis, to realize the assets and settle the liabilities simultaneously (see
note 38.10).
112
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 x) Derivative financial instruments
Dufry enters into a variety of derivative financial instruments to manage its expo-
sure to interest rate or foreign exchange rate risks, including foreign exchange for-
ward contracts, interest rate swaps and cross currency swaps. Further details of
derivative financial instruments are disclosed in note 38.
Derivatives are initially recognized at fair value at the date the derivative contracts
are entered into and are subsequently re-measured to their fair value at the end
of each reporting period. The resulting gain or loss is recognized in the income
statement unless the derivative is designated and effective as a hedging instru-
ment, in which event the timing of the recognition in the income statement depends
on the nature of the hedge relationship.
Embedded derivatives
Derivatives embedded in non-derivative host contracts are treated as separate
derivatives when their risks and characteristics are not closely related to those of
the host contracts and the host contracts are not measured at FVTPL.
y) Hedge accounting
Dufry designates certain hedging instruments, which include derivatives and non-
derivatives in respect of foreign currency risk, as either fair value hedges, cash
flow hedges, or hedges of net investments in foreign operations. Hedges of foreign
exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the entity documents the relationship
between the hedging instrument and the hedged item, along with its risk manage-
ment objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, Dufry docu-
ments whether the hedging instrument is highly effective in offsetting changes in
fair values or cash flows of the hedged item attributable to the hedged risk.
Hedge accounting is discontinued when Dufry revokes the hedging relationship,
when the hedging instrument expires or is sold, terminated, or exercised, or when
it no longer qualifies for hedge accounting. Any gain or loss recognized in other
comprehensive income and accumulated in equity at that time, is recognized when
the underlying hedged item is ultimately derecognized in the income statement.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated
and qualify as cash flow hedges is recognized in other comprehensive income and
accumulated in the hedging and revaluation reserves. The gain or loss relating to
the ineffective portion is recognized in the income statement, and is included in
the interest expenses / income line item.
Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash
flow hedges. Any gain or loss on the hedging instrument relating to the effective
portion of the hedge is recognized in other comprehensive income and accumu-
lated under the heading of translation reserves. The gain or loss relating to the
ineffective portion is recognized immediately in the income statement, and is
included in the foreign exchange gains / losses line item (see notes 31.1 and 31.2).
113
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 2.4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
New and amended standards and interpretations
The accounting policies adopted are consistent with those of the previous finan-
cial year, except for the revised Standards and the Interpretations adopted in these
financial statements (effective January 1, 2015). Their adoption did not have a
significant impact on the amounts reported in these financial statements or dis-
closures therein.
Annual improvements 2010 – 2012 (issued December 2013)
– IFRS 2 Share-based payments
The definition of vesting condition was clarified, by separately defining
a “performance condition” and a “service condition”.
– IFRS 3 Business combinations
Accounting for contingent consideration in a business combination that
is a financial asset or financial liability can only be measured at fair value,
with changes in fair value being presented in either profit or loss or other
comprehensive income.
– IFRS 8 Operating segments
Aggregation of operating segments requires the disclosure of those factors
that are used to identify the entity’s reportable segments.
– IAS 24 Related party disclosures
An entity providing key management personnel services to the reporting
entity is a related party of the reporting entity.
114
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES
3.
OF ESTIMATION UNCERTAINTY
The preparation of Dufry’s financial statements requires management to make
judgments, estimates and assumptions that affect the reported amounts of income,
expenses, assets and liabilities, and the disclosure of contingent liabilities, at the
reporting date.
KEY SOURCES OF ESTIMATION UNCERTAINTY
The key assumptions concerning the future and other key sources of estimation
include uncertainties at the reporting date, which may have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial periods, are discussed below.
Concession rights
Concession rights acquired in a business combination are measured at fair value
as at the date of acquisition. The useful lives of operating concessions are assessed
to be either finite or indefinite based on individual circumstances and are consid-
ering extensions and renewals. The useful lives of operating concessions are
reviewed annually to determine whether the indefinite useful life assessment for
those concessions continues to be sustainable. Dufry annually tests the operat-
ing concessions with indefinite useful lives and assesses these with finite life for
impairment indications. The underlying calculation requires the use of estimates.
The comments and assumptions used are disclosed in note 20.1.2.
Onerous contracts
Some of the long-term concession agreements described above include clauses
to prevent early termination, such as obligations to fulfill guaranteed minimal pay-
ments during the full term of the agreement. The conditions for an onerous con-
tract will be met, when such a contract presents a non-profitable outlook. In this
event, a provision based on the present value of the unavoidable future negative
cash flows expected by the management is established. The unavoidable costs are
the lower of the costs of fulfilling it and any compensation or penalties arising from
failure to fulfil it. Further details are given in note 32.
Brands and goodwill
Dufry tests these items annually for impairment. The underlying calculation
requires the use of estimates. The comments and assumptions used are disclosed
in note 20.1.
Income taxes
Dufry is subject to income taxes in numerous jurisdictions. Significant judgment is
required in determining the worldwide provision for income taxes. There are many
transactions and calculations for which the ultimate tax assessment is uncertain.
Dufry recognizes liabilities for tax audit issues based on estimates of whether
additional taxes will be payable. Where the final tax outcome is different from the
amounts that were initially recorded, such differences will impact the income tax
or deferred tax provisions in the period in which such assessment is made. Further
details are given in notes 15 and 22.
115
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 Deferred tax assets
Deferred tax assets are recognized for unused tax losses and deductible tempo-
rary differences to the extent that it is probable that taxable profit will be avail-
able against which the losses can be utilized. Management judgment is required to
determine the amount of deferred tax assets that can be recognized, based upon
the likely timing and level of future taxable profits. Further details are given in
note 22.
Provisions
Management makes assumptions in relation to the expected outcome and cash
outflows based on the development of each individual case. Further details are
given in note 32.
Share-based payments
Dufry measures the cost of equity settled transactions with employees by refer-
ence to the fair value of the equity instruments at the grant date. Estimating such
fair values require determining the most appropriate valuation model for a grant
of equity instruments, which depends on the terms and conditions of the grant, as
well as, the most appropriate inputs to the valuation model including the expected
probability that the triggering clauses will be met. The result will be the expected
quantity of shares to be assigned. The assumptions and models used are disclosed
in note 28.
Pension and other post-employment benefit obligations
The cost of defined benefit pension plans is determined using actuarial valuations.
The actuarial valuation involves assumptions about discount rates, future salary
and pension increases as well as mortality rates. Due to the long-term nature of
these plans, such estimates are subject to significant uncertainty. Further details
are given in note 33.
Purchase price allocation
The determination of the fair values of the identifiable assets (especially the con-
cession rights) and the assumed liabilities (especially the contingent liabilities rec-
ognized as provisions), resulting from business combinations, is based on valuation
techniques such as the discounted cash flow model. Some of the inputs to this
model are partially based on assumptions and judgments and any changes thereof
would affect the reported values (see note 6).
Consolidation of entities where Dufry has control,
but holding only minority voting rights
Dufry considers controlling certain entities, even when it holds less than the
majority of the voting rights, when it is exposed to or has the rights to variable
returns from the involvements with the investee and has the ability to affect those
returns through its power over the entity. These indicators are evaluated at the
time of first consolidation and reviewed when there are changes in the statutes or
composition of the executive board of these entities. Further details on non-con-
trolling interests are disclosed in notes 29 and 30 as well as the Annex “Most im-
portant subsidiaries”.
116
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 NEW AND REVISED STANDARDS AND INTERPRETATIONS ISSUED
4.
BUT NOT YET ADOPTED / EFFECTIVE
The standards and interpretations described below are expected to have an impact
on Dufry’s financial position, performance, and / or disclosures. Dufry intends to
adopt these standards when they become effective.
IAS 7
Statement of cash flows
(effective January 1, 2017)
The IASB has issued an amendment to IAS 7 introducing an additional disclosure
that will enable users of financial statements to evaluate changes in liabilities aris-
ing from financing activities.
IAS 12
Income taxes
(effective January 1, 2017)
Additional amendments have been issued by the IASB regarding IAS 12 on the rec-
ognition of deferred tax assets for unrealized losses. These amendments clarify
how to account for deferred tax assets related to debt instruments measured at
fair value.
IFRS 9
Financial Instruments
(effective January 1, 2018)
Phase 1: Classification and measurement – determines how financial assets and
financial liabilities are accounted for and measured on an ongoing basis.
Phase 2: Impairment – a new single expected loss impairment model is introduced
that will require more timely recognition of expected credit losses.
Phase 3: Hedge accounting – the new model aligns the accounting treatment with
risk management activities, users of the financial statements will be provided with
better information about risk management and the effect of hedge accounting on
the financial statements.
The adoption of the first phase of IFRS 9 will have an effect on the classification
and measurement of the group’s financial assets, but will not impact the financial
liabilities. Phase 2 is not expected to have any significant impact on the financial
statements and phase 3 is expected to effect the disclosure requirements from a
current point of view.
IFRS 15
Revenue from contracts with customers
(effective January 1, 2018)
IFRS 15, revenue from contracts with customers deals with revenue recognition
and establishes principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of revenue and cash
flows arising from an entity’s contracts with customers. Revenue is recognized
when a customer obtains control of a good or service and thus has the ability to
direct the use and obtain the benefits from the good or service.
117
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 118
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The standard replaces IAS 18 Revenue and IAS 11 Construction contracts and related interpretations. Dufry is currently analyzing the impact of the standard, however, does not expect any material changes to the current revenue recognition approach. Dufry considered the following aspects:(a) Sale of goodsDufry’s retail sales are on cash or credit basis and the revenue recognition occurs when the assets are transferred to the customer, (b) Advertising incomeAdvertising income is recognized when the services have been rendered.IFRS 16Leases(effective January 1, 2019)Lessees will be required to recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability will be measured at present value of the lease payments to be made over the lease term. In other words, lessees will appear to become more asset-rich but also more indebted. To be considered as such, a lease agreement has to convey the right to control the use of an identified asset through-out the period of use, so that the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset; and direct the use of the identified asset (i.e. direct how and for what purpose the asset is used). Dufry will be assessing the impact of IFRS 16 on the accounting for its lease, and in par-ticular the concession agreements.By conducting a detailed survey and compliance analysis of relevant agreements, Dufry will determine if the contracts convey the rights to control the use of the premises and if these grant substantially all economic benefits of that use.Amendments that are considered to be insignificant from a current point of view:Sale or Contribution of Assets between an Investor and its Associate or Joint venture (proposed amendments to IFRS 10 and IAS 28)(effective date not yet defined by IASB)The gain or loss resulting from the sale to or contribution from an associate of assets that constitute a business as defined in IFRS 3 is recognized in full. The gain or loss resulting from the sale to or contribution from a subsidiary that does not constitute a business as defined in IFRS 3 (i.e. not a group of assets conforming a business) to an associate is recognized only to the extent of unrelated investors’ interests in the associate.Annual Improvements 2012 – 2014 – issued September 2014(effective January 1, 2016) –IFRS 5 non-current assets held for sale and discontinued operations: Changes in methods of disposal are clarified, i.e. whether such a change in a disposal method would qualify as a change to a plan of sale. This amendment does not currently have any impact on Dufry. –IAS 34 Interim Financial reporting: Disclosure of information “elsewhere in the interim financial report” is clarified and requires the inclusion of a cross-reference from the interim financial statements to the location of this information. 119
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 20155. SEGMENT INFORMATIONDufry’s risks and returns are predominantly affected by the fact that Dufry oper-ates in different countries. Therefore, Dufry presents the segment information as it does internally to the Group Executive Committee, using 4 geographical areas plus the Nuance business, the World Duty Free business and the distribution cen-ters as additional business units.TURNOVER2015 IN MILLIONS OF CHFwith external customerswith other business unitsTOTALEBITDA 1FULL TIME EQUIVALENTSEMEA & Asia 1,010.8 – 1,010.8 134.5 4,407 America I 808.4 – 808.4 55.7 3,674 America II 487.8 – 487.8 0.7 2,263 United States & Canada 1,043.2 – 1,043.2 126.9 5,743 The Nuance Business 1,337.9 – 1,337.9 131.6 3,386 World Duty Free Business 2 1,410.0 – 1,410.0 153.3 9,069 Distribution Centers 41.2 836.7 877.9 121.1 311 Total segments 6,139.3 836.7 6,976.0 723.8 28,853 Eliminations–(836.7)(836.7)––Dufry 6,139.3 – 6,139.3 723.8 28,853 TURNOVER2014 IN MILLIONS OF CHFwith external customerswith other business unitsTOTALEBITDA 1*FULL TIME EQUIVALENTSEMEA & Asia 1,194.5 – 1,194.5 189.9 4,367 America I 763.0 – 763.0 57.0 3,565 America II 683.3 – 683.3 27.2 2,389 United States & Canada 963.1 – 963.1 121.8 5,669 The Nuance Business 3 536.6 – 536.6 51.3 3,654 World Duty Free Business–––––Distribution Centers 56.1 882.5 938.6 129.3 303 Total segments 4,196.6 882.5 5,079.1 576.5 19,946 Eliminations–(882.5)(882.5)––Dufry 4,196.6 – 4,196.6 576.5 19,946 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 EBITDA before linearization and other operational result2 For the period August to December 20153 For the period September to December 2014As of January 1, 2016, Dufry has regrouped its geographical areas. Mainly the Nuance and the World Duty Free businesses have been included evenly in 5 geo-graphical divisions and the distribution centers as an additional division.In Switzerland (domicile), Dufry generated 5.5 % (2014: 4.9 %) of the turnover with external customers. 120
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Financial Position and other disclosures31.12.2015 IN MILLIONS OF CHFTOTAL ASSETSTOTAL LIABILITIESINCOME TAX (EXPENSE) / GAINCAPITAL EXPENDITURE PAIDDEPRECIATION AND AMORTIZATIONOTHER NON-CASH ITEMSEMEA & Asia 1,284.0 310.7 (23.6)(25.3)(55.6) 9.4 America I 1,381.7 187.5 (4.2)(22.1)(62.7) 14.1 America II 477.8 88.2 17.7 (178.0)(66.9) 2.0 United States & Canada 634.7 130.4 0.4 (41.5)(56.9) 0.4 The Nuance Business 1,967.0 469.5 13.4 (14.5)(99.5) 0.9 World Duty Free Business 1 3,828.1 1,231.6 4.8 (27.0)(86.5) 25.4 Distribution Centers 432.3 152.1 0.6 (1.2)(1.3) 5.4 Total segments 10,005.6 2,570.0 9.1 (309.6)(429.4) 57.6 Unallocated positions 354.0 4,456.9 1.0 (4.9)(15.4) 4.4 Dufry 10,359.6 7,026.9 10.1 (314.5)(444.8) 62.0 31.12.2014 (RESTATED*) IN MILLIONS OF CHFTOTAL ASSETSTOTAL LIABILITIESINCOME TAX (EXPENSE) / GAINCAPITAL EXPENDITURE PAIDDEPRECIATION AND AMORTIZATIONOTHER NON-CASH ITEMSEMEA & Asia 1,391.1 343.8 (20.5)(44.6)(52.1) 1.4 America I 1,324.1 208.1 (1.6)(12.3)(61.3)(1.6)America II 560.6 293.6 6.1 (78.0)(37.1) 3.7 United States & Canada 729.5 132.8 (0.2)(54.8)(49.3)(0.1)The Nuance Business 2 2,377.4 613.0 4.4 (6.5)(34.1)(2.1)World Duty Free Business––––––Distribution Centers 402.4 189.4 (4.2)(0.9)(1.1)(1.3)Total segments 6,785.1 1,780.7 (16.0)(197.1)(235.0)–Unallocated positions 371.8 2,923.1 (4.4)(3.6)(13.9)(5.5)Dufry 7,156.9 4,703.8 (20.4)(200.7)(248.9)(5.5)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 For the period August to December 20152 For the period September to December 2014 121
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Reconciliation of the earningsIN MILLIONS OF CHF2015RESTATED* 2014EBITDA 1 723.8 576.5 Depreciation, amortization and impairment(444.8)(248.9)Linearization(29.2)–Other operational result(117.1)(61.1)Interest expenses(200.7)(154.1)Interest income 16.0 5.7 Foreign exchange gain / (loss) 5.2 (11.1)Earnings before taxes(46.8) 107.0 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 EBITDA before linearization and other operational resultReconciliation of assetsIN MILLIONS OF CHF31.12.2015RESTATED* 31.12.2014Operating assets 10,005.6 6,785.1 Current assets of corporate and holding companies 69.2 93.1 Non-current assets of corporate and holding companies 284.8 278.7 Total assets 10,359.6 7,156.9 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)Reconciliation of liabilitiesIN MILLIONS OF CHF31.12.2015RESTATED* 31.12.2014Operating liabilities 2,570.0 1,780.7 Financial debt of corporate and holding companies, short-term 0.5 0.5 Financial debt of corporate and holding companies, long-term 4,306.4 2,815.5 Other non-segment liabilities 150.0 107.1 Total liabilities 7,026.9 4,703.8 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 122
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 20156. ACQUISITIONS OF BUSINESSES AND OTHER AGREEMENTS2015 TRANSACTIONS6.1 ACQUISITION OF WORLD DUTY FREE S.P.A.On August 7, 2015, Dufry acquired a first stake of 50.1 % in the voting equity inter-ests in World Duty Free S.p.A. (WDF), a publicly listed company in Italy for a total consideration of CHF 1,407.1 (EUR 1,307) million equivalent to EUR 10.25 per share in cash. This initial acquisition of WDF triggered a mandatory tender offer (MTO) for the outstanding 49.9 % of WDF shares (see note 6.3 transactions with non- controlling interests). The acquisition was mainly financed through the issuance of share capital (see note 27.1.1 fully paid ordinary shares). This acquisition has been accounted for using the acquisition method.Continuing with its strategy to expand its travel retail business, Dufry acquired WDF, one of the top global travel retailers, to complement the geographical presence in key markets such as the airports of Heathrow, Gatwick, Stansted, Manchester in the UK, Madrid, Barcelona, Las Palmas and Tenerife in Spain, Vancouver in Canada, 29 destinations in the USA, as well as other key locations in Jamaica, Mexico, Peru, Chile, Finland, France, Germany, Italy, Jordan, Kuwait and Sri Lanka. With more than 500 shops located in 105 locations in 20 countries WDF achieved a turnover of EUR 2,439.6 (CHF 2,962.8) million and employed about 9,500 people in 2014.Dufry expects to generate significant cost and margin synergies through the integration of WDF into its common business model and supply chain as well as through the combination of the global and divisional organizations and support functions, which are reflected in the value of the goodwill. The resulting goodwill is not amortized, is not tax deductible and will be subject to annual impairment testing. WDF will further enhance Dufry’s global position in the travel retail market industry. For this acquisition Dufry incurred transaction costs of CHF 50.7 million presented as other operational expenses and financial transaction taxes of CHF 12.3 million presented as other financial expenses in the income statement. 123
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The fair value of the identifiable assets and liabilities of WDF at the date of acqui-sition and the resulting goodwill were determined preliminarily as Dufry is in the process of verifying the valuation of these net assets identified as follows:PRELIMINARY FAIR VALUE AT AUGUST 7, 2015IN MILLIONS OFCHFEURTrade and credit card receivables 43.3 39.9 Inventories 206.3 191.6 Other current assets 194.7 180.9 Property, plant and equipment 190.4 176.9 Concession rights 1,893.7 1,759.0 Other intangible assets 112.9 104.8 Other non-current assets 268.7 249.6 Trade payables(235.9)(218.8)Financial debt(1,029.3)(956.0)Provisions(162.1)(150.5)Contingent liabilities(6.7)(6.2)Other liabilities(502.9)(467.4)Deferred tax liabilities(383.7)(356.4)Fair value of non-controlling interests(37.7)(35.0)Identifiable net assets 551.7 512.4 Dufry’s share in the net assets (50.1 %) 276.4 256.7 Goodwill 1 1,130.7 1,050.3 Total consideration 1,407.1 1,307.0 1 The goodwill comprises intangible values from several subsidiaries in different countries. At the exchange rate of December 31, 2015, the value was CHF 1,070.9 million (see note 20.1.1) 124
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 20156.2 CASH FLOWS USED FOR BUSINESS COMBINATIONS, NET OF CASH 2015 IN MILLIONS OF CHFTOTAL CONSIDERATIONNET CASH ACQUIREDSUBTOTALCHANGES IN ACCOUNTS PAYABLENET CASH FLOWWorld Duty Free Group, Italy(1,407.1) 40.4 (1,366.7)–(1,366.7)TOTAL(1,407.1) 40.4 (1,366.7)–(1,366.7)6.3 TRANSACTION WITH NON-CONTROLLING INTERESTS IN WORLD DUTY FREEAfter the initial acquisition on August 7, 2015, Dufry launched a MTO for the out-standing WDF shares at the Milan Stock Exchange and acquired until November 13, 2015, in several steps the outstanding 49.9 % WDF shares for a total consideration paid in cash of CHF 1,412.6 million equivalent to EUR 10.25 per share. As a result, WDF has become a fully owned subsidiary of Dufry. The difference of the carrying value of the non-controlling interests in WDF acquired and the total consideration paid in cash is CHF 1,137.3 million. This amount is recognized in the retained earn-ings in the line changes in participation of non-controlling interests in the state-ment of changes in equity. The related transaction costs are described in note 6.1.DECEMBER 31, 2015IN MILLIONS OF CHFIN MILLIONS OF EURCarrying value of the non-controlling interests in WDF acquired 275.3 255.7 Difference recognized in retained earnings within equity 1,137.3 1,046.0 Total consideration paid in cash 1,412.6 1,301.7 From the date when Dufry took control of the WDF operations in August until December 2015, these operations contributed CHF 1,410.0 (EUR 1,299.4) million in turnover and CHF 30.4 (EUR 28.0) million in EBIT to the income statement of Dufry. If the business combination had taken place at the beginning of 2015, WDF would have generated a turnover of CHF 3,118.9 million and an EBIT of CHF 64.1 million.6.4 TRANSACTION WITH NON-CONTROLLING INTERESTS IN DUFRY LOJAS FRANCAS LTD.Dufry entered a call / put option with a Brazilian Partner, which was exercized during the first quarter of 2015. Based on this transaction, Dufry acquired an additional 20 % of the shares of Dufry Lojas Francas Ltd. (DLF), an existing subsidiary operat-ing the duty free shops at the airport of Guarulhos in Sao Paulo, Brazil. The total net consideration paid for this transaction was CHF 147.2 (USD 163.2) million. After the exercise of the option, Dufry holds 80 % of DLF. This step up acquisition gen-erated a change in the participation of non-controlling interests (see statement of changes in equity). 125
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 20152014 TRANSACTIONS6.5 ACQUISITION OF THE NUANCE GROUPOn September 9, 2014, Dufry acquired 100 % of The Nuance Group (TNG) for a net consideration of CHF 1,312.2 million. The acquisition has been accounted for using the acquisition method. The related transaction costs of CHF 11.4 million have been presented in other operational result in the income statement. TNG is one of the top global travel retailers with headquarters in Switzerland. In 2013, TNG reached a turnover of CHF 2,094.9 million (of which CHF 481.2 million from operations in Australia). Overall at acquisition date, TNG operated about 270 shops in 15 countries and employed approximately 3,900 full time equivalents (FTE’s). Among the main locations operated by TNG are airports in Toronto in Canada, Hong Kong and downtown stores in Macau, China, Stockholm in Sweden, Zurich and Geneva in Switzer land, Antalya in Turkey and Heathrow in UK. This geographical presence of TNG complements the one of Dufry very well. Dufry expects to expand this business and to generate significant cost synergies through the integration of TNG into its marketing model and supply chain as well as through the combination of the global and regional organizations and support functions, which are reflected in the value of the goodwill. The resulting goodwill is not amortized, is not tax deductible and will be subject to annual impairment testing. The consideration paid for the acquisition, together with the refinancing of TNG’s debt and related transaction expenses, was financed through the issuance of (gross proceeds): –Mandatory convertible notes of CHF 275.0 million on June 18, 2014 (see note 27.2) –Share capital of CHF 810.0 million on July 8, 2014 (see note 27.2) –Senior Notes of CHF 606.8 million on July 17, 2014 (see note 31)The transaction costs in relation with the equity component of the mandatory con-vertible notes and the share capital increase have been accounted through equity, whereas the costs related with the senior notes are part of the effective interest rate and will be amortized over the term of the debt. 126
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The fair value of the identifiable assets and liabilities at the date of acquisition are to be considered as final and changed from the disclosure in Dufry’s annual finan-cial statements as of December 31, 2014:FAIR VALUE AT SEPTEMBER 09, 2014IN MILLIONS OF CHFPRELIMINARYCHANGEFINALTrade and credit card receivables 54.8 – 54.8 Inventories 211.1 (0.5) 210.6 Other current assets 246.2 – 246.2 Property, plant and equipment 45.6 – 45.6 Concession rights 1,091.0 (12.0) 1,079.0 Other intangible assets 19.5 – 19.5 Investments in associates 67.6 – 67.6 Other non-current assets 20.5 – 20.5 Deferred tax assets 12.4 12.4 Trade payables(144.3)–(144.3)Financial debt(449.7)–(449.7)Provisions(96.8)(13.0)(109.8)Contingent liabilities(1.0)–(1.0)Other liabilities(256.4)–(256.4)Deferred tax liabilities(175.2)(2.6)(177.8)Fair value of non-controlling interests(2.6) 6.5 3.9 Identifiable net assets 642.7 (21.6) 621.1 Dufry’s share in the net assets 642.7 (21.6) 621.1 Goodwill 669.5 21.6 691.1 Total consideration 1,312.2 – 1,312.2 Dufry revised the preliminary values of the purchase price analysis as presented at December 31, 2014 to reflect: –Change in deferred tax values based on more accurate underlying assumptions regarding import regimes / benefits in Turkey –Inclusion of income tax effect on sale of investment in associates and –Enterprise valuation of a startup operation in India after properly assessing the market.From the date when Dufry took control of the TNG operations in September 2014 until December 2014 these operations contributed CHF 536.6 million in turnover and CHF 14.0 million in EBIT to the income statement of Dufry.If the business combination had taken place at the beginning of 2014, TNG would have generated a turnover of CHF 1,776.4 million and an EBIT of approximately CHF 58 million.6.6 CASH FLOWS USED FOR BUSINESS COMBINATIONS, NET OF CASH 2014 IN MILLIONS OF CHFTOTAL CONSIDERATIONNET CASH ACQUIREDSUBTOTALCHANGES IN ACCOUNTS PAYABLENET CASH FLOWThe Nuance Group, Switzerland(1,312.2) 188.5 (1,123.7)–(1,123.7)Alliance, Puerto Rico–––(0.9)(0.9)TOTAL(1,312.2) 188.5 (1,123.7)(0.9)(1,124.6) 127
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 20157. NET SALESNet sales by product categories:IN MILLIONS OF CHF20152014Perfumes and Cosmetics 1,834.3 1,164.5 Confectionery, Food and Catering 1,017.6 734.9 Wine and Spirits 905.7 634.4 Watches, Jewelry and Accessories 419.0 355.9 Tobacco goods 656.6 380.5 Fashion, Leather and Baggage 394.2 350.3 Literature and Publications 204.7 190.6 Electronics 229.2 152.9 Toys, Souvenirs and other goods 300.4 99.1 Total 5,961.7 4,063.1 Net sales by market sector:IN MILLIONS OF CHF20152014Duty-free 3,752.4 2,712.4 Duty-paid 2,209.3 1,350.7 Total 5,961.7 4,063.1 Net sales by channel:IN MILLIONS OF CHF20152014Airports 5,328.9 3,539.0 Border, downtown and hotel shops 251.4 242.1 Cruise liners and seaports 141.0 121.6 Railway stations and other 240.4 160.4 Total 5,961.7 4,063.1 128
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 20158. SELLING EXPENSES IN MILLIONS OF CHF2015RESTATED* 2014Concession fees and rents(1,596.6)(979.7)Credit card commissions(61.8)(46.1)Advertising and commission expenses(30.3)(24.7)Packaging materials(12.2)(10.8)Other selling expenses(27.2)(18.7)Selling expenses(1,728.1)(1,080.0)Concession and rental income 14.0 14.1 Commission income 5.8 7.7 Commercial services and other selling income 24.3 34.9 Selling income 44.1 56.7 Total(1,684.0)(1,023.3)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)Landlords require from Dufry a concession fee to operate duty free shops at airports or other similar locations. These fees are usually determined proportionally to sales or based on the number of passengers and limited by a minimum threshold.9. PERSONNEL EXPENSES IN MILLIONS OF CHF20152014Salaries and wages(669.9)(475.7)Social security expenses(106.3)(85.5)Retirement benefits (defined benefit plans)(7.7) 8.2 Retirement benefits (defined contribution plans)(8.8)(5.3)Other personnel expenses(63.5)(51.4)Total(856.2)(609.7)10. GENERAL EXPENSES IN MILLIONS OF CHF20152014Repairs, maintenance and utilities(66.2)(48.2)Legal, consulting and audit fees(52.3)(41.6)Premises(50.8)(38.2)EDP and IT expenses(32.0)(25.4)Travel, car, entertainment and representation(28.3)(21.2)Office and administration(27.2)(21.2)Franchise fees and commercial services(19.4)(20.2)PR and advertising(13.5)(10.2)Insurances(9.2)(8.0)Taxes, other than income taxes(8.0)(14.9)Bank expenses(7.8)(7.3)Total(314.7)(256.4) 129
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201511. INVESTMENT IN ASSOCIATESLojas Francas de Portugal SA operates duty-paid and duty-free shops in the airports of Lisbon as well as other locations in Portugal and Nuance Group (Chicago) LLC operates a duty-free shop at O’Hare International Airport of Chicago in Illinois, USA.These investments are accounted for using the equity method.Dufry’s interests in Nuance Group (Orlando) LLC and Broward Duty Free LLC were sold on March 15, 2015, for CHF 28.4 (USD 30) million to an existing shareholder at book value.Summarized statement of financial positionIN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SANUANCE GROUP (CHICAGO) LLCNUANCE GROUP (ORLANDO) LLCOTHER ASSOCIATES31.12.2015Cash and cash equivalents 1.2 2.6 – 0.3 4.1 Other current assets 27.0 3.9 – 3.1 34.0 Non-current assets 58.6 27.5 – 0.8 86.9 Financial debt(2.1)–––(2.1)Other current liabilities(23.0)(2.0)–(4.6)(29.6)Non-current liabilities–––(5.1)(5.1)Equity 61.7 32.0 –(5.5) 88.2 Proportion of the Group’s ownership49 %35 %Dufry’s share of the equity 30.2 11.2 –– 41.4 IN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SANUANCE GROUP (CHICAGO) LLCNUANCE GROUP (ORLANDO) LLCOTHER ASSOCIATES31.12.2014Cash and cash equivalents 1.6 2.7 3.5 0.9 8.7 Other current assets 25.7 4.1 3.6 1.5 34.9 Non-current assets 53.5 30.0 47.7 26.5 157.7 Other current liabilities(17.7)(1.9)(1.7)(0.6)(21.9)Equity 63.1 34.9 53.1 28.3 179.4 Proportion of the Group’s ownership49 %35 %37.5 %Dufry’s share of the equity 30.9 12.2 19.9 9.9 72.9 130
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Summarized statement of comprehensive incomeIN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SANUANCE GROUP (CHICAGO) LLCNUANCE GROUP (ORLANDO) LLC 1OTHER ASSOCIATES2015Turnover 205.9 23.0 2.9 7.7 239.5 Depreciation, amortization and impairment(0.9)(4.2)(0.1)(1.6)(6.8)Income tax(3.2)–– 0.1 (3.1)Net earnings for the year (continuing operations) 9.2 (2.5) 0.2 (3.5) 3.4 Dufry’s share of the profit for the year 4.5 (0.9) 0.4 – 4.0 OTHER COMPREHENSIVE INCOMEExchange differences on translating foreign operations(1.6) 0.6 (1.2)(0.5)(2.7)Items to be reclassified to net income in subsequent periods(1.6) 0.6 (1.2)(0.5)(2.7)Total comprehensive income 2.9 (0.3)(0.8)(0.5) 1.3 1 Period from January 1, 2015 to March 15, 2015IN MILLIONS OF CHF 1LOJAS FRANCAS DE PORTUGAL SANUANCE GROUP (CHICAGO) LLCNUANCE GROUP (ORLANDO) LLCOTHER ASSOCIATES2014Turnover 78.3 8.1 6.8 4.2 97.4 Depreciation, amortization and impairment(0.7)(0.1)(0.2)(0.1)(1.1)Income tax(1.1)––(0.1)(1.2)Net earnings for the year (continuing operations) 3.6 0.9 1.2 (2.6) 3.1 Dufry’s share of the profit for the year 1.7 0.3 0.3 – 2.3 OTHER COMPREHENSIVE INCOMEExchange differences on translating foreign operations 0.8 0.8 1.2 0.6 3.4 Items to be reclassified to net income in subsequent periods 0.8 0.8 1.2 0.6 3.4 Total comprehensive income 2.5 1.1 1.5 0.6 5.7 1 Period from September 9, 2014 to December 31, 2014The information above reflects the amounts presented in the financial statements of the associates (and not Dufry’s share of those amounts) adjusted for differences in accounting policies between Dufry and the associates. 131
