ANNUALREPORT2019 DUFRY GROUP – A LEADING
GLOBAL TRAVEL RETAILER
DUFRY AG (SIX: DUFN)
IS A LEADING GLOBAL
TRAVEL RETAILER OPERATING
OVER 2,400 DUTY-FREE
AND DUTY-PAID SHOPS
IN AIRPORTS, CRUISE
LINES, SEAPORTS, RAILWAY
STATIONS AND DOWNTOWN
TOURIST AREAS.
DUFRY EMPLOYS OVER
31,000 (FTE) PEOPLE. THE
COMPANY, HEADQUARTERED
IN BASEL, SWITZERLAND,
OPERATES IN 65 COUNTRIES
ON ALL SIX CONTINENTS.
ANNUAL
REPORT
2019
CONTENT
1 MANAGEMENT REPORT
Dufry at a Glance 4 – 5
Highlights 2019 6 – 7
Message from the Chairman of the Board of Directors 8 – 11
Statement from the Chief Executive Officer 12 – 16
Organizational Structure 17
Board of Directors 18 – 19
Global Executive Committee 20 – 21
Dufry Investment Case 22 – 23
Dufry Strategy 24 – 77
Dufry Divisions 48 – 65
Sustainability 78 – 101
Community Engagement 102 – 108
2 SUSTAINABILITY REPORT
3 FINANCIAL REPORT
Report from the Chief Financial Officer 110 – 114
Financial Statements 115 – 228
Consolidated Financial Statements 116 – 214
Financial Statements Dufry AG 215 – 227
4 GOVERNANCE REPORT
Corporate Governance 229 – 251
Remuneration Report 252 – 269
Information for Investors and Media 272 – 273
Address Details of Headquarters 273
Read the full focus story
on page 30 – 37
3
1 Management Report
DUFRY ANNUAL REPORT 2019
DUFRY
AT A GLANCE
TURNOVER
IN MILLIONS OF CHF
9,000
8,400
7,800
7,200
6,600
6,000
5,400
4,800
4,200
3,600
3,000
2,400
1,800
1,200
600
0
2015
2016
2017
2018
2019
GROSS PROFIT
IN MILLIONS OF CHF
MARGIN
EQUITY FREE CASH FLOW
IN MILLIONS OF CHF
69 %
400
68 %
67 %
66 %
65 %
64 %
63 %
300
62 %
200
61 %
60 %
59 %
58 %
57 %
100
56 %
0
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
5,200
4,800
4,400
4,000
3,600
3,200
2,800
2,400
2,000
1,600
1,200
800
400
0
4
3 % BORDER, DOWNTOWN
AND HOTEL SHOPS
4 % CRUISE LINERS
AND SEAPORTS
NET SALES BY PRODUCT CATEGORY 2019
2 % LITERATURE AND PUBLICATIONS
2 % ELECTRONICS
5 % OTHER
32 % PERFUMES
AND COSMETICS
11 % TOBACCO
GOODS
13 % LUXURY
GOODS
44 % EUROPE
AND AFRICA
17 % WINE
AND SPIRITS
18 % FOOD,
CONFECTIONERY
AND CATERING
NET SALES BY DIVISION 2019
1 % DISTRIBUTION
CENTERS
18 % CENTRAL
AND SOUTH
AMERICA
22 % NORTH
AMERICA
15 % ASIA PACIFIC
AND MIDDLE EAST
NET SALES BY CHANNEL 2019
NET SALES BY MARKET SECTOR 2019
5 % RAILWAY STATIONS AND OTHER
3 % BORDER, DOWNTOWN
AND HOTEL SHOPS
4 % CRUISE LINERS
AND SEAPORTS
39 % DUTY-PAID
88 % AIRPORT
61 % DUTY-FREE
5
1 Management Report
DUFRY ANNUAL REPORT 2019
HIGHLIGHTS
2019
STRENGTHENING
AND EXTENDING
THE CONCESSION
PORTFOLIO
Dufry extended its concession contract
with AENA to operate duty-free shops
up to 5 years in all Spanish airports and
signed several new contracts across
the globe, such as in Mexico, Brazil and
Finland.
ORGANIC
GROWTH
ACCELERATION
Driven by like-for-like growth and
contribution from new concessions,
organic growth sequentially improved
during 2019 and stood in line
with the mid-term average organic
growth target.
5million customers
included in
our CRM system.
The roll-out of our loyalty
program has accelerated
and RED by Dufry is
becoming an important
part of our digital strategy
focused on driving sales.
CHF 383.3
MILLION
EQUITY FREE
CASH FLOW
In 2019, Dufry generated an Equity Free Cash Flow
of CHF 383.3 million in line with our annual target
of CHF 350 – 400 million, growing with top line.
6
STRATEGIC
ACQUISITIONS
Dufry executed three important acquisitions, increasing its footprint in both
duty-free and duty-paid, and adding new F & B concessions in North America.
EXPANDING
ALTERNATIVE
CHANNELS
Dufry opened its first border
duty-free shop in Brazil and
further expanded the cruise
channel.
DEBT REDUCED
AND FINANCING
FURTHER
OPTIMIZED
As per December, 2019 net debt
reached CHF 3,102 million, the lowest
level since 2015. New EUR 750 million
Senior Notes were issued at lower rates,
thus refinancing the existing Senior
Notes as well as reducing bank debt
and financing costs.
REFINING
GOVERNANCE
AND EVOLVING
ESG
REPORTING
Dufry has further refined
its corporate governance
structure and evolved its ESG
reporting in accordance with
the Global Reporting Initiative
(GRI) CORE option.
65 Present in
In line with its geographic diversification
strategy, Dufry has further expanded its
footprint.
65 countries
7
1 Management Report
DUFRY ANNUAL REPORT 2019
MESSAGE FROM
THE CHAIRMAN
OF THE BOARD
OF DIRECTORS
DEAR SHARE-
HOLDERS
In the financial year 2019, Dufry once again delivered re-
silient results with respect to organic growth and equity
free cash flow generation thereby meeting our expecta-
tions. We have also successfully executed three impor-
tant acquisitions – one in Russia and two in the United
States – which further increase our footprint in duty-free
and duty-paid, and contribute to strengthen our capabil-
ities to access new avenues of growth within the impor-
tant food & beverage market in North America. At the
corporate governance level, we have continued to evolve
the structure of the Board of Directors by welcoming a
new member to the Board, introducing the new Lead In-
dependent Director function, and fostering efforts in our
Environment, Social and Governance (ESG) engagement.
the majority stake in OHM Concession Group LLC.
These three acquisitions perfectly showcase our growth
strategy for the future, which besides organic growth
also focusses on small and mid-sized acquisitions pav-
ing the way into new growth avenues.
In the context of growth and the resilience of our busi-
ness, I want to highlight – amongst several other con-
tract extensions and new wins – the important renewal
of the AENA concession contract covering all Spanish
airports, the extension of the Toronto Pearson con-
cession for another eight years, as well as the new
contract won at Mexico City International Airport to
operate three additional duty-free shops.
From a performance perspective, turnover increased
by 1.9 % to CHF 8,848.6 million, resulting in a new all-
time high. Our diversification strategy focusing on op-
erating in different geographic regions and accessing
various travel retail channels has once more proven
effective, generating positive organic growth of 3.0 %
despite adverse trading conditions in some key
markets. Adjusted net profit reached CHF 349.3 mil-
lion, resulting in an Adjusted EPS of CHF 7.00. Equity
free cash flow reached CHF 383.3 million, confirming
Dufry’s resilient cash flow generation capability and
meeting its average mid-term expectation¹.
While in 2018 Dufry focused on improving its opera-
tional efficiency by implementing the Business Oper-
ating Model and on building our digital initiatives to
drive operational excellence, in 2019 we resumed the
focus on growth in strategic areas. In Russia, we ex-
panded our presence in Moscow by acquiring a partic-
ipation in RegStaer Vnukovo. In North America, we
acquired 34 Brookstone shops in the U.S. as well as
¹ For a glossary of financial terms and key performance indicators
please see page 270 of this Annual Report.
Dividend of CHF 4.00
per share proposed
to AGM in 2020.
In 2019, we have continued returning cash to sharehold-
ers by paying a CHF 4.00 dividend per share (previous
year: CHF 3.75 per share); equal to a yield of 4.3 %. Fol-
lowing approval by the 2019 Annual General Meeting,
we also cancelled the 3.3 million shares bought during
the share buyback program executed in 2018. For the
financial year 2019, the Board of Directors’ proposal
to the annual shareholders’ meeting 2020 will be a div-
idend of CHF 4.00 per share corresponding to a yield
of 4.2 %. This dividend level will allow us to maintain our
flexibility to further reduce debt or allocate capital
into M&A.
Our market capitalization at December 31, 2019,
amounted to CHF 4.9 billion. Daily trading volumes on
all platforms reached CHF 66.5 million, confirming
the good liquidity of our shares. The SIX Swiss Ex-
8
change remains our most important trading platform,
where the average daily volume of Dufry shares
reached CHF 27.3 million in 2019. In this context it has
to be mentioned that the SIX Swiss Exchange lost
its EU stock market equivalence on 30 June 2019.
As a consequence, since July 2019, Dufry’s trad-
ing volumes were mainly concentrated at the SIX
61 % and BATS Chi-X OTC 39 % platforms. As is
our tradition, we have maintained a continuous
dialogue with our shareholders and the financial
community in 870 meetings, conference calls
and emails in 2019.
Our long-term shareholders, Travel Retail Invest-
ments, Qatar Investment Authority, Richemont,
GIC Asset Management, Franklin Mutual Advi-
sors LLC as well as Blackrock and JP Morgan
Chase & Co continued to support Dufry with
participations above 3 %. Together, these major
shareholders represent approximately 41 % of
our share capital.
Strong support
by long-term
and new
shareholders.
In 2019, we welcomed Mr. Luis Maroto Camino
to our Board of Directors team. He was elected
by our shareholders at the 2019 AGM and will
contribute with his wealth of experience
within the travel and tourism industry. We
have also continued to develop the struc-
ture and the functions of the Board of
Directors by unanimously resolving to es-
9
1 Management ReportDUFRY ANNUAL REPORT 2019 470,000 m2
Dufry operates close to
470,000 m2 of retail space.
tablish the new position of Lead Independent Director.
This decision formally recognizes the key importance
and strategic role of the independent members of the
Board of Directors, who constitute the majority of the
Board and hold all the seats in all Board Committees.
Subsequently, Ms. Heekyung Jo Min has been ap-
pointed as Dufry’s first Lead Independent Director.
Moreover, based on her extensive experience Ms.
Heekyung Jo Min will also supervise the further devel-
opment of our Environment, Social and Governance
(ESG) engagement.
Evolution of Dufry’s
ESG program.
Engaging with our stakeholders on a regular basis to
understand their expectations, needs and concerns is
part of our ongoing commitment to sustainability. In
this regard, during 2019 we have revised the social, en-
vironmental and economic impacts of our business, and
evolved the material matrix of our sustainability report-
ing by including Data Privacy and IT Security amongst
the material topics for the company.
Moreover, we have further improved the granularity of
our internal ESG data sourcing, refining the set of in-
formation reflected in the KPIs disclosed in the ESG re-
port, which is structured in accordance with the Core
Option of the Global Reporting Initiative (GRI) Stan-
dards. With respect to human resources KPIs, I am
proud to announce that we now cover 100 % of our op-
erations. In this context, we also expanded the reach of
our Supplier Code of Conduct, receiving their respec-
tive acknowledgements and improving acceptance
from 82 % in 2018 to 84 % in 2019.
Fostering a strong corporate culture is one of our
primary concerns. In recent years we have thoroughly
deployed our ONEDUFRY initiative to engage and align
all Dufry employees, while at the same time offering
comprehensive training and development opportuni-
ties. The employee survey done in 2019 shows a very
positive result of this initiative as 75 % of our employ-
ees report to be satisfied working for our company.
Last but not least, in early 2020 Dufry applied to be-
come a signatory member of the UN Global Compact,
and we renewed our support for the United Nation’s
Global Goal awareness-raising campaign #YouNeed-
ToKnow strengthening our ties with the initiative by
supporting a program to reach more passengers using
our airport stores. For a complete overview of all our
ESG achievements please refer to our ESG report on
pages 78 – 100.
Ongoing community
engagement.
Our community engagement programs continue to
support disadvantaged children and families around
the world and assist communities in markets where we
operate. It is now the 10th year that we have supported
the funding of SOS Children’s Villages initiatives in
Brazil, Russia and Mexico. In 2019, we added commu-
nity projects in many other parts of the world such
as Haiti, Greece, Korea, Turkey, the United Kingdom,
Switzerland, the United States and Australia.
At the time we wrote this letter, Covid-19 started to
create a potential temporary impact for the current
business year in locations where we have Asian cus-
10
1 Management ReportDUFRY ANNUAL REPORT 2019 tomers as well as in locations directly affected by the
phenomena. Our first action has been the implemen-
tation of measures to protect the health and safety of
both our employees and customers. Moreover, we have
established a dedicated committee at the Global Ex-
ecutive Committee level who has implemented spe-
cific action plans to protect the performance of our
business. We keep monitoring developments on a daily
basis and will activate and implement other initiatives
as needed.
I thank our management and employees for the
impressive amount of work they have done in 2019 to
further evolve and grow our company. I also thank our
suppliers, landlords and business partners for their
ongoing support and trust in our long-standing rela-
tionships. We also extend our thanks to our sharehold-
ers and bondholders who repeatedly foster our com-
mon vision to further develop Dufry as a WorldClass.
WorldWide company.
Sincerely,
Juan Carlos Torres Carretero
11
1 Management Report
DUFRY ANNUAL REPORT 2019
STATEMENT
OF THE CHIEF
EXECUTIVE
OFFICER
DEAR ALL
In 2019, we have reactivated our strategy of profit-
able growth based on organic growth as well as small
and mid-sized acquisitions despite the headwinds ex-
perienced in South America. We have seen our growth
accelerating in many ways, and we were able to
achieve important milestones, which will contribute
to the future development of Dufry. Our turnover
reached CHF 8,848.6 million versus CHF 8,684.9 mil-
lion in 2018, a total growth of 1.9 %. Adjusted Operat-
ing Profit amounted to CHF 767.7 million, resulting
in an Adjusted Operating Profit margin of 8.7 %.
Equity Free Cash Flow reached CHF 383.3 million, in
line with our guidance¹.
New organization announced in January 2019
In January 2019, we announced a new organization in
order to accelerate growth and to benefit from op-
portunities identified thanks to the implementation
of the new business operating model (BOM) com-
pleted in 2018. This comprised further simplifying our
organization, to drive market agility with full cus-
tomer focus, generating additional efficiencies at
headquarter level and accelerating organic growth.
Changes include the regrouping of the former divi-
sions Southern Europe & Africa and UK & Central Eu-
rope into the new division Europe & Africa. Moreover,
we have further integrated the commercial and cor-
porate teams at divisional and headquarter level, and
we have invested in sales staff and sales incentive
programs. In the context of the new organization, the
Divisional CEOs have joined the Global Executive
Committee.
Consistent execution of growth strategy
Dufry has consistently executed on its growth strat-
egy by progressing in all of its growth pillars includ-
¹ For a glossary of financial terms and key performance indicators
please see page 270 of this Annual Report.
ing extending important contracts, winning new con-
cessions and increasing its footprint with small and
mid-sized acquisitions.
Solid execution
of initiatives for
growth acceleration.
Organic growth accelerated resiliently along the
whole business year supported by our marketing ini-
tiatives and new concessions, and reached 3.0 % for
the full year, in line with our mid-term average guid-
ance. This overall positive performance confirms
once more that geographical diversification helps to
mitigate risks from external factors that are out of
our sphere of influence, such as the challenges we
have faced in Brazil and Argentina and the temporary
slowdown seen in North America. Overall, we saw
good performance in the majority of our other mar-
kets with highlights in the United Kingdom, Spain,
Greece, Turkey, most of the operations in Asia Pacific
and the Middle East as well as Central America and
with Mexico, the Caribbean and the Dominican Re-
public ranking best. Our cruise business also re-
ported overall good growth on all routes and on the
new ferries, which came into operation in the first and
second quarter.
Our like-for-like performance sequentially improved
along the year as well, came in at a healthy 2.2 % in
the last quarter and reached 0.6 % for the full year.
One of our ongoing focus points to drive like-for-like
growth is the refurbishment of shops. The total retail
space refurbished in 2019 included over 41,600 m2 in
over 130 shops across all our divisions. In this con-
text it is worth mentioning the refurbishments car-
12
2,400
Dufry is a real global player
operating over 2,400 shops
throughout all six continents.
ried out in 15 shops in Spain, 9 shops in Sweden,
5 shops in Turkey, 3 shops in Jordan and one shop
each in Morocco and Macau as well as the one New
Generation Store implemented in Buenos Aires,
Argentina. The further tightened collaboration with
our brand partners to increase the number of pro-
motions as well as the extended offering of novelties
and exclusive products also contributed to the like-
for-like acceleration.
Net new concessions contributed with 2.4 % to or-
ganic growth through expansion of existing locations
and the opening of new shops such as in Russia,
Mexico, USA and shops across 19 new ships. In 2019,
we expanded our gross retail space by 33,900 m2 in
total, of which 32 % is located in Asia Pacific and
Middle East, including the retail space in Vnukovo,
27 % in Europe and Africa, while the remaining 41 %
are almost equally distributed across North and
South America. Dufry has further refined its strong
strategic positioning with a broad portfolio of high-
quality concessions across many markets, in a sec-
tor with positive fundamentals.
Expanding footprint
with attractive
acquisitions.
In 2019, Dufry has started again to acquire
attractive operations allowing to efficiently
expand its footprint and to access new
channels of growth. In this context, the ma-
jority participation Dufry took in RegStaer
Vnukovo allows us to further extend presence
in the Moscow area and Russia overall. The
Vnukovo operation, which we consolidated as of
13
1 Management ReportDUFRY ANNUAL REPORT 2019 November 2019, generated a sales volume of EUR 58.8
million in FY 2018 and features 30 duty-free and duty-
paid shops across 6,800 m2. Dufry is now present at
all three Moscow airports, with Vnukovo adding a lo-
cation with premium shops and a high quality passen-
ger profile.
The second bolt-on acquisition was the transaction
to acquire the 34 Brookstone shops in the United
States, which also included the exclusive right to act
as airport retailer to further expand the brand, and
to sell a selected Brookstone assortment in existing
Hudson shops. Through Hudson’s presence in many
other locations, we will be able to accelerate the ex-
pansion of this well-known U.S. brand to further air-
ports in North America.
The acquisition of OHM Concession Group LLC has a
slightly more strategic component as compared to
the two described above. Besides adding a volume of
around 60 airport food & beverage units to Hudson’s
current 50 quick service and café concepts, it adds a
considerable know-how and skill-set to Hudson to ac-
celerate our subsidiary’s further expansion into the
airport food & beverage market in North America.
OHM operates a variety of over 20 F&B concepts,
which provide airport operators with a large variety
of culinary options to enrich their offer for travelers.
Ongoing deployment of digital strategy
to drive sales
Dufry’s digital strategy is aimed at driving sales by
creating an immersive digital communication to in-
crease the number of multichannel touch-points and
customer engagement, as well as providing employ-
ees on the shop floor with digital tools to better serve
and interact with customers to improve their shop-
ping experience. In 2019, we have considerably accel-
erated the digital strategy deployment through the
expansion of all its elements such as the New Gen-
eration Store concept, the RED by Dufry customer
loyalty program, the Reserve & Collect online order-
ing platform, and Dufry’s proprietary social media
channel, Forum by Dufry.
Digital strategy
further accelerated.
The cornerstone of our digital strategy is the new
generation store, of which we have added 4 shops in
Buenos Aires, Amman, Alicante and Malaga, and now
totaling 13 shops deployed across all our divisions. The
new generation stores provide a stronger shopping ex-
perience, as the shops communicate with customers
in different languages, and adapt promotions and mar-
keting campaigns to match the customer profiles and
nationalities present at the airports at any given time
of the day. The new generation store also includes the
employee digitalization element, which consists of
sales tablets to help staff to better serve our custom-
ers with more detailed product and other sales related
information. Sales tablets are now in operation across
111 locations in 30 countries.
We have substantially intensified the rollout of our
customer loyalty program RED by Dufry in the year
under review and it is currently available in 236 loca-
tions across 46 countries. In addition, we have
increased the number of services and benefits for cus-
tomers by engaging with airport and brand partners
around the world. At the end of 2019, Dufry’s CRM
database included 5 million customers – a database
we intend to further expand in 2020 and beyond.
Equally important is the expansion of our Reserve &
Collect network, which now covers 170 airports in
44 countries world-wide. This service, allowing custom-
ers to order online and pick-up their purchases when
departing or upon arrival, is being increasingly used
and we see on average higher tickets being generated
as compared to traditional average in-shop sales.
Last but not least, in 2019 we have ramped up our
social media channel Forum by Dufry, which connects
all of our digital dots and adds emotion and experience
with content provided by brands, bloggers and in-
fluencers highlighting the attractiveness of the travel
retail channel.
The deployment of the digital strategy confirms our
initial expectation that it would contribute to attract-
ing more customers to the shops, would increase
sales, and thus ideally complement the physical shops,
which continue to benefit from the traditionally strong
impulse buying behavior of our affluent and captive
audiences.
Global marketing initiatives driving shopping
experiences and customer engagement
We have seen the trend for a more experience-driven
shopping behavior, focusing on novelties, exclusive
products and limited editions continuing in 2019.
Accordingly, we have intensified bilateral collabora-
tion with our most important global brand partners to
increase the development of products sold only in
travel retail – or increasingly sold exclusively in Dufry
shops. This allows us to create that sense of unique-
ness and individuality that raises brand value, drives
14
1 Management ReportDUFRY ANNUAL REPORT 2019
sales and provides customers with memorable expe-
riences. Moreover, we intensified the deployment of
marketing initiatives with global brands aimed at –
alongside increasing sales for Dufry and the brand
partners – getting closer and engaging more tightly
with customers, as this proves to be one of the key
drivers to increase customer spending.
Securing future business with new concession
wins and contract extensions
Both, new wins and contract extensions are key
elements to secure our future business. In 2019, we
successfully extended the milestone contract to
operate all 25 Spanish airports with AENA for up to
5 years. Spain has already shown an improving perfor-
mance during the year under review and we are look-
ing forward to deploying the operational best prac-
tices successfully tested across 5 pilot airports, which
have given promising results. Other important exten-
sions were agreed with Philadelphia airport for 9 retail
and food & beverage shops, as well as with Toronto
Pearson International Airport for an eight-year duty-
free contract from 2022 to 2030.
Important contract
wins and extensions
across channels.
In this context, I would also like to draw the attention
to the allowance increase approved by the Brazilian
government for arrival duty-free shops, thus doubling
the amount from previously USD 500 to USD 1,000 as
of January 1, 2020. This is an important sales driver
for our Brazilian business, as it not only permits cus-
tomers to spend more, but it allows us to considerably
expand our product assortment with products in the
price range of USD 500 – 1,000, which could not be
presented so far due to the earlier lower limit.
Resilient strong cash
flow generation.
Resilient cash flow generation confirmed;
net debt reduced
The 2019 business year confirmed once more Dufry’s
capability to generate resilient cash flows; while main-
taining our dividend payment, for which in 2019 we
allocated CHF 199.8 million. Our Adjusted Operating
Cash Flow amounted to CHF 959.9 million and Equity
Free Cash Flow came in at CHF 383.3 million (previous
year CHF 370.8 million), in line with our guidance range
of CHF 350 – 400 million. The resilient cash generation
allowed us to further reduce our net debt by CHF 184
million, which stood at CHF 3,102 million at year-end,
which from a full-year perspective is the lowest level
since 2015.
With respect to new wins, Dufry has signed important
new contracts in the United States with 6 new shops
at Newark including Dufry Shopping, as well as for
9 shops in Indianapolis. New concessions were also
awarded at the Mexico City International Airport for
3 duty-free shops covering 1,400 m2; at Florianópolis
(Brazil), with a sales area of 650 m2 including two
duty-free and one duty-paid shop; while in Helsinki
the new contract signed covers 7 luxury boutiques
across 700 m2 of space. Worth mentioning is the new
confectionery concession won at the Singapore
Changi Airport.
2019 was also an important year for alternative chan-
nels such as the cruise ships, where Dufry signed a
further agreement with Holland America to operate
shops on 6 new ships with a total sales area of 650 m2;
as well as for the border shops in Brazil, with the open-
ing of the first border shop covering 850 m2 of retail
space in the city of Uruguaiana. The Brazilian Govern-
ment had previously approved the long expected law
on the border shops, defining 32 cities, where border
duty-free shops can be opened.
Confident outlook for the resilience of our business
The ongoing improvement in organic growth in 2019,
and the additional growth potential we have added with
the three acquisitions provide a solid base for the fur-
ther resilient development of our business. At the time
this letter has been written, we have seen Covid-19
creating a potential temporary impact for 2020 in the
locations where we have Asian customers as well as in
locations directly affected by the phenomena. Both,
from a safety and operational perspective we have
been closely monitoring the developments with a ded-
icated committee of the Global Executive Committee
on a daily and weekly basis and we have immediately
put in place the necessary plans to act as needed.
These plans cover the protection of health and safety
of our employees and customers at any time, and in-
clude measures to drive sales performance as well as
to safeguard the profitability and the cash flows of the
company. While our flexible cost structure provides
certain opportunities to protect the company’s per-
formance, it is difficult to assess the magnitude of any
impact as this will depend on the duration of the phe-
nomena and its geographic spread.
15
1 Management ReportDUFRY ANNUAL REPORT 2019 Thank you
Above all, I want to thank our customers from over
150 nationalities for their ongoing trust and for con-
tinuing to visit our shops, appreciating our offering and
ultimately generating the sales, which allow our com-
pany and our employees to prosper. We will continue
to refine our assortments and services, making any
visit a memorable experience.
2019 continued to present some challenges to Dufry’s
market environment, but the dedication and motiva-
tion of our teams allowed us to deliver solid results in
line with our expectations. All our teams at country,
division and headquarter level focused on our strong
customer centric strategy to drive sales and further
develop our company. I would therefore like to thank
all our colleagues and teams across all functions and
operations for their strong contribution and their en-
gagement in accomplishing our common goals set for
the past year.
I also want to thank our suppliers, landlords and busi-
ness partners for their ongoing support in further de-
veloping Dufry. Again, we have seen the collaboration
intensifying along the value chain of travel retail, which
we consider to be the key factor for our common suc-
cess. We are looking forward to continuing to develop
this collaboration and will strongly support related
initiatives by suppliers and landlords.
Last but not least, I thank our Board of Directors and
our shareholders for their ongoing support, trust and
contributions in making Dufry even more WorldClass.
WorldWide.
Best regards,
Julián Díaz González
16
1 Management ReportDUFRY ANNUAL REPORT 2019 OUR ORGANIZATIONAL STRUCTURE – GLOBAL EXECUTIVE COMMITTEE
Group Chief Executive Officer
Julián Díaz González
Deputy Group Chief Executive Officer
José Antonio Gea
Chief Financial Officer
Yves Gerster
Global Chief Corporate Officer
Luis Marin
Group General Counsel
Pascal Duclos
Chief Executive Officer
Europe, Africa and Strategy
Eugenio Andrades
Chief Marketing and
Digital Innovation Officer
Javier González
Chief Executive Officer
Asia Pacific and Middle East
Andrea Belardini
Chief Executive Officer
Central and South America
René Riedi
Chief Executive Officer
North America
Roger Fordyce
17
BOARD OF
DIRECTORS
MEMBERS
1
2
3
1 Juan Carlos Torres Carretero
2 Julián Díaz González
3 Jorge Born
4 Claire Chiang
4
18
1 Management ReportDUFRY ANNUAL REPORT 2019 5 Heekyung Jo Min
6 Andrés Holzer Neumann
7 Lynda Tyler-Cagni
8 Steven Tadler
9 Luis Maroto Camino
6
7
5
8
9
19
1
4
5
GLOBAL
EXECUTIVE
COMMITTEE
MEMBERS
1 Julián Díaz González
2 Yves Gerster
3 José Antonio Gea
4 Luis Marin
5 Pascal C. Duclos
20
2
3
1 Management ReportDUFRY ANNUAL REPORT 2019 6 Eugenio Andrades
7 Javier González
8 René Riedi
9 Andrea Belardini
10 Roger Fordyce
7
8
6
9
10
21
1 Management Report
DUFRY ANNUAL REPORT 2019
DUFRY’S
INVESTMENT
CASE
MARKET
LEADER
Dufry is the undisputed market leader in the travel
retail industry.
Close to 20 % market share in airport retail.
GLOBALLY
DIVERSIFIED
CONCESSION
PORTFOLIO
Dufry is the most diversified
travel retailer with operations
on all six continents, covering
65 countries and over 420 locations.
Geographic diversification
allows Dufry to capture global
growth trends of the travel
retail industry and in most cases
mitigate potential local events.
Exposure to single contracts
and markets has been reduced
significantly over the years.
420 Over
UNIQUE WINDOW
DISPLAY FOR
GLOBAL BRANDS
420 locations
operated
by Dufry
worldwide
Global player, with over 2,400 shops
operated in 65 countries on six continents.
Offering global brands a unique market
access and window display.
22
7 YEARS
7 years of remaining
average concession
lifetime, across a highly
diversified portfolio
LONG-TERM
CONCESSION
PORTFOLIO
STRONG
EQUITY FREE
CASH FLOW
GENERATION
Long-term concession portfolio further
enhanced through new important
concessions, such as Spain, Finland,
Mexico, Brazil etc.
Solid partner for landlords and airport
authorities.
Dufry is a reliable partner delivering
outstanding results for airports through
a vast offering of unique shop concepts.
4 %4 % p.a. average global
FAST GROWING
INDUSTRY
passenger growth expected
for the next 5 years
Average expected industry passenger
growth of 4 % p.a. in the coming years will
drive Dufry’s organic growth.
Affluent customer base, with above average
spending power.
Equity free cash flow of CHF 383.3
million in 2019.
Low capital intensity of the
business allows for strong cash
generation and fast deleveraging.
GLOBAL
“PURE PLAY”
IN A GROWING
INDUSTRY
Dufry is the only listed global “pure play”
to participate in the growing travel retail
industry.
Dufry’s organic growth to be further
fueled mainly by increasing passenger
numbers and net new concessions.
23
OUR
STRATEGY
CREATING
LONG-TERM
VALUE
For a glossary of financial terms and
key performance indicators please see
page 270 of this Annual Report.
Dufry is the leading player in travel retail – an indus-
try which generated a sales volume of USD 79 billion
in 2018. With a turnover of CHF 8.8 billion in 2019,
Dufry looks back on a successful track record of rapid
expansion through organic growth and acquisitions.
Dufry has a market share of 11 % in travel retail over-
all, and close to 20 % in airport travel retail, which ac-
counts for 88 % of our business.
Creating stakeholder value through customer
experience and retail excellence
Dufry, and travel retail in general, is at the center of
three very important and distinct industries: retail,
travel locations and consumer goods. Addressing the
different requirements of our stakeholders and align-
ing their respective interests is critical in order to gen-
erate value for all. Our approach can be summarized
in a simple way: we focus on offering the best services
to our customers.
Our clear travel retail focus, where we mostly concen-
trate on locations with captive audiences, creates a
winning formula for all stakeholders: for customers,
by providing an unrivalled shopping experience; for
suppliers, by showcasing their brands to a fast-grow-
ing group of affluent customers; for landlords, by fully
exploring the commercial potential of a travel location
and for shareholders, by creating value through gen-
erating cash and profits. For an overview of our stake-
holder community please refer also to the Dufry
stakeholder ecosystem as shown on page 80.
For our customers, we create memorable shopping ex-
periences by constantly improving our shops and
developing best-in-class retail formats, as well as by
implementing innovative cross-channel marketing ini-
tiatives. Our sales representatives will always receive
travelers with their biggest smile, introducing them to
the world of travel retail and providing them with de-
24
tailed product information – increasingly supported
by digital technology.
An unparalleled sense of place is for Dufry a key ele-
ment of an attractive customer shopping experience.
This includes local product offerings, as customers
increasingly want to complete their travel experience
by bringing home memories, as well as internationally
recognized brands that are well known and much liked.
Our shops combine the famous assortments of global
brands and high-quality products with a special local
touch, which differentiates our shops worldwide and
wherever they may be – at airports, seaports, ships, rail-
way stations or borders – and irrespective of whether
they are duty-free or duty-paid. For a selection of our
main retail concepts please refer to pages 38 through
47 of this report.
Unparalleled
customer
experiences.
Demographics play a big role in our business and
changes in customer profiles and preferences can
occur rapidly. For this reason, Dufry sets high priority
on consumer intelligence, extrapolated from internal
operational information and through external re-
search. We constantly track customer behavior at our
shops and use our market insights to continuously
fine-tune our offering and not only match but exceed
the expectations of our clients.
For suppliers we offer access to the largest footprint
in the ever more attractive travel retail channel,
through our more than 2,400 shops in over 420 loca-
tions in 65 countries. Our shops offer suppliers an un-
1 Management ReportDUFRY ANNUAL REPORT 2019 rivalled worldwide window display to promote their
brands and products to an affluent consumer segment.
In recent years, we have seen an increasing impor-
tance of novelties, exclusive products and limited edi-
tions to attract customers to our shops. Dufry works
closely with brands to offer customers a unique prod-
uct selection and to offer dedicated brand experi-
ences, which make the channel even more attractive.
Increasing importance
of novelties and
exclusive products.
Landlords get the highest productivity from their
retail areas, maximizing their revenues when working
with Dufry. We offer a full range of retail concepts
adapted and customized to any specific location.
Moreover, Dufry provides access to the most com-
prehensive portfolio of global and local brands. In a
nutshell, landlords benefit by optimizing their overall
business and by offering attractive commercial spaces
to their passengers.
For shareholders, Dufry is the world’s leading travel
retailer, offering them an attractive investment oppor-
tunity to participate in a growing industry and a com-
pany that focuses on profitable growth and cash gen-
eration. For further information on our equity story,
please refer to section Investors on page 74.
Diversification strategy maximizes opportunities
and mitigates risks
Geographic diversification is of key importance to our
strategy for a number of reasons: first, it is the best
way to benefit from the ever growing number of trav-
elers worldwide; second, as a global organization, we
can efficiently develop new business opportunities
anywhere; third, major global brands can offer their
products via a truly global travel retailer and fourth, it
is a very effective approach to mitigating risks. Dufry
is today not only the market leader in travel retail, but
also by far the most diversified player in the industry
with operations in 65 countries on all six continents.
Our global presence allows us to quickly and thor-
oughly evaluate new projects almost anywhere, capi-
talizing on the expertise of our local teams. This local
perspective helps us to accurately evaluate opportu-
nities, gives us a clear understanding of the local
GLOBAL PRESENCE
A full list of locations is available
on pages 64 and 65.
25
1 Management ReportDUFRY ANNUAL REPORT 2019 market characteristics and allows us to closely collab-
orate with landlords and other local business partners
to effectively develop new businesses.
Furthermore, being geographically diversified consid-
erably mitigates risks generated by external impacts
in single markets or regions. This diversification is best
illustrated by the share of individual concessions in the
Group. With the largest concession accounting for
around 7 % of our business, and with the ten biggest
representing less than 35 % of 2019 sales, Dufry has
limited exposure to single contracts. Ultimately, geo-
graphic diversification is key to offering our brand
partners a fine-meshed network of locations and
shops, which allows them direct engagement with a
growing number of customers through a window dis-
play in any given mature or emerging market.
Diversification
by geography
and by channel.
For Dufry, diversification also means accessing differ-
ent channels, thus further widening the scope of the
company. In this context, the cruise and ferry busi-
nesses, train stations and downtown locations such as
hotels, casinos and leisure resorts have gained in im-
portance. Cruise lines in particular offer an attractive
channel to engage with customers during a longer
period of time and represent a resilient growth oppor-
tunity as cruise vacations continue to be “en vogue”
and shipyards for the construction of new vessels are
fully booked for the next decade.
Resilient cash
flow generation.
Financial discipline focusing on returns
At Dufry, we have a disciplined financial approach to
all our projects, be they organic or acquisitions. We
carefully analyze every project or significant invest-
ment with detailed projections and with a focus on
minimum return requirements. This includes a careful
assessment of the initial investment needed to build
and set up the stores as well as the cost structure,
profitability and cash flow generation of the business
once it is operational. This culture of giving importance
to returns and cost control has allowed us to grow our
business profitably and capture opportunities in many
different markets.
26
As part of our financial risk management, we minimize
business risks by implementing a highly variable cost
structure. These defensive characteristics help to
protect the business in case of downturns, which are
usually local and temporary, thus providing a solid and
resilient profile.
The combination of Dufry’s solid profitability and low
capital intensity results in a strong cash generation.
With the current size of the Group we expect to fur-
ther improve our cash generation capacity in line with
top-line growth.
Organic growth complemented by small
and mid-sized acquisitions
Dufry’s overall growth strategy continues to be char-
acterized by a combination of organic growth as well
as small and mid-sized acquisitions.
With respect to organic growth, the travel retail indus-
try has the unique advantage of benefitting from a
secular increase of travelers around the world and
offering the great opportunity to directly engage with
them. This characteristic clearly differentiates travel
retail from any other retail channel. Consequently,
organic growth will also continue to be an important
driver of Dufry’s development going forward. We will
focus on driving sales through implementing best-in-
class shop concepts, by further deploying our digital
strategy, and by complementing the proven market-
ing and promotional activities we have used and fine-
tuned over the years. Besides benefitting from addi-
tional passengers, we expect to further increase our
retail space, be it through expansion in existing loca-
tions or by winning new contracts in airports where
we don’t currently operate, or in other channels. At
Dufry, we traditionally have a sizeable project pipeline,
allowing us to grow our retail space in different chan-
nels, regions and sectors.
Despite the consolidation seen in travel retail over the
last years, the industry remains relatively fragmented,
with the top 10 players controlling just over half of the
market and the remaining market consisting of small
and medium-sized operators. We expect to be able to
capitalize on M&A when small and mid-sized opportuni-
ties arise, with a focus on Asia and the Middle East, or
with bolt-on acquisitions that complement our presence
in other existing markets. The majority participation
acquired in the RegStaer Vnukovo operation in Russia,
as well as the 34 shops acquired from Brookstone in the
U.S. are good examples of this type of transaction.
1 Management ReportDUFRY ANNUAL REPORT 2019 Offering the best retail experience for international and
domestic travelers in multiple channels, Dufry currently
generates about 61 % of its revenues in duty-free and
39 % in duty-paid operations, with both sectors continu-
ing to offer further, substantial growth opportunities.
With the acquisitions of 34 Brookstone stores across
several U.S. airport locations done through our Hudson
subsidiary, we now also have an additional duty-paid
format, which we can further expand across North
American airports.
On the duty-free side, the airport channel is expected
to continue to be the largest and fastest growing part
of our business. We continue to see additional poten-
tial in further developing the cruise ship business,
duty-free border shops and downtown duty-free
shopping in selected markets.
Passenger growth
is a key driver
in travel retail.
The duty-paid sector also has considerable develop-
ment potential in airports, since the expected growth
of domestic passengers is similar to that for interna-
tional travelers. Furthermore, this sector is even more
fragmented than duty-free, thus offering attractive
new expansion opportunities, as we have successfully
demonstrated in 2019 with the two acquisitions done
through our subsidiary in the United States.
We continue to actively foster the expansion of our
successful duty-paid retail concepts, Hudson and
Dufry Shopping, which have already been implemented
in several markets and have the potential to be de-
ployed further. Hudson is a well-established conve-
nience store concept that has been very successful in
North America over the past 30 years and that we have
deployed in 17 countries so far since 2009. Dufry
Shopping is a duty-paid concept that offers a high-
quality assortment of international brands in an ex-
clusive setting, similar to a duty-free travel retail
store, but it targets domestic passengers.
We originally piloted Dufry Shopping in Brazil in 2014,
expanding to 7 locations across the country and the
immediate success has led us to a strategic decision
to roll out this concept into other countries. The first
Dufry Shopping store outside Brazil was opened in
2017 at Las Vegas McCarran International Airport and
followed by the Malta Dufry Shopping in 2018 and by
the contract signed in 2019 with Newark Liberty Inter-
national Airport for a new Dufry Shopping to be
opened in 2020. Based on the positive results with 9
Dufry Shopping locations in 3 countries so far, we are
convinced that this concept can be successfully rolled
out to other markets globally.
Ever since the Hudson IPO, Dufry has clearly outlined
its intent to further expand into the airport food & bev-
erage market in the U.S. With the acquisition of OHM
Concession Group LLC through Hudson, the Group
made an important step forward, added new food &
beverage concession capabilities and expanded its
North American footprint. Airport food & beverage will
currently be a focus only in North America. Please find
out more on the North American Division on page 56.
Our strategy is supported by strong and resilient
industry fundamentals
Travel retail is a fast-growing industry driven by ongo-
ing growth in traveler numbers. The increased demand
from passengers to travel is the reason why this at-
tractive retail channel keeps growing and displays dif-
ferent dynamics to high street retail.
Global passenger numbers are currently expected to
grow by around 4 % per annum, which translates to a
potential of over 300 million new customers for the
industry every year. Industry specialists expect this
trend to continue, thus providing a resilient driver for
LONG-TERM PASSENGER FORECAST
IN BILLIONS OF PASSENGERS
24
20
16
12
8
4
0
2019
2023
2028
2033
2038
2040
Source: ACI 2019 / World Airport Traffic Forecast 2019 – 2040.
27
1 Management ReportDUFRY ANNUAL REPORT 2019 travel retail going forward. The growth potential is fur-
ther increased by the development of innovative com-
mercial concepts with landlords and brands. Dufry’s
ambition is to deliver excellence in execution while
driving change in the way travel retail operates. We be-
lieve that being the market leader also means being at
the forefront of this development.
Seizing the opportunities digitalization brings
Digitalization is changing the way business is done in
travel retail. At Dufry, we are excited about the possi-
bilities and opportunities these new technologies of-
fer. In the past two years we have successfully built
and deployed our digital platforms, which allow us to
engage more frequently with customers and to pro-
vide them with additional services, with the ultimate
goal of driving sales. For Dufry, digitalization is and re-
mains a key element of our strategy, which supports
and evolves a strong business model to the next level,
to continuously improve our offer to the travelers we
welcome in our shops.
Normally customers come to our stores while they are
waiting to board their plane or train, or while they en-
joy their stay on a cruise liner, in a casino or hotel. They
enjoy strolling through the attractive retail spaces and
take away memorable shopping experiences. Sales are
often generated by impulse decisions and/or immedi-
ate needs, which protect travel retail from the direct
competition of online platforms. To attract more cus-
tomers to our stores we want to provide a superior
customer experience and in addition, create further
value through a more efficient business. Thus, the use
of digital and online technology is changing our busi-
ness in three major areas: how we communicate with
our customers, how we sell products, and how we or-
ganize our processes internally and in the value chain.
Capitalizing
on digital
opportunities.
Specifically, this means that we will be further increas-
ing personalized digital communication with custom-
ers at home, during their whole journey, and in partic-
ular when they are at the airports close to our shops.
We are also digitalizing the shops to increase conver-
sion rates and to simplify in-store processes, such
as product consultations, payments, individual pro-
motions etc. Lastly, we will further improve customer
service and individualize product offers for specific
customer profiles.
28
1 Management ReportDUFRY ANNUAL REPORT 2019 29
FOCUS
STORY
RESILIENT
BUSINESS
MODEL
DRIVING
NEW
GROWTH
AVENUES
30
1 Management ReportDUFRY ANNUAL REPORT 2019 1 Management Report
DUFRY ANNUAL REPORT 2019
Through the integration
of the transformational
acquisitions, the standardiza-
tion achieved through the
implementation of the new
business operating model,
the alignment of the com-
pany’s corporate culture,
the launch of its digital strat-
egy and the ongoing refine-
ment of its retail excellence,
Dufry is well prepared
to drive further growth
and access new avenues
of development.
Ever since its IPO back in
2005, Dufry has consistently
built and executed on its
Global Ambition strategy
of profitable growth, which
is based on 3 main pillars:
• Global presence and
geo-graphic diversifi cation
to benefit from the
world-wide resilient passen-
ger growth, while at
the same time mitigating
local temporary risks.
• Growth focused on activities,
allowing to generate synergies,
as well as on organic foot-
print expansion across several
travel retail channels and
covering a wide product mix.
• Standardization and refine-
ment of operational excellence
to maximize efficiencies and
generate attractive returns
and value creation for share-
holders.
32
In the past 5 years (2014 – 2019) Dufry has considerably
accelerated the implementation of its strategy. This
period has been characterized by a series of distinctive
steps, which have transformed the company and
prepared the ground for further growth – steps, which
can be described as follows:
1
SETTING UP OF GLOBAL
SUPPLY CHAIN
One of the first steps of the Global Ambition
strategy implementation has been the internal
re-organization and the setup of a global supply chain
with centralized procurement and logistics depart-
ments. This has fostered the ongoing improvement of
the gross profit margin, created efficiencies for the
company and simplified the tight collaboration with
and for our suppliers.
2
TRANSFORMATIONAL
ACQUISITIONS
Besides the acquisitions executed between
2006 and 2013, those of Nuance and World Duty Free
boosted Dufry’s market share in airport travel retail
from 10 % in 2013 to well over 20 % in 2015, thus offer-
ing brand partners a unique global window display. The
two acquisitions generated CHF 195 million of imme-
diate synergies and paved the way for additional effi-
ciency gains through further standardization.
3
IMPLEMENTATION OF THE NEW
BUSINESS OPERATING MODEL
Following the integration of the two acquisitions,
Dufry implemented the new business operating model
(BOM) to standardize processes, procedures and ways
of working. The BOM generated CHF 50 million of ad-
ditional efficiencies.
1 Management ReportDUFRY ANNUAL REPORT 2019 4
DIGITAL STRATEGY TO SATISFY
NEW CUSTOMER PROFILES
AND SHOPPING BEHAVIORS
Today’s new customer profiles make an extensive use
of digital technology creating substantial new require-
ments for the travel retail industry and the shopping
experience. Dufry’s digital strategy takes this new
shopping behavior into account and creates a consis-
tent customer engagement from the moment a trip is
planned until the passenger returns home, through
several communication touch points and new online
services to facilitate sales and shopping experience.
As per year-end 2019, Dufry had 13 New Generation
Stores; 5,000,000 customers included in its CRM sys-
tem; 170 locations with the Reserve & Collect service;
111 shops using digital tablets to serve customers, as
well as its own social media channel FORUM by Dufry.
All focused on driving like-for-like sales and growth.
5
RETURNING CASH TO
OUR SHAREHOLDERS
In the years before the transformational ac-
quisitions, Dufry’s capital allocation strategy focused
on deploying its free cash flows purely into further
growth and on deleveraging. As of 2018, the capital al-
location strategy has been evolved to allow sharehold-
ers to benefit from the strong cash generation capac-
ity of the company on a yearly basis. Thus, close to
CHF 800 million of cash were returned to sharehold-
ers in the past two years. Dufry distributed close to
CHF 200 million of dividends per year in 2018 and 2019
and executed on top a CHF 400 million share buy-back
program in 2018. Dividend payments remain a com-
pany priority going forward.
6
CONSIDERABLE IMPROVEMENT
OF GOVERNANCE AND
ESG ENGAGEMENT
Reflecting the company’s transformation and the
increased importance of sustainability, Dufry has per-
manently refined its Environment, Social and Gover-
nance (ESG) engagement and started to report on its
material ESG topics based on the Global Reporting
Initiative (GRI) CORE option. Most recently, Dufry has
established the new Lead Independent Director role
at the Board of Directors level, to which Ms. Heekyung
Jo Min has been appointed. Moreover, Ms. Jo Min will
also be responsible for the supervision of Dufry’s ESG
strategy.
4,197 -
8,849
TURNOVER
DOUBLED
Turnover doubled from 2014 – 2019;
reaching CHF 8,849 million
470,000 m2
RETAIL SPACE
EXPANDED
Retail space increased by over 75 %
from 2014 – 2019
1,688 -
2,400
SHOPS INCREASED
Number of shops increases from 1,688
to over 2,400 from 2014 – 2019
GROSS
PROFIT
MARGIN
IMPROVED
Gross Profit Margin improves from 58.7 %
in 2014 to 60.2 % in 2019
33
1 Management ReportDUFRY ANNUAL REPORT 2019
3 – 4 %
ORGANIC
GROWTH
Mid-term average organic growth target
of 3 – 4 % per annum
350 –
400
MILLION
Mid-term annual Equity Free Cash Flow
target of CHF 350 – 400 million; growing
in line with top line
In 2019, Dufry has accele-
rated again its strategy
of profitable growth, through
ongoing improvement of
organic growth as well as small-
and mid-sized acquisitions.
While organic growth further
increased in existing and new
channels, the three most recent
acquisitions (OHM Concession
Group LLC, Brookstone and
RegStar Vnukovo) confirm
this strategic approach and
are expected to add a total
of approx. CHF 150 million to
Group turnover.
34
1 Management ReportDUFRY ANNUAL REPORT 2019 ACCESSING THE AIRPORT
FOOD & BEVERAGE MARKET
IN NORTH AMERICA
The acquisition of OHM Conces-
sion Group LLC. executed by our
subsidiary Hudson Ltd is a pivotal
step in accelerating the U.S.
expansion beyond retail and into
the airport food & beverage
services market. Besides adding
as immediate effect to Hudson’s
revenues and footprint – OHM
operates 60 units across 13 air-
ports and generated revenues of
around USD 62 million in 2018 –
the acquisition has two important
strategic components: first, it
enhances Hudson’s competences
and capabilities in the North
American food & beverage mar-
ket; and second, it gives access
to additional airport locations
where Hudson was not present.
35
1 Management ReportDUFRY ANNUAL REPORT 2019 EXPANDING DUTY-PAID
AND CONVENIENCE
ASSORTMENT IN THE U.S.
Hudson Ltd also acquired
34 Brookstone shops across
several airports in the U.S.
including the exclusive right
to sell selected Brookstone
merchandise in Hudson shops,
and to further expand the
brand in the airport channel,
thus complementing the overall
retail offer. Brookstone is
an established American brand,
well known for its unique
selection of innovative products
in the travel, wellness, home
and entertainment categories,
and it perfectly complements
Hudson’s convenience assortment.
36
1 Management ReportDUFRY ANNUAL REPORT 2019 CONSOLIDATING
DUFRY’S FOOTPRINT
IN RUSSIA
Through the acquisition of the
60 % stake of RegStaer Vnukovo,
Dufry consolidated its position
in Russia, especially in Moscow,
extracting further synergies with
the integration of operations at
Sheremetyevo and Domodedovo
airports. Vnukovo airport handles
22 million passengers per year,
and includes a long-term con-
cession, until 2035, with more
than 30 duty-free and duty-
paid shops across a retail space
of over 6,800 m2. The Vnukovo
operation is a typical example
of small and mid-size targets
Dufry intends to acquire, with
a focus on Asian markets.
37
1 Management ReportDUFRY ANNUAL REPORT 2019 GENERAL
TRAVEL
RETAIL
SHOPS
The general travel retail shop is the most
commonly used concept at Dufry, covering
the full range of product categories, such
as perfumes & cosmetics, food & confec-
tionery, wines & spirits, watches & jewelry,
fashion & leather, tobacco goods, souvenirs,
electronics and others.
General travel retail shops carry a large
assortment and are typically located in
central areas with high passenger flow,
mostly in airports, but can also be in sea-
ports and other locations. In airports, both
departure and arrival areas can be fitted
with this shop concept. In the duty-free
segment, these shops can be identified as
carrying the name of several retail brands
in our portfolio, including Dufry, Nuance,
World Duty Free, and Hellenic Duty Free
among others. As of December 31, 2019,
Dufry operated over 970 general travel
retail shops.
In 2017, Dufry introduced the new genera-
tion store concept, an innovative evolution
of the general travel retail shop, increasing
the level of communication with the con-
sumer by making use of digital technology.
Dufry opened its first three new generation
stores in Madrid (Spain), Melbourne
(Australia), and Cancun (Mexico) in 2017,
followed by four in Zurich (Switzerland),
a second one in Cancun and one in
Heathrow T3 (UK) in 2018. In 2019, Dufry
added 4 New Generation Stores: in Buenos
Aires (Argentina), Amman (Jordan), Malaga
and Alicante (Spain).
38
39
DUFRY
SHOPPING
Dufry shopping offers domestic passen-
gers a similar shopping experience to
the one offered to international travelers
in a classic general travel retail duty-free
shop, but in a duty-paid environment with
a wide assortment of different product
categories, including a similar brand vari-
ety. In this context, Dufry Shopping fulfills
more a convenience aspect as there are
a number of countries where domestic
travelers account for the majority of pas-
sengers, specifically in large countries
such as China, the United States and
Brazil, where this concept can offer addi-
tional potential.
The concept was first introduced in Brazil
in 2014 and was quickly expanded to 7
other locations in the country. The concept
is also present in the United States
with a Dufry Shopping store at Las Vegas
McCarran International Airport and at
Malta International Airport. The newest
Dufry Shopping store will open in 2020
at Newark Liberty International Airport
in the U.S.
40
41
BRAND
BOUTIQUES
Dufry is a partner of choice for global
brands to showcase their products in dedi-
cated retail spaces and to mirror their high
street image. To best meet each location’s
traveler profile, we design these shops as
standalone boutiques or integrate them as
a shop-in-shop in our general travel retail
stores. Brand boutiques exist in both duty-
free and duty-paid areas and enhance the
traveler’s experience, allowing the creation
of an exciting shopping mall environment.
As of December 31, 2019, Dufry operated
close to 240 brand boutiques, such as:
Armani, Burberry, Bally, Bottega Veneta,
Bvlgari, Cartier, Clarins, Chloe, Coach,
Ermenegildo Zegna, Etro, Gucci, Hermès,
Hugo Boss, Jimmy Choo, Jo Malone,
Lacoste, LaPrairie, Lindt, Loewe,
Longchamp, MAC, Mango, MaxMara,
MCM, Michael Kors, Montblanc, Omega,
Polo Ralph Lauren, Salvatore Ferragamo,
Swatch, Swarovski, Tod’s, Tory Burch,
Tumi, Versace, Victorinox, Victoria’s
Secret and others. See also selection
of brands on page 71.
42
43
CONVENIENCE
STORES
Our convenience stores offer a wide
assortment that passengers may want or
need when traveling. The range includes
soft drinks, confectionery, packaged food,
travel accessories, electronics, personal
items, souvenirs, newspapers, magazines
and books. Within this concept, we are
using different brands according to the
passenger profile and the location. North
America is home to most of our conve-
nience stores, with more than 650 shops.
In addition, we operate 141 convenience
stores outside North America.
“Hudson” is our most important brand in
the convenience segment with a strong
recognition from and highly valued by
passengers. As “The Traveler’s Best Friend”,
our goal with Hudson is to provide passen-
gers with anything they may need during
their journey.
Hudson is a successful, very flexible con-
cept operated at airports within interna-
tional and domestic areas, as well as in
other channels such as railway stations
and other transit locations. Hudson shops
are carefully designed and facilitate
orientation through whimsical, color-coded
signage to attract customers’ attention
to four distinct selling areas: Media, Market-
place, Essentials and Destination.
44
45
SPECIALIZED
SHOPS
Specialized shops and theme stores are
shop concepts that offer products from
a variety of different brands belonging to
one specific product category or which
convey a sense of place. We use this con-
cept often for products such as watches &
jewelry, sunglasses, electronics, spirits,
food and destination products in locations
where we see potential for a shop to carry
a broad product range relating to one spe-
cific theme. These shops can be located in
airports, seaports, on-board cruise liners,
as well as in hotels or downtown locations.
Examples of the shop concept names
include “Colombian Emeralds International”,
a dedicated watches & jewelry format
used in the Caribbean market; “Kids Works”
with its wide selection of toys, dolls, games,
books and apparel for children and “Tech
on the Go”, focusing on the needs of the
tech-oriented traveler offering electronics
and accessories. Further examples are
“Sun Catcher” for sunglasses; “World of
Whiskies” and “Tequileria” for a selection
of finest single malt or blend whiskies
and tequilas; “Master of Time” for luxury
watches and jewelries; “Temptation” and
“Timebox” for fashion watches and acces-
sories; “Sound & Vision” for multi-brand
electronics; “Travel Star” for luggage
and travel aid products and finally “Atelier”,
a women’s leather accessories store.
As of December 31, 2019, Dufry operated
close to 570 shops under the Specialized
Shops / Theme Stores concept.
46
47
1 Management Report
DUFRY ANNUAL REPORT 2019
EUROPE
AND AFRICA
48
CAPE VERDE / COTE D’IVOIRE / EGYPT / FINLAND / FRANCE / GERMANY / GHANA / GREECE / IRELAND / ITALY / JERSEY / KENYA / MALTA / MOROCCO / MOZAMBIQUE / NIGERIA / SPAIN / SWEDEN / SWITZERLAND / TURKEY / UNITED KINGDOM 1 Management Report
DUFRY ANNUAL REPORT 2019
Dufry’s largest division accelerates growth
In early 2019, Dufry announced a new organizational
structure, which among other changes combined the
former divisions UK & Central Europe with Southern
Europe and Africa, creating the new division Europe
and Africa. This division accounted for 44 % of turnover
in 2019, representing the largest segment of our Group.
It features an interesting mix of tourist destinations,
such as the Mediterranean area, an array of more busi-
ness-oriented operations as well as several African
locations, which together allow Dufry to capture impor-
tant passenger flows.
The division, headquartered in Madrid, comprises and
manages 204 locations in 21 countries, as well as our
partnership in Portugal, covering a total sales area of
181,124 m2.
In 2019, Europe & Africa saw an important pick-up in
Spain and ongoing healthy performances in the UK, in
Greece, Turkey, Italy, Malta and Finland, as well as in
most African operations, with highlights in Morocco,
Kenia and Egypt. Overall, the new division accelerated
sales performance and reported a positive organic
growth of 5.8 %.
The key event in the division was the early renewal
of the AENA contract in Spain covering all Spanish air-
ports, which has been extended for up to 5 years start-
ing November 1, 2020. The extension is an important
step to secure a resilient growth pattern in this impor-
tant market. Spain has already considerably improved
its performance in the year under review, and Dufry is
now able and looking forward to implement the best
practices successfully tested in 5 airports across all
Spanish hubs in 2019.
Besides this milestone renewal, Dufry continued
expanding and refurbishing its business also in other
airports in the division. Among the expansions worth
mentioning, Dufry added 4 new stores across 430 m2 in
Casablanca, Morocco, as well as 3 new shops in Italy
across 410 m2 of retail space. A new contract has also
been signed in Madagascar, including 3 shops for a
total sales space of 640 m2 across 2 airports, which are
expected to be opened in early 2020.
With respect to refurbishments, the division saw im-
portant shop renovations such as 15 shops in Spain
(11,600 m2); 9 stores in Sweden (4,200 m2); 5 shops
in Antalya (1,700 m2), Turkey, as well as 1 store in Casa-
blanca (1,100 m2), Morocco.
PORTION OF TURNOVER 2019
KEY REPORTED DATA 2019
DISTRIBUTION
CENTERS
CENTRAL
AND SOUTH
AMERICA
44 % EUROPE
AND AFRICA
Number of shops
Sales area in m²
Employees in FTE
660
181,124
10,015
NORTH
AMERICA
ASIA PACIFIC
AND MIDDLE EAST
TURNOVER
3,851
IN MILLIONS
OF CHF
49
1
3
2
1
CASABLANCA | MOHAMMED V
INTERNATIONAL AIRPORT
Dufry refurbished and expanded the
main duty-free shop located at Terminal 1
with almost 1,200 m².
50
2 ZAKYNTHOS | AIRPORT DIONYSIOS
SOLOMOS
Dufry opened a new Last Minute shop
of 110 m² shop in Zakynthos, offering
to passengers the bestseller products
of the main categories.
3
ALICANTE | ALICANTE-ELCHE AIRPORT
Dufry refurbished its departure duty-free
shop with more than 2,000 m² in Alicante
including an exclusive tasting bar.
5
4
STOCKHOLM | ARLANDA AIRPORT
Dufry inaugurated the refurbished shop at Arlanda Airport,
Terminal 5 with a total retail space of close to 1,700 m².
4
5
BARCELONA | BARCELONA-EL PRAT AIRPORT
The main duty-free shop located in Terminal 2 of Barcelona
El-Prat Airport has gone through a major renovation further
improving the shopping experience to its customers.
51
1 Management Report
DUFRY ANNUAL REPORT 2019
ASIA
PACIFIC
AND MIDDLE
EAST
52
ARMENIA / AUSTRALIA / BULGARIA / CAMBODIA / CHINA / INDIA / INDONESIA / JORDAN / KAZAKHSTAN / KUWAIT / MALAYSIA / RUSSIA / SERBIA / SINGAPORE / SOUTH KOREA / SRI LANKA / UNITED ARAB EMIRATES 1 Management Report
DUFRY ANNUAL REPORT 2019
Strong organic growth, important bolt-on
acquisition and new wins
Asia and the Middle East is a strategic growth area for
Dufry. The region accounts for the globally highest
current and prospective passenger growth, while also
bearing considerable M&A opportunities, created by
the still high fragmentation in these markets. Dufry is
already today the most international travel retailer in
this interesting region and features the largest num-
ber of single operations, which generated 14 % of the
Group’s turnover in 2019.
Headquartered in Hong Kong, the division manages
33 locations across 17 countries, covering a total sales
area of 55,139 m2. In line with our strategy to further
expand our presence in this growth region, Dufry made
an important bolt-on acquisition in 2019, by taking
a 60 % majority stake in the Vnukovo RegStaer opera-
tion. It features more than 30 duty-free and duty-
paid shops across a retail space of over 6,800 m2 with
an assortment offering core duty-free categories as
well as a selection of fashion and accessory products.
The Vnukovo operation generated a sales volume of
EUR 58.8 million in the FY 2018 and has been fully con-
solidated as of November 2019. With the new presence
at Vnukovo airport – featuring an interesting passen-
ger profile – Dufry considerably consolidates its foot-
print in the Moscow area as well as in Russia overall.
Moreover, Dufry also succeeded in winning an impor-
tant new confectionary concession at Singapore’s
Changi airport to operate 4 new shops in the Terminal
2 departure hall for a total sales area of 563 m2. The
shops are expected to be opened sequentially as of
March 2020.
Performance of the division continued to be very
strong in 2019, reporting a double digit organic growth
of 10.8 % driven by both like-for-like improvements
in Russia and Serbia and the important contribution
of the new operations in Perth, Australia, and the de-
parture and arrival shops at the MTR high speed train
station in Hong Kong.
With respect to expansions, Dufry has opened 52 new
shops in Russia covering 9,150 m2 and one additional
shop in Kuwait with a retail space of 1,050 m2 in 2019.
Moreover, the division also saw some important refur-
bishments with three stores of 2,800 m2 in Jordan, and
another one with 1,900 m2 in Macau.
PORTION OF TURNOVER 2019
KEY REPORTED DATA 2019
DISTRIBUTION
CENTERS
CENTRAL
AND SOUTH
AMERICA
EUROPE
AND AFRICA
Number of shops
Sales area in m²
Employees in FTE
221
55,139
4,644
NORTH
AMERICA
14 % ASIA PACIFIC
AND MIDDLE EAST
TURNOVER
1,275
IN MILLIONS
OF CHF
53
1
2
3
1
CAMBODIA | SIHANOUK INTERNATIONAL AIRPORT
Dufry offers distinguished top brands with a variety
of products to is customers travelling through Sihanouk
International Airport.
2
PERTH | PERTH AIRPORT
Following the signing of a new contract with Perth Airport
in July 2018, Dufry has opened its fully refurbished
duty-free walk-through store, located in the international
flights’ departures hall in 2019.
54
4
3
3
MOSCOW | VNUKOVO AIRPORT
Dufry has opened its first 120 m2 arrivals duty free store
at Vnukovo International Airport in January 2019.
4
HONG KONG | HONG KONG INTERNATIONAL AIRPORT
The Dufry and Salvatore Ferragamo partnership unveils
the fully renovated boutique with fresh and contemporary
design in Hong Kong International Airport located in the
East Hall of Terminal 1 Departures.
55
1 Management Report
DUFRY ANNUAL REPORT 2019
NORTH
AMERICA
Hudson Group
Investor Relations
website
56
CANADA/USA 1 Management Report
DUFRY ANNUAL REPORT 2019
Important increase of footprint in North America
The North American travel retail market is another of
Dufry’s traditional core markets, which continues to
offer substantial growth opportunities in duty-paid
and duty-free, but also in the airport food and beverage
channel, which our subsidiary Hudson succeeded in
considerably expanding in 2019. Due to the importance
of food & beverage (F & B) at airports in North America
and its convergence with retail, this is a remarkable step
forward in creating additional avenues of growth.
The division with its operational headquarters in East
Rutherford, New Jersey, manages 1,013 shops across
86 airports in the United States and Canada with a
total sales area of 100,647 m2, thus contributing 22 %
to the Group’s turnover in 2019. Dufry’s North American
business (Hudson Ltd.) is listed at the New York Stock
Exchange since 2018 and Dufry retains a majority stake
of 57 %.
In 2019, Hudson successfully executed two important
transactions, allowing to considerably increase its
footprint. The acquisition of the 34 Brookstone shops
in airports across the U.S. includes the exclusive right
to further expand the brand in the airport channel
and to offer a select Brookstone assortment within the
Hudson convenience shop network, thus further en-
hancing the product offer for domestic travelers.
With the acquisition of OHM Concession Group LLC,
Hudson has not only added 60 units to its existing
50 F & B concessions, but substantially increased its
own skills and expertise in airport food & beverage. This
will ultimately also improve the company’s competitive-
ness to act as master concessionaire going forward. The
OHM acquisition is an important strategic step for the
future development and further expansion of the air-
port F & B and travel retail markets in North America.
From an operational perspective, organic growth, at
1.8 %, saw a slight slow-down in 2019 caused by the lower
spend of Chinese customers in duty-free as well as
some temporary impacts driven by hurricane Dorian and
the grounding of the Boeing 737 MAX aircrafts.
Besides the increases in footprint mentioned above, the
division added another 5,900 m2 of shop floor to its
portfolio by opening 75 new shops across several loca-
tions. Hudson also succeeded to win new contracts such
as the concession for 9 shops at the Indianapolis Inter-
national Airport with a sales area of nearly 9,000 square
feet (836 m2) and the contract for 6 shops at the New-
ark Liberty International Airport with 7,500 square feet
(697 m2) of retail space.