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Reconciliation of the carrying amount of its investmentsIN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SANUANCE GROUP (CHICAGO) LLCNUANCE GROUP (ORLANDO) LLC 1OTHER ASSOCIATES 1TOTALBusiness combinations September 9, 2014 28.4 11.2 18.7 9.3 67.6 Net earnings 1.7 0.3 0.3 – 2.3 Dividends received–(0.1)(0.3)–(0.4)Other comprehensive income 0.8 0.8 1.2 0.6 3.4 Carrying value at December 31, 2014 30.9 12.2 19.9 9.9 72.9 Net earnings 4.5 (0.9) 0.4 – 4.0 Dividends received(3.6)(0.7)(0.5)–(4.8)Disposals––(18.6)(9.4)(28.0)Other comprehensive income(1.6) 0.6 (1.2)(0.5)(2.7)Carrying value at December 31, 2015 30.2 11.2 –– 41.4 1 The Nuance Group (Orlando) LLC and Broward Duty Free LLC were sold in March 2015.12. DEPRECIATION, AMORTIZATION AND IMPAIRMENT IN MILLIONS OF CHF2015RESTATED* 2014Depreciation(134.6)(86.8)Impairment(1.2)(1.4)Subtotal (note 18)(135.8)(88.2)Amortization(299.5)(159.1)Impairment(9.5)(1.6)Subtotal (note 20)(309.0)(160.7)Total(444.8)(248.9)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 132
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201513. LINEARIZATION AND OTHER OPERATIONAL RESULT13.1 LINEARIZATIONIN MILLIONS OF CHF20152014Linearization 1(29.2)–1 In cases where fees for the concession are based on fix or determinable amounts of money, the expenses paid are treated as operational lease. For these operational leases when the amounts are increasing or decreasing over the time, Dufry accrues the difference between the amount paid and the respective straight-line expense for the period calculated over the overall duration of the contract, as linearization. In addition, this line item includes the reduction in concession payments granted based on an upfront payment (prepaid lease) done at the inception of two Spanish contracts (Madrid and Barcelona as main airports), acquired as part of the World Duty Free acquisition.13.2 OTHER OPERATIONAL RESULTOther operational expenses and other operational income include non-recurring transactions, impairments of financial assets and changes in provisions.IN MILLIONS OF CHF20152014Acquisition-related costs(50.7)(13.1)Closing or restructuring of operations(30.0)(24.3)Consulting fees, expenses related to projects and start-up expenses(21.3)(16.4)Impairment of financial assets(6.9)(2.9)Losses on sale of non-current assets(1.7)(1.3)Other operating expenses(12.1)(9.8)Other operational expenses(122.7)(67.8)IN MILLIONS OF CHF20152014Insurance – compensation for losses 0.9 0.4 Gain on sale of non-current assets 0.8 2.2 Recovery of write offs / release of allowances 0.3 –Other income 3.6 4.1 Other operational income 5.6 6.7 IN MILLIONS OF CHF20152014Other operational expenses(122.7)(67.8)Other operational income 5.6 6.7 Other operational result(117.1)(61.1) 133
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201514. INTERESTIN MILLIONS OF CHF20152014INCOME ON FINANCIAL ASSETSInterest income on short-term deposits 6.3 4.3 Other financial income 4.9 0.4 Interest income on financial assets 11.2 4.7 INCOME ON NON-FINANCIAL ASSETSInterest income 4.8 1.0 Total interest income 16.0 5.7 EXPENSES ON FINANCIAL LIABILITIESInterest expense(148.1)(119.7)Amortization / write off of arrangement fees(24.5)(20.1)Other financial expenses 1(6.7)(11.5)Interest expense on financial liabilities(179.3)(151.3)EXPENSES ON NON-FINANCIAL LIABILITIESInterest expense(9.1)(2.8)Other financial expenses 1(12.3)–Interest and other financial expenses on non-financial liabilities(21.4)(2.8)Total interest expense(200.7)(154.1)1 This position mainly includes financial costs and transaction taxes related to the financing of acquisitions 134
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201515. INCOME TAXESINCOME TAX RECOGNIZED IN THE CONSOLIDATED INCOME STATEMENT IN MILLIONS OF CHF2015RESTATED* 2014Current income taxes(69.9)(57.6)of which corresponding to the current period(73.1)(57.1)of which adjustments recognized in relation to prior years 3.2 (0.5)Deferred income taxes 80.0 37.2 of which related to the origination or reversal of temporary differences 72.3 37.2 of which adjustments recognized in relation to prior years 0.2 –of which adjustments due to change in tax rates 7.5 –Total 10.1 (20.4)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)IN MILLIONS OF CHF2015RESTATED* 2014Consolidated earnings before income tax (EBT)(46.8) 107.0 Expected tax rate in %18.4 %15.8 %Tax at the expected rate 8.6 (16.9)EFFECT OFIncome not subject to income tax 3.8 7.5 Different tax rates for subsidiaries in other jurisdictions 28.4 12.9 Effect of changes in tax rates on previously recognized deferred tax assets and liabilities 7.5 –Non-deductible expenses(18.1)(4.1)Net change of unrealized tax loss carry-forwards(21.3)(12.7)Non recoverable withholding taxes(7.7)(7.1)Adjustments recognized in relation to prior year 3.4 (0.5)Other items 5.5 0.5 Total 10.1 (20.4)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)The expected tax rate approximates the average of the income tax rates of the countries where Dufry is active, weighted by the EBT of the respective operations. In 2015, there have been no significant changes in these income tax rates, with the exception of Greece (increase by 3 %) and UK (long-term decrease by 2 %).DEFERRED INCOME TAX RECOGNIZED IN OTHER COMPREHENSIVE INCOME / EQUITY IN MILLIONS OF CHF20152014RECOGNIZED IN OTHER COMPREHENSIVE INCOMEActuarial gains / (losses) on defined benefit plans(1.2) 4.5 Net gain / (loss) on hedge of net investment– 3.2 Cash flow hedges(0.3)–Total(1.5) 7.7 RECOGNIZED IN EQUITYTax effect on share-based payments(0.2) 0.1 Total(0.2) 0.1 135
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201516. EARNINGS PER SHAREEARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTBASICBasic earnings per share are calculated by dividing the net earnings attributable to equity holders of the parent by the weighted average number of shares out-standing during the year.IN MILLIONS OF CHF / QUANTITY2015RESTATED* 2014Net earnings attributable to equity holders of the parent(79.3) 51.6 Weighted average number of ordinary shares outstanding 45,810 33,307 Basic earnings per share in CHF(1.73) 1.55 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)DILUTEDDiluted earnings per share are calculated by dividing the net earnings attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.IN MILLIONS OF CHF / QUANTITY2015RESTATED* 2014Net earnings attributable to equity holders of the parent(79.3) 51.6 Weighted average number of ordinary shares outstanding adjusted for the effect of dilution 45,810 34,303 Diluted earnings per share in CHF(1.73) 1.50 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)EARNINGS PER SHARE FOR CONTINUING OPERATIONSBASIC IN MILLIONS OF CHF / QUANTITY2015RESTATED* 2014Net earnings attributable to equity holders of the parent from continuing operations(79.1) 52.4 Weighted average number of ordinary shares outstanding 45,810 33,307 Basic earnings per share in CHF(1.73) 1.57 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 136
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015DILUTED IN MILLIONS OF CHF / QUANTITY2015RESTATED* 2014Net earnings attributable to equity holders of the parent from continuing operations(79.1) 52.4 Weighted average number of ordinary shares outstanding adjusted for the effect of dilution 45,810 34,303 Diluted earnings per share in CHF(1.73) 1.53 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)EARNINGS PER SHARE ADJUSTED FOR AMORTIZATION (CASH EPS) Cash EPS are calculated by dividing net earnings attributable to equity holders of the parent, adjusted by the amortization effect generated by the intangible assets identified during the purchase price allocations of past acquisitions through weighted average number of ordinary shares outstanding. With this Cash EPS, Dufry aims to facilitate the comparison at EPS level with other companies not having performed such acquisition activities.IN MILLIONS OF CHF / QUANTITY2015RESTATED* 2014Net earnings attributable to equity holders of the parent(79.3) 51.6 ADJUSTED FORDufry’s share of the amortization in respect of acquisitions 262.1 122.8 Adjusted net earnings 182.8 174.4 Weighted average number of ordinary shares outstanding 45,810 33,307 Cash EPS 3.99 5.24 Deferred tax on above mentioned amortization in CHF per share(1.32)(0.79)Linearization of Spanish contracts in CHF per share 0.64 –* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES IN THOUSANDS20152014Outstanding shares 45,904 33,316 Less treasury shares(94)(9)Used for calculation of basic earnings per share 45,810 33,307 EFFECT OF DILUTIONCHF 275 million mandatory convertible notes at conversion price of CHF 152 per share– 996.0 Used for calculation of earnings per share adjusted for the effect of dilution 45,810 34,303 For movements in shares see note 27 Equity, note 28 Share-based payment and Treasury shares. 137
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201517. COMPONENTS OF OTHER COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT2015 IN MILLIONS OF CHFEmployee benefit reserveHedging & revaluation reservesTranslation reservesTOTALNON-CONTROL-LING INTERESTSTOTAL EQUITYExchange differences on translating foreign operations––(75.8)(75.8)(7.9)(83.7)Subtotal––(75.8)(75.8)(7.9)(83.7)Net gain / (loss) on hedge of net investment in foreign operations–– 2.2 2.2 – 2.2 Subtotal–– 2.2 2.2 – 2.2 Changes in the fair value of forward exchange contracts held as cash flow hedges– 1.0 – 1.0 – 1.0 Income tax effect–(0.3)–(0.3)–(0.3)Subtotal– 0.7 – 0.7 – 0.7 Actuarial gains / (losses) on post-employment benefits 12.8 –– 12.8 – 12.8 Income tax effect(1.2)––(1.2)–(1.2)Subtotal 11.6 –– 11.6 – 11.6 Other comprehensive income 11.6 0.7 (73.6)(61.3)(7.9)(69.2)ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT2014 IN MILLIONS OF CHFEmployee benefit reserveHedging & revaluation reservesTranslation reservesTOTALNON-CONTROL-LING INTERESTSTOTAL EQUITYExchange differences on translating foreign operations–– 211.5 211.5 12.4 223.9 Subtotal–– 211.5 211.5 12.4 223.9 Net gain / (loss) on hedge of net investment in foreign operations––(102.4)(102.4)–(102.4)Income tax effect–– 3.2 3.2 – 3.2 Subtotal––(99.2)(99.2)–(99.2)Actuarial gains / (losses) on post-employment benefits(37.7)––(37.7)(0.2)(37.9)Income tax effect 4.5 –– 4.5 – 4.5 Subtotal(33.2)––(33.2)(0.2)(33.4)Other comprehensive income(33.2)– 112.3 79.1 12.2 91.3 138
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201518. PROPERTY, PLANT AND EQUIPMENT 2015 IN MILLIONS OF CHFLEASEHOLD IMPROVEMENTSFURNITURE FIXTURECOMPUTER HARDWAREVEHICLESWORK IN PROGRESSTOTALAT COST Balance at January 1 405.0 289.1 72.6 9.8 48.3 824.8 Business combinations (note 6) 29.6 131.3 5.7 0.6 23.2 190.4 Additions (note 19) 27.4 30.4 5.8 1.3 70.2 135.1 Disposals(61.5)(43.5)(10.7)(2.4)(1.4)(119.5)Reclassification within classes 47.5 28.9 1.8 –(78.2)–Reclassification to intangible assets––––(7.0)(7.0)Currency translation adjustments(14.2)(13.9)(4.5)(0.4)(0.9)(33.9)Balance at December 31 433.8 422.3 70.7 8.9 54.2 989.9 ACCUMULATED DEPRECIATION Balance at January 1(166.8)(160.2)(51.1)(6.3)–(384.4)Additions (note 12)(69.1)(54.6)(9.8)(1.1)–(134.6)Disposals 57.7 41.7 10.2 1.9 – 111.5 Reclassification within classes(0.2)(0.1)–––(0.3)Currency translation adjustments 9.3 11.5 4.2 0.3 – 25.3 Balance at December 31(169.1)(161.7)(46.5)(5.2)–(382.5)IMPAIRMENT Balance at January 1(3.2)(1.8)–––(5.0)Impairment (note 12)(0.7)(0.5)–––(1.2)Disposals 2.5 0.5 ––– 3.0 Reclassification within classes 0.2 0.1 ––– 0.3 Currency translation adjustments 0.3 (0.2)––– 0.1 Balance at December 31(0.9)(1.9)–––(2.8) 139
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 2014 IN MILLIONS OF CHFLEASEHOLD IMPROVEMENTSFURNITURE FIXTURECOMPUTER HARDWAREVEHICLESWORK IN PROGRESSTOTALAT COST Balance at January 1 316.5 226.1 59.6 8.8 29.4 640.4 Business combinations (note 6) 34.7 5.2 2.9 0.3 2.5 45.6 Additions (note 19) 21.8 17.0 6.7 1.2 87.0 133.7 Disposals(38.0)(10.6)(2.6)(1.2)–(52.4)Reclassification within classes 42.8 31.7 1.2 –(75.7)–Currency translation adjustments 27.2 19.7 4.8 0.7 5.1 57.5 Balance at December 31 405.0 289.1 72.6 9.8 48.3 824.8 ACCUMULATED DEPRECIATION Balance at January 1(142.7)(130.7)(42.4)(6.0)–(321.8)Additions (note 12)(48.8)(29.4)(7.6)(1.0)–(86.8)Disposals 36.9 9.6 2.1 1.2 – 49.8 Currency translation adjustments(12.2)(9.7)(3.2)(0.5)–(25.6)Balance at December 31(166.8)(160.2)(51.1)(6.3)–(384.4)IMPAIRMENT Balance at January 1(2.6)(1.7)(0.4)––(4.7)Impairment (note 12)(1.4)––––(1.4)Disposals 0.9 – 0.4 –– 1.3 Currency translation adjustments(0.1)(0.1)–––(0.2)Balance at December 31(3.2)(1.8)–––(5.0)CARRYING AMOUNT At December 31, 2015 263.8 258.7 24.2 3.7 54.2 604.6 At December 31, 2014 235.0 127.1 21.5 3.5 48.3 435.4 19. CASH FLOW USED FOR PURCHASE OF PROPERTY, PLANT AND EQUIPMENT IN MILLIONS OF CHF20152014Payables for capital expenditure at the beginning of the period(13.7)(23.8)Business combinations(16.1)–Additions of property, plant and equipment (note 18)(135.1)(133.7)Payables for capital expenditure at the end of the period 30.1 13.7 Currency translation adjustments–0.1Total Cash Flow(134.8)(143.7) 140
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201520. INTANGIBLE ASSETS CONCESSION RIGHTS2015 IN MILLIONS OF CHFIndefinite livesFinite livesBRANDSGOODWILLOTHERTOTALAT COST Restated* Balance at January 1 61.2 3,315.4 174.3 1,670.2 193.2 5,414.3 Business combinations (note 6)– 1,893.7 105.5 1,130.7 7.4 3,137.3 Additions (note 21)– 19.9 –– 12.8 32.7 Disposals–(86.9)––(12.9)(99.8)Reclassification from prepayments– 16.1 ––– 16.1 Reclassification from property, plant & equipment–––– 7.0 7.0 Currency translation adjustments(4.6)(175.5) 1.0 (132.6)(2.4)(314.1)Balance at December 31 56.6 4,982.7 280.8 2,668.3 205.1 8,193.5 ACCUMULATED AMORTIZATION Restated* Balance at January 1–(576.2)(1.0)–(102.5)(679.7)Additions (note 12)–(271.0)(2.3)–(26.2)(299.5)Disposals– 86.6 –– 11.8 98.4 Reclassification– 0.5 ––(0.5)–Currency translation adjustments– 4.0 –– 1.9 5.9 Balance at December 31–(756.1)(3.3)–(115.5)(874.9)IMPAIRMENT Balance at January 1–(0.4)–(1.0)–(1.4)Impairment (note 12)–(9.5)–––(9.5)Disposals – 0.2 ––– 0.2 Currency translation adjustments– 0.3 ––– 0.3 Balance at December 31–(9.4)–(1.0)–(10.4)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 141
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 CONCESSION RIGHTS2014 IN MILLIONS OF CHFIndefinite livesFinite livesBRANDSGOODWILLOTHERTOTALAT COST Balance at January 1 60.8 1,921.4 158.6 912.8 163.2 3,216.8 Business combinations (note 6)– 1,079.0 15.0 691.1 4.5 1,789.6 Additions (note 21)– 182.2 –– 17.4 199.6 Disposals(0.4)(1.3)––(0.7)(2.4)Currency translation adjustments 0.8 134.1 0.7 66.3 8.8 210.7 Restated * Balance at December 31 61.2 3,315.4 174.3 1,670.2 193.2 5,414.3 ACCUMULATED DEPRECIATION Balance at January 1–(410.1)––(72.5)(482.6)Additions (note 12)–(132.4)(1.0)–(25.7)(159.1)Disposals– 0.7 –– 0.6 1.3 Currency translation adjustments–(34.8)––(4.5)(39.3)Restated * Balance at December 31–(576.2)(1.0)–(102.5)(679.7)IMPAIRMENT Balance at January 1–(0.2)–––(0.2)Impairment (note 12)–(0.6)–(1.0)–(1.6)Disposals – 0.3 ––– 0.3 Currency translation adjustments– 0.1 ––– 0.1 Balance at December 31–(0.4)–(1.0)–(1.4)CARRYING AMOUNT At December 31, 2015 56.6 4,217.2 277.5 2,667.3 89.6 7,308.2 Restated* at December 31, 2014 61.2 2,738.8 173.3 1,669.2 90.7 4,733.2 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 142
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201520.1 IMPAIRMENT TEST Concession rights with indefinite useful lives, as well as brands and goodwill are subject to impairment testing each year. Concession rights with finite useful lives are tested for impairment whenever events or circumstances indicate that the car-rying amount may not be recoverable. 20.1.1 Impairment test of goodwillFor the purpose of impairment testing, goodwill recognized from business combi-nations has been allocated to the following cash generating units (CGU’s). These groups also reflect the reportable segments that are expected to benefit from the synergies of the business combinations:IN MILLIONS OF CHF31.12.2015RESTATED* 31.12.2014EMEA & Asia 293.1 319.5 America I 1 532.4 430.5 America II 1 51.5 149.8 United States & Canada 78.4 78.3 The Nuance Business 641.0 691.1 World Duty Free Business 1,070.9 –Total carrying amount of goodwill 2,667.3 1,669.2 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 The activities of Eurotrade have been transfered to International Operations & Services Corp. (IOSC). Eurotrade had an associated goodwill of CHF 98.6 million which in 2014 was presented under America II and now is presented within IOSC as part of America I. As of 2016, both regions will be presented as the new division Latin America.The recoverable amounts of goodwill for each of the above group of CGU’s have been determined based on value-in-use calculations. Such calculations are based on business plans approved by senior management and use cash flow projections covering a five-year period as well as a discount rate, which represents the weighted average cost of capital (WACC) adjusted for regional specific risks.Cash flows beyond that five-year period have been extrapolated using a steady growth rate that does not exceed the long-term average growth rate for the respective markets in which these CGU’s operate. The discounted cash flow model uses net sales as a basis to determine the free cash flow and the value assigned. Net sales projections are based on actual net sales achieved in the year 2015 and latest estimations for the projected years. The intersegment results of the global distribution centers have been assigned / allocated to the respective geographi-cal segments. 143
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The key assumptions used for determining the recoverable amounts for these busi-ness units are:POST TAX DISCOUNT RATESPRE TAX DISCOUNT RATESGROWTH RATES FOR NET SALESGOODWILL IN PERCENTAGE (%)201520142015201420152014EMEA & Asia 9.69 10.37 11.59 11.90 4.4 – 15.9 4.2 – 8.4 America I 10.59 10.38 11.74 11.67 4.3 – 13.6 5.1 – 11.1 America II 8.48 7.98 8.48 8.79 6.0 – 11.4 5.8 – 16.6 United States & Canada 5.39 5.65 6.75 7.05 4.1 – 10.8 4.3 – 7.3 The Nuance Business 6.20 6.15 6.70 7.62 2.2 – 4.5 5.2 – 5.9 World Duty Free Business 6.20 – 6.96 – 4.3 – 4.5 –As basis for the calculation of these discount rates, the following risk free inter-est rates have been used (derived from past 5 year average of prime 10-year bonds rates): CHF 0.40 %, EUR 1.22 %, USD 2.16 % (2014: CHF 0.62 %, EUR 1.56 %, USD 2.13 %).For the calculation of the discount rates and WACC (weighted average cost of capital), the Company used the following re-levered beta:20152014Beta factor0.880.57Sensitivity to changes in assumptionsManagement believes that any reasonably possible change (+ / – 1 %) in the key assumptions, on which the recoverable amounts are based, would not cause the respective carrying amount to exceed its recoverable amount. For Regions America I, America II and the Nuance Group, where the actual recoverable amount exceed its carrying amount by CHF 291.2 million, 217.9 million and CHF 874 million respectively, an (unlikely) increase of the discount rate by 2 % would lead to an impairment of CHF 86.9 million, CHF 4.9 million and CHF 30.6 million respectively. The key assumptions used for the determination of the value-in-use are described in note 20.1.3. 144
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201520.1.2 Impairment test of concession rights with indefinite useful lives Concession rights are tested for impairment purposes at company level, which represents the cash generating unit. For presentation purposes the CGU’s are grouped into business units. A business unit is a part of Dufry’s business segments. The following table illustrates the existing business units with concession rights with indefinite useful life:IN MILLIONS OF CHF20152014Italy43.648.2Middle East 13.0 13.0 Total carrying amount of concession rights 56.6 61.2 Certain concessions were granted by the non-controlling interest holder. Conse-quently these concession rights are assessed as having an indefinite useful life.The recoverable amounts for each of the CGU’s have been determined based on value-in-use calculations. Such calculations are based on business plans approved by senior management and use cash flow projections covering a five-year period as well as a discount rate, which represents the weighted average cost of capital (WACC) adjusted for local specific risks.Cash flows beyond that five-year period have been extrapolated using a steady growth rate that does not exceed the long-term average growth rate for the respective markets in which these CGU’s operate. The discounted cash flow model uses net sales as a basis to determine the free cash flow and subsequently the value assigned. Net sales projections are based on actual net sales achieved in year 2015 and latest estimations for the years thereafter.The key assumptions used for determining the recoverable amounts for these busi-ness units are:POST TAX DISCOUNT RATESPRE TAX DISCOUNT RATES 1GROWTH RATES FOR NET SALESCONCESSION RIGHTS IN PERCENTAGE (%)201520142015201420152014Italy 7.19 7.43 8.52 8.77 – 1.5 – 3.0 2.8 – 3.1 Middle East 6.39 6.50 6.39 6.50 6.5 – 18.7 7.2 – 8.1 1 based on the country in which the concession is locatedSensitivity to changes in assumptionsWith regard to the assessment of value-in-use, Dufry believes that no reasonably possible change (+ / – 1 %) in any of the above key assumptions would cause the carrying value of the concession rights to materially exceed its recoverable amount. 145
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201520.1.3 Key assumptions used for value-in-use calculationsThe calculation of value-in-use is most sensitive to the following assumptions: –Sales growth –Gross margin and suppliers prices –Concession fee levels –Discount rates –Growth rate used to extrapolateSales growth Sales growth is based on statistics published by external experts, such as Air4cast or ACI (Airports Council International) to estimate the development of interna-tional passenger traffic per country where Dufry is active. For the budget year, the management also takes into consideration specific price inflation factors of the country, the cross currency effect and the expected potential changes to capture clients (penetration) per business unit.Dufry has used a growth rate of 2.0 % – 3.0 % (2014: 1.6 % – 2.1 %) to extrapolate the cash flow projections beyond the period covered by the most recent forecasts.Gross marginsThe expected gross margins are based on average product assortment values estimated by the management for the budget 2016. These values are maintained over the planning period or where specific actions are planned. These values have been increased or decreased by up to 1 % over the 5 year planning horizon com-pared to the historical data. The gross margin is also affected by supplier’s prices. Estimates are obtained from global negotiations held with the main suppliers for the products and countries for which products are sourced, as well as data relat-ing to specific commodities during the months before the budget. Concession fee levelsThese assumptions regarding the concession fee evolution are important and mon-itored in the specific market as well as the renewal conditions and competitor behavior where the CGU’s are active. For the CGU’s subject to a value-in-use cal-culation, the management expects the competitive position to remain stable over the budget period. Discount ratesSeveral factors affect the discount rates: –For the financial debt part, the rate is based on the average interest of the past 5 years of the respective ten-year government bond and is increased by the company’s effective bank margin and adjusted by the effective blended tax rate and country risk of the respective CGU. –For the equity part, a 5 % equity risk premium is added to the base rate commented above and adjusted by the Beta of Dufry’s peer group. The same methodology is used by the management to determine the discount rate used in discounted cash flow (DCF) valuations, which are a key instrument to assess business potential of new or additional investment proposals. 146
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201520.1.4 BrandsIn October 2015, Dufry presented its updated brand strategy. While at corporate level, Dufry will be used as exclusive brand, the Group will apply a multi-brand retail concept including among others our brands including Dufry, Hudson, World Duty Free, Nuance, Hellenic Duty Free, Colombian Emeralds, do Brasil, Regstaer, Interbaires. Management believes that the benefits of the brands are reflecting the economic reality and are in accordance with Dufry’s respective markets, i.e. the airports or seaports where these brands are active. For impairment testing purposes the brand names are valued in relation with their respective sales poten-tial, based on sales projection covering a period of five years.The recoverable amount is determined using the Relief of Royalty method that con-siders a steady cash flow according to the discounted value of the royalty income after tax based on projected sales growth for each brand. The following table indicates the key assumptions used for the valuation of the main brands:ROYALTY INCOME AFTER TAXPOST TAX DISCOUNT RATESGROWTH RATES FOR NET SALESBRAND NAMES IN PERCENTAGE (%)201520142015201420152014Dufry 0.32 0.32 6.98 7.04 4.7 – 13.4 4.3 – 9.3 Hudson News 0.91 0.91 5.39 5.65 4.1 – 10.8 4.3 – 7.3 Colombian Emeralds 1.75 1.75 14.82 13.79 4.0 – 14.0 4.0 – 16.0 Nuance 0.30 0.30 6.20 6.15 2.2 – 4.5 5.2 – 5.9 World Duty Free 0.39 – 6.20 – 4.3 – 4.5 –These growth rates do not exceed the long term average growth rate for the respective brand business. The discount rates represent the weighted average cost of capital (WACC) of the markets where the brand is generating sales.21. CASH FLOWS USED FOR PURCHASE OF INTANGIBLE ASSETS IN MILLIONS OF CHF20152014Payables for capital expenditure at January 1(166.5)(1.4)Additions of intangible assets (note 20)(32.7)(199.6)Payables for capital expenditure at December 31 1.2 166.5 Currency translation adjustments 18.3 (22.5)Total Cash Flow(179.7)(57.0) 147
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201522. DEFERRED TAX ASSETS AND LIABILITIESTemporary differences arise from the following positions:IN MILLIONS OF CHF31.12.2015RESTATED* 31.12.2014DEFERRED TAX ASSETSProperty, plant and equipment 48.6 10.0 Intangible assets 63.6 73.2 Provisions and other payables 67.2 65.2 Tax loss carry-forward 138.2 77.1 Other 46.4 30.0 Total 364.0 255.5 DEFERRED TAX LIABILITIESProperty, plant and equipment(75.1)(24.0)Intangible assets(740.6)(436.5)Provisions and other payables(25.3)(2.9)Other(12.2)(15.3)Total(853.2)(478.7)Deferred tax liabilities net(489.2)(223.2)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)Deferred tax balances are presented in the consolidated statement of financial position as follows:IN MILLIONS OF CHF2015RESTATED* 2014Deferred tax assets 203.9 195.9 Deferred tax liabilities(693.1)(419.1)Balance at December 31(489.2)(223.2)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)Reconciliation of movements to the deferred taxes:IN MILLIONS OF CHF2015RESTATED* 2014Changes in deferred tax assets 8.0 41.0 Changes in deferred tax liabilities(274.0)(157.4)Business combinations (note 6) 383.7 165.4 Currency translation adjustments(39.4)(4.0)Deferred tax income (expense) at December 31 78.3 45.0 THEREOFRecognized in the income statement 80.0 37.2 Recognized in equity(0.2) 0.1 Recognized in OCI(1.5) 7.7 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 148
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Tax loss carry-forwardsCertain subsidiaries incurred tax losses, which according to the local tax legisla-tion gives rise to a tax credit usable in future tax periods. However, the use of this tax benefit is limited in time (expiration) and by the ability of the respective sub-sidiary to generate enough taxable profits in future. Deferred tax assets relating to tax loss carry-forwards or temporary differences are recognized when it is probable that such tax credits can be utilized in the future in accordance with the budget 2016 approved by the Board of Directors and the projections prepared by the management for these entities.The unrecognized tax loss carry-forwards by expiry date are as follows:IN MILLIONS OF CHF31.12.201531.12.2014Expiring within 1 to 3 years 35.3 75.4 Expiring within 4 to 7 years 63.9 153.1 Expiring after 7 years 178.6 67.9 With no expiration limit 315.6 41.8 Total 1 593.4 338.2 1 This amount includes CHF 164.7 (2014: 32) million added through business combinationUnrecognized deferred tax liabilitiesDufry has not recognized deferred tax liabilities associated with investments in subsidiaries where Dufry can control the reversal of the timing differences and where it is not probable that the temporary differences will reverse in the foresee-able future.Dufry does not expect that these differences result in taxable amounts in deter-mining taxable profit (tax loss) of future periods when the carrying amount of the investment is recovered. 149
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201523. OTHER NON-CURRENT ASSETS IN MILLIONS OF CHF31.12.201531.12.2014Guarantee deposits 79.2 38.7 Loans and contractual receivables 32.8 35.9 Prepaid lease 1 221.9 16.5 Other 14.8 16.8 Subtotal 348.7 107.9 Allowances(1.3)(1.3)Total 347.4 106.6 1 Prepaid lease refers mainly to amounts paid in advance to the Spanish concesionaire, which is measured at amortized cost.MOVEMENT IN ALLOWANCES IN MILLIONS OF CHF20152014Balance at January 1(1.3)(1.7)Utilization– 0.5 Currency translation adjustments–(0.1)Balance at December 31(1.3)(1.3) 150
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201524. INVENTORIES IN MILLIONS OF CHF31.12.201531.12.2014Purchased inventories at cost 927.3 758.0 Inventory allowance 1(20.0)(16.8)Total 907.3 741.2 1 The inventory impaired has a book value of CHF 63.0 (2014: 55.2) millionCASH FLOWS USED FOR INCREASE / FROM DECREASE IN INVENTORIES IN MILLIONS OF CHF2015RESTATED* 2014Balance at January 1 758.0 540.5 Balance at December 31 927.3 758.0 Gross change – at cost(169.3)(217.5)Business combinations (note 6) 206.3 210.6 Transfer to discontinued operations (note 40)–(1.8)Change in unrealized profit on inventory(4.0) 0.9 Utilization of allowances 5.1 0.2 Currency translation adjustments(22.8) 43.6 Cash Flow – (Increase) / decrease in inventories 15.3 36.0 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)Cost of sales includes inventories written down to net realizable value and inven-tory differences of CHF 16.5 (2014: 19.1) million. 151
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201525. TRADE AND CREDIT CARD RECEIVABLES IN MILLIONS OF CHF31.12.201531.12.2014Trade receivables 86.9 74.4 Credit card receivables 46.4 44.5 Gross 133.3 118.9 Allowances(0.5)(0.2)Net 132.8 118.7 Trade receivables and credit card receivables are stated at their nominal value less allowances for doubtful amounts. These allowances are established based on an individual evaluation when collection appears to be no longer probable.AGING ANALYSIS OF TRADE RECEIVABLES IN MILLIONS OF CHF31.12.201531.12.2014Not due 59.7 47.0 OVERDUEUp to 30 days 7.5 19.2 31 to 60 days 7.0 3.4 61 to 90 days 1.7 1.4 More than 90 days 1 11.0 3.4 Total overdue 27.2 27.4 Trade receivables, gross 86.9 74.4 1 The main overdue receivables are covered by bank guaranteesMOVEMENT IN ALLOWANCES IN MILLIONS OF CHF20152014Balance at January 1(0.2)(0.1)Creation(1.5)(0.2)Release 1.0 0.1 Utilized 0.1 –Currency translation adjustments 0.1 –Balance at December 31(0.5)(0.2) 152
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201526. OTHER ACCOUNTS RECEIVABLE IN MILLIONS OF CHF20152014Receivables for refund from suppliers 96.7 47.0 Sales tax and other tax credits 87.6 74.0 Accrued concession fees and rental income 41.3 12.0 Prepaid lease 38.7 –Prepayments 30.8 29.8 Receivables from subtenants and business partners 13.0 24.2 Guarantee deposits 7.7 15.1 Loans receivable 6.2 3.2 Personnel receivables 4.2 4.8 Accrued income 3.8 4.2 Derivative financial assets 1 1.7 0.6 Other 16.5 16.5 Total 348.2 231.4 Allowances(12.2)(4.2)Total 336.0 227.2 1 See note 38 Financial instrumentsMOVEMENT IN ALLOWANCES IN MILLIONS OF CHF20152014Balance at January 1(4.2)(3.4)Creation (6.6)(1.6)Release 0.1 0.1 Utilized 0.3 0.6 Reclassification from receivables for refund from suppliers(2.3)–Currency translation adjustments 0.5 0.1 Balance at December 31(12.2)(4.2) 153
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201527. EQUITY27.1 ISSUED CAPITAL IN MILLIONS OF CHF 31.12.201531.12.2014Share capital 269.4 179.5 Share premium 4,259.3 1,964.7 Total 4,528.7 2,144.2 27.1.1 Fully paid ordinary sharesIN MILLIONS OF CHFNUMBER OF SHARESSHARE CAPITALSHARE PREMIUMBalance at January 1, 2014 30,905,056 154.51,207.0Issue of shares 5,000,000 25.0785.0Share issuance costs––(27.3)Balance at December 31, 2014 35,905,056 179.51,964.7Conversion of mandatory convertible notes 1,809,188 9.1253.7Issue of shares 16,157,463 80.82,119.2Share issuance costs––(78.3)Balance at December 31, 2015 53,871,707 269.44,259.327.2 AUTHORIZED AND CONDITIONAL SHARE CAPITAL AUTHORIZED SHARE CAPITALNUMBER OF SHARESIN THOUSANDS OF CHFBalance at January 1, 2014 1,466,387 7,332 Expiration May 2, 2014(1,466,387)(7,332)Balance at December 31, 2014––Balance at December 31, 2015––CONDITIONAL SHARE CAPITALNUMBER OF SHARESIN THOUSANDS OF CHFBalance at January 1, 2014 2,697,620 13,488 Balance at December 31, 2014 2,697,620 13,488 Utilization June 18, 2015(1,809,188)(9,046)Balance at December 31, 2015 888,432 4,442 154