To have an in-depth view of the performance of our
North American division please follow the QR code on
page 56 that will take you to the Hudson Group Inves-
tor Relations website and its Annual Report 2019.
PORTION OF TURNOVER 2019
KEY REPORTED DATA 2019
DISTRIBUTION
CENTERS
CENTRAL
AND SOUTH
AMERICA
EUROPE
AND AFRICA
Number of shops
Sales area in m²
Employees in FTE
1,013
100,647
8,776
22 % NORTH
AMERICA
ASIA PACIFIC
AND MIDDLE EAST
TURNOVER
1,936 IN MILLIONS
OF CHF
57
1
2
1
VANCOUVER | VANCOUVER INTERNATIONAL AIRPORT
Hudson opened the first duty-free Moncler freestanding
boutique in North America, at Vancouver International
Airport, with 87 m2 offering fashion ranging from Moncler’s
men, women, and accessories lines.
2 BOSTON | LOGAN INTERNATIONAL AIRPORT
Hudson has opened several new stores at the airport,
including Hudson shops, offering a range from travel and
convenience necessities, tasteful local souvenirs, and
electronics, to snacks and beverages, books, and magazines.
58
4
3
3
VANCOUVER | VANCOUVER INTERNATIONAL AIRPORT
The opening of the Vancouver store is the first of Hudson’s
partnership with Joe & The Juice and further solidifies the
travel retail company’s ongoing focus to provide travelers
with fresh, locally-sourced offerings along their journeys.
4 INDIANAPOLIS | INDIANAPOLIS INTERNATIONAL AIRPORT
Hudson celebrated the grand opening of the FAO Schwarz
store with almost 100 m2 offering a selection of toys that have
enchanted generations.
59
1 Management Report
DUFRY ANNUAL REPORT 2019
CENTRAL
AND SOUTH
AMERICA
60
ANTIGUA / ARGENTINA / ARUBA / BAHAMAS / BARBADOS / BOLIVIA / BRAZIL / CHILE / COLOMBIA / DOMINICAN REPUBLIC / ECUADOR / GRENADA / HONDURAS / JAMAICA / MEXICO / NETHERLANDS / NICARAGUA / PERU / PUERTO RICO / ST KITTS & NEVIS / ST LUCIA / ST MAARTEN / TRINIDAD & TOBAGO / TURKS & CAICOS ISLANDS / URUGUAY 1 Management Report
DUFRY ANNUAL REPORT 2019
Encouraging developments in a challenging region
Division Central and South America comprises all
operations in Central and South America as well as in
the Caribbean, where Dufry has had for years a very
strong market position in some of the most dynamic
travel retail markets in the world.
Headquartered in Miami, USA, the division runs oper-
ations in 104 locations across 25 countries covering
a retail space of 133,080 m2 and accounted for 17 %
of the Group’s turnover in 2019. Dufry sees further
expansion opportunities in duty-free and duty-paid
operations within airports and alternative channels in
the whole division.
Our Central American operations as well as the Cruise
business continued to show good performance; par-
ticularly in Mexico, the Dominican Republic and the
Caribbean. In South America, performance signifi-
cantly improved in the second half of 2019, even post-
ing positive growth in the last months of the year. In
total, organic growth for the FY 2019 remained in neg-
ative territory reaching – 6.3 %.
In 2019, we saw two important and encouraging devel-
opments in South America, which provide a good
potential for further growth in the coming years.
First, after the Brazilian Federal Government’s approval,
Dufry opened its first border duty-free shop in the
country, in the city of Uruguaiana, offering a core cat-
egory duty-free assortment covering 850 m2 of retail
space. This new channel is an opportunity to further
expand the duty-free business in Brazil. Second, the
Brazilian government has also increased the allowance
for duty-free purchasing on arrival from currently
USD 500 to USD 1,000 as of January 1, 2020. Besides
doubling the potential maximum ticket, the decision is
important as it allows to considerably improve the of-
fering by expanding the assortment with products in
the price range of USD 500 – 1,000, which was not pos-
sible so far due to the earlier lower limit.
Looking at business development and refurbishments,
the division saw an important contract win at the
Mexico City International Airport covering 1,400 m2 of
additional sales space as well as a new concession
for two duty-free and one duty-paid shop totaling
650 m2 at the Florianópolis Airport in Brazil. Moreover,
the division increased its sales area by opening among
others 10 new stores in Brazil (1,600 m2); 6 stores in
the Bahamas (1,100 m2) and 40 additional shops with
5,200 m2 on 19 new ships. The division’s refurbishment
highlight was the transformation of the Buenos Aires
duty-free shop of 3,100 m2 into a New Generation
Store providing customers with the ultimate shopping
experience.
PORTION OF TURNOVER 2019
KEY REPORTED DATA 2019
DISTRIBUTION
CENTERS
17 % CENTRAL
AND SOUTH
AMERICA
EUROPE
AND AFRICA
Number of shops
Sales area in m²
Employees in FTE
535
133,080
7,329
NORTH
AMERICA
ASIA PACIFIC
AND MIDDLE EAST
TURNOVER
1,536 IN MILLIONS
OF CHF
61
1
2
1
BELO HORIZONTE | BELO HORIZONTE INTERNATIONAL
AIRPORT
Dufry increased its presence in the airport with
a new duty-paid shop with 300 m² located in the
domestic departures lounge of Terminal 2.
2 SANTIAGO | COMMODORE ARTURO MERINO BENÍTEZ
AIRPORT
Dufry opened the Cava del Vino, a specialized
shop dedicated to Chilean wine with close to 200 m²
at Terminal C.
62
4
3
3 BUENOS AIRES | EZEIZA INTERNATIONAL AIRPORT
A New Generation Store was launched in the departure
area of Terminal A, with a total retail space of 3,100 m².
This is the third shop of its kind in Central and South
America with a successful and innovative retail format
focused on digital applications.
4 URUGUAIANA | FIRST BORDER DUTY-FREE SHOP IN BRAZIL
Dufry inaugurated its first Brazilian duty-free border shop
with a retail space of 850 m², offering an assortment of
prestige international brands similar to those seen in Dufry’s
airport shops.
63
OVER 420 LOCATIONS WORLDWIDE
EUROPE AND AFRICA
Cape Verde
Boa Vista
Sal
Santiago
Cote d’Ivoire
Abidjan
Egypt
Cairo
Finland
Helsinki
France
Calais
Fort-de-France
Nice
Pointe-à-Pitre
Toulouse
Germany
Dusseldorf
Ghana
Accra
Greece
Aktio
Alexandroupoli
Anchialos
Araxos
Athens
Chania
Corfu
Doirani
Evzonoi
Heraklion
Igoumenitsa
Kafalonia
Kakavia
Kalamata
Karlovasi
Karpathos
Kastanies
Kastelorizo
Katakolo
Kavala
Kipoi
Kos
Krystallopigi
Limnos
Mertziani
Mykonos
Mytilini
Niki
Ormenio
Patras
Piraeus
Promachonas
Rhodes
Sagiada
Samos
Santorini
Skiathos
Symi
Thessaloniki
Zante
Ireland
Center Parks
Italy
Bergamo
64
Florence
Genoa
Milan Central
Milan Linate
Milan Malpensa
Naples
Piza
Verona
Jersey
Saint Peter
Kenya
Nairobi
Malta
Malta
Morocco
Agadir
Casablanca
Dakhla
Essaouira
Fez
Marrakech
Nador
Oujda
Rabat
Tanger
Mozambique
Maputo
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
Sweden
Jönköping
Kalmar
Karlstad
Landvetter
Luleå
Norrköping
Östersund
Stockholm Arlanda
Stockholm Bromma
Sturup
Sundsvall
Umeå
Visby
Switzerland
Basel-Mulhouse
Zurich
Turkey
Antalya
Kayseri
Kutahya
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
London Southend
London St. Pancras
Longleat Forest
Center Parks
Manchester
Newcastle
Norwich
Sherwood Forest
Center Parks
Southampton
Stansted
Whinfell Forest
Center Parks
Windsor
Woburn Forest
Center Parks
Cruise and Ferry ships
Asterion
Blue Galaxy
Blue Horizon
Blue Star I, II
Blue Star Delos
Blue Star Diagoras
Blue Star Naxos
Blue Star Paros
El Venezielos
Elyros
Hellenic Spirit
Highspeed 4
Kriti Ship
Nisos Chios
Nisos Mykonos
Nisos Rhodes
Nisos Samos
Olympic Champion
Patmos
P&O Arcadia
P&O Aurora
P&O Ventura
P&O Queen Elizabeth
P&O European Highlander
P&O European Causeway
P&O Norbay
P&O Norbank
P&O Pride of Rotterdam
P&O Pride of Hull
P&O Pride of Burges
P&O Pride of York
P&O Spirit of Britain
P&O Spirit of France
P&O Pride of Canterbury
P&O Pride of Kent
P&O Pride of Burgundy
Prevelis
Superfast I
Superfast II
Superfast XI
ASIA PACIFIC AND MIDDLE EAST
Armenia
Gyumri
Yerevan
Australia
Canberra
Melbourne
Perth
Bulgaria
Burgas
Varna
Cambodia
Phnom Penh
Siem Reap
Sihanoukville
China
Chengdu
Hong Kong
Macau
Shanghai
India
Bangalore
Indonesia
Bali
Jordan
Amman
Aqaba
Marka
Kazakhstan
Astana
Kuwait
Kuwait City
Malaysia
Kuala Lumpur
Russia
Moscow Domodedovo
Moscow Sheremetyevo
Moscow Vnukovo
St. Petersburg Pulkovo
Serbia
Belgrade
Nis
1 Management ReportDUFRY ANNUAL REPORT 2019
Singapore
Changi
South Korea
Busan
Sri Lanka
Colombo
United Arab Emirates
Sharjah
NORTH AMERICA
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
Cleveland
Corpus Christi
Dallas Fort Worth
Dallas Love Field
Denver
Des Moines
Detroit
Fort Lauderdale Hollywood
Fresno
Grand Rapids
Greater Rochester
Greenville-Spartanburg
Harrisburg
Houston
Houston George Bush
Houston William P. Hobby
Indianapolis
Jackson
Las Vegas Hard Rock Cafe
Las Vegas Mc Carran
Las Vegas Palazzo
Little Rock
Los Angeles
Lubbock
Manchester Boston
Miami
Minneapolis
Mobile Bates Field
Myrtle Beach
Nashville
New Orleans
New York Empire State
New York Grand Central
New York JFK
New York LaGuardia
New York Penn Station
New York Port Authority
New York UN Gift Center
Newark
Newark Liberty
Newport News Williamsburg
Norfolk
Oakland
Omaha
Ontario
Orlando
Orlando Sanford
Philadelphia
Phoenix Sky Harbour Airport
Pittsburgh
Portland
Raleigh
Richmond
Roanoke
Santa Ana
Salt Lake City
San Antonio
San Diego
San Francisco
San José
Seattle
St Louis
St Pete-Clearwater
Stewart Newburgh
Tampa
Tucson International Airport
Tulsa Airport
Washington DC
Washington Dulles
Washington Ronald
Reagan Airport
CENTRAL AND SOUTH AMERICA
Antigua
Antigua
Saint Philip
Argentina
Bariloche
Buenos Aires Aeroparque
Buenos Aires Ezeiza
Cordoba
Mendoza
Aruba
Oranjestad
Bahamas
Bahamas
Great Exuma
Barbados
Barbados
Christ Church
St. Michael
Bolivia
La Paz
Santa Cruz
Brazil
Belém
Belo Horizonte
Brasília
Campinas
Curitiba
Florianopolis
Fortaleza
Goiânia
Natal
Porto Alegre
Recife
Rio de Janeiro
Rio de Janeiro Galeão
Rio de Janeiro
Santos Dumont
Salvador
São Paulo Congonhas
São Paulo Guarulhos
Uruguaiana
Chile
Santiago de Chile
Colombia
Bogota
Dominican Republic
La Romana
Puerto Plata
Samana
Santiago
Santo Domingo
Equador
Santiago de Guayaquil
Grenada
Grenada
Honduras
Roatan
Jamaica
Jamaica
Mexico
Acapulco
Cancun
Cozumel
Guadalajara
Guanajuato
Ixtapa
Los Cabos
Mazatlan
Mexico City
Monterrey
Puerto Vallarta
San José del Cabo
Netherlands
Bonaire
Nicaragua
Costa Esmeralda Airport
El Espino
Guasaule
Managua
Peñas Blancas
Peru
Lima
Puerto Rico
Ponce
San Juan
St Kitts & Nevis
St Kitts
St Kitts Bradshaw Airport
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
Cruise and Ferry ships
Carnival Inspiration
Carnival Panorama
Carnival Sensation
Carnival Valor
Holland of America
Amsterdam
Holland of America
Eurodam
Holland of America
Koningsdam
Holland of America
Maasdam
Holland of America
Nieuw Amsterdam
Holland of America
Nieuw Statendam
Holland of America
Noordam
Holland of America
Oosterdam
Holland of America
Rotterdam
Holland of America
Veendam
Holland of America
Volendam
Holland of America
Westerdam
Holland of America
Zaandam
Holland of America
Zuiderdam
NCL Bliss
NCL Dawn
NCL Escape
NCL Gem
NCL Jade
NCL Jewel
NCL Joy
NCL Pearl
NCL Sky
NCL Spirit
NCL Sun
Pullmantur Horizon
Pullmantur Monarch
Pullmantur Sovereign
Pullmantur Zenith
CHANNELS
Airports
Border, Downtown &
Hotel Shops
Railway Stations & Other
Cruise Liners & Ferries
Seaports
65
1 Management ReportDUFRY ANNUAL REPORT 2019
CUSTOMERS
ENJOYING GREAT
SHOPPING
EXPERIENCES
Research on consumer trends around the world indi-
cates that customers are increasingly leaning towards
experiences rather than just “buying a product”. To
best accommodate this changing behavior and to meet
our customers’ expectations, Dufry is investing in dif-
ferent initiatives to take airport and travel retail shop-
ping to the next level.
Treat yourself, friends
and the family.
Offering customers the best shopping experience
Our aspiration is higher than just selling products. We
are constantly assessing customers’ expectations
and adapting our assortments and service portfolio
to the latest needs. We fulfill the current focus on ex-
periences with an array of initiatives, such as airport
activations, tastings, treatments, an enlarged assort-
ment of novelties, limited editions and exclusive prod-
ucts as well as a comprehensive portfolio of services
and benefits. Most importantly, our well trained and
motivated sales representatives help travelers navi-
gate through a large variety of prestigious brands, in
order to find the right product for you, your family
and friends. Our understanding of customer orienta-
tion goes beyond the pure fulfilment of expectations
and requests we receive in our shops. For us, a satis-
fied customer is a customer that can also trust us
when it comes to product safety and comprehensive
after sales services.
We welcome customers of more than 150 nationalities
to our shops every day and our wide assortment can
exceed 50,000 items in any given location. For this
reason, providing the right product information in dif-
ferent languages is a considerable challenge. There-
fore, we have started to equip our shop staff with tab-
let computers so that they can provide customers
with extensive product information in several lan-
guages. Going forward, we also plan to offer payment
services through the tablets without the need of go-
ing to the tills.
Engage with customers through the
New Generation Stores
In our journey to provide customers with a unique
shopping experience, Dufry’s New Generation Store is
a cornerstone of our latest approach to retail. In our
currently 13 New Generation Stores, our customers
can experience a shopping environment which changes
its appearance depending on which nationality is pres-
ent at the airport at any given time of the day. Displays
appear in different languages and show the brands that
best fit the respective customer profile.
Ongoing deployment
of digital strategy &
channels.
Pre-order at home, collect at the airport
To provide convenience is another priority for Dufry.
For this reason, we want to engage with our custom-
ers well beyond our shops. Even before they start their
trip, travelers can pre-order products through the
internet and collect them conveniently once at the
airport. Our “Reserve & Collect” service is already
available in 170 locations in 44 countries around the
world. New locations are constantly added – the full
list is available on our website under:
www.shopdutyfree.com
66
1 Management ReportDUFRY ANNUAL REPORT 2019 420 Dufry operates
in over 420 locations
in 65 countries
worldwide.
RED by Dufry
RED by Dufry is structured as a loyalty program but it
takes the idea one step further. RED works primarily
through a mobile application (app) and via the tradi-
tional earning of points, the program offers exclusive
advantages such as discounts at Dufry stores and
specific airport benefits. Moreover, members of the
program are identifiable through the app’s beacon
technology once they are at the airport and receive
personalized notifications on promotions and offers
tailored to their preferences. This allows Dufry to in-
crease conversion of travelers into customers and to
attract them to the shops. RED by Dufry is already live
in 236 locations in 46 countries and is continuously ex-
panded to further operations worldwide. A full list of
the locations where RED by Dufry is implemented can
be found here: www.redbydufry.com
Constantly enhancing
customer service.
Forum – Social media for travelers
Forum is Dufry’s social media platform that provides
stories from bloggers and influencers, as well as back-
ground information from brands and Dufry in an ex-
clusive and glamorous environment. Moreover, Forum
by Dufry connects with all our other digital initiatives
such as RED by Dufry and Reserve & Collect and
serves as a vehicle to connect with our potential cus-
tomers when they are planning their journey or even
before. Forum is designed to support the inclination
to shop with us, to change customer perception, and
to position Dufry shops as the place to find the latest
trends and launches for the main categories – visit
Forum by Dufry at: https://forum.shopdutyfree.com/en
True global return guarantee
Dufry is the only global travel retailer in the industry
to offer a true global return guarantee. No matter
if you purchased something in Melbourne, Bali,
St. Petersburg, Barcelona, São Paulo, Las Vegas or
elsewhere in any of our shops in the world: if there is
a problem with any product that you purchased at a
Dufry store, we will replace, refund or exchange your
product within 60 days of purchase. Dufry’s customer
service representatives, who can be reached in several
languages by phone, email or online chat, attended
around 208,000 customers from 127 countries in 2019.
Dufry’s customer service team and policies guarantee
full customer satisfaction. This service level is another
example of our commitment to an outstanding cus-
tomer experience day-by-day.
Customer satisfaction & product safety
Customer satisfaction and safety is our first priority.
As a fundamental first step we ensure that all prod-
ucts strictly comply with applicable legislation and
health and safety requirements. Dufry complies with
legal requirements at every location we operate and
takes a proactive approach, working with governments
and regulators to clarify any concerns. In this context,
Dufry, through active membership of the industry’s
trade associations, has helped shape relevant and
robust Codes of Conduct for the travel retail industry
(e.g. UK Code of Conduct on disruptive passengers,
UK Code of Conduct on VAT, ETRC Code of Conduct
on Sale of Alcohol, DFWC Code of Conduct on Sale of
Alcohol). Moreover, Dufry has also defined its own
Supplier Code of Conduct and shared it with its sup-
plier community as part of the company’s Environ-
ment, Social and Governance (ESG) strategy. More
details are available in the ESG Report on page 78.
67
1 Management ReportDUFRY ANNUAL REPORT 2019 Additionally, the company offers Reserve & Collect
and RED by Dufry services, for which additional per-
sonal information from the customer is needed to pro-
vide them with requested services such as newslet-
ters as well as marketing & advertising materials. In
order to protect and ensure that customer data is han-
dled correctly, Dufry applies high security standards
to safeguard and protect personal data and to ensure
compliance with the different legal frameworks. The
company has a number of systems and security pro-
cesses in place, including a robust IT security system,
a data protection policy and specific training for em-
ployees dealing with personal information, as well as
internal procedures and policies which follow relevant
laws and regulations.
In this context, in the previous year 2018, Dufry com-
pleted a number of processes to conclude the align-
ment of our operations in accordance to the EU Gen-
eral Data Protection Regulation (GDPR). Specifically,
this work involved expanded documentation and infor-
mation requirements, privacy impact assessments
and the right of individuals (mainly customers, employ-
ees, partners and suppliers) to request access to, or
to correct, delete, object to processing of their own
personal data and to request data portability. All of
this was completed ahead of the GDPR implementa-
tion deadline of May 2018. Dufry keeps monitoring new
developments of data protection regulations and will
adapt accordingly where required.
Moreover, the Group also undertakes internal Data
Protection Audits and intrusion tests, on top of per-
manently discussing and improving the protection of
customers’ personal data in dedicated meetings held
quarterly. For any customer, employee or third party
who wishes to report a grievance or who has questions
regarding Dufry’s data privacy, there is a specific email
address to contact the company, and inquiries are co-
ordinated by the Internal Audit, Loss Prevention and
Enterprise Risk Management (ERM) department.
Dufry’s expertise recognized by the industry
In 2019, Dufry’s customer focus and retail excellence
has been recognized by different industry partners
again. A complete list of the 2019 awards is displayed
on our website: www.dufry.com/en/company/our-award
230Dufry’s loyalty program RED
by Dufry is already available
in over 230 locations.
Customer Communications
In its advertising and marketing initiatives, Dufry
shows the same responsible stance that it shows in all
its other activities. We commit to comply with all reg-
ulations and rules in every advertisement and pub-
lished communication in the countries where we op-
erate. We also expect the same behavior from our
suppliers when using the space that we make available
in our stores for advertising and promotions. When it
comes to product labeling, we request our suppliers
to comply with the regulations of all the locations
where the product is going to be sold. Given that our
stores operate in an environment where we serve
many nationalities speaking different languages every
day, we are proactively engaged with our industry
trade associations to find off-the-label solutions. As
far as possible, and in locations where we have our
shop tablets in use, we can provide product specifica-
tion translations in 10 languages.
Dufry commits
to comply with all
advertising and
marketing regulations.
Customer Privacy
Management and protection of customers’ private
data in the processes involving the handling of client
information is an area of importance for Dufry. As
a requirement of customs authorities, airport author-
ities and for contractual reasons, the customer’s per-
sonal data is collected, processed and retained in
accordance with the privacy statement listed on the
Dufry website or in the retail locations.
68
1 Management ReportDUFRY ANNUAL REPORT 2019 MORE THAN
50,000
items are available
in our portfolio
for our customers
to choose from.
NET SALES BY PRODUCT CATEGORY 2019
5 % OTHER
2 % LITERATURE AND
PUBLICATIONS
2 % ELECTRONICS
32 % PERFUMES
AND COSMETICS
11 % TOBACCO
GOODS
13 % LUXURY
GOODS
17 % WINE
AND SPIRITS
18 % FOOD,
CONFECTIONERY
AND CATERING
69
SUPPLIERS
ACCESSING A
UNIQUE GLOBAL
WINDOW DISPLAY
Dufry is the largest travel retail operator worldwide
and offers suppliers a unique window-display oppor-
tunity through its network of over 2,400 shops across
more than 420 locations in 65 countries on 6 conti-
nents. Suppliers benefit from the unparalleled access
to domestic and international travelers to showcase
their brands across the globe, reaching captive audi-
ences in exclusive environments. As Dufry operates
duty-paid and duty-free areas alike, the company’s
footprint allows it to serve customers equally inter-
ested in both convenience products and luxury shop-
ping experiences. In 2019, over one billion passengers
passed through locations where Dufry operates shops,
making us the perfect ambassador for global brands.
Partnering with brands to drive sales
The travel retail industry has a number of elements that
are highly attractive to suppliers: it is a fast growing
channel, it has a captive and affluent audience and it
allows them to personally engage with customers in an
international and exclusive setting. This makes travel
retail an important window display for brands. Dufry
aims to be the preferred partner for global brands,
building on the tight collaboration with brand partners,
based on the scope of our global network and leverag-
ing our superior execution and strong customer service.
Since 2015, we have intensified cooperation with our
suppliers and we increasingly partner with global brands
on more strategic initiatives, identifying opportunities
for marketing campaigns, global promotions or product
launches, that also contribute to our and the brands’
turnover by generating additional income. In this con-
text, we offer each brand a customized approach to
create a joint set of goals for the supplier and for Dufry,
and together we agree on specific actions and distinc-
tive campaigns. Both parties establish clear targets and
evaluate the effectiveness of their initiatives together.
Jointly increasing customer experience
In recent years, we have seen a growing number of
brand partners developing Dufry-exclusive products,
which together with novelties, limited editions and
travel exclusives, considerably augment and differ-
entiate the customers’ shopping experience. Internal
research also shows that personally engaging with
customers in the shop substantially increases spend
per ticket – and what could be better to talk to them
about than an exclusive or a newly launched product?
Centralized procurement and logistics
With a focus on generating efficiencies, Dufry is per-
manently streamlining its key processes. Through our
centralized procurement and logistic functions we
have considerably simplified the entire supply chain.
Our Global Category Managers act as key relation-
ship managers for brands and coordinate activities
with suppliers. They define brand plans with suppli-
ers and negotiate all contractual parameters. Dufry
has also centralized and simplified the ordering pro-
cess, by internally aggregating the orders from the
different retail operations and sending a consoli-
dated order to suppliers.
Accordingly, we have adapted our logistics organiza-
tion with three distribution centers in Uruguay,
Switzerland and Hong Kong which operate additional
warehouses in Hong Kong, Runnymede (UK), Barce-
lona (Spain) and Miami (USA) and provide the timely
shipping of goods to our operations. The process
benefits both Dufry and suppliers, as it allows us to
order and ship larger volumes to the distribution
centers, thus increasing flexibility so that we can
allocate the optimal product quantity to each country
and shop and maximize product availability.
70
1 Management ReportDUFRY ANNUAL REPORT 2019 BRAND UNIVERSE
1,000Dufry works with over
1,000 of the most renowned
global and local brands.
71
1 Management ReportDUFRY ANNUAL REPORT 2019 AIRPORT
AUTHORITIES &
LANDLORDS
BENEFITTING FROM
PROFITABLE
RETAIL CONCEPTS
Dufry is the partner of choice for airport operators
and other travel related landlords. We strive to create
value for landlords and Dufry alike, through our abil-
ity to deliver best-in-class retail concepts and our
deep understanding of our customers, their expecta-
tions and their shopping behavior. The trust our land-
lords have placed in us has allowed Dufry to become
the market leader in travel retail, currently operating
over 2,400 shops in 65 countries located in airports,
seaports, railway stations, downtown areas, border
crossings, cruise liners & ferries, hotels and other
locations with captive audiences.
Benefitting from the widest industry experience
Facility owners and Dufry share a common goal – max-
imizing returns on the available space and creating a
highly innovative and attractive shopping experience
for customers. Dufry’s extensive expertise in all tech-
nical and regulatory aspects and its retail know-how
are core competitive advantages, as is its compre-
hensive range of attractive retail concepts and shop
formats to satisfy any need of a landlord in both
duty-free and duty-paid environments. The in-depth
understanding of customer profiles and their specific
shopping behaviors learned through our worldwide
presence, are key to best designing these retail con-
cepts and to develop successful marketing initiatives
tailored to meet the requirements of every single
airport or any other location. Furthermore, in order to
understand the latest trends in consumer behavior,
Dufry regularly carries out detailed consumer re-
search, thus generating insights that ultimately bene-
fit landlords through increased sales and profitability
of their commercial space.
Creating value for both travel retailers and facility
owners through real partnership
The partnership between facility owners and retailers
is one of the most important aspects of travel retail.
72
Our many years of experience in the business show
that the closer both parties work together and align
their common goals, the higher the value generated.
By joining forces, we can create more inviting and at-
tractive commercial spaces that maximize spend from
the passengers’ arrival at the airport until their board-
ing – and if legislation allows for arrival duty-free even
after landing.
Dufry has a long-standing tradition of partnering with
landlords in different operations, be they large or
small, in emerging or developed markets, at airports
or seaports, border shops, railway stations or on cruise
lines and ferries. Recent examples of refurbishments
and expansions of our shops confirm the value of co-
ordinated strategies. Projects developed at the air-
ports of Spain, Sweden, Jordan, Antalya, Casablanca
and Buenos Aires are a few examples of how Dufry
and landlords can work together on the structuring of
passenger flows, improving the appearance of com-
mercial space and expanding retail offerings to con-
siderably increase sales.
13 New
Generation
Stores now
in operation.
Dufry’s New Generation Store – up and running
In 2019, Dufry opened 4 additional New Generation
stores in Buenos Aires, Amman, Malaga and Alicante
complementing the 9 existing ones in Madrid, Mel-
bourne, Cancun T3 and T4, Zurich as well as at London
Heathrow T3.
3 % BORDER, DOWNTOWN
AND HOTEL SHOPS
4 % CRUISE LINERS
AND SEAPORTS
1 Management ReportDUFRY ANNUAL REPORT 2019 Dufry’s New Generation Store concept makes exten-
sive use of digital technology to increase communica-
tion with passengers at the airport. The digital route
allows Dufry to approach potential customers in an
even more personalized way than ever before and to
flexibly adapt in-store communication during the day
to the changing nationalities and customer profiles,
enhancing the communication’s impact. The sense of
place of our shop designs, an important aspect for
landlords, is also secured in the new concept, as the
format provides for a high degree of customization.
Dufry knows how to perfectly match these require-
ments with efficient retail concepts, to best serve
travelers’ needs and to generate value for landlords
and Dufry alike.
Long-term
concession portfolio.
Deployment of our digital strategy improves
conversion and boosts the visibility of operations
In 2019, Dufry further accelerated the deployment
of its digital strategy launched one year earlier than
originally planned. The digital strategy essentially aims
at converting more travelers into customers, thus
driving sales and ultimately benefitting our landlords.
Besides the New Generation Stores, services such as
Reserve & Collect and above all the loyalty program
RED by Dufry promote our operations online on a
world-wide scale, through their global span and reach
travelers across the world. This gives airports and
their retail offer additional visibility and exposure, thus
promoting them as attractive shopping locations.
NET SALES BY CHANNEL 2019
5 % RAILWAY STATIONS AND OTHER
3 % BORDER, DOWNTOWN
AND HOTEL SHOPS
4 % CRUISE LINERS
AND SEAPORTS
For a more detailed description of our digital strategy,
please also refer to the strategy chapter on page 28.
Successful contract extensions secure
future business
In travel retail, concession contracts are the key busi-
ness driver for retail operators, as they provide the
right to sell their products at a given operation. In 2019,
Dufry continued to successfully win new contracts
and to renew existing concession contracts, some of
them well before the previous expiry date, thus ex-
tending the remaining average lifetime of its portfolio,
which is currently 7 years. Within our concession port-
folio, 17 % of our contracts have a remaining life-time
of one to two years; 22 % three to five years; another
46 % between six and nine years, and the final 15 %
have a remaining duration of ten years or more. On
average, Dufry renews existing contracts that gener-
ate between 10 % to 15 % of our sales every year, as well
as adding new contracts,
243 new shops added to our first-class
concession portfolio
In 2019, Dufry opened and expanded 243 new shops
adding almost 33,900 m² of retail space across all
divisions. At December 31, 2019, the entire concession
portfolio of the group included retail space of close to
470,000 m².
Dufry’s concession portfolio is highly diversified and
well balanced across emerging and mature markets on
all six continents. This considerably reduces risks of
being exposed to single markets and operations; the
largest concession only accounts for approximately
7 % of turnover; while the 10 biggest concessions rep-
resent less than 35 %.
Focusing on investment returns
Dufry systematically follows an approach of financial
discipline when evaluating new projects and opportu-
nities. They are analyzed individually on a commercial
and financial basis. The many aspects of a project be-
ing put together include development potential and
analyzing initial investment requirements, as well as
the expected development of passenger numbers and
profile perspectives. Through a strict evaluation of
these criteria and our disciplined approach to returns,
we ensure that our concession portfolio remains of
the highest quality and that each concession offers
attractive returns for the Group. This methodology is
applied for all project types, irrespective whether we
participate in a tender process, engage in direct nego-
tiations with landlords or perform acquisitions.
88 % AIRPORT
73
1 Management ReportDUFRY ANNUAL REPORT 2019 INVESTORS
COMPELLING
EQUITY STORY,
STRONG
FUNDAMENTALS
Since its listing in 2005, Dufry has pursued and success-
fully executed a consistent strategy focusing on profit-
able growth and cash generation, creating sustainable
value for shareholders and bondholders alike. In the first
phase, the company accelerated growth mainly through
acquisitions, and more recently shifted towards a more
balanced growth profile including both organic growth,
as well as small and mid-size acquisitions.
Pure-player in the fast-growing travel retail
channel
The strong fundamentals of the travel retail industry –
fueled by a resilient long-term global passenger
growth – are a cornerstone of Dufry’s investment
case. This, combined with our track record of growth
as well as an attractive risk profile based on our geo-
graphical diversification, makes Dufry a compelling
investment opportunity. For a detailed view on Dufry’s
investment case please refer to page 22.
Dividend of
CHF 4.00 per
share proposed
to AGM in 2020.
Capital allocation and dividend strategy
In 2018, Dufry revised its capital allocation and divi-
dend strategy, aiming at paying out a dividend of at
least the same amount as in the previous year and
target 40 % of cash earnings. In this context, the div-
idend paid in 2019 for the 2018 business year was
increased to CHF 4.00 per share, equal to a total of
CHF 199.8 million returned to shareholders, which
compares to CHF 3.75 per share paid in 2018. For the
fiscal year 2019, the Board of Directors’ proposal to
74
the General Meeting of Shareholders to be held on
May 7, 2020, will be a dividend of CHF 4.00 per share.
This reflects a dividend yield of 4.2 % compared to the
closing price of our shares at December 31, 2019.
Member of the SMI MID (SMIM) Index
With a market capitalization of CHF 4.9 billion as per
December 31, 2019, Dufry is part of the SMI MID (SMIM)
Index on the SIX Swiss Exchange, which includes the
30 biggest publicly listed companies in Switzerland not
already represented in the Swiss Market Index (SLI).
Dufry’s share price started the year at CHF 92.08,
reached a high of CHF 109.80 mid-March, saw some
softening in the second and third quarters with a low
of CHF 76.10 mid-August and recovered to CHF 96.02
at the end of December, thus closing the year with an
appreciation of 4 %.
Dufry’s trading volume continued to be very healthy
in 2019. Dufry’s average daily trading volume was ap-
proximately CHF 66.5 million. The SIX Swiss Exchange
remains our most important trading platform, where
the average daily volume of Dufry shares reached
CHF 27.3 million in 2019. In this context it has to be
mentioned that the SIX Swiss Exchange lost its EU
stock market equivalence on 30 June 2019. As a con-
sequence, since July, Dufry’s trading volumes were
mainly concentrated at the SIX 61% and BATS Chi-X
OTC 38 % platforms.
Our long-term shareholders, in particular Travel
Retail Investments, Qatar Investment Authority,
Richemont, GIC Asset Management, as well as Frank-
lin Mutual Advisors LLC, Blackrock and JP Morgan
Chase & Co represented around 41 % of our share
capital and continue to support Dufry.
1 Management ReportDUFRY ANNUAL REPORT 2019
DAILY AVERAGE VOLUME
MILLIONS OF CHF
101.1
86.7
66.5
58.0
54.8
110
100
90
80
70
60
50
40
30
20
10
0
2015
2016
2017
2018
2019
Note: Decrease in volume in 2019 due to the termination of the EU stock
market equivalence to Switzerland since July 2019, where the trading of
Swiss shares on EU exchanges has been prohibited as of July.
SHAREHOLDER STRUCTURE
AT DECEMBER 31, 2019
58.2 % OTHER
SHAREHOLDERS
15.5 % GROUP
OF SHARE HOLDERS
LED BY TRAVEL
RETAIL INVEST-
MENTS SCA
5.0 %
COMPAGNIE
FINANCIERE
RUPERT
6.9 % STATE
OF QATAR
5.0 % FRANKLIN
RESOURCES INC.
5.1 % GOVERNMENT
OF SINGAPORE
4.3 % BLACKROCK, INC.
Note: Based on shares. For a complete overview of Shareholder
disclosures please refer to page 230.
75
DUFRY AG SHARE PRICE AND TRADING VOLUME
SHARE PRICE
IN CHF
TRADING VOLUME
MILLIONS OF CHF
200
180
160
140
120
100
80
60
800
700
600
500
400
300
200
100
0
1/18
2/18
3/18
4/18
5/18
6/18
7/18
8/18
9/18 10/18 11/18 12/18 1/19
2/19
3/19
4/19
5/19
6/19
7/19
8/19
9/19 10/19 11/19 12/19
Dufry
SPI
Volume (all exchanges)
Source: Bloomberg
Note: SPI Index has been rebased to Dufry’s share price
MARKET CAPITALIZATION AND FREE FLOAT
BILLIONS OF CHF
9
8
7
6
5
4
3
2
1
0
76
6.5
6.8
7.8
3.7
4.0
2.9
3.0
2.8
5.0
4.9
2015
2016
2017
2018
2019
Free Float
Average Market Capitalization
1 Management ReportDUFRY ANNUAL REPORT 2019
ments for Q1 and Q3 instead of publishing full finan-
cial results. Dufry will continue to publish full financial
results for the half-year and full year periods.
As part of our 2019 Investor Relations activities,
senior management and the Investor Relations team
invested 36 days to meeting investors directly through
roadshows and conferences in Europe as well as in
North and South America, during which we met around
500 investors in one-to-one or group meetings and
many more in presentations. Apart from meetings,
the Investor Relations team answered more than 370
calls and emails in 2019. This results in a total of close
to 870 contacts with investors and analysts. For con-
tact details for our Investor Relations team, located
in Switzerland and Brazil, please see page 273 of this
Annual Report.
IFRS 16 and its impact on Dufry’s financials
As of January 1, 2019, Dufry has adopted the new
International Financial Reporting Standard IFRS 16,
which has substantially affected the accounting of
concession and rental agreements.
Given Dufry’s retail nature and the fact that it does not
own the real estate where it operates, IFRS 16 has
resulted in significant changes to Dufry’s financial
statements.
After preliminary discussions with the analyst / inves-
tor community at the company’s Capital Markets Day
2018, Dufry has held an IFRS 16 teaching event for the
sell-side analyst community on 14 May 2019 (the same
day as the Q1 results presentation) as well as provid-
ing detailed insights to the investor community on
15 May 2019, as part of the Dufry Day 2019 held in
Zurich. Since then, the company has been updating the
market on new developments and indications regard-
ing the expected impacts on the financial statements,
by publishing pro-forma/restated financials 2018 and
KPI’s by quarter available on the company website.
Dufry’s free-float is well balanced, with shares being
held by institutional investors in the most important
investor countries such as the United Kingdom, the
United States, Switzerland as well as across Continen-
tal Europe.
Solid investment for bondholders
Dufry has been a well-established investment oppor-
tunity in the bond market ever since the issuance of
its first Senior Notes in 2012. On the one hand, the
bond market represents an important source of
financing for the company, while on the other hand,
our low operating leverage, as well as the strong and
resilient cash flow generation, are characteristics wel-
comed by the fixed income market.
Long-term financing
further optimized.
In November 2019, Dufry issued new Senior Notes for
a total of EUR 750 million with a coupon of 2.0 %, due
in 2027. The proceeds from the offering were used to
early repay the EUR 700 million Senior Notes due
in 2023. This refinancing is expected to reduce our
financing expenses by EUR 16.5 million per year, start-
ing in 2020. Dufry’s EUR 800 million 2.5 % Senior Notes
due in 2024 remain in place.
Dufry also has bank credit facilities in place totaling
close to CHF 1,250 million maturing in 2022, and around
CHF 1,400 million maturing in 2024 (denominated in
multiple currencies).
Dufry’s Senior Notes are currently rated by Standard
& Poors (BB) and Moody’s (Ba2).
Committed to fair and comprehensive market
communication
We are committed to open and transparent commu-
nications with the financial market to present our in-
vestment story and opportunities. We pursue a con-
stant, open dialogue with investors, analysts and the
media through direct phone and email exchanges, reg-
ular roadshows and one-to-one meetings.
Senior management presents and discusses financial
performance on a regular basis and we provide the
financial community and media with in-depth reports
and information through press and analyst confer-
ences, conference calls and webcasts. In this context,
Dufry has announced in its third quarter results pub-
lication 2019, that as of the 2020 financial year, the
company will be releasing quarterly trading state-
77
1 Management ReportDUFRY ANNUAL REPORT 2019 2 Environment, Social and Governance (ESG) Report
DUFRY ANNUAL REPORT 2019
ENVIRONMENT,
SOCIAL AND
GOVERNANCE (ESG)
REPORT
BEYOND SHOPPING
IN TRAVEL RETAIL
Dufry is a global travel retail operator with over 2,400
duty-free and duty-paid shops in airports, cruise lines,
seaports, railway stations and downtown tourist ar-
eas. We employ over 31,000 employees (FTEs) across
the 65 countries where we hold operations and repre-
sent in our stores over 1,000 different global and lo-
cal brands. Dufry is part of the Swiss Market Index MID
(SMIM) on the SIX Swiss Exchange and has a balanced
share of large and small shareholders.
Dufry is aware that the impact of its operations goes
far beyond its financial goals and is fully committed
to contribute to the travel retail industry and the
society. Understanding the effects our company has
on society and the environment is a vital part of
achieving our sustainability goals. This sustainability
report, prepared following the guidelines of the
Global Reporting Initiative (GRI) Standards, Core
Option, serves Dufry to assess the impact under the
three dimensions of sustainability – economic, envi-
ronmental and social – and to share with our stake-
holders our vision of sustainability. This report is
available online and complements the information
shown in the sustainability section of our corporate
website: www.dufry.com/en/sustainability-dufry
Evolution of our materiality assessment
Dufry started making inroads in sustainability re-
porting back in 2016 with its first materiality assess-
ment commissioned with Ernst & Young. As a result
of this assessment, we disclosed our first Materiality
Matrix, which outlines the topics that are relevant
to both our stakeholders and our business and, which
served to establish our sustainability reporting
framework. Following this milestone, we published
our first Environment, Social and Governance (ESG)
Report in accordance with the Global Reporting
Initiative (GRI) Standards in 2017.
The creation of that materiality matrix was a scaled
process, which began with the assessment of a num-
ber of internal and external sources such as our
existing policies and regulations, publicly available
materiality assessments of peers and the SASB
requirements (Sustainability Accounting Standard
Board) as well as the report of the Governance &
Accountability Institute. As a next step, we gathered
stakeholder feedback, mainly through various inter-
nal sources, but also through our role in trade con-
ferences and associations, one-on-one discussions
and the on-going dialogue with stakeholders. This, to-
gether with the expertise brought from a third party
advisor, enabled us to identify a total of 15 topics that
we consider most important to our business and to
our industry, and that marked the basis of our ESG
Report of 2017.
Our vision of sustainability however is not a static one,
and every year we review our materiality matrix to
ensure it remains accurate and that the information
reported is relevant for our stakeholders. In this
regard, during 2019 we have revised the social, envi-
ronmental and economic impacts of our business, and
consequently evolved the material topics of our ESG
Reporting by including Data Privacy and IT Security
amongst the key topics of our reporting. With the ad-
dition of Data Privacy and IT Security, the list of top-
ics totals 16, all listed in Dufry’s Materiality Matrix.
Stakeholder interaction and dialogue
Engaging with our stakeholders on a regular basis to
understand their expectations, needs and concerns
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2 Environment, Social and Governance (ESG) Report
DUFRY ANNUAL REPORT 2019
MATERIALITY MATRIX
– Corporate governance /
– Products /
h
g
h
i
S
R
E
D
L
O
H
E
K
A
T
S
R
O
F
E
C
N
A
T
R
O
P
M
I
– Diversity and inclusion /
– Operations and security /
– Partnerships /
– Risk management and
compliance /
i
m
u
d
e
m
– Dialogue for stakeholder and social
engagement /
– Supply chain management /
– IT Security and Data Protection /
– Customer satisfaction /
– Financial performance /
– Services /
– Talent management /
– Brand and reputation /
– Digitalization /
– Growth strategy /
medium
high
IMPORTANCE FOR DUFRY
= economic
= social
= environmental dimensions
Note: Within boxes topics are listed in alphabetical order
is part of our ongoing commitment to sustainability.
For 2019, the group of relevant stakeholders included
in our materiality assessment remains valid, and in-
cludes, airports and other landlords, customers, em-
ployees, investors (incl. shareholders, bondholders
and lending banks), public authorities, suppliers,
media and communities.
We interact with our stakeholders in a number of dif-
ferent ways, both formal and informal.
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2 Environment, Social and Governance (ESG) Report
DUFRY ANNUAL REPORT 2019
The graphic below shows our interaction with the core ones. Especially remarkable is the interaction with both
suppliers and landlords, which permits Dufry to provide superior service to our customers. Known in the in-
dustry as the Trinity (airport authorities & landlords, retailers and suppliers), the tight lines between these three
groups permit to improve dialogue and mutual understanding between landlords, retailers and suppliers to the
benefit of our customers. Beyond the Trinity described above, our employees and investors are the other two
key stakeholders contributing to our company’s success.
DUFRY STAKEHOLDER ECOSYSTEM
EMPLOYEES
(see detailed description
on page 91
of this report)
SUPPLIERS
(see detailed description
on page 70
of this report)
– Good place to
work and grow
– Fair and com-
petitive wages
– Support
families and
communities
– Supply
assortment
– Jointly develop
marketing
initiatives
– Develop new
and exclusive
products
– Generate rev-
enues for suppliers
– Give access to
global window
display & market
– Contribute
to global brand
awareness
– Drive company
success
– Talents and
skills
– Provide financing
– Contribute to
company success
– Generate
long-term
value
– Provide
investment
opportunity
– Give access
to growth
industry
INVESTORS
(see detailed description
on page 74
of this report)
80
– Generate
revenues for
landlords
– Provide access
to global brands
– Secure retail
expertise
– Award conces-
sion contracts
– Provide Dufry
with retail space
– Secure passen-
ger & customer
flow
AIRPORT
AUTHORITIES
& LANDLORDS
(see detailed description
on page 72
of this report)
CUSTOMERS
(see detailed
description on page 66
of this report)
– Generate
revenues
for Dufry
– Insights &
trends
– Availability
of global and
local brands
– Create
opportunity
for savings
– Provide unique
shopping
experiences
& services
2 Environment, Social and Governance (ESG) Report
DUFRY ANNUAL REPORT 2019
While the ecosystem on the left page shows the inter-
action with the core group of stakeholders, Dufry also
holds relationships with additional groups of interest,
which include:
– Travel Retail Associations and Industry Bodies –
Dufry is an active member of each of the regional
and national associations in the countries and re-
gions in which it operates (see pages 64/65) and is
proud to have senior staff members on the Board of
the some of the most respected industry bodies –
ETRC, MEADFA, IAADFS, ASUTIL or the Duty Free
World Council. This gives Dufry a voice in industry
debates, ensuring that it plays a proactive role in
shaping the industry’s future.
– Government & Public Institutions – The relation-
ship with this group is of major importance, as they
are the generators and guardians of laws and regu-
lations that circumscribe Dufry’s operating environ-
ment. New laws and regulations can have a signifi-
cant impact on the business and Dufry needs to be
aware of any changes and be prepared to influence
draft regulations and react to comply as needed.
– Media – an important group for Dufry as it permits
the company to communicate with some of our main
stakeholders. Dufry strives to build strong and
close collaborative relationships with media and our
communications teams maintain direct and long-
term relations with media representatives and influ-
encers and provide them with timely information on
a wide range of global, regional and local topics.
– ESG Community – comprised of ESG rating agen-
cies and the ESG community in peer companies of
Dufry, the relationship with this group of stakehold-
ers permits our company to have a better under-
standing of the main topics of concern on a global
basis and identify areas of improvement on our ESG
reporting and communication.
– Communities and Charities – As part of its social
commitment, Dufry supports many activities in
communities in which it operates. Dufry has a par-
ticular focus on education, youth development
and charities for children and encourages its em-
ployees to work as active members at a local level.
For detail information, please see our Community
Engagement section in pages 102 – 108.
A step forward – UN Global Compact
The path initiated by Dufry in 2016 reached a major
milestone in early 2020 when Dufry applied to become
a signatory member of the United Nations Global
Compact, the world’s largest corporate citizenship
and sustainability initiative. As a signatory, Dufry
will support the Global Compact’s 10 principles in the
areas of human rights, labor, environment and anti-
corruption, reinforcing the company’s commitment to
responsible business practices on a global basis.
By joining this initiative, Dufry is committed to making
the UN Global Compact and its principles part of the
strategy, culture and day-to-day operations of the
company, and to engage in collaborative projects,
which advance the broader development goals of the
United Nations, particularly the Sustainable Develop-
ment Goals.
IMPROVEMENTS CARRIED OUT DURING 2019
Application as Signatory member of UN’s Global Compact (early 2020)
Strengthened Dufry’s Code of Conduct to make it more comprehensive and detailed
Increase of breadth and depth of HR data – which now covers 100 % of our workforce
Successful roll-out of our HR employee platform, Dufry Connect, now covering 31,787 employees
Engagement survey, aligned with our cultural transformation program ONEDUFRY, completed
Increased number of suppliers have signed our Supplier Code of Conduct
Successful roll-out of Cybersecurity and IT protection training and communication campaign
Strengthened governance structure with the implementation of the Lead Independent Director function –
and having a board member overseeing Dufry’s ESG strategy and engagement
Revised and updated materiality matrix
New channels of employee communications rolled-out
Completed the setup of our distribution centers and their respective warehouses (Barcelona, London,
Miami and Hong Kong) to further centralize distribution of products and reduce emissions
Active participation in the ACI Europe Climate Task-Force
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OBJECTIVES
For Dufry success goes beyond commercial and financial performance and we understand that our business
activities also have an impact on the societies of the countries where we operate. Articulated under the three
dimensions of sustainability, our long term sustainability objectives remain unchanged. Since 2019, Dufry sup-
ports the Ten Principles of the United Nations Global Compact on human rights, labor, environment and anti-
corruption. In this regard, we are currently in the process of aligning our overall sustainability strategy with
these ten principles. There are a number of on-going initiatives geared to achieve a more sustainable business,
and these include:
•
•
•
•
•
•
•
As the leading travel retailer, we aim to further improve the overall traveler experience – in our shops
we welcome customers from over 150 nationalities every day – and initiate growth opportunities that
benefit brands, airports and travelers alike. We understand that, by developing attractive shopping
environments, we are directly and indirectly supporting the economies of the countries where we
operate. Either by employing local staff, sourcing local products or by paying taxes, we support the
development of local economies.
Supporting the local economies through our workforce is another objective for Dufry. This we achieve
by providing quality working conditions to our staff and by sharing the expertise and know-how
gained by Dufry over the years in different markets, something we have transferred to all our operations
through our staff training programs.
Diversity and inclusion remains an area of focus for Dufry. Our corporate global initiative,
women@dufry.com, which we launched in 2016 and which brings together female leaders across
the business in a variety of functions and geographies, continued with the mission of ensuring
women’s advancement at Dufry. It supports talented women rise to leadership positions within the
company, and helps employees to manage work, family and life-balance topics. The goal of this
initiative is especially important to give visibility to women that are progressing in the company, as
this gives inspiration to others. Other corporate initiatives, such as the talent program (more details
available in the Social section of this report), strive to incentivize women’s progression within Dufry.
The ongoing development of a fair compensation and of the gender pay gap reduction program
remained an important part of our efforts in 2019. Through different initiatives across locations
such as the UK (one of Dufry’s largest operations) and Switzerland, compensation schemes where
analyzed and remediation plans established if needed.
Fostering dialogue with employees is a vital part of our strategy, based on the understanding that
our staff are our most valuable asset. In 2019, we conducted a new wave of the Engagement Survey
with the participation of 25,213 Dufry employees – representing 73 % of our workforce. This was the
first survey after the roll-out of the global corporate initiative ONEDUFRY, aimed at harmonizing our
corporate culture and values. It served to measure the level of assimilation of the program and the
level of adoption of the drivers allowing Dufry to succeed in creating a great place to work and to drive
results. Follow up meetings and plans to improve engagement are now being put in place and will
continue over next year.
Continue our plan to monitor our Supply Chain sustainability and include additional suppliers to acknowledge
our Supplier Code of Conduct.
Ongoing evolution of our ESG strategy: The implementation of the Lead Independent Director function
strengthens our governance structure at the highest level. Amongst other attributions the function oversees
the further evolution of the ESG strategy.
Further details on these topics can be found under the headings of the respective dimensions
on the subsequent pages, as well as on pages 66 – 68 for customer and privacy related topics.
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ECONOMIC
DIMENSION
ENVIRONMENTAL
DIMENSION
SOCIAL
DIMENSION
– Create a sustainable and
profitable company.
– Foster customer satisfaction
and shopping experience
to trigger their recognition.
– Support local economies
by buying local goods and
services, paying local taxes
and employing local staff.
– Minimize our environmental
impact by operating an inte-
grated and efficient logistics
chain to transport products.
– Reduce our waste and energy
consumption.
– Support our landlords in
their initiatives to protect
the environment.
– Maintain quality work envi-
ronments for our employees.
– Responsible procurement
practices.
– Support the communities
in which we live and work.
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ECONOMIC
Dufry operates in an industry that has shown solid and
resilient growth in the last decades – and which is ex-
pected to continue to grow going forward. According
to Generation Research, a travel retail market research
specialist, the travel retail industry had a market value
of USD 79 billion dollars in 2018, a 13 % increase on 2017,
and it is expected to reach USD 116 billion in 2023.
Within this prospective business environment, Dufry
follows a strategy of sustainable and profitable
growth – see also our focus story on pages 30 to 37 –
in order to secure a sustainable development for the
company and all its stakeholders.
Creating the best shopping experience
2019 has been a key year for Dufry for establishing solid
foundations for the future business. The two main pro-
grams that Dufry rolled-out and adopted during 2018
and 2019 – our unified way of operating the business
(Business Operating Model) and the cultural transfor-
mation program ONEDUFRY – together with the digita-
lization of our operations and refurbishment of over
41,600 m2 of our retail space in 2019 alone, has enabled
Dufry to start a new growth phase rooted in the core
of our business: retailing.
In renewing its stores Dufry pays special attention to
creating a strong sense of place, linking the shopping
environment to the country’s cultural heritage, where
they are located. The powerful combination of state-
of-the-art store designs with local motifs, together with
a curated selection of local products on offer that are
acquired from local suppliers, results in unique shop-
ping spaces that enable customers to experience a full
cultural immersion in the destination.
environments to capture the interest of travelers and
to generate selling opportunities. That’s what has to be
the main pillar of our future growth. We closely coop-
erate with airport authorities and brand suppliers for
store design, passenger flows and allocation of commer-
cial space. This collaborative work results in improved
passenger services, as well as more visibility and oppor-
tunities for brands. Testament to this collaboration, and
just as a remarkable example, is Heathrow Airport in
London, where Dufry operates a large proportion of the
stores. In 2019 again, Dufry’s retail offer in Heathrow
has been recognized by Skytrax, winning the accolade
for Best Airport Shopping in the world for the tenth
consecutive year. Milan Malpensa, where Dufry has
operated stores for years, was also in the Top 10 of this
award, which began in 1999 and the 2017 – 2018 edition
of the Skytrax award survey gathered the opinion of
over 13.73 million airport users. For the more detailed
aspects related to our customer services and approach,
please refer to the Customer Section on pages 67/ 68.
Excellence in retailing
In 2019, we have consolidated our commitment towards
digitalizing our shopping experience. We continued
increasing the number of “New Generation Stores” –
a digitalized shopping environment that enables Dufry
to showcase its 360˚ Digital Strategy by making exten-
sive use of digital technology – to elevate customer
engagement to the next level. This facilitates the com-
munication with the most relevant nationalities of pas-
sengers in their own language and addressing the indi-
vidual preferences of the different profiles. In 2019,
Dufry inaugurated New Generation Stores in Buenos
Aires, Amman, Alicante and Malaga, taking the total
number to 13.
As the leading travel retailer and as reflected in our
corporate brand statement, WorldClass.WorldWide,
our ambition is to create the best possible shopping
The digitalization process within the stores however is
not restricted to New Generation Stores and in 2019 we
have seen a significant increase in the use of in-store
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2 Environment, Social and Governance (ESG) Report
DUFRY ANNUAL REPORT 2019
digital tools, with the adoption of Sales Tablets in many
of our operations (111 locations in 30 countries, mainly
in duty-free and larger departure walk through stores).
Sales tablets enable staff to give our customers a more
personalized shopping experience, adjusting the offer-
ing to their specific preferences and needs. They also
provide our staff with additional product information
and details of additional products to complement or
enhance the purchase of our customers. A further level
of customization of our service is achieved when tab-
lets are used in conjunction with other Dufry digital
services, like RED by Dufry. This is the company’s loy-
alty program (available in 236 locations across 46
countries) that allows Dufry to understand customer’s
preferences and engage in a conversation with them
before they even get to the airport, by providing infor-
mation relevant to the customer – connected to their
airport of departure and featuring a curated selection
of offers adjusted to that customer’s profile. Reserve &
Collect is another component of Dufry’s digital market-
ing strategy. It’s a service available in 170 locations in
44 countries, which allows our customers to plan their
shopping ahead of their trips.
Superior customer service however is not only achieved
through the use of the latest technologies and engag-
ing in-store communication. In 2019, Dufry started
a comprehensive program – called Retail Excellence –
which involves revisiting what we do in store, with the
sole objective of enhancing our customer service
through a more effective interaction with our custom-
ers. This program includes a number of operational
initiatives including empowerment of teams through
STAKEHOLDER VALUE ALLOCATION 2019
5 % PUBLIC
AUTHORITIES
21 % BONDHOLDERS,
FINANCING BANKS
strong leadership, staff planning and improvement of
our salesforce capabilities.
Industry recognition
Our ongoing goal to develop state-of-the-art shopping
environments and new services is also being recognized
by the industry and sets new standards. Today, Dufry
has a proven track record in delivering successful shop-
ping concepts, specialized stores and marketing acti-
vations and some of the latest awards gained by Dufry
include the 2018 and 2019 Moodie Davitt Report’s
Dreamstore Award for both our Collection and Sun-
glasses stores in Heathrow Terminal 5. The coveted
Dreamstore award is based on ratings of the world’s
travel retailers by the world’s brand owners.
Also this year, our Zurich Airport team was awarded the
“Best Dedicated Sunglasses Sales Team” in the Sun-
glasses Vision 2020 & Awards. This category initiative
is co-sponsored and judged by leading sunglasses sup-
pliers and it aims to “reward excellence in sunglasses
retail, shining the spotlight on the most progressive
travel retailers in one of the channel’s consistently fast-
est-growing categories”. Also in Zurich, Lindt & Sprüngli
Travel Retail and Dufry’s new Chocolate Boutique was
awarded in the 2019 DFNI Awards in the category “Best
New Store”.
A detailed list of the awards won during 2019 is available
under www.dufry.com/en/company/our-awards
Stakeholder Value Allocation by Dufry in 2019
The stakeholder value allocation corresponds to cor-
porate output less third-party inputs. The calculation
is based on Dufry’s EBIT plus personnel costs. It does
not comprise of values allocated to business stake-
holders, such as suppliers and landlords.
The value allocated reached CHF 1,676.1 million in 2019
(CHF 1,544.4 million in 2018). Out of this amount,
CHF 1,243.3 million was accrued to our employees in
form of remuneration and social security payments.
CHF 348.7 million were interest expenses as payments
to our bondholders and lending banks. Income taxes to
public authorities and communities in which the group
companies are located amounted to CHF 78.2 million.
In 2019, the Board of Directors proposed to the Annual
General Meeting 2019 the payment of a CHF 4.00 divi-
dend per registered share for the 2018 business year,
resulting in a total amount of CHF 199.8 million returned
to shareholders. Further details of the dividend strat-
egy can be found on page 74.
74 % EMPLOYEES
85
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DUFRY ANNUAL REPORT 2019
Anti-corruption and anti-competitive behavior
Corruption is a worldwide phenomenon, which is con-
sidered to be the cause of many negative economic, so-
cial and environmental impacts. From a business per-
spective, corruption distorts the functioning of the
market and undermines governance institutions and in
general, the rule of law.
and facilitation payments to minimize the risk of cor-
ruption. In addition, the rules require careful due dili-
gence to be conducted on external partners Dufry is
working with, including a procedure that must be fol-
lowed to vet all new joint venture partners, consultants
for business development projects, counterparties to
M&A transactions and other similar counterparties.
The subject of corruption is of considerable importance
to Dufry as the Company expands its operations to
many countries with elevated corruption levels and
participates in many public procurement processes to
bid for airport, seaport and other concessions around
the globe each year.
Dufry prohibits bribery and corruption at all times and
in any form. We believe that in order to remain a solid
business leader, all business must be conducted ethi-
cally and in full accordance with all applicable laws,
rules, and regulations. Dufry requires all of its employ-
ees, officers and directors to behave at all times with
honesty, ethics and within the confines of applicable law
and in full compliance with Dufry’s Code of Ethics, Sus-
tainability and Integrity in Business Transactions Pol-
icy (“Code of Ethics”). Where laws, rules or customs ex-
ist that are different from the principles set out in the
Code of Ethics, Dufry employees, officers and directors
are required to follow whichever sets the higher stan-
dard in this regard.
Dufry also wants its employees, officers and directors
to fully respect the safeguarding of integrity and fair
dealing when performing their activities on behalf of
Dufry and to promote the sustainability, diversity, de-
cent work, human rights, zero tolerance to harassment
and discrimination standards adopted by the Dufry
Group as set out in the Code of Ethics.
Dufry’s Code of Ethics, outlines the types of conduct
which are not permissible and imposes strict rules in
relation to charitable contributions and sponsorships,
as well as gifts, hospitality and entertainment expenses,
GOVERNANCE & CORPORATE POLICIES TRAINING
DIVISION
HQ
Europe & Africa
Asia Pacific & Middle East
North America
Central and South America
Total
86
Total Number of
Managers trained /
retrained in 2019
235
327
108
122
127
919
Dufry also conducts compliance training of employees,
officers and directors, as applicable on an ongoing
basis. These training sessions reflect the ongoing
changes introduced in our Code of Ethics, Sustainabil-
ity and Integrity in Business Transaction Policy. Dufry’s
Compliance Department regularly evaluates the con-
tent of Dufry’s training on Compliance and Corporate
Policies. The efforts of the Compliance Department are
fully coordinated with, and supported by, the CEOs of
each Division and the respective HR departments, who
help identify the individuals, including new hires, who
should receive the training.
Dufry properly investigates all complaints and prohib-
its retaliation or discrimination against any employees,
officers and directors who report a concern made in
good faith. Since 2018, two new Group-wide reporting
channels have been initiated to go alongside the email
reporting channel compliance@dufry.com: (1) a world-
wide, toll-free hotline in 9 languages (English, Spanish,
Portuguese, French, Italian, Mandarin, Russian, Greek
and German) also accessible via local dial-in numbers
for all countries in which Dufry operates; and (2) the
online reporting website www.dufry-compliance.com.
These reporting channels, run by an independent third
party, ensure the integrity of such investigations by act-
ing as a centralized contact point through which any
wrongdoing or corruption concern can be reported
directly to the Compliance Department for further in-
vestigation. Unless the report is made anonymously, the
identity of any employees, officers and directors re-
porting such concerns or possible violations of Dufry’s
Code of Ethics is kept strictly confidential, unless the
disclosure of the identity is required by law.
Approximately 5,000 managers have been trained in to-
tal since the training started in 2012, most of them more
than once. These individuals have been selected based
on the following criteria:
1. Community heads at Headquarters (Finance, Trea-
sury, Procurement, Business Development, Inter-
nal Audit, HR, IT, Commercial, Marketing, Customer
Service);
2. Heads of all Divisions;
3. Local managers with exposure to business devel-
opment, external partners and third-party con-
tractors;
2 Environment, Social and Governance (ESG) Report
DUFRY ANNUAL REPORT 2019
4. Managers with exposure to procurement negotia-
tions;
5. Managers with exposure to government officials
such as airport authorities, customs or other pub-
lic authorities;
6. Managers with signatory power or appointed as
directors or officers of a Dufry Group subsidiary;
7. Investor Relations managers;
8. Members of the Legal and Governance Department;
9. Members of the Internal Audit Department, Loss
Prevention and ERM department;
10. HR managers worldwide.
As reflected in the table on page 86, during 2019, over
900 managers at Headquarters and across all Divi-
sions have completed this training.
Dufry employees, who are not included in the list above,
are familiarized with Dufry’s governance and corporate
policies via a series of videos available through various
internal channels, including the Group’s intranet –
Dufry Gate, the learning management system; Dufry
Connect and its in-house television channel Dufry TV,
among others. New employees, officers and directors
are provided with a copy of the Code of Ethics when
they join Dufry and are required to acknowledge accep-
tance of its terms in writing. Additionally, Dufry em-
ployees, officers and directors have access to all of
Dufry’s compliance and corporate policies, including its
Code of Ethics on Dufry Gate for their reference.
Monitoring and control
Dufry adopts a risk management model based on three
levels. This model is applicable to all subsidiaries of the
Group. The company is supported by an Enterprise Risk
Management software tool called GRC (Governance,
Risk and Compliance) that allows a comprehensive
identification and management of potential risks that
may affect the business.
First level – The commitment of Dufry and all its sub-
sidiaries with integrity and transparency begins with its
own staff. Dufry requires all its employees, officers and
directors to act at all times in accordance with the pro-
visions of the Code of Ethics. The latter describes the
types of behavior that are not allowed and imposes
strict rules regarding the operation of the business.
In addition, the rules require each employee, officer and
director to perform due diligence and carefully assess
new external partners with whom Dufry is working, in-
cluding a procedure to be followed to examine all new
minority partners, consultants for business develop-
ment projects, partners for transactions & M&As and
similar counterparts.
Second level – There are different governance func-
tions across the organization including the Compliance,
Legal, Finance and Human Resources departments in
charge of monitoring the main risks and establishing
the most appropriate controls to mitigate, as well as
ensuring compliance with the policies and procedures
of the group. The scope of the Compliance and Cor-
porate Governance function is based on the following
pillars:
– Review and compliance with the set of global com-
pany policies
– Establishment of the overall framework of approv-
als of the group and establishing a policy of “four
eyes” for validations
– Training, both for the members of the staff identi-
fied with greater exposure to risk and for the rest of
the employees
– Global corporate risk management
– Creating internal communication channels to ensure
the integrity of the compliance program
Third level – The Group’s Internal Audit provides inde-
pendent and objective monitoring and consulting ser-
vices designed to add value and improve the operations
of Dufry. This function covers all subsidiaries and ap-
plies a systematic and disciplined approach to evaluate
and improve the effectiveness of governance pro-
cesses, risk management and control, including the
possible commission of fraud and how the organization
manages fraud risk. The main risks identified in the
course of internal audits are reported to senior man-
agement and the Audit Committee of the Board of
Directors, and its status is updated periodically until
resolution or acceptance by the governing bodies.