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Share capital increase2015The General Meeting held on April 29, 2015, approved the increase of the share cap-ital of Dufry from currently CHF 179.5 million by up to CHF 157.1 million to a maxi-mum amount of up to CHF 336.6 million through the issuance of fully paid-in new registered shares with a par value of CHF 5 each.On June 18, 2015, Dufry AG issued 16,157,463 new registered shares with a nomi-nal value of CHF 80.8 million, representing 45 % additional shares. After this share issuance and including the shares created by the conversion of the Mandatory Con-vertible Notes (see comments below), the share capital of Dufry AG amounts to CHF 269.4 million. The offer price for the rights offering as well as for the commit-ted investors was set at CHF 136.16 per new share. In the rights offering, 9,744,390 new shares were subscribed for by existing shareholders, while 6,413,073 new shares were purchased by committed investors, resulting in gross proceeds of CHF 2,200 million.The trading of the newly issued shares on the SIX Swiss Exchange commenced on June 25, 2015. The share issuance costs related with these transactions have been estimated at CHF 78.3 million and are presented in equity.2014The Extraordinary General Meeting held on June 26, 2014, approved the increase of the share capital of Dufry AG from currently CHF 154.5 million by up to CHF 27.3 million to a maximum amount of up to CHF 181.8 million through the issuance of fully paid-in new registered shares with a par value of CHF 5 each.On July 8, 2014, Dufry AG issued 5,000,000 new registered shares representing 16 % additional shares. After this share issuance, the share capital of the company amounts to CHF 179.5 million. The offer price for the rights offering as well as the public offering was set at CHF 162 per new share. In the rights offering, 3,623,976 new shares were subscribed for by existing shareholders, while 1,376,024 new shares were purchased by investors in the international offering, resulting in gross proceeds of CHF 810 million. The trading of the newly issued shares on the SIX Swiss Exchange commenced on July 9, 2014. The share issuance costs related with this transaction amounted to CHF 27.3 million and is presented in equity.Mandatory Convertible Notes (MCN)2015The Mandatory Convertible Notes amounting to CHF 262.8 million (net of issuance costs) were converted into 1,809,188 ordinary registered shares of Dufry during June 2015 at a conversion price of CHF 152 per share. Dufry issued the shares out of the existing conditional share capital. 155
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201527.3 RESERVES IN MILLIONS OF CHF2015RESTATED* 2014Employee benefit reserve(21.3)(32.9)Hedging and revaluation reserves 0.7 –Capital reserve for mandatory convertible notes– 262.8 Translation reserves(185.8)(112.2)Retained earnings(1,158.9) 46.0 Balance at December 31(1,365.3) 163.7 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)27.3.1 Employee benefit reserveIN MILLIONS OF CHF20152014Balance at January 1(32.9) 0.3 Actuarial gains (losses) on defined benefit plans 12.8 (37.7)Income tax relating to components of other comprehensive income(1.2) 4.5 Balance at December 31(21.3)(32.9)27.3.2 Hedging and revaluation reservesIN MILLIONS OF CHF20152014Balance at January 1––Gain / (loss) arising on changes in fair value of financial instruments:– Interest rate swaps entered for as cash flow hedges 1.0 –Income tax relating to components of other comprehensive income(0.3)–Balance at December 31 0.7 – 156
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201527.3.3 Capital reserve for mandatory convertible notesIN MILLIONS OF CHF20152014Balance at January 1 262.8 –Issuance of equity instruments– 269.6 Conversion of mandatory convertible notes 1(262.8)–Transaction costs for equity instruments–(6.8)Balance at December 31– 262.8 1 Details for the Mandatory Convertible Notes (MCN) are described in note 27.227.3.4 Translation reservesIN MILLIONS OF CHF20152014Balance at January 1(112.2)(224.5)Exchange differences arising on translating the foreign operations (attributed to equity holders of parent)(75.8) 211.5 Net gain / (loss) on hedge of net investments in foreign operations (note 31) 2.2 (102.4)Income tax related to net gains / (losses) on hedge of net investments of foreign operations– 3.2 Balance at December 31(185.8)(112.2)Foreign exchange gains and losses on financing instruments that are designated as hedging instruments for net investments in foreign operations are included in the translation reserves. 157
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201528. SHARE-BASED PAYMENTS28.1 PSU PLAN OF DUFRY AGOn October 29, 2015, Dufry granted to the members of the GEC and selected mem-bers of the senior management the Award 2015 with 122,803 PSU free of charge. On May 3, 2018, (vesting date) each PSU will give the right to the holders to receive up to two shares of Dufry depending on the effective cumulative amount of cash earnings per share (Cash EPS) reached by Dufry during the years 2015 to 2017 com-pared with the target of about CHF 24. The Cash EPS equals the basic Earnings per Share adjusted for amortization of intangible assets identified during business combinations and non-recurring effects. If at vesting the cumulative adjusted Cash EPS is at target level, each PSU Award 2015 grants one share. If the cumulative adjustetd Cash EPS is at 150 % of the target (maximum threshold) or above, each PSU Award 2015 grants two shares at vesting, and if the adjusted Cash EPS is at 50 % of the target (minimum threshold) or below, no share will be granted at vest-ing. If the adjusted Cash EPS is in between 50 % and 150 % of the target, the num-ber of shares granted for each PSU will be allocated on a linear basis. Additionally, the allocation of shares is subject to an ongoing contractual relationship of the participant with Dufry throughout the vesting period. As of December 31, 2015, no PSU Award 2015 forfeited, so that 122,803 PSU remain outstanding.At grant date the fair value of one PSU Award 2015 represents the market value for one Dufry share at that date (CHF 116.20) adjusted by the probability that par-ticipants comply with the ongoing contractual relationship clause. At December 31, 2015, a probability of 90 % was determined by taking into account the projected adjusted Cash EPS at vesting. The contractual life of the PSU Award 2015 is 30 months. PSU don’t provide to its holders shareholder rights, like voting or a right to receive dividends. On October 1, 2014, Dufry granted 51,486 PSU Award 2014 to the members of the adjusted GEC. One PSU gives the right to receive in 2017, free of charge, up to two shares, based on the performance achieved by Dufry. For the PSU Awards 2014 the performance will be measured as the average yearly growth rate reached by the earnings per share adjusted for amortization of intangible assets identified during business combinations and non-recurrent effects (adjusted Cash EPS) of Dufry between 2013 and 2016. If the targeted average yearly growth of 7 % is achieved, one share will be granted for each PSU, whereas for an average yearly growth rate of 3.5 % or less, no shares will be granted and for a growth rate of 10.5 % or higher two shares will be granted. If the effective growth rate is in-between 3.5 % and 10.5 % the number of shares granted for each PSU will be allocated on a linear basis. Additionally, the allocation of shares is subject to an ongoing contractual relation-ship of the participant with Dufry from January 1, 2014, until January 1, 2017. As of December 31, 2015, 6,919 PSU Award 2014 forfeited, so that 44,567 PSU remain outstanding.At grant date the fair value of the PSU Award 2014 represents the market value for one Dufry share i.e. CHF 143.1. At December 31, 2015, a probability of 148 % was determined by taking into account the projected adjusted Cash EPS at vesting. The contractual life of the PSU Award 2014 is 27 months. There are no cash settlement alternatives for the participants. 158
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015With the PSU Award 2013 Dufry granted to the members of the GEC 42,957 PSU options. One PSU gives the right to receive in 2016, free of charge, up to two shares, based on the performance achieved by Dufry. For the PSU Award 2013, the perfor-mance will be measured as the average yearly growth rate reached by the earn-ings per share adjusted for amortization of intangible assets identified during busi-ness combinations and non-recurrent effects (adjusted Cash EPS) of Dufry in between 2012 and 2015. Each PSU will grant the right to receive one Dufry share if the targeted average yearly growth of 7 % is achieved, no share if the average yearly growth rate is 3.5 % or lower and two shares if the average growth rate is 10.5 % or higher. If the effective growth rate is in-between 3.5 % and 10.5 % the number of shares granted for each PSU will be allocated on a linear basis. Additionally, the allocation of shares is subject to an ongoing contractual relationship of the par-ticipant with Dufry from January 1, 2013, until January 1, 2016. As of December 31, 2015, 6,100 PSU Award 2013 forfeited, so that 36,857 PSU remain outstanding. At January 1, 2016, the PSU Award 2013 vested and the minimal threshold was not achieved so that no shares have been allocated to the participants and no liability was recognized at December 31, 2015, regarding this award. In 2015 the total expense recognized in the income statement against equity from share-based payment transactions was CHF 2.8 (2014: 2.4) million.28.2 TREASURY SHARESTreasury shares are valued at historical cost.NUMBER OF SHARESIN MILLIONS OF CHFBalance at January 1, 2014 120,269 18.1 Assigned to holders of RSU-Awards 2013 1(117,104)(17.6)Share purchases 91,000 13.8 Balance at December 31, 2014 94,165 14.3 Share purchases 4 –Balance at December 31, 2015 94,169 14.3 1 For description of RSU plan see note 29 in the Annual Report 2014. RSU plans were discontinued in 2014. 159
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201529. BREAKDOWN OF TRANSACTIONS WITH NON-CONTROLLING INTERESTSThe following transactions have been recognized in equity attributable to non- controlling interests at fair value:IN MILLIONS OF CHF2015RESTATED* 2014World Duty Free Group acquisition through business combination (note 6.1) 37.7 –Non-controlling interests in World Duty Free Group after initial acquisition 1(9.0)–The Nuance Group acquisition through business combination (note 6.5)–(3.9)Dufry Lojas Francas Ltd 40 %– 36.6 Dufry Lojas Francas Ltd. 20 % Call option (note 6.4)–(19.8)Dufry France S.A. 30 % Guadeloupe business– 1.7 Hudson Group, increase in share capital of several subsidiaries 4.5 7.2 Other(0.3) 0.9 TOTAL 32.9 22.7 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 Change in non-controlling interests from August 7,2015, until the completion of the acquisition of the remaining interest.30. INFORMATION ON COMPANIES WITH NON-CONTROLLING INTERESTSThe non-controlling interests (NCI) comprise the portion of equity of subsidiaries that are not owned by Dufry. The net earnings attributable to non-controlling interests is CHF 42.4 (2014: restated 34.2) million and Dufry carefully assessed the significance of each subsidiary with non-controlling interests and concluded that none of them is individually material for Dufry.In 2015, the major part of the net earnings attributable to non-controlling inter-ests of CHF 23.7 (2014: 20.0) million relates to several legal entities with different non-controlling interest holders within Hudson Group. The remaining CHF 18.7 (2014: 14.0) million belongs to various other subsidiaries of Dufry. 160
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201531. FINANCIAL DEBT IN MILLIONS OF CHF 31.12.201531.12.2014Bank debt (overdrafts) 23.3 13.7 Bank debt (loans) 51.1 28.7 Third party loans 2.9 3.2 Financial debt, short-term 77.3 45.6 Bank debt (loans) 2,537.7 1,738.3 Senior Notes 1,767.3 1,074.9 Third party loans 8.1 8.6 Financial debt, long-term 4,313.1 2,821.8 Total 4,390.4 2,867.4 OF WHICH AREBank debt 2,612.1 1,780.7 Senior Notes 1,767.3 1,074.9 Third party loans 11.0 11.8 BANK DEBT IN MILLIONS OF CHF 31.12.201531.12.2014MAIN BANK DEBTS ARE DENOMINATED INUS Dollar 1,035.8 1,053.5 Euro 802.6 601.4 British Pound Sterling 631.8 –Swiss Franc 100.0 110.0 Subtotal 2,570.2 1,764.9 LOCAL BANK DEBTS INDifferent currencies 73.1 40.1 Deferred bank arrangement fees 1(31.2)(24.3)Total 2,612.1 1,780.7 1 The arrangement fees relate only to the main bank debtSENIOR NOTES IN MILLIONS OF CHF 31.12.201531.12.2014SENIOR NOTES DENOMINATED INUS Dollar 499.8 496.9 Euro 1,303.6 601.4 Subtotal 1,803.4 1,098.3 Deferred arrangement fees(36.1)(23.4)Total 1,767.3 1,074.9 161
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015DETAILED CREDIT FACILITIESDufry negotiates and manages its key credit facilities centrally. Minor credit lines at local level are kept for practical reasons.The bank credit agreements and the bank guarantee facility (see note 36) contain covenants and conditions customary to this type of financing. During 2015 Dufry complied with the financial covenants and conditions contained in the bank credit agreements.Main bank credit facilitiesDRAWN AMOUNT IN CHFIN MILLIONS OFMATURITYCURRENCYCREDIT LIMIT IN LOCAL CURRENCY31.12.201531.12.2014Committed 5-year term loan31.07.2019USD 1,010.0 1,009.6 1,003.8 Committed 5-year term loan31.07.2019EUR 500.0 543.2 601.4 Committed 4-year term loan (multi-currency)31.07.2019EUR 800.0 835.9 –5-year revolving credit facility (multi-currency)31.07.2019CHF 900.0 181.5 159.7 Total 2,570.2 1,764.9 On March 27, 2015, a syndicate of banks with the London Branch of ING N.V. acting as agent, granted Dufry a committed 4-year term loan of EUR 800 million which was used to replace the bank debt of World Duty Free Group.Senior notesAMOUNT IN CHFIN MILLIONS OFMATURITYCOUPON RATECURRENCYNOMINAL IN LOCAL CURRENCY31.12.201531.12.2014Senior notes15.10.20205.50 %USD 500.0 499.8 496.9 Senior notes15.07.20224.50 %EUR 500.0 543.2 601.4 Senior notes01.08.20234.50 %EUR 700.0 760.4 –Total 1,803.4 1,098.3 On July 28, 2015, Dufry placed denominated Senior Notes of EUR 700 million with a maturity of eight years with qualified institutional investors in Switzerland and abroad.All notes are listed on the Dublin stock exchange and interests are payable semi-annually in arrears. 162
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015WEIGHTED AVERAGE INTEREST RATEThe borrowings under these credit facilities bear interest at a floating rate (EURIBOR or LIBOR) plus spread. Below are the overall weighted average notional interest rates on the main currencies:INTEREST RATE IN PERCENTAGE (%)20152014Average on USD 3.45 2.70 Average on CHF 1.83 1.80 Average on EUR 3.53 2.40 Average on GBP 2.98 –Weighted Average Total 3.42 2.60 31.1 HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONSThe following net debt is designated as hedge in net investment in accordance with IAS 39, paragraph 102:AMOUNT IN HEDGING CURRENCYAMOUNT IN CHFIN MILLIONS OFCURRENCY31.12.201531.12.201431.12.201531.12.2014Dufry do Brasil and other companies 1USD 947.2 947.2 946.9 941.4 World Duty Free Group SAGBP 240.0 – 353.5 –Total 1,300.4 941.4 1 Alliance Inc., Interbaires SA, Navinten SA, Blaicor SA, International Operation & Services Corp., Duty Free Ecuador SA and Regstaer Ltd.31.2 NET INVESTMENT IN FOREIGN OPERATIONSDufry granted below mentioned long-term loans to subsidiaries. These loans are considered as part of Dufry’s net investment in foreign operations in accordance with IAS 21, paragraph 15, as settlement is neither planned nor likely to occur in the foreseeable future.AMOUNT IN HEDGING CURRENCYAMOUNT IN CHFIN MILLIONS OFCURRENCY31.12.201531.12.201431.12.201531.12.2014Dufry America Holding Inc.USD 17.2 19.6 17.2 19.5 Nuance Group (Australia) Pty Ltd.AUD 121.8 121.8 88.8 98.9 Nuance Group (Sverige) ABSEK 110.0 110.0 13.0 14.0 Total 119.0 132.4 163
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201532. PROVISIONS IN MILLIONS OF CHFCONTINGENT LIABILITIESONEROUS CONTRACTSCLOSEDOWNLAWSUITS AND DUTIESLABOR DISPUTESOTHERTOTALPublished at December 31, 2014 42.1 74.6 3.6 8.5 3.2 19.4 151.4 Restatement *– 12.6 ––––12.6Restated* Balance at January 1 42.1 87.2 3.6 8.5 3.2 19.4 164.0 Business combinations (note 6) 6.7 87.7 36.2 9.1 – 22.4 162.1 Charge for the year– 2.1 – 8.7 – 32.4 43.2 Utilized–(9.6)(7.7)(0.9)(0.9)(5.9)(25.0)Unused amounts reversed(3.9)–(0.4)(0.5)––(4.8)Interest discounted– 8.7 –––– 8.7 Reclassification from / to other accounts 1–– 1.5 ––(3.0)(1.5)Reclassification within classes 1.3 1.0 9.1 (2.3)–(9.1)–Currency translation adjustments(0.7)(5.8)(0.3)(0.9)–(1.4)(9.1)Balance at December 31 45.5 171.3 42.0 21.7 2.3 54.8 337.6 THEREOFCurrent – 48.5 42.0 21.7 0.2 41.3 153.7 Non-current 45.5 122.8 –– 2.1 13.5 183.9 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 From other payables (CHF 1.5 million) and to net defined benefit obligation (CHF – 3.0 million)Management believes that its provisions are adequate based upon currently avail-able information. However, given the inherent difficulties in estimating liabilities in the areas described below, actual costs may vary from the amounts provisioned.CONTINGENT LIABILITIESDufry as internationally operating company is exposed to contingent liabilities in respect of legal and tax claims in the ordinary course of business. It is not antici-pated that any material liabilities will arise from the contingent liabilities other than provided for.In 2015, the contingent liabilities increased by CHF 6.7 million based on findings in Europe recognized during the due diligence process made for the acquisition of the World Duty Free Group. In 2014, the contingent liabilities increased by CHF 1.0 mil-lion based on findings in Europe, Asia and Australia recognized during the due diligence process made for the acquisition of The Nuance Group.IFRS 3 Business combinations requires to reflect these liabilities with uncertain amounts in the statement of financial position although the risk exposure for some of these positions has been regarded as medium or low. The identified risks include a variety of potential liabilities from past periods, mainly related to the import and sale of merchandise by entities under common control or regarding contributions owed based on the contractual situation of employees. As the identified risks implied in these contingent liabilities are subject to interpretations and uncertainties in the respective regu lations, the management made an estimation of the fair value. 164
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015ONEROUS CONTRACTSConcession agreements usually fix the fee for the locations as a percentage on net sales. Some of these long-term concession agreements, which Dufry has entered into, include clauses to ensure a minimal concession fee during the full term of the agreement. However, in certain circumstances the economic environ-ment around an activity deteriorates in such a way that it is highly unlikely that the operation will become profitable during the remaining concession duration. In such cases Dufry does impair the assets subject to amortization or depreciation and creates a provision for onerous contracts. This provision reflects the present value of the unavoidable cost (losses) of meeting the contractual obligation. At balance sheet date, an amount of CHF 171.3 (2014 restated: 87.2) million has been provided in relation to operations in Asia and Europe.CLOSE DOWNThe provision of CHF 42 (2014: 3.6) million relates mainly to the closing of opera-tions in Asia and Europe. LABOR DISPUTESThe provision of CHF 2.3 (2014: 3.2) million relates mainly to claims presented by sales staff based on disputes related to the termination of temporary labor con-tracts in Brazil.LAWSUITS AND DUTIESThese provisions of CHF 21.7 (2014: 8.5) million cover uncertainties dependent on the outcome of law suits in relation to taxes, duties or other claims in Brazil, Ecuador, India, Italy and Turkey.The increase in 2015 are mainly related to disputes with custom authorities in Ecuador, India and Turkey.OTHERThe charge for the year includes a provision for the expenses expected to be incurred in relation to the structural improvements and the integration of support functions of the organization.CASH OUTFLOWS OF NON-CURRENT PROVISIONSThe expected timing of the related cash outflows of non-current provisions as of December 31, 2015 is currently projected as follows:IN MILLIONS OF CHFEXPECTED CASH OUTFLOW2017 26.6 2018 15.2 2019 14.6 2020 13.7 2021 + 113.8 Total non-current 183.9 165
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201533. POST-EMPLOYMENT BENEFIT OBLIGATIONSDufry provides retirement benefits through a variety of arrangements comprised principally of stand-alone defined benefit or defined contribution plans, or state administered plans that cover a substantial portion of employees in accordance with local regulations and practices. The most significant plans in terms of the ben-efits accrued to date by participants are cash balance and final salary plans. Around 96.2 % (2014: 93.8 %) of the total defined benefit obligation and 100 % (2014: 100 %) of the plan assets correspond to pension funds in Switzerland (CH) and the United Kingdom (UK). 20152014IN MILLIONS OF CHFFundedUnfundedTOTALFundedUnfundedTOTALSWITZERLANDFair value of plan assets 179.2 – 179.2 181.1 – 181.1 Present value of defined benefit obligation 194.8 – 194.8 205.3 – 205.3 Financial (deficit) surplus(15.6)–(15.6)(24.2)–(24.2)UKFair value of plan assets 186.3 – 186.3 –––Present value of defined benefit obligation 209.8 – 209.8 –––Financial (deficit) surplus(23.5)–(23.5)–––OTHER PLANSFair value of plan assets––––––Present value of defined benefit obligation– 16.2 16.2 – 13.5 13.5 Financial (deficit) surplus–(16.2)(16.2)–(13.5)(13.5)TOTALFair value of plan assets 365.5 – 365.5 181.1 – 181.1 Present value of defined benefit obligation 404.6 16.2 420.8 205.3 13.5 218.8 Total net book value employee benefits(39.1)(16.2)(55.3)(24.2)(13.5)(37.7) 166
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015A description of the significant retirement benefit plans is as follows:Reconciliation to the funded plansIN MILLIONS OF CHF20152014Net defined (obligation) / asset at January 1(24.2) 1.1 Net defined asset / (obligation) of acquired companies(25.6) 0.5 Pension expense through income statement(9.3) 8.2 Remeasurements through other comprehensive income 12.3 (29.7)Transfer payment–(8.0)Contributions paid by employer 7.2 3.7 Currency translation 0.5 –Net defined (obligation) / asset at December 31(39.1)(24.2)33.1 SWITZERLANDDufry operates two company sponsored pension funds in form of foundations in Switzerland that provide contribution-based cash balance retirement and risk benefits to employees. The Pension Fund Nuance (PVN) was integrated to the financial report in September 2014. All pension plans in Switzerland are governed by the Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG), which stipulates that pension plans are to be managed by indepen-dent, legally autonomous units. Pension plans are overseen by a regulator as well as by a state supervisory body. A pension plan’s most senior governing body (Board of Trustees) must be composed of equal numbers of employee and employer rep-resentatives. The various insurance benefits are governed in regulations, with the BVG specifying the minimum benefits that are to be provided. The employer and employees pay contributions to the pension plan. In case of an underfunding, various measures can be taken such as the adjustment of the pension benefits, by altering the actuarial assumptions or increasing future contributions. The employer can also make additional restructuring contributions. The BVG prescribes how employees and employer have to jointly fund potential restructurings.All actuarial risks are borne by the Pension funds Weitnauer (PKW) or PVN. These risks consist of demographic risks, primarily life expectancy, and financial risks such as the discount rate, future increases in salaries / wages, and the return on plan assets. These risks are regularly assessed by the Board of Trustees. In addi-tion, two annual actuarial reports are submitted, one in accordance with the requirements of the BVG, the other in accordance with IFRS requirements. 167
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The investment strategy is defined in form of a long-term target asset-, currency- and risk-structure (investment policy), which takes into account requirements from BVG, and aim to obtain a high long-term return on plan assets. The Board of Trustees is responsible for the investment of the assets, reviewing the investment port folio as often as necessary – especially in the case of significant changes in the expec-tations of market developments and at least once a year. When reviewing the investment portfolio, it takes into account the limitations set in the strategy. The Board of Trustees delegates the implementation of the investment policy – in accordance with the investment strategy as well as various principles and objec-tives – to an Investment Committee, which consists of two members of the Board of Trustees. They supervise the entire investment process. The plan assets are managed by several external specialized and independent asset managers in accordance with the investment strategy, whereby the investments in properties are directly managed by the fund.Under Swiss pension law Dufry cannot recover any surplus from the pension funds, because those belong to the foundations. The pension funds currently invest in a diverse portfolio of asset classes including equities, bonds, property and commodities but do not currently use any more explicit asset-liability matching strategy instruments such as annuity purchase products or longevity swaps. There have been the following changes made to the Swiss retirement benefit arrangements in the periods covered by these financial statements: –In October 2015 Dufry informed their employees about the planned transfer of the PKW into the PVN as of January 1, 2016. Combined with this transfer the foundation board of the Nuance Group pension plan decided to change some of the plan benefits as from January 1, 2016, resulting in a plan change for all pension plan members. The plan change resulted in a past service credit of CHF 3.3 million which has been recognized in the 2015 pension expenses. –As of December 2014 the PKW has made a final allocation of the retirement pensioners (retired before May 31, 2003). This final allocation resulted in a transfer of CHF 17.5 million in assets and CHF 25.5 million in liabilities. –In September 2014 the PKW changed its plan from a defined benefit plan (Leistungsprimat) to a cash balance plan (Beitragsprimat) starting on January 1, 2015. The new plan intended to keep the benefits granted at levels similar to the previous plan. From this plan change a net gain of CHF 12.3 million resulted, presented in the line pension expenses in the income state- ment. The plan changes did not result in a change in qualification as a defined benefit plan under IFRS. –As a result of the acquisition of The Nuance Group in August 2014, Dufry recognized a net defined benefit asset of the PVN in the amount of CHF 0.5 million. The actuarial assumptions applied were the same as for PKW. 168
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201533.2 UNITED KINGDOM (UK)Dufry operates a defined benefit pension plan mainly in the UK under specific regulatory frameworks. The UK plan provides a retirement benefit in the form of a pension payment based on a guaranteed percentage of salary accruing for each year of service, revalued to and payable from retirement. In the UK plan, pension payments increase annually in line with the retail price index, subject to certain limits. The pension payments are made from trustee-administered funds; however, where plans are underfunded, the company meets the benefit payment obligation as it falls due. The plan is governed by local legislation and its own trust documen-tation. The responsibility for the governance of the plan, including investment decisions and contribution schedules, lies with the Board of Trustees. The Board of Trustees must be composed of representatives of the Company and plan par-ticipants in accordance with the plans’ regulations.Cost of defined benefit plans20152014IN MILLIONS OF CHFSwitzerlandUK 1TOTALSwitzerlandSERVICE COSTSCurrent service costs(10.7)(0.3)(11.0)(3.7)Past service costs 3.3 – 3.3 12.3 Fund administration(0.4)–(0.4)(0.3)Net interest (0.3)(0.9)(1.2)(0.1)Total pension expenses recognized in the income statement(8.1)(1.2)(9.3) 8.2 1 For the period August to DecemberThe current service costs, the change to cash balance plan and costs of funds administration of Dufry are included in personnel expenses (see note 9 retirement benefits).Remeasurements employee benefits20152014IN MILLIONS OF CHFSwitzerlandUK 1TOTALSwitzerlandActuarial gains (losses) – experience 3.6 1.0 4.6 (1.2)Actuarial gains (losses) – demographic assumptions 7.8 2.2 10.0 –Actuarial gains (losses) – financial assumptions(6.7) 3.0 (3.7)(33.2)Return on plan assets exceeding expected interest 5.1 (3.7) 1.4 4.7 Total remeasurements recorded in other comprehensive income 9.8 2.5 12.3 (29.7)1 For the period August to December 169
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The following tables summarize the components of the funded status and amounts recognized in the statement of financial position for the plan:Change in the fair value of plan assets20152014IN MILLIONS OF CHFSwitzerlandUK 1TOTALSwitzerlandBalance at January 1 181.1 – 181.1 63.8 Business combinations– 194.6 194.6 89.9 Interest income 2 2.2 6.9 9.1 2.1 Return on plan assets, above interest income 5.1 (3.7) 1.4 4.7 Contributions paid by employer 7.0 0.2 7.2 3.7 Contributions paid by employees 3.6 0.1 3.7 2.1 Benefits paid(19.8)(7.1)(26.9)(2.7)Transfer payment––– 17.5 Currency translation–(4.7)(4.7)–Balance at December 31 179.2 186.3 365.5 181.1 1 For the period August to December2 Expected interest income on plan assets based on discount rate. See actuarial assumptions.Change in present value of defined benefit obligation20152014IN MILLIONS OF CHFSwitzerlandUK 1TOTALSwitzerlandBalance at January 1 205.3 – 205.3 62.7 Business combinations– 220.2 220.2 89.4 Current service costs 10.7 0.3 11.0 3.7 Interest costs 2.6 7.8 10.4 2.1 Contributions paid by employees 3.6 0.1 3.7 2.1 Accrual of expected future administration costs 0.4 – 0.4 0.3 Actuarial losses / (gains) – experience(3.6)(1.0)(4.6) 1.2 Actuarial losses / (gains) – demographic assumptions(7.8)(2.2)(10.0)–Actuarial losses / (gains) – financial assumptions 6.7 (3.0) 3.7 33.2 Benefits paid(19.8)(7.1)(26.9)(2.7)Past service cost – plan amendments(3.3)–(3.3)(12.2)Transfer payment––– 25.5 Currency translation–(5.3)(5.3)–Balance at December 31 194.8 209.8 404.6 205.3 Net defined benefit (obligation) / asset at December 31(15.6)(23.5)(39.1)(24.2)1 For the period August to December 170
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Actuarial assumptionsThe present value of the defined benefit obligation is determined annually by independent actuaries using the projected unit credit method. The main actuarial assumptions used are: 20152014IN PERCENTAGE (%)SwitzerlandUK 1SwitzerlandDiscount rates 1.00 3.85 1.25 Future salary increases 1.50 4.25 1.50 Future pension increases 0.25 2.20 0.50 Average retirement age (in years) 64 65 63 – 64 Mortality table (generational tables)2010201520101 For the period August to DecemberThe mortality table takes into account changes in the life expectancy. Plan asset structure The categories of plan assets in percentage of total value are as follows:20152014IN PERCENTAGE (%)SwitzerlandUK 1SwitzerlandShares30.929.430.1Bonds30.358.533.3Real estate28.10.023.5Other 210.712.113.1Total100.0100.0100.01 For the period August to December2 Includes liquid positions and alternative investments.All assets held by the Pension fund in Switzerland and UK are fair-value-level 1 (quoted prices in active markets), except certain real estate in Switzerland which are fair-value-level 2 (significant observable inputs) representing 13.9 % (2014: 23.5 %) of the total assets.The net outflow of funds due to pension payments can be planned reliably. Contri-butions are paid regularly to the funded pension plans in Switzerland and UK. Further more, the respective investment strategies take account of the need to guarantee the liquidity of the plan at all times. Dufry does not make use of any assets held by pension plans. 171
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Plan participants20152014IN THOUSAND OF CHFSwitzerlandUK 1SwitzerlandACTIVE PARTICIPANTSNumber at December 31 (persons) 882 25 1,015 Average annual plan salary 70.3 70.0 59.9 Average age (years) 40.0 49.0 40.2 Average benefit service (years) 10.0 14.1 8.8 DEFERRED PARTICIPANTSNumber at December 31 (persons)– 1,397 –Average annual plan pension– 5.3 –BENEFIT RECEIVING PARTICIPANTSNumber at December 31 (persons) 137 910 123 Average annual plan rent 24.0 4.0 26.2 1 For the period August to December2015IN MILLIONS OF CHFSwitzerlandUK 1EXPECTED CONTRIBUTIONS FOREmployer 5.8 0.2 Employees 3.1 0.1 Weighted average duration of defined benefit obligation (years) 19.7 21.2 1 For the period August to December20152014IN MILLIONS OF CHFSwitzerlandSwitzerlandMATURITY PROFILE OF DEFINED BENEFIT OBLIGATIONExpected payments within 1 year 7.5 7.5 Expected payments in year 2 7.1 7.8 Expected payments in year 3 7.1 7.9 Expected payments in year 4 7.0 8.0 Expected payments in year 5 6.6 7.8 Expected payments beyond 5 years 36.7 41.6 172
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Sensitivities of significant actuarial assumptionsThe discount rate and the future salary increase were identified as significant actuarial assumptions.The following impacts on the defined benefit obligation are to be expected:SWITZERLANDUK2015 IN MILLIONS OF CHFIncreaseDecreaseIncreaseDecreaseA CHANGE OF 0.5 % IN THE FOLLOWING ASSUMPTIONS WOULD IMPLYDiscount rate(14.7) 16.9 n / a 22.0 Salary rate 4.3 (3.9)n / a n / a Inflation raten / a n / a 16.3 n / a The sensitivity analysis is based on realistically possible changes as of the end of the reporting year. Each change in a significant actuarial assumption was analyzed separately as part of the test. Interdependencies were not taken into account.Expected costs2016IN MILLIONS OF CHFSwitzerlandUKCurrent service cost7.30.4Fund administration expenses0.40.0Net interest expenses0.10.9Costs to be recognized in income statement7.81.334. OTHER LIABILITIES IN MILLIONS OF CHF31.12.201531.12.2014Other service related vendors 1 321.3 173.1 Concession fee payables 167.6 136.0 Personnel payables 165.6 134.4 Sales tax and other tax liabilities 98.4 47.7 Payables for capital expenditure 2 31.3 180.2 Accrual for lease expenses 61.9 –Interest payables 50.8 27.6 Payables for projects 19.5 18.1 Accrued liabilities 16.5 15.9 Financial derivative liabilities 2.6 0.1 Payables to local business partners 1.7 6.3 Payables for acquisitions 0.1 –Other payables 22.3 24.1 Total 959.6 763.5 THEREOFCurrent liabilities 894.7 760.2 Non-current liabilities 64.9 3.3 Total 959.6 763.5 1 Thereof WDF CHF 201.3 million2 Includes in 2014 CHF 162.2 million related to the Put option (see note 6.5) 173
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201535. RELATED PARTIES AND RELATED PARTY TRANSACTIONSA party is related to Dufry if the party directly or indirectly controls, is controlled by, or is under common control with Dufry, has an interest in Dufry that gives it significant influence over Dufry, has joint control over Dufry or is an associate or a joint venture of Dufry. In addition, members of the key management personnel of Dufry or close members of the family are also considered related parties as well as post-employment benefit plans for the benefit of employees of Dufry.The related party transactions and relationships for Dufry are the following:IN MILLIONS OF CHF20152014PURCHASE OF GOODS FROMHudson Wholesale, purchase of merchandises 1 18.5 18.9 Hudson RPM, purchase of merchandises 1 4.1 4.0 Folli Follie Group, purchase of goods 2 3.7 4.9 PURCHASE OF OTHER SERVICES FROMTransportes Aereos de Xalapa de CV 3 2.3 3.4 Folli Follie Group, rent of building 2 0.6 0.8 Pension Fund Weitnauer, post-employment benefits 4.2 2.5 Pension Fund Nuance, post-employment benefits 6.5 1.2 Aeropuertos Siglo XXI SA, Concession fees 3 7.5 6.8 SALE OF GOODS TOFolli Follie Group 2– 0.7 OUTSTANDING PAYABLES AT DECEMBER 31Hudson Wholesale, trade payables 1 1.1 2.2 Hudson RPM, trade payables 1 0.3 0.4 Aeropuertos Siglo XXI SA, concession payables 0.9 0.9 Transportes Aereos de Xalapa SA de CV, other payables 0.7 1.3 Folli Follie Group, trade payables 2 4.2 5.3 Pension Fund Weitnauer, personnel payables– 0.5 Pension Fund Nuance, personnel payables 0.4 0.6 OUTSTANDING RECEIVABLES AT DECEMBER 31Folli Follie Group, trade receivables 2 0.3 4.6 1 These two Hudson companies are controlled by James S. Cohen, a member of the Board of Directors2 Folli Follie Group is controlled by George Koutsolioutsos, a member of the Board of Directors3 Aeropuertos Dominicanos Siglo XXI and Transportes Aereos de Xalapa SA de CV are subsidiaries of Latin America Airport Holding Ltd. Juan Carlos Torres Carretero and Andrés Holzer Neumann are member of the Board of Directors of this company. 174