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ENVIRONMENTAL
Dufry operates over 2,400 retail stores across 65 coun-
tries, where it sells products sourced from over 1,000
suppliers. For information on our divisional structure,
countries and major locations covered by each Division
please refer to pages 48 to 65. All the stores operated
can be categorized into one of five types, which are ex-
plained on pages 38 to 47. Considering that the vast ma-
jority of our shops is located in premises and buildings
owned by third party landlords such as airports or sea-
ports, ships, train stations, and downtown resorts, one
of our key environmental strategies is to support and
align with our landords in the implementation of their
initiatives to protect the environment.
Environmental management
As a pure retailer, the company does not have any pro-
duction sites. However, Dufry consumes materials in
several parts of its supply chain, from materials used
to build stores and boxes, pallets used to transport
products as well as office supplies and carrier bags
given to customers with every sale.
Dufry is committed to implementing the precaution-
ary principle in activities that may pose an average
negative environmental impact and to promote initia-
tives that respect the environmental balance, and has
the ambition that the environment is a collective con-
cern involving both managers and employees. In this
regard, especially in the area of development of shops,
Dufry seeks innovative solutions that use less energy
thus contributing to the fight against climate change
and safeguarding biodiversity. We also work to contin-
uously optimize the supply chain to reduce transport
of goods and thus contribute to reducing our CO2
footprint.
Streamlining distribution and transportation
During 2019, and as key element of our Business Oper-
ating Model, Dufry completed the process to further
improve its organization of the supply chain with the
implementation of One Order. One Order is an internal
procedure which aims to simplify our supply chain by
further centralizing logistics and warehousing. This
process is permitting Dufry to benefit from reduced
operating costs and administrative tasks and to reduce
the environmental impact of the supply chain and dis-
tribution processes. Dufry now operates four major
warehouses located in Barcelona (Spain), serving Eu-
rope, Africa, the Middle East and Russia; Runnymede
(United Kingdom) for the UK market; Hong Kong, serv-
ing Asia and Australia, and a forth one in Miami for our
operations in the US, Canada as well as in Central and
South America. These main logistics centers receive
main shipments and further distribute products to dif-
ferent operations. Through the high efficiency in our
logistics chain, we ensure that the environmental im-
pact of transporting the goods is kept to a minimum.
CO2 emissions
Reducing CO2 emissions is one of the concerns of
Dufry. Whenever possible, the freight is carried by sea,
and we aim to consistently select the most efficient
means of transport in terms of CO2 emissions.
Through the reconfiguration of products in our Distri-
bution Centers’ global and regional logistics platforms,
we reduce inter-company transports to the minimum.
Distribution to individual stores is generally carried out
by road, and Dufry outsources transport logistics to
national and international specialized partners, some
of which have implemented their own environmental
strategies.
Among other actions to reduce CO2 emissions in the
area of business, we advise our employees to consider
alternatives to travel, such as the use of virtual meeting
systems (videoconferences, teleconferences, computer
live meetings, Skype for business etc.) or reducing travel
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frequencies by optimizing each trip. In addition, Dufry
encourages employees to use public transportation not
only for business, but also for their daily trips to and
from work. In specific locations, the company provides
contributions to employees who use public transport
for commuting.
According to the association Airport Carbon Accredi-
tation (airportcarbonaccreditation.org), the airport in-
dustry accounts for approximately 5 % of total carbon
emissions from the sector of air transport. The organi-
zation, launched in 2009, currently has 288 airports
accredited to the program, distributed in 70 countries
worldwide, representing 42.5 % of the global air passen-
ger traffic.
Airport Carbon Accreditation has 4 levels of accredi-
tation (Mapping, Reduction, Optimization & Neutrality),
depending on the efforts carried out by airports. In
order to achieve the Optimization accreditation, air-
ports need to actively engage with airport stakehold-
ers, as they need to develop a more extensive carbon
footprint to include specific scope 3 emissions and
the formulation of a Stakeholder Engagement Plan
to promote wider airport-based emissions’ reductions.
In many cases this involves Dufry as we are the opera-
tor of airport stores.
In 2019, according to background information from Air-
port Carbon Accreditation, 54 of these airports, includ-
ing some prominent airport hubs, have achieved the
optimization level and 61 airports, representing 10.2 %
of the global air passenger traffic, achieved the highest
accreditation (carbon neutrality), which requires offset
of CO2 emissions. Considering both of the groups –
Optimization and Carbon Neutrality – Dufry operates
stores in 38 of the 115 airports, including Zurich, Lon-
don Heathrow, London Gatwick, Abidjan, Dallas Fort
Worth, Stockholm and Queen Alia Airport in Amman,
Jordan.
Supporting ACI Europe’s Climate Task Force
To align its internal ESG strategy and initiatives, with the
efforts undertaken by the airport industry, Dufry has
joined the ACI Europe Climate Task Force created in
2019 and actively participates in the development of
related strategies, goals and initiatives.
Waste and Recycling. Circular economy
Avoiding any waste in the first place or recycling it, if it
occurs, is an effective way to save valuable resources.
In our warehouses, packaging materials, which mainly
consist of cardboard, paper, plastic film, wood as well
as electronic and plastic consumables such as neon
lamps and PET, are sorted into different containers and
sent for recycling. The recycling process is outsourced
to specialized service providers.
In the shops, the waste produced by our operations is
mostly packing material handled through the landlord’s
waste disposal system and recycled accordingly where
possible. Dufry actively collaborates with the airport’s
sustainability teams where possible, as is the case
at London Heathrow airport, to contribute and further
improve recycling systems and /or reduce energy con-
sumption. In other operations, such as Spain, we are
taking measures to reduce single-use plastics and we
have started to replace the roll containers used to
move products from warehouses to the stores – which
have a metal base and two metal sides needing plastic
shrink wrapping for the safe movement of goods – with
new models that include closures on four sides and top,
hence drastically reducing the consumption of the
plastic film needed for the covering. Although there is
not a common process across the locations, in our larg-
est operations, the recycling process is normally out-
sourced to specialized service providers.
With regard to cartons and pallets used to transport
and protect products, Dufry guarantees that these are
reused as much as possible and consequently con-
sumption of new resources is also reduced.
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 at all. Dufry increased its bag assort-
ment to several sizes so that packaging relevant to the
size of the products purchased is used, thus reducing
overall plastic consumption. As a result, we have ob-
served a decrease in the number of bags used per
transaction in our main operations in recent years. In-
vestigating alternatives to reduce the number of bags
and the impact of each individual bag is however an on-
going improvement objective for Dufry. In this regard,
Dufry is in compliance with different regulations to re-
duce the consumption of plastic bags, especially in our
European Union operations which prohibit the free of
charge distribution of plastic bags to consumers in re-
tail outlets.
Lastly, in our offices, the reduction of paper consump-
tion is one of our ongoing challenges. Dufry has put in
place local initiatives to reduce paper and other office
material consumption, including tips to reduce the
amount of paper used such as printing double sided,
avoiding the printing of the legal text on the bottom of
emails, and encouraging people only to print when nec-
essary. The adoption of IT solutions, such as Dufry Con-
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nect, which is being rolled-out to staff across all loca-
tions, is also helping to reduce the amount of paper
used in the day-to-day work of our staff.
Energy consumption
For the most part our travel retail shops are operated
in premises and buildings owned by third party land-
lords such as airports or seaports, ships, train stations,
and downtown resorts. Thus, a large portion of the util-
ities’ consumption, such as energy or water sourcing
and usage in the shops cannot be directly changed or
influenced by Dufry, as these factors are predeter-
mined by the landlords and the building construction.
The highest influence in energy efficiency can be taken
when Dufry is designing or re-designing stores. As pub-
lic spaces, airports have to provide well-lit facilities and
naturally this is a substantial part of their energy con-
sumption. 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 condition-
ing, refrigerators) in our stores, resulting in a significant
drop in the energy consumption (and associated CO2
emissions). The same concept of using the latest en-
ergy-efficient technologies also applies for our Basel
headquarters, division offices and the regional opera-
tion centers.
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SOCIAL
Socio-Economic Compliance
Having operations in 65 countries also means comply-
ing with different national and supranational regula-
tions as well as maintaining an active dialogue to foster
an ongoing stakeholder and social engagement. For this
reason, from a global perspective, Dufry’s position to-
wards regulations necessarily needs to go beyond the
compliance and statutory requirements of the norms
and have a more holistic and broader approach. In this
regard, Dufry has a number of initiatives and control
mechanisms in place that permit the company to mon-
itor and ensure compliance with national and interna-
tional laws and follow respective ethical standards.
Supplier Social Assessment
Dufry is aware of its responsibility beyond its own
direct activities and strives to ensure that suppliers of
goods and services behave responsibly towards soci-
ety and the environment. To ensure this, Dufry expects
suppliers and business partners to comply with the law,
stipulated contract conditions and international best
practices in respect of human rights, the environment,
health and safety and labor standards.
As a step forward towards achieving a more sustainable
supply chain, in 2017 Dufry developed its Supplier’s
Code of Conduct, with the purpose of ensuring that our
suppliers across all product categories have in place
accepted business standards, as described by the UN
Global Compact, regarding:
– Ethics and integrity
– Labor and employment practices and working con-
ditions
– Environmental compliance and sustainability
– Product safety and security
dated in 2019 to reflect developments in law, regula-
tion and professional ethics, as well as our enhanced
commitment to a more sustainable business – and the
Corporate Governance and Remuneration reports in-
cluded in the annual report, demonstrate how Dufry
assumes its responsibility concerning social, ethical
and environmental standards and how we put into
practice the principles of sustainable development in
our day-to-day work.
We expect all of our suppliers and business partners
to comply with the principles included in Dufry Sup-
plier’s Code of Conduct, and ultimately to replicate
these standards further down their supply chain.
In 2019 we continued our effort to proactively share
the Code with additional suppliers from all product
categories. The Supplier’s code of conduct has now
been shared with suppliers accounting for approx.
42 % of our sales. Out of the suppliers reached, we have
received acknowledgement of our code from 84 % of
them. During 2020 we are committed to keep extend-
ing the reach and engage with more of our suppliers.
Customer Privacy and IT Security
Dufry is committed to safeguarding the privacy of its
customers whose personal information Dufry may
have access to. Dufry has implemented the necessary
management and IT Security systems to treat any
customer’s personal information as confidential, se-
curely store such personal information to prevent un-
authorized access to it and collect, use and otherwise
process it for legitimate business purposes only, and
in accordance with the Privacy statement listed on its
website and applicable laws.
This code of conduct, together with the Dufry Code of
Conduct – both of them available on the sustainabil-
ity section of our corporate website and which was up-
Dufry offers two website applications that collect
some personal information from customers – the Re-
serve & Collect service and a loyalty program called
RED by Dufry. These customer engagement channels
91
EMPLOYEES BY DIVISION
NORTH
AMERICA
28 %
32 %
23 %
CENTRAL
AND SOUTH
AMERICA
2 %
HEADQUARTER
AND DISTRIBUTION
CENTERS
EUROPE
AND AFRICA
15 %
ASIA PACIFIC
AND MIDDLE EAST
EMPLOYEES BY GENDER
FEMALE
65 %
35 %
MALE
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DUFRY ANNUAL REPORT 2019
OVERVIEW EMPLOYEE STRUCTURE 2019
FTEs
Headcounts
HQ
Europe and Africa
Asia Pacific and
Middle East
572
614
10,015
11,653
4,644
4,969
North
America
8.776
10,283
Latin
America
7,329
7,567
Total
31,336
35,086
have experienced an important increase in registered
users - reaching over 5 million customers included in
the company CRM system by the end of 2019. Some
personal information, as well as the personal prefer-
ences of these customers is collected during the reg-
istration process, so that Dufry can provide a more
personalized communication and in-store experience.
In 2019, around 4 % of Dufry’s global sales collected
some identifiable customer data and the company is
working towards increasing that share.
Online transactions
While Dufry is undergoing a digital transformation of
its business and embracing digital technology across
multiple customer touchpoints, the company still does
not handle online transactions that include payment
of goods at its airport locations – exceptions are made
for some locations, where respective customs regula-
tions allow for this kind of service. The above men-
tioned Reserve & Collect service only allows custom-
ers to reserve products and collect them at their
preferred airport location at the time the customer
flies. Normally however, it is not until customers col-
lect the products and show their boarding passes as
required, that the payment is processed. This is due to
customs regulations that only permit Dufry to sell
products at the airport.
Data protection
Our Group Data Protection Policy lays out strict re-
quirements for the processing personal data of cus-
tomers, business partners, employees and other third
parties whose personal information Dufry may have
access to. It meets the requirements of the European
General Data Protection Regulation (GDPR) and glob-
ally ensures compliance with the principles of national
and international data protection laws in force all over
the world, including, amongst others, the Payment
Card Industry Data Security Standard (PCI DSS) and
the Sarbanes-Oxley Act (SOX). The policy sets a glob-
ally applicable data protection and security standard
for our company and regulates the sharing of infor-
mation between our Group companies.
Our employees, as well as third-parties who provide
services on Dufry’s behalf, are required by policy and
process, as well as by contract, if applicable, to treat
customer information with care. Our processes are
designed to preclude unnecessary access to confiden-
tial information and Dufry has administrative, techni-
cal and physical safeguards that reflect this obliga-
tion. Dufry regularly reviews and enhances procedures
and policies.
Moreover, the Group also undertakes internal Data
Protection Audits and intrusion tests, while quarterly
meetings are held to discuss and improve the protec-
tion of customers’ personal data. Anyone wishing to
report a grievance or ask a question regarding Dufry’s
data privacy policy, or to access, delete, correct, or
transfer his or her personal information can address
such subject data requests to privacy@dufry.com.
In 2019, Dufry did not report any incident regarding a
breach of customer privacy.
IT Security
Dufry is continuously monitoring, reviewing and up-
grading its processes to protect its business from po-
tential cybersecurity threats. At a global level, Dufry
has a Global IT Security Team, led by the Global IT
Security Head that is responsible for keeping IT
threats away from Dufry’s business, understanding
emerging threats and investing in the necessary tech-
nology to mitigate potential new risks.
In this regard, Dufry has a number of systems and
security processes in place, including a robust IT se-
curity system, and a number of internal policies and
procedures in compliance with applicable laws and
regulations and which are included in the Global Infor-
mation Security Policies.
Dufry performs regular test of its systems and takes
several measures to improve IT security, prevent mal-
ware infections and avoid data breaches. Amongst
others, Dufry:
– Encrypts customer, payment and any sensitive data
and limits access to it
– Keeps software up-to-date by installing updates
and security patches implemented as a result of
newly discovered vulnerabilities
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DUFRY ANNUAL REPORT 2019
– Secures Point of Sale (POS) devices and applica-
tions
– Performs regular vulnerability testing to identify
weaknesses
– Monitors all activity in Dufry’s systems and data for
any anomalous activity and indications of threats
– Uses (and promotes amongst its employees) secure
passwords and two-factor authentication
– Runs antivirus software continuously, periodically
scanning systems for malicious files
Security Awareness Program
As part of the Security Awareness Program, Dufry
conducts regular internal communications campaigns
and training of all employees regardless of function
and location. The content of this communication
and training program includes relevant and individual
steps towards achieving an IT Secure environment,
including:
– Email and messaging management
– Internet browsing
– Mobile Device Security management
– Password safety
– Social engineering awareness
– Social networks awareness
– Safe remote work
– International travel
– Physical IT security
– Protection of personal computer and home network
An organization with over 31,000 employees
worldwide
In the past six years, our workforce has increased by
91 % from 16,423 employees at the beginning of 2014
to 31,336 people (FTE) by the end of 2019. The two ac-
quisitions of Nuance in 2014 and World Duty Free in
2015 and their timely integrations have not only
changed our footprint in the market and have made
Dufry the undisputed market leader in travel retail,
they have also meant a lot of transformation and in-
tegration in terms of our human resources projects.
Overall, our total workforce remained stable during 2019
with 31,336 people (FTE) working for the group at De-
cember 31, 2019 compared to 30,264 at year-end 2018.
Across the 65 countries where the company is pres-
ent, Dufry generates an additional contribution to the
wealth of local comunities and the society by offering
working opportunities to third party employees and
consequently generation of additional salaries and tax
payments. Our over 2,400 stores are not just shopping
windows for our brand partners to showcase their
novelties, but also labor opportunities for the over
3,670 people that work in our stores representing
these brands and other service providers. From beauty
advisors to IT developers, they all contribute to cre-
ate a WorldClass shopping experience and benefit
from accessing a dynamic market and work opportu-
nities.
Caring about our Employees
We encourage our employees to work together with a
focus on our customers, our partners and our compa-
ny’s goals every day. We take pride in the profession-
alism of our teams, their outstanding commitment
to first-class service to our customers, their team
spirit and the close collaboration with our business
partners. This builds a strong base for Dufry’s ongoing
success and makes Dufry a unique place to work and
partner with.
The introduction of the ONEDUFRY program, followed
by the Retail Excellence project, puts in context the
importance that our staff have, especially in the front-
line, in helping us to achieve our goals. For this reason,
Dufry takes special care in attracting the best retail
talents to our team, invests in training and develop-
ment, equips them with the necessary tools and pro-
vides them with working conditions to retain them.
Dufry offers attractive working environments, interest-
ing tasks, fair and competitive wages – which includes
incentive plans based on objectives both for office and
store staff – and a general working atmosphere based
on mutual respect and appreciation for each individual.
Some of our locations have been recognized locally for
the quality of the working conditions offered. One
of the latest examples is our operation in Puerto Rico,
recently awarded as Best Employer and Mejores Patro-
nos by Kincentric. These awards recognize leading
employers, using the most objective measure possible
– employee opinion. It differentiates on people factors
which are the key to accelerating success: high em-
ployee engagement, profound agility, engaging leader-
ship and a strong talent focus.
We foster employee development by supporting a
broad range of both in-house and external training and
development opportunities. In 2019, we have revisited
our Learning and Development catalogue to meet the
developments introduced by ONEDUFRY in 2018 and
the launch of our Retail Excellence program. More de-
tails are available further below in this report.
A great Place to Work and Grow
We firmly believe that long-term success for employ-
ees, as well as for Dufry is achieved by setting clear
expectations and challenging goals, together with
continuous feedback and a performance-centric com-
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DUFRY ANNUAL REPORT 2019
pensation. For this reason, we regularly review and dis-
cuss the professional development together with em-
ployees and link their performance to incentives.
Performance reviews are an important aspect to
a long-term, successful employer-employee relation-
ship. Therefore, it is important for us to build a con-
structive dialogue between each individual employee
and manager on goals, priorities and personal devel-
opment. All our staff members receive an annual per-
formance review aimed at evaluating their perfor-
mance and identifying further personal development
potential for next career steps.
The introduction of ONEDUFRY has also led to the
global adoption of best practices amongst our sales
staff – like the “morning message” for individual brief-
ings on daily objectives, or the daily follow-ups – which
are resulting in more focused staff members, with
clearer objectives and immediate feedback when re-
sults don’t happen in the planned way.
Dufry’s unique cultural diversity
At Dufry we believe that having a diversified workforce
is a precious value. Being present in 65 countries and
engaging on a daily basis with customers from more
than 150 different nationalities, understanding cultural
differences is an essential asset to our company and
for this reason it is natural for Dufry to promote an
inclusive corporate culture that understands and cel-
ebrates the differences, be they in gender, age, race,
culture, beliefs or creed. Our workforce comprises col-
leagues from more than 130 nationalities across all
functions and Divisions. This has been a consistent
situation for many years and we continue to believe that
this broad cultural diversity represents a unique com-
petitive advantage. We also view it as a key element in
the successful development of our Group and in the im-
plementation of our long-term growth strategy.
For our employees, our company represents a truly
international working environment, with colleagues
from around the world and interesting career oppor-
tunities. The staff in our local shops in each country
are predominantly local. Dufry’s presence in 65 coun-
tries around the world make us an important employer
in many locations, with many of our operations being
located in emerging markets. This, in addition to bring-
ing expertise on operating a business, contributes to
local development and wealth beyond the community
engagement projects (see also page 102).
ONEDUFRY – Transforming corporate culture
ONEDUFRY is the continuation of a cultural transfor-
mation process that started after the acquisitions of
Nuance and World Duty Free in 2014 and 2015 respec-
tively. The integration of the three companies into one
served to extract the best practices and know-how
and the ONEDUFRY program was created aimed at
harmonizing values and principles, both at store and
office levels. The initiative pursues mobilizing our peo-
ple to focus their minds, hearts and hands on three
core domains: driving employee experience, driving
customer experience and driving business results.
ONEDUFRY focusses on our values and makes them
visible anywhere in the 65 countries we are present.
Therefore, ONEDUFRY is aligning training and devel-
opment programs, appraisals and recognitions pro-
grams, competency frameworks, etc. all with the sin-
gle objective of ensuring a consistent way of operating
and fostering the same attitude towards doing busi-
ness across the different geographies. The roll-out of
this program has successfully continued over 2019,
reaching all members of our staff – both at offices and
stores – through workshops, online and classroom
training sessions.
Successful Roll-out of Dufry Connect, our HR
digital platform
2019 has been a milestone year for Dufry in the roll out
of its Human Resources information system Dufry
Connect, a tool that supports HR and line managers
to manage people, development and careers at Dufry
in a more consistent, automated and efficient way. The
system implementation, which started in 2016 with the
staff holding Global functions, continued with the roll-
out in key operations in the Divisions over the last
2 years. As part of the standardization of processes
included in the implementation of the Business Oper-
ation Model (BOM), the vast majority of our locations
at country and Division levels have been added.
Dufry Connect has the triple purpose of assisting man-
agers in guiding their teams, helping employees to bet-
ter control their development and professional careers
and enabling HR to manage employee data easily.
From a practical standpoint, this tool provides a more
consistent approach to processes such as recruiting
or performance reviews, replacing the use of excel or
paper documents for a more robust online system that
can be updated and progressed, as and when needed.
Beyond the improved employee management pro-
cesses, Dufry Connect’s learning feature, the plat-
form’s central point for managing all learning materi-
als, offers staff a library of self e-learning modules
categorized by specific roles, or per function, as well
as instructor-led courses that permit staff to self-de-
sign their training paths and to easily access training
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DUFRY ANNUAL REPORT 2019
modules through a web browser, regardless of where
the employee is located.
Talent Management
Dufry ensures that future and long-term management
needs are being addressed by an optimal balance of
promoting internal high-level personnel and hiring ex-
ternal talent (for example in new countries where we
start operations). Dufry operates a global, systematic
process to identify high-potential talent in the organi-
zation and to develop them toward key roles in our
business model.
The talent pipeline
We strongly believe that talent management and suc-
cession planning are key activities for a sustainable
business. Accordingly, we develop new and existing
candidates to get ready for more senior managerial
roles and we carry out yearly reviews of the quality of
our talent pipeline at two levels:
– The first level concentrates on a limited number of
candidates that already have management experi-
ence and that will be able to take over one of the se-
nior positions in our organization. At year-end 2019,
this pool of talented individuals included 70 high-
potential managers. With these managers, we ad-
dress and safeguard succession in specific key man-
agement positions.
– The second level focuses on our stores. Amongst
the top-performing store personnel and supervi-
sors, we have identified over 200 “Retail talent” em-
ployees as of year-end 2019, on whose development
we will focus, in order to ensure a quality store man-
agement succession pipeline.
A tangible example of our Talent Program is Jean-Paul
Hewlett, Retail Manager in our Dufry Cruises Division,
who was one of the eight winners of “Talent of Tomor-
row” in the context of the Frontier Awards (the “Oscars”
of the Travel Retail Industry): This award recognizes
the achievements of young people (under 35) in travel
retail and duty-free and who represent the industry’s
talent pipeline and next generation of future leaders.
Training and professional development
Training of our staff is a critical element in our long-
term strategy mainly for two reasons. First and fore-
most, it enables our staff to better serve our custom-
ers, understand their needs and offer quality service.
Secondly, learning is an important part of our em-
ployee retention policy. We offer our staff relevant
training programs that permit them to upgrade their
skills and professional development.
Dufry’s training methodology follows the “Four E’s
model”:
– Educate (Formal education)
– Experiences (Development)
– Environment (Culture of learning)
– Exposure (Connections with other colleagues and
professionals)
At Dufry we strive to exceed customer expectations
and develop the best ‘in-store retail experience’ in the
industry. Central to any training offered is that the
customer experience is at the heart of everything we
do. Any new member of our staff, whether that is in a
retail, office or warehouse environment, is offered
structured training and development which can open
up all sorts of career opportunities and that includes:
– Induction – everyone who joins Dufry is invited to
attend a company induction, giving an insight into
the wider business
– Service Training – we give new members of our staff
the knowledge and skills to be able to provide ex-
ceptional service to all passengers and customers
who come and shop in our stores
– Product Training – training on all sorts of products
we sell; this can be in the classroom or online and is
often provided by the reputable beauty, liquor and
fashion brands who showcase their best-selling
ranges in our stores
– Development Training – giving our staff skills to de-
velop techniques such as giving and receiving feed-
back, problem solving and decision making right the
way through to the management skills they may re-
quire for future roles
Global Learning and Development programs
Dufry carries a strong Learning and Development
(L&D) portfolio, both at local and global level. During
2019 we have seen an evolution in our learning and
development program to meet the requirements, pro-
cesses and best practices that followed the roll-out of
our Business Operating Model, the corporate initiative
to harmonize ways of working.
When it comes to global programs, the Dufry Retail
Champions Program is the cornerstone of our Learn-
ing and Development strategy. This program has been
designed to provide our professionals with the tools,
knowledge and capabilities they need to perform well
in their jobs and develop to their full potential at Dufry,
and includes two sub-programs: Retail Champions for
Store Associates and Retail Champions for Store
Leaders.
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In 2019, we completed the delivery of our Retail Cham-
pions program for Store Associates to 15,125 sales
staff members and also educated new shop floor hires
(3,828) on this Retail Champions philosophy across the
entire Group in 65 countries. The sub-program for
store leaders, which includes sales professionals, shop
managers and supervisors in the retail operation, has
been running across all Dufry operations in 64 coun-
tries and 2,391 store leaders were trained in this sub-
program in 2019.
The success of our Retail Champions program partially
depends on our ability to transfer know-how and skill
to our trainees. In this regard, our Dufry Certified
Trainers play a critical role. Dufry Certified Trainers
develop new team members by showing and telling,
then observing the behaviors, rating hem and giving
effective feedback.
Following the philosophy of train-the-trainer to en-
sure quicker and more efficient cascading of skills
and knowledge, Dufry had a team of 1,680 active
Dufry Certified Trainers at the end of 2019. This group
of trainers receive regular refreshment training
sessions to ensure they are kept up to date with the
latest developments and with all our internal proce-
dures and any updates to those.
For our managers we offer an extensive portfolio of
learning courses on both operational and soft skills.
Managers running important segments in our value
chain, such as commercial, logistics, procurement,
marketing and retail operations, partake in these var-
ious learning offerings to achieve company perfor-
mance outcomes and run the company according to
the Group’s performance expectations.
The Management Skills programs launched in 2013
provide our managers with a formal education allow-
ing them to assess their current capabilities and im-
prove their role as a manager of teams. In 2019, 1,415
managers participated in our instructor-led sessions
covering several topics from the Management Skills
suite such as leadership, team building, negotiation or
delegation.
In the Operational Skills program our whole group of
leaders are provided with a large range of e-learning
pieces and also instructor-led sessions to acquire the
required knowledge on our operational business pro-
cesses, procedures and tools.
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. We offer and promote working
environments where everyone receives equal treat-
ment, regardless of gender, color, ethnic or national
origins, disability, age, marital status, sexual orienta-
tion or religion. In addition, we adhere to local legisla-
tion and regulations in all the countries where we op-
erate. Any kind of child labor or forced labor is strictly
forbidden and clear recruitment procedures and reg-
ular workplace controls ensure that this never hap-
pens at any location.
Anti-discrimination, diversity and ensuring equal op-
portunities are and have always been important social
and corporate issues for Dufry across all locations,
especially (but not exclusively) in developing countries.
Many locations in which the Group operates still pose
challenges to guarantee equality. We monitor those
countries closely to ensure we provide equal opportu-
nities to all our staff. As explained in our compliance
section, the company has in place whistleblower
mechanisms to denounce discrimination cases if they
happen (See page 86).
We provide our employees with fair and competitive
wages based on an individual’s background and expe-
rience, their particular job within our organization, the
appropriate market benchmark in the respective coun-
tries and locations, as well as her/his performance.
We assess the remuneration structure of our employ-
ees on a regular basis to make sure there is no discrim-
ination related to any kind of diversity. In this context,
we also proactively engage in an internal forum –
Women@Dufry – where we address today’s challenges
for women in their work place, in order to ensure that
our female employees can fully develop their poten-
tial and career opportunities within the company. The
forum is represented by selected female executives of
the company and HR management and is sponsored
by the CEO.
Equal salary certification in Switzerland
Dufry became equal salary certified in Switzerland at
the beginning of 2019. This certification shows the
commitment to a fair and unbiased reward structure,
which enables employees to develop and thrive in their
careers. The certification process took place in three
stages through statistical evaluation, on-site audits
and interviews with individuals and panel groups. All
phases of the certification process were performed at
Basel HQ and the Zurich airport operation and as re-
sult, Dufry has been able to demonstrate how man-
agement systems, HR policies and processes integrate
the dimensions of equal remuneration.
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Freedom of Association and Collective Bargaining
Dufry respects legally recognized unions and internal
forums created to represent their employees’ inter-
ests. The Company’s policy on collective agreements
is tailored to each location in which it operates, as each
location is subject to its own specific laws and regula-
tions. As an example, the current practice in some of
the main Group operations is described below:
– In Brazil, there is a collective agreement in place
which covers core employee related topics such as
salary reviews, general allowances (meal, transport,
benefits, etc.), work contract restrictions/special
conditions, work shifts, vacations, health and safety,
contributions, gratifications, awards and require-
ments aiming employee’s guarantees.
– Greece also has a collective agreement in place rul-
ing the main employee topics.
– In Spain, Dufry has a collective agreement in place
that covers all employees in that country except
senior management. The agreement is negotiated
between the Company and a committee made up of
employee representatives and labor union members
and outlines conditions such as salary, holiday days
and health and safety in the workplace, among other
human resources related matters.
– In the UK, Dufry has an employee forum – “Voice” –
made up of staff representatives. This forum was
created as a partnership between the company’s
management and employees to influence and com-
municate business change.
– In the US, there are a number of recognized trade
unions that Dufry engages with, including Unite
Here, Workers United, United Food and Commercial
Workers, Teamsters, Newspaper Guild and Culinary
Workers.
Increasing the reach of
our Internal Communication
Building relationship with our staff is key to achieve an
engaged workforce. However, the task of communi-
cating with staff is not an easy one. A large proportion
of our staff don’t have daily access to emails, hence,
our capacity to reach them with business communi-
cations is limited.
During 2019, we have introduced technologies to re-
duce the information gap between desktop and non-
desktop staff. The sales tablets are one of these ele-
ments, that are permitting a more fluid communication,
especially with our sales staff. Following pilots in se-
lected markets, Dufry has now started to roll-out an
application called Beekeeper, which empowers em-
ployee connection, facilitates workplace engagement,
and increases productivity through unified communi-
cations. Through Beekeeper, we are sharing with the
98
unconnected members of our staff both information
related to our company – such as the content of our
internal magazine Dufry World – as well as informa-
tion related to their day-to-day work (like shifts, prod-
uct launches, events in store, etc.). The app also fea-
tures tools for internal chats and communications and
the sharing of information in a very similar environ-
ment of that of the most known social networks. This
latest feature is very popular amongst our staff and
permits immediate recognition of successful initia-
tives and work by our store manager and operations
management. Currently, the Beekeeper app connects
21,749 employees, and we plan to finalize the roll-out
in 2020.
We have also worked over 2019 to extend the reach of
our existing internal communication channels, includ-
ing Dufry World, our corporate magazine published in
5 languages 4 times a year, the news section of Dufry’s
intranet “Dufry Gate”, which is also available as a fully
responsive online news channel called “mygate”, and
new initiatives such as Dufry TV, a closed TV circuit
that brings the latest corporate developments and ac-
tivity in store into our offices.
Awards programs
Employee recognition is an important way to value em-
ployee and team achievements. In 2019, and as a con-
tinuation of the roll-out of ONEDUFRY, we launched
the One Dufry Awards, which recognize excellence and
celebrates the success our people worldwide who are
dedicated to delivering.
The awards are divided in five categories:
– The Best Leader Story recognizes individuals that
have demonstrated the right behaviors and charac-
ter, and shown exceptional performance in Driving
Employee Experience domain
– Best Customer Experience, recognizes the highest
scores measured by our Mystery Shopper Survey
– The Best Partnership Initiative Award recognizes an
outstanding initiative with a supplier, business part-
ner, landlord or inter-company (or other) that was in-
novative, well designed, well executed and impactful
– The Best Business Growth Story Award recognizes
the greatest business growth stories, including – but
not limited to – a new store opening, a new airport /
port / border / other development, a growth of a
product category or a business channel or an exist-
ing store that has delivered exceptional growth
– Finally, Best Organic Growth, which recognizes the
country with the strongest year-on-year organic
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Employee engagement
Measuring employee engagement and satisfaction
through regular surveys is an important tool to rec-
ognize potential for improvements across the Group.
Our employee surveys are done systematically over
specifically defined cycles. We ensure that the surveys
always involve a substantial part of our more than
31,000 employees, and that they are carried out
across the world, involve all Divisions as well as the
headquarters and, that over a certain timespan, all
employees have been involved in a survey. Applying
this system results in regular surveys focusing on the
action plans.
These kinds of survey are even more relevant for an
organization if they are made after organizational
changes, as they provide very valuable insight into the
employees’ perspective on changes in the organiza-
tion, their motivation to be productive, how closely
they relate to the work culture and mission.
During 2019, Dufry conducted a new wave of its em-
ployee engagement survey, which comes after impor-
tant changes within our organization and ways of
working, which included the roll-out of a new business
operating model – with unified processes for all oper-
ations across our organization – and the roll-out of our
cultural transformation program, ONEDUFRY.
Being part of a great team, being part of a great com-
pany, having learning opportunities led by inspiring
leaders, having career development opportunities,
motivation /recognition /reward or internal coopera-
tion are some of Dufry’s drivers that are used in this
survey to measure employee engagement. Moreover,
this 2019 edition of the survey not only evaluated the
general climate in the company, but also the progress
made towards ONEDUFRY in general.
25,213 members of our staff – representing 73 % of our
workforce – took part in the survey, which was carried
out by Willis Towers Watson for the vast majority of
Dufry and by McLean for our colleagues in Division 3.
Results of the survey were very positive: 75 % of our
staff responded that they were satisfied working for
Dufry (vs. the retail industry average of 63 %), and 78 %
would recommend Dufry as a place to work (compared
to 73 % achieved in the 2017 wave of the survey).
Employee health & safety
and airport security practices
Dufry is strongly committed to providing all staff with
a working environment that protects their health,
safety and wellbeing.
Workplace safety is a priority and an essential com-
mitment for the company, both in its offices and in
stores. The company ensures that all activities are car-
ried out safely and taking all possible measures to
eliminate (or at least reduce) the risks to health, safety
and welfare of employees, contractors, customers,
visitors and any other person who can be impacted by
our operations.
The majority of our workforce operates in airport,
port, cruise-ship and similar environments, where as
a basic prerequisite employees have to comply and fol-
low the respective airport’s, seaport’s or vessel’s
safety rules, as these environments are highly regu-
lated. On top of this, Dufry has specific health & safety
regulations for its employees, including internal poli-
cies and guidelines – both global and local – which may
go beyond the legal health and safety requirements.
Dufry strives to achieve high occupational health &
safety standards and actively encourages compliance
across the whole Group. As a result, Dufry has a num-
ber of different Health & Safety Policies throughout
the organization. Regardless of the specific require-
ments of each local legislation, there are certain prin-
ciples that all these policies adhere to, including:
– Adherence to country, state and local health &
safety legislation and any other requirements
– Workplaces as safe and hazard-free spaces
– That employees have the necessary skills and train-
ing to perform their duties
– That employees have been informed of the contents
of the policy
– That all the elements and protective equipment re-
quired for employees to carry out their job safely
have been provided
– That the Group has procedures in place in case of
emergency
Management of occupational health and safety man-
agement processes change from one location to an-
other, with a number of common guidelines that apply
to all our operations, including the following:
– All Dufry operations provide information to employ-
ees on topical issues and health and safety initia-
tives, including workers that are not members of our
staff but work on our premises
– Health and safety activities are regularly reviewed
to ensure issues are effectively managed and im-
provements are made where necessary. In some of
our locations, reviews include employee represen-
tation consultations (where appropriate).
– Responsibility for the governance and review of
health and safety sits with local operations and HR
teams
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– At airport and seaport environments, we ensure
close collaboration with landlord teams to ensure
compliance with their own H&S regulation and man-
agement process
els of safety and consumer protection. Worldwide
safety regulations are set by the International Civil
Aviation Organization and within Europe by the Euro-
pean Aviation Safety Agency.
In order to work in our stores, members of our staff
need to obtain the corresponding airport authoriza-
tion, which in most cases involves training courses on
security measures and procedures in the airport en-
vironment.
Promoting a healthy working environment
Ensuring a safe workplace is a duty of all members of
our staff. Whilst the joint work of local Health & Safety
Committees and HR teams is crucial in identifying po-
tential risks and hazards, workers are encouraged to
report to these teams any work related hazards or
hazardous situations to management. The same pro-
cess is used for workers to remove themselves from
work situations that they believe could cause injury or
ill health. Work-related incidents are investigated and
reported to management to ensure remediation plans
(where needed) are designed in cooperation with the
Health & Safety committees, and implemented, ensur-
ing that processes are duly updated.
Additionally, Health and Safety committees undertake
regular worksite analysis to identify risks and hazards.
This analysis is aimed to identify existing hazards as
well as conditions and operations in which changes
might occur to create hazards. Results of these as-
sessments are shared with the local HR teams and
management.
The highest incidence of occupational accidents is, of
course, among store and warehouse staff. The great-
est risks to which Dufry workers are affected include:
– Risks related to material elements, objects, prod-
ucts and constituent elements of machines or vehi-
cles
– Falls at the same level
– Incidents with transport and transfer devices
Training on Health and Safety is critical to promote a
safe work environment. We therefore conduct induc-
tion sessions with new members of our staff and hold
regular training sessions with all of our staff, both in
stores and offices, ensuring understanding of the pol-
icies and procedures. If needed, this training is ex-
tended to workers who are not members of our staff
but do work on our premises.
Airport security practices
Due to the nature of our business, most of our staff is
located in an airport environment, either working in
stores, in airport offices and or in airport warehouses.
As part of the airport ecosystem, our staff have to ad-
here to and follow the security principles and pro-
cesses established at the airport where our stores are
located. Most of these regulations and policies are
harmonized across the world to ensure consistent lev-
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2 Sustainability ReportDUFRY ANNUAL REPORT 2019 COMMUNITY
ENGAGEMENT
For many years, Dufry has placed significant impor-
tance on supporting charitable causes as a way of
giving back to society. This has been done in a num-
ber of ways, such as by making donations to non-
profit organizations, supporting cultural events and
entities or giving visibility to some social or humani-
tarian initiatives. And we intend to continue giving our
strong support.
Sponsoring and supporting disadvantaged children,
young people and their families, together with enabling
them access to education, has remained the main line
of action in our corporate community initiatives. At
country level, similar projects have been supported
and, in some of these operations, our employees have
actively participated in the process of selecting the
projects we support, reinforcing the engagement and
motivation to collaborate with the initiatives.
We are very proud of the efforts carried out by our
staff in supporting disadvantaged communities and
charitable initiatives even during their free time. Where
and when possible, we have supported and funded
them and made the individuals and their great work
visible to the rest of their colleagues, by using our in-
ternal communication channel. This serves a two-fold
purpose by a) helping them to obtain additional sup-
port and b) it is a way of recognizing and thanking them
for their philanthropic support.
Finally, it is also important to mention the role of our
customers, who have helped us to raise additional
funds with the purchase of certain products – includ-
ing bottled water, chocolates and perfumes – in sup-
port of different NGOs, and by making donations in the
boxes available in some of our airport locations.
The initiatives described below are just a short selec-
tion of the main projects we support. Our relationship
with some of these charities has spanned many years,
the earliest project having started in 1995, and we are
very happy with the progress made so far. During 2020
we will unveil a cross-national charity project in col-
laboration with SOS Children Villages, one of our long-
standing charity partners. So far we have confirmed
the participation of Dufry stores in 23 countries and
we expect this new project to help us boost the reach
of our support even further.
SOS Children’s Villages supported programs
in Brazil, Mexico and Russia
Dufry and SOS Children’s Villages have been working
together for the past ten years, supporting families
worldwide with the aim that no child should grow up
alone. Back in 2009, Dufry started to sponsor a first
project with preventive care in Igarassu, Brazil. The
construction of a social center was a tangible exam-
ple of investing in the care for children and youth.
Dufry has been continuing to support the running
costs and training classes of the center ever since. In
2019, our donation benefited nearly 400 infants, young
children and teenagers with their mothers and enabled
them to join family strengthening programs with child-
minding and day care centers. In addition, we financed
the yearly family-budgets, medical costs and school
fees for children in the SOS Children’s Village of
Igarassu.
In Russia, Dufry has again been supporting the running
costs of the SOS Children’s Villages center in Lavrovo
since 2015. Lavrovo lies in the heart of Russia, about
350 kilometers south of Moscow. The SOS Children’s
Villages considers foster care as a priority form of child
upbringing in Russia. Dufry’s funding in 2019 supported
a child’s village family during one year to receive the
loving care and requirements to shape their own future.
Starting in 2020 this program will be partly self-
sufficient and partly financed by other sources. As an
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2 Community Engagement DUFRY ANNUAL REPORT 2019 alternative Dufry will support a new project, a family
strengthening program in Nairobi, Kenya.
In Mexico, Dufry supports SOS Children Villages Fam-
ily strengthening programs in Comitán. The programs
of SOS Children’s Villages in the social center in Co-
mitàn ensure that children are included in early child-
hood development programs. Mothers have better op-
portunities to go to work and earn their own income,
while counting on day care solutions for their children.
Fathers receive rising awareness in educational
matters and are better involved in family responsibil-
ity, improving the quality of life for these families. The
financial support covers expenses for food, school
expenditures, medical assistance and educational
staff. Dufry’s contribution in 2019 supported more
than 1,000 beneficiaries.
Since 2013, Dufry has also run an additional financing
channel to benefit the worldwide work of SOS Chil-
dren’s Villages, by installing coin collection boxes in
various Dufry shops all over the world. To intensify the
commitment with this organization, and in the context
of the 10-year anniversary of our relationship, Dufry
and SOS Children Villages are now evaluating new
plans to make the work of SOS Children’s Villages even
more tangible for Dufry shops, co-workers and part-
ners. In cooperation with this organization, we will be
deploying a new cross-national initiative that will
serve to reach even more locations and engage with
more customers and this will start to come to fruition
in the first part of 2020. Each coin or note is a little
milestone for the future of the children and youth at
the different SOS Children’s Villages projects.
One Water – selling bottles to provide sustainable
clean water service
World Duty Free continues to be one of The One Foun-
dation’s main commercial supporters, a place it has held
almost since the beginning of the partnership in 2016.
World Duty Free sells the charity’s bottled “One Water”
and branded jute bags in all of its UK airport stores. To
date, World Duty Free has raised £2.2 million for clean
water and sanitation projects, changing in the process
over 414,000 lives.
to go on trips to Malawi as part of a staff incentive to
celebrate stores that have shown the most growth in
terms of sales. Employees who were nominated to go
on the trip are real advocates for the brand, and the ex-
perience provides them with a chance to see for them-
selves the work that One Water is doing. These journeys
to Africa are a great way to inspire our staff to get in-
volved and keep supporting the One Water projects,
taking back to the stores and our customers, what they
have learnt.
Broadening our
community
engagement
with additional
projects.
United Nations’ global campaign #YouNeedToKnow
Achieving a more sustainable world is the ultimate goal
of the United Nations initiative, #YouNeedToKnow.
Started at the UN’s Geneva operations a couple of
years ago, #YouNeedToKnow is aimed at raising aware-
ness for the 17 Sustainable Development Goals (SDGs)
that were agreed by all 193 nations in 2015.
Since 2016, soon after the SDGs were set, Dufry has
been supporting the initiative by giving visibility to the
17 SDGs and the #YouNeedToKnow campaign. Every
year, a key event is marked in the agenda – the World
Economic Forum in Davos, Switzerland. At Zurich Air-
port, Switzerland’s main hub for serving international
flights, many of the World Economic Forum delegates
arrive and/or travel through this airport. Our Swiss
team, in coordination with the UN, runs special activ-
ities in this airport, sharing with passengers the im-
portance of the SDGs and the role that each individ-
ual can play in order to achieve them. Similar activities
are performed by our team at the Basel Airport.
In 2019, World Duty Free has helped improve water ser-
vices in low-income areas in Nairobi through the pro-
motion of household connections and pre-paid water
dispensers. World Duty Free’s support has also helped
to repair broken water points in rural communities in
Malawi, to train community members to manage and
maintain their water points for future sustainability, and
to help deliver piped water systems in Rwanda. Over the
years, World Duty Free employees have been selected
One of the major communication tools for the cam-
paign is a booklet, developed by the UN called “170
daily actions to transform our world”. It offers exam-
ples of small and incremental – but also fundamental
– changes everyone can adopt to live responsibly and
to be accountable to the next generation. Some of the
actions described in the booklet will become a central
piece of a joint campaign by the UN and Dufry and will
be launched across Dufry’s network in early 2020.
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2 Community Engagement DUFRY ANNUAL REPORT 2019 Continuation of Charity Water Project
in Zurich and Basel Airports
The Charity Water project was launched in 2014 as a
joint project between Flughafen Zürich AG and Dufry.
Since then, Zurich duty-free mineral water has been
sold in favor of several charity organizations, which are
usually changed every year. The newest one is the one
started this year with “Schweizer Berghilfe” (Swiss
Mountain Aid), an NGO which supports communities
and projects in the Swiss mountains. Swiss Mountain
Aid is an organization exclusively financed by dona-
tions, with the aim of improving the livelihoods and
living conditions of the people in the Swiss mountain
area. It promotes the self-help of the mountain popu-
lation and thus helps to develop many economic and
living spaces, to preserve the regional culture and
to cultivate the cultural landscape. In the 12 months
supporting Schweizer Berghilfe the initiative raised
CHF 426,400 for the NGO’s projects.
Since mid-September 2019, the Children’s Hospital
(Kispi) Zurich is being supported by Dufry. The Chil-
dren’s Hospital is a non-profit private institution
serving all children and adolescents. It is the largest
university children’s hospital in Switzerland and one
of the leading centers for pediatric and adolescent
medicine in Europe. Each year, approximately 2,300
dedicated employees are committed to the well-
being of more than 100,000 young patients from the
first day of life to the age of 18. A similar activity is
also carried out at Basel Airport, in partnership with
the NGO Krebskranke Kinder in support of Children
with Cancer.
Dufry continued to support Foundation RgZ, which is
supporting the development, way of life and social in-
tegration of children, teenagers and adults with move-
ment disorders, development problems and mental
and/or multiple disabilities, regardless of the severity.
The 260 RgZ employees foster, teach, support and en-
gage more than 2,700 children, young people and
adults every year in the greater area of Zurich, Swit-
zerland.
Sponsoring children’s education in Haiti
During 2019, Dufry also continued its support to the
Hand in Hand for Haiti Foundation, with the sponsor-
ing of their Student Sponsoring Program. Hand in
Hand for Haiti runs the “Lycée Jean-Baptiste Pointe
du Sable”, which was built as part of the collective re-
sponse to the humanitarian crisis in Haiti, following the
catastrophic earthquake of January 12, 2010. Located
in the village of Saint Marc, north of Port-au-Prince,
the school provides trilingual education in French,
English and Creole to pupils. Dufry’s donation in 2019
104
supported 25 students to receive free education and
it also covered the costs of meals, health services, uni-
forms, school supplies, and bus transportation to and
from the school.
Rio de Janeiro, Brazil – Helping to build the future
of young teenagers
Since 1995, Dufry has been sponsoring a social pro-
motion program in Rio de Janeiro, offering free pro-
fessional education to 30 young people every year
from communities around Galeão Airport. Every day,
these teenagers go to the program where they partic-
ipate in various classes and education modules such
as English, computer classes, retail operations, pro-
fessional orientation, teamwork, leadership, rules of
etiquette, ethics and citizenship. Classes can be at-
tended by 16 to 20 year-old female or male teenagers.
The students also receive free meals, medical and den-
tal care, uniforms, school and educational material, as
well as transportation assistance. Dufry supports the
students with their career progression too, alerting
them to any job opportunities within Dufry’s organiza-
tion, or with external partners. Employability rates
usually reach high levels for those teenagers taking
part in the program. Since its beginning over 24 years
ago, the program has benefited almost 730 teenagers
in total.
Dufry employees are extremely proud to be involved
in this initiative and regularly participate as volunteers,
as well as acting as mentors to individuals taking part.
Every year, 60 volunteers from Dufry and other part-
ners are involved in this important social action.
Support of disadvan-
taged children
remains our main
line of action.
Hudson Group supports Communities in Schools
in the United States
In 2019, Hudson Group, Dufry’s North American busi-
ness, continued its long-term partnership with Com-
munities in Schools (CIS), the largest and leading
dropout prevention group in the United States, through
its fund-raising program.
CIS and its over 160 local affiliates in the United States
work directly inside schools, building relationships
2 Community Engagement DUFRY ANNUAL REPORT 2019 1
2
2
1
IGARASSU | BRAZIL
Dufry continued to sponsor SOS Children Village
preventive care in Igarassu, Brazil.
2
COMITÁN | MEXICO
SOS Children Village in Comitán, Mexico, improves
education and quality of life.
105
2 Community Engagement DUFRY ANNUAL REPORT 2019 that empower at-risk students to stay in school and
succeed in life. The organization works with nearly 1.5
million students and is proud of its success rate: 99 %
of their students stayed in school and 93 % of their se-
niors graduated or received a GED (General Education
Development credential). To date, Hudson has raised
and donated over $3 million for the cause, and has also
supported various local programs in the communities
we serve, including schools and libraries.
Manchester HOME project
Opened in 2015, HOME is Manchester’s cultural orga-
nization founded by the merger of two of the city’s
long-standing arts venues – Cornerhouse, established
in 1985 and the Library Theatre Company, founded in
1952. World Duty Free’s partnership with the Greater
Manchester Arts Centre (HomeMcr) supports work
with local schools, youth centers and community cen-
ters in the Wythenshawe area (south of Manchester).
Since 2016, World Duty Free has funded workshops at
The Wythenshawe Community Workshop and projects
at the Wythenshawe Primary & Secondary School.
These projects provide opportunities to young people
and pupils to expand their horizons, develop new skills
and increase their confidence. The opportunity for
children and young people to take part in creative
workshops that help to develop a range of skills, are
fun, but most importantly, the projects give the group
a chance to maximize their potential for future train-
ing and employment.
World Duty Free’s support allowed 196 participants
from 7 different groups to take part in a total of
16 workshops in 2019. There were 2 building tours and
3 showcase events attended by 551 people. 81 % of high
school pupils reported that they felt more confident
following participation and 72 % reported that they felt
more comfortable speaking in front of the class. World
Duty Free will be continuing to support similar activi-
ties in 2020.
Mind – a new charity partner in the UK for 2019 – 2021
At the end of 2018, Dufry UK employees selected their
charity partner for the next three years. We were de-
lighted to start supporting Mind, the mental health
charity supporting individuals who suffer from men-
tal health problems, as of January 1, 2019. Mind won’t
give up until everyone experiencing a mental health
problem gets both support and respect. Mind empow-
ers people through advice, support and clear informa-
tion. They campaign to improve services, battle stigma
and end discrimination. As well as having a national
reach through this work, they also have local presence
across England and Wales through their network of
130 local Minds.
During our 3-year partnership, we have pledged
to raise over £150,000 to support Mind’s varied and
holistic services. This includes online peer-to-peer
support and a mental health Infoline, which received
around 120,000 calls last year. The £50,000 that
Dufry plans to raise each year could enable just under
10,000 calls to that busy Infoline; each response pro-
viding clarity and comfort when it’s needed most.
In addition to supporting Mind, staff in Scotland and
Northern Ireland will be supporting the Scottish
Association for Mental Health (SAMH) and Inspire re-
spectively. All three charities work towards the shared
goal of supporting people with mental health problems
and promoting awareness and understanding of men-
tal health.
The first year has gone incredibly well with over
£55,000 raised in total for the three charities. This has
been raised through a range of activities including
staff tester sales, brave skydives, bake sales on World
Mental Health Day, and of course, generous donations
from our customers into till point collection pots in
the terminals. To bolster our fundraising during win-
ter, we proudly promoted sales for Meghan the Christ-
mas Bear with a £1 donation to Mind, SAMH or Inspire
(depending on location of sale) for every bear sold.
Special Olympics support in Greece
Hellenic Duty Free Shops sponsored Special Olympics
Hellas and created a special shopping bag to support
this sports organization for athletes with intellectual
and physical disabilities. With the support of all the
staff more than 8,000 bags were sold, resulting in
funds of more than €16,000 donated to the Special
Olympics. Bloggers and influencers promoted the
Special Olympics in their blogs and social media pages,
as part of the dedicated PR program developed by our
team in Greece.
At the ”2019 Special Olympics World Games” in Abu
Dhabi, which took place from March 14 to 21, 2019, the
Greek delegation consisting of 91 people achieved
a great performance that surpassed any previous re-
sults. The athletes returned to Greece with 64 medals
(27 gold, 20 silver, 17 bronze).
Humanitarian help in Mozambique
Dufry has donated 591 aid kits to the ASEM orphanage
in Beira, a town heavily affected by the March 2019
Tropical Cyclone Idai in the central-east part of Mo-
zambique. Beira is located about 1,200 km north from
106
2 Community Engagement DUFRY ANNUAL REPORT 2019 3
3
4
3
NAIROBI | KENIA
In 2019, Dufry has supported the improvement
of water services in Nairobi, Kenya.
4
RWANDA
In Rwanda, One Foundation trains community
members to manage and maintain water points.
Maputo, the capital city of Mozambique, where Dufry
operates stores at the airport.
direct supervision of both Dufry’s General Manager in
Mozambique, Mario Dinis and ASEM founder, Barbara
Hoffman. The Rotary Club in Beira also attended.
The devastation caused by the cyclone in Mozambique
North of Beira in March 2019, left 1.85 million people in
need of humanitarian assistance. Due to the floods,
many children have sadly lost relatives or have been
separated from their families. They’re also particularly
vulnerable to deadly diseases like cholera and malaria
in these dangerous conditions.
The kits included essential, nonperishable food items,
including rice, biscuits, milk powder, flour, pasta, sugar
and soya oil as well as soap, all packed in a plastic bucket
that can be used to transport and to store water.
Hand in hand with the Rotary Club in Maputo, that sup-
ported Dufry in identifying where our contribution was
most needed, and with the Rizwan Adatia Foundation
that helped to prepare the kits and transported them
from Maputo to Beira, the aid has been successfully
delivered. The orphanage received the kits under the
Ladybug Dufry École Maternelle – Kindergarten
project in Senegal
In September 2019, the NGO Formacion Senegal com-
pleted the construction of the Kindergarten Ladybug
École Maternelle in Nguiguiss Bamba, in the Louga
region of Senegal. This school, 100 % funded by Dufry,
can host 60 children aged between 0 and 7 years old
and has been placed near a training and work cooper-
ative, also built by this NGO, which is empowering over
140 women in the region. The location of this kinder-
garten close to the workshop allows women to leave
their children being looked after, while they build their
skills and develop their professional activity. The
school project financed by Dufry provides children
with early stimulation techniques and essential learn-
ing for young children. This is a pioneer initiative in this
area of the Sahel, where schooling – in the best case
scenario – usually doesn’t begin until the age of seven.
107
2 Community Engagement DUFRY ANNUAL REPORT 2019 In addition to the construction of the infrastructure
and the provision of resources, specific training will be
carried out for three local people to permanently per-
form the functions of caregivers /teachers.
Ethiopian Enterprises
Dufry supported Ethiopian Enterprises to run its pop-
ular Raffle Rapture, celebrated every year during the
Ethiopian New Year on September 11. Proceeds of the
raffle were used to finance infrastructure for Ethip-
ioan Enterprises’s Arts&Crafts building at Lemlem
Baro School. This center provides invaluable art and
crafts lessons for their school students and also
offers additional courses to both children and adults
from the community.
Further donations and cultural events
Dufry supports many other social projects with local
activities in countries in which it operates. In Spain,
Dufry employees from Barcelona, Bilbao, Madrid,
Sevilla and Valencia operations participated in several
running events organized by Action Against Hunger as
part of the Intercompany Challenge in the months of
October and November 2019. For every kilometer run
by a Dufry employee, the company funded 10 days of
child nutrition treatments. With their efforts on the
track, Dufry runners managed to raise over 7,830 days
of nutritional treatments, a 40 % increase versus the
previous year, equivalent to covering the treatment of
780 children with severe malnutrition.
During the Christmas campaign, Dufry Spain part-
nered with SOS Children Villages and the Spanish
airport landlord AENA to jointly promote the sale of
two products – Carremi Nougat – a popular Spanish
product during Christmas – and one of the best-sell-
ers perfume brands, Tous. Benefits from the sale of
these two products were donated to SOS Children
Villages and helped to refurbish an upgrade of the
facilities of one of their children’s homes in Spain.
In Turkey, Dufry entered a charity run with 40 employ-
ees. The aim was to support disadvantaged children
with their education and the Dufry team managed to
collect substantial funds for this purpose. Dufry also
continued its ongoing collaboration with WWF and
supported their Green Office program. The goal of this
program is to reduce the ecological footprint, combat
climate change and promote sustainable lifestyles in
offices and beyond.
In Greece, Dufry also continued its long-term part-
nership with the Hellenic Red Cross, supporting their
refugees program by giving monetary support and
donating products to the organization for use in their
lotteries and raffles to raise much needed funds.
108
In Australia, Dufry is a supporter of the Diamond Din-
ner for the Children’s Cancer Institute. In 2019, this
fundraising event once again brought together over
250 high-net worth individuals, celebrities and indus-
try leaders to support the work of the institute that is
wholly dedicated to childhood cancer. Dufry was the
sponsor of this event and also displayed donation
boxes at till points in our stores.
In Armenia, we have supported a Children’s Cancer as-
sociation as well as a project to build playgrounds,
smart centers for kids and adults and the provision of
medical devices to hospitals in depressed villages in
this Country.
In Korea, through different donations, we support
local students with high school scholarships, English
classes for children of low-income families and Ko-
rean language teaching for multicultural families. In
Jordan, Dufry employees supported SOS Children
Villages joining an entertainment trip for orphans and
adoptive parents, giving food and educational games
to inspire creativity and their involvement in the soci-
ety. The activity benefitted 25 children and 7 mothers.
The annual sponsorship of cultural events also contin-
ued. Many local community events such as the Swiss
Indoor tennis tournament in Basel, the Mutua Madrid
Tennis Open, the Baloîse Session, a three week music
festival in Switzerland or the Fondazione Teatro Doni-
zetti in Bergamo, Italy, received our support.
Having a broad and worldwide network of travel retail
shops not only has an advantage for Dufry as the
leader in our industry, but it also gives us a unique op-
portunity to spread the support of social programs
worldwide. In many shops we maintain donation boxes
and encourage our customers to participate in sup-
porting specific local programs or helping victims of
natural disasters. The amounts collected every year
are truly surprising and we thank all participants for
their generous donations. The charities that we pass
them to welcome and really appreciate them.
Last but not least, there is a long list of causes our
staff contribute to and help with their efforts, either
by baking cakes for selling, looking for sponsors for
sports challenges, or by helping colleagues and neigh-
bors affected by natural catastrophes. Dufry has of-
ten facilitated the communication and the celebration
of such events and in some cases, also contributed to
and helped raise funds for these causes.
2 Community Engagement DUFRY ANNUAL REPORT 2019 FINANCIAL
REPORT
2019
3 Financial Report
DUFRY ANNUAL REPORT 2019
SOLID RESULTS
ACHIEVED AND
TARGETS MET
DEAR ALL
In 2019, Dufry further accelerated its growth strategy
and ended the year delivering a solid set of results sup-
ported mainly by an organic growth improvement
quarter after quarter. Turnover reached CHF 8,848.6
million in the year with organic growth confirming the
acceleration trend and reaching 3.0 %. Gross Profit
margin expanded by 40 basis points from 59.8 % to
60.2 % in 2019. Adjusted Operating Cash Flow was
CHF 959.9 million, while Equity Free Cash Flow came in
at CHF 383.3 million, in line with the mid-term Equity
Free Cash Flow target of CHF 350 – 400 million.1
changes in our financials, especially in the accounting
treatment of leases: while before leases were ac-
counted as expenses, now fixed components are cap-
italized and amortized over the lifetime of the con-
tract. It’s import to highlight that the new IFRS
standard has no economic impact on Dufry as evi-
denced in the cash flow statement, which remained
unchanged in general. In this regard, Dufry’s main
KPI’s currently include: Organic Growth, Adjusted Op-
erating Profit, Adjusted Net Profit and EPS, Adjusted
Operating Cash Flow and Equity Free Cash Flow.
One of the main drivers for our solid results in 2019
was the continuous improvement of the organic
growth, which developed positively throughout the
year supported by the like-for-like performance, which
also showed an ongoing improvement along the
quarters and reached 0.6 % for the full year. In the
fourth quarter, all divisions reported positive organic
growth resulting in a Group organic growth perfor-
mance of 3.1 % supported by a healthy like-for-like
growth of 2.2 % driven by the commercial activities
Dufry fostered along the year, namely the brand plans
and promotions.
From an accounting perspective, the 2019 business
year was characterized and impacted by the introduc-
tion of IFRS 16 standard in the financials. Both P&L
and Balance Sheet saw considerable changes in their
structure, making the comparability difficult. There-
fore, we also replaced some of our traditional KPI’s,
such as e.g. EBITDA, as they became irrelevant. That
is why going forward we will focus more on cash-flow-
related KPI’s, which are not affected by the IFRS 16
introduction, thus preserving a better performance
comparability. The new standard brings relevant
¹
For a glossary of financial terms and key performance indicators
please see page 270 of this Annual Report.
In terms of cash generation, Dufry recorded a very
solid performance in 2019, with the Equity Free Cash
Flow reaching 383.3 million, a 3.4 % increase versus the
CHF 370.8 million reported in 2018. Net debt was
reduced to CHF 3,101.9 million on December 31, 2019,
which on a full-year base is the lowest level since 2015.
The respective covenant calculated as Net Debt /
Adjusted Operating Cash Flow stood at 3.52x securing
a comfortable headroom towards the threshold of
4.50x.
One of the main achievements in 2019 were the acqui-
sitions we did along the year. In June, Dufry announced
the acquisition of the majority stake of 60 % in Reg-
Staer Vnukovo, further consolidating our position in
Russia, especially in the Moscow area, where we will be
able to extract further synergies with the integration
of existing operations. The newly acquired business
started to be fully consolidated as of November 2019.
During October, we also had the two important acqui-
sitions performed by Hudson: Brookstone, which
started to be consolidated as of October, and OHM,
adding additional growth opportunities and acceler-
ating further expansion in the food & beverage airport
market in North America.
110
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DUFRY ANNUAL REPORT 2019
1.9 %Turnover grew
by 1.9 % and reached
CHF 8,848.6 million
Moreover, in November, Dufry successfully issued a
new bond of EUR 750 million using the proceeds to
refinance the former bond of EUR 700 million and re-
duce existing bank debt. The new bond has a coupon
of 2 % and will generate annual financing cost savings
of EUR 16.5 million as compared to the previous one.
Turnover
In 2019, Turnover grew by + 1.9 %, reaching CHF
8,848.6 million versus CHF 8,684.9 million in 2018.
Organic growth for the year stood at 3.0 %, with
like-for-like contributing 0.6 % and net new con-
cessions adding 2.4 %. Changes in Scope, which
includes the contribution of the acquisitions of
Vnukovo and Brookstone, amounted to 0.1 %.
The translational FX effect in the period was
– 1.2 % as a net effect of the strengthening of
the US Dollar and weakening of the Euro and
the British Pound.
Turnover in Europe and Africa was CHF 3,850.9
million in 2019 from CHF 3,828.2 million one
year ago. Organic growth in the division
reached 5.8 % in the year and 7.5 % in the
fourth quarter. The like-for-like contribution
remained strong during Q4, reaching 6.1 %.
The UK and especially Spain continued to
deliver solid performance for the year. The
implementation of the pilot projects across
five Spanish airports including several com-
mercial initiatives and best practices were
very successful, showing improving sales dur-
ing the whole year. Greece and especially
Turkey maintained their positive momentum
in 2019, delivering a solid growth. Other loca-
tions such as Malta, Italy and Finland also
posted positive growth. Africa saw a stronger
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DUFRY ANNUAL REPORT 2019
performance in most operations, with Morocco, Kenya
and Egypt growing double-digit in the year.
Asia-Pacific and Middle East’s turnover reached
CHF 1,274.9 million in 2019 from CHF 1,153.6 million in
2018. Organic growth for the year stood at 10.8 %
supported mainly by the contribution of new conces-
sions in 2019. It’s worth to highlight that the like-for-
like performance has also improved during the year,
reaching 8.3 % in the fourth quarter.
Eastern Europe posted positive performance, sup-
ported by Russia and Serbia. Asia-Pacific posted a
double-digit growth mainly driven by Hong Kong with
the successful opening in the MTR high-speed railway
station, as well as the strong performance seen in
Macau and the positive growth in Cambodia and China.
Australia also posted solid performance for the year,
supported by the opening of new shops in Perth. The
Middle East posted a good performance, with solid
growth in India, Sri Lanka and Sharjah.
Turnover in North America amounted to CHF 1,935.8
million compared to CHF 1,884.4 million in 2018 and
organic growth came in at 1.8 % in the year. The North
American operation has been performing strongly
for many years and in 2019 the duty-paid business
confirmed its resilience despite some temporary
challenges. The duty-free segment was negatively
impacted by the lower spending from Chinese passen-
gers along the first nine months, but showed signs of
a recovery in the fourth quarter 2019.
Growth acceleration
leads to solid
performance
Central and South America’s turnover stood at
CHF 1,536.1 million in 2019 versus CHF 1,617.0 million
in 2018. Organic growth in the region was – 6.3 % in the
year with performance in the fourth quarter turning
positive at 0.2 %, mainly supported by the implemen-
tation of commercial initiatives.
During 2019, performance in South America remained
challenging, impacted by local currency devaluations,
namely in Brazil and Argentina. Performance in Mexico
was positive throughout the year, reaching solid
results especially during the fourth quarter. The
Dominican Republic posted positive growth, while the
Caribbean was healthy along the year, supported by
the cruise business.
Worth mentioning are the two positive changes in leg-
islation approved by the Brazilian government during
2019 – the possibility to open border shops and the
increase of the arrival duty-free allowance –, which will
further support organic growth in this important
market in South America.
Gross profit
In 2019, Gross Profit increased to CHF 5,323.2 million
from CHF 5,195.7 million in the previous year, with the
Gross Profit margin increasing by 40 basis points, and
reaching 60.2 % from 59.8 % in the previous year. The
continued improvement is the result of Dufry’s nego-
tiations with global and mainly local suppliers as well
as the further standardization of the supply chain and
the implementation of the commercial platforms,
which increase the agility of the commercial teams and
take them closer to the market.
Adjusted Operating Profit (Adjusted EBIT)
Adjusted Operating Profit (Adjusted EBIT) reached
CHF 767.7 million, with the respective margin amount-
ing to 8.7 % in 2019.
As mentioned previously, Dufry started to report
under the new IFRS 16 standard, which mainly changes
the accounting treatment of leases. In short, whilst
previously leases were accounted as expenses, now
fixed components are capitalized and amortized over
the lifetime of the contract, while all variable com-
ponents of the concessions are classified as lease
expenses. For 2019, Lease Expenses amounted to
CHF – 1,372.9 million.
Personnel Expenses amounted to CHF – 1,243.3 million
in 2019 from CHF – 1,175.2 million one year earlier. As a
percentage of turnover, Personnel Expenses increased
by 60 basis points to 14.1 % driven mainly by North
America. Reasons were the increase in the minimum
wages, as well as a one-off charge of USD 7.6 million
of accrued severance expenses related to changes in
the local management structure in Q1 2019.
Other Expenses reached CHF – 618.8 million in 2019.
Other Expenses mainly replace the former income
statement line “General Expenses” and also include the
former “Other Operational Expense”. Other Income is
now aggregated and presented in a specific line reach-
ing CHF 121.6 million (2018: CHF 45.5 million).
(excluding Right-of-Use)
Depreciation
reached
CHF – 203.9 million, remaining stable as a percentage
of turnover (– 2.3 %) versus last year. Amortization in
absolute terms stood at CHF – 402.8 million, increas-
ing as a percentage of turnover (– 4.6 %) compared to
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DUFRY ANNUAL REPORT 2019
last year (– 4.3 %) due to the acquisitions done in 2019.
Depreciation of Right-of-Use was CHF – 1,170.3 million,
which relates to the leases that are capitalized.
Net Profit
Adjusted Net Profit reached CHF 349.3 million in 2019,
while the respective Adjusted EPS was CHF 7.00. Net
Profit to Equity Holders reached CHF – 26.5 million in
the year under review. Financial Results (excluding
Lease Interest and FX) amounted CHF – 127.6 million
and Income Tax reached CHF – 78.2 million, mainly
driven by deferred taxes. Minorities were CHF – 56.6
million for the year.
Cash flow and net debt
Contrary to the Income Statement, the effects of
IFRS 16 on the cash flow are minimal. Cash flow KPIs
will therefore continue to be key for measuring the
performance of the business.
Adjusted Operating Cash Flow reached CHF 959.9
million in 2019 compared to the CHF 973.2 million in
2018. Equity Free Cash Flow increased solidly to
CHF 383.3 million in 2019 compared to CHF 370.8 mil-
lion in the previous year.
Continuous
deleveraging
in place
Net Debt amounted to CHF 3,101.9 million at the end
of December 2019, including the dividend payment of
CHF 199.8 million in May, compared to CHF 3,286.1
million in December 2018 and reaching the lowest level
on a full year base since 2015. Our covenant, Net Debt/
Adjusted Operating Cash Flow was 3.52x as per Decem-
ber 31, 2019, representing an ongoing improvement
versus previous quarters and providing comfortable
headroom against the maximum threshold of 4.50x.
The covenant calculation has also been adapted to the
IFRS 16 implementation, thus not directly comparable
with the previous year, but reflects the same risk pro-
file as under the former calculation method.
Targets achieved in 2019 and confident outlook
2019 was an important year where we could prove
the efficiency of our growth strategy. We were able
to improve organic growth quarter after quarter, in
line with our expected average target. Such achieve-
ment reflects the set of commercial activities devel-
oped along the year and underlines our execution
capabilities.
In terms of cash generation, we continued to deliver a
record level, being able to increase the Equity Free
Cash Flow from CHF 370.8 million last year to 383.3
million in 2019, in line with the Equity Free Cash Flow
mid-term target of CHF 350 – 400 million.
From an outlook perspective I am convinced about the
resilience of our business and the travel retail industry
going forward in general and I also believe that the
acquisitions we executed will support our development
going forward. At the time we wrote this letter, Covid-
19 started to create a potential temporary impact for
the current business year in locations where we have
Asian customers or which are directly affected by the
phenomena, resulting in a low visibility and making it
difficult to assess in detail the potential impacts.
I would like to thank our customers, shareholders,
bondholders, banks, analysts and key advisors for their
trust in Dufry and their support throughout the year
to contribute to Dufry’s success.
Kind regards,
Yves Gerster
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DUFRY ANNUAL REPORT 2019
CONSOLIDATED INCOME STATEMENT
CONTINUING OPERATIONS
Net sales
Advertising income
Turnover
Cost of sales
Gross profit
Lease expenses
Personnel expenses
Depreciation, amortization and impairment
Other expenses
Other income
Operating profit / (loss)
Finance income
Finance expenses
Foreign exchange gain / (loss)
Profit / (loss) before taxes
Income tax
Net profit / (loss)
ATTRIBUTABLE TO
Non-controlling interests
Equity holders of the parent
IN MILLIONS
OF CHF
2019
IN %
IN MILLIONS
OF CHF
2018
IN %
8,609.8
238.8
8,848.6
(3,525.4)
5,323.2
(1,372.9)
(1,243.3)
(1,777.0)
(618.8)
121.6
432.8
71.7
(387.0)
(9.2)
108.3
(78.2)
30.1
56.6
(26.5)
100.0 %
39.8 %
60.2 %
15.5 %
14.1 %
20.1 %
7.0 %
1.4 %
4.9 %
0.8 %
4.4 %
0.1 %
1.2 %
0.9 %
0.3 %
8,455.8
229.1
8,684.9
(3,489.2)
5,195.7
(2,494.7)
(1,175.2)
(571.9)
(630.2)
45.5
369.2
68.5
(198.0)
(5.5)
234.2
(98.8)
135.4
63.6
71.8
100.0 %
40.2 %
59.8 %
28.7 %
13.5 %
6.6 %
7.3 %
0.5 %
4.3 %
0.8 %
2.3 %
0.1 %
2.7 %
1.1 %
1.6 %
EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT
Basic earnings per share in CHF
(0.53)
1.38
OTHER DUFRY KPI’S
Adjusted operating profit
Adjusted net profit
Adjusted earnings per share in CHF
767.7
349.3
7.00
681.4
354.2
6.83
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DUFRY ANNUAL REPORT 2019
FINANCIAL
STATEMENTS
2019
CONTENT
Consolidated Financial Statements
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Report of the statutory auditor
116
117
118
119 – 120
121– 122
123 – 210
211 – 214
Financial Statements Dufry AG
Statement of profit or loss
Statement of financial position
Notes to the financial statements
Report of the statutory auditor
215
216
217 – 225
226 – 227
115
115 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
116CONSOLIDATED STATEMENT OF PROFIT OR LOSSFOR THE YEAR ENDED DECEMBER 31, 2019 IN MILLIONS OF CHFNOTE2019RECLASSIFIED 2018*Net sales7 8,609.8 8,455.8 Advertising income 238.8 229.1 Turnover 8,848.6 8,684.9 Cost of sales (3,525.4) (3,489.2)Gross profit 5,323.2 5,195.7 Lease expenses8 (1,372.9) (2,494.7)Personnel expenses9 (1,243.3) (1,175.2)Depreciation, amortization and impairment10 (1,777.0) (571.9)Other expenses11 (618.8) (630.2)Other income12 121.6 45.5 Operating profit / (loss) 432.8 369.2 Finance expenses13 (387.0) (198.0)Finance income13 71.7 68.5 Foreign exchange gain / (loss)13 (9.2) (5.5)Profit / (loss) before taxes 108.3 234.2 Income tax14 (78.2) (98.8)Net profit / (loss) 30.1 135.4 ATTRIBUTABLE TONon-controlling interests 56.6 63.6 Equity holders of the parent (26.5) 71.8 EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTBasic earnings per share in CHF25.4 (0.53) 1.38 Diluted earnings per share in CHF25.4 (0.53) 1.38 * See note 43. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
117IN MILLIONS OF CHFNOTE20192018Net profit / (loss) 30.1 135.4 OTHER COMPREHENSIVE INCOMEChanges in the fair value of equity investments at FVOCI15 0.3 (0.3)Remeasurements of post-employment benefit plans15 (16.0) 10.6 Income tax14, 15 1.7 (1.8)Items not being reclassified to net income in subsequent periods, net of tax (14.0) 8.5 Exchange differences on translating foreign operations15 (10.5) (74.3)Net gain / (loss) on hedge of net investment in foreign operations15 1.8 17.1 Share of other comprehensive income of associates15, 19 (0.4) 0.3 Items to be reclassified to net income in subsequent periods, net of tax (9.1) (56.9)Total other comprehensive income, net of tax (23.1) (48.4)Total comprehensive income, net of tax 7.0 87.0 ATTRIBUTABLE TONon-controlling interests 53.4 65.3 Equity holders of the parent (46.4) 21.7 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED DECEMBER 31, 2019 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
118CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAT DECEMBER 31, 2019IN MILLIONS OF CHFNOTE31.12.201931.12.2018ASSETSProperty, plant and equipment16 627.1 644.3 Right-of-use assets*17 4,328.1 –Intangible assets18 3,236.1 3,516.8Goodwill18 2,611.3 2,601.5 Investments in associates19 31.9 35.6 Deferred tax assets31 122.1 138.4 Net defined benefit assets33 3.4 4.8 Other non-current assets20 303.1 259.6 Non-current assets 11,263.1 7,201.0 Inventories21 1,050.0 1,062.7 Trade and credit card receivables22 44.2 62.6 Other accounts receivable23 422.0 475.8 Income tax assets 26.1 50.3 Cash and cash equivalents 553.5 538.2 Current assets 2,095.8 2,189.6 Total assets 13,358.9 9,390.6 LIABILITIES AND SHAREHOLDERS’ EQUITYEquity attributable to equity holders of the parent24 2,645.3 2,898.8 Non-controlling interests24, 26 462.7 442.9 Total equity 3,108.0 3,341.7 Borrowings27 3,602.2 3,766.3 Lease obligations*28 3,319.0 –Deferred tax liabilities31 396.8 425.9 Provisions32 41.1 82.4 Employee benefit obligations33 47.4 33.4 Other non-current liabilities30 88.3 62.8 Non-current liabilities 7,494.8 4,370.8 Trade payables 645.6 640.4 Borrowings27 53.2 58.0 Lease obligations*28 1,085.7 –Income tax payables 87.9 64.8 Provisions32 56.6 54.8 Other liabilities30 827.1 860.1 Current liabilities 2,756.1 1,678.1Total liabilities 10,250.9 6,048.9 Total liabilities and shareholders’ equity 13,358.9 9,390.6 * The Group adopted the new Lease Standard IFRS 16 as of January 1, 2019. The non-current and current lease obligations represent the present value of Dufry’s remaining unavoidable lease payments from concession- and other lease agreements. At the same time, Dufry recognized a right-of-use asset, which as of January 1, 2019 equaled the lease obligations less accrued lease expense (linearization) and which will be depreciated over the remaining lease term. For additional information please refer to Note 42 and Note 2.3 n) and w) in the accounting policies. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
119CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2019ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTIN MILLIONS OF CHFNOTEShare capital Share premium Treasury sharesEmployee benefit reserveHedging & revalu-ation reservesTrans- lation reservesRetained earningsTOTALNON-CON-TROLLING INTERESTSTOTAL EQUITYBalance at January 1, 2019 269.4 4,060.6 (520.8) (18.1) (0.3) (324.1) (567.9) 2,898.8 442.9 3,341.7 Net Profit / (loss) of the period–––––– (26.5) (26.5) 56.6 30.1 Other comprehensive income / (loss)15––– (14.4) 0.3 (5.8)– (19.9) (3.2) (23.1)Total comprehensive income / (loss) for the period––– (14.4) 0.3 (5.8) (26.5) (46.4) 53.4 7.0 TRANSACTIONS WITH ORDISTRIBUTIONS TO SHAREHOLDERSDividends to shareholders24.1– (199.8)––––– (199.8)– (199.8)Dividends to non-controlling interests–––––––– (73.8) (73.8)Share capital reduction24 (16.6) (385.3) 401.9 –––––––Assignment of treasury shares–– 26.4 ––– (27.8) (1.4) (2.0) (3.4)Share-based payments–––––– 13.3 13.3 0.4 13.7 Income tax on equity transactions14–––––– 1.6 1.6 1.2 2.8 Total transactions with or distributions to owners (16.6) (585.1) 428.3 ––– (12.9) (186.3) (74.2) (260.5)CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIESPut option held by non-controlling interests6.1–––––––– (55.7) (55.7)Other changes in participation of non-controlling interests26–––––– (20.8) (20.8) 96.3 75.5 Changes in participation of non-controlling interests26–––––– (20.8) (20.8) 40.6 19.8 Balance at December 31, 2019 252.8 3,475.5 (92.5) (32.5)– (329.9) (628.1) 2,645.3 462.7 3,108.0 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
120CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2019ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTIN MILLIONS OF CHFNOTEShare capitalShare pre-miumTreasury sharesEmployee benefit reserveHedging & revalu-ation re-servesTrans- lation reservesRetained earningsTOTALNON-CON-TROLLING INTERESTSTOTAL EQUITYBalance at January 1, 2018 269.4 4,259.3 (12.5) (26.9)– (265.5)(1,093.7) 3,130.1 226.1 3,356.2 Profit / (loss) of the period–––––– 71.8 71.8 63.6 135.4 Other comprehensive income / (loss)15––– 8.8 (0.3) (58.6)– (50.1) 1.7 (48.4)Total comprehensive income / (loss) for the period––– 8.8 (0.3) (58.6) 71.8 21.7 65.3 87.0 TRANSACTIONS WITH OR DISTRIBUTIONS TO SHAREHOLDERS:Dividends to shareholders24.1– (198.7)––––– (198.7)– (198.7)Dividends to non-controlling interests–––––––– (76.2) (76.2)Purchase and sale of treasury shares25.3–– (522.6)–––– (522.6)– (522.6)Profit on disposal of treasury shares––––– 0.2 0.2 – 0.2 Assignment of treasury shares–– 14.3 – (14.3)–––Share-based payments–––––– 26.2 26.2 5.0 31.2 Income tax effect on equity transactions14–––––– 4.0 4.0 1.3 5.3 Total transactions with or distributions to owners– (198.7) (508.3)––– 16.1 (690.9) (69.9) (760.8)CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES:Gain on sale of 42.6 % of Hudson Ltd–––––– 439.5 439.5 206.4 645.9 Other changes in participation of non-controlling interests–––––– (1.6) (1.6) 15.0 13.4 Balance at December 31, 2018 269.4 4,060.6 (520.8) (18.1) (0.3) (324.1) (567.9) 2,898.8 442.9 3,341.7 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
121CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2019IN MILLIONS OF CHFNOTE2019Reclassified 2018CASH FLOWS FROM OPERATING ACTIVITIESProfit / (loss) before taxes 108.3 234.2 ADJUSTMENTS FOR:Depreciation, amortization and impairment10 1,777.0 571.9 Increase / (decrease) in allowances and provisions 0.6 25.5 Linearization of concession fees– (29.6)Other non-cash items 9.7 25.2 Loss / (gain) on sale of non-current assets 3.0 6.9 Loss / (gain) on foreign exchange differences 9.6 5.4 Finance expense13 387.0 196.4 Finance income13 (71.7) (68.5)Cash flow before working capital changes 2,223.5 967.4 Decrease / (increase) in trade and other accounts receivable (98.4) 93.7 Decrease / (increase) in inventories 2.8 (57.0)Increase / (decrease) in trade and other accounts payable 71.2 (40.8)Dividends received from associates19 5.6 5.7 Cash generated from operations 2,204.7 969.0 Income tax paid 1 (97.0) (132.8)Net cash flows from operating activities 2,107.7 836.2 CASH FLOW USED IN INVESTING ACTIVITIESPurchase of property, plant and equipment 16 (199.3) (201.7)Purchase of intangible assets18 (54.1) (53.8)Purchase of financial assets (0.1) (2.1)Purchase of interest in associates19 (2.5) (3.3)Proceeds from lease income 5.9 –Proceeds from loans receivable repaid 2 3.2 0.2 Proceeds from sale of property, plant and equipment 8.7 4.4 Proceeds from sale of financial assets 0.2 0.1 Other investing activities (0.6)–Interest received 31.2 29.5 Business combinations, net of cash6.3 (48.1)–Net cash flows used in investing activities (255.5) (226.7) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
122IN MILLIONS OF CHFNOTE2019Reclassified 2018CASH FLOW FROM FINANCING ACTIVITIESTransaction costs for financial instruments 329 (2.5) (12.0)Proceeds from borrowings29 914.0 163.8 Repayment of borrowings29 (976.7) (478.2)Dividends paid to shareholders of the parent24 (199.8) (198.7)Dividends paid to non-controlling interests26.1 (70.5) (70.1)Purchase of treasury shares25.3– (549.8)Proceeds from sale of treasury shares– 27.4 Contributions from non-controlling interests 4.3 671.1 Lease payments 4 (1,269.5)–Interest paid 5 (199.3) (169.9)Net cash flows used in financing activities (1,800.0) (616.4)Currency translation on cash29 (36.9) (19.9)Decrease / Increase in cash and cash equivalents 15.3 (26.8)CASH AND CASH EQUIVALENTS AT THE– beginning of the period 538.2 565.0 – end of the period 553.5 538.2 1 Income tax paid includes a refund of CHF 17.7 (EUR 15.1) million from Spanish tax authorities.2 2018 comparative amounts have been reclassified from cash flow from financing activities.3 Transaction costs for financial instruments includes fees paid for the issuance of financing instruments (2019: Senior Notes; 2018: Hudson IPO).4 Lease payments includes CHF 187.7 million interests accrued on lease obligation (note 13).5 Includes CHF 18.0 million call premium and other fees paid for the cancellation and amendment of financing arrangements.CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)FOR THE YEAR ENDED DECEMBER 31, 2019 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
123NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 20191. CORPORATE INFORMATIONDufry 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 2.400 shops worldwide. The shares of the Company are listed on the Swiss Stock Exchange (SIX) in Zurich.The consolidated financial statements of Dufry AG and its subsidiaries (Dufry or the “Group”) for the year ended December 31, 2019 and the respective compara-tive information were authorized for public disclosure in accordance with a reso-lution of the Board of Directors of the Company dated March 4, 2020, and are sub-ject to the approval of the Annual General meeting to be held on May 7, 2020.2. ACCOUNTING POLICIES2.1 BASIS OF PREPARATIONThe consolidated financial statements of Dufry AG and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).The consolidated financial statements have been prepared on the historical cost basis, except for certain financial assets, liabilities (including derivative instruments) and defined benefit plan assets, that are measured at fair value, 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 values 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 state-ments are presented in millions of Swiss Francs “CHF”. All values are rounded to the nearest one hundred thousand, except when indicated otherwise.2.2 BASIS OF CONSOLIDATIONThe consolidated financial statements of Dufry comprise all entities directly or indirectly controlled by Dufry (its subsidiaries) as at December 31, 2019 and December 31, 2018 respectively for the comparative information. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
124Subsidiaries 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. All intra group balances, transactions, unrealized gains or losses or 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 Dufry loses control over a subsidiary, 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 statement of profit or loss, –recognizes any receivable from / payable to this former subsidiary.2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa) Goodwill and Business combinationsBusiness 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 presented in other expenses. 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. Thereafter any change in the fair value of the contingent consideration not classified as equity will be recognized through the statement of profit or loss.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 statement of profit or loss.After initial recognition, goodwill is measured at cost less any accumulated impair-ment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of Dufry’s group of cash-generating units that are expected to benefit from the combination. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
125Where goodwill forms part of a cash-generating unit and an operation within 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 portion of the cash- generating unit retained, unless there are specific allocations identifiable.b) Foreign currency translationEach subsidiary in Dufry uses its corresponding functional currency. Items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are recorded at the date of the trans-action in the functional currency using the exchange rate of such date.Monetary assets and liabilities denominated in foreign currencies are re-measured using the functional currency exchange rate at the reporting date and the differ-ence is recorded as unrealized foreign exchange gains / losses. Exchange differences arising on the settlement or on the translation of derivative financial instruments are recognized through the statement of profit or loss, except where the hedges on net investments allow the recognition through other comprehensive income, until the respective investments are disposed of. Deferred tax related to unreal-ized exchange differences is accounted for accordingly. 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 foreign currency are translated into the presentation currency of Dufry (CHF), using the exchange rate at the reporting date. The statements of profit or loss of the sub-sidiaries 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 re-lating to that particular operation is recognized in the statement of profit or loss as gain or loss on sale of subsidiaries.Goodwill, intangible assets and fair value adjustments identified during a business combination (purchase price allocation) are treated as assets and liabilities in the functional currency of such operation.Principal foreign exchange rates applied for valuation and translation:AVERAGE RATECLOSING RATEIN CHF2019201831.12.201931.12.20181 USD0.99350.97840.96780.98141 EUR1.11241.15471.08531.12591 GBP1.26911.30551.28441.2524c) Net salesTurnover is comprised of net sales and advertising income and is recognized fromcontracts with customers. The Group recognizes revenue from retail sales and the related cost of goods sold at point in time, when it sells and hands over directly at the stores to the traveler consumables or fashion products manufactured by third parties. These transactions have to be settled by cash or credit card on delivery. Net sales are measured at fair value of the consideration received for the goods sold, excluding discounts or sales taxes. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
126d) Advertising incomeThe Group’s advertising income is resulting from several distinctive marketing sup-port activities, not affecting the retail price, performed by Dufry after having been developed and coordinated together with our suppliers. The income is recognized in the period the advertising is performed. The compensation will be received on contractual terms. Usually Dufry is not entitled to offset the income with trade payables related with the same supplier. An allowance on these advertising receiv-ables is recognized to reflect the risks and uncertainties in relation with the final achievements of incentives based on thresholds, to be confirmed after the end of the respective program.e) Cost of salesCost of sales are recognized when the Company sells the products and comprise the purchase price and the cost incurred until the products arrive at the warehouse, i. e. import duties, transport, purchase discounts (price-offs) as well as inventory valuation adjustments and inventory losses. f) 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 Dufry are recognized at the proceeds received, net of direct issue costs. Repurchase of Dufry’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in the statement of profit or loss on the purchase, sale, issue or cancellation of Dufry’s own equity instruments.g) Share capitalOrdinary shares are classified as equity. 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.For Dufry shares purchased by Dufry AG or any subsidiary, 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 transaction expenses and income tax, is included in equity.h) 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. The plan assets are valued at fair value.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 costs 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
127Net 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 statement of profit or loss: –Service costs comprising current service costs are disclosed under “personnel expenses”. Past service costs, gains and losses on curtailments and non-routine settlements are shown under “other expenses” –Net interest expense or income under “finance expenses” or “finance income”Based on pension legislation of certain countries the employer and/or the employees have the obligation to remedy any default situation of the pension foun-dation, which usually would result in higher periodic contributions. At the state-ment of financial position date, there was no such default situation. The actuarial calculations based on IAS 19 resulted in a defined benefit obligation/asset as pre-sented in note 33.i) 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 payments is expensed on a pro rata basis over the vesting period, based on the estimated 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 statement of profit or loss 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.j) TaxationIncome tax expense represents the sum of the current income tax and deferred tax. Where the functional currency is not the local currency, the position includes the effects of foreign exchange translation on deferred tax assets or deferred tax liabilities.Income tax positions not relating to items recognized in the statement of profit or loss, are recognized in correlation to the underlying transaction, either in other comprehensive income or equity.Current income taxIncome 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 taxDeferred tax is provided using the liability method on temporary differences be-tween the tax basis of assets or liabilities and their carrying amounts for financial reporting purposes at the reporting date. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
128Deferred 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 futureDeferred 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.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.k) Property, plant and equipmentThese 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 the lease term or 10 years –Furniture and fixtures the shorter of the lease term or 5 years –Motor vehicles the shorter of the lease term or 5 years –Computer hardware the shorter of the lease term or 5 yearsl) Right-of-use assetsThe Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are mea-sured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease obligations. The cost of right-of-use assets includes the amount of lease obligations recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
129lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized rightofuse assets are depreciated on a straightline basis over the shorter of its estimated useful life or the lease term. Rightofuse assets are subject to impairment. The contractual term of our assets is up to 40 years.To contain a lease, an agreement has to convey the right to control the use of an identified asset throughout the period of use in exchange for consideration, so that the lessee 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). The lease term corresponds to the noncancellable period of each contract and where the Group is reasonably certain of exercising renewal options contractually foreseen. Rightofuse assets are capitalized at a value equivalent to the lease obligation at inception and depreciated over the useful life of the asset, except for leases with a Leaseterm (or remaining upon adoption) of less than 12 months or leases of low value assets.Initial direct costs for contracts signed in the past were not recognized as part ofthe rightofuse asset at the date of initial adoption.Short term leases with a duration of less than 12 months and low value leases, aswell as those lease elements, not complying with the principles of recognition defined by IFRS 16 are recognized in Profit or Loss when incurred.The standard affects the accounting of:a) ShopsDufry enters into lease agreements with operators of airports, seaports, railway stations etc. to operate retail shops which in substance are considered leases. These lease agreements contain complex features, which include variable payment based on sales, which cannot be lower than a minimal threshold (MAG). The MAG can be fixed or variable depending on certain parameters. The MAG amounts may: a) be fixed by the lease agreement or b) be calculated based on a percentage of fees paid in the previous year, or c) adjusted based on an index. In these cases, the unavoidable portions of the fees are considered as in substance fixed payments, despite having a variable component. Management signs and renews on average more than 50 agreements every year with a typical duration of 5 to 10 years.These agreements do not contain a residual value guarantee. In some cases, the current parts of the lease obligations are secured with bank guarantees in case the Group would not fulfill its contractual commitments. Dufry has capitalized all elements of the lease contracts in accordance with IFRS 16 when at the commencement of the agreement such commitments are in substance fixed. Payment obligations that do not have a fixed or in substance fixed commitment, will continue to be presented as variable lease expense. Dufry has identified a number of agreements in its portfolio which are not fulfilling the principles of recognition defined by IFRS 16, i. e. they have minimal guaranteed payments based on nonpredictable parameters or variables, such as actual number of passengers, which will continue to be presented as variable lease expense.b) Other buildingsLease agreements for offices or warehouse buildings will usually qualify for capitalization under IFRS 16. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
130c) Vehicles and otherDufry has also entered into many other lease agreements for e. g. vehicles, hard or software, and other assets, which in accordance with IFRS 16 will qualify for capitalization of leases. m) Short-term leases and leases of low-value assetsThe Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the com-mencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below CHF 5,000, division North America below USD 25.000). Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. n) Intangible assetsThese assets mainly comprise of concession rights and brands. Usually these assets are capitalized at cost, but when identified as part of a business combina-tion, these assets are capitalized at fair value as at the date of acquisition. The use-ful lives of these intangible assets are assessed to be either finite or indefinite. Fol-lowing initial recognition, the cost model is applied to intangible assets. 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 prospective basis. The brand assets have indefinite useful life, whereas the concession rights have a useful life based on the lease term, which can be up to 40 years.o) SoftwareSoftware is valued at amortized historical cost, or in case of internal developments by the sum of costs incurred less amortization.p) Impairment of non-financial assetsGoodwill and intangible assets with indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to depreciation and amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized 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 or 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).q) AssociatesAssociates are all entities over which Dufry has significant influence but not control, generally accompanying a shareholding interest of more than 20 % of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost. The carrying amount is increased or decreased to recognize changes in the Group’s share of net assets of the associate after the date of acquisition and de-creased by dividends declared. Dufry’s investment in associates includes goodwill identified on acquisition.Dufry’s share of post-acquisition net profit/(loss) is recognized in the statement of profit or loss, and its share of post-acquisition movements in other comprehen-sive income is recognized in the statement of comprehensive income with a cor- 3 Financial Report
Consolidated Financial Statements
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131responding 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 recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. If the ownership inter-est in an associate is reduced but significant influence is retained, only a propor-tionate share of the amounts previously recognized in other comprehensive income is reclassified to net profit/(loss) 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 calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount within the finance expense in the statement of profit or loss.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 necessary to ensure consistency with the policies adopted by Dufry.Dilution gains and losses arising in investments in associates are recognized in the statement of profit or loss.r) InventoriesInventories are valued at the lower of historical cost or net realizable value. Historical cost includes all expenses incurred in bringing the inventories to their present location and condition. Beside the purchase price of the goods less the discounts or rebates obtained, the historical cost includes import duties and trans-port cost. In 2019, Dufry changed its accounting policy adopting the weighted average cost method to determine the historical costs of the inventory. In the past periods, the Group was using the first in, first out inventory valuation cost method and has evaluated that this change does not generate material differences since the group companies are reporting in hard currencies, the inflation is low and the inventory rotation short. The benefit of the weighted average cost method is to be simpler to apply. Dufry purchases most of the inventory centrally and provides the subsidiaries the goods in their reporting currency, i.e. free of currency risk for them.The net realizable value is the estimated selling price in the ordinary course of busi-ness less the estimated costs necessary to make the sale. Inventory allowances are set up for slow-moving and obsolete stock. Expired items are fully written off.s) Trade and credit card receivables These accounts include receivables related to the sale of merchandise.t) Cash and cash equivalentsCash and cash equivalents consist of cash on hand or current bank accounts as well as current deposits at banks with initial maturity below 91 days. Credit card receivables with a maturity of up to 4 working days are included as cash in transit. Current investments are included in this position if they are highly liquid, readily convertible into known amounts of cash and subject to insignificant risk of changes in value. 3 Financial Report
Consolidated Financial Statements
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132u) Lease obligationsAt the commencement date of the lease, the Group recognizes lease obligations measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reason-ably certain to be exercised by the Group and payments of penalties for terminat-ing a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recog-nized as expense in the period on which the event or condition that triggers the payment occurs.In calculating the present value of lease payments, the Group uses the incremen-tal borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease obligations is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease obligations is re-measured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.Dufry uses a discount rate which is the aggregation of the risk free rate for the respective currency and lease duration, increased by individual company risk factors.The lease liability represents the net present value of fixed or in substance fixed lease payments over the lease term. The implied interest charge is presented as interest expenses on lease obligation. Where a lease agreement does not specify a discount rate and as the subsidiaries are financed internally, Dufry uses a dis-count rate which is the aggregation of the risk free rate for the respective cur-rency and lease duration, increased by individual company risk factors.Usually the lease contracts do not specify interest, so that when the Group pays the variable amount of lease commitment, the minimal in substance fix commit-ments are presented as lease payments under cash flow from financing, whereas the remaining part is presented as cash outflow from operations.v) ProvisionsProvisions are recognized when Dufry has a present obligation (legal or construc-tive) 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. 3 Financial Report
Consolidated Financial Statements
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133Contingent 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 recognized in accordance with IAS 37 Provisions, contingent liabilities and contin-gent assets and the amount initially recognized less cumulative income recognized in accordance with IFRS 15 Revenue from contracts with customers.Onerous contractsPresent obligations arising under onerous contracts are measured and recognized 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.RestructuringsA restructuring provision is recognized when Dufry has developed a detailed formal 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 announcing its main features to those affected by it. The measurement of a restructuring pro-vision 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.Lawsuits and dutiesA lawsuits and duties provision is recognized to cover uncertainties dependent on the outcome of ongoing lawsuits in relation with taxes, other than income taxes and duties.w) Investments and other financial assets (i) ClassificationThe group classifies its financial assets in the following measurement categories: –those to be measured subsequently at fair value (either through OCI or through profit or loss), and –those to be measured at amortized cost.The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).(ii) Recognition and derecognitionRegular purchases and sales of financial assets are recognized on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.(iii) MeasurementAt initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), trans-action costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
134Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.Debt instrumentsSubsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments: –Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or loss. Impairment losses are presented in the other operational result. –FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the asset’s cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss. Interest income from these financial assets is included in finance income using the effective interest rate method. Impairment expenses are presented in the other operational result. –FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in profit or loss and presented as net in the period in which it arises.Equity instrumentsThe group subsequently measures all equity investments at fair value. Where the group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as other income when the group’s right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognized in the finance income or finance expenses in the statement of profit or loss as applicable.(iv) Impairment of financial assetsThe group assesses on a forward looking basis the expected credit losses associ-ated with its debt instruments carried at amortized cost and FVOCI. The impair-ment methodology applied depends on whether there has been a significant in-crease in credit risk. For trade receivables, receivables for refund from suppliers and related services the group applies the simplified approach which requires ex-pected lifetime losses to be recognized from initial recognition of the receivables, see note 39 for further details.x) Trade, other accounts receivable and cash and cash equivalentsTrade and other receivables (including credit cards receivables, other accounts receivable, cash and cash equivalents) are measured at amortized cost using the effective interest. 3 Financial Report
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135y) Financial liabilitiesi) Financial liabilities at FVPLThese are stated at fair value, with any gains or losses arising on re-measurement recognized in the statement of profit or loss. The net gain or loss recognized in the consolidated statement of profit or loss incorporates any interest paid on the financial liability and is included in the finance income or finance expenses in the statement of profit or loss. Fair value is determined in the manner described in note 35.ii) Other financial liabilitiesOther financial liabilities (including borrowings) are subsequently measured at amortized cost using the effective interest method.iii) Derecognition of financial liabilitiesDufry derecognizes financial liabilities only when the obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid or payable is recognized in the statement of profit or loss.iv) Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable 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 29.1).z) Derivatives and hedging activitiesDerivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The group designates certain derivatives as either: –hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedges) –hedges of a particular risk associated with the cash flows of recognized assets and liabilities and highly probable forecast transactions (cash flow hedges), or –hedges of a net investment in a foreign operation (net investment hedges).At inception of the hedge relationship, the group documents the economic rela-tionship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The group documents its risk management objective and strategy for undertaking its hedge transactions. The fair values of derivative financial instruments designated in hedge relationships are disclosed in note 34. Movements in the hedging reserve in shareholders’ equity are shown in note 24.4. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability. 3 Financial Report
Consolidated Financial Statements
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136Cash flow hedges that qualify for hedge accountingThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within OCI. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, within other gains/(losses).When option contracts are used to hedge forecast transactions, the group desig-nates only the intrinsic value of the options as the hedging instrument.Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in the cash flow hedge reserve within OCI. The changes in the time value of the options that relate to the hedged item (‘aligned time value’) are recognized within OCI. When forward contracts are used to hedge forecast transactions, the group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognized in the cash flow hedge reserve within equity. The change in the forward element of the contract that relates to the hedged item (‘aligned forward element’) is recognized within OCI. In some cases, the entity may designate the full change in fair value of the forward contract (including forward points) as the hedging instrument. In such cases, the gains or losses relating to the effective portion of the change in fair value of the entire forward contract are recognized in the cash flow hedge reserve.Amounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss, as follows: –Where the hedged item subsequently results in the recognition of a non-financial asset (such as inventory), both the deferred hedging gains and losses and the deferred time value of the option contracts or deferred forward points, if any, are included within the initial cost of the asset. The deferred amounts are ultimately recognised in profit or loss as the hedged item affects profit or loss (for example through cost of sales). –The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in profit or loss within finance cost at the same time as the interest expense on the hedged borrowings. When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.Net investment hedgesHedges 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 recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit or loss within other finance income or finance expense. Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed of or sold. See notes 27.1 and 27.2 for further details. 3 Financial Report
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137Derivatives that do not qualify for hedge accountingCertain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge account-ing are recognized immediately in the statement of profit or loss and are included in other finance income or finance expense. Further details of derivative financial instruments are disclosed in note 35.2.4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES New and amended standards and interpretationsThe accounting policies adopted are consistent with those of the previous financial year, except for the following revised Standards and the Interpretations adopted in these financial statements (effective January 1, 2019).IFRS 16 - LeasesThe Group adopted the standard as of January 1, 2019 under the modified retro-spective approach. IFRS 16 replaces IAS 17 and sets the principles for recognition, measurement, presentation of leases, specifying the requirements for disclosures of lessees and lessors more extensive than under IAS 17. The main difference in the Group’s consolidated financial statements is that IFRS 16 introduces a single lessee accounting model and requires a lessee for lease contracts to recognize right-of-use assets (RoU), see note 17 and lease obligations, see note 28. IFRIC Interpretation 23 – Uncertainty over Income Tax TreatmentsThe interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. –An entity is required to use judgment to determine whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. –An entity is to assume that a taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. –An entity has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, that it used or plans to use in its income tax filing. If the entity concludes that it is probable that a particular tax treatment is accepted, the entity has to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment included in its income tax filings. If the entity concludes that it is not probable that a particular tax treatment is accepted, the entity has to use the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The decision should be based on which method provides better predictions of the resolution of the uncertainty, when there is uncertainty over income tax. The impact on the statement of financial position due to implementation of IFRS 16 and IFRIC 23 is disclosed in note 42.Other amendments and interpretationsOther amendments and interpretations applicable for the first time in 2019 have no material impact on the consolidated financial statements of the Group. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
1383. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTYThe 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 UNCERTAINTYThe 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.Impairment tests assetsDufry annually tests goodwill and intangible assets with indefinite useful lives and assesses other non-financial assets for impairment indications. Where required, the company performs impairment tests which are based on the discounted value models of future cash flows. The underlying calculation requires the use of esti-mates. The estimates and assumptions used are disclosed in note 18.1.1 and 18.1.3.Onerous contractsSome of the long-term lease agreements include clauses to prevent early termi-nation, such as obligations to fulfill guaranteed minimal payments during the full term of the agreement. The conditions for an onerous contract will be met, when the business behind such a contract presents a non-profitable outlook. In this event, an impairment of the tangible, intangible and Right-of-Use assets may be required, or even a provision based on the present value of the unavoidable future negative cash flows expected is established. The unavoidable costs are the lower of the costs of fulfilling the contract and any compensation or penalties arising from failure to fulfil it. Further details are given in note 32.Income taxesDufry is active in numerous jurisdictions which makes it subject to local income tax. Significant judgment is required in determining the taxability of certain trans-actions based on the local tax regulations. In case of uncertainties for some trans-actions in relation with the correct tax treatment, Dufry recognizes a tax expense and a liability for the amounts required to settle the estimated tax obligations. Where the final tax outcome is different from the carrying amounts, such differ-ence will impact the net profit in the period in which the obligations become certain. Further details are given in notes 14 and 31.Deferred tax assetsDeferred tax assets are recognized for unused tax losses and deductible temporary differences to the extent that it is probable that taxable profit will be available against which the credits can be utilized. Management judgment is required to determine the amount of future taxable profits that can be generated in each jurisdiction, and the limitations in use of the respective tax credits to calculate 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 31. 3 Financial Report
Consolidated Financial Statements
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139ProvisionsManagement makes assumptions in relation to the expected outcome and required cash outflows based on the development of each individual case. Further details are given in note 32.Share-based paymentsDufry 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 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 25.Pension and other post-employment benefit obligationsThe 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 allocationThe 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 carrying values.Consolidation of entities where Dufry has control, but holds only minority voting rightsDufry 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- controlling interests are disclosed in notes 26 and 26.1 as well as the list “Most important subsidiaries” in the financial statements of Dufry AG.4. NEW AND REVISED STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET ADOPTED/EFFECTIVECertain new accounting standards and interpretations were issued that are not effective for 2019. Dufry will adopt these when they become mandatory. From the current point of view they are not expected to have a material impact in future reporting periods. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
1405. 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 Global Executive Committee, using geographical segments and the distribution centers as an additional segment.As of January 1, 2019 Dufry merged the division Southern Europe and Africa with the division UK, Central Europe and Eastern Europe into one division Europe and Africa. All the remaining structure remained equal. The comparative figures have been presented accordingly to reflect these changes.The list of most important subsidiaries indicates the entities consolidated in each segment in the financial statements of Dufry AG.Following the adoption of the new lease standard, the Group is presenting as alternative performance indicator an Adjusted Operating Profit to its chief oper-ating decision maker. This indicator is calculated from the operating profit plus amortizations of intangible assets identified during previous acquisitions. The Group discontinued the adjusted EBITDA concept.TURNOVER2019 IN MILLIONS OF CHFwith external customerswith other divisionsTOTALADJUSTED OPER-ATING PROFIT (unaudited)EMPLOYEES (FTE) (unaudited)Europe and Africa 3,850.9 – 3,850.9 334.1 10,015 Asia Pacific & Middle East 1,274.9 – 1,274.9 96.4 4,644 North America 1,935.8 – 1,935.8 150.0 8,776 Central & South America 1,536.1 – 1,536.1 170.6 7,329 Distribution Centers 250.9 1,595.1 1,846.0 16.6 572 Total divisions 8,848.6 1,595.1 10,443.7 767.7 31,336 Eliminations– (1,595.1) (1,595.1)––Dufry 8,848.6 – 8,848.6 767.7 31,336 TURNOVER2018 IN MILLIONS OF CHFwith external customerswith other divisionsTOTALADJUSTED OPER-ATING PROFIT (unaudited)EMPLOYEES (FTE) (unaudited)Europe and Africa 3,828.2 – 3,828.2 343.4 9,821 Asia Pacific & Middle East 1,153.6 – 1,153.6 122.2 3,588 North America 1,884.4 – 1,884.4 104.5 9,372 Central & South America 1,617.0 – 1,617.0 101.0 6,899 Distribution Centers 201.7 1,463.5 1,665.2 10.3 584 Total divisions 8,684.9 1,463.5 10,148.4 681.4 30,264 Eliminations– (1,463.5) (1,463.5)––Dufry 8,684.9 – 8,684.9 681.4 30,264 Dufry generated 5.4 % (2018: 3.9 %) of its turnover with external customers in Switzerland (domicile). 3 Financial Report
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141Adjusted Operating ProfitIN MILLIONS OF CHFNOTE20192018 1Operating profit / (loss) 432.8 369.2 Adjusted for:Amortization of concession rights*18 308.9 310.1 Impairment of concession rights*18 26.0 2.1 Adjusted operating profit 767.7 681.4 * Related to acquisitions.1 Restated for comparability purposes.Financial Position and other disclosures 31.12.2019 IN MILLIONS OF CHFTOTAL ASSETSTOTAL LIABILITIESINCOME TAX (EXPENSE) / INCOMECAPITAL EXPENDITURE PAIDDEPRECIATION AND AMORTIZATION Europe and Africa 5,554.7 2,661.0 (30.9) (81.0) (817.5)Asia Pacific & Middle East 1,427.3 1,025.4 (1.7) (35.4) (255.5)North America 2,863.6 1,533.7 (14.4) (72.5) (361.1)Central & South America 2,421.7 915.8 (20.1) (38.1) (316.6)Distribution Centers 773.9 390.9 (4.8) (3.1) (5.8)Total divisions 13,041.2 6,526.8 (71.9) (230.1) (1,756.5)Unallocated positions 317.7 3,724.1 (6.3) (23.3) (20.5)Dufry 13,358.9 10,250.9 (78.2) (253.4) (1,777.0)31.12.2018 IN MILLIONS OF CHFTOTAL ASSETSTOTAL LIABILITIESINCOME TAX (EXPENSE) / INCOMECAPITAL EXPENDITURE PAIDDEPRECIATION AND AMORTIZATION Europe and Africa 4,257.1 1,100.2 (44.6) (92.0) (239.3)Asia Pacific & Middle East 606.5 201.8 (3.1) (24.9) (41.2)North America 1,338.9 234.1 (3.2) (67.9) (126.2)Central & South America 1,419.6 306.7 (13.7) (47.9) (144.1)Distribution Centers 1,183.1 339.7 (8.0) (6.7) (2.3)Total divisions 8,805.2 2,182.5 (72.6) (239.4) (553.1)Unallocated positions 585.4 3,866.4 (26.2) (16.1) (18.8)Dufry 9,390.6 6,048.9 (98.8) (255.5) (571.9) 3 Financial Report
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142Reconciliation of assetsIN MILLIONS OF CHF31.12.201931.12.2018Operating assets 13,041.2 8,805.2 Current assets of corporate and holding companies 1 (312.8) (175.3)Non-current assets of corporate and holding companies 630.5 760.7 Total assets 13,358.9 9,390.6 1 Includes notional Cash Pool overdrafts at Headquarter.Reconciliation of liabilitiesIN MILLIONS OF CHF31.12.201931.12.2018Operating liabilities 6,526.8 2,182.5 Borrowings of corporate and holding companies, current 0.2 –Borrowings of corporate and holding companies, non-current 3,591.9 3,754.0 Other non-segment liabilities 132.0 112.4 Total liabilities 10,250.9 6,048.9 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
1436. ACQUISITION OF BUSINESSES AND TRANSACTIONS WITH NON-CONTROLLING INTERESTS2019 TRANSACTIONS6.1 ACQUISITION OF REGSTAER M LLC, RUSSIARegStaer M Ltd. operates at the Vnukovo airport in Moscow a retail concession running for 15 years consisting of 6,800 square meters of duty-free and duty-paid shops offering a broad assortment of core duty free products, complemented with a selection of fashion and accessories. In 2019, the company generated net sales of CHF 83.7 (EUR 76.3) million, both unaudited figures, and an operating profit of CHF 9.0 (EUR 8.2) million. With this acquisition, Dufry is now present in all the air-ports of Moscow.On November 6, 2019, the Group acquired 60 % of RegStaer M LLC (“Vnukovo”) through its majority owned (51 %) subsidiary Dufry Staer Holding Ltd for a total consideration partially contributed in shares, equivalent to CHF 80.2 (EUR 73.7) mil-lions. The transaction was closed in November 2019, when the Group obtained con-trol and the required regulatory approvals. The acquisition was accounted for using the acquisition method. The transaction costs in relation to this acquisition amounted to CHF 0.3 (EUR 0.3) million. The non-controlling interests, resulting from the transaction was measured at the proportionate share in the identifiable net assets.Dufry will integrate this company with its remaining operations in Russia into a sub-division which will generate synergies, which are reflected in the value of the good-will besides other intangibles that are not recognized individually. The resulting goodwill is not amortized, is not tax deductible and is subject to annual impairment testing. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
144The fair value of the identifiable assets and liabilities of RegStaer M, LLC at the date of the acquisition are determined preliminary as the company is in the process of verifying the values. These values are as follows:PRELIMINARY FAIR VALUE AT NOVEMBER 6, 2019IN MILLIONS OFCHFEURInventories 16.7 15.4 Other current assets 1.5 0.5 Property, plant and equipment 10.9 10.1 Right-of-use assets 7.7 7.1 Concession rights 95.4 87.7 Trade payables (3.3) (3.0)Lease obligations (7.7) (7.1)Provisions (2.0) (1.8)Other liabilities (4.9) (3.9)Deferred tax liabilities (19.2) (17.6)Identifiable net assets 95.1 87.4 Non-controlling interests (40.0 %) 38.0 35.0 Dufry’s share in the net assets (60.0 %) 57.0 52.4 Goodwill 23.1 21.3 Consideration in cash 41.3 38.0 Consideration in shares 1 38.9 35.7 Total consideration 80.2 73.7 1 The fair value of the shares contributed by the partner of Dufry Staer Holding are derived from Dufry’s transaction.From the date when Dufry took control of RegStaer M, LLC operations in Novem-ber 2019 until December 2019 these operations contributed CHF 12.4 (EUR 11.3) mil-lion in turnover and CHF 1.6 (EUR 1.4) million, in operating profit to the consolidated statement of profit or loss (both unaudited figures).As part of the transaction, the Group entered into put and call options with the non-controlling interest holder Dufry Staer Holding Ltd which mainly provide to our partner after a holding period of three years the option to sell its non-control-ling interest (49 %) subject to the completion of certain contractual conditions for a fair value of the entity to be determined upon exercise of the option.The put option was accounted for as a liability in these financial statements and val-ued to the respective portion of the fair value of Dufry Staer Holding. The difference between this value and the eliminated non-controlling interest was booked against the reserve for transactions with non-controlling interest in the Group’s equity.6.2 BROOKSTONEOn October 10, 2019, the Group acquired the business and assets related to the operations in Brookstone airport stores in the U.S.. Hudson obtained the license to use the Brookstone brand and trademarks. Brookstone sells a unique selection of innovative products in the categories travel, wellness, home and entertainment for a net consideration of CHF 7.4 (USD 7.4) million. Brookstone has been integrated to the Hudson Group. Through this acquisition, Hudson Group expects to expand the business and to generate cost synergies through the integration of Brookstone into its marketing and supply chain as well as support functions, which are reflected in the value of the goodwill besides other intangibles like concession rights (CHF 5.5 (USD 5.5) million determined preliminary) that are recognized individually. The result 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
145in goodwill is not amortized but is tax deductible and will be subject to annual impairment testing. The Group incurred in transaction costs in relation to this acquisition of CHF 0.5 (USD 0.5) million.6.3 CASH FLOWS USED FOR BUSINESS COMBINATIONS, NET OF CASH 2019 IN MILLIONS OF CHFTOTAL CONSIDERATIONNET CASH ACQUIREDNET CASH FLOWRegStaer M Ltd (41.3) 0.3 (41.0)Brookstone Group (7.1)– (7.1)TOTAL (48.4) 0.3 (48.1)6.4 ACQUISITIONS TRANSACTION EXPENSESDufry incurred in transaction expenses related to acquisitions in the amount of CHF 2.9 million.2018 TRANSACTIONSThere were no transactions during 2018.7. NET SALESNet sales by product categories:IN MILLIONS OF CHF20192018Perfumes and Cosmetics 2,744.4 2,694.6 Food, Confectionery and Catering 1,566.2 1,490.9 Wine and Spirits 1,427.0 1,311.4 Luxury goods 1,074.9 1,094.9 Tobacco goods 988.4 995.0 Electronics 194.7 186.1 Literature and Publications 171.0 188.7 Other 443.2 494.2 Total 8,609.8 8,455.8 Net sales by market sector:IN MILLIONS OF CHF20192018Duty-free 5,260.4 5,182.3 Duty-paid 3,349.4 3,273.5 Total 8,609.8 8,455.8 Net sales by channel:IN MILLIONS OF CHF20192018Airports 7,587.9 7,597.0 Border, downtown and hotel shops 295.3 275.3 Cruise liners and seaports 306.1 255.1 Railway stations and other 420.5 328.4 Total 8,609.8 8,455.8 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
1468. LEASE EXPENSES IN MILLIONS OF CHF20192018Lease expenses relating to variable lease payments 1 (1,277.2) (2,512.5)Lease expenses relating to variable lease payments - MAG complement (102.9)–Lease expenses short term contracts (5.2)–Lease expenses low value contracts (1.4)–Sublease income 13.8 17.8 Total (1,372.9) (2,494.7)1 Not included in the measurement of lease obligations.Most lease contracts require as compensation the higher of two amounts: a) a per-centage of sales or b) a fixed minimal guaranteed amount (MAG). The fair value of these MAG commitments over the contractual term are presented usually as right-of-use assets and expensed as depreciation. Lease payments exceeding the MAG are presented as lease expenses and are normally calculated as a percentage of sales. Other lease contracts require only variable payments, which are fully pre-sented as lease expense. For the following year, the Group estimates that the lease expenses may be between 14 % and 16 % of net sales.Variable lease expense approximates the related cash flows due to the short pay-ment term characteristic of these contracts.9. PERSONNEL EXPENSES IN MILLIONS OF CHF20192018Salaries and wages (980.0) (919.2)Social security expenses (147.6) (144.0)Retirement benefits (22.0) (20.2)Other personnel expenses (93.7) (91.8)Total (1,243.3) (1,175.2)10. DEPRECIATION, AMORTIZATION AND IMPAIRMENT IN MILLIONS OF CHF20192018Depreciation of Property, Plant and Equipment (184.2) (178.1)Impairment of Property, Plant and Equipment (19.7) (24.2)Subtotal (note 16 Property, Plant and Equipment) (203.9) (202.3)Depreciation of RoU (1,170.3)–Subtotal (note 17 Right-of-use Assets) (1,170.3)–Amortization of Intangibles (368.2) (367.4)Impairment of Intangibles (34.6) (2.2)Subtotal (note 18 Intangible Assets) (402.8) (369.6)Total (1,777.0) (571.9) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
147Aggregated information of impairments per division (segment)20192018IN MILLIONS OF CHFProperty, Plant and Equipment Intangible AssetsProperty, Plant and Equipment Intangible AssetsEurope and Africa (8.1) (9.6) (9.7) (2.1)Asia Pacific & Middle East (0.5) (1.0)––North America (4.1)– (14.5) (0.1)Central & South America (7.0) (24.0)––Total (19.7) (34.6) (24.2) (2.2)There have been no reversals of impairments during 2019 or 2018.In 2019, the Company recognized impairment of depreciable and amortizable assets. The main events affecting the European locations were a low passenger development together with missing implementation of new international flight con-nections, and in one case a postponed refurbishment of an airport. The locations in South America were affected by a drop of purchase power from departing passengers leading to a reduced average spend per passengers and the delayed expansion of an airport.11. OTHER EXPENSES IN MILLIONS OF CHF20192018Repairs, maintenance and utilities (91.4) (84.7)Credit card expenses (115.2) (111.3)Professional advisor expenses (59.7) (62.8)IT expenses (51.0) (47.1)Freight & packaging material (46.7) (14.1)Other operational expenses (53.2) (69.9)Advertising expenses (31.8) (31.4)Office and admin expenses (31.2) (32.0)Travel, car, entertainment and representation (29.8) (33.0)Franchise fees and commercial services (27.1) (22.4)Public relations expenses (24.3) (22.8)Taxes, other than income tax expense (21.9) (10.0)Ancillary premises expenses (16.4) (70.5)Insurances (13.6) (12.1)Bank expenses (5.5) (6.1)Total (618.8) (630.2) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
14812. OTHER INCOME IN MILLIONS OF CHF20192018Sales tax recovery 1 64.4 –Selling income 24.0 25.2 Other operating income 33.2 20.3 Total 121.6 45.5 1 In September 2019, a decision of the Federal Court in Rio de Janeiro in a lawsuit between one of our Brazilian subsidiaries and the Brazilian federal tax authority became final and non-appealable, consequently Dufry assessed the recovery of these amounts as virtually certain and will claim back certain indirect tax payments made since 2009. 13. FINANCE INCOME AND FINANCE EXPENSES FINANCE INCOME IN MILLIONS OF CHF20192018INCOME ON FINANCIAL ASSETSInterest income on current deposits 28.5 21.8 Gain on modification of financing arrangements 16.3 –Other finance income 26.0 36.2 Interest income on financial assets 70.8 58.0 INCOME ON NON-FINANCIAL ASSETSInterest income 0.3 6.7 INCOME FROM FINANCIAL INVESTMENTS AND ASSOCIATESShare of result in associates 0.4 3.8 Gain on disposal of financial investments 0.2 –Income from financial investments and associates 0.6 3.8 Total finance income 71.7 68.5 FINANCE EXPENSES EXPENSES ON FINANCIAL LIABILITIESInterest expense (348.7) (162.6)of which lease interest (187.7)–of which bank interest (144.8) (153.3)of which bank commitment fees (4.6) (4.9)of which bank guarantees commission expense (3.6) (3.0)of which related to other financial liabilities 1 (8.0) (1.4)Amortization / write off of arrangement fees (10.2) (6.0)Other finance costs (25.7) (26.3)Interest expense on financial liabilities (384.6) (194.9)EXPENSES ON NON-FINANCIAL LIABILITIESInterest expense (2.4) (3.1)Interest and other finance expenses (2.4) (3.1)Total finance expenses (387.0) (198.0)Foreign exchange gain / (loss) (9.2) (5.5)Financial result (324.5) (135.0)1 Of which CHF 4.7 million correspond to credit card factoring expenses. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