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015The compensation to members of the Board of Directors and the Group Executive Committee for the services provided during the respective years includes all forms of consideration paid, payable or provided by Dufry, including compensation in company shares as follows: IN MILLIONS OF CHF20152014BOARD OF DIRECTORSNumber of directors99Short-term employee benefits 1 5.6 4.9 Post-employment benefits 0.3 0.3 Share-based payments––Total compensation 5.9 5.2 GROUP EXECUTIVE COMMITTEENumber of members99Short-term employee benefits 16.1 16.9 Post-employment benefits 1.2 1.9 Share-based payments 2 2.8 2.4 Total compensation 20.1 21.2 1 In prior year, the short-term employee benefit of the Board of Directors includes a compensation for the strategic consulting service provided by Mr. Bouton of CHF 0.3 million. This service agreement was terminated on December 31, 2014.2 Expenses accrued during the year for members of the Group Executive CommitteeFor further information regarding participations and compensations to member of the Board of Directors or Group Executive Committee, please refer to the remu-neration report at the end of the annual report. 175
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201536. COMMITMENTS AND CONTINGENCIESGUARANTEE COMMITMENTSSome long-term concession agreements, which Dufry has entered into, include obligations to fulfill minimal fee payments during the full term of the agreement. Some of these agreements have been backed with guarantees provided by Dufry or a financial institution. During the years 2015 or 2014, no party has exercised their right to call upon such guarantees. All accrued, but still unpaid fees are presented as liabilities in the balance sheet.37. FAIR VALUE MEASUREMENTFAIR VALUE OF FINANCIAL INSTRUMENTS CARRIED AT AMORTIZED COSTExcept as detailed in table Quantitative disclosures fair value measurement hier-archy for assets below, Dufry considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.The following tables provide the fair value measurement hierarchy of Dufry’s assets and liabilities, that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable: –Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. –Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). –Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). 176
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Quantitative disclosures fair value measurement hierarchy for assetsFAIR VALUE MEASUREMENT USINGDECEMBER 31, 2015 IN MILLIONS OF CHFDATE OF VALUATIONTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)BOOK VALUESASSETS MEASURED AT FAIR VALUEDerivative financial assets (Note 38.5.2)Foreign exchange forward contracts – USD31.12.2015 0.5 0.5 0.5 Foreign exchange forward contracts – EUR31.12.2015 1.2 1.2 1.2 Financial assets valued at FVTPL (Note 38.2)Short-term deposits31.12.2015 29.5 29.5 – 29.5 Short-term financial investments31.12.2015 17.7 17.7 – 17.7 ASSETS FOR WHICH FAIR VALUES ARE DISCLOSEDLoans and receivablesCredit card receivables31.12.2015 45.5 45.5 46.4 FAIR VALUE MEASUREMENT USINGDECEMBER 31, 2014 IN MILLIONS OF CHFDATE OF VALUATIONTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)BOOK VALUESASSETS MEASURED AT FAIR VALUEDerivative financial assets (Note 38.5.2)Foreign exchange forward contracts – USD31.12.2014 0.6 0.6 0.6 Financial assets valued at FVTPL (Note 38.2)Short-term deposits31.12.2014 23.9 23.9 23.9 ASSETS FOR WHICH FAIR VALUES ARE DISCLOSEDLoans and receivablesCredit card receivables31.12.2014 43.7 43.7 44.5 There were no transfers between the Level 1 and 2 during the period. 177
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Quantitative disclosures fair value measurement hierarchy for liabilitiesFAIR VALUE MEASUREMENT USINGDECEMBER 31, 2015 IN MILLIONS OF CHFDATE OF VALUATIONTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)BOOK VALUESLIABILITIES MEASURED AT FAIR VALUEDerivative financial liabilities (Note 38.5.2)Foreign exchange forward contracts – USD31.12.2015 0.9 0.9 0.9 Foreign exchange forward contracts – EUR31.12.2015 0.1 0.1 0.1 Foreign exchange forward contracts – GBP31.12.2015 0.1 0.1 0.1 Financial assets valued at FVTPL (Interest rate swaps)31.12.2015 1.5 1.5 1.5 LIABILITIES FOR WHICH FAIR VALUES ARE DISCLOSEDAt amortized costSenior Notes USD 50031.12.2015 519.2 519.2 493.2 Senior Notes EUR 50031.12.2015 569.3 569.3 529.6 Senior Notes EUR 70031.12.2015 792.4 792.4 744.4 Floating rate borrowings USD31.12.2015 1,089.5 1,089.5 1,019.2 Floating rate borrowings EUR31.12.2015 859.1 859.1 789.7 Floating rate borrowings CHF31.12.2015 102.4 102.4 98.4 Floating rate borrowings GBP31.12.2015 674.0 674.0 631.8 FAIR VALUE MEASUREMENT USINGDECEMBER 31, 2014 IN MILLIONS OF CHFDATE OF VALUATIONTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)BOOK VALUESLIABILITIES MEASURED AT FAIR VALUEDerivative financial liabilities (Note 38.5.2)Foreign exchange forward contracts – USD31.12.2014 0.1 0.1 0.1 LIABILITIES FOR WHICH FAIR VALUES ARE DISCLOSEDAt amortized costSenior Notes USD31.12.2014 518.4 518.4 489.0 Senior Notes EUR31.12.2014 642.7 642.7 585.9 Floating rate borrowings USD31.12.2014 1,068.4 1,068.4 1,053.5 Floating rate borrowings EUR31.12.2014 652.5 652.5 601.4 Floating rate borrowings CHF31.12.2014 112.2 112.2 110.0 There were no transfers between the Level 1 and 2 during the period. 178
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538. FINANCIAL INSTRUMENTSSignificant accounting policies are described in note 2.3 t) and following notes.38.1 CAPITAL RISK MANAGEMENTCapital comprises equity attributable to the equity holders of the parent less hedg-ing and revaluation reserves for unrealized gains or losses on net investment, plus other equity-linked or equity-like instruments attributable to the parent.The primary objective of Dufry’s capital management is to ensure that it maintains an adequate credit rating and sustainable capital ratios in order to support its busi-ness and maximize shareholder value.Dufry manages its financing structure and makes adjustments to it in light of its strategy and the long-term opportunities and costs of each financing source. To maintain or adjust the financing structure, Dufry may adjust dividend payments to shareholders, return capital to shareholders, issue new shares or issue equity-linked instruments or equity-like instruments.Furthermore, Dufry monitors the financing structure using a combination of ratios, including a gearing ratio, cash flow considerations and profitability ratios. As for the gearing ratio Dufry includes within net debt, interest bearing loans and bor-rowings, less cash and cash equivalents, excluding discontinued operations. 38.1.1 Gearing ratioThe following ratio compares owner’s equity to borrowed funds:IN MILLIONS OF CHF31.12.2015RESTATED * 31.12.2014Cash and cash equivalents (432.5)(513.0)Financial debt, short-term 77.3 45.6 Financial debt, long-term 4,313.1 2,821.8 Net debt 3,957.9 2,354.4 Equity attributable to equity holders of the parent 3,149.1 2,293.6 ADJUSTED FORAccumulated hedged gains / (losses) 40.1 42.0 Effects from transactions with non-controlling interests 1 1,821.0 692.6 Total capital 2 5,010.2 3,028.2 Total net debt and capital 8,968.1 5,382.6 Gearing ratio 44.1 %43.7 %* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 Represents the excess paid (received) above fair value of non-controlling interests on shares acquired (sold) as long as there is no change in control (IFRS 10.23)2 Includes all capital and reserves of Dufry that are managed as capitalDufry did not hold collateral of any kind at the reporting dates. 179
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.2 CATEGORIES OF FINANCIAL INSTRUMENTS AT DECEMBER 31, 2015FINANCIAL ASSETSIN MILLIONS OF CHFLoans and receivablesat FVTPL 1SUBTOTALNON-FINANCIAL ASSETS 2TOTALCash and cash equivalents 403.0 29.5 432.5 – 432.5 Financial instruments at fair value through profit and loss– 17.7 17.7 – 17.7 Trade and credit card receivables 132.8 – 132.8 – 132.8 Other accounts receivable 131.8 1.7 133.5 202.5 336.0 Other non-current assets 109.4 – 109.4 238.0 347.4 Total 777.0 48.9 825.9 FINANCIAL LIABILITIESIN MILLIONS OF CHFat amortized costat FVTPL 1SUBTOTALNON-FINANCIAL LIABILITIES 2TOTALTrade payables 546.8 – 546.8 – 546.8 Financial debt short-term 77.3 – 77.3 – 77.3 Other liabilities 776.1 2.6 778.7 116.0 894.7 Financial debt long-term 4,313.1 – 4,313.1 – 4,313.1 Other non-current liabilities 3.0 – 3.0 61.9 64.9 Total 5,716.3 2.6 5,718.9 1 Financial assets and liabilities at fair value through income statement2 Non-financial assets and liabilities comprise prepaid expenses and deferred income, which will not generate a cash outflow or inflow as well as sales tax and other tax positionsAT DECEMBER 31, 2014FINANCIAL ASSETSIN MILLIONS OF CHFLoans and receivablesat FVTPL 1SUBTOTALNON-FINANCIAL ASSETS 2TOTALCash and cash equivalents 489.1 23.9 513.0 – 513.0 Trade and credit card receivables 118.7 – 118.7 – 118.7 Other accounts receivable 109.7 0.6 110.3 116.9 227.2 Other non-current assets 73.6 – 73.6 33.0 106.6 Total 791.1 24.5 815.6 FINANCIAL LIABILITIESIN MILLIONS OF CHFat amortized costat FVTPL 1SUBTOTALNON-FINANCIAL LIABILITIES 2TOTALTrade payables 418.3 – 418.3 – 418.3 Financial debt short-term 45.6 – 45.6 – 45.6 Other liabilities 695.9 0.1 696.0 64.2 760.2 Financial debt long-term 2,821.8 – 2,821.8 – 2,821.8 Other non-current liabilities 3.3 – 3.3 – 3.3 Total 3,984.9 0.1 3,985.0 1 Financial assets and liabilities at fair value through income statement2 Non-financial assets and liabilities comprise prepaid expenses and deferred income, which will not generate a cash outflow or inflow as well as sales tax and other tax positions 180
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.2.1 Net income by IAS 39 valuation categoryFinancial Assets at December 31, 2015IN MILLIONS OF CHFLOANS AND RECEIVABLESAT FVTPLTOTALInterest income 5.6 0.7 6.3 Other finance income 0.4 4.5 4.9 From interest 6.0 5.2 11.2 Fair values gain (loss)– 4.9 4.9 Foreign exchange gain (loss) 1(148.3) 10.9 (137.3)Impairments / allowances 2(11.7)–(11.7)Total – from subsequent valuation(160.0) 15.8 (144.2)Net (expense) / income(154.0) 21.0 (133.0)Financial Liabilities at December 31, 2015IN MILLIONS OF CHFAT AMORTIZED COSTAT FVTPLTOTALInterest expenses(172.6)–(172.6)Other finance expenses(5.5)(1.2)(6.7)From interest(178.1)(1.2)(179.3)Foreign exchange gain (loss) 1 136.3 – 136.3 Total – from subsequent valuation 136.3 – 136.3 Net (expense) / income(41.8)(1.2)(43.0)1 This position includes the foreign exchange gain (loss) recognized on third party and intercompany financial assets and liabilities through consolidated income statement2 This position includes the income from the released impairments and allowances and recoveries during the period less the increase of impairments and allowances 181
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Financial Assets at December 31, 2014IN MILLIONS OF CHFLOANS AND RECEIVABLESAT FVTPLTOTALInterest income 4.3 – 4.3 Other finance income 0.4 – 0.4 From interest 4.7 – 4.7 Fair values gain (loss)– 4.8 4.8 Foreign exchange gain (loss) 1 137.8 – 137.8 Impairments / allowances 2(2.9)–(2.9)Total – from subsequent valuation 134.9 4.8 139.7 Net income 139.6 4.8 144.4 Financial Liabilities at December 31, 2014IN MILLIONS OF CHFAT AMORTIZED COSTAT FVTPLTOTALInterest expenses(139.8)–(139.8)Other finance expenses(11.5)–(11.5)From interest(151.3)–(151.3)Fair values gain (loss)–(1.0)(1.0)Foreign exchange gain (loss) 1(139.9)–(139.9)Total – from subsequent valuation(139.9)(1.0)(140.9)Net expense(291.2)(1.0)(292.2)1 This position includes the foreign exchange gain (loss) recognized on third party and intercompany financial assets and liabilities through consolidated income statement2 This position includes the income from the released impairments and allowances and recoveries during the period less the increase of impairments and allowances 182
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.3 FINANCIAL RISK MANAGEMENT OBJECTIVESAs a global retailer, Dufry has worldwide activities which need to be financed in different currencies and are consequently affected by fluctuations of foreign exchange and interest rates. Dufry’s treasury manages the financing of the oper-ations through centralized credit facilities to ensure an adequate allocation of these resources and simultaneously minimize the potential currency financial risk impacts.Dufry continuously monitors the market risk, such as risks related to foreign currency, interest rate, credit, liquidity and capital. Dufry seeks to minimize the currency exposure and interest rates risk using appropriate transaction structures or alternatively, using derivative financial instruments to hedge the exposure to these risks. The treasury policy forbids entering or trading financial instruments for speculative purposes.38.4 MARKET RISKDufry’s financial assets and liabilities are mainly exposed to market risk in foreign currency exchange and interest rates. Dufry’s objective is to minimize the income statement impact and to reduce fluctuations in cash flows through structuring the respective transactions to minimize market risks. In cases, where the associated risk cannot be hedged appropriately through a transaction structure, and the evaluation of market risks indicates a material exposure, Dufry may use financial instruments to hedge the respective exposure.Dufry may enter into a variety of financial instruments to manage its exposure to foreign currency risk, including forward foreign exchange contracts, currency swaps and over the counter plain vanilla options.During the current financial year Dufry utilized foreign currency forward contracts and options for hedging purposes. 183
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.5 FOREIGN CURRENCY RISK MANAGEMENTDufry manages the cash flow surplus or deficits in foreign currency of the opera-tions through FX-transactions in the respective local currency. Major imbalances in foreign currencies at Group level are hedged through foreign exchange forwards contracts. The terms of the foreign currency forward contracts have been nego-tiated to match the terms of the forecasted transactions.38.5.1 Foreign currency sensitivity analysisAmong various methodologies to analyze and manage risk, Dufry utilizes a system based on sensitivity analysis. This tool enables group treasury to identify the level of risk of each entity. Sensitivity analysis provides an approximate quantification of the exposure in the event that certain specified parameters were to be met under a specific set of assumptions.Foreign Currency Exposure:IN MILLIONS OF CHFUSDEUROGBPBRLOTHERTOTALDECEMBER 31, 2015Monetary assets 1,655.2 1,897.9 659.0 20.2 256.8 4,489.1 Monetary liabilities 3,139.5 2,130.2 1,014.1 36.0 166.2 6,486.0 Net exposure before hedging(1,484.3)(232.3)(355.1)(15.8) 90.6 (1,996.9)Hedging 929.7 – 353.5 –(101.8) 1,181.4 Net exposure after hedging(554.6)(232.3)(1.6)(15.8)(11.2)(815.5)DECEMBER 31, 2014Monetary assets 1,253.6 1,427.7 – 44.3 275.5 3,001.1 Monetary liabilities 2,317.8 1,562.3 – 72.2 163.4 4,115.7 Net exposure before hedging(1,064.2)(134.6)–(27.9) 112.1 (1,114.6)Hedging 922.0 –––(79.1) 842.9 Net exposure after hedging(142.2)(134.6)–(27.9) 33.0 (271.7)The sensitivity analysis includes all monetary assets and liabilities irrespective of whether the positions are third party or intercompany. Dufry has considered some intercompany long-term loans as net investment in foreign operations (IAS 21, paragraph 15). Consequently, the related exchange differences are presented in other comprehensive income and thereafter as translation reserve in equity.The foreign exchange rate sensitivity is calculated by aggregation of the net for-eign exchange rate exposure of Dufry entities at December 31 of the respective year. The values and risk disclosed here are the hedged and not hedged positions assuming a 5 % appreciation of the CHF against all other currencies. 184
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015A positive result indicates a profit, before tax in the consolidated income state-ment or in the hedging and revaluation reserves when the CHF strengthens against the relevant currency.IN MILLIONS OF CHF31.12.201531.12.2014Effect on the Income Statement – profit (loss) of USD 27.7 7.2 Other comprehensive income – profit (loss) of USD 46.5 46.0 Effect on the Income Statement – profit (loss) of EUR 11.6 6.7 Reconciliation to categories of financial instruments:IN MILLIONS OF CHF31.12.201531.12.2014FINANCIAL ASSETSTotal financial assets held in foreign currencies (see above) 4,489.1 3,001.1 less intercompany financial assets in foreign currencies(4,278.6)(2,758.6)Third party financial assets held in foreign currencies 210.5 242.5 Third party financial assets held in reporting currencies 615.4 573.1 Total third party financial assets 1 825.9 815.6 FINANCIAL LIABILITIESTotal financial liabilities held in foreign currencies (see above) 6,486.0 4,115.7 less intercompany financial liabilities in foreign currencies(2,868.4)(2,057.9)Third party financial liabilities held in foreign currencies 3,617.6 2,057.8 Third party financial liabilities held in reporting currencies 2,101.3 1,927.2 Total third party financial liabilities 1 5,718.9 3,985.0 1 See note 38.2 Categories of financial instruments38.5.2 Forward foreign exchange contracts and foreign exchange options at fair valueAs the management of the company actively pursues to naturally hedge the posi-tions in each operation, the policy of Dufry is to enter into foreign exchange forward and options contracts only where needed.The following table shows the contracts or underlying principal amounts and fair values of derivative financial instruments. Contracts or underlying principal amounts indicate the volume of business outstanding at the balance sheet date. The fair values are determined by reference to market prices or standard pricing models that used observable market inputs at December 31 of each year.IN MILLIONS OF CHFCONTRACT OR UNDERLYING PRINCIPAL AMOUNTPOSITIVE FAIR VALUENEGATIVE FAIR VALUEDecember 31, 2015 273.7 1.7 1.1 December 31, 2014 13.1 0.6 0.1 185
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.5.3 Financial instruments at fair value through profit and lossThe Argentinian subsidiary is subject to international cash transfer restrictions. Consequently excess of cash was placed in Bonds denominated in USD to reduce the currency exposure. The changes in fair value are booked through profit and loss.Denomination: Bono de la Nacion Argentina vinculado al dolar (BONAD 16)Issuer: Argentinian GovernmentFixed interest rate: 1.75 %Maturity date: 28.10.2016Currency: Issued in USD and settled in Argentinian PesosThe movements of the listed public bonds denominated in USD are as follows:IN MILLIONS OF CHF20152014Balance at January 1––Additions 11.7 –Fair value adjustment 4.9 –Currency translation 1.1 –Balance at December 31 17.7 –The fair value of the listed public bonds is based on their current bid prices in an active market.Purchases of and proceeds from the sale of financial assets at fair value through profit and loss are presented within investing activities in the statement of cash flows. 186
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.6 INTEREST RATE RISK MANAGEMENTDufry manages the interest rate risk through interest rate swaps and options to the extent that the hedging cannot be implemented through managing the dura-tion of the debt drawings. The levels of the hedging activities are evaluated regu-larly and may be adjusted in order to reflect the development of the various parameters. Dufry had 9 outstanding interest swaps contracts during 2015 (none in 2014).38.6.1 Interest rate swap contractsThe following table shows the contracts or underlying principal amounts and fair values of derivative financial instruments. Contracts or underlying principal amounts indicate the volume of business outstanding at December 31. The fair values are determined by reference to market prices or standard pricing models that used observable market inputs at December 31.IN MILLIONS OF CHFCONTRACT OR UNDERLYING PRINCIPAL AMOUNTPOSITIVE FAIR VALUENEGATIVE FAIR VALUEDecember 31, 2015 195.5 – 1.5 December 31, 2014–––The interest rate swaps settle on a monthly basis. The floating rate on the interest rate swaps is the equivalent to one month GBP LIBOR rate. Dufry will settle the difference between the fixed and the floating interest rate on a net basis.All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce Dufry’s cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the interest payments on the loan occur simultane-ously and the amount accumulated in equity is reclassified to the income state-ment over the period that the floating rate interest payments on debt affect the income statement.38.6.2 Interest rate sensitivity analysisThe sensitivity analysis below has been determined based on the exposure to interest rates derivatives and non-derivative instruments at the reporting date. The risk analysis provided here assumes a simultaneous increase of 100 basis points of the interest rate of all interest bearing financial positions.If interest rates had been 100 basis points higher whereas all other variables were held constant, Dufry’s net earnings for the year 2015 would decrease by CHF 33.2 (2014: decrease by 15.9) million. 187
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.6.3 Allocation of financial assets and liabilities to interest classesIN %IN MILLIONS OF CHFAT DECEMBER 31, 2015Average variable interest rateAverage fixed interest rateVariable interest rateFixed interest rateTotal interest bearingNon-interest bearingTOTAL Cash and cash equivalents0.4 %17.3 % 155.2 38.7 193.9 238.6 432.5 Financial instruments at fair value through profit and loss1.8 %– 17.7 17.7 – 17.7 Trade and credit card receivables––– 132.8 132.8 Other accounts receivable7.1 % 2.9 – 2.9 130.6 133.5 Other non-current assets3.1 %0.5 % 36.4 0.4 36.8 72.6 109.4 Financial assets 194.5 56.8 251.3 574.6 825.9 Trade payables––– 546.8 546.8 Financial debt, short-term6.1 % 74.4 2.5 76.9 0.4 77.3 Other liabilities1.3 %– 1.5 1.5 777.2 778.7 Financial debt, long-term2.6 %5.0 % 2,569.0 1,744.1 4,313.1 – 4,313.1 Other non-current liabilities––– 3.0 3.0 Financial liabilities 2,643.4 1,748.1 4,391.5 1,327.4 5,718.9 Net financial liabilities 2,448.9 1,691.3 4,140.2 752.8 4,893.0 IN %IN MILLIONS OF CHFAT DECEMBER 31, 2014Average variable interest rateAverage fixed interest rateVariable interest rateFixed interest rateTotal interest bearingNon-interest bearingTOTAL Cash and cash equivalents0.0 %0.3 % 400.4 41.5 441.9 71.1 513.0 Trade and credit card receivables––– 118.7 118.7 Other accounts receivable0.0 % 10.1 – 10.1 100.2 110.3 Other non-current assets3.2 %1.1 % 8.4 25.8 34.2 39.4 73.6 Financial assets 418.9 67.3 486.2 329.4 815.6 Trade payables––– 418.4 418.4 Financial debt, short-term3.0 %3.0 % 40.5 4.7 45.2 0.4 45.6 Other liabilities1.8 %– 0.1 0.1 695.9 696.0 Financial debt, long-term2.1 %5.0 % 1,738.2 1,083.5 2,821.7 – 2,821.7 Other non-current liabilities––– 3.3 3.3 Financial liabilities 1,778.7 1,088.3 2,867.0 1,118.0 3,985.0 Net financial liabilities 1,359.8 1,021.0 2,380.8 788.6 3,169.4 188
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.7 CREDIT RISK MANAGEMENTCredit risk refers to the risk that counterparty may default on its contractual obligations resulting in financial loss to Dufry. Almost all Dufry sales are retail sales made against cash or internationally recog-nized credit / debit cards. Dufry has policies in place to ensure that other sales are only made to customers with an appropriate credit history or that the credit risk is insured adequately. The remaining credit risk is in relation to taxes, refunds from suppliers and guarantee deposits.The credit risk on cash deposits or derivative financial instruments relates to banks or financial institutions. Dufry monitors the credit ranking of these institutions and does not expect defaults from non-performance of these counterparties.38.7.1 Maximum credit riskThe carrying amount of financial assets recorded in the financial statements, after deduction of any allowances for losses, represents Dufry’s maximum exposure to credit risk. 189
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.8 LIQUIDITY RISK MANAGEMENTDufry evaluates this risk as the ability to settle its financial liabilities on time and at a reasonable price. Beside its capability to generate cash through its operations, Dufry mitigates liquidity risk by keeping unused credit facilities with financial institutions (see note 31).38.8.1 Remaining maturities for non-derivative financial assets and liabilitiesThe following tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities (based on the earliest date on which Dufry can receive or be required to pay). The tables include principal and interest cash flows.AT DECEMBER 31, 2015 IN MILLIONS OF CHF1 – 6 MONTHS6 – 12 MONTHS1 – 2 YEARSMORE THAN 2 YEARSTOTAL Cash and cash equivalents 434.6 0.2 –– 434.8 Financial instruments at fair value through profit and loss– 17.9 –– 17.9 Trade and credit card receivables 132.0 0.8 –– 132.8 Other accounts receivable 131.8 0.1 –– 131.9 Other non-current assets 0.4 0.8 1.0 112.5 114.7 Total cash inflows 698.8 19.8 1.0 112.5 832.1 Trade payables 546.9 ––– 546.9 Financial debt, short-term 82.7 6.2 –– 88.9 Other liabilities 776.1 ––– 776.1 Financial debt, long-term 79.7 79.8 161.0 4,856.5 5,177.0 Other non-current liabilities––– 3.0 3.0 Total cash outflows 1,485.4 86.0 161.0 4,859.5 6,591.9 AT DECEMBER 31, 2014 IN MILLIONS OF CHF1 – 6 MONTHS6 – 12 MONTHS1 – 2 YEARSMORE THAN 2 YEARSTOTAL Cash and cash equivalents 513.6 ––– 513.6 Trade and credit card receivables 117.8 0.9 –– 118.7 Other accounts receivable 109.6 0.1 –– 109.7 Other non-current assets 0.8 0.9 4.5 76.6 82.8 Total cash inflows 741.8 1.9 4.5 76.6 824.8 Trade payables 418.1 0.2 –– 418.3 Financial debt, short-term 47.1 2.3 –– 49.4 Other liabilities 695.0 0.9 –– 695.9 Financial debt, long-term 46.9 46.3 152.4 3,195.0 3,440.6 Other non-current liabilities––– 3.3 3.3 Total cash outflows 1,207.1 49.7 152.4 3,198.3 4,607.5 38.8.2 Remaining maturities for derivative financial instrumentsDufry has derivative financial instruments at year-end of net CHF 1.0 million with maturities below 6 month. 190
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201538.9 LEGAL RESTRICTIONS ON MONEY TRANSFERCash and cash equivalents at the end of the reporting period include CHF 71.7 (2014: 54.9) million held by subsidiaries operating in countries with exchange controls or other legal restrictions on money transfer.38.10 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIESDufry’s notional cash pool is operated by a major finance institute. The respective balances at the end of the period have been set-off as follows, based on enforce-able master netting agreement:IN MILLIONS OF CHFBALANCE BEFORE GLOBAL POOLINGSET-OFFNET BALANCE 31.12.2015Cash and cash equivalents 1,009.7 (577.2) 432.5 Financial debt, short-term 654.5 (577.2) 77.3 31.12.2014Cash and cash equivalents 848.5 (335.5) 513.0 Financial debt, short-term 381.1 (335.5) 45.6 191
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201539. RESTATEMENTDufry revised the preliminary values of the purchase price analysis as presented at December 31, 2014 to reflect: –Change in deferred tax calculation due to timing limitations of current income taxes in Turkey –Inclusion of income tax effect on sale of investment in associates and –Enterprise valuation of a startup operation in India after assessing properly the market.39.1 CONSOLIDATED INCOME STATEMENT IN MILLIONS OF CHFPUBLISHED 2014RESTATEMENTRESTATED* 2014CONTINUING OPERATIONSNet sales 4,063.1 – 4,063.1 Advertising income 133.5 – 133.5 Turnover 4,196.6 – 4,196.6 Cost of sales(1,733.5) 0.5 (1,733.0)Gross profit 2,463.1 0.5 2,463.6 Selling expenses(1,023.7) 0.4 (1,023.3)Personnel expenses(609.7)–(609.7)General expenses(256.4)–(256.4)Share of result of associates 2.3 – 2.3 EBITDA 1 575.6 0.9 576.5 Depreciation, amortization and impairment(249.1) 0.2 (248.9)Linearization–––Other operational result(61.1)–(61.1)Earnings before interest and taxes (EBIT) 265.4 1.1 266.5 Interest expenses(154.1)–(154.1)Interest income 5.7 – 5.7 Foreign exchange gain / (loss)(11.1)–(11.1)Earnings before taxes (EBT) 105.9 1.1 107.0 Income tax(20.3)(0.1)(20.4)Net earnings from continuing operations 85.6 1.0 86.6 DISCONTINUED OPERATIONSNet earnings from discontinued operations(0.8)–(0.8)Net earnings 84.8 1.0 85.8 ATTRIBUTABLE TOEquity holders of the parent 50.8 0.8 51.6 Non-controlling interests 34.0 0.2 34.2 EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTBasic earnings per share 1.53 0.02 1.55 Diluted earnings per share 1.48 0.02 1.50 Weighted average number of outstanding shares in thousands33,307– 33,307 EARNINGS PER SHARE FOR CONTINUING OPERATIONSBasic earnings per share attributable to equity holders of the parent 1.55 0.02 1.57 Diluted earnings per share attributable to equity holders of the parent 1.50 0.03 1.53 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39)1 EBITDA is earnings before interest, taxes, depreciation, amortization, linearization and other operational result 192
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201539.2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IN MILLIONS OF CHFPUBLISHED 2014RESTATEMENTRESTATED* 2014Net earnings 84.8 1.0 85.8 OTHER COMPREHENSIVE INCOMEActuarial gains / (losses) on post-employment benefits(37.9)–(37.9)Income tax 4.5 – 4.5 Items not being reclassified to net income in subsequent periods, net of tax(33.4)–(33.4)Exchange differences on translating foreign operations 223.9 223.9 Net gain / (loss) on hedge of net investment in foreign operations(102.4)(102.4)Income tax on above positions 3.2 – 3.2 Items to be reclassified to net income in subsequent periods, net of tax 124.7 – 124.7 Total other comprehensive income, net of tax 91.3 – 91.3 Total comprehensive income, net of tax 176.1 1.0 177.1 ATTRIBUTABLE TOEquity holders of the parent 129.9 0.8 130.7 Non-controlling interests 46.2 0.2 46.4 Total comprehensive income attributable to equity holders of the parent 129.9 0.8 130.7 ATTRIBUTABLE TOContinuing operations 130.7 0.8 131.5 Discontinued operations(0.8)–(0.8)* Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 193
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201539.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN MILLIONS OF CHFPUBLISHED 31.12.2014RESTATEMENTRESTATED* 31.12.2014ASSETSProperty, plant and equipment 435.4 – 435.4 Intangible assets 4,723.4 9.8 4,733.2 Investments in associates 72.9 – 72.9 Deferred tax assets 195.9 – 195.9 Other non-current assets 106.6 – 106.6 Non-current assets 5,534.2 9.8 5,544.0 Inventories 741.2 – 741.2 Trade and credit card receivables 118.7 – 118.7 Other accounts receivable 227.2 – 227.2 Income tax receivables 11.0 – 11.0 Cash and cash equivalents 513.0 – 513.0 Current assets 1,611.1 – 1,611.1 Assets of discontinued operations held for sale 1.8 – 1.8 Total assets 7,147.1 9.8 7,156.9 LIABILITIES AND SHAREHOLDERS’ EQUITYEquity attributable to equity holders of the parent 2,292.8 0.8 2,293.6 Non-controlling interests 165.8 (6.3) 159.5 Total equity 2,458.6 (5.5) 2,453.1 Financial debt 2,821.8 – 2,821.8 Deferred tax liabilities 416.4 2.7 419.1 Provisions 96.6 12.6 109.2 Post-employment benefit obligations 37.7 – 37.7 Other non-current liabilities 3.3 – 3.3 Non-current liabilities 3,375.8 15.3 3,391.1 Trade payables 418.3 – 418.3 Financial debt 45.6 – 45.6 Income tax payables 33.8 – 33.8 Provisions 54.8 – 54.8 Other liabilities 760.2 – 760.2 Current liabilities 1,312.7 – 1,312.7 Total liabilities 4,688.5 15.3 4,703.8 Total liabilities and shareholders’ equity 7,147.1 9.8 7,156.9 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 194
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201539.4 CONSOLIDATED STATEMENT OF CASH FLOWS IN MILLIONS OF CHFPUBLISHED 2014RESTATEMENTRESTATED* 2014CASH FLOWS FROM OPERATING ACTIVITIESEarnings before taxes (EBT) 105.9 1.1 107.0 Net earnings from discontinued operations(0.8)–(0.8)Total earnings before taxes (EBT) 105.1 1.1 106.2 ADJUSTMENTS FORDepreciation, amortization and impairment 249.1 (0.2) 248.9 Loss / (gain) on sale of non-current assets(0.9)–(0.9)Increase / (decrease) in allowances and provisions(16.0)–(16.0)Loss / (gain) on unrealized foreign exchange differences 9.1 – 9.1 Other non-cash items 2.4 – 2.4 Share of result of associates(2.3)–(2.3)Interest expense 154.1 – 154.1 Interest income(5.7)–(5.7)Cash flow before working capital changes 494.9 0.9 495.8 Decrease / (increase) in trade and other accounts receivable(32.0)–(32.0)Decrease / (increase) in inventories 36.5 (0.5) 36.0 Increase / (decrease) in trade and other accounts payable(43.1)(0.4)(43.5)Dividends received from associates 0.4 – 0.4 Cash generated from operations 456.7 – 456.7 Income taxes paid(65.2)(65.2)Net cash flows from operating activities 391.5 – 391.5 CASH FLOW FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (143.7)–(143.7)Purchase of intangible assets(57.0)–(57.0)Proceeds from sale of property, plant and equipment 3.1 – 3.1 Interest received 4.9 – 4.9 Business combinations, net of cash(1,124.6)–(1,124.6)Proceeds from sale of interests in subsidiaries and associates 0.2 – 0.2 Net cash flows used in investing activities(1,317.1)–(1,317.1)CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of new shares 810.0 – 810.0 Proceeds from mandatory convertible notes 275.0 – 275.0 Transaction costs for issuance of financial instruments(75.9)–(75.9)Proceeds from bank loans 1,570.8 – 1,570.8 Proceeds from issuance of notes 606.8 – 606.8 Repayment of bank loans and senior notes(1,821.7)–(1,821.7)Proceeds from / (repayment of) 3rd party loans (5.7)–(5.7)Dividends paid to non-controlling interest(39.5)–(39.5)Net purchase of treasury shares(13.8)–(13.8)Net contributions from / (purchase of) non-controlling interests 31.1 – 31.1 Interest paid (107.8)–(107.8)Net cash flows (used in) / from financing activities 1,229.3 – 1,229.3 Currency translation on cash(37.1)–(37.1)(Decrease) / increase in cash and cash equivalents 266.6 – 266.6 CASH AND CASH EQUIVALENTS AT THE– beginning of the period 246.4 – 246.4 – end of the period 513.0 – 513.0 * Based on the final assessment of the Purchase Price Allocation related to the Nuance Group, certain amounts presented in the annual report 2014 have been restated (see note 39) 195