14914. INCOME TAXESINCOME TAX RECOGNIZED IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSSIN MILLIONS OF CHF20192018Current Income tax expense (108.7) (125.9)of which corresponding to the current period (110.3) (128.5)of which adjustments recognized in relation to prior years 1.6 2.6 Deferred Income tax expense 30.5 27.1 of which related to the origination or reversal of temporary differences 30.2 18.3 of which adjustments recognized in relation to prior years 9.0 5.6 of which relates to foreign exchange movements 1 (10.7) (9.4)of which adjustments due to change in tax rates 2.0 12.6 Total (78.2) (98.8)1 In countries where Dufry pays taxes in another currency than the functional currency, deferred tax assets and liabilites are impacted by foreign exchange fluctuations. These changes are presented as income tax.IN MILLIONS OF CHF20192018Consolidated profit / (loss) before taxes 108.3 234.2 Expected tax rate in %20.7 % 21.1 % Income tax at the expected rate (22.4) (49.4)EFFECT OFIncome not subject to income tax 0.4 5.8 Different tax rates for subsidiaries in other jurisdictions 12.3 14.8 Effect of changes in tax rates on previously recognized deferred tax assets and liabilities 2.0 12.6 Non-deductible expenses (7.5) (11.3)Change of unrecognized tax loss carry-forwards (32.5) (52.9)Net change of revision of estimates on the taxability / deductibility of temporary differences 1 (25.5) 1.2 Non recoverable withholding taxes (8.6) (12.0)Income taxes in non-controlling interest holders 8.6 9.4 Adjustments recognized in relation to prior year 10.8 8.2 Foreign exchange movements on deferred tax balances 2 (10.7) (9.4)Other items 3 (5.1) (15.8)Total (78.2) (98.8)1 In 2019 this included CHF 14.1 million deferred tax assets based on timing differences arising from IFRS 16.2 In countries where Dufry pays taxes in another currency than the functional currency, deferred tax assets and liabilities are impacted by foreign exchange fluctuations between the functional and local currencies. These changes are included in the group’s tax expense line.3 In 2018 Other items includes CHF 13.5 capital gain taxes resulting from internal restructuring in connection with the IPO of our North American division. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
150The expected tax rate in % approximates the average income tax rate of the coun-tries where the Group is active, weighted by the profit before taxes of the respec-tive operations. For 2019, the most important change in tax rate related to a revised tax reform in Greece, reduced the rate to 24 % for the years 2019 and following, resulting in a deferred tax gain of CHF 4.1 million. The tax reform in Switzerland had overall no material impact on the group’s deferred tax positions. For 2018, the most important change in tax rate related to the reduction of the federal US corporate income tax rate. A gradual tax rate change of the Greek cur-rent income tax rate from 29 % to 25 % was enacted in December 2018, which resulted in a deferred tax income of CHF 11.6 million. DEFERRED INCOME TAX RECOGNIZED IN OTHER COMPREHENSIVE INCOME OR IN EQUITYIN MILLIONS OF CHF20192018RECOGNIZED IN OTHER COMPREHENSIVE INCOMEActuarial gains / (losses) on defined benefit plans 1.7 (1.8)Total 1.7 (1.8)RECOGNIZED IN EQUITYTax effect on share-based payments 1 2.8 5.3 Total 2.8 5.3 1 Includes CHF 1.2 (2018: 1.3) million as equity attributable to non-controlling interests. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
15115. COMPONENTS OF OTHER COMPREHENSIVE INCOMEATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT2019 IN MILLIONS OF CHFEmployee benefit reserveHedging & revaluation reservesTranslation reservesRetained earningsTOTALNON-CON-TROLLING INTERESTSTOTAL EQUITYRemeasurement of post-employment benefits plans (16.1)––– (16.1) 0.1 (16.0)Income tax effect 1.7 ––– 1.7 – 1.7 Subtotal (14.4)––– (14.4) 0.1 (14.3)Exchange differences on translating foreign operations–– (7.2)– (7.2) (3.3) (10.5)Subtotal–– (7.2)– (7.2) (3.3) (10.5)Net gain / (loss) on hedge of net investment in foreign operations–– 1.8 – 1.8 – 1.8 Subtotal–– 1.8 – 1.8 – 1.8 Changes in the fair value of equity investments at FVOCI– 0.3 –– 0.3 – 0.3 Subtotal– 0.3 –– 0.3 – 0.3 Share of other comprehensive income of associates–– (0.4)– (0.4)– (0.4)Subtotal–– (0.4)– (0.4)– (0.4)Other comprehensive income (14.4) 0.3 (5.8)– (19.9) (3.2) (23.1)ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT2018 IN MILLIONS OF CHFEmployee benefit reserveHedging & revaluation reservesTranslation reservesRetained earningsTOTALNON-CON-TROLLING INTERESTSTOTAL EQUITYRemeasurement of post-employment benefits plans 10.6 ––– 10.6 – 10.6 Income tax effect (1.8)––– (1.8)– (1.8)Subtotal 8.8 ––– 8.8 – 8.8 Exchange differences on translating foreign operations–– (76.0)– (76.0) 1.7 (74.3)Subtotal–– (76.0)– (76.0) 1.7 (74.3)Net gain / (loss) on hedge of net investment in foreign operations–– 17.1 – 17.1 – 17.1 Subtotal–– 17.1 – 17.1 – 17.1 Changes in the fair value of equity investments at FVOCI– (0.3)–– (0.3)– (0.3)Subtotal– (0.3)–– (0.3)– (0.3)Share of other comprehensive income of associates–– 0.3 – 0.3 – 0.3 Subtotal–– 0.3 – 0.3 – 0.3 Other comprehensive income 8.8 (0.3) (58.6)– (50.1) 1.7 (48.4) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
15216. PROPERTY, PLANT AND EQUIPMENT 2019 IN MILLIONS OF CHFLEASEHOLD IMPROVE-MENTSBUILDINGS FURNITURE FIXTURESCOMPUTER HARDWAREVEHICLESWORK IN PROGRESSTOTALAT COSTBalance at January 1 627.7 49.7 396.0 47.0 7.6 62.9 1,190.9 Business combinations 11.4 –––– 1.1 12.5 Additions 69.9 2.1 40.0 11.2 1.3 70.4 194.9 Disposals (46.2) (0.3) (32.7) (5.5) (0.8) (3.6) (89.1)Reclassification within classes (17.7) 3.1 85.5 3.7 0.1 (74.7)–Reclassification to intangible assets––– (1.4)–– (1.4)Currency translation adjustments (11.2) (1.7) 2.5 0.6 (0.1) (0.3) (10.2)Balance at December 31 633.9 52.9 491.3 55.6 8.1 55.8 1,297.6 ACCUMULATED DEPRECIATIONBalance at January 1 (291.0) (17.4) (189.7) (11.8) (4.4)– (514.3)Additions (note 10) (86.9) (5.2) (76.8) (14.1) (1.2)– (184.2)Disposals 35.1 0.2 24.5 5.0 0.7 – 65.5 Reclassification within classes 35.3 – (36.3) 1.0 –––Reclassification to intangible assets––– (0.1)–– (0.1)Currency translation adjustments 5.9 0.6 (4.2) (0.9)–– 1.4 Balance at December 31 (301.6) (21.8) (282.5) (20.9) (4.9)– (631.7)IMPAIRMENTBalance at January 1 (17.6) (0.2) (13.7) (0.8)–– (32.3)Impairment (note 10) (17.1)– (2.4) (0.2)–– (19.7)Disposals 6.5 – 5.5 0.2 –– 12.2 Currency translation adjustments 0.7 – 0.3 ––– 1.0 Balance at December 31 (27.5) (0.2) (10.3) (0.8)–– (38.8)CARRYING AMOUNTAt December 31, 2019 304.8 30.9 198.5 33.9 3.2 55.8 627.1 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
153 2018 IN MILLIONS OF CHFLEASEHOLD IMPROVE-MENTSBUILDINGS FURNITURE FIXTURESCOMPUTER HARDWAREVEHICLESWORK IN PROGRESSTOTALAT COSTBalance at January 1 569.2 43.3 439.2 71.4 8.4 58.6 1,190.1 Additions 48.2 0.6 24.4 12.6 1.1 111.1 198.0 Disposals (31.5) (4.5) (95.9) (41.9) (1.9) (0.8) (176.5)Reclassification within classes 48.4 12.0 35.5 8.5 0.1 (104.5)–Reclassification to intangible assets––– (2.7)–– (2.7)Currency translation adjustments (6.6) (1.7) (7.2) (0.9) (0.1) (1.5) (18.0)Balance at December 31 627.7 49.7 396.0 47.0 7.6 62.9 1,190.9 ACCUMULATED DEPRECIATIONBalance at January 1 (237.7) (15.6) (213.8) (40.7) (5.2)– (513.0)Additions (note 10) (84.3) (4.7) (74.5) (13.4) (1.2)– (178.1)Disposals 29.5 2.4 92.5 41.7 1.9 – 168.0 Reclassification within classes (1.5)– 1.5 ––––Reclassification to intangible assets––– 0.2 –– 0.2 Currency translation adjustments 3.0 0.5 4.6 0.4 0.1 – 8.6 Balance at December 31 (291.0) (17.4) (189.7) (11.8) (4.4)– (514.3)IMPAIRMENTBalance at January 1 (3.7) (0.2) (5.1) (0.2)–– (9.2)Impairment (note 10) (14.8)– (8.8) (0.6)–– (24.2)Disposals 0.5 ––––– 0.5 Currency translation adjustments 0.4 – 0.2 ––– 0.6 Balance at December 31 (17.6) (0.2) (13.7) (0.8)–– (32.3)CARRYING AMOUNTAt December 31, 2018 319.1 32.1 192.6 34.4 3.2 62.9 644.3 Cash flow used for purchase of property, plant and equipmentIN MILLIONS OF CHF20192018Payables for capital expenditure at the beginning of the period (32.7) (36.8)Additions of property, plant and equipment (194.9) (198.0)Payables for capital expenditure at the end of the period 28.2 32.7 Currency translation adjustments 0.1 0.4 Total Cash Flow (199.3) (201.7) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
15417. RIGHT-OF-USE ASSETS 2019SHOPSOTHER BUILDINGS VEHICLESOTHERTOTALAT COSTBalance at January 1 at inception of IFRS 16 (note 42) 4,620.9 171.2 3.8 1.0 4,796.9 Business combinations (note 6) 3.3 7.7 –– 11.0 Additions790.0 37.0 0.9 0.5 828.4 Disposals 1 (79.3) (0.6)–– (79.9)Currency translation adjustments (83.0) (2.7) (0.1) (0.1) (85.9)Balance at December 31 5,251.9 212.6 4.6 1.4 5,470.5 ACCUMULATED DEPRECIATIONBalance at January 1 at inception of IFRS 16–––––Additions (note 10) (1,135.1) (33.3) (1.3) (0.6) (1,170.3)Disposals 1 2.6 0.1 –– 2.7 Currency translation adjustments 24.4 0.7 0.1 – 25.2 Balance at December 31 (1,108.1) (32.5) (1.2) (0.6) (1,142.4)CARRYING AMOUNTAt December 31, 2019 4,143.8 180.1 3.4 0.8 4,328.1 1 Early termination of leases. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
15518. INTANGIBLE ASSETSCONCESSION RIGHTS2019 IN MILLIONS OF CHFAcquisition relatedPlainBRANDSOTHERTOTALGOODWILLAT COSTBalance at January 1 4,716.9 205.3 274.4 289.3 5,485.9 2,603.1 Adjustment on IFRS 16 implementation (see note 42)– (6.8)–– (6.8)–Adjusted Balance at January 1 4,716.9 198.5 274.4 289.3 5,479.1 2,603.1 Business combinations (note 6) 100.8 –– 0.1 100.9 23.1 Additions (note 18.1.4)– 9.6 – 40.1 49.7 –Disposals– (0.8)– (4.5) (5.3)–Reclassification from property, plant & equipment––– 1.4 1.4 –Currency translation adjustments (53.2) 3.9 (3.7) (2.4) (55.4) (13.3)Balance at December 31 4,764.5 211.2 270.7 324.0 5,570.4 2,612.9 ACCUMULATED AMORTIZATIONBalance at January 1 (1,648.5) (66.4) (3.3) (174.0) (1,892.2)–Adjustment on IFRS 16 implementation (see note 42)– 3.2 –– 3.2 –Adjusted Balance at January 1 (1,648.5) (63.2) (3.3) (174.0) (1,889.0)–Additions (note 10) (308.9) (21.5)– (37.8) (368.2)–Disposals– 0.8 – 4.1 4.9 –Reclassification from property, plant & equipment––– 0.1 0.1 –Currency translation adjustments 27.0 (1.4)– 1.4 27.0 –Balance at December 31 (1,930.4) (85.3) (3.3) (206.2) (2,225.2)–IMPAIRMENTBalance at January 1 (76.9)––– (76.9) (1.6)Impairment (note 10) (26.0)–– (8.6) (34.6)–Disposals (0.1)––– (0.1)–Currency translation adjustments 2.3 –– 0.2 2.5 –Balance at December 31 (100.7)–– (8.4) (109.1) (1.6)CARRYING AMOUNTAt December 31, 2019 2,733.4 125.9 267.4 109.4 3,236.1 2,611.3 1 In 2019, concession rights are newly broken down in acquisition related and in plain. As of January 1, 2019 concession rights with indefinite useful lives of CHF 45.2 million have been reclassified to finite lived intangibles.In 2019, Dufry has reviewed if the criteria of indefinite useful lives is still valid for certain concession rights. Based on the experience with other similar cases in Asia, Dufry decided to reclassify the concession right as with finite useful lives and amortize the concession rights over the remaining useful life. This change in estimate resulted in an increase of amortization charge of CHF 2.0 million per year as of 2019. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
156CONCESSION RIGHTS2018 IN MILLIONS OF CHFIndefinite livesFinite livesBRANDSOTHERTOTALGOODWILLAT COSTBalance at January 1 46.9 4,984.1 278.2 255.8 5,565.0 2,670.6 Additions (note 18.1.4)– 8.8 – 39.2 48.0 –Disposals– (2.1)– (12.0) (14.1)–Reclassification– (4.9)– 4.9 ––Reclassification from property, plant & equipment––– 2.7 2.7 –Currency translation adjustments (1.7) (108.9) (3.8) (1.3) (115.7) (67.5)Balance at December 31 45.2 4,877.0 274.4 289.3 5,485.9 2,603.1 ACCUMULATED DEPRECIATIONBalance at January 1– (1,408.4) (3.3) (147.6) (1,559.3)–Additions (note 10)– (331.7)– (35.7) (367.4)–Disposals– 2.0 – 8.6 10.6 –Reclassification from property, plant and equipment––– (0.2) (0.2)–Currency translation adjustments– 23.2 – 0.9 24.1 –Balance at December 31– (1,714.9) (3.3) (174.0) (1,892.2)–IMPAIRMENTBalance at January 1– (76.6)–– (76.6) (1.6)Impairment (note 10)– (2.2)–– (2.2)–Disposals – 0.1 –– 0.1 –Currency translation adjustments– 1.8 –– 1.8 –Balance at December 31– (76.9)–– (76.9) (1.6)CARRYING AMOUNTAt December 31, 2018 45.2 3,085.2 271.1 115.3 3,516.8 2,601.5 18.1 IMPAIRMENT TEST OF INTANGIBLE ASSETSBrands 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 carrying amount may not be recoverable. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
15718.1.1 Impairment test of goodwillFor the purpose of impairment testing, goodwill recognized from business combi-nations has been allocated to the following groups of 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 CHF31.12.201931.12.2018Europe and Africa 1,527.9 1,513.2 Asia Pacific & Middle East 86.8 87.5 North America 311.2 306.1 Central & South America 643.7 652.7 Distribution Centers 41.7 42.0 Total carrying amount of goodwill 2,611.3 2,601.5 The recoverable amounts of each group of cash generating unit (GCGU) is deter-mined based on value-in-use calculations which require the use of assumptions (see table with key assumptions below). The calculations use cash flow projections based on financial forecasts approved by the management covering a five-year period. Cash flows beyond the five-year period are extrapolated using a steady growth rate that does not exceed the long-term average growth rate for the respective market and are consistent with forecasted growth included in the travel retail industry reports. The financial results of the distribution centers have been broken down by GCGU and allocated accordingly.The key assumptions used for determining the recoverable amounts of goodwill are:POST TAX DISCOUNT RATESPRE TAX DISCOUNT RATESGROWTH RATES FOR NET SALESCASH GENERATING UNITS IN PERCENTAGE (%)201920182019201820192018Europe and Africa 6.95 6.57 8.06 7.47 3.3 – 5.4 3.1 – 4.9 Asia Pacific and Middle East 8.27 8.76 9.35 10.06 4.9 – 7.3 6.0 – 10.6 North America 7.39 7.13 10.32 8.91 1.9 – 7.4 4.9 – 5.7 Central and South America 8.66 9.11 10.33 10.14 4.4 – 5.9 4.3 – 6.3 As basis for the calculation of these discount rates, the Group uses the weighted average cost of capital, based on the following risk free interest rates (derived from past 5 year average of prime 10-year bonds rates): CHF – 0.32 %, EUR 0.25 %, USD 2.17 % (2018: CHF – 0.21 %, EUR 0.30 %, USD 2.18 %).For the calculation of the discount rates and WACC (weighted average cost of capital), the Company used the following re-levered beta:20192018Beta factor1.010.97 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
158Sensitivity analysis 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 recov erable amount of the CGU to materially fall below the carrying amount, except for the goodwill allocated to the division Central and South America, where the carrying amount would exceed the value in use by CHF 206.8 million, if the interest rate increases by 1 %, or by CHF 151.2 million if the sales drop 1 %, or by CHF 183.1 million if the operating profit margin is 1 % lower.18.1.2 Key assumptions used for value-in-use calculationsThe calculation of value-in-use is most sensitive to the following assumptions: –Sales growth –Growth rate used to extrapolate –Gross margin and suppliers prices –Lease expense and lease payments –Discount ratesSales growth Sales growth is based on passenger statistics published by external experts, such as Air4cast or ACI (Airports Council International) to estimate the development of international 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 cash generating unit.Growth rates used to extrapolateFor the period after 5 years, Dufry has used growth rates between 0.0 % – 2.0 % (2018: 1.0 % – 2.0 %) to extrapolate the cash flow projections.Gross marginsThe expected gross margins are based on average product assortment values estimated by the management for the budget 2020. These values are maintained over the planning period or where specific actions are planned and have been increased or decreased by up to 1 % over the 5 year planning horizon compared 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 relating to specific commodities during the months before the budget. Lease expense and lease paymentsThe company uses a lease database to project future fix payments and estimate variable lease payments based on expected sales developments. Where the con-tractual terms of certain operations comes to an end during the budget period, the company has analyzed the renewal conditions and the market situation and assumed renewals where the situation / conditions are favorable. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
159Discount ratesSeveral factors affect the discount rates: –For the borrowings 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 spread and adjusted by the effective blended tax rate and country risk of the respective group of GCGU. –For the equity part, a 5 % equity risk premium is added to the base rate commented above and adjusted by the Beta factor 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. 18.1.3 BrandsWhile at corporate level the Group is recognized under the name of Dufry, for retail purposes, it is applying several brands including, among others, Dufry, Hudson, World Duty Free, Nuance, Hellenic Duty Free, Colombian Emeralds, Duty Free Caribbean, do Brasil or Interbaires. The book values of these brand names remain at fair value recognized at acquisition and are subject to annual impairment testing. With regard to the assessment of value-in-use, Dufry believes that no reasonably possible change (+ / – 1 %) in any of the below key assumptions would cause that the recoverable amount falls materially below the carrying value of the respective brand name. The recoverable amount is determined using the Relief of Royalty method that con-siders a steady cash flow income from the royalty income after tax on projected sales for each brand. The following table indicates the key assumptions used for the valuation of the main brands:ROYALTY INCOME RATE AFTER TAXPOST TAX DISCOUNT RATESGROWTH RATES FOR NET SALESBRAND NAMES IN PERCENTAGE (%)201920182019201820192018Dufry 0.30 0.31 6.88 7.36 2.1 – 9.8 0.1 – 4.7 Hudson News 1.10 1.10 7.39 7.16 1.9 – 8.4 4.5 – 5.7 Colombian Emeralds 1.89 1.70 12.20 7.88 2.5 – 20.2 (3.3)– 3.7 Nuance 0.32 0.33 6.23 6.20 2.5 – 3.8 3.6 – 17.7 World Duty Free 0.33 0.32 6.25 6.19 2.5 – 3.8 3.6 – 5.4 These sales growth rates are in line with the assumptions used for the impairment test of goodwill. The post tax discount rates represent the weighted average cost of capital (WACC) of the markets where the brands are generating sales.18.1.4 Cash flows used for purchase of intangible assetsIN MILLIONS OF CHF20192018Payables for capital expenditure at January 1 (4.7) (11.3)Additions of intangible assets (49.7) (48.0)Payables for capital expenditure at December 31 0.2 4.7 Currency translation adjustments 0.1 0.8 Total Cash Flow (54.1) (53.8) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16019. INVESTMENTS IN ASSOCIATESThis includes mainly Lojas Francas de Portugal SA which operates duty-paid and duty-free shops in the airport of Lisbon, as well as other locations in Portugal.These investments are accounted for using the equity method.Summarized statement of financial positionIN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SAOTHER ASSOCIATES31.12.2019Cash and cash equivalents 4.3 11.4 15.7 Other current assets 27.7 13.8 41.5 Non-current assets 61.3 10.3 71.6 Other current liabilities (28.5) (20.0) (48.5)Non-current liabilities (12.3) (5.9) (18.2)Net assets 52.5 9.6 62.1 Proportion of Dufry’s ownership49 % Dufry’s share of the equity 25.7 6.2 31.9 IN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SAOTHER ASSOCIATES31.12.2018Cash and cash equivalents 10.0 3.5 13.5 Other current assets 22.2 11.7 33.9 Non-current assets 53.9 10.2 64.1 Other current liabilities (26.7) (12.0) (38.7)Non-current liabilities– (5.6) (5.6)Net assets 59.4 7.8 67.2 Proportion of Dufry’s ownership49 % Dufry’s share of the equity 29.1 6.5 35.6 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
161Summarized statement of comprehensive incomeIN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SAOTHER ASSOCIATES2019Turnover 302.2 44.3 346.5 Depreciation, amortization and impairment (17.6) (0.8) (18.4)Financial expenses (0.3)– (0.3)Income tax (3.1) (0.2) (3.3)Net profit / (loss) 5.1 (0.8) 4.3 OTHER COMPREHENSIVE INCOMEItems to be reclassified to net income in subsequent periods (0.5) (0.1) (0.6)Total other comprehensive income (0.5) (0.1) (0.6)Total comprehensive income 4.6 (0.9) 3.7 DUFRY’S SHARE49 % Net profit / (loss) 2.5 (2.1) 0.4 Total other comprehensive income (0.3) (0.1) (0.4)Total comprehensive income 2.2 (2.2)–IN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SAOTHER ASSOCIATES2018Turnover 286.4 50.8 337.2 Depreciation, amortization and impairment (7.6) (0.3) (7.9)Financial expenses– (0.4) (0.4)Income tax (4.1)– (4.1)Net profit / (loss) 8.4 (1.4) 7.0 OTHER COMPREHENSIVE INCOMEItems to be reclassified to net income in subsequent periods (0.5) 1.1 0.6 Total other comprehensive income (0.5) 1.1 0.6 Total comprehensive income 7.9 (0.3) 7.6 DUFRY’S SHARE49 % Net profit / (loss) 4.1 (0.3) 3.8 Total other comprehensive income (0.2) 0.5 0.3 Total comprehensive income 3.9 0.2 4.1 The 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 the associates and Dufry. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
162Reconciliation of the carrying amount of its investmentsIN MILLIONS OF CHFLOJAS FRANCAS DE PORTUGAL SAOTHER ASSOCIATES TOTALCarrying value at January 1, 2018 30.9 3.0 33.9 Additions– 3.3 3.3 Net profit / (loss) 4.1 (0.3) 3.8 Dividends received (5.7)– (5.7)Other comprehensive income (0.2) 0.5 0.3 Currency translation adjustments– (0.0) (0.0)Carrying value at December 31, 2018 29.1 6.5 35.6 Additions– 2.5 2.5 Net profit / (loss) 2.5 (2.1) 0.4 Dividends received (5.6)– (5.6)Other comprehensive income (0.3) (0.1) (0.4)Currency translation adjustments– (0.6) (0.6)Carrying value at December 31, 2019 25.7 6.2 31.9 20. OTHER NON-CURRENT ASSETS IN MILLIONS OF CHF31.12.201931.12.2018Guarantee deposits 108.1 102.1 Loans and contractual receivables 34.3 33.9 Lease receivables 7.5 –Prepayment for leases 56.5 120.9 Tax receivable (note 12)1 94.6 –Other 7.4 5.7 Subtotal 308.4 262.6 Allowances (5.3) (3.0)Total 303.1 259.6 1 Out of this amount, our subsidiary will need to pay a lease obligation of CHF 30 million (note 30). The income is disclosed in the line other income (note 12).MOVEMENT IN ALLOWANCES IN MILLIONS OF CHF20192018Balance at January 1 (3.0) (2.0)Creation (2.8) (2.6)Utilized 0.4 1.6 Currency translation adjustments 0.1 –Balance at December 31 (5.3) (3.0) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16321. INVENTORIES IN MILLIONS OF CHF31.12.201931.12.2018Inventories at cost 1,123.1 1,126.7 Inventory allowance (73.1) (64.0)Total 1,050.0 1,062.7 Cost of sales includes inventories written down to net realizable value and inventory losses of CHF 39.5 (2018: 30.7) million.22. TRADE AND CREDIT CARD RECEIVABLES IN MILLIONS OF CHF31.12.201931.12.2018Trade receivables 37.9 47.3 Credit card receivables 12.0 18.6 Gross 49.9 65.9 Allowances (5.7) (3.3)Net 44.2 62.6 AGING ANALYSIS OF TRADE RECEIVABLES IN MILLIONS OF CHF31.12.201931.12.2018Not due 14.7 19.7 OVERDUEUp to 30 days 3.0 8.3 31 to 60 days 1.9 7.4 61 to 90 days 1.7 1.4 More than 90 days 16.6 10.5 Total overdue 23.2 27.6 Trade receivables, gross 37.9 47.3 MOVEMENT IN ALLOWANCES IN MILLIONS OF CHF31.12.201931.12.2018Balance at January 1 (3.3) (1.5)Creation (3.1) (1.9)Utilized 0.1 0.1 Reclassification 0.5 –Currency translation adjustments 0.1 –Balance at December 31 (5.7) (3.3) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16423. OTHER ACCOUNTS RECEIVABLE IN MILLIONS OF CHF31.12.201931.12.2018Advertising receivables 168.5 146.4 Services provided to suppliers 20.0 60.2 Loans receivable 2.4 4.8 Receivables from subtenants and business partners 3.8 4.8 Personnel receivables 3.4 2.1 Accounts receivables 198.1 218.3 Prepayments of lease expenses and rents 47.3 108.7 Prepayments of sales and other taxes 108.3 109.4 Prepayments to suppliers 15.6 7.3 Prepayments, other 14.5 15.3 Prepayments 185.7 240.7 Receivables from subleases 4.7 –Guarantee deposits 5.7 5.9 Derivative financial assets 8.5 7.6 Accrued income 0.1 0.3 Financial instruments at fair value through other comprehensive income– 1.7 Other 36.8 19.5 Other receivables 55.8 35.0 Total 439.6 494.0 Allowances (17.6) (18.2)Total 422.0 475.8 MOVEMENT IN ALLOWANCES IN MILLIONS OF CHF31.12.201931.12.2018Balance at January 1 (18.2) (17.5)Creation (0.6) (3.9)Released 0.8 1.7 Utilized 0.6 1.3 Reclassification (0.5)–Currency translation adjustments 0.3 0.2 Balance at December 31 (17.6) (18.2) 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16524. EQUITYIN MILLIONS OF CHFNOTE31.12.201931.12.2018Attributable to equity holders of the parentShare capital24.1 252.8 269.4 Share premium24.1 3,475.5 4,060.6 Treasury shares25.3 (92.5) (520.8)Employee benefit reserve24.3 (32.5) (18.1)Hedging and revaluation reserves24.4– (0.3)Translation reserves24.5 (329.9) (324.1)Retained earnings24.6 (628.1) (567.9)Total 2,645.3 2,898.8 Non-controlling interests 462.7 442.9 Total Equity 3,108.0 3,341.7 24.1 FULLY PAID ORDINARY SHARES IN MILLIONS OF CHFNUMBER OF SHARESSHARE CAPITALSHARE PREMIUMBalance at January 1, 2018 53,871,707 269.44,259.3Distribution to shareholders–– (198.7)Balance at December 31, 2018 53,871,707 269.44,060.6Redeemed shares (3,304,541) (16.6) (385.3)Distribution to shareholders–– (199.8)Balance at December 31, 2019 50,567,166 252.83,475.5The ordinary general assembly of May 9, 2019 approved a dividend of CHF 4.00 per share and the company paid such dividend of CHF 199.8 million in the second quarter 2019.The Group announced on April 5, 2018 a share buyback program with a volume up to CHF 400 million. Dufry completed the program on October 31, 2018 and repur-chased 3,304,541 Dufry shares (CHF 16.6 million) for cancellation.24.2 AUTHORIZED AND CONDITIONAL SHARE CAPITAL AUTHORIZED SHARE CAPITALNUMBER OF SHARESIN THOUSANDS OF CHFBalance at January 1, 2018––Balance at December 31, 2018––Balance at December 31, 2019 5,000,000 25,000 CONDITIONAL SHARE CAPITALNUMBER OF SHARESIN THOUSANDS OF CHFBalance at January 1, 2018 888,432 4,442 Balance at December 31, 2018 888,432 4,442 Balance at December 31, 2019 888,432 4,442 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16624.3 EMPLOYEE BENEFITS RESERVEATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTNON-CONTROLLING INTERESTSTOTAL EQUITYIN MILLIONS OF CHFIN MILLIONS OF CHFIN MILLIONS OF CHFBalance at January 1, 2018 (26.9)Remeasurement of post-employment benefit plans 10.6 – 10.6 Income tax (1.8)– (1.8)Balance at December 31, 2018 (18.1)Remeasurement of post-employment benefit plans (16.1) 0.1 (16.0)Income tax 1.7 – 1.7 Balance at December 31, 2019 (32.5)24.4 HEDGING AND REVALUATION RESERVESATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTNON-CONTROLLING INTERESTSTOTAL EQUITYIN MILLIONS OF CHFIN MILLIONS OF CHFIN MILLIONS OF CHFBalance at January 1, 2018–––Gain / (loss) arising on changes in fair value of financial instruments: - Fair value changes of equity investments (0.3)– (0.3)Balance at December 31, 2018 (0.3)–Gain / (loss) arising on changes in fair value of financial instruments: - Interest rate swaps entered for as cash flow hedges 0.3 – 0.3 Balance at December 31, 2019––24.5 TRANSLATION RESERVESATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTNON-CONTROLLING INTERESTSTOTAL IN MILLIONS OF CHFIN MILLIONS OF CHFIN MILLIONS OF CHFBalance at January 1, 2018 (265.5)Exchange differences arising on translating the foreign operations (76.0) 1.7 (74.3)Net gain / (loss) on hedge of net investments in foreign operations 1 (note 27.2) 17.1 – 17.1 Share of other comprehensive income of associates 0.3 – 0.3 Balance at December 31, 2018 (324.1)Exchange differences arising on translating the foreign operations (7.2) (3.3) (10.5)Net gain / (loss) on hedge of net investments in foreign operations (note 27.2) 1.8 – 1.8 Share of other comprehensive income of associates (0.4)– (0.4)Balance at December 31, 2019 (329.9)1 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. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16724.6 RETAINED EARNINGSATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENTNON-CONTROLLING INTERESTSTOTAL EQUITYIN MILLIONS OF CHFIN MILLIONS OF CHFIN MILLIONS OF CHFBalance at January 1, 2018 (1,093.7)Profit of the period 71.8 63.6 135.4 Dividends to non-controlling interests– (76.2) (76.2)Profit on disposal of treasury shares 0.2 – 0.2 Assignment of treasury shares (14.3)– (14.3)Share-based plan expenses 26.2 5.0 31.2 Income tax on equity transactions 4.0 1.3 5.3 Gain on sale of 42.6 % of Hudson Ltd 439.5 206.4 645.9 Other changes in participation of non-controlling interests (1.6) 15.0 13.4 Balance at December 31, 2018 (567.9)Profit of the period (26.5) 56.6 30.1 Dividends to non-controlling interests– (73.8) (73.8)Assignment of treasury shares (27.8) (2.0) (29.8)Share-based plan expenses 13.3 0.4 13.7 Income tax on equity transactions 1.6 1.2 2.8 Share capital increase Dufry Columbia (21.3)– (21.3)Put option held by non-controlling interests– (55.7)Other changes in participation of non-controlling interests 0.5 96.3 96.8 Balance at December 31, 2019 (628.1)25. SHARE-BASED PAYMENT PLANS25.1 SHARE PLAN OF DUFRY AGOn December 12, 2019, Dufry granted to selected members of the senior manage-ment the award 2019 consisting of 81,334 performance share units (PSU). The PSU award 2019 has a contractual life of 29 months and will vest on May 2, 2022. At grant date the fair value of one PSU award 2019 represents the market value for one Dufry share at that date, i. e. CHF 97.36. As of December 31, 2019, no PSU award 2019 forfeited and 81,334 PSU award 2019 remain outstanding.On December 12, 2018, Dufry granted to selected members of the senior manage-ment the award 2018 consisting of 136,443 PSU units. The PSU award 2018 has a contractual life of 29 months and will vest on May 1, 2021. At grant date the fair value of one PSU award 2018 represents the market value for one Dufry share atthat date, i. e. CHF 91.48. As of December 31, 2019, 6,897 PSU award 2018 forfeited and 129,546 PSU award 2018 remain outstanding. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
168On December 1, 2017, Dufry granted to the members of the Global Executive Com-mittee and selected members of the senior management the award 2017 consisting of 144,654 PSU units. The PSU award 2017 has a contractual life of 29 months and will vest on May 4, 2020. At grant date the fair value of one PSU award 2017 repre-sents the market value for one Dufry share at that date, i. e. CHF 140.69, adjusted by the probability that participants comply with the ongoing contractual relation-ship clause. As of December 31, 2019, 6,897 PSU award 2017 forfeited, so that 137,757 PSU award 2017 remain outstanding.Holders of one PSU award 2019, 2018 or 2017 will have the right to receive free of charge up to two Dufry shares depending on the effective cumulative amount of cash earnings per share (Cash EPS) reached by Dufry during the grant year of award and the following two years compared with the target (2019: CHF 23.82, 2018: CHF 24.27, 2017: CHF 24.98). The Cash EPS equals the basic earnings per share adjusted for amortization of intangible assets identified during business combina-tions and acquisition transaction expenses. As of 2019, the plan administrator adjusted the cash EPS targets for 2019 and onwards by adjusting it also regarding the interest expense on lease obligation. If at vesting the cumulative adjusted EPS is at target level, each PSU grants one share. If the cumulative adjusted EPS is at 150 % of the target (maximum threshold) or above, each PSU grants 2 shares at vesting, and if the adjusted EPS is at 50 % of the target (minimum threshold) or be-low, no share will be granted at vesting. If the adjusted EPS is between 50 % and 150 % of the target, 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 con-tractual relationship of the participant with Dufry throughout the vesting period. Holders of PSU are not entitled to vote or receive dividends like shareholders do.On May 3, 2019, the PSU-award 2016 vested and the company assigned and deliv-ered free of charge 151,931 Dufry shares to the holders of these certificates. The performance of the PSU award 2016 was measured against the target Cash EPS of CHF 24.59 and achieved a pay-out ratio of 1.04 Dufry shares per PSU award 2016.On January 3, 2019 holders of 82,536 RSU-award 2016 received free of charge one Dufry share per RSU after fulfilling all the contractual conditions. On May 4, 2020, the PSU-award 2017 will vest and the company estimate to assign and deliver free of charge 130,181 Dufry shares to the holders of these certificates. The performance of the PSU award 2017 measured against the target Cash EPS of CHF 24.98 has achieved a pay-out ratio of 0.945 Dufry shares per PSU award 2017. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
16925.2 SHARE PLAN OF HUDSON LTD.On September 10, 2019, Hudson Ltd granted to selected members of its senior man-agement the Hudson- award 2019 consisting of 405,674 PSU’s units and 135,243 RSU’s units. Both plans have a contractual life of 32 months and will vest on May 2, 2022. At grant date the fair value of one PSU or RSU award 2019 represents the market value for one Hudson share at that date, i. e. CHF 12.23 (USD 12.64), adjusted by the probability that participants comply with the ongoing contractual relation-ship clauses. As of December 31, 2019, no PSU or RSU Hudson-award 2019 forfeited, so that the remaining 403.806 PSU’s and 134.620 RSU Hudson-awards 2019 remain outstanding.On November 1, 2018, Hudson Ltd granted to selected members of its senior man-agement the Hudson- award 2018 consisting of 435,449 PSU’s units and 145,150 RSU’s units. Both plans have a contractual life of 30 months and will vest on May 1, 2021. At grant date the fair value of one PSU or RSU award 2018 represents the market value for one Hudson share at that date, i. e. CHF 20.85 (USD 21.06), adjusted by the probability that participants comply with the ongoing contractual relation-ship clauses As of December 31, 2018, 103,661 PSU or RSU Hudson-award 2018 vested or forfeited, so that the remaining 357,703 PSU’s and 119,235 RSU Hudson-awards 2018 remain outstanding.On June 28, 2018, Hudson Ltd. granted an IPO-award in the form of restricted share units (RSU’s) to selected members of management. The IPO-award consists of 526,313 RSU’s in total. One RSU gives the holder the right to receive free of charge one Hudson Ltd. Class A common share. At grant date, the fair value of one RSU award represented the market value for one Hudson Ltd. share at that date, i. e. CHF 17.24 (USD 17.39). The RSUs were vested on the grant date and 50 % has been assigned during the first quarter 2019 whereas the remaining 50 % will be settled in the first quarter 2020. Hudson plans to settle remaining share obligations by purchasing Class A common shares in the market or by issuing new shares. Hudson recognized in 2018 CHF 9.0 (USD 9.2 million) expenses related to this award through shareholders’ equity as these incentives were provided in connection with the successful listing of Hudson Ltd. As of December 31, 2019, no IPO-award forfeited, and Hudson Ltd expects to assign 238,469 class A common shares to the partici-pants. The holders of one PSU Hudson award 2019 and 2018 will have the right to receive free of charge up to two Hudson Ltd Class A common share based on the cumu-lative results achieved by Hudson over a three year period on three performance metrics (PM) against the respective targets measured in USD and thus as follows: 30 % on Sales of CHF 5.937 or USD 6,135 (2018: CHF 5,719 or USD 5,828) million, 30 % on EBITDA of CHF 731 or USD 755 (2018: CHF 694.8 or USD 708) million and 40 % on Cash EPS of CHF 2.21 or USD 2.28 (2018: CHF 2.17 or USD 2.22). 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
170Whereby the Cash EPS equals the basic Earnings per Share adjusted for amorti-zation of intangible assets identified during business combinations and non-recur-ring effects. As of 2019, the plan administrator adjusted the cash EPS targets for 2019 and onwards by adjusting it also regarding the interest expense on lease pay-ments. If at vesting the effective cumulative PM are at target level, each PSU grants one share. If a cumulative PM is at 150 % of the target (maximum threshold) or above, each PSU will grant at vesting the specific PM weight of two shares, and if a PM is at 50 % of the PM target (minimum threshold) or below, no share will be granted at vesting. If a PM is between 50 % and 150 % of the target, the pay-out ra-tio will be allocated on a linear basis. Finally, the number of shares granted for each PSU will be the sum of the three pay-out ratios. Additionally, the allocation of shares is subject to an ongoing contractual relationship of the participant with Hudson throughout the vesting period. Holders of PSU are not entitled to vote or receive dividends, like shareholders do. The plans consider different rights in case of early termination.No shares have been assigned yet based on PSU or RSU awards 2018 or 2019, ex-cept those commented above in relation to IPO-Award.In 2019 Dufry recognized through profit and loss for all these share-based plans expenses for a total of CHF 18.1 (2018: 22.2) million.25.3 TREASURY SHARESTreasury shares are valued at historical cost.NUMBER OF SHARESIN MILLIONS OF CHFBalance at January 1, 2018 84,190 (12.5)Purchased shares 4,379,541 (549.8)Share sales (197,334) 27.2 Assigned to holders of PSU-Awards (97,308) 14.3 Balance at December 31, 2018 4,169,089 (520.8)Redeemed shares (3,304,541) 401.9 Assigned to holders of PSU / RSU-Awards (234,467) 26.4 Balance at December 31, 2019 630,081 (92.5)25.4 EARNINGS PER SHARE25.4.1 Earnings per share attributable to equity holders of the parentBasicBasic earnings per share are calculated by dividing the net profits / (loss) attribut-able to equity holders of the parent by the weighted average number of shares outstanding during the year.IN MILLIONS OF CHF / QUANTITY20192018Net profit / (loss) attributable to equity holders of the parent (26.5) 71.8 Weighted average number of ordinary shares outstanding 49,885,624 51,867,767 Basic earnings per share in CHF (0.53) 1.38 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
171DilutedDiluted earnings per share are calculated by dividing the net profits/(loss) attrib-utable 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 / QUANTITY20192018Net profit / (loss) attributable to equity holders of the parent (26.5) 71.8 Weighted average number of ordinary shares outstanding 49,885,624 52,156,991 Diluted earnings per share in CHF (0.53) 1.38 25.4.2 Adjusted EPSDufry uses the adjusted EPS as an alternative performance indicator (non-IFRS figure). The table below shows how this indicator has been derive at:IN MILLIONS OF CHF / QUANTITYNOTE201920181Net profit / (loss) attributable to equity holders of the parent (26.5) (36.1)ADJUSTED FOR Amortization of concession rights*18 308.9 312.2 Impairment of concession rights*18 26.0 – Interest on lease obligation13 187.7 209.4 Transactions expenses*6 2.9 12.4 Income tax on above lines (90.6) (84.4)Minority interst on above lines (59.1) (59.3)Adjusted net profit 349.3 354.2 Weighted average number of ordinary shares outstanding 49,885,624 51,867,767 Adjusted EPS 7.00 6.83 * related to acquisitions.1 restated to make it comparable to the new adjustment concepts 2019.25.4.3 Weighted average number of ordinary sharesIN THOUSANDS20192018Outstanding shares 52,441,248 53,871,707 Less treasury shares (2,555,624) (2,003,940)Used for calculation of basic earnings per share 49,885,624 51,867,767 EFFECT OF DILUTIONPSU / RSU Awards– 289,224 Used for calculation of earnings per share adjusted for the effect of dilution 49,885,624 52,156,991 For movements in shares see note 24 Equity and note 25.3 Treasury shares. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
17226. BREAKDOWN OF TRANSACTIONS WITH NON-CONTROLLING INTERESTS The following transactions have been recognized in equity attributable to non- controlling interests:IN MILLIONS OF CHFNOTE20192018Hudson Ltd 42.6 % disposed 6 – 206.4 Put Option held by NCI to sell 49 % of Dufry Staer Holding Ltd 1 (note 6.1) 6 (55.7)–Dufry DFASS Colombia SAS 49 % acquired 12.1 –Dufry Cyprus Ltd 30 % acquired (holding of Russian entity)– 0.3 Other non-controlling interests disposed (0.7)–Change in Dufry’s interest (44.3) 206.7 RegStaer M Ltd (Vnukovo acqusition) 40 % (note 6.1) 6 38.0 –Dufry Staer Holding Ltd share capital increase 1 (note 6.1) 6 39.7 –Brookstone acquisition 0.1 –Business combinations (see note 6) 77.8 –Division North America, increase in share capital of several subsidiaries 4.1 15.1 Duty Free Carribean (Bahamas) Ltd 40 % 1.4 –Dufry DFASS Colombia SAS share capital increase 1.5 –Dufry Kenia Ltd share capital increase 1– 0.2 Dufry Thomas Julie Korea Co. Ltd share capital increase 0.2 0.2 Dufry TCDC Ltd liquidation (Taiwan)– (0.5)Nuance Group (Bulgaria) AD liquidation– (0.2)Other (0.1) (0.1)Share capital changes 7.1 14.7 Total40.6 221.4 1 No cash flow effects in current financial period.26.1 INFORMATION ON COMPANIES WITH NON-CONTROLLING INTERESTSIn 2019 Dufry allocated CHF 56.6 (2018: 63.6) million of net profit to non- cont rolling interests (NCI). Within the Dufry Group, the net earnings allocated to non-controlling interests is predominantly related to Hudson sub-group, totaling CHF 38.7 (2018: 46.3) million. At February 1, 2018 Dufry sold a minority interest in Hudson Ltd. (see note 6), and thereafter holds 57.4 % of the outstanding shares of Hudson Ltd. Hudson Ltd. is a holding company incorporated in Hamilton, Bermuda which is the ultimate parent of various subsidiaries with NCI’s (none of which is individually ma-terial) in the United States and operates duty free and duty paid shops. Details about the name of these subsidiaries, location of primary operations, Hudson’s share in ownership and share capital of these subsidiaries, sorted by country of in-corporation, have been disclosed in the list of most important subsidiaries within these financial statements. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
173Airport authorities in the United States frequently require Dufry group companies to partner with local business partners based on Airport Concession Disadvan-taged Business Enterprise (“ACDBE”) regulation. Dufry also may partner with third parties to win new business opportunities and maintain existing ones. Consequently, Dufry’s business model contemplates the involvement of local partners. Net profits from these operating subsidiaries attributed to Dufry and to non-controlling interests holders reflect the applicable ownership structure, and as a result net profits and dividend payments attributable to non-controlling interests exclude expenses borne by Dufry which are not attributable to the local partners, such as acquisition related interest expenses, income taxes and amortization of intangible assets from acquisitions. More information about Hudson Ltd. is available under www.hudsongroup.com.31.12.2019 IN MILLIONS OF CHFHUDSON LTD.OTHER 1TOTALDividends paid to NCI 3 (39.8) (30.7) (70.5)Current assets 537.0 527.2 1,064.2 of which cash and cash equivalents 307.8 71.4 379.2 Non-current assets 2,203.6 1,146.1 3,349.7 Current liabilities 523.2 520.3 1,043.5 of which financial liabilities 282.3 500.8 783.1 Non-current liabilities 1,589.0 417.5 2,006.5 of which financial liabilities 1,549.7 368.3 1,918.0 Net assets 628.4 735.5 1,363.9 Equity attributable to NCI 310.4 152.3 462.7 31.12.2018 IN MILLIONS OF CHFHUDSON LTD.OTHER 1TOTALDividends paid to NCI 2 (38.6) (31.5) (70.1)Current assets 457.1 613.2 1,070.3 of which cash and cash equivalents 229.8 109.3 339.1 Non-current assets 949.9 774.0 1,723.9 Current liabilities 265.8 756.3 1,022.1 of which financial liabilities 50.4 726.7 777.1 Non-current liabilities 523.7 185.2 708.9 of which financial liabilities 483.5 124.2 607.7 Net assets 617.5 445.7 1,063.2 Equity attributable to NCI 310.2 132.7 442.9 1 Other subsidiaries with non-controlling interests.2 NCI’s of Hudson. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
17431.12.2019 IN MILLIONS OF CHFHUDSON LTD.OTHER 1TOTALTurnover 1,935.8 996.5 2,932.3 Depreciation, amortization and impairment (361.1) (165.6) (526.7)Finance income 4.7 1.7 6.4 Finance expense (88.5) (22.5) (111.0)Income tax (14.4) (10.1) (24.5)Net profit / (loss) 46.0 52.0 98.0 of which attributable to NCI 2 38.7 17.9 56.6 Other comprehensive income 22.2 (12.2) 10.0 Total comprehensive income 68.2 39.8 108.0 of which attributable to NCI 40.5 12.9 53.4 31.12.2018 IN MILLIONS OF CHFHUDSON LTD.OTHER 1TOTALTurnover 1,884.4 1,454.4 3,338.8 Depreciation, amortization and impairment (126.2) (80.2) (206.4)Finance income 2.5 2.4 4.9 Finance expense (30.4) (18.7) (49.1)Income tax (3.2) (19.8) (23.0)Net profit / (loss) 65.0 7.5 72.5 of which attributable to NCI 2 46.3 17.3 63.6 Other comprehensive income 10.0 (4.1) 5.9 Total comprehensive income 75.0 3.4 78.4 of which attributable to NCI 50.5 14.8 65.3 1 Other subsidiaries with non-controlling interests.2 The net earnings attributable to NCI represent the share the NCI have in the result of the respective subsidiaries prepared on local GAAP’s. The net earnings attributable to the Group for these operations represent the remaining part of the net earnings adjusted to comply with IFRS as well as adjusted with the fair value adjustments made at the time of acquisitions. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
175HUDSON IPOPrior to the completion of the secondary initial public offering, Dufry Interna-tional AG created Hudson Ltd, a fully owned subsidiary in Bermuda, to hold all the shares of Dufry America Holding, Inc. the parent entity of the Hudson Group (HG), Inc. in the USA and Canada, as well as The Nuance Group (Canada), Inc. the parent entity of WDFG Vancouver LP. All these operations comprise Dufry’s North America division. On January 31, 2018, the initial public offering (IPO) took place where Dufry International AG offered 42.6 % or 39,417,765 Class A common shares of Hudson Ltd at a public offering price of USD 19.00 per share, adding up to a gross income of CHF 697.4 (USD 748.9) million. The underwriting discounts and commis-sions incurred were CHF 32.2 (USD 34.5) million, resulting in proceeds of CHF 665.2 (USD 714.4) million. The shares began trading on the New York Stock Exchange on February 1, 2018, under the ticker symbol “HUD”. Dufry used the proceeds in the first instance to reduce bank debt. The gain of this transaction after transaction expenses amounted to CHF 439.5 million and will have no material income tax effect. After the IPO Dufry retained the control of Hudson Ltd, as the shares offered through the IPO represented less than 50 % of the total in terms of shares or voting rights. IN MILLIONS OF CHFUSDCHFInitial public offering proceeds748.9697.4Underwriting discounts and commissions(34.5)(32.2)Proceeds from sale714.4665.2Transaction cost for financial instruments(11.1)(10.3)IPO award Hudson (see note 24.2)(9.2)(9.0)Net proceeds694.1645.9Cost of sale of 42.6 % share of investment in Hudson–(206.4)Gain on sale of minority share in Hudson Ltd.–439.5 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
17627. BORROWINGS IN MILLIONS OF CHF31.12.201931.12.2018Bank debt overdrafts 8.7 9.4 Bank debt loans 40.5 44.7 Third party loans 4.0 3.9 Borrowings, current 53.2 58.0 Bank debt loans1,931.9 2,083.6 Senior Notes 1,658.4 1,675.4 Third party loans 11.9 7.3 Borrowings, non-current 3,602.2 3,766.3 Total 3,655.4 3,824.3 OF WHICH AREBank debt 1,981.1 2,137.7 Senior Notes 1,658.4 1,675.4 Third party loans 15.9 11.2 BANK DEBTIN MILLIONS OF CHF31.12.201931.12.2018BANK DEBTS ARE DENOMINATED INUS Dollar 677.5 1,324.9 British Pound 1,220.2 563.60 Swiss Franc 50.4 200.4 Subtotal 1,948.1 2,088.9 BANK DEBTS AT SUBSIDIARIES INVarious currencies 49.3 60.0 Deferred arrangement fees (16.3) (11.2)Total 1,981.1 2,137.7 SENIOR NOTESIN MILLIONS OF CHF31.12.201931.12.2018Senior Notes denominated in Euro 1,682.2 1,688.8 Deferred gain on modification of financing arrangements (15.9)–Deferred arrangement fees (7.9) (13.4)Total 1,658.4 1,675.4 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
177DETAILED CREDIT FACILITIESDufry negotiates and manages its main credit facilities centrally.The bank credit agreements and the bank guarantee facilities contain covenants and conditions customary to this type of financing. Dufry complied with the finan-cial covenants and conditions contained in the bank credit agreements in 2019 and 2018 as well.Bank credit facilitiesDRAWN AMOUNT IN CHFIN MILLIONS OFMATURITYCURRENCYCREDIT LIMIT IN FOREIGN CURRENCY31.12.201931.12.2018Committed 5-year term loan (multi-currency)03.11.2022 USD 700.0 677.5 687.0 Committed 5-year term loan (multi-currency)03.11.2022 EUR 500.0 564.2 551.4 5+ 1+ 1-year revolving credit facility (multi-currency)03.11.2024 EUR 1,300.0 706.4 700.5 Uncommited current facilitiesn.a. CHF 490.7 – 150.0 Total 1,948.1 2,088.9 Senior notesAMOUNT IN CHFIN MILLIONS OFMATURITYCOUPON RATECURRENCYNOMINAL IN FOREIGN CURRENCY31.12.201931.12.2018Senior notes01.08.20234.50 % EUR 700.0 – 782.0 Senior notes15.10.20242.50 % EUR 800.0 864.1 893.4 Senior notes15.02.20272.00 % EUR 750.0 794.3 0.0 Total 1,658.4 1,675.4 WEIGHTED 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 for the respective years:INTEREST RATE IN PERCENTAGE (%)20192018Average on USD 4.03 3.67 Average on CHF 0.63 1.40 Average on EUR 3.30 3.35 Average on GBP 2.12 2.02 Weighted Average Total 2.97 3.21 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
17827.1 HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONSThe following borrowings are designated as hedge in net investment:AMOUNT IN HEDGING CURRENCYAMOUNT IN CHFIN MILLIONS OFCURRENCY31.12.201931.12.201831.12.201931.12.2018Dufry do Brasil and other subsidiaries 1 USD 292.9 292.9 283.4 287.4 Total 283.4 287.4 1 Alliance Inc., Interbaires SA, Navinten SA, Blaicor SA, International Operation & Services SA, Duty Free Ecuador SA and Regstaer Ltd.27.2 NET INVESTMENT IN FOREIGN OPERATIONSDufry granted to below mentioned foreign subsidiaries long-term loans. These loans are considered as part of Dufry’s net investment in foreign operations, as settlement is neither planned nor likely to occur in the foreseeable future.HEDGED AMOUNT IN FOREIGN CURRENCYEQUIVALENT AMOUNT IN CHFIN MILLIONS OFCURRENCY31.12.201931.12.201831.12.201931.12.2018Nuance Group (Australia) Pty Ltd. AUD 121.8 121.8 82.8 84.3 Dufry America Holding Inc. USD 10.2 10.2 9.9 10.0 Nuance Group (Sverige) AB SEK 110.0 110.0 11.4 12.2 Dufry Duty Free (Nigeria) Ltd. USD 6.1 6.1 5.9 6.0 Total 110.0 112.5 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
17928. LEASE OBLIGATIONS IN MILLIONS OF CHF31.12.201931.12.2018Lease obligations, current 1,085.7 –Lease obligations, non-current 3,319.0 –Total 4,404.7 –29. BORROWINGS AND LEASE OBLIGATIONS, NET IN MILLIONS OF CHFCASH AND CASH EQUIVALENTSLEASE OBLIGATIONSBORROWINGS CURRENTBORROWINGS NON-CURRENTNET DEBTBalance at January 1, 2019 538.2 – 58.0 3,766.3 3,286.1Lease obligation at January 1, 2019 1– 4,784.3 –– 4,784.3 Balance including lease obligation at January 1, 2019 538.2 4,784.3 58.0 3,766.3 8,070.4 Cash flows from operating, financing and investing activities 51.9 ––– (51.9)Transaction costs for financial instruments––– (2.5) (2.5)Proceeds from borrowings–– 76.7 837.3 914.0 Repayment of borrowings–– (108.9) (867.8) (976.7)Repayments of lease obligations– (1,269.5)–– (1,269.5)Cash flow 51.9 (1,269.5) (32.2) (33.0) (1,386.6)Business combinations (note 6) 0.3 11.0 0.6 – 11.3 Additions to lease obligations– 838.5 –– 838.5 Interest on lease obligations– 187.7 –– 187.7 Arrangement fees amortization––– (13.7) (13.7)Early termination of lease obligations– (78.1)–– (78.1)Foreign exchange adjustments (36.9) (69.2) 26.8 (117.4) (122.9)Other non-cash movements (36.6) 889.9 27.4 (131.1) 822.8 Balance at December 31, 2019 553.5 4,404.7 53.2 3,602.2 7,506.6 1 See footnote 42 Accounting policy changes.IN MILLIONS OF CHFCASH AND CASH EQUIVALENTSBORROWINGS CURRENTBORROWINGS NON-CURRENTNET DEBTBalance at January 1, 2018 565.0 86.8 4,165.1 3,686.9 Cash flows from operating, financing and investing activities (7.0)–– 7.0 Transaction costs for financial instruments–– (1.7) (1.7)Proceeds from borrowings– 2.8 161.0 163.8 Repayments of borrowings– (41.4) (436.8) (478.2)Cash flow (7.0) (38.6) (277.5) (309.1)Arrangement fees amortization–– 9.8 9.8 Foreign exchange adjustments (19.8) 9.8 (131.1) (101.5)Other non-cash movements (19.8) 9.8 (121.3) (91.7)Balance at December 31, 2018 538.2 58.0 3,766.3 3,286.1 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
18029.1 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIESDufry’s notional cash pool is operated by a major finance institute. Based on enforceable master netting agreement, the respective balances at the end of the period have been set-off as follows:IN MILLIONS OF CHFBALANCE BEFORE GLOBAL POOLINGSET-OFF NET BALANCE 31.12.2019 Cash and cash equivalents 1,922.7 (1,369.2) 553.5 Borrowings, current 1,422.4 (1,369.2) 53.2 31.12.2018 Cash and cash equivalents 1,440.6 (902.4) 538.2 Borrowings, current 960.4 (902.4) 58.0 29.2 LEGAL RESTRICTIONS ON MONEY TRANSFERCash and cash equivalents at the end of the reporting period include CHF 67.5 (2018: 58.4) million held by subsidiaries operating in countries with exchange controls or other legal restrictions on money transfer.30. OTHER LIABILITIES IN MILLIONS OF CHF31.12.201931.12.2018Concession fee payables 200.3 184.8 Other service related vendors 201.0 178.2 Personnel payables 144.9 155.1 Deferred lease expense 108.7 210.2 Sales and other tax liabilities 49.4 72.7 Put option Dufry Staer Holding Ltd (note 6.1) 55.7 –Financial derivative liabilities - current 24.4 17.3 Lease obligation due to tax refund (further comments on note 12) 30.0 0.2 Payables for capital expenditure 28.4 37.4 Interest payables 14.4 23.7 Payables to local business partners 1.8 1.9 Other payables 56.4 41.4 Total 915.4 922.9 THEREOFCurrent liabilities 827.1 860.1 Non-current liabilities 88.3 62.8 Total 915.4 922.9 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
18131. DEFERRED TAX ASSETS AND LIABILITIESDeferred tax assest and liabilities arise from the following positions:IN MILLIONS OF CHF31.12.201931.12.2018DEFERRED TAX ASSETSInventories 18.2 15.3 Property, plant and equipment 32.1 28.3 Intangible assets 35.1 33.2 Lease obligations 688.6 –Provisions and other payables 40.5 41.6 Tax loss carry-forward 95.5 96.9 Other 5.4 23.4 Total 915.4 238.7 DEFERRED TAX LIABILITIESProperty, plant and equipment (14.7) (14.1)Right-of-use assets (687.8)–Intangible assets (454.1) (497.7)Provisions and other payables (4.3) (14.3)Other (29.2) (0.1)Total (1,190.1) (526.2)Deferred tax liabilities net (274.7) (287.5)Deferred tax balances are presented in the consolidated statement of financial position as follows:IN MILLIONS OF CHF20192018Deferred tax assets 122.1 138.4 Deferred tax liabilities (396.8) (425.9)Balance at December 31 (274.7) (287.5)Reconciliation of movements to the deferred taxes:IN MILLIONS OF CHF20192018Changes in deferred tax assets (16.3) 5.1 Changes in deferred tax liabilities 29.1 40.9 Business combinations (note 6) 19.3 –Currency translation adjustments 2.9 (15.4)Deferred tax movements (expense) at December 31 35.0 30.6 THEREOFRecognized in the statement of profit or loss 30.5 27.1 Recognized in equity 1 2.8 5.3 Recognized in OCI 1.7 (1.8)1 Includes CHF 1.2 (2018: 1.3) million recognized as equity attributable to non-controlling interests. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
182Tax loss carryforwardCertain subsidiaries incurred tax losses, which according to the local tax legislation gives rise to a tax credit usable in future tax periods. However, the use of this tax benefit may be limited by local law in time (expiration) or in quantity or limited by the ability of the respective subsidiary to generate enough taxable profits in the future. Deferred tax assets relating to unused tax losses carryforwards or temporary differences are recognized when it is probable that such tax credits can be utilized in future periods by the respective entity in accordance with the approved budget 2020 and the management projections thereafter.The unrecognized tax losses carryforwards by expiry date are as follows:IN MILLIONS OF CHF31.12.201931.12.2018Expiring within 1 to 3 years 103.1 5.7 Expiring within 4 to 7 years340.5 348.2 Expiring after 7 years 65.0 56.6 With no expiration limit640.5 731.9 Total 1,149.2 1,142.4 Unrecognized 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 determining taxable profit (tax loss) of future periods when the carrying amount of the investment is recovered. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
18332. PROVISIONS IN MILLIONS OF CHFCONTIN-GENT LIABILITIESONEROUS CONTRACTSCLOSEDOWNLAWSUITS AND DUTIESLABOR DISPUTESOTHERTOTALBalance at January 1 (as previously published) 46.3 33.4 5.1 33.6 4.1 14.7 137.2 IFRIC 23 implementation (32.8)––––– (32.8)Balance at January 1 (adjusted) 13.5 33.4 5.1 33.6 4.1 14.7 104.4 Business combinations (note 6)––––– 2.0 2.0 Charge for the year 0.3 20.5 0.6 1.2 0.9 2.2 25.7 Utilized (0.2) (16.3) (0.4) (4.9) (1.5) (0.5) (23.8)Unused amounts reversed (1.4)– (2.8) (5.9)– (0.1) (10.2)Interest discounted– 2.0 ––– (0.1) 1.9 Currency translation adjustments (0.9) (1.0) (0.2) (0.6) 0.1 0.3 (2.3)Balance at December 31 11.3 38.6 2.3 23.4 3.6 18.5 97.7 THEREOF Current – 21.0 2.3 23.4 1.2 8.7 56.6 Non-current 11.3 17.6 –– 2.4 9.8 41.1 1 In the context of the implementation of IFRIC 23 uncertain tax positions, CHF 32.8 have been reclassified from provisions for contingent liabilities to income taxes payable to better reflect the economic substance of the position.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, final expenses may vary from the amounts provisioned.CONTINGENT LIABILITIESContingent liabilities are recognized in connection with business combinations, usually in relation with legal claims, from which the final outcome is difficult to assess.ONEROUS CONTRACTSDufry enters in certain non-cancellable long term lease agreements for shops. If the economic condition to operate such business deteriorates materially, it can happen that the present value of the unavoidable futures cash flows is not enough to cover the carrying amount of the tangible or intangible assets, or even become negative so that the company would need to present a provision for onerous con-tracts. Estimating these future cash flows requires management to project future sales and operating profits. At balance sheet date, an amount of CHF 38.6 (2018: 33.4) million has been provided in relation to two operations in Europe.CLOSE DOWNThe provision of CHF 2.3 (2018: 5.1) million relates mainly to two operations in Asia and Europe. In 2019 the Group reversed CHF 2.8 million unused provision mainly in one operation in Europe and several minor locations in Asia, Pacific and Middle East. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
184LAWSUITS AND DUTIESThe provision for lawsuits and duties of CHF 23.4 (2018: 33.6) million cover uncer-tainties related to the outcome of law suits in relation to taxes, other than income taxes, duties or other claims in connection with our subsidiaries in India and Brazil. The major cases relate to two subsidiaries in India which still keep open claims (CHF 12.9 million) in relation with customs duties and service taxes. Dufry expects that both cases won’t be finally judged in the next year. During 2019 Dufry used the provision for duties in Ecuador an released the one in Turkey. LABOR DISPUTESThe provision of CHF 3.6 (2018: 4.1) million relates mainly to claims presented by sales staff in Brazil based on disputes due to the termination of temporary labor contracts.OTHEROther provisions comprise potential liabilities to cover the cost for restoration of leased shops to their original condition at the end of the lease agreement. The charges for the year are in connection with a loyalty program and a disputed penalty fee due to the close down of a store in a Caribbean Island. The utilization of the year mainly relates to the loyalty program.CASH OUTFLOWS OF NON-CURRENT PROVISIONSThe cash outflows of non-current provisions as of December 31, 2019 are expected to occur in:IN MILLIONS OF CHFEXPECTED CASH OUTFLOW2021 9.9 2022 3.1 2023 0.9 2024–2025+ 27.2 Total non-current 41.1 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
18533. 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 benefits accrued to date by participants are cash balance and final salary plans. Around 99.5 % (2018: 99.5 % ) of the total defined benefit obligation and 99.5 % (2018 99.5 % ) of the plan assets correspond to pension funds in Switzerland (CH) and the United Kingdom (UK). 20192018IN MILLIONS OF CHFFundedUnfundedTOTALFundedUnfundedTOTALSWITZERLANDFair value of plan assets 207.5 – 207.5 189.7 – 189.7 Present value of defined benefit obligation 236.1 – 236.1 205.0 – 205.0 Financial (liability) asset (28.6)– (28.6) (15.3)– (15.3)UKFair value of plan assets 209.5 – 209.5 182.5 – 182.5 Present value of defined benefit obligation 206.5 – 206.5 177.9 – 177.9 Financial (liability) asset 3.0 – 3.0 4.6 – 4.6 OTHER PLANSFair value of plan assets 2.1 0.2 2.3 2.0 – 2.0 Present value of defined benefit obligation 1.9 18.8 20.7 1.8 18.1 19.9 Financial (liability) asset 0.2 (18.6) (18.4) 0.2 (18.1) (17.9)CARRYING AMOUNTNet defined benefit assets 3.2 0.2 3.4 4.8 – 4.8 Employee benefit obligations (28.6) (18.8) (47.4) (15.3) (18.1) (33.4)A description of the significant retirement benefit plans is as follows:Reconciliation to the funded plans20192018IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUK Net defined (obligation) / asset at January 1 (15.3) 4.6 (13.7) (7.7)Pension income / (expense) through statement of profit or loss (7.4) 0.1 (8.0) (0.2)Remeasurements through other comprehensive income (12.0) (4.1) 0.2 10.0 Contributions paid by employer 6.1 2.1 6.0 2.1 Currency translation– 0.3 0.2 0.4 Net defined (obligation) / asset at December 31 (28.6) 3.0 (15.3) 4.6 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
18633.1 SWITZERLANDIn Switzerland Dufry’s pension plan is a cash balance plan where contributions are made by employees and employer based on a percentage of the pensionable salary. The pension plan guarantees the amount accrued on the members saving account, as well as a minimum interest on those savings amounts. At retirement date, the savings account are converted into pensions, or optionally part of the savings can be paid out as a lump sum. The board of trustees on a discretional basis, based on the annual performance and financial situation of the fund can grant increases in pension payment.LEGAL FRAMEWORKPension 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 as independent, legally autonomous units, a pen-sion fund. Pension plans are overseen by a regulator as well as by a state supervi-sory body. A pension plan’s most senior governing body (Board of Trustees) must be composed of equal numbers of employee and employer representatives. The various insurance benefits are governed in regulations, with the BVG law specifying the minimum benefits that are to be provided. In case of an underfunding, various measures can be taken such as: a) increasing future contributions, b) revising the investment strategy or c) revising the benefits granted above the legally minimal benefits. The BVG law prescribes how the employer and employees have to jointly fund potential restructurings. Under Swiss pension law the employer cannot recover any surplus from the pension foundation. MAIN RISKSThe main risks to which the pension fund is exposed are: a) mortality risk as if the effective average life result to be longer than the assumptions used based on the official demographic statistics, then pension payments would need to be done for longer periods, b) Market and liquidity risk as if the future rate of return on plan assets is lower to the actual discount rate used to calculate the conversion factor, then additional funds will be needed and c) Death and disability risk as if the amounts or number of effective cases are higher than the indications provided by the demographic statistics this can result in a mismatch of asset-liabilities relation of the pension fund. These risks are regularly monitored by an actuary and the Board of Trustees. The financial situation of the pension fund is presented annually in two reports, in accordance with the requirements of the BVG and IFRS respec-tively.ASSET-LIABILITY MANAGEMENT The Swiss pension fund currently invests in a diverse portfolio of asset classes including equities, bonds, property and alternative investments but do not currently use any more explicit asset-liability matching strategy instruments such as annuity purchase products or longevity swaps. With the investment strategy the board of trustees defines the allocation of asset classes, currencies and other risks, which takes into account requirements from BVG, and the objective of achieving an investment return which together with the contributions paid, is sufficient to main-tain reasonable control over the various funding risks of the plan, The board of trustees is responsible for the investment of the assets and reviews the investment portfolio from time to time at least once a year. The plan assets are deposited in a global custody bank account, whereby the investments in real estate funds are directly managed by a specialized 3rd party administration. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
18733.2 UNITED KINGDOM (UK)Dufry operates another defined benefit pension plan in the UK under specific regulatory frameworks. The Plan has been closed to new members for many years and as well as to existing members. Under the Plan, members are entitled to annual pensions on retirement at age 65 of one sixtieth of revalued pensionable salary for each year of service. Pensionable salary is defined as basic salary less the statu-tory Lower Earnings limit. The Plan is administered by a separate board of trustees which is legally separate from the Company. The Trustees are comprised of repre-sentatives of employer, employees and independent trustees. The trustees are required by law to act in the interest of all relevant beneficiaries and are respon-sible for the investment policy with regards to assets plus the day to day adminis-tration of the scheme. The pension payments are made from the trustee-admin-istered funds; however, where plans are underfunded, the company meets the benefit payment obligation as it falls due.Cost of defined benefit plans20192018IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUK SERVICE COSTSCurrent service costs (7.1)– (7.5)–Fund administration (0.3)– (0.4)–Net interest (0.1) 0.1 (0.1) (0.2)Total pension expenses recognized in the statement of profit or loss (7.5) 0.1 (8.0) (0.2)The current service costs are included in personnel expenses, whereas fund administration expenses are included in the other expenses.Remeasurements employee benefits20192018IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUK Actuarial gains (losses) - experience (4.3) 4.0 (1.3) (3.1)Actuarial gains (losses) - demographic assumptions 1.6 (0.4)– 5.2 Actuarial gains (losses) - financial assumptions (24.4) (28.9) 5.4 15.1 Return on plan assets exceeding expected interest 15.1 21.3 (3.9) (7.2)Total remeasurements recorded in other comprehensive income (12.0) (4.0) 0.2 10.0 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
188The 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 assets20192018IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUK Balance at January 1 189.7 182.5 189.7 203.8 Interest income 1 1.7 5.5 1.5 4.9 Return on plan assets, above interest income 15.2 21.3 (3.9) (7.2)Contributions paid by employer 6.2 2.1 6.0 2.1 Contributions paid by employees 3.6 – 3.7 –Benefits paid (8.9) (6.6) (10.6) (11.1)Transfer payment–– 3.3 –Currency translation– 4.7 – (10.0)Balance at December 31 207.5 209.5 189.7 182.5 1 Expected interest income on plan assets based on discount rate. See actuarial assumptions.Change in present value of defined benefit obligation20192018IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUK Balance at January 1 205.0 177.9 203.4 211.5 Current service costs 7.1 – 7.5 –Interest costs 1.8 5.4 1.5 5.1 Contributions paid by employees 3.6 – 3.7 –Accrual of expected future administration costs 0.3 – 0.4 –Actuarial losses / (gains) - experience 4.4 (3.9) 1.3 3.1 Actuarial losses / (gains) - demographic assumptions (1.6) 0.4 – (5.2)Actuarial losses / (gains) - financial assumptions 24.4 28.9 (5.4) (15.1)Benefits paid (8.9) (6.6) (10.6) (11.1)Past service cost - plan amendments––––Transfer payment–– 3.2 –Currency translation– 4.4 – (10.4)Balance at December 31 236.1 206.5 205.0 177.9 Net defined benefit (obligation) / asset at December 31 (28.6) 3.0 (15.3) 4.6 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
189Actuarial assumptionsThe present value of the defined benefit obligation is determined annually by inde-pendent actuaries using the projected unit credit method. The main actuarial assumptions used are:20192018IN PERCENTAGE (%)SwitzerlandUKSwitzerlandUK Discount rates 0.25 2.10 0.90 3.00 Future salary increases 1.50 – 1.50 –Future pension increases 0.25 1.80 0.25 1.80 Average retirement age (in years) 64 65 64 65 Mortality table (generational tables)2015201820152016The mortality table takes into account changes in the life expectancy. Plan asset structure The structure of categories of plan assets is as follows:20192018IN PERCENTAGE (%)SwitzerlandUKSwitzerlandUKShares 37.4 33.4 34.533.3Bonds 20.2 –22.10.0Real estates 38.0 –42.6–Other 1 4.4 66.6 0.866.7Total100.0 100.0 100.0100.01 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 and alternative invest-ments in Switzerland which are fair-value-level 3 (significant unobservable inputs) representing 27.7 % (2018 27.7 % ) of the total assets.The net outflow of funds due to pension payments can be planned reliably. Con-tributions are paid regularly to the funded pension plans in Switzerland and UK. Furthermore, 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 these pension plans. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
190Plan participants20192018IN THOUSAND OF CHFSwitzerlandUKSwitzerlandUKACTIVE PARTICIPANTSNumber at December 31 (participants) 751 – 774 –Average annual plan salary 84.0 – 82.0 –Average age (years) 42.0 – 41.5 –Average benefit service (years) 12.3 – 10.8 –DEFERRED PARTICIPANTSNumber at December 31 (participants)– 1,114 – 1,194 Average annual plan pension– 5.0 – 5.3 BENEFIT RECEIVING PARTICIPANTSNumber at December 31 (participants) 150 1,095 150 1,053 Average annual plan pension 25.0 4.3 24.0 4.0 20202019IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUKEXPECTED CASH FLOW FORContribution Employer 5.4 2.1 5.6 2.2 Contribution Employees 3.2 – 3.2 –Weighted average duration of defined benefit obligation (years) 21.3 19.0 20.2 19.0 20192018IN MILLIONS OF CHFSwitzerlandUKSwitzerlandUKMATURITY PROFILE OF DEFINED BENEFIT OBLIGATIONExpected payments within 1 year 7.1 5.0 6.9 4.9 Expected payments in year 2 6.9 5.9 6.7 5.1 Expected payments in year 3 6.7 6.0 6.6 6.0 Expected payments in year 4 7.6 6.3 6.4 6.0 Expected payments in year 5 7.0 6.7 7.4 5.5 Expected payments in year 6 and beyond 32.1 32.2 32.4 30.4 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
191Sensitivities 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:SWITZERLANDUK2019 IN MILLIONS OF CHFIncreaseDecreaseIncreaseDecreaseA CHANGE OF 0.5 % IN THE FOLLOWING ASSUMPTIONS WOULD IMPLYDiscount rate (19.1) 24.4 – 20.6 Salary rate 4.5 (4.4)––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 costs2020IN MILLIONS OF CHFSwitzerlandUKCurrent service cost 7.6 –Fund administration expenses 0.3 –Net interest expenses 0.1 0.1 Costs to be recognized in the statement of profit or loss 8.0 0.1 34. FAIR VALUE MEASUREMENTFAIR VALUE OF FINANCIAL INSTRUMENTS CARRIED AT AMORTIZED COSTExcept as detailed in the table Quantitative disclosures fair value measurement hierarchy 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). 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
192Quantitative disclosures fair value measurement hierarchy for assetsFAIR VALUE MEASUREMENT AT DECEMBER 31, 2019 USINGDECEMBER 31, 2019 IN MILLIONS OF CHFTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)CARRYING AMOUNTSASSETS MEASURED AT FAIR VALUEDerivative financial assetsForeign exchange forward contracts - USD 0.2 0.2 0.2 Foreign exchange swaps contracts - EUR 3.5 3.5 3.5 Foreign exchange swaps contracts - OTHER 0.1 0.1 0.1 Cross currency swaps contracts - GBP 1.2 1.2 1.2 Options - USD 3.4 3.4 3.4 Total (Note 37.3) 8.4 8.4 8.4 ASSETS FOR WHICH FAIR VALUES ARE DISCLOSEDLoans and receivablesCredit card receivables 11.7 11.7 12.0 FAIR VALUE MEASUREMENT AT DECEMBER 31, 2018 USINGDECEMBER 31, 2018 IN MILLIONS OF CHFTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)CARRYING AMOUNTSASSETS MEASURED AT FAIR VALUEDerivative financial assetsForeign exchange forward contracts - USD 0.2 0.2 0.2 Foreign exchange swaps contracts - USD 0.5 0.5 0.5 Foreign exchange swaps contracts - EUR 4.5 4.5 4.5 Foreign exchange swaps contracts - OTHER 0.9 0.9 0.9 Cross currency swaps contracts - USD 1.0 1.0 1.0 Cross currency swaps contracts - GBP 0.5 0.5 0.5 Total (Note 37.3) 7.6 7.6 7.6 Financial assets valued at FVOCIEquity investments at FVOCI 1.7 1.7 – 1.7 Total (Note 37.3) 1.7 – 1.7 ASSETS FOR WHICH FAIR VALUES ARE DISCLOSEDLoans and receivablesCredit card receivables 18.1 18.1 18.6 There were no transfers between Level 1 and 2 during the period. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
193Quantitative disclosures fair value measurement hierarchy for liabilities FAIR VALUE MEASUREMENT AT DECEMBER 31, 2019 USINGDECEMBER 31, 2019 IN MILLIONS OF CHFTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)CARRYING AMOUNTSLIABILITIES MEASURED AT FAIR VALUEDerivative financial liabilitiesForeign exchange forward contracts - OTHER 0.1 0.1 0.1 Foreign exchange swaps contracts - EUR 2.9 2.9 2.9 Cross currency swaps contracts - GBP 15.7 15.7 15.7 Put option Dufry Staer Holding Ltd 55.7 55.7 55.7 Other options 3.7 3.7 3.7 Total (Note 37.3 and note 6.1) 78.1 22.4 55.7 78.1 Financial liabilities valued at FVPL Interest rate swaps 2.0 2.0 2.0 Total (Note 38.1) 2.0 2.0 2.0 LIABILITIES FOR WHICH FAIR VALUES ARE DISCLOSEDAt amortized costSenior Notes EUR 800 892.6 892.6 864.1 Senior Notes EUR 750 823.2 823.2 794.3 Total 1,715.8 1,715.8 1,658.4 Floating rate borrowings USD 716.8 716.8 671.8 Floating rate borrowings CHF 53.4 53.4 50.0 Floating rate borrowings GBP 1,068.1 1,068.1 1,210.0 Total 1,838.3 1,838.3 1,931.8 There were no transfers between Level 1 and 2 during the period. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
194FAIR VALUE MEASUREMENT AT DECEMBER 31, 2018 USINGDECEMBER 31, 2018 IN MILLIONS OF CHFTOTALQuoted prices in active markets (Level 1)Significant observable inputs (Level 2)Significant unobservable inputs (Level 3)CARRYING AMOUNTSLIABILITIES MEASURED AT FAIR VALUEDerivative financial liabilitiesForeign exchange forward contracts - USD 0.5 0.5 0.5 Foreign exchange forward contracts - OTHER 1.5 1.5 1.5 Cross currency swaps contracts - USD 5.9 5.9 5.9 Cross currency swaps contracts - GBP 6.7 6.7 6.7 Total (Note 37.3) 14.6 14.6 14.6 Financial liabilities valued at FVPL Interest rate swaps 2.7 2.7 2.7 Total (Note 38.1) 2.7 2.7 2.7 LIABILITIES FOR WHICH FAIR VALUES ARE DISCLOSEDAt amortized costSenior Notes EUR 800 857.8 857.8 893.4Senior Notes EUR 700 805.0 805.0 782.0Total 1,662.8 1,662.8 1,675.4 Floating rate borrowings USD 1,368.5 1,368.5 1,317.8Floating rate borrowings CHF 201.4 201.4 199.3Floating rate borrowings GBP 583.4 583.4 560.6Total 2,153.3 2,153.3 2,077.7 There were no transfers between Level 1 and 2 during the period. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
19535. CAPITAL RISK MANAGEMENTCapital comprises equity attributable to the equity holders of the parent less hedging and revaluation reserves for unrealized gains or losses on net investments, 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 business 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 borrow-ings, less cash and cash equivalents. 35.1 GEARING RATIOThe following ratio compares owner’s equity to borrowed funds:IN MILLIONS OF CHF31.12.201931.12.2018Cash and cash equivalents (553.5) (538.2)Borrowings, current 53.2 58.0 Borrowings, non-current 3,602.2 3,766.3 Borrowings, net 3,101.9 3,286.1 Equity attributable to equity holders of the parent 2,645.3 2,898.8 ADJUSTED FORAccumulated hedged gains / (losses) (64.1) (62.3)Effects from transactions with non-controlling interests 1 1,375.7 1,355.1 Total capital 2 3,956.9 4,191.6 Total net debt and capital 7,058.8 7,477.7 Gearing ratio 43.9 % 43.9 % 1 Represents the excess paid (received) above fair value on shares acquired (sold) from non-controlling interests as long as there is no change in control (IFRS 10.23).2 Includes all capital and reserves of Dufry that are managed as capital.Dufry did not hold collateral of any kind at the reporting dates. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
19635.2 CATEGORIES OF FINANCIAL INSTRUMENTSAT DECEMBER 31, 2019FINANCIAL ASSETSIN MILLIONS OF CHFat amortized costat FVOCI (non-recyclable)at FVPLSUBTOTALNON-FINANCIAL ASSETS 1TOTALCash and cash equivalents 553.5 –– 553.5 – 553.5 Trade and credit card receivables 44.2 –– 44.2 – 44.2 Other accounts receivable 226.7 – 8.5 235.2 186.8 422.0 Other non-current assets 238.2 – 0.2 238.4 64.5 302.9 Total 1,062.6 – 8.7 1,071.3 FINANCIAL LIABILITIESIN MILLIONS OF CHFat amortized costat FVPLSUBTOTALNON-FINANCIAL LIABILITIES 1TOTALTrade payables 645.6 – 645.6 – 645.6 Borrowings, current 53.2 – 53.2 – 53.2 Lease obligations, current 1,085.7 – 1,085.7 – 1,085.7 Other liabilities 749.2 24.4 773.6 53.5 827.1 Borrowings, non-current 3,642.3 – 3,642.3 (40.1) 3,602.2 Lease obligations, non-current 3,319.0 – 3,319.0 – 3,319.0 Other non-current liabilities 88.3 – 88.3 – 88.3 Total 9,583.3 24.4 9,607.7 1 Non-financial assets or non-financial liabilities comprise prepaid expenses (Incl. deferred bank fees set off from borrowings) and deferred income, which will not generate a cash outflow or inflow as well as other tax positions.AT DECEMBER 31, 2018FINANCIAL ASSETSIN MILLIONS OF CHFLoans and receivablesat FVOCI (non-re-cyclable)at FVPLSUBTOTALNON-FINANCIAL ASSETSTOTALCash and cash equivalents 538.2 –– 538.2 – 538.2 Financial instruments at fair value through profit and loss– 1.7 – 1.7 – 1.7 Trade and credit card receivables 62.6 –– 62.6 – 62.6 Other accounts receivable 220.0 – 7.6 227.6 246.5 474.1 Other non-current assets 134.9 –– 134.9 124.7 259.6 Total 955.7 1.7 7.6 965.0 FINANCIAL LIABILITIESIN MILLIONS OF CHFat amortized costat FVPLSUBTOTALNON-FINANCIAL LIABILITIESTOTALTrade payables 640.4 – 640.4 – 640.4 Borrowings, current 58.0 – 58.0 – 58.0 Other liabilities 761.4 17.3 778.7 81.4 860.1 Borrowings, non-current 3,790.9 – 3,790.9 (24.6) 3,766.3 Other non-current liabilities 1.1 – 1.1 61.7 62.8 Total 5,251.8 17.3 5,269.1 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
19735.3 NET INCOME BY IFRS 9 VALUATION CATEGORYFinancial Assets at December 31, 2019IN MILLIONS OF CHFAT AMORTIZED COSTAT FVOCI (NON-RECYCLABLE)AT FVPLTOTALInterest income 28.4 – 0.1 28.5 Other finance income 2.1 – 40.2 42.3 From interest 30.5 40.3 70.8 Foreign exchange gain (loss) 1 (59.6)– 32.5 (27.1)Impairments / allowances 2 (6.7)–– (6.7)Total – from subsequent valuation (66.3)– 32.5 (33.8)Net (expense) / income (35.8)– 72.8 37.0 Financial Liabilities at December 31, 2019IN MILLIONS OF CHFAT AMORTIZED COSTAT FVPLTOTALInterest expenses and arrangement fees (352.1)– (352.1)Other finance expenses (0.7) (18.2) (18.9)From interest (352.8) (18.2) (371.0)Foreign exchange gain (loss) 1 70.4 (53.8) 16.6 Total – from subsequent valuation 70.4 (53.8) 16.6 Net (expense) / income (282.4) (72.0) (354.4)1 This position includes the foreign exchange gain (loss) recognized on third party and intercompany financial assets and liabilities through consolidated statement of profit or loss.2 This position includes net income / expense from released impairments, allowances or recoveries during the period less the increase of impairments or allowances. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
198Financial Assets at December 31, 2018IN MILLIONS OF CHFLOANS AND RECEIVABLESAT FVOCI (NON-RECYCLABLE)AT FVPLTOTALInterest income 21.7 – 0.1 21.8 Other finance income 0.3 – 35.9 36.2 From interest 22.0 – 36.0 58.0 Foreign exchange gain (loss) 1 (57.1)– 9.5 (47.6)Impairments / allowances 2 (2.1)–– (2.1)Total – from subsequent valuation (59.2)– 9.5 (49.7)Net (expense) / income (37.2)– 45.5 8.3 Financial Liabilities at December 31, 2018IN MILLIONS OF CHFAT AMORTIZED COSTAT FVPLTOTALInterest expenses and arrangement fees (168.6)– (168.6)Other finance expenses (5.4) (20.9) (26.3)From interest (174.0) (20.9) (194.9)Foreign exchange gain (loss) 1 68.2 (26.0) 42.2 Total – from subsequent valuation 68.2 (26.0) 42.2 Net (expense) / income (105.8) (46.9) (152.7)1 This position includes the foreign exchange gain (loss) recognized on third party and intercompany financial assets and liabilities through consolidated statement of profit or loss.2 This position includes net income / expense from released impairments, allowances or recoveries during the period less the increase of impairments or allowances.36. FINANCIAL RISK MANAGEMENT OBJECTIVESAs a global retailer, Dufry has worldwide activities which are financed in different currencies and are consequently affected by fluctuations of foreign exchange and interest rates. Dufry’s treasury manages the financing of the operations through centralized credit facilities to ensure an adequate allocation of these resources and simultaneously minimize the potential currency and 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. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
19937. 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 impact on statement of profit or loss 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 struc-ture, 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.37.1 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.37.2 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. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
200Foreign Currency ExposureIN MILLIONS OF CHFUSDEUROGBPBRLOTHERTOTALDECEMBER 31, 2019Monetary assets 2,072.6 336.2 297.9 122.2 513.0 3,341.9 Monetary liabilities 2,067.7 1,050.7 1,425.3 289.8 451.7 5,285.2 Net currency exposure before foreign currency contracts and hedging 4.9 (714.5) (1,127.4) (167.6) 61.3 (1,943.3)Foreign currency contracts (329.4) 696.9 1,111.0 219.1 (74.2) 1,623.4 Hedging 267.7 ––– (94.2) 173.5 Net currency exposure (56.8) (17.6) (16.4) 51.5 (107.1) (146.4)DECEMBER 31, 2018Monetary assets 1,314.0 1,086.9 215.6 23.3 454.1 3,093.9 Monetary liabilities 2,261.6 1,706.0 728.1 32.2 277.5 5,005.4 Net currency exposure before hedging (947.6) (619.1) (512.5) (8.9) 176.6 (1,911.5)Foreign currency contracts 543.1 527.7 501.0 15.2 (16.2) 1,570.8 Hedging 271.4 ––– (96.5) 174.9 Net currency exposure (133.1) (91.4) (11.5) 6.3 63.9 (165.8)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. Conse-quently, the related exchange differences are presented in other comprehensive income and thereafter as translation reserve in equity and Dufry has entered into cross currency swaps to reduce the currency exposure.The foreign exchange rate sensitivity is calculated by aggregation of the net cur-rency exposure of Dufry entities at December 31 of the respective year. The values and risk disclosed here are the hedged and remaining net currency exposure assuming a 5 % appreciation of the CHF against all other currencies. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
201A positive result indicates a profit, before tax in the statement of profit or loss or in the hedging and revaluation reserves when the CHF strengthens against the relevant currency.IN MILLIONS OF CHF31.12.201931.12.2018Effect on profit or loss based on USD 2.8 6.7 Other comprehensive income based on USD 13.4 13.6 Effect on profit or loss based on EUR 0.9 4.6 Effect on profit or loss based on GBP 0.8 0.6 Effect on profit or loss based on BRL (2.6)–Reconciliation to categories of financial instruments:IN MILLIONS OF CHF31.12.201931.12.2018FINANCIAL ASSETSTotal financial assets held in foreign currencies (see above) 3,341.9 3,093.9 less intercompany financial assets in foreign currencies (2,847.4) (2,874.7)Third party financial assets held in foreign currencies 494.5 219.2 Third party financial assets held in reporting currencies 576.8 745.8 Total third party financial assets 1 1,071.3 965.0 FINANCIAL LIABILITIESTotal financial liabilities held in foreign currencies (see above) 5,285.2 5,005.4 less intercompany financial liabilities in foreign currencies (1,607.0) (1,167.0)Third party financial liabilities held in foreign currencies 3,678.2 3,838.4 Third party financial liabilities held in reporting currencies 5,929.5 1,430.7 Total third party financial liabilities 1 9,607.7 5,269.1 1 See note 35.2 Categories of financial instruments.37.3 FOREIGN EXCHANGE FORWARD 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 for-ward and options contracts only where needed.The following table shows the contracts or underlying principal amounts and fair values of derivative financial instruments, including foreign exchange forwards and foreign exchange swaps as well as cross currency interest rate swaps. 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 Decem-ber 31 of each year. During 2019, Dufry has entered into a number of cross currency swap contracts in order to optimize interest expenses, which led to a material increase of contractual underlying amounts as of December 31, 2019 compared to previous year.IN MILLIONS OF CHFCONTRACT OR UNDERLYING PRINCIPAL AMOUNTPOSITIVE FAIR VALUENEGATIVE FAIR VALUEDecember 31, 2019 2,893.9 8.4 22.4 December 31, 2018 2,044.7 7.6 14.6 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
20238. 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 duration of the debt drawings. The levels of the hedging activities are evaluated regularly and may be adjusted in order to reflect the development of the various parameters.38.1 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. The fair values are determined by reference to market prices or standard pricing models that used observable market inputs. IN MILLIONS OF CHFCONTRACT OR UNDER-LYING PRINCIPAL AMOUNTPOSITIVE FAIR VALUENEGATIVE FAIR VALUEDecember 31, 2019 677.5 – 2.0 December 31, 2018 687.0 – 2.7 38.2 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 2019 would decrease by CHF 39.0 (2018: decrease by CHF 37.0) million. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
20338.3 ALLOCATION OF FINANCIAL ASSETS AND LIABILITIES TO INTEREST CLASSESIN %IN MILLIONS OF CHFAT DECEMBER 31, 2019Average variable interest rateAverage fixed interest rateVariable interest rateFixed interest rateTotal interest bearingNon-interest bearing TOTAL Cash and cash equivalents0.5 % 1.5 % 71.6 39.5 111.1 442.4 553.5 Trade and credit card receivables––– 44.2 44.2 Other accounts receivable1.1 % 6.3 % 0.4 0.2 0.6 234.6 235.2 Other non-current assets6.1 % 2.0 % 27.9 2.6 30.5 207.9 238.4 Financial assets 99.9 42.3 142.2 929.1 1,071.3 Trade payables––– 645.5 645.5 Borrowings, current2.6 % 4.3 % 48.3 4.3 52.6 0.6 53.2 Other liabilities––– 773.6 773.6 Borrowings, non-current2.9 % 2.3 % 1,948.1 1,694.2 3,642.3 – 3,642.3 Lease obligations1.6 % 4.2 % 2.6 4,402.2 4,404.8 – 4,404.8 Other non-current liabilities––– 88.3 88.3 Financial liabilities 1,999.0 6,100.7 8,099.7 1,508.0 9,607.7 Net financial liabilities 1,899.1 6,058.4 7,957.5 578.9 8,536.4 IN %IN MILLIONS OF CHFAT DECEMBER 31, 2018Average variable interest rateAverage fixed interest rateVariable interest rateFixed interest rateTotal interest bearingNon-interest bearing TOTAL Cash and cash equivalents0.6 % 2.5 % 214.5 23.6 238.1 300.1 538.2 Trade and credit card receivables––– 62.6 62.6 Other accounts receivable1.6 % 4.9 % 0.5 0.3 0.8 228.5 229.3Other non-current assets6.4 % 4.0 % 37.1 2.1 39.2 95.7 134.9 Financial assets 252.1 26.0 278.1 686.9 965.0 Trade payables––– 640.4 640.4 Borrowings, current5.5 % 4.5 % 30.7 3.9 34.6 23.4 58.0 Other liabilities––– 778.7 778.7 Borrowings, non-current2.8 % 3.4 % 2,088.0 1,701.9 3,789.9 1.0 3,790.9 Other non-current liabilities––– 1.1 1.1 Financial liabilities 2,118.7 1,705.8 3,824.5 1,444.6 5,269.1 Net financial liabilities 1,866.6 1,679.8 3,546.4 757.7 4,304.1 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
20439. 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.The main banks where the Group keeps net assets positions hold a credit rating of A – or higher.39.1 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. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
20540. 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 27).40.1 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, 2019 IN MILLIONS OF CHF1 – 6 MONTHS6 – 12 MONTHS1 – 2 YEARSMORE THAN 2 YEARS TOTAL Cash and cash equivalents 570.1 19.6 –– 589.7 Trade and credit card receivables 44.1 0.1 –– 44.2 Other accounts receivable 214.2 12.5 –– 226.7 Other non-current assets 2.6 3.1 16.5 241.5 263.7 Total cash inflows 831.0 35.3 16.5 241.5 1,124.3 Trade payables 644.9 0.7 –– 645.6 Borrowings, current 48.0 39.0 –– 87.0 Other liabilities 748.0 1.2 –– 749.2 Borrowings, non-current 37.1 39.3 144.6 3,762.8 3,983.8 Lease obligations 517.4 568.3 796.3 3,146.1 5,028.1 Other non-current liabilities–– 88.3 – 88.3 Total cash outflows 1,995.4 648.5 1,029.2 6,908.9 10,582.0 AT DECEMBER 31, 2018 IN MILLIONS OF CHF1 – 6 MONTHS6 – 12 MONTHS1 – 2 YEARSMORE THAN 2 YEARS TOTAL Cash and cash equivalents 545.7 19.8 –– 565.5 Trade and credit card receivables 62.0 0.6 –– 62.6 Other accounts receivable 219.1 2.7 ––221.8Other non-current assets 2.8 2.9 41.9 90.1 137.7 Total cash inflows 829.6 26.0 41.9 90.1 987.6 Trade payables 640.4 ––– 640.4 Borrowings, current 66.0 9.1 –– 75.1 Other liabilities 759.9 1.5 –– 761.4 Borrowings, non-current 59.7 52.9 115.2 4,050.9 4,278.7 Other non-current liabilities––– 1.1 1.1 Total cash outflows 1,526.0 63.5 115.2 4,052.0 5,756.7 40.2 REMAINING MATURITIES FOR DERIVATIVE FINANCIAL INSTRUMENTSDufry holds derivative financial instruments at year-end of net CHF – 15.6 millions with maturity below 6 months. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
20641. 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 CHF20192018PURCHASE OF GOODS FROMHudson RPM, literature and publications 16.5 –Folli Follie Group, luxury goods 1– 1.2 PURCHASE OF SERVICES FROMFolli Follie Group, rent of building 1– 0.8 Pension Fund Dufry, post-employment benefits 6.1 6.2 ACCOUNTS PAYABLES AT DECEMBER 31Hudson RPM 0.1 –Pension Fund Dufry 0.8 1.6 1 Folli Follie is a company controlled by George Koutsoulioutsos, a member of the board of directors until June 2018. The values 2018 of Folli Follie correspond to the period January to June 2018.The transactions with associates are the following:IN MILLIONS OF CHF20192018PURCHASE OF SERVICES FROMLojas Francas de Portugal S.A. (2.7) (2.3)Nuance Group (Chicago) LLC (0.2) (0.3)SALES OF SERVICES TOLojas Francas de Portugal S.A. 1.5 2.6 Nuance Basel LLC (Sochi) 0.4 0.5 Nuance Group (Chicago) LLC 0.7 0.9 SALES OF GOODS TOLojas Francas de Portugal S.A. 41.9 38.0 Nuance Basel LLC (Sochi) 3.6 3.5 Nuance Group (Chicago) LLC 1.7 4.2 ACCOUNTS RECEIVABLES AT DECEMBER 31Lojas Francas de Portugal S.A. 1.6 6.7 Nuance Basel LLC (Sochi) 10.9 10.7 Nuance Group (Chicago) LLC 1.2 0.8 NCM Brookstone Stores Georiga, LLC 0.4 –ACCOUNTS PAYABLES AT DECEMBER 31Lojas Francas de Portugal S.A. 0.1 0.1 Nuance Group (Chicago) LLC 0.2 0.3 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
207The compensation to members of the Board of Directors and the Global 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 CHF20192018BOARD OF DIRECTORSNumber of directors911Current employee benefits 6.2 7.2 Post-employment benefits 0.3 0.3 Total compensation 6.5 7.5 GLOBAL EXECUTIVE COMMITTEENumber of members106Current employee benefits 16.9 12.0 Post-employment benefits 1.8 1.6 Share-based payments 1 5.1 8.5 Total compensation 23.8 22.1 1 Expenses accrued during the year for members of the Global Executive Committee.For further information regarding participations and compensation to members of the Board of Directors or Global Executive Committee, please refer to the remuneration report at the end of the annual report. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
20842. ACCOUNTING POLICY CHANGESThe table below shows the changes in presentation or valuation of the financial positions as of January 1, 2019 after adopting of IFRS 16 and IFRIC 23. The com-parative figures presented during 2018 have not been restated as the company applied the modified retrospective approach permitted by IFRS.This table shows all accounts of the statement of financial position and the effects of the IFRS 16 and IFRIC 23 implementation: IN MILLIONS OF CHF2018 AS PUBLISHEDCORRECTIONSRESTATED BALANCE 01.01.2019ASSETSProperty, plant and equipment 644.3 – 644.3 Right-of-use assets– 4,796.9 4,796.9 Intangible assets 3,516.8 (3.6) 3,513.2 Goodwill 2,601.5 – 2,601.5 Investments in associates 35.6 – 35.6 Deferred tax assets 138.4 – 138.4 Net defined benefit asset 4.8 – 4.8 Other non-current assets 259.6 (53.3) 206.3 Non-current assets 7,201.0 4,740.0 11,941.0 Inventories 1,062.7 – 1,062.7 Trade and credit card receivables 62.6 – 62.6 Other accounts receivable 475.8 (51.6) 424.2 Income tax receivables 50.3 – 50.3 Cash and cash equivalents 538.2 – 538.2 Current assets 2,189.6 (51.6) 2,138.0 Total assets 9,390.6 4,688.4 14,079.0 LIABILITIES AND SHAREHOLDERS’ EQUITYEquity attributable to equity holders of the parent 2,898.8 – 2,898.8 Non-controlling interests 442.9 – 442.9 Total equity 3,341.7 – 3,341.7 Borrowings 3,766.3 – 3,766.3 Lease obligations– 3,707.9 3,707.9 Deferred tax liabilities 425.9 – 425.9 Provisions 1 82.4 (32.8) 49.6 Post-employment benefit obligations 33.4 – 33.4 Other non-current liabilities 62.8 (61.4) 1.4 Non-current liabilities 4,370.8 3,613.7 7,984.5 Trade payables 640.4 – 640.4 Borrowings 58.0 – 58.0 Lease obligations– 1,076.4 1,076.4 Income tax payables 1 64.8 32.8 97.6 Provisions 54.8 – 54.8 Other liabilities 860.1 (34.5) 825.6 Current liabilities 1,678.1 1,074.7 2,752.8 Total liabilities 6,048.9 4,688.4 10,737.3 Total liabilities and shareholders’ equity 9,390.6 4,688.4 14,079.0 1 IFRIC 23 (note 32). 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
209The weighted average incremental borrowing rate (IBR) applied to the lease obli-gations at the date of initial application was 4.24 %. The IBR for 5 year leases and for 10 year leases was for CHF 1.50 %/1.88 %, for USD 4.48 %/4.59 % and for EUR 1.76 %/2.40 % respectively.43. STATEMENT OF PROFIT OR LOSS, CHANGE IN ACCOUNTING POLICIESDufry reclassified the Statement of Profit or Loss and changed its accountingPolicies in order to better reflect the performance of the Group. The comparativefigures for 2018 are presented accordingly to reflect the changes.IN MILLIONS OF CHFFOOTNOTEPublished 2018Reclassification2018Net sales 8,455.8 8,455.8 Advertising income 229.1 229.1 Turnover 8,684.9 8,684.9 Cost of sales (3,489.2) (3,489.2)Gross profit 5,195.7 5,195.7 Selling expenses1, 7 (2,580.5) 2,580.5 –Lease expenses1, 5– (2,494.7) (2,494.7)Personnel expenses (1,175.2)– (1,175.2)General expenses10 (403.5) 403.5 –Other expenses10 ,4, 2, 7– (630.2) (630.2)Other income3– 45.5 45.5 Share of result of associates6 3.8 (3.8)–EBITDA (discontinued expression) 1,040.3 ––Depreciation, amortization and impairment (571.9)– (571.9)Linearization5 (47.7) 47.7 –Other operational result2, 3 (49.3) 49.3 –Operating profit / (loss) 371.4 (2.2) 369.2 Interest income8 64.7 (64.7)–Interest expense9 (196.4) 196.4 –Foreign exchange gain / (loss) (5.5)– (5.5)Finance income6, 8– 68.5 68.5 Finance expenses4, 9– (198.0) (198.0)Profit / (loss) before taxes 234.2 – 234.2 Income tax (98.8) (98.8)Net profit / (loss) 135.4 135.4 ATTRIBUTABLE TONon-controlling interests 63.6 63.6 Equity holders of the parent 71.8 71.8 EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT IN CHFBasic earnings / (loss) per share 1.38 1.38 Diluted earnings / (loss) per share 1.38 1.38 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
210FootnotesCONCEPT (INCLUDES FINANCIAL IMPACT IN MILLIONS OF CHF)Reclassification fromReclassification to20181. Concession fee expensesSelling expensesLease expenses 2,447.0 2. Other operating expensesOther operational resultOther expenses 94.8 3. Other operating incomeOther operational resultOther income 45.5 4. Impairment financial assetsOther expensesFinance expenses 1.6 5. LinearizationLinearizationLease expenses 47.7 6. Share of result from associatesShare of result from associatesFinance income (3.8)7. Sales related expensesSelling expensesOther expenses 133.6 8. Interest incomeInterest incomeFinance income (64.7)9. Interest expensesInterest expensesFinance expenses 196.4 10. Other expensesGeneral expensesOther expenses 403.5 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
211To the General Meeting of Dufry AG, BaselBasel, March 11, 2020Statutory auditor’s report on the audit of the consolidated financial statementsOpinionWe have audited the consolidated financial statements of Dufry AG and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at December 31, 2019 and the consolidated statement of profit or loss, and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.In our opinion, the consolidated financial statements (pages 116 to 209) give a true and fair view of the consolidated financial position of the Group as at December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.Basis for opinionWe conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsi-bilities for the Audit of the Consolidated Financial Statements section of our report.We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the consolidated financial statements. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
212Valuation of goodwill / intangible assets with indefinite useful lifeArea of FocusAs of December 31, 2019, the Group has recorded intangibles assets with indefinite useful lives of CHF 2,879 million, of which CHF 2,611 million relate to goodwill. The carrying value of goodwill and other intangible assets with indefinite useful lives is tested annually for impairment. The impairment assessment for goodwill and other intangible assets with indefinite useful lives is dependent on the estimation of future cash flows and the discount rates applied. Due to the significance of the carrying values of goodwill and other intangible assets with indefinite useful lives and the judgment involved in performing the impairment tests, this matter was considered to be significant to our audit. The accounting policies regarding goodwill and other intangible assets with indefinite useful lives applied by the Group are explained in the notes to the consolidated financial statements in sections 2.3a, 2.3o and 2.3q. Further details on intangible assets with indefinite useful lives and the annual impairment tests are disclosed in notes 3, 18 and 18.1 to the consolidated financial statements.Our audit responseWe tested, with the support of our valuation specialists, the appropriateness of the Group’s valuation model and evaluated management’s key assumptions, including growth rates used in the cash flow projections during the forecast period, the terminal growth rate assumption and the discount rate. Further, we assessed the historical accuracy of management’s estimates and considered their ability to produce accurate long-term forecasts. Our work included an evaluation of management’s sensitivity analysis on changes to the key assumptions, to quantify the downside changes that could result in an impairment.Our audit procedures did not lead to any reservations concerning the valuation of goodwill and other intangible assets with indefinite useful lives.Valuation of concession rightsArea of FocusAs of December 31, 2019, the Group has capitalized concession rights with definite useful lives of CHF 2,859 million. Acquired concession rights are measured at cost as of the date of the acquisition. Concessions rights that were acquired as part of a business combination are measured at their fair value as of the date of the acquisition. Subsequently, all capitalized concessions are amortized over their useful lives. Management assesses quarterly whether there are indi-cators for impairment of a capitalized concession right. Whenever such indicators are identified, the carrying value of a concession right is tested for impairment. Due to the significance of the carrying values of concession rights and the significant judgment involved in performing impairment tests or in assessing future economic benefits of a contract, this matter was significant to our audit. In particular, the fair value estimates of the economic benefits of a contract were sensitive to significant assumptions such as the discount rate, forecasted growth rates, including terminal growth rate, which are affected by expectations about future market or economic conditions. The accounting policies regarding concession rights applied by the Group are explained in the notes to the consolidated financial statements in sections 2.3o. Further details on concession rights are disclosed in notes 3 and 18 to the consolidated financial statements. Our audit responseWe assessed management’s process for identifying indicators of potential impairment. For those concession rights for which there were impairment indicators, we performed audit procedures, with the support of our valuation specialists, that included, among others, assessing methodologies and testing the significant assumptions and the underlying data used by the Company in its analysis. We performed analyses over the significant assumptions used by management including the projected sales growth, the growth rate used to extrapolate gross margin, lease expense and lease payments and the discount rates. We performed a lookback analysis assessing budget to actual by comparing actualized passenger travel growth rates to the Company’s actual sales growth rates and independently recalculating the discount rates used by management in the impairment models. Further, we performed sensitivity analyses of significant assump-tions to evaluate the changes in management’s calculated recoverable amounts that would result from changes in the assumptions.Our audit procedures did not lead to any reservations concerning the valuation of concession rights. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
213Accounting for lease contracts under IFRS 16Area of FocusAs of December 31, 2019, the Group has right of use assets of CHF 4,328 million and lease obligations of CHF 4,405 million (current and non-current). These represent 32% and 33% of the Group’s total assets and total liabilities, respec-tively. The Group adopted IFRS 16 leases as of January 1, 2019 and the implementation considerations are disclosed in the notes to the financial statements (notes 2.4 and 42). Key assumptions regarding lease accounting are disclosed in the notes (note 8, 17, 28, and 29). Due to the risk of incompleteness of leases included in the IFRS 16 assessment and inappropriate accounting assessment of lease contracts at transition and ongoing, this matter was considered significant to our audit.Our audit responseWe obtained an understanding of the Group’s accounting policies and processes implemented including the process to identify the full population of leases, the determination of the minimum lease payments, whether fixed or in- substance fixed and the termination and extension options, to assess the right of use assets and lease obligations. We assessed the completeness of the lease population used in management’s assessment considered for IFRS 16 accounting. We evaluated management’s analysis regarding the minimum lease payments by selecting a sample of the underlying contracts and analyzing the Group’s assessment. We also tested a sample of additions or changes to lease contracts and analyzed whether these represented lease modifications or should be accounted for as separate leases.Our audit procedures did not lead to any reservations concerning the right of use assets and lease obligations.Other information in the annual reportThe Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the statutory financial statements and the remuneration report and our auditor’s reports thereon.Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance conclusion thereon.In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 3 Financial Report
Consolidated Financial Statements
DUFRY ANNUAL REPORT 2019
214Responsibility of the Board of Directors for the consolidated financial statementsThe Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.Auditor’s responsibilities for the audit of the consolidated financial statementsOur objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstate-ments can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.Report on other legal and regulatory requirementsIn accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.We recommend that the consolidated financial statements submitted to you be approved.Ernst & Young Ltd/s/ Jolanda Dolente /s/ Siro BonettiJolanda Dolente Siro BonettiLicensed audit expert Licensed audit expert(Auditor in charge) 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
215STATEMENT OFPROFIT OR LOSSFOR THE YEAR ENDED DECEMBER 31, 2019 IN THOUSANDS OF CHFNOTE20192018Financial income 15 8,229 Franchise fee income 3,091 2,713 Total income 3,106 10,942 Personnel expenses8 (17,536) (14,962)General and administrative expenses (4,973) (4,315)Management fee expenses (5,437) (17,889)Impairment of investments in subsidiaries7 (390,000)–Financial expenses (9,035) (2,316)Taxes (2,195) (2,032)Total expenses (429,176) (41,514)(Loss) / profit for the year (426,070) (30,572) 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
216STATEMENT OF FINANCIAL POSITIONAT DECEMBER 31, 2019IN THOUSANDS OF CHF NOTE31.12.201931.12.2018ASSETSCash and cash equivalents 17 217 Current receivables third parties 12,954 137 Current receivables subsidiaries 415 3,248 Current receivables other group companies 371 –Prepaid expenses and accrued income 13 107 Current assets 13,770 3,709 Investments in subsidiaries3 3,848,415 4,238,415 Non-current assets 3,848,415 4,238,415 Total assets 3,862,185 4,242,124 LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent interest bearing liabilities 17,831 121 Current liabilities third parties 3,373 1,661 Current liabilities participants and bodies 1,034 909 Current liabilities subsidiaries 4,424 4,571 Current liabilities other group companies 36 –Deferred income and accrued expenses 27,791 43,945 Current liabilities 54,489 51,207 Non-current interest-bearing liabilities subsidiaries 408,050 175,717 Non-current liabilities 408,050 175,717 Total liabilities 462,539 226,924 Share capital5.1 252,836 269,359 Legal capital reservesReserve from capital contribution5.1 3,420,326 3,983,404 Reserve from capital contribution for own shares held at subsidiaries5.1 86,700 108,699 Legal retained earningsOther legal reserves 5,927 5,927 Voluntary retained earningsResults carried forward12 59,927 90,499 (Loss) / profit for the year12 (426,070) (30,572)Treasury shares6– (412,116)Shareholders’ equity 3,399,646 4,015,200 Total liabilities and shareholders’ equity 3,862,185 4,242,124 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
217NOTES TO THE FINANCIAL STATEMENTS 1. 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.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 PREPARATIONWe have prepared the statutory financial statements in accordance with the accounting principles as set out in Art. 957 to Art. 963b of the Swiss Code of Obligations (the “CO”). Since we have prepared our consolidated financial state-ments in accordance with the International Financial Reporting Standards (“IFRS”), a recognized accounting standard, we have, in accordance with the CO, elected to forego presenting the statement of cash flows, the additional disclosures and the management report otherwise required by the CO. Our financial statements may be influenced by the creation and release of excess reserves.All amounts are presented in Swiss francs (“CHF”), unless otherwise indicated. Group companies include all legal entities, which are directly or indirectly owned and controlled by the Company.Where not prescribed by law, the significant accounting and valuation principles applied are described below. 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
2182.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESInvestments in subsidiariesInvestments are held at historical cost. The Company reviews the carrying amount of these investments annually, and if events and circumstances suggest that this amount may not be recoverable, an impairment is recognized in the statement of profit or loss.Treasury sharesTreasury shares are recognized at acquisition cost and deducted from shareholders’ equity. Gains or losses arising out of transactions with treasury shares are recorded in the statement of profit or loss.Share-based paymentsThe Company accrues personnel expenses related to share-based payment plans for the respective period in deferred income and accrued liabilities. Any difference between the acquisition costs of treasury shares and the accrual created for the plan will be recognized in the statement of profit or loss, when the shares are assigned to the member of the share-based payment plans. Current and non-current interest-bearing liabilitiesInterest-bearing liabilities are recognized at their nominal value in the statement of financial position.Exchange rate differencesAll assets and liabilities denominated in foreign currencies are translated into CHF using year-end exchange rates, except investments in subsidiaries, which are rec-ognized at historical values. Net unrealized exchange losses are recognized in the statement of profit or loss and net unrealized gains are deferred within accrued expenses. Realized exchange gains or losses arising from business transactions denominated in foreign currencies are recognized in the statement of profit or loss. 3. DIRECT SUBSIDIARIESSHARE IN CAPITAL AND VOTING RIGHTSSHARE CAPITALIN THOUSANDS OF CHF2019201820192018Dufry 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 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
2194. SIGNIFICANT SHAREHOLDERS’ PARTICIPATION IN PERCENTAGE (%) OF OUTSTANDING REGISTERED SHARES31.12.201931.12.2018Group of shareholders consisting of various companies 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 Koutsolioutsos15.53 % 16.34 % State of Qatar6.92 % 6.92 % Government of Singapore5.05 % 5.05 % Compagnie Financiere Rupert5.00 % 5.00 % Franklin Resources, Inc.4.95 % 5.09 % Black Rock, Inc.4.34 % 3.25 % Hainan Province Cihang Foundation–20.92 % 5. SHARE CAPITAL5.1 ORDINARY SHARESIN THOUSANDS OF CHFNUMBER OF SHARESSHARE CAPITALRESERVE FROM CAPITAL CONTRIBUTIONBalance at January 1, 2018 53,871,707 269,359 4,290,806 Reserves for treasury shares held by the Company’s subsidiaries–– (108,699)Distribution–– (198,703)Balance at December 31, 2018 53,871,707 269,359 3,983,404 Share capital reduction (3,304,541) (16,523) (385,330)Distribution–– (199,748)Reclass from reserve from capital contribution for own shares held at subsidiaries–– 22,000 Balance at December 31, 2019 50,567,166 252,836 3,420,326 5.2 CONDITIONAL SHARE CAPITAL IN SHARESCHFBalance at January 1, 2018 888,432 4,442,160 Balance at December 31, 2018 888,432 4,442,160 Balance at December 31, 2019 888,432 4,442,160 5.3 AUTHORIZED SHARE CAPITAL IN SHARESNOMINAL VALUE IN CHFBalance at January 1, 2018––Balance at December 31, 2018––Shareholders’ resolution as of May 9, 2019 5,000,000 25,000,000 Balance at December 31, 2019 5,000,000 25,000,000 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
2206. TREASURY SHARES IN THOUSANDS OFSHARESCHFBalance at January 1, 2018 84.2 12,504 Assigned to holders of PSU Awards 2015 (97.3) (14,310)Share purchases 3,392.2 413,922 Balance at December 31, 2018 3,379.1 412,116 Assigned to holders of PSU & RSU Awards 2016 (234.5) (26,480)Share capital reduction (3,304.5) (401,853)Share purchases 159.9 16,217 Balance at December 31, 2019––7. IMPAIRMENT OF INVESTMENT IN DUFRY HOLDINGS & INVESTMENTS AGDufry AG has reviewed the valuation of its investment in Dufry Holdings & Invest-ments AG, since its subsidiaries in South America have been adversely affected by market developments. Based on the assessment performed, the Company recog-nized an impairment of CHF 390 million.8. PERSONNEL EXPENSESThe personnel expenses correspond to the share-based payments for selected members of the senior management, as described in Note 25 of the Company’s consolidated financial statements.Dufry AG employed less than 10 employees in 2019 and 2018. 9. GUARANTEE COMMITMENT REGARDING SWISS VALUE ADDED TAX (VAT)The Company belongs to the Swiss value added tax (VAT) group of Dufry Interna-tional AG, and thus carries joint liability to the Swiss federal tax administration for VAT. Members of the VAT group are: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 AG 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
22110. CONTINGENT LIABILITIESThe Company jointly and severally with Dufry International AG and Dufry Finan-cial Services B. V. guaranteed the following credit facilities:DRAWN AMOUNT IN CHFIN MILLIONS OFMATURITYCOUPON RATECURRENCYNOMINAL AMOUNT IN LOCAL CURRENCY31.12.201931.12.2018MAIN BANK CREDIT FACILITIESCommitted 5-year term loan03.11.2022 USD 700.0 677.5 687.0 Committed 5-years term loan (multi-currency)03.11.2022 EUR 500.0 564.2 551.4 5 + 1 + 1 - year revolving credit facility (multi-currency)03.11.2024 EUR 1,300.0 706.4 700.5 Uncommitted revolving credit agreementn.a. CHF 50.0 ––Subtotal 1,948.1 1,938.9 SENIOR NOTESSenior notes01.08.20234.50 % EUR 700.0 – 788.1 Senior notes15.10.20242.50 % EUR 800.0 868.2 900.7 Senior notes15.02.20272.00 % EUR 750.0 814.0 –Subtotal 1,682.2 1,688.8 GUARANTEE FACILITYUncommitted guarantee facilityn.a. EUR 49.0 28.8 26.2 Subtotal 28.8 26.2 Total 3,659.1 3,653.9 There were no assets pledged as of December 31, 2019 and 2018. 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
22211. PARTICIPATIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE GLOBAL EXECUTIVE COMMITTEE IN DUFRY AGThe following members of the Board of Directors or of the Global Executive Committee of Dufry AG (including related parties) held directly or indirectly shares or share options of the Company as at December 31, 2019 and December 31, 2018 (members not listed do not hold any shares or options):31.12.201931.12.2018IN THOUSANDSSHARESFINANCIAL IN-STRUMENTS 1PARTICIP.SHARESFINANCIAL IN-STRUMENTS 1PARTICIP.MEMBERS OF THE BOARD OF DIRECTORSJuan Carlos Torres Carretero, Chairman 966.0 23.71.96 % 1,001.0 71.1 11.99 % Andrés Holzer Neumann, Director 3,991.0 –7.89 % 4,334.4 55.2 18.15 % Jorge Born, Director (2018: Vice-Chairman) 22.0 –0.04 % 22.0 30.9 20.10 % Julián Diáz Gonzalez, Director and Group CEO 233.0 17.50.50 % 230.0 35.10.49 % Steven Tadler, Director 13.0 –0.03 % –––H. Jo Min, Lead Director (2018: Director) 0.5 –0.00 % 0.5 –0.00 % Total Board of Directors 5,225.5 41.210.42 % 5,587.9 192.3 10.73 % MEMBERS OF THE GLOBAL EXECUTIVE COMMITTEEJulián Diáz Gonzalez, Director and Group CEO 233.0 17.50.50 % 230.0 35.1 10.49 % José Antonio Gea, Deputy Group CEO 33.0 –0.07 % 14.4 –0.03 % Yves Gerster, CFO 2.2 –0.00 % n.a. n.a. n.a.Luis Marin, CCO 7.8 –0.02 % 4.3 –0.01 % Javier Gonzalez 3.3 –0.01 % 2.0 –0.00 % Andrea Belardini 18.7 –0.04 % n.a. n.a. n.a.Roger Fordyce 3.6 –0.01 % n.a. n.a. n.a.René Riedi 1.1 –0.00 % n.a. n.a. n.a.Eugenio Andrades 1.0 –0.00 % –––ADDITIONAL MEMBERS OF FORMER GLOBAL EXECUTIVE COMMITTEE (IN 2018)Andreas Schneiter, CFO n.a. n.a. n.a. 12.9 –0.02 % Total Global Executive Committee 303.7 17.5 0.64 % 263.6 35.1 0.55 % 1 The detailed terms of the various financial instruments disclosed above are as disclosed to the SIX Swiss Exchange and published on August 3, 2019, for the year 2019 and December 28, 2018, for the year 2018.2 European Capped Calls on 30,940 shares of Dufry AG. The transaction was divided into 5 tranches of 6,188 shares each, which expired on 29.07.2019, 30.07.2019, 31.07.2019, 04.08.2019 and 05.08.2019, respectively. Each tranche was automatically exercised, and the differences were cash settled. The strike price for each option was CHF 160, and the cap was CHF 260 per option. 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
223In addition to the above, the shareholders’ group consisting, among others, of different legal entities controlled by Andrés Holzer Neumann, Juan Carlos Torres Carretero and Julián Díaz González held sale positions of 3.62 % through options (1,829,190 voting rights) as of December 31, 2019 (as of December 31, 2018: sale positions of 5.09 % through options 2,739,430 voting rights). Disclosure notices are available on the SIX Swiss Exchange website:www.six-exchange-regulation.com/en/home/publications/significant- shareholders.html12. PROPOSED APPROPRIATION OF RETAINED EARNINGS AND CAPITAL DISTRIBUTION IN THOUSANDS OF CHF20192018Proposed appropriation of retained earningsResult carried forward 59,927 90,499 Loss for the year (426,070) (30,572)Retained earnings at December 31 (366,143) 59,927 Proposed distribution out of reserve from capital contribution 1Balance at beginning of the year 3,983,404 4,290,806 Distribution out of reserve from capital contribution (199,748) (198,703)Reserves for treasury shares held by the Company’s subsidiaries from capital contribution 2– (108,699)Share capital reduction (385,330)–Reclass from reserve from capital contribution for own shares held at subsidiaries 22,000 –Reserve from capital contribution at December 31 3,420,326 3,983,404 Proposed distribution of CHF 4.00 per registered share for the financial year 2019 (202,269) (199,141)Reserve from capital contribution after proposed distribution 3,218,057 3,784,263 1 Distributions are free of Swiss withholding tax and are not subject to income tax for Swiss resident individuals holding the shares as a private investment.2 Reclassification to reserve from capital contribution for own shares held at subsidiaries.13. EVENTS AFTER REPORTING DATENo significant events occurred after December 31, 2019 up to March 4, 2020 that would have a material impact on these financial statements 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
22414. MATERIAL INDIRECT SUBSIDIARIESH = Holding R = Retail D = Distribution CenterAS OF DECEMBER 31, 2019LOCATIONCOUNTRYTYPEOWNERSHIP IN %SHARE CAPITAL IN THOUSANDSCURRENCYEUROPE & AFRICAWorld Duty Free Group Helsinki LtdVantaaFinlandR100 2,500 EURDufry France SANiceFranceR100 8,291 EURWorld Duty Free Group Germany GmbHDüsseldorfGermanyR100 250 EURHellenic Duty Free Shops S.A.AthensGreeceR100 397,535 EURHellenic Distributions S.A.AthensGreeceD100 6,296 EURDufrital SpAMilanItalyR60 466 EURNuance Group (Malta) LtdLuqaMaltaR52 2,796 EURDufry Maroc SARLCasablancaMoroccoR80 2,500 MADWorld Duty Free Group SAMadridSpainR100 19,831 EURSociedad de Distribucion Comercial Aeroportuaria de Canarias, S.L.TeldeSpainR60 667 EURNuance Group (Sverige) ABStockholmSwedenR100 100 SEKThe Nuance Group AGZurichSwitzerlandR100 82,100 CHFDufry Basel-Mulhouse AGBaselSwitzerlandR100 100 CHFUrart Gumr. Magaza Isletm. ve Ticaret A.S.AntalyaTurkeyR100 1,161 EURWDFG UK LimitedLondonUKR100 360 GBPNuance Group (UK) LtdLondonUKR100 50 GBPWDFG Ferries LimitedLondonUKR100 50 GBPASIA PACIFIC AND MIDDLE EASTADF Shops CJSCYerevanArmeniaR100 553,834 AMDNuance Group (Australia) Pty LtdMelbourneAustraliaR100 210,000 AUDDufry Cambodia LtdPhnom PenCambodiaR80 1,231 USDThe Nuance Group (HK) LtdHong KongChinaR100–HKDThe Nuance Group (Macau) LtdMacauChinaR100 49 HKDDufry (Shanghai) Commercial Co., LtdShanghaiChinaR100 123,547 CNYNuance Group (India) Pvt. LtdBangaloreIndiaR100 1,035,250 INRPT Dufrindo InternasionalBaliIndonesiaR100 91 USDAldeasa Jordan Airports Duty Free Shops LtdAmmanJordanR100 705 USDWDFG SA, Kuwait BranchKuwait CityKuwaitR100 2,383 KWDRegStaer M LtdVnukovoRussiaR60 142 EURLenrianta CSJCSt. PetersburgRussiaR100 315 EURDufry EastMoscowRussiaR100 712 USDRegstaer LtdMoscowRussiaR51 3,991 EURD. d.o.o. BelgradeBelgradeSerbiaR100 693,078 RSDDufry Thomas Julie Korea Co. LtdBusanSouth KoreaR85 1,100,000 KRWDufry Shops Colombo LimitedColomboSri LankaR100 30,000 LKRDufry Sharjah FZCSharjahU. Arab. EmiratesR50 2,054 AEDNORTH AMERICA, held through Hudson Ltd.*The Nuance Group (Canada) Inc.TorontoCanadaR100 13,260 CADWDFG Vancouver LPVancouverCanadaR100 9,500 CADHudson Group Canada IncVancouverCanadaR100–CADWDFG North America LLCDelawareUSAH/R100–USDHudson Las Vegas JV Hudson News O’Hare JVLas VegasUSAR73–USDSeattle Air VenturesOlympiaUSAR75–USDHudson Group (HG) Retail, LLCNew JerseyUSAH/R100–USD 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
225AS OF DECEMBER 31, 2019LOCATIONCOUNTRYTYPEOWNERSHIP IN %SHARE CAPITAL IN THOUSANDSCURRENCYHudson News O’Hare JVChicagoUSAR70–USDHG Logan Retailers JVBostonUSAR80–USDHG Magic Concourse TBITLos AngelesUSAR68–USDAirport Management Services LLCLos AngelesUSAH/R100–USDJFK Air Ventures II JVNew YorkUSAR80–USDAMS of South Florida JVFort LauderdaleUSAR31–USDHG Midway JVChicagoUSAR65–USDBrookstone IAD, T-B, LLCDullesUSAH75–USDDufry Newark IncNewarkUSAR100–USDHG Denver JVDenverUSAR76–USDHG PHL Retailers JVPhiladelphiaUSAR65–USDHG St Louis JVSt. LouisUSAR70–USDAMS-SJC JVSan JoseUSAR100–USDThe Nuance Group (Las Vegas) LLCLas VegasUSAR73 850 USDHudson-NIA JFK T1 JVNew YorkUSAR90–USDHG-KCGI-TEI JFK T8 JVNew YorkUSAR85–USDHG National JVVirginiaUSAR70–USDDufry O’Hare T5 JVChicagoUSAR80–USDHG-Multiplex-Regali Dallas JVDallasUSAR75–USDHudson-Magic Johnson Ent. CV LLCLos AngelesUSAR91–USDWDFG TAC ATL Retail LLC, AtlantaDelawareUSAR86–USDDufry Seattle JVSeattleUSAR88–USDLATIN AMERICAInterbaires SABuenos AiresArgentinaR100 46,743 USDDFC Ltd - BarbadosSt. MichaelBarbadosR60 5,000 USDDufry Lojas Francas LtdaSao PauloBrazilR100 99,745 USDDufry Brasil Duty Free Shop LtdaRio de JaneiroBrazilR100 98,175 USDAldeasa Chile, LtdSantiago de ChileChileR100 2,517 USDDufry - DFASS Colombia S.A.SBogotaColombiaR100 3,120 USDInversiones Tunc, SASanto DomingoDominican RepublicR100–USDInversiones Pánamo, S.A.Santo DomingoDominican RepublicR100–USDDufry Mexico SA de CVMexico CityMexicoR100 268 USDWDFG, Peru S.A.C.LimaPeruR100 1,010 USDAlliance Duty Free, LLCSan JuanPuerto RicoR100 2,213 USDABC Netherlands LLCSan JuanPuerto RicoR100 10 USDNavinten SAMontevideoUruguayR100 126 USDDufry Cruise Services, Inc.MiamiUSAR100–USDGLOBAL DISTRIBUTION CENTERSInternational Operations & Services (HK) LtdHong KongHong KongD100 109,000 HKDInternational Operations & Services (CH) AGBaselSwitzerlandD100 5,000 CHFInternational Operations & Services (UY) S.A.MontevideoUruguayD100 50 USDInternational Operations & Services (USA) LLCMiamiUSAD100 398 USDHEADQUARTERSDufry International LtdBaselSwitzerlandH100 1,000 CHFDufry Holdings & Investments AGBaselSwitzerlandH100 1,000 CHFDufry Financial Services B.V.EindhovenNetherlandsH100–EURDufry One BVEindhovenNetherlandsH100–EUR* Dufry Group holds 57.4 % of Hudson Ltd. 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
226To the General Meeting of Dufry AG, BaselBasel, 11 March 2020Report of the statutory auditor on the financial statementsAs statutory auditor, we have audited the financial statements of Dufry AG (the “Company”), which comprise the statement of financial position, statement of profit or loss, and notes (pages 215 to 225), for the year ended December 31, 2019.Board of Directors’ responsibilityThe Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the Company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.OpinionIn our opinion, the financial statements for the year ended December 31, 2019 comply with Swiss law and the Company’s articles of incorporation. Report on key audit matters based on the circular 1 / 2015 of the Federal Audit Oversight AuthorityKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.We have fulfilled the responsibilities described in the Auditor’s responsibility section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements. 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
227Valuation of investments in subsidiariesArea of focusAs of December 31, 2019, investments in subsidiaries amounted to CHF 3,848 million and accounted for 99.6% of the Company’s total assets. Investments are held at historical cost. The Company reviews the carrying amount of these investments annually, and if events and circumstances suggest that this amount may not be recoverable, an impairment is recognized in the statement of profit or loss. Due to the significance of the carrying values of the investments in subsidiaries and the judgment involved in performing the impairment tests, this matter was considered to be significant to our audit. Further details on the Company’s investments in subsidiaries are disclosed in notes 2.2 and 3 to the financial statements.Our audit responseWe tested, with the support of our valuation specialists, the appropriateness of the valuation approach and evaluated management’s key assumptions, including growth rates used in the cash flow projections during the forecast period, the terminal growth rate assumption and the discount rate. Further, we assessed the historical accuracy of management’s estimates and considered their ability to produce accurate forecasts. We assessed the difference between the carrying amounts of the investments in subsidiaries and their recoverable amount.Our audit procedures did not lead to any reservations concerning the valuation of investments in subsidiaries.Report on other legal requirementsWe confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and inde-pendence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.We further confirm that the proposed appropriation of available earnings (note 12) complies with Swiss law and the Company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.Ernst & Young Ltd/s/ Jolanda Dolente /s/ Siro BonettiJolanda Dolente Siro BonettiLicensed audit expert Licensed audit expert(Auditor in charge) 3 Financial Report
Financial Statements of Dufry AG
DUFRY ANNUAL REPORT 2019
228The financial reports are available under:https://www.dufry.com/en/investors/ir-reports-presentations-and-publications Page section “Presentation of results and other publications” – select Financial ReportsFor the Investor Relations and Corporate Communications contacts as well as a summary of anticipated key dates in 2020 please refer to pages 272 / 273 of this Annual Report. CORPORATE
GOVERNANCE
Listed company as of December 31, 2019
COMPANY
Dufry AG, Brunngässlein 12, 4052 Basel, Switzerland
(hereinafter “Dufry AG” or the “Company”)
LISTING
Registered shares: SIX Swiss Exchange
MARKET CAPITALIZATION BASED ON SHARES ISSUED
CHF 4,855,459,279 as of December 31, 2019
PERCENTAGE OF SHARES HELD BY DUFRY AG
1.25 % of Dufry AG share capital as of December 31, 2019
SECURITY NUMBERS
Registered shares:
ISIN-Code CH0023405456, Swiss Security-No. 2340545,
Ticker Symbol DUFN
Listed consolidated subsidiary as of December 31,
2019
As of February 1, 2018, Hudson Ltd. is separately listed
on the New York Stock Exchange.
COMPANY
Hudson Ltd., 2 Church Street, Hamilton, HM 11, Bermuda
LISTING
Class A common shares: New York Stock Exchange
MARKET CAPITALIZATION BASED ON SHARES ISSUED
USD 1,419,119,967 as of December 31, 2019
PERCENTAGE OF SHARES HELD BY DUFRY AG
53,093,315 Class B common shares (non-listed), being 57.41 % of the
Hudson Ltd. share capital (93.1 % of voting rights) as of December 31,
2019
SECURITY NUMBERS
Class A common shares (listed):
ISIN-Code BMG464081030, Ticker Symbol HUD
Non-listed consolidated entities as of December 31,
2019
For a table of the operational non-listed consolidated
entities please refer to page 224 in the section Finan-
cial Statements of this Annual Report*.
INTRODUCTION
This Report is prepared in accordance with the
Corporate Governance Directive (DCG) of the SIX
Swiss Exchange. All information within this Corporate
Governance Report and within the Remuneration
Report (see page 252) refers to the Company Organi-
zation, Internal Regulations and Articles of Incor-
poration that were in effect as of December 31, 2019
(if not specifically mentioned otherwise).
The Articles of Incorporation are available on the
Company website, www.dufry.com, section Investors –
Corporate Governance – Articles of Incorporation.
Link:
www.dufry.com/en/investors/corporate-governance
page section “Featured downloads –
Articles of Incorporation”
Dufry engages with shareholders, analysts and inves-
tors on a regular basis to better understand their ex-
pectations, needs and concerns as part of the com-
pany’s stakeholder dialogue strategy and over ESG
engagement. Feedback is taken into consideration
when evolving the company strategy as well as corpo-
rate governance and remuneration matters. In this
context, management and the investor relations team
had 870 contacts with shareholders and investors
combining personal meetings, calls and emails in 2019.
1. GROUP STRUCTURE AND SHAREHOLDERS
1.1 GROUP STRUCTURE
For an overview of the management organizational
chart and operational Group structure, please refer
to page 17 of this Annual Report.
*
Including the company names, locations, percentage of shares
held, share capital. The list of consolidated entities does not include
all subsidiaries of the Company, but the most important subsidiaries
in terms of sales for Retail and Distribution Center companies and
in terms of total assets for holding companies.
229
4 Governance ReportDUFRY ANNUAL REPORT 2019 1.2 SIGNIFICANT SHAREHOLDERS
Pursuant to the information provided to the Company
by its shareholders in compliance with the Financial
Market Infrastructure Act during 2019, the following
shareholders disclosed significant positions as of
December 31, 2019 1.
Further details regarding these shareholders and
shareholder groups as well as additional information
regarding the individual disclosure notices in 2019 are
available on the website of SIX Swiss Exchange at:
www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html
SHAREHOLDER
Through shares
Long position
through
financial
instruments 2
Short positions 3
Net long position
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 and Dimitrios Koutsolioutsos 4
State of Qatar 5
Government of Singapore 6
Compagnie Financiere Rupert 7
Franklin Resources, Inc. 8
BlackRock, Inc. 9
JP Morgan Chase & Co. 10
1
2
3
4
The percentage of voting rights has to be read in context with
the 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.
Financial instruments such as conversion and share purchase rights,
granted (written) share sale rights.
Share sale rights (especially put options) and granted (written)
conversion 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).
Beneficial owners of these shares are: Andrés Holzer Neumann, Wilen
(Sarnen)/Switzerland, Julián Díaz González, Altendorf/Switzerland,
Juan Carlos Torres Carretero, Meggen/Switzerland, James S. Cohen,
Alpine NJ/USA, James S. Cohen Family Dynasty Trust, Teaneck,
NJ/USA and Dimitrios Koutsolioutsos, Agios Stephanos/Greece.
Shares are directly held by the following companies and legal entities:
Travel Retail Investment S.C.A., Luxembourg/Grand Duchy of
Luxembourg, Petrus PTE Ltd, Singapore/Singapore, Witherspoon
Investments LLC, Wilmington, DE/USA, Petrus AG, Basel/Switzerland,
Laguna Partners AG, Luzern/Switzerland, JDG Partners AG, Luzern/
Switzerland, JLC Investments, LLC, Teaneck, NJ/USA, Hudson Media,
Inc., Teaneck, NJ/USA, Folli Follie Commercial Industrial and
Technical S.A., Agios Stephanos/Greece, and Strenaby Finance Ltd.,
Tortola/British Virgin Islands. Of the total share position of 15.53 %,
1.16 % relate to delegated voting rights.
Shareholders’ agreements
The type of understanding among the members of the
group of shareholders consisting of various compa-
nies 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 and Dimitrios Koutso-
lioutsos is one or more shareholder agreements.
230
15.53 %
6.92 %
5.05 %
5.00 %
4.95 %
4.34 %
0.03 %
0.08 %
– 3.62 %
–
–
–
–
–
–
–
–
0.31 %
3.46 %
– 0.36 %
– 3.46 %
11.99 %
6.92 %
5.05 %
5.00 %
4.95 %
4.29 %
0.03 %
5
6
7
8
9
Shares directly held by Qatar Holding LLC, Doha/Qatar. The indirect
holder of the shares is the State of Qatar, Doha/Qatar. Qatar Holding
LLC is owned by the Qatar Investment Authority, which was founded
and is controlled by the State of Qatar.
Shares directly held by GIC Private Limited (“GIC”), Singapore/
Singapore. The indirect holder of the shares is the Government
of Singapore, Singapore/Singapore. GIC is wholly owned by the
Government of Singapore (“GoS”) and manages the reserves of
Singapore. GIC acts as the fund manager for GoS and the Monetary
Authority of Singapore.
Shares directly held by Richemont Luxury Group Ltd, St Heller/
Jersey. The indirect holder of the shares is Compagnie Financiere
Rupert, Geneva/Switzerland.
Shares directly held by Franklin Mutual Advisors, LLC, Short Hills,
NJ/USA and Franklin Adviory Services, Short Hills, NJ/USA. The
indirect holder of the shares is Franklin Resources, Inc., San Mateo,
CA/USA. Of the total share position of 4.95 %, 0.02 % relate to
delegated voting rights.
BlackRock, Inc., New York, NY/USA. Of the total share position
of 4.65 %, 0.18 % relate to securities lending and similar transactions,
and 0.89 % to delegated voting rights.
10 Shares and financial instruments directly held by JPMorgan Chase
Bank, N.A., Ohio/USA. The indirect holder of the shares and financial
instruments is JPMorgan Chase & Co., New York, NY/USA.
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 %.
4 Governance ReportDUFRY ANNUAL REPORT 2019 2. CAPITAL STRUCTURE
2.1 SHARE CAPITAL
As of December 31, 2019, the Company’s capital struc-
ture is as follows:
ORDINARY SHARE CAPITAL
CHF 252,835,830 (nominal value) divided in 50,567,166 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
AUTHORIZED SHARE CAPITAL
CHF 25,000,000 (nominal value) divided in 5,000,000 fully paid regis-
tered shares with nominal value of CHF 5 each; authorization to increase
share capital until May 9, 2021
For the website link regarding the Articles of Incorpo-
ration referred to in the following chapters please see
page 251 of this Corporate Governance Report.
2.2 DETAILS TO CONDITIONAL AND AUTHORIZED
SHARE CAPITAL
Conditional share capital
Article 3bis of the Articles of Incorporation, dated
July 17, 2019, reads as follows:
1. The share capital may be increased in an amount not
to exceed CHF 4,442,160 by the issuance of up to
888,432 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 is-
suance 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.
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 with-
out 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.
The conditional share capital of CHF 4,442,160 repre-
sents 1.76 % of the issued ordinary share capital of the
Company registered in the commercial register as of
December 31, 2019.
Authorized share capital
Article 3ter of the Articles of Incorporation, dated
July 17, 2019, reads as follows:
1. The Board of Directors shall be authorized to in-
crease the share capital in an amount not to exceed
CHF 25,000,000 through the issuance of up to
5,000,000 fully paid registered shares with a nom-
inal value of CHF 5 per share by not later than May 9,
2021. Increases in partial amounts shall be permit-
ted.
2. The subscription and acquisition of the new shares,
as well as each subsequent transfer of the shares,
shall be subject to the restrictions of Article 5 of
the Articles of Incorporation.
3. The Board of Directors shall determine the issue
price, the type of payment, the date of issue of new
shares, the conditions for the exercise of the pref-
erential subscription rights, and the beginning date
for dividend entitlement. In this regard, the Board
of Directors may issue new shares by means of a
firm underwriting through a banking institution, a
syndicate of another third party and a subsequent
offer of these shares to the current shareholders.
The Board of Directors may permit preferential sub-
scription rights that have not been exercised to ex-
pire or it may place these rights and /or shares as
to which preferential subscription rights have been
granted but not exercised, at market conditions or
231
4 Governance ReportDUFRY ANNUAL REPORT 2019 use them for other purposes in the interest of the
Company.
4. The Board of Directors is further authorized to re-
strict or deny the preferential subscription rights
of shareholders or allocate such rights to third par-
ties if the shares are to be used:
a) for the acquisition of enterprises, parts of an en-
terprise or participations, or for new investment
plans or, in case of a share placement, for the
financing or refinancing of such transactions; or
b) for the participation of strategic partners (in-
cluding in the case of a public takeover bid) or for
the purpose of broadening the shareholder con-
stituency or in connection with a listing of shares
on domestic or foreign stock exchanges, includ-
ing for the purpose of delivering shares to the
participating banks in connection with an over-
allotment option (Greenshoe).
The authorized share capital of CHF 25,000,000 rep-
resents 9.89 % of the issued ordinary share capital of
the Company registered in the commercial register as
of December 31, 2019.