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 201540. ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALEAs part of the Nuance acquisition, Dufry acquired the operations in Sydney exclu-sively with the view to its subsequent disposal.These assets are presented as held for sale following the approval of the Dufry’s management on September 9, 2014 to sell this operation. The transaction was com-pleted by end of February 2015.a) Assets of discontinued operationsIN MILLIONS OF CHF31.12.201531.12.2014Operational assets in Sydney– 1.8 In accordance with IFRS 5, the assets held for sale were written down to the value agreed with the buyer and no further costs to sell are expected.b) Cash flowsIN MILLIONS OF CHF20152014Cash flows from operating activities 2.8 (1.9)Cash flows from investing activities 0.1 –Cash flows from financing activities(2.9) 1.8 Currency translation on cash– 0.1 Total cash flows ––There are no items recognized in equity relating to the assets of discontinued operations classified as held-for-sale. 196
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015MOST IMPORTANT SUBSIDIARIESH = Holding R = Retail D = Distribution CenterAS OF DECEMBER 31, 2015LOCATIONCOUNTRYTYPEOWNER-SHIP IN %SHARE CAPITAL IN THOUSANDSCURRENCYEMEA & ASIAADF Shops CJSCYerevanArmeniaR100553,834AMDDufry (Cambodia) LtdPhnom PenCambodiaR801,231USDDufry (Shanghai) Commercial Co., LtdShanghaiChinaR10019,497CNYDufry France SANiceFranceR1008,291EURHellenic Duty Free Shops SAAthensGreeceR100397,535EURPT Dufrindo InternationalBaliIndonesiaR10062USDDufrital SpAMilanItalyR60258EURDufry Maroc SARLCasablancaMoroccoR802,500MADDufry East OOOMoscowRussiaR100712USDRegstaer LtdMoscowRussiaR1003,991EURDufry D.O.O.BelgradeSerbiaR100693,078RSDDufry Thomas Julie Korea Co. LtdBusanSouth KoreaR70100,000KRWDufry Basel-Mulhouse AGBaselSwitzerlandR100100CHFDufry Sharjah FZCSharjahU. Arab. EmiratesR512,054AEDAMERICA IInterbaires SABuenos AiresArgentinaR100306USDDufry Aruba N.V.OranjestadArubaR801,900USDDuty Free Caribbean Ltd.St. MichaelBarbadosR1005,000USDInversiones Tunc SRLSanto DomingoDominican RepublicR1000USDDufry Mexico SA de CVMexico CityMexicoR10027,429USDDufry Yucatan SA de CVMexico CityMexicoR1001,141USDAlliance Duty Free, Inc.San JuanPuerto RicoR1002,213USDDufry Trinidad LtdPort of SpainTrinidad and TobagoR60392USDNavinten SAMontevideoUruguayR100126USDFlagship Retail Services IncMiamiUSAR1000USDAMERICA IIDufry do Brasil DF Shop LtdaRio de JaneiroBrazilR1003,175USDDufry Lojas Francas LtdaSao PauloBrazilR8099,745USDUNITED STATES & CANADAHudson Group Canada Inc.VancouverCanadaR1000CADDufry O’Hare T5 JVChicagoUSAR800USDHG-Multiplex-Regali Dallas JVDallasUSAR750USDHudson Las Vegas JVLas VegasUSAR730USDHG Magic Concourse TBIT JVLos AngelesUSAR700USDLAX Retail Magic 2 JVLos AngelesUSAR800USDHudson Group (HG) Retail, LLCNew JerseyUSAH / R1000USDNew Orleans Air Ventures IINew OrleansUSAR660USDAirport Management Services LLCNew YorkUSAH / R1000USDJFK Air Ventures II JVNew YorkUSAR800USDHG-KCGI-TEI JFK T8 JVNew YorkUSAR850USDHudson-NIA JFK T1 JVNew YorkUSAR900USDHudson-Retail NEU LaGuardia JVNew YorkUSAR800USD 197
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015Dufry Newark IncNewarkUSAR1001,501USDAMS-BW Newark JVNewarkUSAR700USDSeattle Air Ventures IIOlympiaUSAR750USDDufry Seattle JVSeattleUSAR880USDHudson News O’Hare JVChicagoUSAR700USDHG National JVVirginiaUSAR700USDTHE NUANCE BUSINESSNuance Group (Canada) Inc.TorontoCanadaR10013,260CADNuance Group (HK) LtdHong KongChinaR1000HKDNuance-Watson (Macau) LtdMacauChinaR10049HKDNuance Group (India) Pvt. LtdBangaloreIndiaR50828,200INRNuance Group (Malta) LtdMaltaMaltaR1002,796EURLenrianta CSJCSt. PetersburgRussiaR80315EURNuance Group (Sverige) ABStockholmSwedenR100100SEKThe Nuance Group AGZurichSwitzerlandH / R10082,100CHFNet Magaza Isletm. ve Ticaret A.S.AntalyaTurkeyR1003,886EURNuance Group (UK) LtdSouthamptonUKR10050GBPNuance Group Las Vegas PartnershipLas VegasUSAR73850USDNuance Group (Australia) Pty LtdMelbourneAustraliaR100210,000AUDWORLD DUTY FREE BUSINESSWorld Duty Free Group SA *LimaPeruR1001,163USDWorld Duty Free Group Vancouver LPVancouverCanadaR1009,500CADAldeasa Chile, LtdSantiago de ChileChileR1002,517USDWorld Duty Free Group Helsinki LtdVantaaFinlandR1002,500EURWorld Duty Free Group France SNCNeuilly Sur SeineFranceR1005EURWorld Duty Free Group Germany GmbHDüsseldorfGermanyR100250EURSociedad de Distribucion Comercial Aeroportuaria de Canarias, S.L.TeldeGran CanariaR60667EURAldeasa Jamaica, LtdSt. JamesJamaicaR100280USDAldeasa Jordan Airports Duty Free Shops LtdAmmanJordanR100705USDWorld Duty Free Group SA *Kuwait CityKuwaitR1002,383KWDAldeasa Mexico, S.A de C.V.CancunMexicoR1003,766USDWorld Duty Free Group SAMadridSpainR10019,832EURAutogrill Lanka PVT LtdColomboSri LankaR10030,000LKRWorld Duty Free Group UK LtdLondonUKR100360GBPGLOBAL DISTRIBUTION CENTERSInternational Operations & Services (CH) AGBaselSwitzerlandD1005,000CHFInternational Operations & Services Corp.MontevideoUruguayD10050USDInternational Operations & Services (USA) Inc.MiamiUSAD100398USDHEADQUARTERSDufry International AGBaselSwitzerlandH1001,000CHFDufry Management AGBaselSwitzerlandH100100CHFDufry Holdings & Investments AGBaselSwitzerlandH1001,000CHFDufry Financial Services B.V.AmsterdamNetherlandsH1000EUR* Branch of World Duty Free Group SA, SpainAS OF DECEMBER 31, 2015LOCATIONCOUNTRYTYPEOWNER-SHIP IN %SHARE CAPITAL IN THOUSANDSCURRENCY 198
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 199
3 Financial Report Consolidated Financial StatementsDUFRY ANNUAL REPORT 2015 200
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015INCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2015IN THOUSANDS OF CHF20152014*Dividend income– 30,000 Financial income 11,411 9,795 Management and franchise fee income 6,175 8,867 Total income 17,586 48,662 Personnel expenses(8,659)(7,731)General and administrative expenses(4,921)(4,039)Management and franchise fee expenses(15,965)(13,704)Amortization of intangibles(5,755)(5,755)Financial expenses(1,286)(421)Expenses related with capital increase(595)(29,297)Direct taxes(8,868)(3,181)Total expenses (46,049)(64,128)(Loss) / profit for the year(28,463)(15,466)* Prior year figures were adjusted to the new structure (see note 2.2) 201
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015STATEMENT OF FINANCIAL POSITIONAT DECEMBER 31, 2015IN THOUSANDS OF CHFNOTE31.12.201531.12.2014*ASSETSCash and cash equivalents 10,746 730 Current receivables third parties 41 118 Current receivables participants and bodies 1 –Current receivables subsidiaries 980 1,661 Current receivables other group companies 11 87 Prepaid expenses and accrued income 7 14 Current financial assets subsidiaries 357,000 373,000 Current assets 368,786 375,610 Investments3 4,238,415 1,892,671 Intangible assets 82,006 87,761 Non-current assets 4,320,421 1,980,432 Total assets 4,689,207 2,356,042 LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent interest bearing liabilities– 6,811 Current liabilities third parties 2,626 872 Current liabilities participants and bodies 994 815 Current liabilities subsidiaries 12,788 10,653 Current liabilities other group companies 2 13 Deferred income and accrued expenses 13,347 11,093 Current liabilities 29,757 30,257 Total liabilities 29,757 30,257 Share capital5 269,359 179,525 Legal capital reservesReserve from capital contribution5 4,290,806 2,030,305 Legal retained earningsOther legal reserves 5,927 5,927 Voluntary retained earningsResults carried forward 136,098 139,594 (Loss) / profit for the year13(28,463)(15,466)Treasury shares6(14,277)(14,100)Shareholders’ equity 4,659,450 2,325,785 Total liabilities and shareholders’ equity 4,689,207 2,356,042 * Prior year figures were adjusted to the new structure (see note 2.2) 202
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015NOTES TO THE FINANCIAL STATEMENTS1. CORPORATE INFORMATIONDufry AG (the company) is a publicly listed company. The shares of the Company are listed on the Swiss Stock Exchange (SIX) in Zurich and its Brazilian Depository Receipts on the BM&FBOVESPA in Sao Paolo.Dufry AG was incorporated in 1865 and is registered with the commercial register in the canton of Basel Stadt, Switzerland.2. ACCOUNTING POLICIES2.1 BASIS OF PREPARATIONThese financial statements of Dufry AG were prepared in accordance with the requirements of the Swiss law on Accounting and Financial Reporting (32nd title of the Swiss Code of Obligations).Where not prescribed by law, the significant accounting and valuation principles applied are described below.2.2 FIRST-TIME ADOPTION OF THE NEW SWISS LAW ON ACCOUNTING AND FINANCIAL REPORTINGThe 2015 financial statements of Dufry AG are the first statements in which Dufry AG adopts the new Swiss law on Accounting and Financial Reporting (32nd title of the Swiss Code of Obligations).To ensure comparability, the previous year’s figures have been adjusted to the new presentation requirements. In particular the following positions are affected: –Treasury shares are restated as a deduction in equity. The reserve for treasury shares were released accordingly. 203
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 20152.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFinancial AssetsFinancial assets include loans. A valuation adjustment reserve has not been accounted for. Loans granted in foreign currencies are translated at the rate at the balance sheet date, whereby unrealized losses are recorded. Unrealized profits are not recognized in the income statement but deferred within accrued liabilities.Treasury SharesTreasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the time of acquisition. In case of a resale, the gain or loss is recognized through the income statement as financial income or financial expenses.Intangible assetsIntangible assets generated internally are capitalized if they meet the following conditions cumulatively at the date of recognition: –The intangible assets generated internally are identifiable and controlled by the entity; –the intangible assets generated internally will generate a measurable benefit for the entity for more than one year; –the expenses incurred in the creation of the intangible assets generated internally can be separately recognized and measured; –it is likely that the resources required to complete and market or use the intangible assets for the entity’s own purposes are available or will be made available.Intangible assets are amortized using the straightline method. As soon there are indicators that book values may be overstated, these are reviewed and, if necessary, adjusted.Share-based paymentsShould treasury shares be used for sharebased payment programs for Board members, the difference between the acquisition costs and any consideration paid by the employees at grant date is recognized as personnel expenses.Current interest-bearing liabilitiesInterestbearing liabilities are recognized in the balance sheet at nominal value.Exchange rate differencesExcept for investments in subsidiaries which are translated at historical rates, all assets and liabilities denominated in foreign currencies are translated into Swiss francs (CHF) using yearend exchange rates. Realized exchange gains and losses arising from these as well as those from business transactions denominated in foreign currencies are recorded in the income statement. Net unrealized exchange losses are recorded in the income statement; net unrealized gains, however, are deferred within accrued liabilities.Foregoing a cash flow statement and additional disclosures in the notesAs Dufry AG has prepared its consolidated financial statements in accordance with a recognized accounting standard (IFRS), it has decided to forego presenting additional information on interestbearing liabilities and audit fees in the notes as well as a cash flow statement in accordance with the law. 204
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 20153. SIGNIFICANT INVESTMENTS SHARE IN CAPITAL AND VOTING RIGHTSSHARE CAPITALIN THOUSANDS OF CHF2015201420152014Dufry International AG, Switzerland100 %100 % 1,000 1,000 Dufry Management AG, Switzerland100 %100 % 100 100 Dufry Corporate AG, Switzerland100 %100 % 100 100 Dufry Holdings & Investments AG, Switzerland100 %100 % 1,000 1,000 Total 4. SIGNIFICANT SHAREHOLDERS’ PARTICIPATION IN PERCENTAGE (%) OF OUTSTANDING REGISTERED SHARES31.12.201531.12.2014Group of shareholders consisting of various companies and legal entities representing the interests of Andrés Holzer Neumann, Julián Díaz González, Juan Carlos Torres Carretero, George Koutsolioutsos, James S. Cohen, Nucleo Capital Co-Investment Fund I Ltd. and James S. Cohen Family Dynasty Trust 20.50 %26.80 %Temasek Holdings (Private) Ltd.8.55 %–Government of Singapore7.79 %–State of Qatar6.92 %–Black Rock, Inc.3.06 %–Credit Suisse Group–7.10 %Group of shareholders represented by Tarpon Gestora de Recursos S.A.–3.13 %T. Rowe Price Associates, Inc.–3.01 % 205
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 20155. SHARE CAPITAL5.1 ORDINARY SHARES IN THOUSANDS OF CHFNUMBER OF SHARESSHARE CAPITALRESERVE FROM CAPITAL CONTRIBUTION *Balance at January 1, 2014 30,905,056 154,525 1,245,305 Issue of shares 5,000,000 25,000 785,000 Balance at December 31, 2014 35,905,056 179,525 2,030,305 Conversion of mandatory convertible notes 1,809,188 9,046 231,073 Issue of shares 16,157,463 80,788 2,119,213 Reclassification to retained earnings––(8,064)Share issuance costs not recognized as capital contribution––(81,721)Balance at December 31, 2015 53,871,707 269,359 4,290,806 * The amount of the reserve from capital contribution (share premium) is subject to a formal confirmation by the Swiss tax authorities. As of December 31, 2015, CHF 2,022,241,801 of the total amount disclosed are recognized by the Swiss tax authorities (2014: CHF 1,245,305,293).The General Meeting held on April 29, 2015, approved the increase of the share capital of Dufry from currently CHF 179,525,280 by up to CHF 157,142,860 to a maximum amount of up to CHF 336,668,140 through the issuance of fully paid-in new registered shares with a par value of CHF 5 each.On June 18, 2015, Dufry AG issued 16,157,463 new registered shares with a nomi-nal value of CHF 80,788 million, representing 45 % additional shares. After this share issuance and including the shares created by the conversion of the Manda-tory Convertible Notes (see comment below), the share capital of Dufry AG amount to CHF 269,358,535. The offer price for the rights offering as well as for the com-mitted investors was set at CHF 136.16 per new share. In the rights offering, 9,744,390 new shares were subscribed for by existing shareholders, while 6,413,073 new shares were purchased by committed investors, resulting in gross proceeds of CHF 2,200 million.During June 2015, the Mandatory Convertible Notes amounting to CHF 262,800 were converted into 1,809,188 ordinary registered shares of Dufry AG at a conver-sion price of CHF 152 per share. Dufry issued the shares out of the existing condi-tional share capital (see note 5.2).On June 26, 2014, the Extraordinary General Meeting approved the increase of the share capital of Dufry from CHF 154,525,280 by up to CHF 27,269,160 to a maxi-mum amount of up to CHF 181,794,440 through the issuance of fully paid-in new registered shares with a par value of CHF 5 each.On July 8, 2014, Dufry AG issued 5,000,000 new registered shares representing 16 % additional shares. The price obtained during the public offering was CHF 162.00 per share. During the rights offering, 3,623,976 shares were subscribed by existing shareholders, while 1,376,024 shares were purchased by third party investors resulting in a gross proceeds of CHF 810.0 million. The trading of the shares com-menced on July 9, 2014. The share issuance costs related with this transaction of CHF 29.3 million have been expensed. 206
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 20155.2 CONDITIONAL SHARE CAPITAL IN THOUSANDS OFSHARESCHFBalance at January 1, 2014 2,698 13,488 Balance at December 31, 2014 2,698 13,488 Utilization June, 2015(1,809)(9,046)Balance at December 31, 2015 888 4,442 6. TREASURY SHARES IN THOUSANDS OFSHARESCHFBalance at January 1, 2014 120.3 18,444 Assigned to holders of RSU Awards 2013(117.1)(18,327)Share purchases 340.1 54,102 Share sales(249.1)(40,303)Revaluation– 183 Balance at December 31, 2014 94.2 14,100 Share purchases 0.0 1 Revaluation– 177 Balance at December 31, 2015 94.2 14,277 7. FULL-TIME EQUIVALENTSThe annual average number of full-time equivalents (FTE) for the reporting year, as well as the previous year, did not exceed 9 FTE’s.8. PLEDGED ASSETSIn 2015 and 2014, Dufry AG had no pledged assets. 207
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 20159. GUARANTEE COMMITMENT REGARDING SWISS VALUE ADDED TAX (VAT)The following companies form a tax group for the Swiss Federal Tax Administra-tion – Main division VAT:DUFRY International AGDUFRY Management AGInternational Operations & Services (CH) AGDUFRY Corporate AGDUFRY Samnaun AGDUFRY Holdings & Investments AGDUFRY Participations AGDUFRY AGDUFRY Russia Holding AGDUFRY Altay AGDUFRY Trading AGThe Nuance Group AGDUFRY Basel Mulhouse AGThe Nuance Group (International) AG10. CONTINGENT LIABILITIESDufry AG jointly and severally with Dufry Holdings & Investments AG, Dufry Inter-national AG, Hudson Group (HG), Inc. and Dufry Financial Services B.V. guaranteed the following credit facility:DRAWN AMOUNT IN CHFIN MILLIONS OFMATURITYCOUPON RATECURRENCYNOMINAL IN LOCAL CURRENCY31.12.201531.12.2014MAIN BANK CREDIT FACILITIESCommitted 5-year term loan31.07.2019USD 1,010.0 1,009.7 1,003.8 Committed 5-year term loan31.07.2019EUR 500.0 543.2 601.4 Committed 4-year term loan31.07.2019EUR 800.0 835.9 –5-year revolving credit facility31.07.2019CHF 900.0 181.5 157.4 Subtotal 2,570.3 1,762.6 SENIOR NOTESSenior notes15.10.20205.50 %USD 500.0 499.8 496.9 Senior notes15.07.20224.50 %EUR 500.0 543.2 601.4 Senior notes01.08.20234.50 %EUR 700.0 760.4 –Subtotal 1,803.4 1,098.3 GUARANTEE FACILITYCommitted 5-year term guarantee line Unicredit AG09.09.2019EUR 250.0 103.7 278.5 Subtotal 103.7 278.5 Total 4,477.4 3,139.4 208
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 201511. PARTICIPATIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE GROUP EXECUTIVE COMMITTEE IN DUFRY AGThe following members of the Board of Directors or of the Group Executive Com-mittee of Dufry AG (including related parties) hold directly or indirectly shares or share options of the Company as at December 31, 2015 or December 31, 2014:31.12.201531.12.2014IN THOUSANDSSHARESFINANCIAL IN-STRUMENTS 1PARTICIP.SHARESFINANCIAL IN-STRUMENTS 1PARTICIP.MEMBERS OF THE BOARD OF DIRECTORSJuan Carlos Torres Carretero, Chairman 982.2 257.1 2.38 % 743.0 164.4 2.53 %Andrés Holzer Neumann, Vice-Chairman 4,291.3 463.6 9.13 % 3,708.8 468.2 11.63 %Jorge Born, Director 21.9 30.9 20.10 %– 30.92 0.09 %James S. Cohen, Director 2,059.3 –3.96 % 2,089.0 93.4 6.08 %Julián Diáz Gonzalez, Director and CEO 284.5 92.6 0.72 % 286.9 43.8 0.92 %George Koutsolioutsos, Director 3 1,608.4 200.0 3.47 % 1,536.1 272.3 5.04 %Joaquin Moya-Angeler Cabrera, Director––0.00 % 6.0 –0.02 %Total Board of Directors 9,247.6 1,044.2 19.76 % 8,369.8 1,073.0 26.31 %MEMBERS OF THE GROUP EXECUTIVE COMMITTEEJulián Diáz Gonzalez, CEO 284.5 92.6 0.72 % 286.9 43.8 0.92 %Andreas Schneiter, CFO 6.1 –0.02 % 6.1 –0.02 %José Antonio Gea, GCOO 4.1 –0.01 % 4.1 –0.01 %Luis Marin, CCO 1.5 –0.00 % 1.5 –0.00 %Xavier Rossinyol, COO Region EMEA & Asia 4n / a n / a n/a 27.0 –0.08 %José C. Rosa, COO America II 5n / an / a n / a 4.6 6 –0.01 %Joseph Didomizio, COO United States & Canada––0.00 % 9.5 –0.03 %Total Group Executive Committee 296.2 92.6 0.73 % 339.7 43.8 1.07 %1 The detailed terms of the various financial instruments disclosed above are as disclosed to the SIX Swiss Exchange and published on July 9, 2015, for the year 2015 and on November 26, 2014, for the year 2014.2 European Capped Calls on 30,940 shares of Dufry AG. The transaction is divided into 5 tranches of 6,188 shares each, which expire on 29.07.2019, 30.07.2019, 31.07.2019, 04.08.2019 and 05.08.2019, respectively. Each tranche is automatically exercised, and the differences are to be cash settled. The strike price for each option is CHF 160, and the cap is CHF 260 per option.3 Director as of April 29, 20144 Member until March 31, 20155 Member until October 31, 20156 Includes 4.5 shares and 0.1 BDRsAt December 31, 2015, the Dufry share had a market value of CHF 120 (2014: 149) each. 209
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015In addition to the above, the shareholders’ group consisting of different legal entities controlled by Andrés Holzer Neumann, Juan Carlos Torres Carretero, Julián Díaz González, James S. Cohen, James S. Cohen Family Dynasty Trust and George Koutsolioutsos holds sale positions of 8.81 % through options (4,589,120 voting rights) as of December 31, 2015 (as of December 31, 2014: sales positions of 10.80 % through options (3,877,480 voting rights)). The detailed terms of these financial instruments are as disclosed to the SIX Swiss Exchange and published on July 9, 2015 (for sale position as of December 31, 2014: publication of disclosure notice on November 26, 2014).Disclosure notices are available on the SIX Swiss Exchange website:https://www.six-exchange-regulation.com/en/home/publications/ significant-shareholders.html12. OPTIONS ON SHARES FOR THE GROUP EXECUTIVE COMMITTEEMembers of the Group Executive Committee received CHF 57.0 (2014: 51.5) thou-sands stock options with a value of CHF 6,288 (2014: 5,371) thousands.13. APPROPRIATION OF AVAILABLE EARNINGS IN THOUSANDS OF CHF20152014Result carried forward 124,128 121,486 Movement in reserves for treasury shares– 3,832 Reclassification former reserves from treasury shares to retained earnings– 14,276 Other 3,906 –Reclassification from reserve from capital contribution (see note 5.1) 8,064 –(Loss) / profit for the year(28,463)(15,466)Voluntary retained earnings at December 31 107,635 124,128 To be carried forward 107,635 124,128 210
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015 211
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015 The financial reports are available under:
http://www.dufry.com/en/Investors/FinancialReports/index.htm
For the Investor Relations and Corporate Communications contacts as well as a
summary of anticipated key dates in 2016 please refer to pages 246 / 247 of this
Annual Report.
212
3 Financial Report Financial Statements of Dufry AGDUFRY ANNUAL REPORT 2015 CORPORATE
GOVERNANCE
1. GROUP STRUCTURE AND SHAREHOLDERS
1.1 GROUP STRUCTURE
In fiscal year 2015, the Group was operationally struc-
tured in 4 regions, with the newly acquired businesses
of Nuance (acquired in 2014) and World Duty Free (ac-
quired in 2015) being reported as additional separate
entities, as shown in Note 5 “Segment information” of
the Consolidated Financial Statements on page 119.
As of January 1, 2016, the Group operates in 5 geo-
graphic divisions as shown in the management orga-
nizational chart on page 16 of this Annual Report.
INTRODUCTION
Listed company
COMPANY
This Report is prepared in accordance with the Cor-
porate Governance Directive (DCG) of the SIX Swiss
Exchange. All information within this Corporate Gov-
ernance Report and within the Remuneration Report
(see page 233) refers to the Company Organization,
Internal Regulations and Articles of Incorporation
that were in effect as of December 31, 2015 (if not spe-
cifically mentioned otherwise).
Dufry AG, Brunngässlein 12, 4052 Basel, Switzerland
(hereinafter “Dufry AG” or the “Company”)
LISTING
Registered shares: SIX Swiss Exchange
Brazilian Depositary Receipts (BDRs):
São Paulo Stock Exchange
(BM & FBOVESPA – Bolsa de Valores de São Paulo), Brazil
Dufry is
committed to
good Corporate
Governance,
Openness and
Transparency.
MARKET CAPITALIZATION
CHF 6,464,604,840 as of December 31, 2015
PERCENTAGE OF SHARES HELD BY DUFRY AG
0.18 % of Dufry AG share capital as of December 31, 2015
SECURITY NUMBERS
Registered shares:
ISIN-Code CH0023405456, Swiss Security-No. 2340545
Ticker Symbol DUFN
Brazilian Depositary Receipts (BDRs):
ISIN-Code BRDAGBBDR008
Ticker Symbol DAGB33
The Articles of Incorporation are available on the
Company website www.dufry.com section Investors –
Articles of Incorporation.
Non-listed companies
For a table of the operational non-listed consolidated
entities please refer to page 196 in the section Finan-
cial Statements of this Annual Report*.
Direct link:
http://www.dufry.com/en/Investors/
Articlesofincorporation/index.htm
*
Including the company names, locations, percentage of shares held,
share capital.
213
4 Governance ReportDUFRY ANNUAL REPORT 2015 1.2 SIGNIFICANT SHAREHOLDERS
Pursuant to the information provided to the Company
by its shareholders in compliance with the Swiss Stock
Exchange Act during 2015, the following significant
shareholders disclosed positions of more than 3 % of
the voting rights as of December 31, 2015 (1).
SHAREHOLDER
Group of shareholders consisting of various companies and legal
entities including Travel Retail Investment S.C.A., Folli Follie
Commercial Industrial and Technical S.A. and Hudson Media, Inc.,
such group representing the interests of Andrés Holzer Neumann,
Julián Díaz González, Juan Carlos Torres Carretero, James S. Cohen,
James S. Cohen Family Dynasty Trust, Dimitrios Koutsolioutsos and
Nucleo Capital Co-Investment Fund I Ltd. (4)
Morgan Stanley Group (5)
Temasek Holdings (Private) Limited (6)
Government of Singapore (7)
State of Qatar (8)
BlackRock, Inc. (9)
DISCLOSURE
OF PURCHASE
POSITIONS
DISCLOSURE
OF SALE
POSITIONS (3)
Through
registered shares
Through
other financial
instruments (2)
Total
Total
20.5 %
0.27 %
8.55 %
7.79 %
6.92 %
3.06 %
1.94 %
9.76 %
–
–
–
0.00001 %
22.44 %
10.03 %
8.55 %
7.79 %
6.92 %
3.06 %
8.86 %
3.68 %
–
–
–
1.76 %
(1) The percentage of voting rights has to be read in context with the
g) Dimitrios Koutsolioutsos holds his shares and financial instruments
relevant and applicable stock exchange and disclosure rules. The
actual shareholdings may differ from the figures indicated in the
table, as the Company must only be notified by its shareholders if
one of the thresholds defined in Article 120 of the Financial Market
Infrastructure Act is crossed. Percentages have been calculated on
the basis of the number of shares recorded in the Commercial Register.
(2) Financial instruments such as conversion and share purchase rights,
granted (written) share sale rights.
(3) Share sale rights (especially put options) and granted (written) con-
version and / or share purchase rights as well as financial instruments
that provide for or permit cash settlement as well as other differential
transactions (e.g. contracts for difference and / or financial futures).
(4) Shares held through:
a) Travel Retail Investment S.C.A. (Luxembourg / Grand Duchy of
Luxembourg) holds shares and financial instruments. Shares in Travel
Retail Investment S.C.A. are held by: 1) Petrus Pte. Ltd. (Singapore),
which in turn is held by The Bingo Trust (New Zealand). Travel Retail
S.á.r.l. is the general partner and sole manager of Travel Retail Invest-
ment S.C.A. Petrus Pte. Ltd. holds the majority of the shares in Travel
Retail Investment S.C.A. and Travel Retail S.á.r.l. Mr. Andrés Holzer
Neumann is the settlor of The Bingo Trust and exercises indirect
control over the trust. 2) Witherspoon Investments LLC (Wilmington,
DE / USA), which is held directly by Mr. Juan Carlos Torres Carretero.
3) Mr. Julián Díaz González (Lachen / Switzerland).
b)
Mr. Julián Díaz González holds certain shares directly.
c)
Mr. Juan Carlos Torres Carretero holds certain shares directly.
d) Petrus Pte. Ltd., Grupo Industrial Omega, S.A. de C.V. (Cuidad de
Mexico / Mexico), various companies held directly by Grupo
Industrial Omega, S.A. de C.V., and Consorcio Ann Taylor S.A. de
C.V., all of which are controlled by Mr. Andrés Holzer Neumann.
Mr. James S. Cohen holds his shares partly directly, partly through
Hudson Media, Inc. (East Rutherford, NJ / USA), which he controls.
James S. Cohen Family Dynasty Trust (East Rutherford, NJ / USA)
holds all its shares directly. Mr. James S. Cohen is the Grantor of
this trust, but is not a beneficiary of the trust.
e)
f)
indirectly through Folli Follie Commercial Industrial and Technical S.A.
(Agios Stephanos / Greece), which he controls, and Strenaby Finance
Ltd. (British Virgin Islands), fully controlled by Folli Follie Commercial
Industrial and Technical S.A. Dimitrios Koutsolioutsos holds shares
in Folli Follie Commercial Industrial and Technical S.A. through Cordial
Worldwide Ltd (British Virgin Islands), which he fully owns.
Nucleo Capital Co-Investment Fund I Ltd (Grand Cayman / Cayman
Islands), which holds the shares directly.
h)
(5) Morgan Stanley, The Corporation Trust Company (Wilmington,
DE / USA) holds the shares and financial instruments indirectly
through several subsidiaries.
(6) Shares held through Kinder Investments Pte. Ltd. (Singapore). The
indirect holder of the shares is Temasek Holdings (Private) Limited
(Singapore). Temasek Holdings (Private) Limited is owned by the Minis-
ter of Finance of the Republic of Singapore. Kinder Investment Pte. Ltd.
is wholly owned by Tembusu Capital Pte. Ltd., which in turn is wholly
owned by Temasek Holdings (Private) Limited (Singapore).
(7) Shares held through GIC Private Limited (“GIC”) (Singapore) and
Purple Green Investment Pte. Ltd. (Singapore). Both companies are
owned (directly and indirectly) by the Government of Singapore
(“GoS”). GIC is wholly owned by the GoS and manages the reserves of
Singapore. GIC acts as the fund manager for GoS and the Monetary
Authority of Singapore. Purple Green Investment Pte. Ltd. is an invest-
ment holding company wholly owned by GIC Blue Holdings Pte. Ltd.,
which in turn is wholly owned by GIC (Ventures) Pte. Ltd., which in
turn is wholly owned by the GoS. Purple Green Investment Pte. Ltd.
is managed by GIC.
(8) Shares held through Qatar Holding LLC. The indirect holder of the
shares is the State of Qatar (Qatar). Qatar Holding LLC is owned by
the Qatar Investment Authority, which was founded and is owned
by the State of Qatar.
(9) BlackRock, Inc. (New York, NY/USA) holds the shares, financial
instruments and sale positions (contracts of difference) indirectly
through several subsidiaries.
214
4 Governance ReportDUFRY ANNUAL REPORT 2015 Further details regarding these shareholders and
shareholder groups as well as additional information
regarding the individual disclosures notices in 2015 are
available on the website of SIX Swiss Exchange on:
https://www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html
Shareholders agreements
The group of shareholders consisting of various com-
panies and legal entities representing the interests of
Andrés Holzer Neumann, Julián Díaz González, Juan
Carlos Torres Carretero, James S. Cohen, James S.
Cohen Family Dynasty Trust, Dimitrios Koutsolioutsos
and Nucleo Capital Co-Investment Fund I Ltd have
four different shareholders agreements.
Shareholders agreement among Petrus Pte. Ltd., Wither-
spoon Investment LLC, Mr. Díaz González, Mr. Torres and
Travel Retail S.à.r.l.
1.3 CROSS-SHAREHOLDINGS
Dufry AG has not entered into cross-shareholdings
with other companies in terms of capital sharehold-
ings or voting rights in excess of 5 %.
2. CAPITAL STRUCTURE
2.1 SHARE CAPITAL
As of December 31, 2015 the Company’s capital struc-
ture is as follows:
ORDINARY SHARE CAPITAL
CHF 269,358,535 (nominal value) divided in 53,871,707 fully paid registered
shares with nominal value of CHF 5 each
CONDITIONAL SHARE CAPITAL
CHF 4,442,160 (nominal value) divided in 888,432 fully paid registered
shares with nominal value of CHF 5 each
Shareholders agreement among Travel Retail Invest-
ment S.C.A., James S. Cohen, James S. Cohen Family
Dynasty Trust, and Hudson Media, Inc.
AUTHORIZED SHARE CAPITAL
None
Shareholders agreement between Travel Retail Invest-
ment S.C.A. and Folli Follie Commercial Industrial and
Technical S.A.
2.2 DETAILS TO CONDITIONAL AND AUTHORIZED
SHARE CAPITAL
Shareholders agreement among Travel Retail Invest-
ment S.C.A., Mr. Torres and Nucleo Capital Co-Invest-
ment Fund I Ltd. Nucleo Capital Ltda. is only a party to
that agreement as investment manager of Nucleo
Capital Co-Investment Fund I Ltd.
Travel Retail Investment S.C.A. (interests of Messrs.
Holzer Neumann, Torres and Díaz González), Mr. Torres,
Nucleo Capital Co-Investment Fund I Ltd, Nucleo
Capital Ltda., James S. Cohen, James S. Cohen Family
Dynasty Trust, Hudson Media, Inc. (interests of Mr. Cohen)
and Folli Follie Commercial Industrial and Technical
S.A. (interests of Mr. Koutsolioutsos) entered into an
additional agreement that limits the number of equity
securities these parties and their affiliates may hold
in Dufry AG to prevent that a mandatory offer thresh-
old is crossed, and provides for an automatic exclu-
sion of shareholders from the group reported herein
in case of a breach of such a limit. Under this additional
agreement, Nucleo Capital Ltda. has to make sure that
other funds for which it is the investment manager
comply with such limit as well.
Conditional share capital
Article 3bis of the Articles of Incorporation, dated
June 24, 2015, reads as follows:
1. The share capital may be increased in an amount not
to exceed CHF 13,488,100 by the issuance of up to
2,697,620 fully paid registered shares with a nominal
value of CHF 5 each through the exercise of conver-
sion and / or option rights granted in connection
with the issuance of newly or already issued con-
vertible debentures, debentures with option rights
or other financing instruments by the Company or
one of its group companies.
2. The preferential subscription rights of the share-
holders shall be excluded in connection with the
issuance of convertible debentures, debentures
with option rights or other financing instruments.
The then current owners of conversion and / or
option rights shall be entitled to subscribe for the
new shares.
3. The acquisition of shares through the exercise of
conversion and / or option rights and each subse-
quent transfer of the shares shall be subject to the
restrictions set forth in Article 5 of these Articles
of Incorporation.
215
4 Governance ReportDUFRY ANNUAL REPORT 2015 4. The Board of Directors may limit or withdraw the
right of the shareholders to subscribe in priority to
convertible debentures, debentures with option
rights or similar financing instruments when they
are issued, if
a) an issue by firm underwriting by a consortium of
banks with subsequent offering to the public
without preferential subscription rights seems to
be the most appropriate form of issue at the time,
particularly in terms of the conditions or the time
plan of the issue; or
b) the financing instruments with conversion or
option rights are issued in connection with the
financing or refinancing of the acquisition of an
enterprise or parts of an enterprise or with par-
ticipations or new investments of the Company.
5. If advance subscription rights are denied by the
Board of Directors, the following shall apply:
a) Conversion rights may be exercised only for up to
15 years; and option rights only for up to 7 years
from the date of the respective issuance.
b) The respective financing instruments must be is-
sued at the relevant market conditions.
Authorized share capital
As of December 31, 2015, the Company has no autho-
rized share capital.