2.3 CHANGES IN CAPITAL OF DUFRY AG
NOMINAL SHARE CAPITAL
December 31, 2017
December 31, 2018
December 31, 2019
CONDITIONAL SHARE CAPITAL
December 31, 2017
December 31, 2018
December 31, 2019
AUTHORIZED SHARE CAPITAL
December 31, 2017
December 31, 2018
December 31, 2019
CHF 269,358,535
CHF 269,358,535
CHF 252,835,830
CHF
CHF
CHF
4,442,160
4,442,160
4,442,160
None
None
CHF 25,000,000
Changes in capital in 2019
At the Ordinary General Meeting of Shareholders
on May 9, 2019, shareholders approved the Board of
Directors’ proposal to cancel the 3,304,541 registered
shares purchased under the share buyback program
completed in November 2018. As a result, the share
capital decreased from CHF 269,358,535 (53,871,707
shares) to CHF 252,835,830 (50,567,166 shares). The
change in capital was registered in the commercial
register on July 22, 2019.
The same Ordinary General Meeting of Shareholders
also approved the Board of Directors’ proposal to cre-
ate authorized capital in the amount of CHF 25,000,000
(5,000,000 shares).
232
Changes in capital in 2018 and 2017
The capital of Dufry AG remained unchanged in fiscal
years 2018 and 2017.
2.4 SHARES
As of December 31, 2019, the share capital of Dufry AG
is divided into 50,567,166 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 en-
titled 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 usu-
fructuaries of registered shares in the share regis-
ter shall be recognized as such by the Company. In
the share register, the name and address of the
shareholders 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 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
4 Governance ReportDUFRY ANNUAL REPORT 2019 3. BOARD OF DIRECTORS
3.1 MEMBERS OF THE BOARD OF DIRECTORS
As of December 31, 2019, the Board of Directors com-
prised nine Board members compared with eight mem-
bers as of December 31, 2018.
The members of the Board of Directors are elected
individually and for a term of office extending until
completion of the next Ordinary General Meeting of
Shareholders. The Chairman of the Board of Directors
and the members of the Remuneration Committee are
directly elected by the General Meeting of Shareholders.
The following table sets forth the name and year of
first election as a member of the Board of Directors
for each respective member, followed by their Curri-
cula Vitae with a short description of each member’s
business experience, education and activities.
Changes in the Board of Directors in fiscal year 2019
Luis Maroto Camino was elected as a new member of
the Board of Directors at the Ordinary General Meet-
ing of Shareholders on May 9, 2019. The Board of
Directors unanimously resolved to formally establish
the position of Lead Independent Director as of
July 25, 2019. Heekyung Jo Min was appointed by the
Board of Directors to this new position. Jorge Born
acted as Vice-Chairman of the Board of Directors as
of October 30, 2018 until July 25, 2019. The position of
Vice-Chairman was replaced by the Lead Independent
Director position.
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 General 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 nom-
inee how to vote at the General Meeting of Share-
holders. Shares held by a nominee for which it is not
able to produce such a proxy count as not repre-
sented at the General 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.
– 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 not granted any exceptions during
the year under review.
Required quorums for a change
of the limitations of transferability
A change of the limitations on the transfer of regis-
tered shares or the removal of such limitations re-
quires a resolution of the General Meeting of Share-
holders 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, 2019, 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 certain share-based payments, the es-
sentials of which are disclosed in the “Remuneration
Report” on page 252 ff.
233
4 Governance ReportDUFRY ANNUAL REPORT 2019 BOARD OF DIRECTORS AS OF DECEMBER 31, 2019
NAME
PROFESSION
NATIONALITY
POSITION
WITH DUFRY
DATE OF
FIRST ELECTION
Juan Carlos Torres Carretero
Chairman of Dufry AG
Spanish
Chairman
2003
Heekyung Jo Min
Jorge Born
Claire Chiang
Executive Vice President of
CJ Cheiljedang
CEO of Bomagra S.A
Senior Vice President of
Banyan Tree Holdings Limited
American
Argentinian
Lead Independent
Director 1
Director
Singaporean
Director
Julián Díaz González
Group CEO of Dufry AG
Spanish
Director, Group CEO
2016
2010
2016
2013
Andrés Holzer Neumann
President / CEO of Grupo Industrial
Omega (1973 – 2018)
Mexican
Director
2004
Luis Maroto Camino
Steven Tadler
Lynda Tyler-Cagni
CEO and President of
Amadeus IT Group
Managing Partner
Advent International
CEO of Only the Best Agency
British and Italian
American
Director
Director
Spanish
Director
2019
2018
2018
1 Lead Independent Director as of July 2019
DIVERSITY OF THE BOARD OF DIRECTORS
11 % BRITISH/ITALIAN
33 % SPANISH
11 % MEXICAN
33.4 % FEMALE
22 % AMERICAN
11 % ARGENTINIAN
66.6 % MALE
11 % SINGAPOREAN
The Chairman of the Board of Directors is male, the In-
dependent Lead Director is female. Over recent years,
the Board of Directors was renewed and currently, 55 %
of the Board members have a tenure of 4 years or less.
234
4 Governance ReportDUFRY ANNUAL REPORT 2019 3.2 EDUCATION, PROFESSIONAL BACKGROUND, OTHER ACTIVITIES AND FUNCTIONS
JUAN CARLOS TORRES
CARRETERO
Executive Chairman, born 1949,
Spanish
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 management operating
experience. 1988 Joined Advent
International, a private equity
firm, in Boston as a partner.
1991 – 1995 Partner at Advent
International in Madrid. 1995 – 2016
Managing Director and Senior
Partner in charge of Advent Inter-
national Corporation’s investment
activities in Latin America.
Current Board Mandates
Dufry AG, Hudson Ltd. and Acamar
Partners Acquisition Corp.
HEEKYUNG JO MIN
Lead Independent Director,
born 1958, American
JORGE BORN
Director, born 1962,
Argentinian
Education
B.S. in economics from the
Wharton School of the University
of Pennsylvania.
Professional Background
2001 – 2010 Deputy Chairman
of Bunge Ltd. 1992 – 1997 Head
of Bunge’s European operations.
Before 1997 various capacities in
the commodities trading, oil seed-
ing 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.
and Fundación Bunge y Born
(Chairman).
Education
Ph. D in Business Administration
from Seoul Business School
(aSSIST), MBA from Columbia
University Graduate School of
Business in New York, and a BA
from Seoul National University.
Professional Background
2004 – 2005 Executive Vice
President at Prudential Invest-
ments and Securities Co. in Korea.
2006 Country Advisor, Global
Resolutions in Korea. 2007 – 2010
Director General of the Invest-
ment Promotion Bureau at the
Incheon Free Economic Zone
(IFEZ) in Korea. Since 2011, Senior
Executive Vice President and Head
of Corporate Social Responsibility
of CJ Cheiljedang Corporation
in Korea. Ms. Min speaks regularly
on the subject of sustainability
and ESG (Environment, Social,
Governance).
Current Board Mandates
Dufry AG, Asia New Zealand
Foundation (Honorary Advisor)
and CJ Welfare Foundation.
235
4 Governance ReportDUFRY ANNUAL REPORT 2019 CLAIRE CHIANG
Director, born 1951,
Singaporean
JULIÁN DÍAZ GONZÁLEZ
Director, Group Chief Executive
Officer, born 1958, Spanish
ANDRÉS HOLZER NEUMANN
Director, born 1950,
Mexican
Education
Masters in Philosophy from the
University of Hong Kong and an
Undergraduate Degree from the
University of Singapore.
Education
Degree in business
administration from Universidad
Pontificia Comillas I.C.A.D.E.,
de Madrid.
Professional Background
Founder and Managing Director
of Banyan Tree Gallery, and Co-
founder and Senior Vice President
of Singapore listed Banyan Tree
Holdings Limited since 1994.
Member of Parliament for the
Government of Singapore from
1997 to 2001.
Current Board Mandates
Dufry AG, ISS A/S, Banyan Tree
Holdings Limited, Banyan Tree
Gallery (Singapore) Pte. Ltd.
and Mandai Safari Park Holdings
Pte. Ltd.
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 General Manager
of Latinoamericana Duty-Free,
S.A. de C.V. Since 2004 Chief
Executive Officer at Dufry AG.
Current Board Mandates
Dufry AG and Hudson Ltd.
Education
Graduate of Boston University,
holds an MBA from Columbia
University.
Professional Background
1973 – 2018 President / CEO 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
Metropolitano Inmobiliario, S.A.
de C.V., Inmobiliara Coapa Larca,
S.A. de C.V., Inmobiliara
Castellanos, S.A. de C.V.,
and Negocios Creativos, S.A. de
C.V. Previous board mandates
include Banco Mercantil de México
(1982 – 1999), Latin American
Airport Holdings (2008 – 2016)
Current Board Mandates
Dufry AG, Arrendadora SOHO
City Center, Altum Capital and
Hudson Ltd.
236
4 Governance ReportDUFRY ANNUAL REPORT 2019 LUIS MAROTO CAMINO
Director, born 1964,
Spanish
STEVEN TADLER
Director, born 1959,
American
LYNDA TYLER-CAGNI
Director, born 1956,
British and Italian
Education
Bachelor’s degree in Law from
the Universidad Complutense
Madrid, MBA from the Instituto
de Estudios Superiores de la
Empresa, Madrid (IESE), further
qualifications from Stanford,
Harvard Business School, INSEAD
and IMD.
Professional Background
2000 Joined Amadeus IT Group,
a leading player in the travel and
tourism industry, where he served
as Deputy CEO, CFO and Director
Marketing Finance. Prior to joining
Amadeus, he held several manage-
rial positions at the Bertelsmann
Group. Since 2011, CEO and
President of Amadeus IT Group.
Current Board Mandates
Dufry AG and Amadeus IT Group.
Education
Master in Business Administration
from Harvard Business School.
B.S., with distinction, from the
University of Virginia.
Education
B.A. (Hons) in Languages,
Economics & Politics from the
University of Kingston, London.
Professional Background
1985 Joined Advent International
as Managing Partner. Serves as a
Director of Advent International
Corp (since 2002) and wTe Corpo-
ration (since 1989).
Previous board mandates include
Dufry AG (2010 – 2013),
Skill-soft (2020 – 2014),
Transunion (2012 – 2017),
Bojangles’ (2011 – 2019)
Current Board Mandates
Dufry AG, Advent International
Corp and wTe Corporation.
Professional Background
Lynda Tyler-Cagni is the founder
and CEO at Only the Best Agency
Ltd, a consulting company advising
and representing talent primarily
in the fashion, retail and FMCG
sectors since 2015. She also served
as a Director at Atlantia SpA, an
Italian listed global oper ator in the
motorway and airport infrastruc-
ture sector until November 2018.
Ms. Tyler-Cagni previously served
on the Board of World Duty Free
Group as a non-executive and inde-
pendent member and chair of
the HR & Remuneration Committee
(from 2013 until the acquisition
of World Duty Free Group by
Dufry AG in 2015). She was also an
advisor to the management Board
of Bonpoint and held various
management positions with
Fast Retailing Group, Uniqlo and
Ermenegildo Zegna.
Current Board Mandates
Dufry AG and EDHEC Paris.
237
4 Governance ReportDUFRY ANNUAL REPORT 2019
Messrs. Juan Carlos Torres Carretero (Chairman),
Andrés Holzer Neumann and Julián Díaz González
(Directors) are members of a group of shareholders,
which held a 15.61 % purchase position of Dufry AG as
of December 31, 2019 (participation mentioned in-
cludes financial instruments). See for details the dis-
closure under “1.2 Significant Shareholders” on page
230 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
Group Chief Executive Officer. All other members of the
Board of Directors are non-executive members. None
of the current members of the Board of Directors (ex-
cept Julián Díaz González as Group CEO) have ever been
in a managerial position at Dufry AG or any of its sub-
sidiaries. For information on related parties and related
party transactions please refer to Note 41 on page 207
and to the information provided in the Remuneration
Report on page 252 ff. of this Annual Report.
3.3 RULES IN THE ARTICLES OF INCORPORATION
REGARDING THE NUMBER OF PERMITTED
MANDATES OUTSIDE THE COMPANY
For the website link regarding the Articles of Incorpo-
ration referred to in the following chapters please see
page 251 of this Corporate Governance Report.
In accordance with Article 24 para. 2 of the Articles of
Incorporation, dated July 17, 2019, 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 July 17, 2019:
– The Board of Directors shall consist of at least three
and at most nine members.
– Members of the Board of Directors and the Chair-
man of the Board of Directors shall be elected for
a term of office extending until completion of the
next Ordinary General Meeting of Shareholders.
– The members of the Board of Directors and the
Chairman of the Board of Directors 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 General Meeting of Shareholders.
– Except for the election of the Chairman of the Board
of Directors and the members of the Remuneration
Committee by the General Meeting of Sharehold-
ers, 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
stipulates the following: As members of the Board
of Directors 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
operations 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 May 9, 2019. The same Gen-
eral Meeting re-elected Juan Carlos Torres Carretero
as Chairman of the Board of Directors. Ms. Lynda Tyler-
Cagni, Ms. Claire Chiang and Mr. Jorge Born were
re-elected in individual elections as members of the
Remuneration Committee.
3.5 INTERNAL ORGANIZATIONAL STRUCTURE
Except for the election of the Chairman of the Board
of Directors and the members of the Remuneration
Committee (which are to be elected by the General
238
4 Governance ReportDUFRY ANNUAL REPORT 2019 THE BOARD COMMITTEES AS OF DECEMBER 31, 2019
MEMBER OF THE BOARD
OF DIRECTORS
BOARD OF DIRECTORS
AUDIT COMMITTEE
NOMINATION COMMITTEE
Juan Carlos Torres Carretero
Chairman
–
Heekyung Jo Min
Jorge Born
Claire Chiang
Lead Independent
Director
Director
Director
Julián Díaz González
Director / Group CEO
Andrés Holzer Neumann
Luis Maroto Camino 1
Steven Tadler
Lynda Tyler-Cagni
Number of meetings
in fiscal year 2019
Average attendance ratio 2
Director
Director
Director
Director
8
99 %
Committee Member
–
–
–
Committee Member
–
–
–
–
–
Committee Member
Committee Member
–
4
100 %
Committee Member
Committee Chairwoman
5
100 %
6
100 %
Committee Chairman
Committee Chairman
Committee Member
Committee Member
Committee Member
REMUNERATION
COMMITTEE
–
–
–
–
–
–
1 Member of the Board of Directors since the Ordinary General Meeting of Shareholders held on May 9, 2019.
2 The average attendance ratio regarding the Committees refers directly to the members of the respective Committee.
Additional participants who participate as guests in Committee meetings are not included in the percentage calculations.
For the newly elected Board member, his attendance ratio is calculated as of the date of election at the Ordinary
General Meeting of Shareholders in 2019.
Meeting of Shareholders), the Board of Directors
determines its own organization. It shall elect the
Lead Independent Director or a Vice-Chairman, the
members of the Audit Committee and of the Nomina-
tion Committee, and appoint a Secretary who does
not need to be a member of the Board of Directors.
The Board of Directors unanimously resolved to for-
mally establish the position of Lead Independent
Director as of July 25, 2019. Heekyung Jo Min was ap-
pointed by the Board of Directors to this new position.
Jorge Born acted as Vice-Chairman of the Board of
Directors as of October 30, 2018 until July 25, 2019.
The position of Vice-Chairman was replaced by the
Lead Independent Director position.
As of December 31, 2019, Dufry AG has three com-
mittees: the Audit Committee, the Nomination Com-
mittee and the Remuneration Committee. All three
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, 2019: Jorge Born (Chair-
man Audit Committee), Heekyung Jo Min, Luis Maroto
Camino, Steven Tadler.
The members of the Audit 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 inde-
pendent member is a non-executive member, who has
not been an executive member of the Dufry Group in
the last three years and has no or comparatively mi-
nor business relations with the Company. The mem-
bers shall be appointed, as a rule, for the entire dura-
tion 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 findings 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 Direc-
tors 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 Committee
generally meets at the same dates the Board of Direc-
tors meetings take place (usually 4 – 5 times per year),
although the Chairman may call meetings as often as
business requires. The length of the meetings lasted
usually for approximately 2 to 3 hours in fiscal year
2019, during which the Audit Committee held 4 meet-
ings (1 meeting per quarter). The auditors attended
3 meetings of the Audit Committee in 2019. The Chair-
man of the Board of Directors usually participates as
239
4 Governance ReportDUFRY ANNUAL REPORT 2019 a guest in the Audit Committee meetings. Members of
the Global Executive Committee attended meetings of
the Audit Committee as follows: Group CEO 4 meet-
ings and the CFO (who acts as Secretary of the Audit
Committee) 4 meetings.
Nomination Committee
Members as of December 31, 2019: Jorge Born (Chair-
man Nomination Committee), Claire Chiang, Steven
Tadler, Lynda Tyler-Cagni.
The members of the Nomination 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, who 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 Nomination Committee assists the Board of
Directors in fulfilling its nomination related matters. It
is responsible for assuring the long-term planning of
appropriate appointments to the positions of the Group
CEO and the Board of Directors, reviewing the curric-
ulum vitae, credentials and experience of the candi-
dates proposed by the Board of Directors to fill vacan-
cies on the Board of Directors or for the position of the
Group CEO, making recommendations on Board com-
position and balance, presenting to the Board a pro-
posal of succession plan for the position of the Group
CEO at least once a year, and reviewing the adequacy
of the selection system and criteria used for the ap-
pointment of the members of the Global Executive
Committee. The Nomination Committee meets as of-
ten as business requires (usually 2 – 4 meetings per
year). The 5 meetings held in the fiscal year 2019 lasted
about 1 to 2 hours (Q1 2 meetings, Q2 1 meeting, Q3
1 meeting, Q4 1 meeting). Members of the Global Exec-
utive Committee attended meetings of the Nomination
Committee as follows: Group CEO 5 meetings.
Remuneration Committee
Members as of December 31, 2019: Lynda Tyler-Cagni
(Chairwoman Remuneration Committee), Jorge Born,
Claire Chiang.
The members of the 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, who
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 mem-
bers shall be appointed by the General Meeting of
Shareholders until the next Ordinary General Meeting
of Shareholders and be re-eligible.
The Remuneration Committee assists the Board of
Directors in fulfilling its remuneration related matters.
It is responsible for the review of the remuneration
system of the Company and for proposals in relation
thereto to the Board of Directors. The Remuneration
Committee makes recommendations regarding the
proposals of the Board of Directors in relation to the
maximum aggregate amount of compensation of the
Board and of the Global 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 Group CEO and the
members of the Board. The Remuneration Committee
makes proposals on the grant of options or other se-
curities under any other management incentive plan
of the Company, if any. The Remuneration Committee
reviews and recommends to the Board of Directors
the Remuneration Report. The Remuneration Commit-
tee meets as often as business requires (usually
4 meetings per year). The 6 meetings held in the fiscal
year 2019 lasted about 1 to 2 hours (Q1 3 meetings, Q3
1 meeting, Q4 2 meetings). The Chairman of the Board
of Directors usually participates as a guest in the
Remuneration Committee meetings. Members of
the Global Executive Committee attended meetings of
the Remuneration Committee as follows: Group CEO
4 meetings.
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 8 meet-
ings during fiscal year 2019, of which 1 was held as
a telephone conference. The meetings of the Board of
Directors usually lasted about 4 hours. The Chairman
determines the agenda and items to be discussed
at the Board meetings. All members of the Board of Di-
rectors can request to add further items on the agenda.
The Group CEO, the CFO, the Deputy Group CEO and
the Group General Counsel, also acting as Secretary
to the Board, attend the meetings of the Board of
Directors. Other members of the Global Executive
Committee may attend meetings of the Board of
Directors as and when required. Members of the Global
Executive Committee attended meetings of the Board
of Directors in 2019 as follows: Group CEO 8 meetings,
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4 Governance ReportDUFRY ANNUAL REPORT 2019 CFO 6 meetings, Deputy Group CEO 6 meetings,
Group General Counsel 8 meetings, Chief Marketing
and Digital Innovation Officer 2 meetings, Global
Chief Corporate Officer 2 meetings.
The Board of Directors also engages specific advisors
to address specific matters when required. External
financial advisors attended pertinent portions of
1 meeting of the Board of Directors in 2019. The ex-
ternal Auditors attended 3 meetings of the Audit
Committee in 2019.
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, the Articles of Incorporation or the
Board regulations have not been delegated to an-
other 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
Group CEO who is responsible for overall management
of the Dufry Group. The following responsibilities re-
main 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 Arti-
cles of Incorporation, regulations and directives;
– Preparation of the business report, the remunera-
tion report and the General Meetings of Sharehold-
ers and to carry out the resolutions adopted by the
General 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 In-
corporation 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 General Meeting of Share-
holders, and to appoint an independent voting rights
representative 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
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,
balance sheet and other financial statements on
a monthly basis. The management information is
prepared on a consolidated basis as well as per
division. 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 Group CEO information
concerning the course of business of the Company
and the Group and, with the authorization of the
Chairman, about specific matters.
– The Group CEO reports at each meeting of the
Board of Directors 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 Group
CEO. Apart from the meetings, the Group CEO
reports immediately any extraordinary event and
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4 Governance ReportDUFRY ANNUAL REPORT 2019 and procedures, tax regulations, agreements or
contracts and integrity policy, anticipating exter-
nally imposed guidelines and preventing losses.
The program is sponsored by the Global Executive
Committee and based on the concept of direct
stakeholder assurance feedback, and is distributed
among all operations and areas.
– All the results of these Global Internal Audit activi-
ties are communicated to key management in charge
and to the Group’s senior management, including all
the members of the Global Executive Committee on
an on-going basis, and also to the Audit Committee.
– Detailed information on the financial risk manage-
ment is provided in Notes 36 to 40 in the consoli-
dated financial statements of this Annual Report.
any change within the Company and within the
Dufry Group to the Chairman.
– For attendance of the members of the Global Exec-
utive Committee at meetings of the Board of Direc-
tors or meetings of the Board Committees please
refer to section “3.5 Internal organizational struc-
ture” above.
– The Audit Committee met 4 times in 2019 with man-
agement to review the business, better understand
laws, regulations and policies impacting the Dufry
Group and its business and support the manage-
ment in meeting the requirement and expectations
of stakeholders. In meetings of the Audit Committee,
the CFO acts as Secretary to the Committee. The
Auditors are invited to the meetings of the Audit
Committee and attended 3 meetings of the Audit
Committee in 2019. Among these meetings some or
part of them are also held without management.
– The Global Internal Audit department provides
independent risk-based and objective assurance
reviews, loss prevention advice, and risk exposure
analysis to group companies through three differ-
ent activities streams: Internal Audit, Investigations
and Enterprise Risk Management.
– Internal auditing is an independent function that pro-
vides objective assurance and consulting activity,
aiming to improve the organization’s operations. The
selection of Internal Audit reviews to be executed
during the year is based on specific methodology
throughout the Dufry Group and includes the
consideration of internal and external factors.
In fiscal year 2019, the Global Internal Audit con-
ducted over 80 reviews, examining Headquarters
activities, Divisional functions and Distribution Cen-
ters in addition to 45 operations in all Divisions, rep-
resenting a coverage of more than 88 % of 2019
group net sales including non-consolidated entities.
Regular follow-up is performed to ensure that risk
mitigation and control improvement measures are
implemented on a timely basis.
– The Global Investigations 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 bi-monthly for all group com-
panies and results are proven to provide valuable
information for loss prevention purposes. Addition-
ally, Dufry is continuously trying to use new data
mining techniques to establish validations that can
enhance the coverage and create a higher assur-
ance level over the key retail risks.
– Dufry has in place an Enterprise Risk Management
program which sets out the approach for assessing
compliance with: relevant laws, corporate policies
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4 Governance ReportDUFRY ANNUAL REPORT 2019 4. GLOBAL EXECUTIVE COMMITTEE
4.1 MEMBERS OF THE GLOBAL
EXECUTIVE COMMITTEE
The following table sets forth the name and year of ap-
pointment of the respective members, followed by their
Curricula Vitae with a short description of each mem-
ber’s business experience, education and activities.
As of December 31, 2019, the Global Executive Com-
mittee comprised ten executives compared to seven
members as of December 31, 2018.
All agreements entered into with the members of the
Global Executive Committee are entered for an indefi-
nite period of time.
The Global Executive Committee under the control of
the Group CEO, conducts the operational management
of the Company pursuant to the Company’s board reg-
ulations. The Group CEO reports to the Board of Direc-
tors on a regular basis.
GLOBAL EXECUTIVE COMMITTEE AS OF DECEMBER 31, 2019
NAME
NATIONALITY
POSITION
Julián Díaz González
Yves Gerster
José Antonio Gea
Luis Marin
Pascal C. Duclos
Javier González
Eugenio Andrades
Andrea Belardini
René Riedi
Roger Fordyce
Spanish
Swiss
Spanish
Spanish
Swiss
Spanish
Spanish
Italian
Swiss
Group Chief Executive Officer (Group CEO)
Chief Financial Officer (CFO)
Deputy Group Chief Executive Officer (Deputy Group CEO)
Global Chief Corporate Officer (GCCO)
Group General Counsel (GGC)
Chief Marketing and Digital Innovation Officer
Chief Executive Officer Europe, Africa and Strategy
Chief Executive Officer Division Asia Pacific and Middle East
Chief Executive Officer Division Central and South America
American
Chief Executive Officer Division North America
GEC MEMBER
SINCE YEAR
2004
2019
2004
2014
2005
2018
2016
2019
2019
2019
Changes in the Global Executive Committee
in fiscal year 2019
As of January 18, 2019, Dufry announced that it is fur-
ther simplifying its organization to drive market agil-
ity with full customer focus, generate additional effi-
ciencies at headquarter level and drive strong organic
growth. As part of the changes, Andrea Belardini, René
Riedi and Roger Fordyce (all Divisional CEOs) were join-
ing the previously existing Global Executive Commit-
tee with immediate effect.
Andreas Schneiter, previously CFO, left the Company
on May 31, 2019. He was replaced by Yves Gerster, who
became the new CFO and a member of the Global Ex-
ecutive Committee as of April 1, 2019. For details re-
garding the Curriculum Vitae of Andreas Schneiter
please refer to the Annual Report 2018, page 237 of
the Corporate Governance Report section. The An-
nual Report 2018 can be downloaded from the Com-
pany website under
https://www.dufry.com/en/investors/ir-reports-
presentations-and-publications
DIVERSITY OF THE GLOBAL EXECUTIVE COMMITTEE
10 % AMERICAN
10 % ITALIAN
50 % SPANISH
30 % SWISS
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4 Governance ReportDUFRY ANNUAL REPORT 2019 4.2 EDUCATION, PROFESSIONAL BACKGROUND, OTHER ACTIVITIES AND VESTED INTERESTS
JULIÁN DÍAZ GONZÁLEZ
Group Chief Executive Officer,
born 1958, Spanish
YVES GERSTER
Chief Financial Officer, born 1978,
Swiss
JOSÉ ANTONIO GEA
Deputy Group Chief Executive
Officer, born 1963, Spanish
LUIS MARIN
Global Chief Corporate Officer,
born 1971, Spanish
Education
Degree in business administration
from Universidad 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 General Manager
of Latinoamericana Duty-Free,
S.A. de C.V. Since 2004 Chief
Executive Officer at Dufry AG.
Current Board Mandates
Dufry AG and Hudson Ltd.
Education
Degree in Business Administration
& Finance, University of Basel.
Professional Background
1999 – 2003 Assistant Group
Treasurer at Danzas Management
AG. 2003 – 2006 Assistant Group
Treasurer at Bucher Industries AG.
November 2006 – 2019 Global
Head Group Treasury at Dufry
International AG. Since April
2019 Chief Financial Officer at
Dufry AG.
Education
Degree in economics and business
sciences from Colegio Universitario
de Estudios Financieros.
Education
Degree in Economic Sciences
and Business Administration from
Universidad de Barcelona.
Professional Background
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.
2004 – 2017 Global Chief Operating
Officer at Dufry AG. Since 2018
Deputy Group Chief Executive
Officer at Dufry AG.
Professional Background
1995 – 1998 Auditor at Coopers &
Lybrand. 1998 – 2001 Financial
Controller at Derbi Motocicletas –
Nacional Motor S.A. 2001 – 2004
Head of Finance and Administra-
tion of Spanish subsidiaries of
Areas (member of the French
group Elior). Joined Dufry in 2004,
as Business Controlling Director
and since 2012, also responsible
for mergers and acquisitions.
2014 Appointed Chief Corporate
Officer. Since 2018 Global Chief
Corporate Officer at Dufry AG.
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4 Governance ReportDUFRY ANNUAL REPORT 2019
PASCAL C. DUCLOS
Group General Counsel,
born 1967, Swiss
JAVIER GONZÁLEZ
Chief Marketing and Digital
Innovation Officer, born 1976,
Spanish
EUGENIO ANDRADES
Chief Executive Officer Europe,
Africa and Strategy, born 1968,
Spanish
Education
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 assistant
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.
Education
Executive MBA from La Salle
University Philadelphia, Basel.
Degree in Business Administration
and Economics, EBS, Madrid.
Professional Background
1998 – 1999 Marketing Executive
at Coca Cola. 1999 – 2001
In-Store & Events Manager at
Lego Iberia. 2001 – 2002 In-Store
Marketing Manager at British
American Tobacco. 2002 – 2004
Sales Manager at British American
Tobacco. 2004 – 2005 Business
Unit Marketing Manager at British
American Tobacco. 2005 – 2009
International Senior Brand
Manager at British American
Tobacco. 2009 – 2011 Senior
Marketing Manager at Dufry AG.
2011 – 2014 Global Marketing
Director at Dufry AG. 2014 – 2016
Global Retail Operations and
Marketing Director at Dufry AG.
Since 2016 Chief Marketing
and Digital Innovation Officer
at Dufry AG.
Education
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 & Develop-
ment and Investor Relations at
Aldeasa. 2001 Chief Executive
Officer Jordan and Middle East
region at Aldeasa. 2002 – 2007
Director of Strategy & Develop-
ment and Investor Relations at
Aldeasa. 2007 – 2010 Commercial
Director and Operations Coordi-
nator at Aldeasa. 2011 – 2014 Chief
Commercial Officer at World Duty
Free Group. 2014 – 2015 Chief
Executive Officer at World Duty
Free Group. 2016 – 2017 Chief
Executive Officer Division UK,
Central and Eastern Europe at
Dufry AG. 2018 Chief Executive
Officer Operations and Strategy
at Dufry AG. Since January 2019
Chief Executive Officer Europe,
Africa and Strategy at Dufry AG.
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4 Governance ReportDUFRY ANNUAL REPORT 2019
ANDREA BELARDINI
Chief Executive Officer Division
Asia Pacific and Middle East,
born 1968, Italian
RENÉ RIEDI
Chief Executive Officer Division
Central and South America,
born 1960, Swiss
ROGER FORDYCE
Chief Executive Officer Division
North America, born 1955,
American
Education
Degree in Business and
Economics, University of Rome
(La Sapienza).
Education
Degree in business administration
from the School of Economy and
Business Administration Zurich.
Education
Bachelor of Arts in Psychology
from SUNY Stony Brook.
Professional Background
1991 – 1996 various positions
as Controller and Project Manager
at Carlson Wagonlit Travel.
1997 – 1999 Director of Operations
Italy at Carlson 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
Commercial Business Manage-
ment & 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 2016,
Chief Executive Officer Division
Asia Pacific and Middle East at
Dufry AG.
Professional Background
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
Distribution Ltd. 1998 – 2000).
2000 – 2012 Chief Operating
Officer Region Eurasia at
Dufry AG. 2012 – 2015 Chief Oper-
ating Officer Region America I
at Dufry AG. Since 2016 Chief
Executive Officer Division Central
and South America at Dufry AG.
Professional Background
Prior to 1988 positions as Manag-
er at Dobbs /Aeroplex, WH Smith,
and Greenman Bros. 1988 Joined
Hudson Group as a District
Manager. 1992 – 1996 Vice President
of Operations at Hudson Group.
1996 – 2008 Senior Vice President
of Operations at Hudson Group.
2008 – 2018 Executive Vice Presi-
dent and Chief Operating Officer
at Hudson Group. Since January
2019 Chief Executive Officer
Division North America (Hudson
Group) at Dufry AG.
Current Board Mandates
Hudson Ltd.
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4 Governance ReportDUFRY ANNUAL REPORT 2019
Other activities and vested interests
As of December 31, 2019, none of the members of the Global 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 outside Dufry
Group. The business Division North America is separately listed on the New York Stock Exchange under the name of Hudson Ltd. (see also
comments about Hudson Ltd. in section 1.1 Group Structure). Roger Fordyce is the Chief Executive Officer of Division North America and
therefore also Chief Executive Officer and a member of the Board of Directors of the listed entity Hudson Ltd. Similarly, Julián Díaz González
is a member of the Board of Directors of Hudson Ltd. as well as of Dufry AG. No member of the Global 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 July 17, 2019, no member of the
Global 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 Global Executive Committee
in fiscal year 2019 is included in the Remuneration
Report on pages 252 to 268 of this Annual Report.
b) mandates held at the request of the Company or any
company controlled by it. No member of the Global
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 Global Executive Commit-
tee may hold more than ten such mandates.
For definition of “mandate” please refer to section 3.3
above. For the website link regarding the Articles of
Incorporation please see page 251 of this Corporate
Governance Report.
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 General Meeting of
Shareholders, the supplementary amount for changes
in the executive management as well as the general
compensation principles please refer to Articles
20 – 22 of the Articles of Incorporation. The Articles of
Incorporation do not contain any rules regarding
loans, credit facilities or post-employment benefits
for the members of the Board of Directors and exec-
utive management. The rules regarding agreements
with members of the Board of Directors and of the ex-
ecutive management in terms of duration and termi-
nation are stipulated in Article 23.
Dufry’s Articles of Incorporation are available on the
Company website www.dufry.com – section Investors –
Corporate Governance – Articles of Incorporation.
For the website link regarding the Articles of Incorpo-
ration please see page 251 of this Corporate Gover-
nance Report.
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4 Governance ReportDUFRY ANNUAL REPORT 2019 6. SHAREHOLDERS’ PARTICIPATION RIGHTS
For the website link regarding the Articles of Incorpo-
ration referred to in the following chapters please see
page 251 of this Corporate Governance Report.
6.1 VOTING RIGHTS AND REPRESENTATION
Each share recorded as a 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
General Meeting of Shareholders by the independent
voting rights representative or any person who is au-
thorized 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
specific qualifying date (record date) designated by the
Board of Directors shall be entitled to vote at the
General Meeting of Shareholders and to exercise their
votes at the General Meeting of Shareholders. See
section 6.5 below.
Nominees are only entitled to represent registered
shares held by them at a General Meeting of Share-
holders 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
General Meeting of Shareholders. Shares held by a
nominee for which it is not able to produce such a
proxy count as not being represented at the General
Meeting of Shareholders.
6.2 THE INDEPENDENT VOTING RIGHTS
REPRESENTATIVE
In accordance with Article 10 para. 3 of the Articles of
Incorporation, dated July 17, 2019, the independent
voting rights representative shall be elected by the
General Meeting of Shareholders for a term of office
extending until completion of the next Ordinary
General Meeting of Shareholders. Re-election is possi-
ble. If the Company does not have an independent vot-
ing rights representative, the Board of Directors shall
appoint the independent voting rights representative
for the next General 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.
248
The Ordinary General Meeting of Shareholders held on
May 9, 2019, re-elected Altenburger Ltd legal + tax,
Kuesnacht-Zurich, as the independent voting rights
representative until the completion of the Ordinary
General Meeting of Shareholders in 2020. Altenburger
Ltd legal + tax is independent from the Company and
has no further mandates for Dufry AG.
For the upcoming Ordinary General Meeting of Share-
holders on May 7, 2020, the Company will enable its
shareholders to send their voting instructions elec-
tronically to the independent voting rights represen-
tative Altenburger Ltd legal + tax through the platform:
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 invitation
to the General Meeting of Shareholders.
6.3 QUORUMS
The General Meeting of Shareholders shall be duly
constituted irrespective of the number of sharehold-
ers present or of shares represented. Unless the law
or Articles of Incorporation provide for a qualified
majority, an absolute majority of the votes repre-
sented at a General Meeting of Shareholders is
required for the adoption of resolutions or for elec-
tions, with abstentions, blank and invalid votes having
the effect of “no” votes. The Chairman of the Meet-
ing shall have a casting vote.
A resolution of the General Meeting of Shareholders
passed by at least two thirds of the votes repre-
sented and the absolute majority of the nominal value
of shares represented 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;
4 Governance ReportDUFRY ANNUAL REPORT 2019 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.
7. CHANGE OF CONTROL
AND DEFENSE MEASURES
For the website link regarding the Articles of Incorpo-
ration referred to in the following chapters please see
page 251 of this Corporate Governance Report.
6.4 CONVOCATION OF THE GENERAL MEETING
OF SHAREHOLDERS
7.1 DUTY TO MAKE AN OFFER
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).
7.2 CLAUSES ON CHANGE OF CONTROL
In case of change of control, the share-based payments
as disclosed in the Remuneration Report shall vest
immediately.
In case of change of control, all amounts drawn
under the USD 700,000,000, EUR 500,000,000 and
EUR 1,300,000,000 multicurrency term and revolving
credit facilities agreements shall become immediately
due and payable. Furthermore, upon the occurrence
of a change of control, Dufry may be required to repur-
chase the EUR 800,000,000 Senior Notes due 2024
and the EUR 750,000,000 Senior Notes due 2027 at a
purchase price equal to 101 % of their principal amount,
plus accrued and unpaid interest.
According to Article 23 of the Articles of Incorporation,
employment and other agreements with the members
of the Global Executive Committee may be concluded
for a fixed term or for an indefinite term. Agreements
for a fixed term may have a maximum duration of one
year. Renewal is possible. Agreements for an indefinite
term may have a notice period of maximum twelve
months. The current contracts with the members of
the Global Executive Committee contain termination
periods of twelve months or less.
The General Meeting of Shareholders shall be called
by the Board of Directors or, if necessary, by the
Auditors. One or more shareholders with voting rights
representing in the aggregate not less than 10 % of the
share capital can request, in writing, that a General
Meeting of Shareholders be convened. Such request
must be submitted to the Board of Directors, specify-
ing the items and proposals to appear on the agenda.
The General Meeting of Shareholders shall be con-
vened by notice 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 General Meeting of Sharehold-
ers 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 de-
mand that the General 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 General Meeting of
Shareholders. Such a request must be made in writing
to the Board of Directors at the latest 60 days be-
fore 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 share-
holders into the share register in view of their partici-
pation in the General Meeting of Shareholders is de-
fined by the Board of Directors. It is usually around
2 weeks before the Meeting. Shareholders who dispose
of their registered shares before the General Meeting
of Shareholders are no longer entitled to vote with such
disposed shares.
249
4 Governance ReportDUFRY ANNUAL REPORT 2019 8. AUDITORS
8.1 AUDITORS, DURATION OF MANDATE
AND TERM OF OFFICE OF THE LEAD AUDITOR
Pursuant to the Articles of Incorporation, the Stat-
utory Auditors shall be elected each year and may be
re-elected. Ernst & Young Ltd are the Statutory Audi-
tors since 2004. Jolanda Dolente has been the Lead
Auditor since 2019.
8.2 AUDITING FEE
Financial Officer can delegate non-audit related man-
dates to the Auditors.
The Audit Committee agrees the scope of and dis-
cusses the results of the external audit with the Stat-
utory Auditors. The Statutory Auditors prepare a com-
prehensive report addressed to the Board of Directors
once per year, informing them in detail on the results
of their audit. The Statutory Auditors also review the
interim consolidated financial statements before they
are released.
The auditing fees for 2019, for the audit of the consol-
idated and statutory financial statements of Dufry AG
and its subsidiaries are CHF 7.6 million (including quar-
terly reviews).
Representatives of the Statutory Auditors are regu-
larly invited to meetings of the Audit Committee,
namely to attend during those agenda points that
deal with accounting, financial reporting or auditing
matters.
In addition, the Audit Committee reviews regularly
the internal audit plan. Internal Audit reports are com-
municated to management in charge and the Com-
pany’s senior management on an on-going basis and
4 briefings were done to the Audit Committee in 2019.
During the fiscal year 2019, the Audit Committee held
4 meetings. The Statutory Auditors were present at 3
of those meetings. The Board of Directors has deter-
mined the rotation interval for the Lead Auditor to be
seven years, as defined by the Swiss Code of Obliga-
tion; such rotation occurred the last time in 2019.
8.3 ADDITIONAL FEES
During 2019, Ernst & Young billed additional fees for com-
fort letters, agreed-upon procedures and tax services
in the amounts of CHF 0.2 million, CHF 0.2 million and
CHF 0.1 million, respectively.
8.3 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 Statutory Auditors at least once
each year. Based on its review, the Audit Committee
recommends to the Board of Directors which exter-
nal Auditor should be proposed for election at the Gen-
eral Meeting of Shareholders. The decision regarding
this agenda item is then taken by the Board of Direc-
tors. When evaluating the performance and indepen-
dence of the Statutory Auditors, the Audit Commit-
tee puts special emphasis on the following criteria:
Global network of the audit firm, professional compe-
tence of the lead audit team, understanding of Dufry’s
specific business risks, personal independence of the
lead auditor and independence of the audit firm as a
company, coordination of the Statutory Auditors with
the Audit Committee and the Senior Management /
Finance Department of Dufry Group, practical recom-
mendations with respect to the application of IFRS
regulations.
Within the yearly approved budget, there is also an
amount permissible for non-audit services that the
Statutory Auditors may perform. Within the scope
of the approved and budgeted amount, the Chief
250
4 Governance ReportDUFRY ANNUAL REPORT 2019 9. INFORMATION POLICY
The official means of publication of the Company
is the Swiss Official Gazette of Commerce:
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 used to publish its financial reports on a
quarterly basis in English. As of the 2020 financial
year, Dufry will release a quarterly trading state-
ment for Q1 and Q3 instead of publishing full finan-
cial results. Dufry will continue to publish full finan-
cial results for the half-year and full year periods.
This change is made to focus on a more meaningful
time period of six months, thus allowing to assess
the detailed performance of the Company with a re-
duced influence by quarterly volatility and by the
more pronounced seasonality caused by the IFRS 16
implementation. All financial reports and media re-
leases containing financial information continue to
be available on the Company website.
In addition, Dufry AG organizes presentations and con-
ference calls with the financial community and media
to further discuss details of the reported earnings
or on any other matters of importance. The Company
undertakes roadshows for institutional investors on a
regular basis.
Details and information on the business activities,
Company structure, financial reports, media releases
and investor relations are available on the Company’s
website:
www.dufry.com
www.shab.ch
Web-links regarding the SIX Swiss Exchange push-/
pull-regulations concerning ad-hoc publicity issues
are:
www.dufry.com/en/media/press-releases
www.dufry.com/en/media/press-release-
registration-form
The current Articles of Incorporation are available
on Dufry’s website under:
www.dufry.com/en/investors/corporate-governance
page section “Featured downloads – Articles
of Incorporation”
The financial reports are available under:
www.dufry.com/en/investors/ir-reports-
presentations-and-publications
page section “Presentation of results and other
publications – select Financial Reports”
For the Investor Relations and Corporate Communi-
cations contacts, the Corporate Headquarter address
and a summary of anticipated key dates in 2020 please
refer to pages 272/273 of this Annual Report.
251
4 Governance ReportDUFRY ANNUAL REPORT 2019 REMUNERATION
REPORT
DEAR SHARE-
HOLDERS
2019 was once more a very successful year for Dufry.
Our growth has been accelerating and with CHF 8,848.6
million of turnover reached a new record level. The
adoption of IFRS 16, which became effective as of Jan-
uary 1, 2019, has affected the way we account for our
concession and lease agreements, as we have already
indicated in our 2018 Annual Report. You will find fur-
ther explanations and reference to this change in the
accounting rules in this Remuneration Report and in
the letter of the CFO on page 110, as well as in the con-
solidated financial statements Note 2.4 on page 137,
respectively.
Shareholder interaction and dialogue
Dufry engages with shareholders, analysts and inves-
tors on a regular basis to better understand their ex-
pectations, needs and concerns as part of the Compa-
ny’s strategy with regards to stakeholder dialoque and
ESG engagement. Feedback is taken into consideration
when evolving the Company strategy as well as corpo-
rate governance and remuneration matters. In this con-
text, in 2019, management and the investor relations
team had 870 contacts with shareholders and investors
combining personal meetings, calls and emails. Discus-
sions with analysts, potential investors and sharehold-
ers primarily involved questions and explanations of the
Company strategy and clarifications on the IFRS 16 im-
plementation. Shareholder feedback on remuneration
practices was generally positive and were not a topic
raised often. Related questions and remarks were taken
into consideration by the Board of Directors and the
Remuneration Committee.
The Company recently conducted investor perception
studies - mandated to an external third party - to re-
ceive additional insights of shareholder expectations.
The most recent perception studies were done in Sep-
tember 2018 and June /July 2019. For a more compre-
hensive overview of Dufry’s stakeholder ecosystem
252
please refer to the ESG report section on page 78 of
this Annual Report.
Remuneration Committee
The Remuneration Committee, whose members were
re-elected at the General Meeting of Shareholders on
May 9, 2019, consists of Claire Chiang, Jorge Born and
myself, all of us being non-executive and independent
members of the Board of Directors.
Our Committee reviews the remuneration system, in-
cluding the bonus scheme and long-term incentive plan
(Performance Share Unit plan) on an annual basis to en-
sure alignment with shareholders’ interests and best
practices, and to provide fair and transparent manage-
ment compensation.
In fiscal year 2019, the Remuneration Committee held
six meetings, with attendance ratio of 100 %.
Results of Shareholders’ Meeting on May 9, 2019
Our Shareholders’ Meeting approved the Board of
Directors’ proposal for the maximum aggregate amount
of compensation for the Board of CHF 8.5 million from
the AGM 2019 to the AGM 2020 with a majority of 89.8 %.
The proposal for the maximum aggregate amount of
compensation for the Global Executive Committee of
CHF 42.53 million for the fiscal year 2020 was accepted
with a majority of 71.16 %. Our Remuneration Report
2018 was approved by the Shareholders’ Meeting in a
consultative, non-binding vote by 89.01 % of the votes
represented.
This year’s Remuneration Report 2019 will again be sub-
mitted to a consultative vote at our Shareholders’
Meeting on May 7, 2020.
4 Governance ReportDUFRY ANNUAL REPORT 2019 Changes in 2019 regarding compensation
The following changes regarding compensation were
applied in fiscal year 2019:
For further details on these changes please refer to the
respective sections in this Remuneration Report.
On behalf of the Remuneration Committee and the en-
tire Board of Directors, I would like to thank you, our
shareholders, for your contributions and continued
trust in Dufry.
Yours sincerely,
Lynda Tyler-Cagni
Chairwoman of the Remuneration Committee
Board of Directors:
– The Shareholders’ Meeting approved an amendment
of section 22 para. 2 of the Articles of Incorporation
regarding the compensation of the Board of Direc-
tors (allowing compensation also in shares) by
99.25 %. The bonus of the Chairman, which is based
on the Adjusted EPS for 2019, will be paid in cash.
– The new position of Lead Independent Director was
established in July 2019.
– In addition and as part of the Company’s ESG initia-
tives, one Board member was given responsibility to
oversee Dufry’s ESG initiatives.
Global Executive Committee:
– Short-term incentive: Due to the implementation of
IFRS 16, with EBITDA no longer being reported in the
income statement, and the implementation of the
Business Operating Model being completed by the
end of 2018, the measures regarding financial per-
formance relevant for the annual bonus have been
adjusted. The relevant metrics for 2019 were 40 % Or-
ganic Growth, 20 % Adjusted Operating Profit and
40 % Equity Free Cash Flow (2018: 50 % EBITDA, 25 %
Business Operating Model Efficiency, 25 % Free Cash
Flow). The alignment of the short-term incentive KPIs
is in line with the current Company strategy and the
operational focus of the management team.
– Long-term incentive: Also as a result of the IFRS 16
implementation, the formerly used Normalized Cash
EPS has been replaced with Adjusted EPS as metric
for the calculation of the targets and achievement
ratios of the Performance Share Unit (PSU) plan.
The targets and achievement ratios of the PSU plan
remain as challenging as before.
253
4 Governance ReportDUFRY ANNUAL REPORT 2019 INTRODUCTION
The continuous success of Dufry is dependent on its
ability to attract, motivate and retain outstanding in-
dividuals. Dufry’s aim is to provide appropriate and
competitive remuneration to its employees and to
support their development in a high performance en-
vironment.
This Remuneration Report provides information on the
remuneration system and compensation paid to the
members of the Board of Directors and the Global
Executive Committee for fiscal year 2019. 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 Global Executive Committee.
The Remuneration Report will be presented to the
General Meeting of Shareholders on May 7, 2020, 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 mem-
bers of the Global Executive Committee. It approves
the individual compensation of the members of
the Board of Directors and the Global Executive Com-
mittee. As an exception, the individual compensa-
tion of the Chief Executive Officer for the Division
North America – the separately listed Hudson Ltd. –
is approved directly by the Board of Directors of
Hudson Ltd. In 2019, the Hudson Board of Directors
included Juan Carlos Torres Carretero as Chairman,
Julián Díaz González as Vice-Chairman, Heekyung
Jo Min as Member (January to October) and Andrés
Holzer Neumann as Member (since December 18,
2019). The total size of the Hudson Board was 9 Direc-
tors in fiscal year 2019.
Since January 1, 2015, the General Meeting of Share-
holders has to approve the proposal of the Board of
Directors in relation to the maximum aggregate amounts
of compensation of the Board of Directors for the pe-
riod until the next Ordinary General Meeting of Share-
holders and of the Global Executive Committee for the
following fiscal year. The vote at the Ordinary General
Meeting of Shareholders has binding effect for these
maximum aggregate amounts of compensation. There-
after, the approval of the individual compensation to
the members of the Board of Directors and of the Global
Executive Committee (within the limits approved by the
General Meeting of Shareholders) is with the Board of
Directors (for the CEO of Hudson Ltd. with the Board of
Directors of Hudson Ltd.).
The Remuneration Committee, which consists of three
non-executive independent members of the Board of
Directors, supports the Board of Directors in fulfilling
all remuneration related duties. The General Meeting
of Shareholders held on May 9, 2019, re-elected Ms.
Lynda Tyler-Cagni, Ms. Claire Chiang and Mr. Jorge
Born (all individually elected) as members of the Re-
muneration Committee for a term of office until com-
pletion of the next Ordinary General Meeting of
Shareholders in 2020. Lynda Tyler-Cagni has been
appointed as Chairwoman of the Remuneration Com-
mittee.
COMPENSATION COMPARISONS
During the course of 2019, the Board of Directors of
Dufry consulted PricewaterhouseCoopers AG (PwC)
for its annual review on the structure and level of exec-
utive compensation arrangements, including both
short- and long-term components. As part of this an-
nual review process, the Company conducted a bench-
mark ana ly sis on compensation levels for members of
the Global Executive Committee using third party com-
pensation survey data and disclosed information from
various companies. The peer group for compensation
benchmarking has been selected considering Swiss
listed companies and also factoring in geographic
spread, demographic size of employee base and com-
plexity of the industry. The Company continually
reviews the approach to market benchmarks to ensure
they remain relevant. The list of companies in 2019
included ABB, Adecco, Barry Callebout, Clariant,
Ems-Chemie, Geberit, Georg Fischer, Lafarge Holcim,
Lindt, Lonza, Nestlé, Novartis, Richemont, Roche, Sika,
Sonova, Straumann, Swatch and Swisscom. Other divi-
sions of PwC provided services as Tax and HR Advisors
for other internal projects.
ADJUSTMENTS TO THE REMUNERATION SYSTEM
IN 2019 DUE TO THE IMPLEMENTATION OF THE NEW
FINANCIAL REPORTING STANDARD IFRS 16
As already mentioned in the Annual Report 2018,
Dufry Group adopted the new International Finan-
cial Reporting Standard IFRS 16, effective as of
January 1, 2019. IFRS 16 is the new standard on lease
accounting and affects the accounting of conces-
254
4 Governance ReportDUFRY ANNUAL REPORT 2019 COMMITTEES AND COMMITTEE MEMBERSHIPS
AS OF DECEMBER 31, 2019
MEMBER OF THE BOARD OF DIRECTORS
REMUNERATION COMMITTEE
AUDIT COMMITTEE
NOMINATION COMMITTEE
Juan Carlos Torres Carretero, Chairman
Heekyung Jo Min, Lead Independent Director 1
Jorge Born, Director 2
–
–
–
Committee Member
–
–
Committee Member
Committee Chairman
Committee Chairman
Claire Chiang, Director
Committee Member
Julián Díaz González, Director / Group CEO
Andrés Holzer Neumann, Director
Luis Maroto Camino, Director
Steven Tadler, Director
Lynda Tyler-Cagni, Director
–
–
–
–
–
–
–
Committee Member
Committee Member
–
–
–
Committee Member
Committee Member
Committee Chairwoman
–
Committee Member
1 Dufry’s Board of Directors unanimously resolved to formally establish the position of Lead Independent Director as of July 25, 2019.
Heekyung Jo Min was appointed by the Board of Directors to this new position.
2 Jorge Born acted as Vice-Chairman of the Board of Directors as of October 30, 2018 until July 25, 2019. The position of Vice-Chairman
was replaced by the Lead Independent Director Position mentioned above.
For further details regarding the responsibilities of
the Remuneration Committee and the meetings held
in fiscal year 2019, please refer to section 3.5 Internal
Organizational Structure of the Corporate Governance
Report.
sion agreements, rent agreements for office and
warehouse buildings and other lease arrangements.
As Dufry has hundreds of concession agreements
and lease agreements, the introduction of IFRS 16
impacted a number of items in the balance sheet,
the statement of income and the cash flow state-
ment.
For further explanation of IFRS 16 please also refer
to Note 2.4, which also includes reference to various
other notes in the consolidated financial state-
ments.
The adoption of IFRS 16 had certain consequences
on Dufry’s remuneration system for fiscal year 2019:
– Under IFRS 16, EBITDA is no longer reported in the
income statement.
– In the short-term incentive (annual bonus) for the
Global Executive Committee, Dufry has replaced
the previous key performance indicators EBITDA,
Business Operating Model Efficiency and Free
Cash Flow, which were used in financial year 2018,
with Organic Growth, Adjusted Operating Profit
and Equity Free Cash Flow for the financial year
20191. The weightings of these key performance in-
dicators relevant for 2019 were set at 40 % Organic
Growth, 20 % Adjusted Operating Profit and 40 %
Equity Free Cash Flow. This change was done to
reflect both the impacts caused by the implemen-
tation of IFRS 16 as well as the alignment of the
STI-KPIs with the current Company strategy and
operational focus of the management team.
– In the share-based incentive (PSU), the formerly
used Normalized Cash EPS (earnings per share ad-
justed for amortization of acquisitions, normalized
over a 3-year period) for the calculation of the tar-
gets and achievement ratios of the PSU plans has
been replaced with Adjusted EPS for the financial
year 2019. This earnings per share metric is derived
from “Adjusted Net Profit”, which reflects Net
Profit attributable to Equity Holders of the parent
+ amortization of concession rights + impairment
of concession rights + interest on lease obligations
+ transaction expenses – income tax on these lines
– minority interest on these lines. This adjustment
is of technical nature due to IFRS 16; the challenge
to reach the targets has remained unchanged.
– For the Performance Share Units (PSU) granted
to the members of the Global Executive Committee
during fiscal year 2019, the target value of the
Cumulative Adjusted EPS was set at CHF 23.82,
representing a budgeted Adjusted EPS of CHF 7.67
for the year 2019 and a 3.5% annual growth in 2020
and 2021. This annual growth rate is considered
to be challenging in the Company’s view and is in
line with the target top line growth rate of 3 – 4 %
for the Group.
1
For a glossary of key performance indicators and other performance
measures please see page 270 of this Annual Report.
– For the Performance Share Units (PSU) granted in
the years 2017 and 2018 with their initial targets
255
4 Governance ReportDUFRY ANNUAL REPORT 2019 POSITION / RESPONSIBILITY
Chairman
Lead Independent Director 1
Vice-Chairman 1
Member of the Board of Directors 2
Member responsible for the oversight on Dufry’s ESG initiatives 1
Member of the Remuneration Committee
Member of the Audit Committee
Member of the Nomination Committee
ANNUAL FEE 2019
IN THOUSANDS OF CHF
ANNUAL FEE 2018
IN THOUSANDS OF CHF
2,010.5
100.0
–
250.0
100.0
50.0
50.0
50.0
2,010.5
–
350.0
250.0
–
50.0
50.0
50.0
1 The new Lead Independent Director position was introduced in July 2019, and replaced the former Vice-Chairman position. The fees mentioned
for the position of Lead Independent Director and Responsible on ESG initiatives are in addition to the usual fee as member of the Board of Directors.
2 The Group CEO does not receive additional compensation as a Board member.
set as nominal amounts expressed in Swiss Francs
at CHF 29.23 for the 2018 grant and CHF 25.97
for the 2017 grant, the Board of Directors decided
for the calculation of the payout ratio to use the
previous Cash EPS for fiscal year 2017 and 2018,
and the Adjusted EPS for fiscal year 2019. The
alignment to the new metric Adjusted EPS results
in a deviation from the previous mechanic incor-
porating Cash EPS. The new target for the 2018
Award amounts to CHF 24.27 and for the 2017
Award to CHF 24.98.
– For the CEO Division North America (Hudson Ltd.),
who is a member of the Global Executive Commit-
tee since January 18, 2019, the key performance
indicators for the short-term incentive are based
on Hudson Ltd. targets and results. The Hudson
long-term incentive plan includes Restricted
Share Units (RSU) and Performance Share Units
(PSU). For further details see section “Perfor-
mance targets for the Hudson 2019 LTI plan”
on page 265 of this Annual Report.
REMUNERATION OF THE MEMBERS
OF THE BOARD OF DIRECTORS
REMUNERATION SYSTEM
The remuneration of the members of the Board of
Directors is set to attract and retain highly qualified
individuals to serve on the Board of Directors. The Board
of Directors determines the amount of remuneration
of its members, taking into account their responsibil-
ities, experience and the time they invest in their ac-
tivity as members of the Board of Directors.
tion to his position as member of the Board, included
the following elements in fiscal year 2019:
– Fixed fee in cash as members of the Board of
Directors and members of Board Committees;
– For one member the fixed fee for her responsibili-
ties to oversee Dufry’s ESG initiatives
– For one member the fixed fee in cash as member
of the Board of Directors of Hudson Ltd. (listed
subsidiary) for the period January to October 2019
– Mandatory social security contributions.
In addition, the Chairman of the Board of Directors, who
is intensely involved with the Company’s management
and is therefore considered an executive Chairman,
may also receive a performance bonus. The 2019 bo-
nus was based on the budgeted Adjusted EPS for the
year under review, which for fiscal year 2019 was a tar-
get of CHF 7.67 based on the new calculation of Ad-
justed EPS due to the adoption of IFRS 16 (2018: bonus
based on growth of reported Cash EPS for 2018). The
bonus has a minimum threshold of 75 % of the target
that must be achieved otherwise no bonus will be paid
and a maximum threshold of 130 % of the target. The
bonus for fiscal year 2019 is capped at 130 % of the tar-
get bonus. The amount of the target bonus for fiscal
year 2019 was set at 100 % of the Chairman’s board fee
(2018: target bonus was also set at 100 % of Chairman’s
board fee; with the cap at 150 %). Since fiscal year 2019,
the Chairman’s bonus can be paid either in cash or in
an equivalent number of shares allocated to him or as
a mix between the two compensation instruments. The
Board of Directors decided that the bonus for the
Chairman for fiscal year 2019 will be paid in cash (2018:
bonus also paid in cash).
The total compensation of the members of the Board
of Directors, except for the Group Chief Executive Of-
ficer who does not receive any compensation in rela-
With the exception of the variable compensation of the
Chairman and of the Group CEO (each in their capac-
ity as Chairman and Group Chief Executive Officer),
256
4 Governance ReportDUFRY ANNUAL REPORT 2019
COMPENSATION OF THE BOARD OF DIRECTORS (AUDITED)
2019
NAME, FUNCTION
IN THOUSANDS OF CHF
REMUNERATION
POST-
EMPLOYMENT
BENEFITS 10
TOTAL
REMUNERATION
POST-
EMPLOYMENT
BENEFITS 10
2018
TOTAL
3,845.4
196.1
4,041.5
4,773.4
243.0
5,016.4
Juan Carlos Torres Carretero, Chairman 1, 5
Heekyung Jo Min, Independent Lead Director 2, 5
Jorge Born, Director 3
Claire Chiang, Director
Julián Díaz González, Director and CEO 4, 5
Andrés Holzer Neumann, Director 3
Luis Maroto Camino, Director 6
Steven Tadler, Director 7
Lynda Tyler-Cagni, Director 7
497.9
400.0
321.7
–
400.0
182.8
321.7
308.5
–
23.4
15.6
–
19.6
10.8
–
18.2
497.9
423.4
337.3
–
419.6
193.6
321.7
326.7
499.7
383.1
300.0
–
400.0
–
198.3
198.3
Subtotal for active members as at Dec 31
6,278.0
283.7
6,561.7
6,752.8
Xavier Bouton, Director 8
George Koutsolioutsos, Director 9
Joaquin Moya-Angeler Cabrera, Director 5, 8
–
–
–
–
–
–
–
–
–
119.6
119.4
186.2
–
22.4
14.5
–
19.6
–
–
11.7
311.2
5.8
7.1
5.8
499.7
405.5
314.5
–
419.6
–
198.3
210.0
7,064.0
125.4
126.5
192.0
Total
6,278.0
283.7
6,561.7
7,178.0
329.9
7,507.9
1 The remuneration for Mr. Torres Carretero includes Board fee of CHF 2.01 million and bonus of CHF 1.83 million
(2018: CHF 2.01 million Board fee and CHF 2.76 million bonus).
2 Ms. Heekyung Jo Min was appointed as Lead Independent Director on July 25, 2019. In addition, she is responsible
for the oversight of Dufry’s ESG initiatives. The fees for these two responsibilities started to get paid as of November 2019.
3 Mr. Holzer Neumann was Vice-Chairman and Chairman of the Nomination Committee until October 30, 2018. Mr. Born
assumed these duties as of October 31, 2018 and until July 25, 2019. The position of Vice-Chairman was replaced
by the new Lead Independent Director position. In 2019, Mr. Holzer Neumann received an additional fee of CHF 0.15 million
as compensation for the significant additional time spent on further developing the Company’s retail concepts and new activities.
4 Mr. Díaz González (Group CEO) does not receive any additional compensation as Board member.
5 In fiscal year 2019, the following Dufry Board members also served as members of the Board of Directors of Hudson Ltd.:
Juan Carlos Torres Carretero, Julián Díaz González, Heekyung Jo Min (Jan – Oct) and Andrés Holzer Neumann (as of Dec 18, 2019).
Heekyung Jo Min received a Board fee of USD 0.17 million in 2019 for the period Jan – Oct (2018: USD 0.20 million for period Jan – Dec)
for her services as member of the Board of Hudson Ltd. In 2018, Mr. Moya-Angeler Cabrera received a Board fee of USD 0.07 million
(Jan – Apr) for the services as members of the Board of Hudson Ltd. Juan Carlos Torres Carretero and Julián Díaz González did not receive
additional fees for their services as Hudson Board members in fiscal year 2019 or in fiscal year 2018.
6 Director since AGM on May 9, 2019.
7 Director since AGM on May 3, 2018.
8 Director until AGM on May 3, 2018.
9 Resigned from the Board of Directors on June 22, 2018.
10 Amount includes mandatory employer social security contributions.
the compensation of the members of the Board of
Directors is not tied to particular targets.
Extraordinary assignments or work which a member
of the Board of Directors performs for the Company
outside of his / her activity as a Board member can be
specifically remunerated and has to be approved by
the Board of Directors. Mr. Andrés Holzer Neumann
received an additional fee of TCHF 150 as compensa-
tion for the significant additional time spent on fur-
ther developing the Company’s retail concepts and
new activities (2018: no extraordinary assignments).
In addition, the members of the Board of Directors are
reimbursed all reasonable cash expenses incurred by
them in the discharge of their duties.
The Remuneration Committee discusses the annual
compensation (board fees, committee fees, target bo-
nus for Chairman) in separate meetings. The Chairman
and the Group CEO usually participate as guests in
these meetings without any voting rights. They leave
the room, when their own compensation is discussed
by the Remuneration Committee. The 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 mem-
bers once per year, with all Board members being pres-
ent during such meeting (Group CEO compensation
reviewed and decided separately as described in the
section “Remuneration of the members of the Global
Executive Committee”).
257
4 Governance ReportDUFRY ANNUAL REPORT 2019
CHANGES IN THE REMUNERATION SYSTEM
IN 2019 – BOARD OF DIRECTORS
SUMMARY OF REMUNERATION IN
FISCAL YEARS 2019 AND 2018
– In July 2019, the Board of Directors established the
position of Lead Independent Director as a new po-
sition, replacing the Vice-Chairman position. The
Board of Directors has set the annual fee for this
new position at TCHF 100 (this fee started to get
paid as of November 2019).
– Reflecting the importance of ESG initiatives and re-
porting, the Board of Directors appointed Heekyung
Jo Min as the Board member responsible to have the
oversight on Dufry’s ESG initiatives. The Board of
Directors has set the annual fee for this position at
TCHF 100 (this fee started to get paid as of Novem-
ber 2019). During 2019, Ms. Min’s involvement in-
cluded, among other topics, the evolution of our
Corporate Governance and advice on Dufry’s over-
all ESG strategy and focus areas.
– Jorge Born, Vice-Chairman as of October 31, 2018
until July 25, 2019, received TCHF 250 as a Board
member and a total of TCHF 150 for his membership
in three different committees. He received no spe-
cific Vice-Chairman remuneration for this period.
– The other Board fees remained unchanged in fiscal
year 2019 compared with 2018.
– Certain members of Dufry AG’s Board of Directors
are also members of the Board of Directors of
Hudson Ltd., Dufry’s subsidiary which has been
separately listed on the New York Stock Exchange
as of February 1, 2018. The compensation of the
Board of Directors as shown in the table on page 257
includes such remuneration. In fiscal year 2019,
Heekyung Jo Min was the only member that re-
ceived additional compensation for her services in
the Board of Directors at Hudson Ltd. for the period
January to October 2019 that she still served as
Board member of Hudson Ltd. (2018: Heekyung Jo
Min and Joaquin Moya-Angeler Cabrera received
additional compensation as members of the Board
of Directors of Hudson Ltd.).