2.3 CHANGES IN CAPITAL OF DUFRY AG
NOMINAL SHARE CAPITAL
December 31, 2013
December 31, 2014
December 31, 2015
CONDITIONAL SHARE CAPITAL
December 31, 2013
December 31, 2014
December 31, 2015
AUTHORIZED SHARE CAPITAL
December 31, 2013
December 31, 2014
December 31, 2015
CHF 154,525,280
CHF 179,525,280
CHF 269,358,535
CHF
CHF
CHF
13,488,100
13,488,100
4,442,160
CHF
7,331,940
None
None
Changes in capital in 2013
On December 13, 2013, Dufry issued 1,231,233 shares
with nominal value of CHF 5 from the authorized capi-
tal. Hence, the existing authorized share capital de-
creased from CHF 13,488,105 to CHF 7,331,940, and the
ordinary share capital increased from CHF 148,369,115
to CHF 154,525,280.
Changes in capital in 2014
At the Extraordinary General Meeting of Shareholders
on June 26, 2014, shareholders approved the Board of
Directors’ proposal to increase the ordinary share
capital of the Company from CHF 154,525,280 by up
to CHF 27,269,160 to a maximum amount of up to
CHF 181,794,440. This proposal by the Board of Direc-
tors was made in connection with the acquisition of
The Nuance Group. On July 8, 2014, the Company is-
sued 5,000,000 shares with nominal value of CHF 5,
and the ordinary share capital increased from
CHF 154,525,280 to CHF 179,525,280.
Changes in capital in 2015
At the Ordinary General Meeting of Shareholders on
April 29, 2015, shareholders approved the Board of Di-
rectors’ proposal to increase the ordinary share cap-
ital of the Company from CHF 179,525,280 by up to
CHF 157,142,860 to a maximum amount of up to
CHF 336,668,140. This proposal by the Board of Direc-
tors was made in connection with the acquisition of
the World Duty Free Group.
In June 2015, Mandatory Convertible Notes matured
and were converted into 1,809,188 shares with nomi-
nal value of CHF 5. On June 18, 2015, the Company is-
sued 16,157,463 shares with nominal value of CHF 5 in
connection with the capital increase mentioned above.
From these two transactions, the ordinary share cap-
ital of the Company increased from CHF 179,525,280
to CHF 269,358,535. The conditional share capital de-
creased (due to the conversion of the Mandatory Con-
vertible Notes) from CHF 13,488,100 to CHF 4,442,160.
Note that the additional 1,809,188 shares, while validly
issued, were not yet reflected in the Commercial Reg-
ister as of December 31, 2015 (total number of shares
as per the Commercial Register was 52,062,519). In line
with Art. 653h of the Swiss Code of Obligations, this
registration will occur in the course of March 2016, to
reflect the total amount of 53,871,707.
216
4 Governance ReportDUFRY ANNUAL REPORT 2015 2.4 SHARES
As of December 31, 2015, the share capital of Dufry AG
is divided into 53,871,707 fully paid in registered shares
with a nominal value of CHF 5 each.
The Company has only one category of shares. The
shares are issued in registered form. All shares are
entitled to dividends if declared. Each share entitles
its holder to one vote. The Company maintains a share
register showing the name and address of the share-
holders or usufructuaries. Only persons registered as
shareholders or usufructuaries of registered shares
in the share register shall be recognized as such by
the Company.
2.5 PARTICIPATION CERTIFICATES AND
PROFIT SHARING CERTIFICATES
The Company has not issued any non-voting equity
securities, such as participation certificates (“Par-
tizipationsscheine”) or profit sharing certificates
(“Genussscheine”).
2.6 LIMITATION ON TRANSFERABILITY AND
NOMINEE REGISTRATION OF REGISTERED SHARES
– Only persons registered as shareholders or usufruc-
tuaries of registered shares in the share register
shall be recognized as such by the Company. In the
share register the name and address of the share-
holders or usufructuaries is recorded. Changes must
be reported to the Company.
– Acquirers of registered shares shall be registered
as shareholders with the right to vote, provided that
they expressly declare that they acquired the reg-
istered shares in their own name and for their own
account.
– The Board of Directors may register nominees with
the right to vote in the share register to the extent
of up to 0.2 % of the registered share capital as set
forth in the commercial register. Registered shares
held by a nominee that exceed this limit may be reg-
istered in the share register with the right to vote if
the nominee discloses the names, addresses and
number of shares of the persons for whose account
it holds 0.2 % or more of the registered share capi-
tal as set forth in the commercial register. Nominees
within the meaning of this provision are persons who
do not explicitly declare in the request for registra-
tion to hold the shares for their own account and
with whom the Board of Directors has entered into
a corresponding agreement (see also Article 5 of the
Articles of Incorporation). Nominees are only enti-
tled to represent registered shares held by them at
a Meeting of Shareholders provided that they are
registered in the share register and they hold a valid
written proxy granted by the beneficial owner of the
registered shares instructing the nominee how to
vote at the Meeting of Shareholders. Shares held by
a nominee for which it is not able to produce such
a proxy count as not represented at the Meeting
of Shareholders.
– Corporate bodies and partnerships or other groups
of persons or joint owners who are interrelated to
one another through capital ownership, voting
rights, uniform management or otherwise linked as
well as individuals or corporate bodies and partner-
ships who act in concert to circumvent the regula-
tions concerning the nominees (esp. as syndicates),
shall be treated as one single nominee within the
meaning of the above mentioned regulation in terms
of nominees.
– The Board of Directors may cancel the registration,
with retroactive effect if appropriate, if the regis-
tration was effected based on false information or
in case of breach of the agreement between the
nominee and the Board of Directors.
– After consulting the party involved, the Company
may delete entries in the share register if such en-
tries occurred in consequence of false statements
by the purchaser. The purchaser must be informed
immediately of the deletion.
Exceptions granted in the year under review
The Company has registered with the CVM and listed
its shares in the form of BDRs on the BM & FBovespa.
Each BDR issued by Itaú Unibanco S.A. (“Depositary
Institution”) of the BDR program represents one share
issued by the Company and held in custody by the
Bank of New York Mellon, in London (“Custodian”).
BDR holders do not own, from a legal point of view, the
Dufry AG shares underlying their BDRs. As a con-
sequence, BDR holders are prevented from directly
exercising any of the shareholders’ rights provided
for by the Company’s Articles of Incorporation and
by Swiss corporate law. For example, BDR holders
are not entitled to personally participate in the
General Meetings of the Company. However, BDR
holders are entitled to instruct the Depositary Insti-
tution to vote the Dufry AG shares underlying their
BDRs, according to the instructions sent to them by
the Depositary Institution.
To facilitate voting by BDR holders, the Company en-
tered into arrangements with the Depositary Institu-
tion and the Custodian to enable, by way of exception,
registration of The Bank of New York Mellon in the
share register as nominee with voting rights for the
217
4 Governance ReportDUFRY ANNUAL REPORT 2015 number of registered shares corresponding to the to-
tal number of outstanding BDRs. Otherwise, no excep-
tions have been granted during the year under review.
BDR holders who wish to be in a position to directly
exercise any of the shareholders’ rights granted by
Swiss corporate law or the Company’s Articles of In-
corporation must convert their BDRs into shares of
Dufry AG and ask to be registered in the share register
of the Company, pursuant to Article 5 of the Compa-
ny’s Articles of Incorporation.
Required quorums for a change
of the limitations of transferability
A change of the limitations on the transfer of registered
shares or the removal of such limitations requires
a resolution of the Meeting of Shareholders passed
by at least two thirds of the votes represented and
the absolute majority of the nominal value of shares
represented.
2.7 CONVERTIBLE BONDS AND OPTIONS
As of December 31, 2015, there are no outstanding
bonds that are convertible into, or warrants or options
to acquire shares issued by or on behalf of the Com-
pany. Dufry has a Performance Share Unit (PSU) plan,
the essentials of which are disclosed in the “Remuner-
ation Report” on page 233 ff.
218
4 Governance ReportDUFRY ANNUAL REPORT 2015 3. BOARD OF DIRECTORS
3.1 MEMBERS OF THE BOARD OF DIRECTORS
NAME
PROFESSION
NATIONALITY
POSITION
WITH DUFRY
DATE OF
FIRST ELECTION
Juan Carlos Torres Carretero
Executive at Advent International
Spanish
Chairman
Andrés Holzer Neumann
President of Grupo Industrial Omega
Mexican
Vice-Chairman
CEO of Bomagra S.A.
Argentinian
Director
French
American
Spanish
Brazilian
Greek
Spanish
Director
Director
Director, CEO
Director
Director
Director
2003
2004
2010
2005
2009
2013
2010
2014
2005
OTHER
POSITIONS
WITH DUFRY
AC ¹
NRC ²
AC ¹ | NRC ², ³
NRC ²
NRC ²
None
AC ¹, ³
None
AC ¹
Jorge Born
Xavier Bouton
James S. Cohen
Consultant
CEO of Hudson Media Inc
Julián Díaz González
CEO of Dufry AG
José Lucas Ferreira de Melo
Consultant
George Koutsolioutsos
CEO of Folli Follie Group
Joaquín Moya-Angeler Cabrera
Consultant
¹ AC: Audit Committee
² NRC: Nomination and Remuneration Committee
³ Committee Chairman
3.2 EDUCATION, PROFESSIONAL BACKGROUND, OTHER ACTIVITIES AND FUNCTIONS
JUAN CARLOS TORRES CARRETERO
Chairman, born 1949
ANDRÉS HOLZER NEUMANN
Vice-Chairman, born 1950
JORGE BORN
Director, born 1962
Education
Education
Education
MS in physics from Universidad Complutense
de Madrid and MS in management from MIT’s
Sloan School of Management.
Professional Background
Many years of private equity and senior man-
agement operating experience. 1988 Joined
Advent International, a private equity firm, in
Boston as a partner. 1991 – 1995 Partner at
Advent International in Madrid. Since 1995
Managing Director and Senior Partner in
charge of Advent International Corporation’s
investment activities in Latin America.
Current Board Mandates
Dufry AG, Latin American Airport Holding, Ltd.,
Aeropuertos Dominicanos Siglo XXI, S.A., TCP
Participações S.A., InverCap Holdings, S.A. de
C.V., Grupo Biotoscana, S.L.U.
Graduate of Boston University, holds an MBA
from Columbia University.
B.S. in economics from the Wharton School of
the University of Pennsylvania.
Professional Background
Professional Background
Since 1973 President of Grupo Industrial
Omega, S.A. de C.V., the holding company of
Holzer y CÌA, S.A. de C.V., Industria Nacional de
Relojes Suizos, S.A. de C.V., Consorcio Metro-
politano Inmobiliario, S.A. de C.V., Inmobiliara
Coapa Larca, S.A. de C.V., Inmobiliara Castel-
lanos, S.A. de C.V., and Negocios Creativos, S.A.
de C.V.
Current Board Mandates
Dufry AG, Latin American Airport Holding, Ltd.
and Opequimar, S.A. de C.V.
2001 – 2010 Deputy Chairman of Bunge Ltd.
1992 – 1997 Head of Bunge’s European opera-
tions. Before 1997 various capacities in the
commodities trading, oil seeding processing
and food products areas in Argentina, Brazil,
the United States and Europe for Bunge Ltd.
2004 – 2005 Board member of Dufry AG. Since
1997 President and Chief Executive Officer of
Bomagra S.A., Argentina.
Current Board Mandates
Dufry AG, Hochschild Mining, Ltd., Latin
American Executive Board at Wharton Busi-
ness School, Board of Governors of the
Lauder Institute at Wharton Business School,
Georgetown University and Fundación Bunge
y Born (Chairman).
Mr. Born served as a member of the Board of
Directors of Dufry South America, Ltd. until
its merger with Dufry Holdings & Investments
AG in March 2010.
219
4 Governance ReportDUFRY ANNUAL REPORT 2015 XAVIER BOUTON
Director, born 1950
JAMES S. COHEN
Director, born 1958
JULIÁN DÍAZ GONZÁLEZ
Director, Chief Executive Officer, born 1958
Education
Education
Education
Diploma in economics and finance from l’Institut
d’Etudes Politiques de Bordeaux and doctorate
in economics and business administration from
the University of Bordeaux.
Professional Background
1978 – 1984 Director of C.N.I.L. (Commission
Nationale de l’Informatique et des Libertés).
1985 – 1994 General Secretary of Reader’s Digest
Foundation. 1990 – 2005 Board member of
Laboratoires Chemineau. Since 1999 Chairman
of the Supervisory Board of FSDV (Fayenceries
de Sarreguemines Digoin & Vitry le François)
based in Paris, France.
Current Board Mandates
Dufry AG, ADL Partners and F.S.D.V. (Fayenceries
de Sarreguemines, Digoin & Vitry le François)
(Chairman of the Supervisory Board).
Bachelor’s degree in economics from the Whar-
ton School of the University of Pennsylvania.
Degree in business administration from Univer-
sidad Pontificia Comillas I.C.A.D.E., de Madrid.
Professional Background
Professional Background
Since 1980 various positions at Hudson Media
Inc. (President and CEO since 1994).
Current Board Mandates
Dufry AG, Hudson Media, Inc.
1989 – 1993 General Manager at TNT Leisure,
S.A. 1993 – 1997 Division Director at Aldeasa.
1997 – 2000 various managerial and business
positions at Aeroboutiques de Mexico, S.A. de
C.V. and Deor, S.A. de C.V. 2000 – 2003 Gen-
eral Manager of Latinoamericana Duty-Free,
S.A. de C.V. Since 2004 Chief Executive Officer
at Dufry AG.
Current Board Mandates
Dufry AG, Distribuidora Internacional de Ali-
mentacion, S.A. (DIA).
JOAQUÍN MOYA-ANGELER CABRERA
Director, born 1949
Education
Master’s degree in mathematics from the
University of Madrid, diploma in economics and
forecasting from the London School of Eco-
nomics and Political Science and an MBA from
MIT’s Sloan School of Management.
JOSÉ LUCAS FERREIRA DE MELO
Director, born 1956
Professional Background
Education
Mr. Moya-Angeler has focused his career on the
technology and real estate industries, including
having founded a number of companies. He has
been the Chairman of the Board of various
companies: IBM Spain (1994 – 1997), Leche Pas-
cual (1994 – 1997), Meta4 (1997 – 2002), TIASA
(1996 – 1998), and Hildebrando (2003 – 2014). To
date Chairman of Redsa (since 1997), Presenzia
and Pulsar Technologies (since 2002), La Quinta
Real Estate (since 2003), Inmoan (since 1989),
Avalon Private Equity (since 1999) and Corpo-
ración Tecnológica Andalucía (since 2005).
Current Board Mandates
Dufry AG, La Quinta Group (Chairman), Palamon
Capital Partners, Corporación Tecnológica
Andalucia (Chairman), Board of Trustees of the
University of Almeria (Chairman), Fundación
Mediterránea (Honorary Chairman), Redsa S.A.
(Chairman), Inmoan SL (Chairman), Avalon Pri-
vate Equity (Chairman), Spanish Association of
Universities Governing Bodies (Honorary Chair-
man), Calidad Pascual (Vice Chairman), Sarqua-
vitae (Board of Advisors), AGS Nasoft (Board of
Advisors) and Corporación Gropo Leche Pas-
cual (Vice Chairman).
Bachelor’s degree in accounting from Associa-
ção de Ensino Unificado do Distrito Federal,
Brazil.
Professional Background
1979 – 1991 various positions at Pricewater-
house Coopers Auditores Independentes. 1992
Director of Brazilian Exchange Commission
(CVM). 1993 – 1997 Partner at Pricewaterhouse-
Coopers Auditores Independentes. 1998 Part-
ner at Global Control Consultoria. 1999 – 2009
Executive Director and later Vice-President at
Unibanco – União de Bancos Brasileiros, S.A.
and Unibanco Holdings, S.A.
Current Board Mandates
Dufry AG, International Meal Company Alimen-
tação, S.A., Cetip S.A. – Balcão Mercados Orga-
nizados and Restoque Comércio e Confecções
de Roupas S.A.
Mr. Ferreira de Melo served as a member of the
Board of Directors of Dufry South America, Ltd.
until its merger with Dufry Holdings & Invest-
ments AG in March 2010.
GEORGE KOUTSOLIOUTSOS
Director, born 1968
Education
Degree in Economics, University of Hartford,
Hartford, USA / Paris and Master’s degree in Busi-
ness Administration and Marketing, University of
Hartford, USA.
Professional Background
Mr. Koutsolioutsos’ professional career started
in New York working two years in the jewelry
industry. 1992 – 2011 held various key positions
at Folli Follie Group, including supervising and
managing local and international distribution,
investor relations, and leading the international
expansion. Since January 2011 Chief Executive
Officer of Folli Follie Group.
Current Board Mandates
Dufry AG, Folli Follie Group.
220
4 Governance ReportDUFRY ANNUAL REPORT 2015
Messrs. Juan Carlos Torres Carretero (Chairman),
Andrés Holzer Neumann (Vice-Chairman), Julián Díaz
González, James S. Cohen and George Koutsolioutsos
are members of a group of shareholders, which held
a 22.44 % purchase position of Dufry AG as of De-
cember 31, 2015 (participation mentioned includes
financial instruments). See for details the disclosure
under “1.2 Significant Shareholders” on page 214 of this
Annual Report.
Due to his intense involvement with the Company’s
management the Chairman of the Board of Directors,
Mr. Juan Carlos Torres Carretero is considered an ex-
ecutive Chairman. Mr. Julián Díaz González acts as
Chief Executive Officer of the Company. All other
members of the Board of Directors are non-executive
members. Mr. George Koutsolioutsos, in his function
as CEO of the Folli Follie Group, oversaw the opera-
tions of Hellenic Duty Free Shops SA prior to its ac-
quisition by Dufry in 2013 (no executive function for
Dufry AG or any of its subsidiaries in 2014 or 2015).
Otherwise, none of the members of the Board of Di-
rectors have ever been in a managerial position at
Dufry AG or any of its subsidiaries. For information on
related parties and related party transactions please
refer to Note 35 on page 173 and to the information
provided in the Remuneration Report on page 233 ff.
of this Annual Report.
3.3 RULES IN THE ARTICLES OF INCORPORATION
REGARDING THE NUMBER OF PERMITTED
MANDATES OUTSIDE THE COMPANY
In accordance with Article 24 para. 2 of the Articles of
Incorporation, dated June 24, 2015, no member of the
Board of Directors may hold more than four additional
mandates in listed companies and ten additional man-
dates in non-listed companies. The following mandates
are not subject to the limitations under para. 2 of this
Article:
a) mandates in companies which are controlled by the
Company or which control the Company;
b) mandates held at the request of the Company or any
company controlled by it. No member of the Board of
Directors may hold more than ten such mandates;
and
c) mandates in associations, charitable organizations,
foundations, trusts and employee welfare founda-
tions. No member of the Board of Directors may
hold more than ten such mandates.
Mandates shall mean mandates in the supreme gov-
erning body of a legal entity which is required to be
registered in the commercial register or a comparable
foreign register. Mandates in different legal entities
that are under joint control or the same beneficial
ownership are deemed one mandate.
3.4 ELECTION AND TERMS OF OFFICE
In accordance with Article 13 of the Articles of Incor-
poration, dated June 24, 2015:
– The Board of Directors shall consist of at least three
and at most nine members.
– Members of the Board of Directors and the Chairman
of the Board shall be elected for a term of office ex-
tending until completion of the next Ordinary Meet-
ing of Shareholders.
– The members of the Board of Directors and the
Chairman of the Board may be re-elected without
limitation.
– If the office of the Chairman of the Board of Direc-
tors is vacant, the Board of Directors shall appoint
a Chairman from among its members for a term of
office extending until completion of the next Ordi-
nary Meeting of Shareholders.
– Except for the election of the Chairman of the Board
of Directors and the members of the Remuneration
Committee by the Meeting of Shareholders, the
Board of Directors determines its own organization.
The Board of Directors shall elect a Vice-Chairman.
It shall appoint a Secretary who does not need to
be a member of the Board of Directors.
Article 24 para. 1 of the Articles of Incorporation stip-
ulates the following: As members of the Board of Di-
rectors only persons may be elected who served a
minimum of four years in aggregate on the Board of
Directors or on the Executive Management of each of
(i) one or several travel retail company(ies) with oper-
ations in more than one continent at the end of at least
one year of the years of activity of such person, and
(ii) one or several publicly listed retail company(ies)
with an annual turnover of at least CHF 3 billion at the
end of at least one year of the years of activity of such
person. The requirements under (i) and (ii) above can
be fulfilled by the same or several cumulated position(s)
held by such person.
All members of the Board of Directors were elected in
individual elections at the Ordinary General Meeting
of Shareholders held on April 29, 2015. The same Gen-
eral Meeting elected Juan Carlos Torres Carretero as
Chairman of the Board of Directors. Messrs. Jorge
Born, Xavier Bouton, James Cohen and Andrés Holzer
Neumann were elected in individual elections as mem-
bers of the Nomination and Remuneration Committee.
221
4 Governance ReportDUFRY ANNUAL REPORT 2015 3.5 INTERNAL ORGANIZATIONAL STRUCTURE
Except for the election of the Chairman of the Board
of Directors and the members of the Nomination and
Remuneration Committee (which are to be elected by
the General Meeting of Shareholders), the Board of Di-
rectors determines its own organization. It shall elect
its Vice-Chairman, the members of the Audit Commit-
tee, and appoint a Secretary who does not need to be
a member of the Board of Directors.
The Board of Directors has established two commit-
tees: the Audit Committee and the Nomination and Re-
muneration Committee. Both Committees are assisting
the Board of Directors in fulfilling its duties and have
also decision authority to the extent described below.
Audit Committee
Members as of December 31, 2015: José Lucas Ferreira
de Melo (Chairman Audit Committee), Jorge Born,
Joaquín Moya-Angeler Cabrera, Juan Carlos Torres
Carretero.
The members of the Audit Committee, with the excep-
tion of Juan Carlos Torres Carretero (who is considered
an executive Chairman), are non-executive and inde-
pendent members of the Board of Directors. Pursuant
to item 14 of the Swiss Code of Best Practice for Cor-
porate Governance (SCBP), an independent member
is a non-executive member, has not been an executive
member of the Dufry Group in the last three years and
has no or comparatively minor business relations with
the Company. The members shall be appointed, as a
rule, for the entire duration of their mandate as Board
members and be re-eligible.
The Audit Committee assists the Board of Directors
in fulfilling its duties of supervision of management.
It is responsible for the review of the performance
and independence of the Auditors, the review of and
the decision on the audit plan and the audit results
and the monitoring of the implementation of the find-
ings by management, the review of the internal audit
plan, the assessment of the risk management and the
decision on proposed measures to reduce risks, the
review of the compliance levels and risk management,
as well as the review to propose whether the Board
of Directors should accept the Company’s accounts.
The Audit Committee regularly reports to the Board
of Directors on its decisions, assessments, findings
and proposes appropriate actions. The Audit Commit-
tee generally meets at the same dates the Board of
Directors meetings take place, although the Chair-
man may call meetings as often as business requires.
The length of the meetings lasted usually for approxi-
mately 2 to 3 hours in fiscal year 2015, during which
the Audit Committee held 5 meetings. The average
attendance ratio of the Audit Committee members at
its meetings was 100 %. The auditors attended 3 meet-
ings of the Audit Committee in 2015. Members of the
Group Executive Committee attended meetings of
the Audit Committee as follows: CEO 5 meetings, the
CFO (who acts as Secretary of the Audit Committee
meetings) 5 meetings.
Nomination and Remuneration Committee
Members as of December 31, 2015: Jorge Born (Chair-
man Nomination and Remuneration Committee), Xavier
Bouton, James S. Cohen, Andrés Holzer Neumann.
The members of the Nomination and Remuneration
Committee are all non-executive and independent
members of the Board of Directors. Pursuant to item
14 of the Swiss Code of Best Practice for Corporate
Governance (SCBP), an independent member is a non-
executive member, has not been an executive member
of the Dufry Group in the last three years and has no
or comparatively minor business relations with the
Company. The members shall be appointed by the
shareholders’ meeting until the next Ordinary General
Meeting of Shareholders and be re-eligible.
The Nomination and Remuneration Committee assists
the Board of Directors in fulfilling its nomination and
remuneration related matters. It is responsible for as-
suring the long-term planning of appropriate appoint-
ments to the positions of the CEO and the Board of Di-
rectors, as well as for the review of the remuneration
system of the Company and for proposals in relation
thereto to the Board of Directors. The Nomination and
Remuneration Committee makes recommendations
regarding the proposals of the Board of Directors in
relation to the maximum aggregate amount of com-
pensation of the Board and of the Group Executive
Committee to be submitted to the general Meeting of
Shareholders of the Company for approval, as well as
in relation to the remuneration package of the CEO
and the members of the Board. The Nomination and
Remuneration Committee makes proposals on the
grant of options or other securities under any other
management incentive plan of the Company, if any. The
Nomination and Remuneration Committee meets as
often as business requires. The 4 meetings held in the
fiscal year 2015 lasted about 1 to 3 hours. The average
attendance ratio of the Nomination and Remuneration
Committee members at its meetings was 100 %. The
Chairman of the Board of Directors usually partici-
pates as a guest in the Nomination and Remuneration
Committee meetings. Members of the Group Execu-
tive Committee attended meetings of the Nomination
222
4 Governance ReportDUFRY ANNUAL REPORT 2015 and Remuneration Committee as follows: CEO 4 meet-
ings. External advisors attended 2 meetings of the
Nomination and Remuneration Committee in 2015.
Work method of the Board of Directors
As a rule, the Board of Directors meets about six to
seven times a year (usually at least once per quarter).
Additional meetings or conference calls are held as
and when necessary. The Board of Directors held 13
meetings during fiscal year 2015. The meetings of the
Board of Directors usually lasted half a day. The aver-
age attendance ratio of the Board members at the
Board of Directors’ meetings was 100 %. The Chair-
man determines the agenda and items to be dis-
cussed at the Board meetings. All members of the
Board of Directors can request to add further items
on the agenda.
The CEO, the CFO, the GCOO and the GC, also acting
as Secretary to the Board, attend the meetings of the
Board of Directors. Other members of the Group Exec-
utive Committee may attend meetings of the Board of
Directors as and when required. Members of the Group
Executive Committee attended meetings of the Board
of Directors in 2015 as follows: CEO 13 meetings, CFO
11 meetings, GCOO 10 meetings, GC 11 meetings,
GCCO 1 meeting, COOs of the regions 1 meeting.
The Board of Directors also engages specific advisors
to address specific matters when required. External
advisors attended pertinent portions of 2 meetings
of the Board of Directors in 2015 in connection with
the acquisition projects of the Company. The exter-
nal Auditors attended 3 meetings of the Audit Com-
mittee in 2015.
3.6 DEFINITION OF AREAS OF RESPONSIBILITY
The Board of Directors is the ultimate corporate body
of Dufry AG. It further represents the Company to-
wards third parties and shall manage all matters
which by law, Articles of Incorporation or Board reg-
ulations have not been delegated to another body of
the Company.
In accordance with the Board regulations (“Organisa-
tionsreglement”), the Board of Directors has delegated
the operational management of the Company to the
CEO who is responsible for overall management of the
Dufry Group. The following responsibilities remain with
the Board of Directors:
– Ultimate direction of the business of the Company
and the power to give the necessary directives;
– Determination of the organization of the Company;
– Administration of the accounting system, financial
control and financial planning;
– Appointment and removal of the members of the
committees installed by itself as well as the persons
entrusted with the management and representation
of the Company, as well as the determination of their
signatory power;
– Ultimate supervision of the persons entrusted with
the management of the Company, in particular with
respect to their compliance with the law, the Articles
of Incorporation, regulations and directives;
– Preparation of the business report, the compensa-
tion report and the Meetings of Shareholders and
to carry out the resolutions adopted by the Meeting
of Shareholders;
– Notification of the judge if liabilities exceed assets;
– Passing of resolutions regarding the subsequent
payment of capital with respect to non-fully paid in
shares;
– Passing of resolutions confirming increases in
share capital and the amendments of the Articles
of Incorporation entailed thereby;
– Non-delegable and inalienable duties and powers
of the Board of Directors pursuant to the Swiss
Merger Act;
– To approve any non-operational or non-recurring
transaction not included in the annual budget and
exceeding the amount of CHF 10,000,000;
– To issue convertible debentures, debentures with
option rights or other financial market instruments;
– To approve the annual investment and operating
budgets of the Company and the Dufry Group;
– To approve the executive regulations promulgated
in accordance with the board regulations; and
– To propose an independent voting rights represen-
tative for election to the Meeting of Shareholders,
and to appoint an independent voting rights repre-
sentative in the event of a vacancy.
Except for the Chairman of the Board of Directors,
who has single signature authority, the members of the
Board have joint signature authority, if any.
3.7 INFORMATION AND CONTROL INSTRUMENTS
VIS-À-VIS THE SENIOR MANAGEMENT
The Board of Directors ensures that it receives suffi-
cient information from the management to perform
its supervisory duty and to make the decisions that
are reserved to the Board through several means.
– Dufry Group has an internal management informa-
tion system that consists of financial statements,
performance indicators and risk management. In-
formation to management is provided on a regular
223
4 Governance ReportDUFRY ANNUAL REPORT 2015 executed during the year is based on specific meth-
odology throughout the Dufry Group and includes
the consideration of internal and external factors.
In fiscal year 2015, Internal Audit conducted over
60 reviews, examining more than 30 operations in
all regions, representing a coverage of above 90 %
of 2015 group net sales, in which the newly acquired
business of Nuance was already included. The WDF
group was integrated in the Dufry governance
structure in December 2015, nevertheless its oper-
ations are already part of the 2016 Dufry Internal
Audit annual plan. Regular follow-up is performed
to ensure that risk mitigation and control improve-
ment measures are implemented on a timely basis.
– The Global Loss Prevention activity was created to
prevent losses and misappropriations within the
group. The day-to-day work is designed to leverage
profitability using advanced data mining and anti-
fraud techniques. Currently, validations are per-
formed monthly or bimonthly for all group compa-
nies and results are proven to provide valuable
information for loss prevention purposes. Addi-
tionally, we are continuously trying to use new
data mining techniques to establish validations that
can enhance our coverage and create a higher as-
surance level over our key retail risks.
– We have in place an Enterprise Risk Management
program which sets out our approach for assessing
compliance with: relevant laws, corporate policies
and procedures, tax regulations, agreements or
contracts and integrity policy, anticipating exter-
nally imposed guidelines and preventing losses. The
program is sponsored by the Group Executive Com-
mittee and based on the concept of direct stake-
holder assurance feedback, and is distributed
among all operations and areas.
– All the results of these Group Internal Audit activi-
ties are communicated to key management in
charge and to the Group’s senior management on
an on-going basis, and regular briefings are done to
the Audit Committee.
– Detailed information on the financial risk manage-
ment is provided in Note 38 in the Financial State-
ments of this Annual Report.
basis according to the cycles of the business: sales
on a weekly basis; income statement, cash manage-
ment and key performance indicator (KPI) including
customer, margins and investment information, bal-
ance sheet and other financial statements on a
monthly basis. The management information is pre-
pared on a consolidated basis as well as per busi-
ness unit. Financial statements and key financial
indicators / ratios are submitted to the entire Board
of Directors on a quarterly basis.
– During Board meetings, each member of the Board
may request information from the other members
of the Board, as well as from the members of the
management present on all affairs of the Company
and the Group.
– Outside of Board meetings, each member of the
Board may request from the Chief Executive Officer
information concerning the course of business of
the Company and the Group and, with the authori-
zation of the Chairman, about specific matters.
– The CEO reports at each meeting of the Board of Di-
rectors on the course of business of the Company
and the Group in a manner agreed upon from time
to time between the Board and the CEO. Apart from
the meetings, the CEO reports immediately any ex-
traordinary event and any change within the Com-
pany and within the Dufry Group to the Chairman.
– For attendance of the members of the Group Exec-
utive Committee at meetings of the Board of Di-
rectors or meetings of the Audit Committee or
Nomination and Remuneration Committee please
refer to section “3.5 Internal organizational struc-
ture” above.
– The Audit Committee met 5 times in 2015 with
management to review the business, better under-
stand laws, regulations and policies impacting the
Dufry Group and its business and support the man-
agement in meeting the requirement and expecta-
tions of stakeholders. In meetings of the Audit
Committee, the CFO acts as Secretary to the Com-
mittee. The Auditors are invited to the meetings of
the Audit Committee and attended 3 meetings of
the Audit Committee in 2015. Among these meet-
ings some or part of them are also held without
management.
– The Global Internal Audit department provides in-
dependent risk-based and objective assurance re-
views, loss prevention advice, and risk exposure
analysis to group companies through 3 different
activities streams: Internal Audit, Loss Prevention
and Enterprise Risk Management.
– Internal auditing is an independent function that
provides objective assurance and consulting ac-
tivity, aiming to improve our organization’s opera-
tions. The selection of Internal Audit reviews to be
224
4 Governance ReportDUFRY ANNUAL REPORT 2015 4. GROUP EXECUTIVE COMMITTEE
4.1 MEMBERS OF THE GROUP
EXECUTIVE COMMITTEE
As of December 31, 2015, the Group Executive Com-
mittee (GEC) comprised seven executives. As of Jan-
uary 1, 2016, Dufry regrouped its business into 5 geo-
graphic divisions (previously 4 regions with Nuance
and Word Duty Free operations reported as separate
entities). The Group Executive Committee was ex-
panded to twelve members, taking into account the
larger group structure as a result of the Nuance Group
and World Duty Free acquisitions.
The Group Executive Committee, under the control of
the CEO, conducts the operational management of the
Company pursuant to the Company’s board regula-
tions. The CEO reports to the Board of Directors on a
regular basis. The following table sets forth the name
and year of appointment of the members of the Group
Executive Committee, followed by a short description
of each member’s business experience, education and
activities:
NAME
NATIONALITY
POSITION
Julián Díaz González
Andreas Schneiter
José Antonio Gea
Luis Marin
Jordi Martin-Consuegra
Pascal C. Duclos
Pedro J. Castro Benitez
Eugenio Andrades
Andrea Belardini
René Riedi
Joseph DiDomizio
Gustavo Magalhães Fagundes
Spanish
Swiss
Spanish
Spanish
Spanish
Swiss
Spanish
Spanish
Italian
Swiss
American
Brazilian
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Global Chief Operating Officer (GCOO)
Global Chief Corporate Officer (GCCO)
Global Resources Director (GRD)
General Counsel (GC)
Chief Executive Officer (DCEO) Division Southern Europe and Africa
Chief Executive Officer (DCEO) Division UK, Central and Eastern Europe
Chief Executive Officer (DCEO) Division Asia, Middle East and Australia
Chief Executive Officer (DCEO) Division Latin America
Chief Executive Officer (DCEO) Division North America
General Manager (GM) Brazil and Bolivia
GEC MEMBER
SINCE YEAR
2004
2012
2004
2014
2016 1
2005
2016 1
2016 1
2016 1
2000
2008
2016 1
1 Appointment to Group Executive Committee as of January 1, 2016
All agreements entered into with the members of the
Group Executive Committee are entered for an indef-
inite period of time.
Mr. Xavier Rossinyol, former Chief Operating Officer
of Region EMEA & Asia, left the Company effective
March 31, 2015. Mr. José Carlos Costa da Silva Rosa,
former Chief Operating Officer of Region America II,
has become active for Dufry in Portugal and left the
Group Executive Committee effective October 31, 2015.
225
4 Governance ReportDUFRY ANNUAL REPORT 2015 4.2 EDUCATION, PROFESSIONAL BACKGROUND, OTHER ACTIVITIES AND VESTED INTERESTS
JULIÁN DÍAZ GONZÁLEZ
Chief Executive Officer, born 1958
ANDREAS SCHNEITER
Chief Financial Officer, born 1970
JOSÉ ANTONIO GEA
Global Chief Operating Officer, born 1963
Education
Education
Education
Degree in business administration from Univer-
sidad Pontificia Comillas I.C.A.D.E., de Madrid.
Professional Background
1989 – 1993 General Manager at TNT Leisure,
S.A. 1993 – 1997 Division Director at Aldeasa.
1997 – 2000 various managerial and business
positions at Aeroboutiques de Mexico, S.A. de
C.V. and Deor, S.A. de C.V. 2000 – 2003 Gen-
eral Manager of Latinoamericana Duty-Free,
S.A. de C.V. Since 2004 Chief Executive Officer
at Dufry AG.
Current Board Mandates
Dufry AG, Distribuidora Internacional de Ali-
mentacion, S.A. (DIA).
Degree in business administration and special-
ization in finance at School of Economy and
Business Administration Berne.
Degree in economics and business sciences
from Colegio Universitario de Estudios Financie-
ros.
Professional Background
Professional Background
1998 – 2003 various positions at UBS Warburg
in Zurich in the area of Mergers and Acquisi-
tions. Joined Dufry in 2003 as Head Corporate
Controlling. 2004 – 2012 Head Group Treasury
and since 2005 additionally Investor Relations
at Dufry. Since July 2012 Chief Financial Offi-
cer at Dufry AG.
1989 – 1995 various positions at TNT Express
Espana, S.A. Director of Blue Cow Division
(1993 – 1995). 1995 – 2003 various managerial
positions at Aldeasa. Left Aldeasa as Director
of Operations. Since 2004 Global Chief Operat-
ing Officer at Dufry AG.
PASCAL C. DUCLOS
General Counsel, born 1967
LUIS MARIN
Global Chief Corporate Officer, born 1971
Education
Degree in Economic Sciences and Business
Administration from Universidad de Barcelona.
Education
Professional Background
Licence en droit from Geneva University
School of Law, L.L.M. from Duke University
School of Law. Licensed to practice law in
Switzerland and admitted to the New York Bar.
Professional Background
1991 – 1997 Senior attorney at law at Geneva law
firm Davidoff & Partners. Also academic assis-
tant at the University of Geneva School of Law
(1994 – 1996). 1999 – 2001 Attorney at law at New
York law firm Kreindler & Kreindler. 2001 – 2002
Financial planner at UBS AG in New York.
2003 – 2004 Senior foreign attorney at law at the
Buenos Aires law firm Beretta Kahale Godoy.
Since 2005 General Counsel and Secretary to
the Board of Directors at Dufry AG.
1995 – 1998 Auditor at Coopers & Lybrand.
1998 – 2001 Financial Controller at Derbi Moto-
cicletas – Nacional Motor S.A. 2001 – 2004 Head
of Finance and Administration of Spanish
subsidiaries of Areas (member of the French
group Elior). Joined Dufry in 2004, as Business
Controlling Director and since 2012, also re-
sponsible for mergers and acquisitions. Since
January 2014 Gobal Chief Corporate Officer
at Dufry AG.
JORDI MARTIN-CONSUEGRA
Global Resources Director, born 1972
Education
Executive MBA from Instituto de Empresa,
Madrid. Degree in economics from Universi-
dad Complutense de Madrid and Bachelor of
Arts in Combined Studies from University of
Wolverhampton, UK.
Professional Background
1996 – 1998 Business Consultant at Burke in
Madrid (today Burke is part of ALTEN Group in
Spain). 1998 – 2000 Director of Consultancy
Services at Burke. 2001 – 2002 Lawson Soft-
ware Product Manager at Burke in Madrid.
2003 – 2005 Director of Business Solutions at
Burke. 2005 – 2008 Global Information Tech-
nology Director at Dufry AG. 2008 – 2009
Global Integration Director at Dufry AG.
2009 – 2012 Global Organization and Human
Resources Director at Dufry AG. Since 2012
Global Resources Director at Dufry AG.
226
4 Governance ReportDUFRY ANNUAL REPORT 2015 PEDRO J. CASTRO BENITEZ
Chief Executive Officer Division Southern
Europe and Africa, born 1967
EUGENIO ANDRADES
Chief Executive Officer Division UK, Central
and Eastern Europe, born 1968
ANDREA BELARDINI
Chief Executive Officer Division Asia, Middle
East and Australia, born 1968
Education
Education
Education
Masters degree in international relations, spe-
cializing in foreign trade, from Spanish Diplo-
matic School in Madrid. Degree in administration
and political science, specializing in foreign af-
fairs, from Complutense University in Madrid.
Professional Background
1998 – 2000 General Manager Chile at Aldeasa.
2000 – 2003 Managing Director Canariensis at
Aldeasa. 2003 – 2006 Chief Executive Officer at
Aldeasa Jordan. 2006 – 2010 Director Opera-
tions Spain at Aldeasa. 2011 – 2015 Chief Operat-
ing Officer International at World Duty Free.
Since January 2016 Chief Executive Officer Divi-
sion Southern Europe and Africa at Dufry AG.
Degree in Mining Engineering at Politécnica
University of Madrid. MS of Economics and
Strategy of Colorado School of Mines, Colorado/
USA.
Professional Background
Prior to 1996 Consultant at McKinsey & Co and
Carboex, a subsidiary of Endesa. 1996 – 2001
Director of Strategy & Development and In-
vestor Relations at Aldeasa. 2001 Chief Ex-
ecutive Officer Jordan and Middle East region
at Aldeasa. 2002 – 2007 Director of Strategy
& Development and Investor Relations at
Aldeasa. 2007 – 2010 Commercial Director and
Operations Coordinator at Aldeasa. 2011 – 2014
Chief Commercial Officer at World Duty Free
Group. 2014 – 2015 Chief Executive Officer at
World Duty Free Group. Since January 2016
Chief Executive Officer Division UK, Central
and Eastern Europe at Dufry AG.
Degree in Business and Economics, University
of Rome (La Sapienza).
Professional Background
1991 – 1996 various positions as Controller and
Project Manager at Carlson Wagonlit Travel.
1997 – 1999 Director of Operations Italy at Carl-
son Wagonlit Travel. 1999 – 2000 Vice President
Operations South Europe at Carlson Wagonlit
Travel. 2000 – 2004 Executive Vice President
Strategy & Development at Aeroporti di Roma.
2004 – 2009 Executive Vice President Commer-
cial Business Management & Development at
Aeroporti di Roma. 2009 – 2015 Chief Executive
Officer Europe at Nuance Group (since 2013 also
Global Chief Commercial Officer at Nuance
Group). Since January 2016 Chief Executive
Officer Division Asia, Middle East and Australia
at Dufry AG.
RENÉ RIEDI
Chief Executive Officer Division
Latin America, born 1960
Education
Degree in business administration from the
School of Economy and Business Administra-
tion Zurich.
JOSEPH DIDOMIZIO
Chief Executive Officer Division
North America, born 1970
Professional Background
Education
Prior to 1993 worked in product marketing and
international sales of the multinational FMCG
(Fast Moving Consumer Goods) company
Unilever. 1993 – 2000 Joined Dufry as Sales
Manager Eastern Europe. Product Category
Manager Spirits & Tobacco (1995 – 1996). Head
of Product Marketing (1996 – 1997). Director
Division Spirits & Tobacco (Weitnauer Distribu-
tion Ltd. 1998 – 2000). 2000 – 2012 Chief Oper-
ating Officer Region Eurasia at Dufry AG.
2012 – 2015 Chief Operating Officer Region
America I at Dufry AG. Since January 2016
Chief Executive Officer Division Latin America
at Dufry AG.
Bachelor’s of Arts degree in Marketing and
Business Administration from the University
of Bridgeport.
Professional Background
1992 – 2008 several managerial positions in
Hudson Group (April–September 2008:
President and Chief Executive Officer). 2008 -
2015 Chief Operating Officer Region United
States & Canada at Dufry AG. Since January
2016 Chief Executive Officer Division North
America at Dufry AG.
GUSTAVO MAGALHÃES FAGUNDES
General Manager Brazil and Bolivia, born 1967
Education
Degree in business administration and man-
agement and post-graduate degree in HR and
marketing from EAESP/Fundação Getúlio
Vargas in São Paulo, Master in international
economics and management from Bocconi
University in Milan, executive MBA from AmBev
Corporate University in São Paulo, general
management degree from Harvard Business
School in Massachusetts, USA.
Professional Background
1996 – 2002 Head of Marketing at AmBev. 2002 –
2009 Chief Operating Officer at Travel Retail,
Brasif. 2010 – 2014 Chief Operating Officer at
Brasif Holding. 2014 – 2015 COO Dufry Brazil
and Bolivia. Since January 2016 General
Manager Brazil and Bolivia at Dufry AG.
227
4 Governance ReportDUFRY ANNUAL REPORT 2015 Other activities and vested interests
As of December 31, 2015, none of the members of the Group Executive Committee of Dufry AG has had other activities in governing and
supervisory bodies of important Swiss or foreign organizations, institutions or foundations under private and public law with the exception
of the Board mandates of Mr. Julián Díaz mentioned above. No member of the Group Executive Committee has permanent management
or consultancy functions for important Swiss or foreign interest groups, nor holds any official functions and political posts.
4.3 RULES IN THE ARTICLES OF INCORPORATION
REGARDING THE NUMBER OF PERMITTED
MANDATES OUTSIDE THE COMPANY
In accordance with Article 25 para. 1 of the Articles of
Incorporation, dated June 24, 2015, no member of the
Group Executive Committee may hold more than two
additional mandates in listed companies and four ad-
ditional mandates in non-listed companies. The follow-
ing mandates are not subject to the limitations under
para. 1 of this Article:
a) mandates in companies which are controlled by the
Company or which control the Company;
5. COMPENSATION, SHAREHOLDINGS
AND LOANS
5.1 CONTENT AND METHOD
OF DETERMINING THE COMPENSATION
AND SHAREHOLDING PROGRAMS
Detailed information of compensation, shareholdings
and loans to active and former members of the Board
of Directors and of the Group Executive Committee in
fiscal year 2015 is included in the Remuneration Re-
port on pages 233 to 244 of this Annual Report.
b) mandates held at the request of the Company or any
company controlled by it. No member of the Group
Executive Committee may hold more than ten such
mandates; and
5.2 DISCLOSURE OF RULES IN THE ARTICLES
OF INCORPORATION REGARDING COMPENSATION
OF THE BOARD OF DIRECTORS AND OF THE
EXECUTIVE MANAGEMENT
c) mandates in associations, charitable organizations,
foundations, trusts and employee welfare founda-
tions. No member of the Group Executive Commit-
tee may hold more than ten such mandates.
For definition of “mandate” please refer to section 3.3
above.
4.4 MANAGEMENT CONTRACTS
Dufry AG does not have management contracts with
companies or natural persons not belonging to the
Group.
For rules in the Articles of Incorporation regarding the
approval of compensation by the Meeting of Share-
holders, the supplementary amount for changes in the
Executive Management as well as the general compen-
sation principles please refer to Articles 20 – 22 of the
Articles of Incorporation. The Articles of Incorpora-
tion do not contain any rules in association with loans,
credit facilities or post-employment benefits for the
members of the Board of Directors and Executive
Management. The rules regarding agreements with
members of the Board of Directors and of the Execu-
tive Management in terms of duration and termination
are stipulated in Article 23. Dufry’s Articles of In-
corporation are available on the Company website
www.dufry.com – section Investors – Articles of In-
corporation. Direct link:
http://www.dufry.com/en/Investors/
Articlesofincorporation/index.htm
228
4 Governance ReportDUFRY ANNUAL REPORT 2015 6. SHAREHOLDERS’ PARTICIPATION RIGHTS
6.1 VOTING RIGHTS AND REPRESENTATION
6.2 THE INDEPENDENT VOTING RIGHTS
REPRESENTATIVE
In accordance with Article 10 para. 3 of the Articles of
Incorporation, dated June 24, 2015, the independent
voting rights representative shall be elected by the
Meeting of Shareholders for a term of office extend-
ing until completion of the next Ordinary Meeting of
Shareholders. Re-election is possible. If the Company
does not have an independent voting rights represen-
tative, the Board of Directors shall appoint the inde-
pendent voting rights representative for the next
Meeting of Shareholders.
The Company may also make arrangements for elec-
tronic voting (Article 11 para. 5). Resolutions passed by
electronic voting shall have the same effect as votes
by ballot.
The Ordinary General Meeting of Shareholders held on
April 29, 2015, re-elected the law firm Buis Bürgi AG,
Zurich, as the independent voting rights representative
until the completion of the Ordinary General Meeting
of Shareholders in 2016. Buis Bürgi AG is independent
from the Company and has no further mandates for
Dufry AG.
For the upcoming General Meeting of Shareholders on
April 28, 2016, the Company will enable its sharehold-
ers to send their voting instructions electronically to
the independent voting rights representative Buis
Bürgi AG through the platform:
https://www.netvote.ch/dufry
The corresponding instructions regarding registration
and voting procedures on this electronic platform will
be sent to the shareholders together with the invita-
tion to the General Meeting.
Each share recorded as share with voting rights in the
share register confers one vote on its registered
holder. Each shareholder duly registered in the share
register on the record date may be represented at the
Meeting of Shareholders by the independent voting
rights representative or any person who is authorized
to do so by a written proxy. A proxy does not need to
be a shareholder. Shareholders entered in the share
register as shareholders with voting rights on a spe-
cific qualifying date (record date) designated by the
Board of Directors shall be entitled to vote at the
Meeting of Shareholders and to exercise their votes at
the Meeting of Shareholders. See section 6.5 below.
Nominees are only entitled to represent registered
shares held by them at a Meeting of Shareholders, if
they are registered in the share register in accordance
with Article 5 para. 4 of the Articles of Incorporation
and if they hold a valid written proxy granted by the
beneficial owner of the registered shares instructing
the nominee how to vote at the Meeting of Sharehold-
ers. Shares held by a nominee for which it is not able
to produce such a proxy count as not being repre-
sented at the Meeting of Shareholders.
As explained under section 2.6 above, BDR holders do
not own the Dufry AG shares underlying their BDRs.
As a consequence, BDR holders are prevented from
exercising directly any of the shareholders’ rights pro-
vided for by the Company’s Articles of Incorporation
and by Swiss corporate law. For example, BDR holders
are not entitled to personally participate in the Gen-
eral Meetings of the Company. However, BDR holders
are entitled to instruct the Depositary Institution to
vote the Company’s shares underlying their BDRs, ac-
cording to the instructions sent to them by the Depos-
itary Institution. See section 2.6 above or the Articles
of Incorporation on our website:
http://www.dufry.com/en/Investors/
Articlesofincorporation/index.htm
229
4 Governance ReportDUFRY ANNUAL REPORT 2015 6.3 QUORUMS
6.4 CONVOCATION OF THE MEETING
OF SHAREHOLDERS
The Meeting of Shareholders shall be called by the
Board of Directors or, if necessary, by the Auditors.
One or more shareholders with voting rights repre-
senting in the aggregate not less than 10 % of the share
capital can request, in writing, that a Meeting of Share-
holders be convened. Such request must be submit-
ted to the Board of Directors, specifying the items and
proposals to appear on the agenda.
The Meeting of Shareholders shall be convened by no-
tice in the Swiss Official Gazette of Commerce (SOGC)
not less than 20 days before the date fixed for the
Meeting. Registered shareholders will also be informed
by ordinary mail.
6.5 AGENDA
The invitation for the Meeting of Shareholders shall
state the day, time and place of the Meeting, and the
items and proposals of the Board of Directors and, if
any, the proposals of the shareholders who demand
that the Meeting of Shareholders be called or that
items be included in the agenda.
One or more shareholders with voting rights whose
combined holdings represent an aggregate nominal
value of at least CHF 1,000,000 may request that an
item be included in the agenda of a Meeting of Share-
holders. Such a request must be made in writing to the
Board of Directors at the latest 60 days before the
Meeting and shall specify the agenda items and the
proposals made.
6.6 REGISTRATION INTO THE SHARE REGISTER
The record date for the inscription of registered
shareholders into the share register in view of their
participation in the Meeting of Shareholders is de-
fined by the Board of Directors. It is usually around
2 weeks before the Meeting. Shareholders who dis-
pose of their registered shares before the Meeting of
Shareholders are no longer entitled to vote with such
disposed shares.
The Meeting of Shareholders shall be duly constituted
irrespective of the number of shareholders present or
of shares represented. Unless the law or Articles of
Incorporation provide for a qualified majority, an ab-
solute majority of the votes represented at a Meeting
of Shareholders is required for the adoption of reso-
lutions or for elections, with abstentions, blank and in-
valid votes having the effect of “no” votes. The Chair-
man of the Meeting shall have a casting vote.
A resolution of the Meeting of Shareholders passed by
at least two thirds of the votes represented and the
absolute majority of the nominal value of shares rep-
resented shall be required for:
1. a modification of the purpose of the Company;
2.
3.
the creation of shares with increased voting powers;
restrictions on the transfer of registered shares
and the removal of such restrictions;
restrictions on the exercise of the right to vote and
the removal of such restrictions;
4.
5. an authorized or conditional increase in share
6.
capital;
an increase in share capital through the conversion
of capital surplus, through a contribution in kind or
in exchange for an acquisition of assets, or a grant
of special benefits upon a capital increase;
7. the restriction or denial of pre-emptive rights;
8. the change of the place of incorporation of the
Company;
9.
the dismissal of a member of the Board of Directors;
10. an increase in the maximum number of members
of the Board of Directors;
11. a modification of the eligibility requirements of the
members of the Board of Directors (Article 24
para. 1 of the Articles of Incorporation);
12. the dissolution of the Company;
13. other matters where statutory law provides for a
corresponding quorum.
230
4 Governance ReportDUFRY ANNUAL REPORT 2015 7. CHANGE OF CONTROL
AND DEFENCE MEASURES
7.1 DUTY TO MAKE AN OFFER
8. AUDITORS
8.1 AUDITORS, DURATION OF MANDATE
AND TERM OF OFFICE OF THE LEAD AUDITOR
An investor who acquires more than 33 ¹⁄³ % of all vot-
ing rights (directly, indirectly or in concert with third
parties) whether they are exercisable or not, is re-
quired to submit a takeover offer for all shares out-
standing (Article 135 Financial Market Infrastructure
Act, FMIA). The Articles of Incorporation of the Com-
pany contain neither an opting-out nor an opting-up
provision (Article 125 para. 4 FMIA).
Pursuant to the Articles of Incorporation, the Audi-
tors shall be elected every year and may be re-elected.
Ernst & Young Ltd acted as Auditors and has held the
mandate as Auditor since 2004. Bruno Chiomento
has been the Lead Auditor in charge for the consoli-
dated financial statements of the Company and the
statutory financial statements as of December 31,
2015. Mr. Chiomento took the existing auditing man-
date in 2015.
7.2 CLAUSES ON CHANGE OF CONTROL
In case of change of control or in any event which
would trigger a mandatory offer pursuant to the FMIA
with respect to the Company, the Performance Share
Units awarded to the PSU Plan Participants shall vest
immediately.
In case of change of control, all amounts drawn
under the CHF 2,500,000,000, USD 1,010,000,000,
EUR 500,000,000, and EUR 3,600,000,000 multicur-
rency term and revolving credit facilities agreements
and the EUR 250,000,000 letter of credit and bank
guarantee facility agreement shall become immedi-
ately due and payable. Furthermore, upon the occur-
rence of a change of control, Dufry may be required
to repurchase the USD 500,000,000 Senior Notes due
2020, the EUR 500,000,000 Senior Notes due 2022
and the EUR 700,000,000 Senior Notes due 2023 at a
purchase price equal to 101 % of their principal amount,
plus accrued and unpaid interest.
According to Article 23 of the Articles of Incorpora-
tion, employment and other agreements with the
members of the Group Executive Committee may be
concluded for a fixed term or for an indefinite term.
Agreements for a fixed term may have a maximum du-
ration of one year. Renewal is possible. Agreements for
an indefinite term may have a notice period of maxi-
mum twelve months. The current contracts with the
members of the Group Executive Committee contain
termination periods of twelve months or less.
8.2 AUDITING FEE
During fiscal year 2015, Dufry agreed with Ernst &
Young Ltd to pay a fee of CHF 3.4 million for services
in connection with auditing the statutory annual fi-
nancial statements of Dufry AG (including quarterly
reviews) and its subsidiaries, as well as the consoli-
dated financial statements of Dufry Group and a fee
of CHF 0.1 million for audit related services.
8.3 ADDITIONAL FEES
Additional fees amounting to CHF 0.6 million were paid
to Ernst & Young Ltd for transaction services and
CHF 0.7 million for tax services.
8.4 SUPERVISORY AND CONTROL INSTRUMENTS
PERTAINING TO THE AUDIT
The Audit Committee as a committee of the Board of
Directors reviews and evaluates the performance and
independence of the Auditors at least once each year.
Based on its review, the Audit Committee recom-
mends to the Board of Directors, which external Au-
ditor should be proposed for election at the General
Meeting of Shareholders. The decision regarding this
agenda item is then taken by the Board of Directors.
When evaluating the performance and independence
of the Auditors, the Audit Committee puts special em-
phasis on the following criteria: Global network of the
audit firm, professional competence of the lead audit
team, understanding of Dufry’s specific business risks,
personal independence of the lead auditor and inde-
pendence of the audit firm as a company, co-ordina-
tion of the Auditors with the Audit Committee and the
Senior Management / Finance Department of Dufry
Group, practical recommendations with respect to the
application of IFRS regulations.
231
4 Governance ReportDUFRY ANNUAL REPORT 2015 Details and information on the business activities,
Company structure, financial reports, media releases
and investor relations are available on the Company’s
website:
https://www.dufry.com
The official means of publication of the Company is
the Swiss Official Gazette of Commerce:
http://www.shab.ch
Web-links regarding the SIX Swiss Exchange push-/
pull-regulations concerning ad-hoc publicity issues are:
http://www.dufry.com/en/OurCompany/
NewsandMedia/Latestnews/index.htm
http://www.dufry.com/en/OurCompany/
NewsandMedia/Mediareleasesubscription/index.htm
Web-links regarding the filings made by the Company
with the CVM or BM & FBOVESPA are:
http://www.dufry.com/en/Investors/CVMFilings/
QuarterlyFinancialStatementsITR/index.htm
http://www.cvm.gov.br
http://www.bmfbovespa.com.br
The current Articles of Incorporation are available on
Dufry’s website under:
http://www.dufry.com/en/Investors/
Articlesofincorporation/index.htm
The financial reports are available under:
http://www.dufry.com/en/Investors/
FinancialReports/index.htm
For the Investor Relations and Corporate Communi-
cations contacts as well as a summary of anticipated
key dates in 2015 please refer to pages 246 /247 of this
Annual Report.
Within the yearly approved budget, there is also an
amount permissible for non-audit services that the
Auditors may perform. Within the scope of the ap-
proved and budgeted amount, the Chief Financial
Officer can delegate non-audit related mandates to
the Auditors.
The Audit Committee determines the scope of the ex-
ternal audit and the relevant methodology to be applied
to the external audit with the Auditors and discusses
the results of the respective audits with the Auditors.
The Auditors prepare a management letter addressed
to the Senior Management, the Board of Directors and
the Audit Committee once per year, informing them in
detail on the result of their audit. The Auditors also re-
view the interim quarterly reports before these publi-
cations are released.
Representatives of the Auditors are regularly invited
to meetings of the Audit Committee, namely to attend
during those agenda points that dealt with accounting,
financial reporting or auditing matters.
In addition, the Audit Committee reviews regularly the
internal audit plan. Internal Audit reports are commu-
nicated to management in charge and the Company’s
senior management on an on-going basis and regular
briefings are done to the Audit Committee.
During the fiscal year 2015, the Audit Committee held
5 meetings. The Auditors were present at 3 of those
meetings. The Board of Directors has determined the
rotation interval for the Lead Auditor to be seven
years, as defined by the Swiss Code of Obligation; such
rotation occurred the last time in 2015.
9. INFORMATION POLICY
Dufry is committed to an open and transparent com-
munication with its shareholders, financial analysts,
potential investors, the media, customers, suppliers
and other interested parties.
Dufry AG publishes its financial reports on a quarterly
basis, both in English and Portuguese. The financial re-
ports and media releases containing financial infor-
mation are available on the Company website.
In addition, Dufry AG organizes presentations and
conference calls with the financial community and
media to further discuss details of the reported earn-
ings or on any other matters of importance. The Com-
pany undertakes roadshows for institutional investors
on a regular basis.
232
4 Governance ReportDUFRY ANNUAL REPORT 2015 REMUNERATION
REPORT
DEAR SHARE-
HOLDERS
2015 was a transformational year for Dufry. The inte-
gration of the Nuance acquisition on one hand and the
acquisition of WDF on the other hand, were the key
topics for both Management and the Board of Directors
along 2015. The final result of these transformational
transactions will be only seen in 2017 and 2018, once
all businesses are fully integrated and all synergies
have been implemented. Nevertheless, important work
has been done by Dufry in 2015, and 2016 will be critical
to achieve the stated targets which are expected to
reflect value creation in the coming years.
In 2015, the Nomination and Remuneration Committee
of Dufry focused to further improve the compensation
programs for both the Board of Directors as well as the
Group Executive Committee and to adapt them to the
new increased size of the Group.
In this context, the Nomination and Remuneration
Committee mandated PwC to carry out a compensa-
tion benchmarking for the Board of Directors and the
Group Executive Committee, based on a group of 18
companies, which are comparable in size, geographic
reach and market profile. At the same time, we also
asked external expert opinion to review our compen-
sation systems. Such benchmarking and external ad-
vice is requested periodically to update and adjust
compensation to current market trends.
After the successful implementation of the Ordi-
nance against Excessive Compensation (Minder Ini-
tiative) in the 2015 Annual General Meeting, Dufry
plans also to hold a consultative vote on the Compen-
sation Report 2015 in the Annual General Meeting
2016. We believe that this step provides shareholders
with a further option to express their views on Dufry’s
compensation model.
In 2015, the Board of Directors approved a proposal by
the Nomination and Remuneration Committee to in-
crease the compensation for Board members of Dufry,
based on the PwC benchmarking. Dufry has almost tri-
pled its size in the last few years and has further ex-
panded its global reach. As a consequence, the level of
preparation has increased on one hand and the com-
plexity of risk assessment has risen on the other hand.
These two points, as well as the increased number of
meetings, have made the Dufry Board mandate more
time consuming and the new Board fees are designed
to compensate for this. The Board of Directors held 13
meetings, the Audit Committee 5 meetings and the
Nomination and Remuneration Committee 4 meetings
in 2015. The average attendance ratio was 100 % for
the Board and each of the Committee meetings.
In 2015, we abolished a project started the year before
to partially compensate Board members with shares.
After a detailed review, this option was considered not
to be best practice for compensation and therefore
Dufry’s Board of Directors decided not to pursue this
option any longer.
We also launched a project in 2015 to split the Nomi-
nation and Remuneration Committee in two separate
bodies, which will become effective in 2016. Given the
higher intensity of each of the functions in today’s en-
vironment, we believe that it is more effective to ad-
dress the two topics separately. It will allow the Com-
mittee members to dedicate more time to their
respective topic, and with this, to assess a broader
range of aspects including current market trends.
Last but not least, we also adapted the long-term in-
centive plan (PSU plan) for Dufry management. In or-
der to recognize the broader management team as well
as to ensure that we can attract the best talents in our
industry, we have broadened the PSU plan to include
233
4 Governance ReportDUFRY ANNUAL REPORT 2015 about 60 senior managers below the Group Executive
Committee. The second change in the PSU plan was
done in relation to the PSU calculation. Whereas the old
program was based on a normalized Cash EPS of a given
year, the new plan uses a three year Cumulative nor-
malized Cash EPS. We implemented the change because
the previous plan proved to be very volatile partially due
to consolidation effects of the acquisitions and had a
very low visibility along the vesting period. The new
metric results in a flatter pay-out curve, i.e. the likeli-
hood of both, the plan not vesting and the plan vesting
at maximum is considerably lower. We are convinced
that the new metric will provide a better measure to
reflect the long-term value creation of the Group.
will carefully monitor the compensation aspects of
this transformation. Furthermore, we also will review
the regulatory and industry developments in relation
to compensation. In both cases, we plan to address any
points pro-actively in case any change is warranted.
We would like to thank our shareholders for their
contribution and the trust they have put in Dufry.
Yours Sincerely,
2016 and beyond will be important years for Dufry,
as the enlarged group will become fully integrated.
Dufry’s Nomination and Remuneration Committees
Jorge Born
Committee. Since January 1, 2015, the Meeting of
Shareholders has to approve the proposal of the Board
of Directors in relation to the maximum aggregate
amount of compensation of the Board of Directors for
the period until the next Ordinary Meeting of Share-
holders and of the Group Executive Committee for the
following financial year. The vote at the Ordinary Meet-
ing of Shareholders has binding effect for these total
maximum amounts of compensation. Thereafter, the ap-
proval of the individual compensation to the members
of the Board of Directors and of the Group Executive
Board (within the limits approved by the Meeting of
Shareholders) is directly with the Board of Directors.
The Nomination and Remuneration Committee sup-
ports the Board of Directors in fulfilling its nomination
and remuneration related matters. The Committee
consists of four non-executive members of the Board
of Directors. The General Meeting of Shareholders
held on April 29, 2015, elected Messrs. Jorge Born and
Xavier Bouton, and re-elected Messrs. James Cohen
and Andrés Holzer Neumann (all individually elected) as
members of the Nomination and Remuneration Com-
mittee for a term of office until completion of the next
Ordinary Meeting of Shareholders in 2016. Jorge Born
has been appointed by the Board of Directors as Chair-
man of the Nomination and Remuneration Committee.
INTRODUCTION
The success of Dufry is dependent on its ability to at-
tract, motivate and retain outstanding individuals. It
is Dufry’s aim to provide appropriate and competitive
remuneration to its employees and to support their
development in a high performance environment.
This Remuneration Report provides information on the
remuneration system and compensation paid to the
members of the Board of Directors and of the Group
Executive Committee in fiscal year 2015. The Report
is prepared in accordance with Articles 13 – 17 of the
Ordinance against excessive Compensation (OaeC)
and item 5 of the Annex to the Corporate Governance
Directive (DCG) of the SIX Swiss Exchange, governing
disclosure of remuneration systems and compensa-
tion paid to members of the Board of Directors and
the Group Executive Committee.
The Remuneration Report will be presented to the
General Meeting of Shareholders on April 28, 2016, for
a consultative vote.
GOVERNANCE
Based on Dufry’s Articles of Incorporation and in line
with the OaEC, the Board of Directors has the overall
responsibility for defining the personnel and remuner-
ation policy used for the entire Group, as well as the
general terms and conditions of employment for
members of the Group Executive Committee. It ap-
proves the individual compensation of the members of
the Board of Directors and of the Group Executive
234
4 Governance ReportDUFRY ANNUAL REPORT 2015 COMMITTEES AND COMMITTEE MEMBERSHIPS
AS OF DECEMBER 31, 2015
MEMBER OF THE BOARD OF DIRECTORS
Juan Carlos Torres Carretero, Chairman
Andrés Holzer Neumann, Vice-Chairman
Jorge Born, Director
Xavier Bouton, Director
James S. Cohen, Director
Julián Díaz González, Director / CEO
José Lucas Ferreira de Melo, Director
George Koutsolioutsos, Director
Joaquín Moya-Angeler Cabrera, Director
NOMINATION &
REMUNERATION COMMITTEE
–
Committee Member
Committee Chairman
Committee Member
Committee Member
–
–
–
–
AUDIT COMMITTEE
Committee Member
–
Committee Member
–
–
–
Committee Chairman
–
Committee Member
For further details regarding the responsibilities of
the Nomination and Remuneration Committee and
the meetings held in fiscal year 2015, please refer to
section 3.5 Internal Organizational Structure of the
Corporate Governance Report.
COMPENSATION COMPARISONS
During the course of 2015, the Board of Directors of
Dufry consulted PricewaterhouseCoopers AG (PwC)
on the structure and level of Executive compensation
arrangements, with a particular focus on the Executive
PSU plan. PwC also conducted a benchmark analysis
on compensation levels for both members of the Board
of Directors and of the Group Executive Committee
using third party compensation survey data and dis-
closed information from 18 companies with a similar
size, geographical reach and / or complexity, mostly
from the SMI and SMIM universe. Other divisions of
PwC also provided services as Tax and HR Advisors for
other internal projects.
REMUNERATION TO THE MEMBERS
OF THE BOARD OF DIRECTORS
REMUNERATION SYSTEM
The remuneration of the members of the Board of Di-
rectors is set to attract and retain highly qualified in-
dividuals to serve on the Board of Directors. The Board
of Directors determines the amount of remuneration of
its members, taking into account their responsibilities,
experience and the time they invest in their activity as
members of the Board of Directors.
The total compensation to the members of the Board
of Directors, except for the Chief Executive Officer who
does not receive any compensation in relation to his po-
sition as member of the Board, included the following
elements in fiscal year 2015:
– Fixed fee in cash as member of the Board of Directors
and members of Board Committees; and
– Mandatory social security contributions
In addition, the Chairman of the Board of Directors,
who due to his intense involvement with the Company’s
management is considered an executive Chairman,
may also receive a performance bonus. This perfor-
mance bonus is related to financial performance of
the Company (performance objective: EBITDA) and is
capped at 130 % of the target bonus. The target bonus
for fiscal year 2015 was set at 100 % of the Chairman’s
board fee (2014: target bonus also 100 % of Chairman’s
board fee). With the exception of the variable compen-
sation to the Chairman and to the CEO (each in their
capacity as Chairman and Chief Executive Officer), the
235
4 Governance ReportDUFRY ANNUAL REPORT 2015 POSITION / RESPONSIBILITY
Chairman ¹
Vice-Chairman ²
Member of the Board of Directors ², ³
Member of the Audit Committee
Member of the Nomination and Remuneration Committee
¹ The Chairman receives no fees as a Committee member.
² Increased Board fee of TCHF 250 for period from AGM 2015 to AGM 2016.
³ The CEO does not receive additional compensation as a Board member.
FEE 2015
IN THOUSANDS OF CHF
FEE 2014
IN THOUSANDS OF CHF
1,914.8
250.0
250.0
50.0
50.0
1,665.0
175.0
175.0
50.0
50.0
compensation for the members of the Board of Di-
rectors is not tied to particular targets. Extraordinary
assignments or work which a member of the Board of
Directors would perform for the Company outside of
his activity as a Board member can be specifically re-
munerated and has to be approved by the Board of Di-
rectors. No extraordinary assignments outside Board
activities have taken place in fiscal year 2015. In addi-
tion, the members of the Board of Directors are reim-
bursed all reasonable cash expenses incurred by them
in the discharge of their duties.
The Nomination and Remuneration Committee (“NRC”)
discusses the annual compensation (board fees, com-
mittee fees, target bonus for Chairman) in separate
NRC meetings. The Chairman usually participates as
a guest in these meetings without any voting rights.
The Nomination and Remuneration Committee then
makes proposals in relation to the compensation of
each Board member to the entire Board of Directors.
Thereafter, the Board of Directors decides collectively
on the compensation of its members once per year,
with all Board members being present during such
meeting (CEO compensation reviewed and decided
separately as described in section Remuneration to
the members of the Group Executive Committee).
In fiscal year 2015, the Board of Directors decided to
raise the fee for the Chairman to TCHF 1,915 (increase
of TCHF 250 compared to previous fee for the Chair-
man). The Board of Directors further decided to in-
crease the Board fee for the members of the Board of
Directors for the period from the Annual General Meet-
ing of Shareholders, held on April 29, 2015, to the next
Annual General Meeting in 2016. Each member of the
Board of Directors (except the Chairman and the CEO)
receives a Board membership fee of TCHF 250 in cash
(representing an increase of TCHF 75 compared to the
previous Board fee) and an additional TCHF 50 in cash
as a member of a Board Committee (no increase in the
Committee fee). The Chairman fee and Board fee were
raised to reflect the complexity of tasks and high in-
tensity of the work done by the Board, also due to the
increased size of the Company (see also section
236
“Changes in the Remuneration System in 2015 – Board
of Directors” below). For fiscal year 2015, the Chair-
man of the Board of Directors will receive a cash bonus
of TCHF 1,943, based on profit targets (EBITDA) of the
Group. The bonus amounts to 101.5 % of the Chairman’s
board fee (2014: TCHF 1,595 and 96 % of board fee).
CHANGES IN THE REMUNERATION SYSTEM
IN 2015 – BOARD OF DIRECTORS
The Nomination and Remuneration Committee had an-
alyzed in a project whether to include share-based re-
muneration by granting shares of Dufry AG to the
members of the Board of Directors in the amount of
TCHF 75 per Board member (except for the Chairman
and the CEO). After a thorough analysis, the Nomina-
tion and Remuneration Committee concluded that it
will not introduce such share grants for the members
of the Board of Directors. Due to the high intensity of
the work done by the Board, and due to the increased
size and geographical diversification of the Company,
as well as the monitoring of risks becoming more ex-
tensive, the Board of Directors approved a proposal
by the Nomination and Remuneration Committee to
increase the cash fees for membership in the Board to
TCHF 250 (as of AGM 2015). The CEO (who does not re-
ceive a fee as Board member) is excluded from such
increase in the Board fees.
SUMMARY OF REMUNERATION IN
FISCAL YEAR 2015 AND 2014
On December 31, 2015, the Board of Directors com-
prised 9 members (December 31, 2014: also 9 Board
members). For fiscal year 2015 and 2014, covering the
period between January 1 and December 31, the re-
muneration for the members of the Board of Directors
is shown in the table below. The remuneration differ-
ence compared to the previous year is mainly due to
the increased remuneration for the Chairman and the
Board members as explained above.
4 Governance ReportDUFRY ANNUAL REPORT 2015 COMPENSATION TO THE BOARD OF DIRECTORS (AUDITED)
2015
NAME, FUNCTION
IN THOUSANDS OF CHF
REMUNERATION
POST-
EMPLOYMENT
BENEFITS 5
TOTAL
REMUNERATION
POST-
EMPLOYMENT
BENEFITS 5
2014
TOTAL
Juan Carlos Torres Carretero, Chairman 1
3,857.8
Andrés Holzer Neumann, Vice-Chairman
Jorge Born, Director
Xavier Bouton, Director 2
James S. Cohen, Director
Julián Díaz González, Director and CEO 3
José Lucas Ferreira de Melo, Director
George Koutsolioutsos, Director 4
Joaquin Moya-Angeler Cabrera, Director
275.4
309.0
259.0
275.4
–
275.4
225.4
275.4
197.1
14.8
18.2
15.4
16.3
–
16.3
13.5
13.3
4,054.9
3,260.2
169.5
3,429.7
290.2
327.2
274.4
291.7
–
291.7
238.9
288.7
225.0
213.7
425.0
225.0
–
225.0
117.6
225.0
13.5
12.8
10.6
13.5
–
13.5
7.2
12.8
238.5
226.5
435.6
238.5
–
238.5
124.8
237.8
Total
5,752.8
304.9
6,057.7
4,916.5
253.4
5,169.9
1 The remuneration for Mr. Torres Carretero includes Board fee of CHF 1.915 million and bonus of CHF 1.943 million
(2014: CHF 1.665 million Board fee and CHF 1.595 million bonus).
2 In 2014, the remuneration for Mr. Bouton included fees for consulting services of CHF 0.25 million.
These consulting services have been terminated as per December 31, 2014.
3 Mr. Díaz González (CEO of the Company) does not receive any additional compensation as Board member.
4 Director as of April 29, 2014.
5 Amount includes mandatory employer social security contributions.
RECONCILIATION BETWEEN REPORTED
BOARD COMPENSATION FOR 2015 AND THE
AMOUNT APPROVED BY THE SHAREHOLDERS
AT THE AGM 2015 UNTIL THE AGM 2016
of office from the AGM 2015 to the AGM 2016 of
CHF 7.4 million. The following table shows the recon-
ciliation between the reported Board compensation
for fiscal year 2015 and the amount approved by the
shareholders at the AGM 2015.
The Ordinary Meeting of Shareholders held on April 29,
2015, approved a maximum aggregate amount of
compensation of the Board of Directors for the term
BOARD
COMPENSATION
IN FISCAL YEAR
2015 AS
REPORTED
LESS BOARD
COMPENSATION
TO BE ACCRUED
FOR THE PERIOD
JANUARY 1, 2015
TO THE AGM
IN APRIL 2015
(4 MONTHS)
PLUS BOARD
COMPENSATION
TO BE ACCRUED
FOR THE PERIOD
JANUARY 1, 2016
TO THE AGM
IN APRIL 2016
(4 MONTHS)
TOTAL BOARD
COMPENSATION
FOR THE PERIOD
FROM AGM 2015
TO AGM 2016
TOTAL
MAXIMUM
AMOUNT AS
APPROVED BY
SHAREHOLDERS
AT THE AGM 2015
FOR PERIOD OF
AGM 2015 TO
AGM 2016
COMPEN-
SATION
RATIO
IN THOUSANDS OF CHF
Total Board of Directors
6,057.7
1,190.4
1,409.8
6,277.1
7,400
84.8 %
OTHER COMPENSATION, LOANS
OR GUARANTEES (AUDITED)
In the years 2015 and 2014, there was no other compen-
sation paid directly or indirectly to active or former
members of the Board of Directors, or to their related
parties. There are also no loans or guarantees received
or provided to these Board members, nor to their re-
lated parties.
237
4 Governance ReportDUFRY ANNUAL REPORT 2015 REMUNERATION TO THE MEMBERS
OF THE GROUP EXECUTIVE COMMITTEE
REMUNERATION SYSTEM
Dufry aims to provide internationally competitive
compensation to the members of its Group Executive
Committee (as of January 1, 2016, CEO, CFO, GCOO,
GC, GCCO, GRD, five Divisional CEOs and one GM Bra-
zil & Bolivia; for the structure during fiscal year 2015
see also Corporate Governance Report on page 225)
that reflects the experience and the area of responsi-
bility of each individual member. Members of the Group
Executive Committee (GEC) receive compensation
packages, which consist of a fixed basic salary in cash,
social benefits, allowances in kind, a performance re-
lated bonus and share-based incentive plans.
BASIC SALARY
reaches the objectives in full, the bonus pay-out will
correspond to the targeted level. If one or more ob-
jectives are not reached, the bonus will be reduced.
The bonus pay-out can be between a minimum of zero
and the maximum capped amount of 130 % of the tar-
get bonus for all members of the Group Executive
Committee, including the CEO.
PERFORMANCE OBJECTIVES
GROUP EXECUTIVE COMMITTEE (2015)
EBITDA
NON-
FINANCIAL
Chief Executive Officer
Chief Financial Officer
Global Chief Operating Officer
Global Chief Corporate Officer
General Counsel
2 Regional Chief Operating Officers
(one of them until March 31, 2015)
2 Regional Chief Operating Officers
(one of them until October 31, 2015)
100 %
–
50 %
50 %
The annual basic salary is the fixed compensation re-
flecting the scope and key areas of responsibilities of
the position, the skills required to perform the role and
the experience and competencies of the individual
person. The basic salary is reviewed annually.
ANNUAL BONUS
The target bonus amounted to 200 % of the basic sal-
ary for the CEO and to between 60 % and 200 % of the
basic salary for the other members of the Group Ex-
ecutive Committee in fiscal year 2015 (Fiscal Year 2014:
200 % for the CEO and between 60 % and 200 % for the
other members of the Group Executive Committee).
The annual bonus is defined once per year and is based
on a bonus target expressed in percentage of the an-
nual basic salary. The target bonus corresponds to the
bonus award at 100 % achievement of the pre-defined
objectives. Each member of the Group Executive Com-
mittee has its own bonus. In case that an executive
The main part of the bonus is related to measures re-
garding financial performance, which in fiscal year
2015 and 2014 was based on EBITDA, for both, the
Group and the respective Region in the case of the Re-
gional Chief Operating Officers (RCOOs). Such finan-
cial measures were weighted for the CEO, CFO, GCOO,
REMUNERATION COMPONENTS
Basic salary
Bonus
Share-based incentives
PSUs
INSTRUMENT
PURPOSE
INFLUENCED BY
– Basic compensation
– Paid in cash on monthly basis
– To attract and retain
management
– Position
– Competitive market
environment
– Experience of the person
– Annual bonus
– Usually paid in cash after
completion of the relevant year
– Performance Share Units (PSU)
if any, vesting conditional on
performance
– Pay for performance
– Achievement of financial
results of the Group and of
specific Regions and of defined
goals by each individual person
– Rewarding long-term
– PSU Awards 2013/2014: Cash
performance
– Aligning compensation to
shareholder interests
EPS growth over 3 years
– PSU Awards 2015/following
years: Cumulative Cash EPS
in CHF over 3 years
– Market practice and position
– Legal requirements of social
benefits
Other indirect benefits,
post-employment benefits
– Allowances in kind
– Social pension and insurance
– To attract and retain
management
prerequisites
238
4 Governance ReportDUFRY ANNUAL REPORT 2015 GC, GCCO and 2 of the 4 RCOOs (one of these two
RCOOs was a GEC member until March 31, 2015) as fol-
lows: 100 % EBITDA; for 2 of the 4 RCOOs (one of these
two RCOOs was a GEC member until October 31, 2015)
50 % EBITDA and 50 % non-financial oriented targets in
form of individual and general performance of the busi-
ness as evaluated by the CEO (Fiscal Year 2014: 100 %
EBITDA for the CEO, CFO, GCOO, GC, GCCO and 2
of the 4 RCOOs. 50 % EBITDA and 50 % non-financial
oriented targets for 2 of the 4 RCOOs).
CEO’s bonus compensation is determined based on
achieved targets and proposed by the Nomination and
Remuneration Committee and decided by the Board
of Directors once per year. The Nomination and Remu-
neration Committee as well as the Board of Directors
review the compensation of the CEO, CFO, GCOO,
GCCO and the GC (as of January 1, 2016 also the GRD)
yearly. The compensation of the RCOOs is reviewed
once per year by the CEO (as of January 1, 2016 all five
Divisional CEOs including the GM Brazil & Bolivia).
The bonus accrued as part of the compensation for
the members of the Group Executive Committee rep-
resented in 2015 between 61 % and 203 % of their basic
salary and amounted to CHF 9.7 million in the aggre-
gate (2014: between 55 % and 201 % of their basic salary
and an amount of CHF 9.9 million in the aggregate). The
achievement ratio regarding the EBITDA target was
101.5 % for fiscal year 2015.
RANGE OF BONUS COMPONENTS
IN % OF BASIC SALARY
2015
2014
2013
Group
Executive Committee
61 – 203 %
55 – 201 %
17 – 100 %
SHARE-BASED INCENTIVES (PSU )
In 2013, the Company introduced a Performance
Share Unit (PSU) plan for the members of the Group
Executive Committee. The purpose of the plan is to
provide the members of the Group Executive Commit-
tee (and since fiscal year 2015 also selected members
of the Senior Management team) with an incentive to
make significant and extraordinary contributions to
the long-term performance and growth of Dufry
Group, enhancing the value of the shares for the
benefit of the shareholders of the Company. The
share-based incentive is also increasing the ability of
Dufry Group to attract and retain persons of excep-
tional skills.
The bonus compensation for each of the members of
the Group Executive Committee, other than the CEO
bonus, is approved by the Nomination and Remunera-
tion Committee in coordination with the CEO. The
From an economic point of view, the PSUs are stock
options with an exercise price of nil. However, they are
expected to have no dilutive effect, as the shares for
TIMING OF THE PSU PLANS
YEAR 2013
YEAR 2014
YEAR 2015
YEAR 2016
YEAR 2017
YEAR 2018
PSU Award 2013
Grant date
Vesting period PSU Award 2013
Vesting condition
not reached
PSU Award 2013
No vesting
PSU Award 2014
Grant date
Vesting period PSU Award 2014
Vesting condition reached
(Yes / No?)
PSU Award 2014
PSU Award 2015
Grant date
Vesting period PSU Award 2015
Vesting condition reached
(Yes / No?)
PSU Award 2015
239
4 Governance ReportDUFRY ANNUAL REPORT 2015 share-based incentives historically have been sourced
from treasury shares, held by the Company.
Details of the Performance Share Units (PSU)
The number of PSUs allocated to each member of the
Group Executive Committee in any given year takes
into account the base salary as well as the prevailing
share price, i.e. an assumption of one share for every
PSU. The accrued value of the PSU awards 2015 rep-
resented about 119 % of the basic salary for the CEO
and between 62 % and 117 % of the basic salary for the
other members of the Group Executive Committee
(2014: 89 % for the CEO and between 62 % and 90 % for
the other members of the Group Executive Committee).
The PSU awards will only vest in the third year of the
award and are linked to specific performance criteria
(see below).
Vesting conditions of the PSUs are:
– The participant’s ongoing contractual relationship
on the vesting date; and
– The achievement of the performance target as de-
scribed below.
Performance target for 2013 and 2014 PSU grants
The number of shares allocated for each PSU for the
2013 and 2014 PSU grants directly depends on the av-
erage growth rate reached of the Company’s basic
earnings per share adjusted for acquisition-related
amortization and normalized for non-recurring effects
(Cash EPS). For the calculation of the relevant EPS
growth for the PSU awards 2013 and 2014, the follow-
ing metrics are used:
– Cash EPS of the fiscal year directly preceding the
grant date (i.e. for the PSU Award 2014 Cash EPS of
2013; for the PSU Award 2013 Cash EPS of 2012) is
used as a basis and is compared to the Cash EPS of
the fiscal year preceding the vesting date (i.e. for the
PSU Award 2014: respective metric in 2016; for the
PSU Award 2013: respective metric in 2015).
Depending on the average growth achieved, each PSU
will convert according to the following grid:
– Minimum threshold of average Cash EPS growth of
3.5 % per annum must be achieved; otherwise the
PSU shall not vest and will become nil and void. The
participant will not be allocated any shares from the
PSU.
– For a Cash EPS growth of 7 % per annum (target), the
participant shall be allocated one share for every
PSU that has vested.
– For a Cash EPS growth of 10.5 % per annum or above
(maximum threshold), the participant shall be allo-
cated two shares for every PSU that has vested.
– For a Cash EPS growth of between 3.5 % and 7 % per
annum or between 7 % and 10.5 % per annum the
number of shares allocated from vested PSUs is
calculated on a linear basis.
– The maximum number of shares allocated is capped
at two shares per vested PSU.
CASH EPS GROWTH PER ANNUM
PSU GRANTS 2013 /2014
PSU VESTING
< 3.5 % (minimum threshold)
No vesting
Between 3.5 % and 7 %
=7 % (at target)
Between 7 % and 10.5 %
Linear calculation
(between 0 % and 100 % vesting)
100 % vesting (1 share per PSU)
Linear calculation
(between 100 % and 200 % vesting)
≥ 10.5 % (maximum threshold)
200 % vesting (2 shares per PSU)
Performance target for 2015
and following years’ grants
The number of shares allocated for each PSU for the
2015 grants (and following years’ grants) directly de-
pends on the Company’s Cumulative Normalized Cash
EPS as a nominal amount in Swiss Francs of the three
year period preceding the vesting date (see also sec-
tion “Changes in the Remuneration System in 2015 –
Group Executive Committee” on page 241).
– For the 2015 grants, the Target Cumulative Cash EPS
has been set at a nominal amount in Swiss Francs
that was based on the cumulative cash EPS of the
years 2012 to 2014 and applied a growth rate of 5 %
per annum. This amount which is about CHF 24, and
the derived figures below are subject to change
from year to year by the Nomination and Remuner-
ation Committee.
Depending on the Cumulative Normalized Cash EPS
achieved, each PSU will convert according to the fol-
lowing grid:
– Minimum threshold of 50 % of target must be
achieved; otherwise the PSU shall not vest and will
become nil and void. The participant will not be al-
located any shares from the PSU.
– For a Cumulative Cash EPS at target, the participant
shall be allocated one share for every PSU that has
vested.
– For a Cumulative Cash EPS of 150 % of target or
above, which represents the maximum threshold, the
participant shall be allocated two shares for every
PSU that has vested.
– For a Cumulative Cash EPS higher than the minimum
threshold but lower than the maximum threshold,
the number of shares allocated from vested PSUs
is calculated on a linear basis.
– The maximum number of shares allocated is capped
at two shares per vested PSU.
240
4 Governance ReportDUFRY ANNUAL REPORT 2015 CUMULATIVE CASH EPS
PSU GRANTS 2015
< minimum threshold
(50 % of target)
at target
≥ maximum threshold
(150 % of target)
PSU VESTING
No vesting
100 % vesting (1 share per PSU)
Maximum vesting (2 shares per PSU)
Between minimum
threshold and maximum
threshold
Linear calculation
(between 0 and maximum
2 shares per PSU)
In 2015, the members of the Group Executive Commit-
tee have been granted, in the aggregate 56,965 PSU.
Out of this amount, 18,347 PSU were granted to the
CEO. The total maximum number of shares that can be
allocated to the members of the Group Executive
Committee (maximum 2 shares per vested PSU) would
amount to 113,930 shares for the PSU Award 2015,
89,134 shares for the PSU Award 2014 and to nil shares
for the PSU Award 2013 (as the PSU Award 2013 will
not vest).
The PSU plans have been approved by the Nomination
and Remuneration Committee and the Board of Direc-
tors. The Nomination and Remuneration Committee
reviews achievement of the respective performance
target at a specific vesting date, upon proposal of the
CEO, who as plan administrator will analyze and ad-
just potential exceptional and non-recurring events
to normalize Cash EPS in relation to the PSU plan. The
CEO acts as Plan Administrator and therefore pro-
poses the amount of each specific grant to each indi-
vidual plan participant, which are reviewed by the
Nomination and Remuneration Committee. The grants
made to the CEO are decided by the Nomination and
Remuneration Committee.
OTHER INDIRECT BENEFITS
The Company limits further benefits to a minimum.
Fringe benefits such as health insurance, company car,
or housing allowances have been granted to certain
members of the Group Executive Committee. The to-
tal amounted to CHF 0.54 million in the aggregate in
fiscal year 2015 (2014: CHF 0.66 million).
CHANGES IN THE REMUNERATION SYSTEM
IN 2015 – GROUP EXECUTIVE COMMITTEE
The Nomination and Remuneration Committee has de-
cided on some changes to the remuneration system in
fiscal year 2015:
The Restricted Share Units (RSU) program that was in
place from 2005 until 2013 was terminated in 2013 and
no awards were made since. In 2015, the Nomination
and Remuneration Committee considered an alterna-
tive program going forward, but decided that the share-
based compensation for the members of the Group
Executive Committee should consist of Performance
Share Units (PSUs) only.
Based on a proposal by the Nomination and Remuner-
ation Committee, the Board of Directors decided to
adapt the metrics for the PSU plan from fiscal year 2015
onwards. As described above the adaption to the PSU
plan was to change from the annual growth rate of
Cash EPS of the one year directly preceding the date of
grant and the vesting date, respectively, to the Cumu-
lative Cash EPS in Swiss Francs of the three years pre-
ceding the vesting date. The change is intended to re-
duce the volatility of the PSU plan as the original plan
has a very steep pay-out curve, which is likely to re-
sult in the maximum or non-vesting scenario, respec-
tively. The new metric also rewards continuous and
sustainable improvements in the Cash EPS generation
over time. The duration of the PSU plan (PSUs vest in
the third year of the award) remained unchanged.
The number of persons qualified to PSU awards has
been broadened and includes since fiscal year 2015 not
only the members of the Group Executive Committee,
but also further selected members of the Senior Man-
agement team of Dufry (about 60 senior managers). In
addition to the PSUs awarded to the members of the
Group Executive Committee as detailed above, this
further group of Senior Managers received in aggre-
gate 65,838 PSU from the Award 2015. The conditions
of the PSU plans are identical for all plan participants
(whether members of the Group Executive Committee
or Senior Managers). The total maximum number of
shares that can be allocated to all participants of the
PSU Awards 2015 and 2014 (maximum 2 shares per
vested PSU) would amount to 334,740 shares, repre-
senting together a total of 0.62 % of outstanding
shares as at December 31, 2015. The PSU Awards 2013
will not vest as the vesting conditions were not
reached. Historically, Dufry has always sourced its
share based compensation from treasury shares, so
that no dilutive effect is expected from the PSUs.
241
4 Governance ReportDUFRY ANNUAL REPORT 2015 REMUNERATION STRUCTURE GROUP EXECUTIVE COMMITTEE IN 2015
BASIC SALARY
BONUS
SHARE-BASED PAYMENTS
IN THOUSANDS OF CHF
POST-EMPLOYMENT
BENEFITS,
OTHER INDIRECT BENEFITS
8 % POST-EMPLOYMENT BENEFITS,
OTHER INDIRECT BENEFITS
26 % BASIC SALARY
26 % SHARE-BASED
INCENTIVES
40,000
30,000
GEC
2,014
20,000
7,150
10,000
10,940
6,711
0
CEO
477
2,025
3,402
1,701
GEC
2,280
14,300
14,222
6,711
CEO
566
4,051
4,423
1,701
GEC
1,818
6,288
9,732
6,159
CEO
483
2,025
3,453
1,701
Target (100%)
Maximum potential
Accrued compensation
2015
40 % BONUS
COMPARISON AND COMPOSITION OF
REMUNERATION TO THE GROUP EXECUTIVE
COMMITTEE IN FISCAL YEAR 2015
SUMMARY OF REMUNERATION
IN FISCAL YEAR 2015
The charts above reflect the composition of the dif-
ferent remuneration components as well as the actual
remuneration of the seven active members and two
former members of the Group Executive Committee
(as of December 31) for fiscal year 2015. In the chart,
this actual remuneration is also compared to the po-
tential compensation (for all nine members) if 100 % of
the target bonus was reached, and the maximum po-
tential of compensation possible based on the capped
bonus and the share-based compensation.
PAY-OUT COMPONENTS FOR FISCAL YEAR 2015
For fiscal year 2015, the achievement ratio in conjunc-
tion with the EBITDA target was 101.5 %. Based on this,
the pay-out of the bonus component for the CEO
amounts to CHF 3.5 million, which represents 203 % of
the CEO’s basic salary. As mentioned before, the PSU
Awards 2013 have not vested and there will be no pay-
out for the CEO or any other members of the Group
Executive Committee from the PSU Awards 2013.
Therefore, the pay-out for the entire Group Executive
Committee for fiscal year 2015 amounts to a total of
CHF 17.7 million, of which CHF 5.6 million is the pay-
out to the CEO.
For fiscal year 2015, the remuneration of the Group Ex-
ecutive Committee includes the compensation to the
seven active GEC members (as of December 31) for the
entire year, and to the two former GEC members on
a pro rata basis up to the dates on which they left the
GEC (fiscal year 2014: includes compensation to the
nine Executives for the entire year). The remuneration
for fiscal years 2015 and 2014, mentioned in the ta-
ble on the opposite page covers the period between
January 1 and December 31.
The remuneration difference compared to the previous
year are mainly due to the change in the number of the
Executives during the year, regular salary increases
based on annual performance review and individual
bonus payments based on achievement of yearly ob-
jectives set in advance, as well as the different values
of the PSU awards.
The Ordinary Meeting of Shareholders held on April 29,
2015, approved a maximum aggregate amount of com-
pensation for the members of the Group Executive
Committee for the financial year 2016 of CHF 50.5 mil-
lion. The approved maximum aggregate amount re-
flects the maximum possible pay-out calculated for
each compensation element and takes into account
twelve members of the Group Executive Committee in
fiscal year 2016. As of January 1, 2016, the Group Ex-
ecutive Committee has been expanded to a total of
twelve members (see also page 225 in the Corporate
Governance section of this Annual Report), taking into
account the larger group structure as a result of the
242
4 Governance ReportDUFRY ANNUAL REPORT 2015 COMPENSATION TO THE MEMBERS OF THE GROUP EXECUTIVE COMMITTEE (AUDITED)
REMUNERATION COMPONENT
IN THOUSANDS OF CHF
Basic salary
Bonus
Post-employment benefits 3
Other indirect benefits
Share-based payments 4
Total compensation accrued
2015
2014
GEC 1
CEO 2
GEC
CEO 2
6,158.7
9,732.3
1,281.0
537.1
6,288.4
23,997.5
1,701.2
3,452.6
447.1
35.5
2,025.3
7,661.7
6,264.0
9,935.0
1,896.9
660.7
5,370.9
24,127.5
1,675.1
3,209.9
527.3
35.0
1,497.7
6,945.0
Total compensation pay -out
17,709.1
5,636.3
18,756.6
5,447.3
Number of performance share units awarded (in thousands)
57.0
18.3
51.5
14.4
1
Compensation in 2015 includes remuneration of Mr. Rossinyol (former COO Region EMEA & Asia until March 31, 2015)
and Mr. Rosa (former COO Region America II until October 31, 2015) on a pro rata basis up to these dates.
2 The CEO has the highest compensation of the Group Executive Committee.
3 Amount includes employer social security contributions and pension contributions.
4 For valuation details see Note 28 of the consolidated financial statements.
recent acquisitions of the Nuance Group and World
Duty Free. The compensation ratio, including the dis-
tribution among the different compensation compo-
nents, will be disclosed in detail in the Remuneration
Report 2016.
OTHER COMPENSATION, LOANS
OR GUARANTEES (AUDITED)
In the years 2015 and 2014, there were no other com-
pensations paid directly or indirectly to active or for-
mer members of the Group Executive Committee, or
to their related parties. There are also no loans or
guarantees received or provided to the Group Execu-
tive Committee members, or to related parties.
CONTRACTS OF EMPLOYMENT TERMS
According to Article 23 of the Articles of Incorpora-
tion, employment and other agreements with the
members of the Group Executive Committee may be
concluded for a fixed term or for an indefinite term.
Agreements for a fixed term may have a maximum du-
ration of one year. Renewal is possible. Agreements for
an indefinite term may have a notice period of maxi-
mum twelve months. The current contracts with the
members of the Group Executive Committee contain
termination periods of twelve months or less.
243
4 Governance ReportDUFRY ANNUAL REPORT 2015 PARTICIPATIONS IN DUFRY AG
The following members of the Board of Directors or of
the Group Executive Committee of Dufry AG (includ-
ing related parties) hold directly or indirectly shares
or share options of the Company as at December 31,
2015 or December 31, 2014 (members not listed do not
hold any shares or options):
DECEMBER 31, 2015
DECEMBER 31, 2014
SHARES
FINANCIAL IN-
STRUMENTS 1
PARTICIP.
SHARES
FINANCIAL IN-
STRUMENTS 1
PARTICIP.
IN THOUSANDS
MEMBERS OF THE BOARD OF DIRECTORS
Juan Carlos Torres Carretero, Chairman
Andrés Holzer Neumann, Vice-Chairman
Jorge Born, Director
James S. Cohen, Director
Julián Díaz González, Director and CEO
George Koutsolioutsos, Director 3
Joaquin Moya-Angeler Cabrera, Director
982.2
4,291.3
21.9
2,059.3
284.5
1,608.4
-
257.1
463.6
30.9 2
-
92.6
200.0
-
Total Board of Directors
9,247.6
1,044.2
MEMBERS OF THE GROUP EXECUTIVE COMMITTEE
Julián Díaz González, CEO
Andreas Schneiter, CFO
José Antonio Gea, GCOO
Luis Marin, CCO
Xavier Rossinyol, COO Region EMEA & Asia 4
José C. Rosa, COO America II 5
Joseph DiDomizio, COO United States & Canada
Total Group Executive Committee
284.5
92.6
6.1
4.1
1.5
n/a
n/a
–
296.2
-
-
-
n/a
n/a
–
92.6
2.38 %
9.13 %
0.10 %
3.96 %
0.72 %
3.47 %
0.00 %
19.77 %
0.72 %
0.01 %
0.01 %
0.00 %
n/a
n/a
0.00 %
0.73 %
743.0
3,708.8
-
2,089.0
286.9
1,536.1
6.0
164.4
468.2
30.9 2
93.4
43.8
272.3
-
2.53 %
11.63 %
0.09 %
6.08 %
0.92 %
5.04 %
0.02 %
8,369.8
1,073.0
26.31 %
286.9
43.8
0.92 %
6.1
4.1
1.5
27.0
4.6 6
9.5
339.7
-
-
-
-
-
-
43.8
0.02 %
0.01 %
0.00 %
0.08 %
0.01 %
0.03 %
1.07 %
1 The detailed terms of the various financial instruments disclosed below are as disclosed to the SIX Swiss Exchange
and published on July 9, 2015, for the year 2015 and on November 26, 2014, for the year 2014.
2 European Capped Calls on 30,940 shares of Dufry AG. The transaction is divided into 5 tranches of 6,188 shares each,
which expire on 29.07.2019, 30.07.2019, 31.07.2019, 04.08.2019, and 05.08.2019, respectively. Each tranche is automatically exercised,
and the differences are to be cash settled. The strike price for each option is CHF 160, and the cap is CHF 260 per option.
3 Director as of April 29, 2014.
4 Member until March 31, 2015.
5 Member until October 31, 2015.
6 Includes 4.5 shares and 0.1 BDRs.
In addition to the above, the shareholders’ group con-
sisting of different legal entities controlled by Andrés
Holzer Neumann, Juan Carlos Torres, Julían Díaz
González, James S. Cohen, James S. Cohen Family
Dynasty Trust and Dimitrios Koutsolioutsos holds sale
positions of 8.81 % through options (4,589,120 voting
rights) as of December 31, 2015 (as of December 31,
2014: sale positions of 10.80 % through options
(3,877,480 voting rights)).
The detailed terms of these financial instruments are as
disclosed to the SIX Swiss Exchange and published on
July 9, 2015 (for sale position as of December 31, 2014:
publication of disclosure notice on November 26, 2014).
Disclosure notices are available on the SIX Swiss
Exchange website:
https://www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html
244
4 Governance ReportDUFRY ANNUAL REPORT 2015 245
4 Governance ReportDUFRY ANNUAL REPORT 2015 INFORMATION
FOR INVESTORS
AND MEDIA
REGISTERED SHARES
Issuer
Listing
Type of security
Ticker symbol
ISIN-No.
Swiss Security-No.
Reuters
Bloomberg
Dufry AG
SIX Swiss Exchange
Registered shares
DUFN
CH0023405456
2340545
DUFN.S
DUFN:SW
BRAZILIAN DEPOSITARY RECEIPTS (BDRS)
Issuer
Listing
Type of security
Ticker symbol
ISIN-No.
Reuters
Bloomberg
Dufry AG
BM&FBOVESPA
Brazilian Depositary
Receipts (BDRs)
DAGB33
BRDAGBBDR008
DAGB33.SA
DAGB33:BZ
KEY DATES IN 2016
March 16, 2016
Results Fiscal Year 2015,
Publication of Annual Report
Annual General Meeting
Results First Three Months 2016
Results First Half Year 2016
April 28, 2016
May 3, 2016
July 29, 2016
November 3, 2016 Results First Nine Months 2016
246
SENIOR NOTES
Issuer
Listing
Type of security
Size of issue
Interest rate
Maturity
ISIN-No.
Bloomberg
Dufry Finance SCA
ISE Irish Stock Exchange
Senior Notes
USD 500 million
5.5 % p.a., paid semi-annually
October 15, 2020
USL2660RAA25 (Serie REG S)
US26433UAA34 (Serie 144A)
DUFSCA
Issuer
Listing
Type of security
Size of issue
Interest rate
Maturity
ISIN-No.
Bloomberg
Dufry Finance SCA
ISE Irish Stock Exchange
Senior Notes
EUR 500 million
4.5 % p.a., paid semi-annually
July 15, 2022
XS1087753353 (Serie REG S)
XS1087754245 (Serie 144A)
DUFSCA
Issuer
Listing
Type of security
Size of issue
Interest rate
Maturity
ISIN-No.
Bloomberg
Dufry Finance SCA
ISE Irish Stock Exchange
Senior Notes
EUR 700 million
4.5 % p.a., paid semi-annually
August 1, 2023
XS1266592457 (Serie REG S)
XS1266592705 (Serie 144A)
DUFSCA
4 Governance ReportDUFRY ANNUAL REPORT 2015
ADDRESS
CORPORATE
HEADQUARTERS
INVESTOR AND MEDIA CONTACTS
Renzo Radice
Global Head Investor Relations
and Corporate Communications
Phone + 41 61 266 44 19
renzo.radice@dufry.com
DUFRY AG
Brunngässlein 12
P.O. Box
4010 Basel
Switzerland
Phone +41 61 266 44 44
INVESTOR RELATIONS
Sara Lizi
Head Investor Relations
Phone + 55 21 21 57 99 01
sara.lizi@br.dufry.com
Rafael Duarte
Investor Relations
Phone + 41 61 266 45 77
rafael.duarte@dufry.com
CORPORATE COMMUNICATIONS
Renzo Radice
Global Head Corporate Communications
Phone + 41 61 266 44 19
renzo.radice@dufry.com
Mario Rolla
Corporate Communications Brazil
Phone + 55 21 21 57 96 11
mario.rolla@br.dufry.com
DUFRY.COM
Company’s website:
Latest news:
Articles of incorporation:
Financial reports:
247
4 Governance ReportDUFRY ANNUAL REPORT 2015 This Annual Report contains certain forward-looking statements, which can be identified by terms like “believe”, “assume”, “expect” or
similar expressions, or implied discussions regarding potential new projects or potential future revenues, or discussions of strategy,
plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause
actual results to be materially different from any future results, performance or achievements expressed or implied by such statements.
All forward-looking statements are based only on data available to Dufry at the time of preparation of this Annual Report. Dufry does
not undertake any obligation to update any forward-looking statements contained in this Annual Report as a result of new information,
future events or otherwise.
Publisher Dufry AG, Basel
Concept, Production Tolxdorff & Eicher Consulting, Horgen
Design MetaDesign, Zurich
Production, Print Neidhart + Schön AG, Zurich
© Dufry AG 2016
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