– Messrs. Juan Carlos Torres, Julián Díaz González
and Andrés Holzer Neumann who are also members
of the Board of Directors of Hudson Ltd. as of De-
cember 31, 2019, received no compensation for their
Board memberships at Hudson in 2019 or 2018.
For 2019, the members of the Board of Directors (ex-
cept the Chairman and the Group CEO) received a
Board membership fee of TCHF 250 in cash and an ad-
ditional TCHF 50 in cash for each membership in a
Board Committee. The level of these Board fees re-
mained unchanged for the last five years, i.e. since the
Ordinary General Meeting of Shareholders in April
2015. For the new responsibilities of Lead Independent
Director and for the oversight on Dufry’s ESG initia-
tives, the Board of Directors set those fees at TCHF 100
each, as explained above.
The Board fee for the Chairman position was last in-
creased in 2017 and remained unchanged in fiscal year
2018 and 2019. The Chairman of the Board of Directors
will receive a bonus of TCHF 1,834.9 for fiscal year 2019,
to be paid in cash (2018: bonus in cash of TCHF 2,763.0).
The bonus amounts to 91 % of the Chairman’s board
fee (2018: 137 % of board fee). For further details please
refer to the remuneration table on page 257.
On December 31, 2019, the Board of Directors com-
prised 9 members (December 31, 2018: 8 Board mem-
bers). For fiscal years 2019 and 2018, covering the
period between January 1 and December 31, the remu-
neration for the members of the Board of Directors is
shown in the remuneration table on page 257.
The remuneration difference compared with the previ-
ous year is mainly due to the changes in the total num-
ber of Board members and the composition of the Board
of Directors and of its Committees, different length of
time periods of Board compensation for services on the
Board of Directors of Hudson Ltd. (if any) as well as the
different amount of bonus for the Chairman.
OTHER COMPENSATION, LOANS
OR GUARANTEES (AUDITED)
For the years 2019 and 2018, no other compensation
(other than mentioned in the table on page 257) was paid
directly or indirectly to current or former members of
the Board of Directors, or to their related parties.
BOARD
COMPENSATION
FOR FISCAL YEAR
2019 AS
REPORTED
LESS BOARD
COMPENSATION
TO BE ACCRUED
FOR THE PERIOD
JANUARY 1, 2019
TO THE AGM
ON MAY 9, 2019
(4 MONTHS)
PLUS BOARD
COMPENSATION
TO BE ACCRUED
FOR THE PERIOD
JANUARY 1, 2020
TO THE AGM
ON MAY 7, 2020
(4 MONTHS)
TOTAL BOARD
COMPENSATION
FOR THE PERIOD
FROM AGM 2019
TO AGM 2020
TOTAL
MAXIMUM
AMOUNT AS
APPROVED BY
SHAREHOLDERS
AT THE AGM 2019
FOR PERIOD OF
AGM 2019 TO
AGM 2020
COMPEN-
SATION
RATIO
IN THOUSANDS OF CHF
Total Board of Directors
6,561.7
(1,462.5)
1,637.8
6,737.0
8,500.0
79.3 %
258
4 Governance ReportDUFRY ANNUAL REPORT 2019
There are also no loans or guarantees received or pro-
vided to these Board members, nor to their related
parties.
REMUNERATION OF THE MEMBERS
OF THE GLOBAL EXECUTIVE COMMITTEE
RECONCILIATION BETWEEN REPORTED
BOARD COMPENSATION FOR FISCAL YEAR 2019
AND THE AMOUNT APPROVED BY THE
SHAREHOLDERS AT THE AGM 2019 UNTIL
THE AGM 2020
The Ordinary General Meeting of Shareholders held on
May 9, 2019 approved a maximum aggregate amount
of compensation of the Board of Directors for the
term of office from the AGM 2019 to the AGM 2020 of
CHF 8.5 million (CHF 8.7 million from AGM 2018 to AGM
2019). The table on page 258 shows the reconciliation
between the reported Board compensation for fiscal
year 2019 and the amount approved by the sharehold-
ers at the AGM 2019.
10 MEMBERS OF THE GLOBAL EXECUTIVE
COMMITTEE IN 2019 VS. 7 MEMBERS IN 2018
On January 18, 2019, Dufry announced a new, simpli-
fied organization to drive market agility with full cus-
tomer focus, generate additional efficiencies and drive
organic growth. The Global Executive Committee,
which consisted of seven members as of December 31,
2018, was increased by the three positions of the CEOs
for the Divisions Asia Pacific and Middle East, Central
and South America as well as North America. Further-
more, the former CFO Andreas Schneiter left the
Company on May 31, 2019 and was replaced by the new
CFO Yves Gerster as of April 1, 2019.
At year-end 2019, the Global Executive Committee
consisted of ten members. These members are the
Group Chief Executive Officer, Chief Financial Offi-
cer, Deputy Group Chief Executive Officer, Global
Chief Corporate Officer, Group General Counsel,
Chief Executive Officer Europe, Africa and Strategy,
Chief Executive Officer Division Asia Pacific and Mid-
dle East, Chief Executive Officer Division Central and
South America, Chief Executive Officer Division North
America, and the Chief Marketing and Digital Innova-
tion Officer.
REMUNERATION COMPONENTS
Basic salary
Bonus 1
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
– Pay for performance
– Achievement
Share-based incentives
PSU 1, 2
– Performance Share Units (PSU)
if any, vesting conditional on
performance
– Rewarding long-term
performance
– Aligning compensation
to shareholder interests
Other indirect benefits,
post-employment benefits
– Allowances in kind
– Social pension and insurance
– To attract and retain
management
prerequisites
of financial results of the Group
and of specific Divisions
(for the Divisional CEOs)
– PSU Award 2019: Cumulative
Adjusted EPS in CHF over
3 years (2019, 2020 and 2021)
– PSU Award 2018: Cumulation
of Cash EPS in CHF for 2018
and Adjusted EPS in CHF for
the years 2019 and 2020
- PSU Award 2017: Cumulation
of Cash EPS in CHF for the
years 2017 and 2018 and
Adjusted EPS in CHF for 2019
– Market practice and position
– Legal requirements of social
benefits
1 For the CEO Division North America (Hudson Ltd.) based on targets of Hudson Ltd.
2 The share-based incentive scheme of Hudson includes Restricted Share Units (RSU) and Performance Share Units (PSU).
259
4 Governance ReportDUFRY ANNUAL REPORT 2019 PERFORMANCE OBJECTIVES FOR BONUS 1
FISCAL YEAR 2019
FISCAL YEAR 2018
OBJECTIVES FOR THE GLOBAL EXECUTIVE COMMITTEE 2
OBJECTIVES FOR THE GLOBAL EXECUTIVE COMMITTEE
40 % Organic Growth
20 % Adjusted Operating Profit
40 % Equity Free Cash Flow
50 % EBITDA
25 % Business Operating Model Efficiency
25 % Free Cash Flow
1 For a glossary of the key performance indicators and other performance measures please refer to page 270 of this Annual Report.
2 For the Division CEOs the metrics Organic Growth and Adjusted Operating Profit are based on the results of their Divisions (for the other GEC
members on Dufry Group results). The objective Equity Free Cash Flow is based on Dufry Group level. For the CEO Division North America, the
objectives are based on Hudson results only, with objectives being 40 % Organic Growth, 35 % Adjusted EBITDA and 25 % Adjusted EPS of Hudson.
REMUNERATION SYSTEM
ANNUAL BONUS
Dufry aims to provide internationally competitive
compensation to the members of its Global Executive
Committee (GEC) that reflects the experience and the
area of responsibility of each individual member. The
members of the Global Executive Committee receive
compensation packages which consist of a fixed basic
salary in cash, social benefits, allowances in kind, a per-
formance related bonus and share-based incentive plans.
The CEO of the Division North America, Hudson Ltd.,
which is separately listed on the New York Stock Ex-
change, is a member of the Global Executive Commit-
tee, but participates in terms of his compensation
packages (including the performance related bonus
and long-term incentive plans) in a separate remuner-
ation system and incentive plan for members of the
Hudson Ltd. management. All other members of the
Global Executive Committee participate in the Dufry
remuneration system and incentive plans.
BASIC SALARY
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.
Salary increases for members of the Global Executive
Committee are generally done in line with increases
for the broader workforce. In case of promotions, typ-
ically a more substantial salary increase may be war-
ranted. Nevertheless, a newly promoted GEC member
would get a base salary at the lower end of the ex-
pected range with a view to get above-average in-
creases alongside his growing experience and with a
view to get between the median and the upper half of
the target range within 3 – 5 years. Also, higher salary
increases may be warranted when there is an increase
in responsibilities.
260
The annual bonus is defined once per year and is based
on a bonus target expressed as a percentage of the
annual basic salary. The target bonus corresponds
to the bonus award at 100 % achievement of the pre-
defined objectives. Each member of the Global Exec-
utive Committee has its own bonus. In the event that
an executive reaches the objectives in full, the bonus
pay-out will correspond to the targeted level. If one
or more objectives are not reached, the bonus will be
reduced. The bonus pay-out can be between a mini-
mum of zero and the maximum capped amount of
130 % of the target bonus for all members of the Global
Executive Committee, including the Group CEO.
The targets for the annual bonus are set to be stretch-
ing but achievable and focus on key operational met-
rics and metrics related to key strategic initiatives. The
Remuneration Committee considers the financial tar-
gets for the annual bonus to be commercially sensitive
and that it would be detrimental to disclose details.
The annual bonus is usually paid out in cash in the sec-
ond quarter of the following year. As an exception, the
Board of Directors (upon proposal by the Remunera-
tion Committee) decided in 2016 that the bonus for fis-
cal year 2015 shall be settled 50 % in cash and 50 % in
rights to receive shares, which finally vested if the GEC
member was still employed on January 1, 2019. The
shares that were used to settle the 2015 bonus pay-
ment had no dilutive effect, as they were sourced ex-
clusively from treasury shares. The bonus pay-outs for
the following fiscal years, including 2019, are in cash.
RANGE OF BONUS COMPONENTS
IN % OF BASIC SALARY
2019
2018
2017
Global Executive
Committee
26 – 97 %
37 – 97 %
41 – 217 %
4 Governance ReportDUFRY ANNUAL REPORT 2019
TIMING OF THE PSU PLANS
YEAR 2016
YEAR 2017
YEAR 2018
YEAR 2019
YEAR 2020
YEAR 2021
YEAR 2022
PSU Award 2016
Grant date
Vesting period PSU Award 2016
Vesting condition
reached
PSU Award 2016
Vesting
PSU Award 2017
Grant date
Vesting period PSU Award 2017
Vesting condition
reached
PSU Award 2017
Vesting
PSU Award 2018
Grant date
Vesting period PSU Award 2018
Vesting condition
reached
(Yes / No?)
PSU Award 2018
PSU Award 2019
Grant date
Vesting period PSU Award 2019
Vesting condition
reached
(Yes / No?)
PSU Award 2019
For fiscal year 2019, the target bonus amounted to
110 % of the basic salary for the Group CEO and to be-
tween 50 % and 105 % of the basic salary for the other
members of the Global Executive Committee (fiscal
year 2018: 100 % for the Group CEO and between 38 %
and 100 % for the other members of the Group Exec-
utive Committee). Considering the market review of
total compensation for the members of the Global Ex-
ecutive Committee for the 2019 business year, some
further alignment and harmonisation of the variable
compensation was required to align both with the ex-
ternal market for similar roles and also with internal
peer groups. This resulted in a narrowing of the range
to between 50 % and 105 % in 2019. The strategy of the
compensation review was to balance the weighting be-
tween base salary and the variable compensation
component.
The bonus is mainly related to measures regarding
financial performance: in 2019, the relevant weightings
for the members of the Global Executive Committee
were 40 % Organic Growth (Like-for-like growth + Net
new concessions), 20 % Adjusted Operating Profit (Op-
erating profit + amortization of concession rights + im-
pairment of concession rights + transaction expenses)
and 40 % Equity Free Cash Flow (Free Cash Flow - In-
terest paid - Cash Flow related to minorities +/- Other
financing items) of the Dufry Group results. For the Di-
vision CEOs it was 40 % Organic Growth and 20 % Ad-
justed Operating Profit of their respective Division and
40 % Equity Free Cash Flow of Dufry Group. For the CEO
Division North America, the objectives are based on
Hudson results only, with objectives being 40 % Organic
Growth, 35 % Adjusted EBITDA and 25 % Adjusted EPS.
In the previous year 2018, the weightings for all mem-
bers of the Global Executive Committee were 50 %
EBITDA, 25 % Business Operating Model Efficiency and
25 % Free Cash Flow.
261
4 Governance ReportDUFRY ANNUAL REPORT 2019 DUFRY AG PSU VESTING
DUFRY AG PSU GRANTS 2019
DUFRY AG PSU GRANTS 2018
METRIC
PSU VESTING
METRIC
PSU VESTING
EPS basis
< minimum threshold
(50 % of target)
at target
> maximum threshold
(150 % of target)
Between minimum
threshold and maximum
threshold
Based on Cumulative
Adjusted EPS (three-year
period 2019 – 2021)
No vesting
100 % vesting
(1 share per PSU)
Maximum vesting
(2 shares per PSU)
Linear calculation
(between 0 and maximum
2 shares per PSU)
EPS basis
< minimum threshold
(50 % of target)
at target
> maximum threshold
(150 % of target)
Between minimum
threshold and maximum
threshold
Based on Cumulation of Cash
EPS (for 2018) and Adjusted
EPS (for years 2019 and 2020)
No vesting
100 % vesting
(1 share per PSU)
Maximum vesting
(2 shares per PSU)
Linear calculation
(between 0 and maximum
2 shares per PSU)
The bonus accrued as part of the compensation for the
members of the Group Executive Committee repre-
sented in 2019 between 26 % and 97 % of their basic sal-
ary and amounted to CHF 4.63 million in the aggregate
(2018: between 37 % and 97 % of their basic salary and
an amount of CHF 4.97 million in the aggregate). The
achievement ratio regarding the Group results’ targets
of the three elements Organic Growth, Adjusted Oper-
ating Profit and Equity Free Cash Flow combined was
53 % for fiscal year 2019 (2018: achievement ratio 97 %
for the elements EBITDA, Business Model Operating Ef-
ficiency and Free Cash Flow). The achievement levels
for each of the components were between 56 % and
96 % of target for metrics at Group level (Group Organic
Growth, Group Adjusted Operating Profit and Group
Equity Free Cash Flow) in 2019. The threshold limits are
75 % and 130 % for each metric.
The bonus compensation for the members of the Global
Executive Committee, other than the bonuses for the
Group CEO and for the CEO Division North America, is
approved by Dufry’s Remuneration Committee in coor-
dination with the Group CEO. The Group CEO’s bonus
is determined based on achieved targets and proposed
by the Remuneration Committee and decided by the
Board of Directors once per year. The Remuneration
Committee as well as the Board of Directors review the
compensation of the members of the Global Executive
Committee on a yearly basis. The bonus for the CEO
Division North America is approved by Hudson’s Remu-
neration Committee in consultation with the Group
CEO who is also Vice-Chairman of the Board of Direc-
tors at Hudson Ltd.
SHARE-BASED INCENTIVES (PSU )
In 2013, Dufry introduced a Performance Share Unit
(PSU) plan for the members of the Global Executive
Committee. The purpose of the plan is to provide the
members of the Global Executive Committee (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 per-
formance 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 in-
creasing the ability of Dufry Group to attract and retain
persons of exceptional skills.
Since its separate listing on the New York Stock
Exchange, Dufry’s subsidiary Hudson Ltd. has its
own long-term incentive (LTI) plan for members of the
management of Hudson Ltd. Details of Hudson’s LTI
plan awards are available in Note 25.2 of the consoli-
dated financial statements in this Annual Report. The
LTI plan awards granted by Hudson are directly vest-
ing into Hudson shares and are therefore not part of
the Dufry AG PSU plan. The CEO Division North Amer-
ica (Hudson Ltd.) is participating in the Hudson LTI plan
which consists of Restricted Share Units (RSU) and
Performance Share Units (PSU), instead of the
Dufry AG PSU plan. He is the only member of the Global
Executive Committee that does not participate in the
Dufry AG PSU plan.
From an economic point of view, Dufry’s PSU and also
Hudson’s RSU and PSU are stock options with an ex-
ercise price of nil. However, they are expected to have
no dilutive effect, as the shares for share-based incen-
tives historically have been sourced from treasury
262
4 Governance ReportDUFRY ANNUAL REPORT 2019 COMPENSATION OF THE MEMBERS OF THE GLOBAL EXECUTIVE COMMITTEE (AUDITED)
REMUNERATION COMPONENT
IN THOUSANDS OF CHF
Basic salary
Bonus
Post-employment benefits 2
Other indirect benefits
Share-based payments accrued (3 years vesting period) 3
Total compensation accrued
GEC
(10 members)
8,759.8
4,627.7
1,775.5
373.3
5,704.2
21,240.5
2019
CEO 1
1,924.0
1,121.2
571.5
23.1
1,180.2
4,820.0
GEC
(7 members)
6,661.8
4,966.0
1,610.1
330.9
5,405.3
18,974.1
2018
CEO 1
1,832.4
1,775.6
593.3
23.1
1,635.2
5,859.6
Total compensation pay -out
27,038.7
7,281.2
20.021.6
6,611.5
Number of performance share units awarded (in thousands) 3
126.8
12.1
55.6
16.8
1 The Group CEO is the highest paid member.
2 Amount includes employer social security contributions and pension contributions.
3 For valuation details of the Dufry performance share units see Note 25.1 of the consolidated financial statements.
The accrued values in the table reflect the different valuations of the PSU in the different reporting years. PSU are calculated at target.
Fiscal year 2019 also includes the Hudson RSU and PSU granted to the CEO Division North America
(for valuation details of these RSU and PSU see Note 25.2 of the consolidated financial statements).
shares held by the Company (or by Hudson in case of
the Hudson RSU / PSU).
Details of the Performance Share Units (PSU)
The number of PSU allocated to each member of the
Global Executive Committee in any given year takes into
account the basic salary as well as the prevailing share
price and assumes that the target will be achieved, i.e.
that one share vests for each PSU. The accrued value
of the PSU represented about 61 % of the basic salary
for the Group CEO and between 41 % and 92 % of the
basic salary for the other members of the Global Exec-
utive Committee (2018: 89 % for the Group CEO and be-
tween 74 % and 92 % for the other members of the
Global Executive Committee). The PSU awards will only
vest in the third year of the award period and are linked
to specific performance criteria (see below). Once PSU
are vesting, the shares will become immediately unre-
stricted and available to the plan participants. The
structure of the PSU is identical in the case of the Hud-
son PSU, however with different performance metrics
for Hudson.
Vesting conditions of the PSU are:
– The participant’s ongoing contractual relationship
on the vesting date; and
– The achievement of the performance target as de-
scribed below.
Performance targets for the Dufry 2019 and 2018
PSU grants
2019 grant: The number of shares allocated for each
PSU directly depends on the Company’s Cumulative
Adjusted EPS as a nominal amount in Swiss Francs of
the three-year period preceding the vesting. The Tar-
get Cumulative Adjusted EPS (period 2019-2021) has
been set at CHF 23.82, based on the 2019 budgeted Ad-
justed EPS (of CHF 7.67) and applying a growth rate of
3.5 % per annum. This annual growth rate is considered
to be challenging in the Company’s view and is in line
with the current target top line growth rate of 3 - 4 %
for the Group. The percentage of the applied growth
rate for the PSU plan of the next year is subject to po-
tential change from year to year by the Remuneration
Committee.
2018 grant: With the implementation of IFRS 16 and
the previously used Normalized Cash EPS metric no
longer being continued as of January 1, 2019, the 2018
grant has been amended as follows: For the calcula-
tion of the cumulative achievement, the number of
shares allocated for each PSU depends on a cumula-
tion (period 2018 - 2020) of the formerly used Cash EPS
for the year 2018 and the Adjusted EPS for the years
2019 and 2020.
Depending on the Cumulative Adjusted EPS (for 2018
plan: combination of Cash EPS for 2018 and Adjusted
EPS for 2019 and 2020) achieved, each PSU will con-
vert according to the following grid:
263
4 Governance ReportDUFRY ANNUAL REPORT 2019 REMUNERATION STRUCTURE GROUP EXECUTIVE COMMITTEE IN 2019 (TEN MEMBERS)
10 % POST-EMPLOYMENT BENEFITS,
OTHER INDIRECT BENEFITS
41 % BASIC SALARY
27 % SHARE-BASED
PAYMENTS
BASIC SALARY
BONUS
SHARE-BASED PAYMENTS
POST-EMPLOYMENT
BENEFITS,
OTHER INDIRECT BENEFITS
IN THOUSANDS OF CHF
30.000
20.000
10.000
0
GEC
2.315
5.704
7.291
8.760
CEO
657
1.180
2.116
1.924
GEC
2.981
11.408
9.478
8.760
GEC
2.149
5.704
4.627
8.760
CEO
594
1.180
1.121
1.924
CEO
788
2.360
2.751
1.924
Target (100%)
Maximum potential
Accrued compensation
2019
22 % BONUS
– 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
allocated any shares from the PSU.
– For a Cumulative Adjusted EPS at target, the par-
ticipant shall be allocated one share for every PSU
that has vested.
– For a Cumulative Adjusted EPS of 150 % of target
or above, which represents the maximum thresh-
old, the participant shall be allocated two shares
for every PSU that has vested.
– For a Cumulative Adjusted EPS higher than the min-
imum threshold but lower than the maximum thresh-
old, the number of shares allocated from vested
PSU is calculated on a linear basis.
– The maximum number of shares allocated is capped
at two shares per vested PSU.
In 2019, nine members of the Global Executive Com-
mittee (excluding the CEO Division North America
who participates in the Hudson LTI plan) have been
GEC REMUNERATION (ACCRUED) IN PERIODS 2015–2019
Maximum potential
Target (100%)
2015
2016
2017
2018
2019
Actual accrued compensation in the year
YE 2015: 7 GEC members; YE 2016/2017: 12 GEC members;
YE 2018: 7 GEC members; YE 2019: 10 GEC members.
264
granted, in the aggregate, 50,134 PSU (2018: 55,612
PSU to seven members of the Global Executive Com-
mittee). Out of this amount, 12,122 PSU were granted
to the Group CEO (2018: 16,823 PSU). The total num-
ber of shares that can be allocated to these nine
members of the Global Executive Committee would
amount to the following: At target, 50,134 shares for
the PSU Award 2019, 61,060 shares for the PSU Award
2018 and 55,275 shares for the PSU Award 2017, which
will vest in 2020. At maximum (i.e. at 2 shares per
vested PSU from the 2019 and 2018 grants) it would
amount to 100,268 shares for the PSU Award 2019,
122,120 shares for the PSU Award 2018 and 55,275
shares for the PSU Award 2017.
Overall, the number of persons qualified to receive PSU
awards includes (since fiscal year 2015) not only the
members of the Global Executive Committee, but also
further selected members of the Senior Management
team of Dufry (about 26 senior managers). In addition to
the PSU awarded to the members of the Global Execu-
tive Committee, this further group of Senior Managers
received in aggregate 31,200 PSU from the Award 2019
(2018: about 60 managers and 68,486 PSU from the
Award 2018; in 2017: about 80 managers and 74,905 PSU
from the PSU Award 2017, which will vest in 2020). The
conditions of the Dufry PSU plans are identical for all
plan participants (whether members of the Global Exec-
utive Committee or Senior Managers). The total number
of shares that can be allocated to the Senior Manage-
ment team members would amount to the following: At
target, 31,200 shares for the PSU Award 2019, 68,486
shares for the PSU Award 2018 and 74,905 shares for the
PSU Award 2017, which will vest in 2020. At maximum,
4 Governance ReportDUFRY ANNUAL REPORT 2019 62,400 shares for the PSU Award 2019, 136,972 shares
for the PSU Award 2018 and 74,905 shares for the PSU
Award 2017.
For the PSU plan 2015 that vested in May 2018, 92.6 % of
the target number of shares were allocated to the plan
participants. For the PSU plan 2016 that vested in
May 2019, 104.0 % of the target number of shares were
allocated to the plan participants.
The total number of shares that can be allocated to all
participants of the Dufry PSU Awards 2019 and 2018,
the vested and allocated 130,180 shares from the PSU
Award 2017 and the vested rights to receive shares
from the 2015 bonus (which was split into 50 % cash
and 50 % in rights to receive shares, equivalent to
82,536 shares in total, and which vested on January 1,
2019) would amount to the following: At target 423,596
shares, representing a total of 0.84 % of the outstand-
ing shares as at December 31, 2019. At maximum (i.e.
at 2 shares per vested PSU from the PSU Awards 2019
and 2018) 634,476 shares, representing a total of 1.25 %
of the outstanding shares as at December 31, 2019.
Historically, Dufry has always sourced its share-based
compensation from treasury shares, so that no dilu-
tive effect is expected from the PSU.
For a description of the performance targets of the
PSU Awards 2016 and 2017 (with vesting in 2019 and
2020, respectively), please refer to the details in the
Remuneration Report 2017 on page 243 of the An-
nual Report 2017. Please note that as a result of the
implementation of IFRS 16, for the PSU Award 2017,
the relevant metric for the year 2019 was also Ad-
justed EPS (i.e. the shares allocated for each PSU 2017
depended on a cumulation (period 2017 – 2019) of the
formerly used Cash EPS for the years 2017 and 2018,
and the Adjusted EPS for the year 2019). The new cu-
mulative target for this combined metric amounted
to CHF 24.98.
Link to the Annual Report 2017:
www.dufry.com/en/investors/ir-reports-
presentations-and-publications
page section “Presentation of results and other
publications – select Financial Reports”
The Dufry PSU plans have been approved by the Re-
muneration Committee and the Board of Directors.
The Remuneration Committee reviews achievement
of the respective performance target at a specific
vesting date, upon proposal of the Group CEO, who as
plan administrator will analyze and adjust potential
exceptional and non-recurring events to normalize
Adjusted EPS in relation to the PSU plan. The Group
CEO acts as Plan Administrator and therefore pro-
poses the amount of each specific grant to each indi-
vidual plan participant, which is reviewed by the Re-
muneration Committee. The grants made to the Group
CEO are decided by the Remuneration Committee.
Performance targets for the Hudson 2019 LTI plan
The CEO Division North America (Hudson Ltd.) is the only
member of the Global Executive Committee who partic-
ipates in the Hudson long-term incentive plans. As he
was appointed to the Global Executive Committee as
of January 18, 2019, the following description of the
Hudson LTI plan refers only to the fiscal year 2019 grant.
Hudson has a long-term incentive plan (LTIP) that is
split between 75 % Performance Share Units (PSU) and
25 % Restricted Share Units (RSU), both with a vesting
period of three years. The number of shares allocated
for each PSU depends on the following performance
metrics of Hudson: Sales 2019 – 2021 (30 % weighting),
Adjusted EBITDA 2019 – 2021 (30 % weighting) and Ad-
justed EPS 2019 – 2021 (40 % weighting). The RSU vest
on a service condition, i.e. the member of the Hudson
management must have an ongoing contractual rela-
tionship on the vesting date.
The LTI plan awards granted by Hudson are directly
vesting into Hudson shares and are therefore not part
of the Dufry PSU plan. Details of the Hudson LTI plan
awards are available in the Notes to the consolidated
financial statements (Note 25.2) Share-based pay-
ments) of this Annual Report. The table with the com-
pensation of the members of the Global Executive
Committee on page 263 also includes the accrued
value of the Hudson RSU / PSU 2019 grants to the CEO
Division North America (in “share-based payments
accrued”).
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 Global Executive Committee. The total
amounted to CHF 0.4 million in the aggregate in fiscal
year 2019 (2018: CHF 0.3 million in aggregate for cer-
tain members of the Global Executive Committee).
CHANGES IN THE REMUNERATION SYSTEM
IN 2019 – GLOBAL EXECUTIVE COMMITTEE
The Board of Directors, upon proposal by the Remu-
neration Committee, has decided on the following
change to the remuneration system in fiscal year 2019:
265
4 Governance ReportDUFRY ANNUAL REPORT 2019 – As under IFRS 16, EBITDA is no longer reported in
the income statement and the implementation of
the Business Operating Model was completed by the
end of 2018, the measures regarding the financial
performance relevant for the annual bonus have
been adjusted. In 2019, the relevant metric were
40 % Organic Growth, 20 % Adjusted Operating
Profit and 40 % Equity Free Cash Flow (see also ex-
planation under section “Annual bonus – perfor-
mance objectives” on page 260). In fiscal year 2018,
the metric used for the short-term incentive was
50 % EBITDA, 25 % Business Operating Model (BOM)
Efficiency and 25 % Free Cash Flow. With the BOM
completed by the end of 2018 and EBITDA no longer
used as a metric in Dufry’s income statement due
to IFRS 16, the change to focus on Organic Growth,
Adjusted Operating Profit and Equity Free Cash
Flow reflects the focus of the organization on these
key issues.
– For the Performance Share Units (PSU) plans, the
formerly used Cash EPS for the calculation of the
targets and achievement ratios of the PSU plans has
been replaced with Adjusted EPS for the year 2019
and onwards. For details regarding the individual
grants see section “Details of the Performance Share
Units (PSU)” on page 263 of this Annual Report.
COMPARISON AND COMPOSITION OF
REMUNERATION OF THE GLOBAL EXECUTIVE
COMMITTEE FOR FISCAL YEAR 2019
The charts on page 264 reflect the composition of the
different remuneration components as well as the ac-
tual remuneration of the 10 members of the Global
Executive Committee for fiscal year 2019. In the chart,
this actual remuneration is also compared to the po-
tential compensation if 100 % of the target bonus was
reached, and the maximum potential of compensation
possible based on the capped bonus and the capped
share-based compensation.
PAY-OUT COMPONENTS FOR FISCAL YEAR 2019
ments Operating Growth, Adjusted Operating Profit
and Equity Free Cash Flow combined was 53 %. The pay-
out of the bonus component for the Group CEO
amounts to CHF 1.12 million, which represents 58 % of
the Group CEO’s basic salary. The Dufry PSU Award
2017 will vest in fiscal year 2020 at a ratio of 94.5 %. This
will lead to 130,180 shares being vested, of which 15,898
reflect the shares vested for the Group CEO.
The pay-out for the entire Global Executive Commit-
tee for fiscal year 2019 amounts to a total of CHF 27.04
million, of which CHF 7.28 million is the pay-out to the
Group CEO.
SUMMARY OF REMUNERATION
FOR FISCAL YEAR 2019
For fiscal year 2019, the remuneration of the Global
Executive Committee includes the compensation
of ten GEC members (former CFO until May 31, 2019,
current CFO as of April 1, 2019; in 2018: seven Group
Executive Committee members). The remuneration for
fiscal years 2019 and 2018, mentioned in the table on
page 263 covers the period between January 1 and
December 31.
The remuneration difference compared with the pre-
vious year is mainly due to the change in the number
of members of the current Global Executive Commit-
tee compared to the previous year (10 members in
2019 vs. 7 members in 2018), regular salary increases
based on annual performance review, individual bonus
payments based on achievement of yearly objectives
set in advance, as well as the different values of the
PSU awards.
RECONCILIATION BETWEEN REPORTED GLOBAL
EXECUTIVE COMMITTEE COMPENSATION FOR
FISCAL YEAR 2019 AND THE AMOUNT APPROVED
BY THE SHAREHOLDERS AT THE AGM 2018 FOR
FISCAL YEAR 2019
For fiscal year 2019, the achievement ratio in conjunc-
tion with the Group result targets for the three ele-
The Ordinary General Meeting of Shareholders held
on May 3, 2018, approved a maximum aggregate
amount of compensation for the members of the
COMPENSATION RATIO FOR REMUNERATION OF GLOBAL EXECUTIVE COMMITTEE (TEN MEMBERS) FOR 2019
GEC COMPENSATION
FOR FISCAL YEAR 2019
AS REPORTED
TOTAL MAXIMUM AMOUNT FOR GEC
COMPENSATION AS APPROVED BY
SHAREHOLDERS AT THE AGM 2018 FOR
FISCAL YEAR 2019
COMPENSATION RATIO
21,240.6
37,100.0
57.3 %
IN THOUSANDS OF CHF
Total Global Executive
Committee
266
4 Governance ReportDUFRY ANNUAL REPORT 2019 Global Executive Committee for the fiscal year 2019
of CHF 37.1 million. The approved maximum aggregate
amount reflects the maximum possible pay-out cal-
culated for each compensation element and took into
account the seven members of the Group Executive
Committee in office at the time the proposal to the
AGM 2018 was made. The actual compensation ratio
(accrued compensation) for the 10 members of the
Global Executive Committee compared with the
amount approved by the General Meeting of Share-
holders was 57.3 %.
For fiscal year 2020, the Ordinary General Meeting
of Shareholders held on May 9, 2019, approved a max-
imum aggregate amount of compensation for the
members of the Global Executive Committee of
CHF 42.53 million. The compensation ratio for 2020 will
again be disclosed in the Remuneration Report 2020.
OTHER COMPENSATION, LOANS
OR GUARANTEES (AUDITED)
For the years 2019 and 2018, no other compensation
was paid directly or indirectly to current or former
members of the Global Executive Committee, or to their
related parties. There are also no loans or guarantees
received or provided to the Global Executive Commit-
tee members, or to related parties.
CONTRACTS OF EMPLOYMENT TERMS
According to Article 23 of the Articles of Incorporation,
employment and other agreements with the members
of the Global Executive Committee may be concluded
for a fixed term or for an indefinite term. Agreements
for a fixed term may have a maximum duration of one
year. Renewal is possible. Agreements for an indefinite
term may have a notice period of maximum twelve
months. The current contracts with the members of
the Global Executive Committee contain termination
periods of twelve months or less.
267
4 Governance ReportDUFRY ANNUAL REPORT 2019 PARTICIPATIONS IN DUFRY AG
The following members of the Board of Directors or of
the Global Executive Committee of Dufry AG (includ-
ing related parties) directly or indirectly hold shares
or share options of the Company as at December 31,
2019. Members not listed in the tables do not hold any
shares or options.
IN THOUSANDS
MEMBERS OF BOARD OF DIRECTORS
J. C. Torres Carretero, Chairman
A. Holzer Neumann, Director
J. Born, Director (2018: Vice-Chairman)
J. Díaz González, Director and Group CEO
S. Tadler, Director
H. Jo Min, Independent Lead Director (2018: Director)
Total Board of Directors
MEMBERS OF GLOBAL EXECUTIVE COMMITTEE
J. Díaz González, Director and Group CEO
J. A. Gea, Deputy Group CEO
Y. Gerster, CFO
L. Marin, Global CCO
J. Gonzalez, Chief Marketing and Digital Innovation Officer
A. Belardini, Division CEO Asia Pacific and Middle East
R. Fordyce, Division CEO North America
R. Riedi, Division CEO Central and South America
E. Andrades, CEO Europe, Africa and Strategy
ADDITIONAL MEMBERS OF FORMER GROUP EXECUTIVE
COMMITTEE (IN 2018)
DECEMBER 31, 2019
DECEMBER 31, 2018
SHARES
FINANCIAL
INSTRUMENTS 1
PARTICIP.
SHARES
FINANCIAL
INSTRUMENTS 1
PARTICIP.
966.0
3,991.0
22.0
233.0
13.0
0.5
5,225.5
233.0
33.0
2.2
7.8
3.3
18.7
3.6
1.1
1.0
23.7
–
–
17.5
–
–
1.96 %
7.89 %
0.04 %
0.50 %
0.03 %
0.00 %
1,001.0
4,334.0
22.0
230.0
–
0.5
71.1 1
55.2 1
30.9 2
35.1 1
–
–
1.99 %
8.15 %
0.10 %
0.49 %
–
0.00 %
41.2
10.42 %
5,587.9
192.3
10.73 %
17.5
–
–
–
–
–
–
–
–
0.50 %
0.07 %
0.00 %
0.02 %
0.01 %
0.04 %
0.01 %
0.00 %
0.00 %
230.0
35.1 1
14.4
n/a
4.3
2.0
n/a
n/a
n/a
–
–
n/a
–
–
n/a
n/a
n/a
–
0.49 %
0.03 %
n/a
0.01 %
0.00 %
n/a
n/a
n/a
–
A. Schneiter, CFO
n/a
n/a
n/a
12.9
–
0.02 %
Total Global Executive Committee
303.7
17.5
0.64 %
263.6
35.1
0.55 %
1 The detailed terms of the various financial instruments disclosed are as disclosed to the SIX Swiss Exchange and published
on August 3, 2019, for the year 2019 and on December 28, 2018, for the year 2018.
2 European Capped Calls on 30,940 shares of Dufry AG. The transaction is divided into 5 tranches of 6,188 shares each,
which expired 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.
In addition to the above, the shareholders’ group con-
sisting, among others, of different legal entities con-
trolled by Andrés Holzer Neumann, Juan Carlos Torres,
Julián Díaz González holds sale positions of 3,62 %
through options (1,829,190 voting rights) as of De-
cember 31, 2019 (as of December 31, 2018: sale positions
of 5.09 % through options (2,739,430 voting rights)).
The detailed terms of these financial instruments are as
disclosed to the SIX Swiss Exchange and published on
August 3, 2019 (for sale position as of December 31, 2018:
publication of disclosure notice on December 28, 2018).
Disclosure notices are available on the SIX Swiss
Exchange website:
www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html
268
4 Governance ReportDUFRY ANNUAL REPORT 2019 To the General Meeting of
Dufry AG, Basel
Basel, 11 March 2020
Report of the statutory auditor on the remuneration report
We have audited the remuneration report of Dufry AG for the year ended 31 December 2019. The audit
was limited to the information according to articles 14 – 16 of the Ordinance against Excessive
Compensation in Stock Exchange Listed Companies (Ordinance) contained in the tables and sections
labeled “audited” on pages 252 to 268 of the remuneration report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the
remuneration report in accordance with Swiss law and the Ordinance. The Board of Directors is also
responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the remuneration report. We conducted our audit in
accordance with Swiss Auditing Standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the
remuneration report complies with Swiss law and articles 14–16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the
remuneration report with regard to compensation, loans and credits in accordance with articles 14 – 16
of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatements in the remuneration report, whether due to fraud or error. This
audit also includes evaluating the reasonableness of the methods applied to value components of
remuneration, as well as assessing the overall presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion, the remuneration report for the year ended December 31, 2019 of Dufry AG complies
with Swiss law and articles 14 – 16 of the Ordinance.
Ernst & Young Ltd
/s/ Jolanda Dolente
/s/ Siro Bonetti
Jolanda Dolente
Licensed audit expert
(Auditor in charge)
Siro Bonetti
Licensed audit expert
269
4 Governance ReportDUFRY ANNUAL REPORT 2019 CAPEX
Purchase of Property, Plant and Equipment
- Purchase of Intangibles
- Other Investing Activities
+ Proceeds from Sale of Property, Plant
and Equipment
= Capex
ADJUSTED OPERATING CASH FLOW
Cash Flow before Working Capital Changes
– Lease Payments
+ Proceeds from Lease Income
= Adjusted Operating Cash Flow
EQUITY FREE CASH FLOW
Net cash flows from operating activities
- Lease Payments
+ Proceeds from Lease Income
- Capex
+ Interest received
= Free cash flow
– Interest Paid
– Cash Flow related to Minorities
– Purchase of interest in associates
– Dividends paid to non-controlling interest
+ Contributions from
non-controlling interests
+/– Other Financing items
– Purchase of financial assets
+ Proceeds from sale of financial assets
+ Proceeds from loans receivable repaid
= Equity Free Cash Flow
ALTERNATIVE PERFORMANCE MEASURES
ORGANIC GROWTH
Like-for-like *
+ Net new concessions **
= Organic Growth
ADJUSTED OPERATING PROFIT (Adjusted EBIT)
Operating profit / (loss)
+ Amortization of concession rights ***
+ Impairment of concession rights ***
= Adjusted Operating Profit (Adjusted EBIT)
ADJUSTED NET PROFIT / ADJUSTED EPS
Net profit / (loss) attributable to Equity
Holders of the parent
+ Amortization of concession rights ***
+ Impairment of concession rights ***
+ Interest on Lease Obligations
+ Transaction Expenses ***
– Income Tax on above lines
- Minority interest on above lines
= Adjusted Net Profit
÷ Weighted Average number of Ordinary
Shares Outstanding
= Adjusted EPS
NET DEBT
Borrowings (short and long-term)
– Cash and Cash Equivalents
= Net Debt
CORE NET WORKING CAPITAL
Inventories
+ Trade and Credit Card Receivables
– Trade Payables
= Core Net Working Capital
Note: Calculation methods applicable as of 2019
* Sales on same space as previous comparable period
** Store openings minus store closings in the period under review
*** Related to acquisitions
270
4 Governance ReportDUFRY ANNUAL REPORT 2019
271
4 Governance ReportDUFRY ANNUAL REPORT 2019 INFORMATION
FOR INVESTORS
AND MEDIA
REGISTERED SHARES
SENIOR NOTES
Issuer
Listing
Type of security
Size of issue
Interest rate
Maturity
ISIN-No.
Bloomberg
Issuer
Listing
Type of security
Size of issue
Interest rate
Maturity
ISIN-No.
Bloomberg
Dufry One B.V.
The International Stock
Exchange (“TISE”)
Senior Notes
EUR 800 million
2.5 % p.a., paid semi-annually
October 15, 2024
XS1699848914 (Serie REG S)
DUFNSW
Dufry One B.V.
The International Stock
Exchange (“TISE”)
Senior Notes
EUR 750 million
2.0 % p.a., paid semi-annually
February 15, 2027
XS2079388828 (Serie REG S)
DUFNSW
Dufry AG
SIX Swiss Exchange
Registered shares
DUFN
CH0023405456
Issuer
Listing
Type of security
Ticker symbol
ISIN-No.
Swiss Security-No. 2340545
Reuters
Bloomberg
DUFN.S
DUFN:SW
KEY DATES IN 2020
March 12, 2020
May 7, 2020
May 12, 2020
August 3, 2020
November 3, 2020
Results Fiscal Year 2019,
Publication of Annual Report
Annual General Meeting
Trading Statement
First Quarter 2020
Results First Half Year 2020
Trading Statement
Third Quarter 2020
272
4 Governance ReportDUFRY ANNUAL REPORT 2019
ADDRESS
CORPORATE
HEADQUARTERS
DUFRY AG
Brunngässlein 12
P.O. Box
4010 Basel
Switzerland
Phone +41 61 266 44 44
DUFRY.COM
Company’s website:
Latest news:
Articles of incorporation:
Financial reports:
273
INVESTOR AND MEDIA CONTACTS
Renzo Radice
Global Head Investor Relations
and Corporate Communications
Phone + 41 61 266 44 19
renzo.radice@dufry.com
INVESTOR RELATIONS
Sara Lizi
Head Investor Relations Americas &
Communication Division 4
Phone + 55 21 21 57 99 01
sara.lizi@br.dufry.com
CORPORATE COMMUNICATIONS
Renzo Radice
Global Head Investor Relations and
Corporate Communications
Phone + 41 61 266 44 19
renzo.radice@dufry.com
Karen Sharpes
Global Media & Events Manager
Phone + 44 208 624 43 26
karen.sharpes@dufry.com
Sara Lizi
Head Investor Relations Americas &
Communication Division 4
Phone + 55 21 21 57 99 01
sara.lizi@br.dufry.com
4 Governance ReportDUFRY ANNUAL REPORT 2019 SUSTAINABILITY
REPORT 2019
ANNEX
SUSTAINABILITY
REPORT
ANNEX
About the report
Following Dufry’s commitment towards providing
more visibility over its annual non-financial perfor-
mance, and building on the steps taken in 2016 with
the commissioning of our first Materiality Assessment
to identify the sustainability topics and in 2017 with the
preparation of the first Sustainability Report follow-
ing international standards. Dufry has again aligned
its Sustainability Report, with the guidelines of the
Global Reporting Initiative (GRI) Standards on its Core
Option. Reporting in accordance with this interna-
tional standard permits a more transparent and com-
parable approach to information and facilitates the
tracking of sustainability performance indicators.
As indicated in page 78 of the 2019 Annual Report,
Dufry has added Data Privacy and IT Security as an
additional material topic for this year´s report, The rest
of the GRI indicators remain unchanged compared
to previous years. Dufry 2019 Sustainability Report ap-
plies the 2016 version of the GRI Standards for most
of the indicators; where noted “2016*” and “2018*” in
this annex and in the GRI Index, it refers to the Stan-
dards issue date, not the date of the information pre-
sented.
The report is divided in two main sections. The main
one – included in the annual report – gives the reader
a wider view of Dufry, its relationship with its main
stakeholders and its vision on sustainability. The sec-
ond part of the report - which is annexed to the An-
nual Report and also available in the sustainability sec-
tion of the corporate website, www.dufry.com, is this
document which contains information presented in
several tables with quantitative indicators as per the
GRI Standard indications. Both documents present
data as of December 31, 2019.
For easier tracking, a list of the whole set of indicators
in the GRI Index is available on the website. That Index
cross references GRI indicators and page numbers
and serves as a guide to where the information on each
topic may be found – either in the annual report, on
the Group website or in this annex document.
Scope
During 2019, Dufry has made significant progress in
the roll-out of Dufry Connect, Dufry’s digital HR plat-
form, which has permitted the company to increase
the breadth and depth of our employee-related infor-
mation to prepare this report.
For the general profile and most of the GRI indicators,
we have included information on the whole group. For
staff-related indicators – GRI 102-8, GRI 102-41. GRI
202 and GRI 400 series (from 402 to 406). information
is broken-down by five geographical divisions:
— HQ - Group Headquarters in Basel, Switzerland
— Division 1 – Europe & Africa
— Division 2 – Asia Pacific and Middle East
— Division 3 – North America
— Division 4 – Central and South America
More information about each of the Divisions and
countries included may be found on pages 48 – 65 of
the annual report.
Should you have any comments about the content of
the report or want to know more about Dufry’s efforts
towards sustainability, please email us to
sustainability@dufry.com
2/8
Sustainability Report 2019 Annex
INFORMATION ON EMPLOYEES AND OTHER WORKERS
(USING GRI CODING)
102-8 INFORMATION ON EMPLOYEES AND OTHER WORKERS
Headcounts
Number of Nationalities
Male
Female
HQ
DIVISION 1
DIVISION 2
DIVISION 3
DIVISION 4
TOTAL
240
120
120
55
11,653
3,971
7,682
118
5,144
2,024
3,120
53
10.383
3,298
7,085
50
7.666
3,019
4,647
47
35,086
12,432
22,654
133
3/8
Sustainability Report 2019 AnnexHQDIVISION 1DIVISION 2DIVISION 3DIVISION 4BREAKDOWN BY EMPLOYEE TYPEHeadcounts 240 11,653 5,144 10,383 7,666 Male 120 3,971 2,024 3,298 3,019 Full time 114 3,219 1,894 2,798 2,869 Part time 6 752 130 500 150 Female 120 7,682 3,120 7,085 4,647 Full time 96 4,492 2,769 5,760 4,364 Part time 24 3,190 351 1,325 283 BREAKDOWN BY CONTRACT TYPEHeadcounts 240 11,653 5,144 10,383 7,666 Male 120 3,971 2,024 3,298 3,019 Permanent 119 3,586 1,847 3,265 2,695 Temporary 1 385 177 33 324 Female 120 7,682 3,120 7,085 4,647 Permanent 118 6,918 2,759 7,036 4,353 Temporary 2 764 361 49 294 BREAKDOWN BY AGE GROUPHeadcounts 240 11,653 5,144 10,383 7,666 Male 120 3,971 2,024 3,298 3,019 < 30 years 7 801 795 981 1,102 30 – 50 years 85 2,221 1,080 1,213 1,650 > 50 years 28 949 149 1,104 267 Female 120 7,682 3,120 7,085 4,647 < 30 years 18 1,509 1,241 1,870 1,567 30 – 50 years 76 4,064 1,664 2,649 2,700 > 50 years 26 2,109 215 2,566 380 BREAKDOWN BY PROFESSIONAL LEVEL Headcounts 240 11,653 5,144 10,383 7,666 Male 120 3,971 2,024 3,298 3,019 Director / Top management 44 97 9 32 74 Admin & Professional 76 644 429 26 611 Sales & Ops Managers - 319 135 7 203 Sales & Ops Staff - 2,911 1,451 3,233 2,131 Female 120 7,682 3,120 7,085 4,647 Director / Top management 15 29 2 14 67 Admin & Professional 105 771 371 19 507 Sales & Ops Managers - 365 255 24 314 Sales & Ops Staff - 6,517 2,492 7,028 3,759 Note: These tables provide additional information to that available in the Annual Report, page 93, including: breakdown of headcounts of relevant operations by gender, employee type, employee contract, age and professional level. For more consistent tracking, headcounts from the Distribution Centres have been re- assigned to the divisions where these are located. 4/8
Sustainability Report 2019 Annex102-41 PERCENTAGE OF EMPLOYEES COVERED BY A COLLECTIVE BARGAINING AGREEMENT 2016*HQDIVISION 1DIVISION 2DIVISION 3DIVISION 4TOTALIN %Headcounts100 %46 %9 %38 %76 %45 %201-2 FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES DUE TO CLIMATE CHANGEIt is not possible to determine if the changes in existing rules initiated by climate change will involve changes to business processes associated with significant costs. Global regulation that could massively affect the predicted growth of international air traffic (with expected annual growth rates of 4 – 5 % until 2035) is rather unlikely due to the fact that it would necessarily need to be accompanied by restrictions for individual countries. Stricter regulatory requirements due to climate change could eventually be an op-portunity for some of our operations. As indicted in pages 88 – 89 of the 2019 Annual Report, Dufry has retail shops in 38 of the 115 of the airports that have achieved either the the optimization or carbon neutrality accreditations. 202-1 RATIOS OF STANDARD ENTRY LEVEL WAGE BY GENDER COMPARED TO LOCAL MINIMUM WAGE HQDIVISION 1DIVISION 2DIVISION 3DIVISION 4RATIO (1.00 = MINIMUM WAGE)Male1.001.211.191.171.52Female1.001.221.131.121.51Note: In the Canton of Basel (Switzerland) where Dufry’s HQ is located, there are different levels of minimum wages that depend on skills and experience. Likewise, we have not identified a benchmark for Cambodia, India, Indonesia, Hong Kong, UAE, hence, these operations have been omitted for the calcula-tion of the Division 2 group. 202-2 PROPORTION OF SENIOR MANAGEMENT HIRED FROM THE LOCAL COMMUNITYAt Dufry, we believe talent has no nationality. Our operations and offices however are very much linked to where they are based and this is reflected in the composition of our staff at all professional levels. As a general practice, and where possible, Dufry incorporates members of the local communities to its management team as this gives a better understanding and, as a result, a better running of the operations.HQDIVISION 1DIVISION 2DIVISION 3DIVISION 4IN %Locally hired33 %96 %45 %95 %63 %204-1 PROPORTION OF SPENDING ON LOCAL SUPPLIERSThe food, confectionery and catering category (which represent 18 % of Dufry 2019 global sales) has by large the largest proportion of their global procurement budget spent on local providers, with approximately 60 %. This is followed by the Wine & Spir-its (17 % of the 2019 global sales), with 20 % of their budget spent on local brands, and the Luxury category (13 % of 2019 global sales), with 19 % of their budget spent on local providers. Tobacco goods (11 % of the 2019 global sales) accounts for 2.5 % while Perfume and Cosmetics (32 % of the 2019 global sales) spends approximately 1.5 % on local providers. 5/8
Sustainability Report 2019 Annex401-1 NEW EMPLOYEE HIRES AND EMPLOYEE TURNOVERNote that Dufry operates in airports that have a very marked seasonal pattern and traffic, especially in Division 1 (Europe & Africa) and Division 4 (Central & South Amer-ica). Over the summer season – from April until October – these airports concentrate over 80 % of the annual traffic. Staff is hence reinforced over each summer period. Wherever possible, Dufry employs the same staff year after year. However, these sea-sonal employment contracts are accounted as new hires in the table below and there-fore also impact the turnover figures. HQDIVISION 1DIVISION 2DIVISION 3DIVISION 4HEADCOUNTSNew Hires 37 3,409 1,824 3,104 1,208 Male 15 1,238 667 1,066 507 < 30 years 4 669 385 589 272 30 – 50 years 10 481 258 354 215 > 50 years 1 88 24 123 20 Female 22 2,171 1,157 2,038 701 < 30 years 8 1,070 627 1,085 387 30 – 50 years 12 887 500 701 290 > 50 years 2 214 30 252 24 IN %New Hires15 %29 %35 %30 %16 %Male13 %31 %33 %32 %17 %< 30 years2 %6 %7 %6 %4 %30 – 50 years8 %12 %13 %11 %7 %> 50 years1 %3 %1 %4 %1 %Female18 %28 %37 %29 %15 %< 30 years7 %14 %20 %15 %8 %30 – 50 years13 %20 %18 %12 %7 %> 50 years8 %7 %9 %19 %8 %HEADCOUNTSEmployee turnover 58 3,331 1,239 6,532 899 Male 29 1,144 499 2,224 439 < 30 years 9 569 292 1,228 222 30 – 50 years 19 478 191 712 155 > 50 years 1 97 16 284 62 Female 29 2,187 740 4,308 459 < 30 years 9 1,054 397 2,318 226 30 – 50 years 19 854 315 1,449 167 > 50 years 1 279 28 541 66 IN %Employee turnover24 %29 %24 %63 %12 %Male24 %29 %25 %67 %15 %< 30 years129 %71 %37 %125 %20 %30 – 50 years22 %22 %18 %59 %9 %> 50 years4 %10 %11 %26 %23 %Female24 %28 %24 %61 %10 %< 30 years50 %70 %32 %124 %14 %30 – 50 years25 %21 %19 %55 %6 %> 50 years4 %13 %13 %21 %17 % 6/8
Sustainability Report 2019 Annex402-1 MINIMUM NOTICE PERIODS REGARDING OPERATIONAL CHANGESHQDIVISION 1DIVISION 2DIVISION 3DIVISION 4IN WEEKSMinimum notice period12 Weeks3 Weeks*7 Weeks2 Weeks4 Weeks* There is no such a requirement/information not available for Greece and Uruguay.403-1 WORKERS REPRESENTATION IN FORMAL JOINT MANAGEMENT– WORKER HEALTH AND SAFETY COMMITTEESHQDIVISION 1DIVISION 2DIVISION 3DIVISION 4IN %Staff represented in H&S committees88 %65 %n/a2 %2 %Health & Safety applicable legislation changes from one country to another. And while in operations like Spain or the UK, 100 % of the staff is covered by a joint manage-ment-worker committee, in others, like Greece or Brazil, the work done by this com-mittee is outsourced and covered by a third-party company. There is not such a com-mittee in our North America operation.403-8 WORKERS COVERED BY AN OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEM BASED ON LEGAL OR RECOGNIZED STANDARDS HQDIVISION 1DIVISION 2DIVISION 3DIVISION 4ABSOLUTE / IN %Employees and workers who are not employees, covered by the H&S system240100 %12,341106 %1,98438.57 %n/a–7,39296.43 %Employees and workers who are not employees, covered by the H&S system that has been INTERNALLY audited–0 %6,68757 %1,85035.96 %n/a–3,71648.47 %Employees and workers who are not employees, covered by the H&S system that has been EXTERNALLY audited–0 %6,44555 %–0 %n/a–4,64960.64 %* Division 1 only includes Morocco from Dufry operations in Africa. Division 2 only includes Armenia, Kazakhstan, Russia and Serbia. In Division 3 (North America) there is not such a H&S committee as previ-ously indicated, hence, no information is reported for this indicator.404-1 AVERAGE HOURS OF TRAINING PER YEAR PER EMPLOYEEHQDIVISION 1DIVISION 2DIVISION 3DIVISION 4HOURS OF TRAININGTotal average 22.6 12.4 87.2 1.5 36.7Male 21.0 13.4 77.6 1.5 29.6 Director / Top management 20.5 11.9 5.0 1.9 19.7 Admin & Professional 21.2 20.6 23.8 1.0 17.5 Sales & Ops Managers - 21.8 120.8 2.5 26.2 Sales & Ops Staff - 10.9 89.9 1.5 33.7 Female 24.3 11.9 93.4 1.6 41.3 Director / Top management 20.5 5.5 - 1.8 19.2 Admin & Professional 24.8 17.8 32.2 1.2 18.6 Sales & Ops Managers - 23.5 163.9 1.5 24.2 Sales & Ops Staff - 10.6 95.4 1.6 46.2 * training hours in Division 2 (Asia Pacific and Middle East) are over the global average due to new opera-tions, which resulted in higher training hours of our sales staff. In Division 3 (North America) a different system and criteria for tracking training hours have been applied, resulting in lower training hours than the average. Information will be harmonized for next year. 7/8
Sustainability Report 2019 Annex404-3 PERCENTAGE OF EMPLOYEES RECEIVING REGULAR PERFORMANCE AND CAREER DEVELOPMENT REVIEWS HQDIVISION 1DIVISION 2DIVISION 3DIVISION 4IN %Total100 %100 %100 %100 %100 %Male100 %100 %100 %100 %100 %Office managers100 %100 %100 %100 %100 %Office staff100 %100 %100 %100 %100 %Sales & Operations managers100 %100 %100 %100 %100 %Sales & Operations staff100 %100 %100 %100 %100 %Female100 %100 %100 %100 %100 %Office managers100 %100 %100 %100 %100 %Office staff100 %100 %100 %100 %100 %Sales & Operations managers100 %100 %100 %100 %100 %Sales & Operations staff100 %100 %100 %100 %100 %405-1 DIVERSITY OF GOVERNANCE BODIES AND EMPLOYEESHQDIVISION 1DIVISION 2DIVISION 3DIVISION 4IN %% male48 %34 %39 %45 %35 %% female52 %66 %61 %55 %65 %% minority groupsN/A0.5 %1 %50 %94 %% < 30 years11 %19 %40 %7 %10 %% 30 – 50 years70 %55 %53 %59 %61 % % > 50 years19 %26 %7 %34 %29 %406-1 INCIDENTS OF DISCRIMINATION AND CORRECTIVE ACTIONS TAKENHQDIVISION 1DIVISION 2DIVISION 3DIVISION 4# OF INCIDENTSTotal number06030Remediation plans implemented01000Remediation plan implemented and under supervision00000Incidents no longer subject to action05030410-1 SECURITY PERSONNEL TRAINED IN HUMAN RIGHTS POLICIES OR PROCEDURESDufry does not employ in-house security personnel of its own. This is largely due to the fact that it’s retail stores are overwhelmingly located in airports, railway stations and on cruise lines (96 % of 2019 global sales), where security is already strict and generally provided by the airport authority or cruise line itself. To the extent that se-curity personnel are required and are contracted, Dufry expects its security service contractors to act in a manner consistent with local and national laws as well as with applicable human rights standards. Dufry outsources this service to trustworthy pro-viders, regulated by local governments and with a reputable track record of services, including the respect for human rights. We have not recorded for the period any case of human rights or abuse by the security personnel hired by Dufry. 416-1 ASSESSMENT OF THE HEALTH AND SAFETY IMPACTS
OF PRODUCT AND SERVICE CATEGORIES
We are committed to ensuring that every product we sell is safe. Our procurement
teams focus on preventing issues occurring by sourcing products from a reliable sup-
ply base. Dufry does not sell own-brand products.
Some of the products that Dufry sell are heavily regulated – especially alcohol and
tobacco but also beauty and food. Dufry complies with all regulations and rules re-
lated to the products sold in the countries where it operates.
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Sustainability Report 2019 Annex
GRI
CONTENT
INDEX
2019
1/7
GRI
CONTENT
INDEX
2019
Page indications in this Index refer to the 2019 Dufry Annual Report unless otherwise noted.
* Dufry 2019 Sustainability Report applies the 2016 & 2018 version of the Global Reporting Initiative (GRI) Standards;
2016* and 2018* refer to the Standards issue date, not the date of the information presented in this report.
DISCLOSURE
DESCRIPTION
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REASONS FOR OMISSION
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GRI CONTENT INDEX 2019DUFRY SUSTAINABILITY REPORT 2019GRI 102: GENERAL DISCLOSURES 2016*ORGANIZATIONAL PROFILE102-1Name of the organizationDufry AG.102-2Activities, brands, products and servicesPages 38 – 47, 66 – 67, 70 – 71. 102-3Location of headquartersBrunngässlein 12, 4052 Basel, Switzerland.102-4Location of operationsPages 64 – 65.102-5Ownership and legal formPages 222, 229.102-6Markets servedPages 48 – 63.102-7Scale of the organizationPages 4, 229.102-8Information on employees and other workersPages 92 – 100, Sustainability Report Annex and www.dufry.com/en/sustainability-dufry102-9Supply chainPage 70.102-10Significant changes to the organization and its supply chainPage 12, 88.102-11Precautionary Principle or approachDufry has not formally adopted the precautionary principle.102-12External initiativesDufry has not formally joined any external international initiatives in 2019. In 2020 Dufry applied to become a signatory member of the UN Global Compact (Page 81).102-13Membership of associations www.dufry.com/en/company/our-stakeholders/associations-and-authoritiesSTRATEGY 102-14Statement from senior decision-makerPages 8 – 11, 12 – 16, 110 – 113.102-15Key impacts, risks, and opportunitiesPages 78 – 79, 83, 196 – 205.ETHICS AND INTEGRITY102-16Values, principles, standards, and norms of behaviorPage 86, Dufry Code of Conduct, www.dufry.com/en/sustainability-dufry, www.dufry.com/en/careers & www.dufry.com/en/company/ our-brand-values102-17Mechanisms for advice and concerns about ethicsPage 86, Dufry Code of Conduct, www.dufry-compliance.com & www.dufry.com/en/sustainability-dufry GOVERNANCE102-18Governance structurePages 229 – 242.102-22Composition of the highest governance body and its committeesPages 229 – 242.102-23Chair of the highest governance bodyPage 234.102-24Nominating and selecting the highest governance bodyPage 238.102-30Effectiveness of risk management processes Page 241 – 242.102-35Remuneration policiesPage 254 – 267.102-36Process for determining remuneration Page 254 – 267. DISCLOSURE
DESCRIPTION
PAGE NUMBER(S) AND/OR URL(S)
REASONS FOR OMISSION
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GRI CONTENT INDEX 2019DUFRY SUSTAINABILITY REPORT 2019GRI 102: GENERAL DISCLOSURES 2016* (CONT.)STAKEHOLDER ENGAGEMENT102-40List of stakeholder groupsPage 79.102-41Collective bargaining agreementsPage 98, Sustainability Report Annex and www.dufry.com/en/sustainability-dufry102-42Identifying and selecting stakeholdersPage 78.102-43Approach to stakeholder engagementPages 66 – 68, 70, 72 – 73, 77, 79 – 81, 95, 98, 99 & Media and Investor Relations sections at www.dufry.com102-44Key topics and concerns raisedPage 79.REPORTING PRACTICE102-45Entities included in the consolidated financial statementsPages 224 – 225.102-46Defining report content and topic BoundariesSustainability Report Annex and www.dufry.com/en/sustainability-dufry102-47List of material topicsPage 79.102-48Restatements of informationNone.102-49Changes in reportingNone.102-50Reporting period2019.102-51Date of most recent reportSustainability Report Annex and www.dufry.com/en/sustainability-dufry102-52Reporting cycleSustainability Report Annex and www.dufry.com/en/sustainability-dufry102-53Contact point for questions regarding the reportSustainability Report Annex and www.dufry.com/en/sustainability-dufry102-54Claims of reporting in accordance with the GRI StandardsSustainability Report Annex and www.dufry.com/en/sustainability-dufry102-55GRI content indexwww.dufry.com/en/sustainability-dufry102-56External assuranceNo.GRI 201: ECONOMIC PERFORMANCE 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 4, 12 – 13, 22 – 23, 85.103-2The management approach and its components Pages 4, 12 – 13, 22 – 23, 85.103-3Evaluation of the management approachPages 4, 12 – 13, 22 – 23, 85.201-1Direct economic value generated and distributedPage 85201-2Financial implications and other risks and opportunities due to climate changeSustainability Report Annex and www.dufry.com/en/sustainability-dufry201-3Defined benefit plan obligations and other retirement plansPage 126 – 127, 139, 187 – 192.201-4Financial assistance received from governmentNone.GRI 202: MARKET PRESENCE 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 48 – 65. 103-2The management approach and its components Pages 48 – 65. 103-3Evaluation of the management approachPages 48 – 65.202-1Ratios of standard entry level wage by gender compared to local minimum wageSustainability Report Annex and www.dufry.com/en/sustainability-dufry202-2Proportion of senior management hired from the local communitySustainability Report Annex and www.dufry.com/en/sustainability-dufry DISCLOSURE
DESCRIPTION
PAGE NUMBER(S) AND/OR URL(S)
REASONS FOR OMISSION
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GRI CONTENT INDEX 2019DUFRY SUSTAINABILITY REPORT 2019GRI 204: PROCUREMENT PRACTICES 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPage 70, 88. 103-2The management approach and its components Page 70, 88. 103-3Evaluation of the management approachPage 70, 88. 204-1Proportion of spending on local suppliersSustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 205: ANTI-CORRUPTION 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 86 – 87, Dufry Code of Conduct & www.dufry.com/en/sustainability-dufry 103-2The management approach and its components Pages 86 – 87, Dufry Code of Conduct & www.dufry.com/en/sustainability-dufry 103-3Evaluation of the management approachPages 86 – 87, Dufry Code of Conduct & www.dufry.com/en/sustainability-dufry 205-2Communication and training about anti-corruption policies and proceduresPages 86 – 87 GRI 206: ANTI-COMPETITIVE BEHAVIOR 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 86 – 87 & www.dufry.com/en/sustainability-dufry 103-2The management approach and its components Pages 86 – 87 & www.dufry.com/en/sustainability-dufry103-3Evaluation of the management approachPages 86 – 87 & www.dufry.com/en/sustainability-dufry 206-1Legal actions for anti-competitive behavior, anti-trust, and monopoly practicesDuring 2019, Dufry didn’t have any legal action for competitive behavior, anti-trust, and monopoly practice.GRI 301: MATERIALS 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 89, 90. 103-2The management approach and its components Pages 89, 90. 103-3Evaluation of the management approachPages 89, 90. 301-3Reclaimed products and their packaging materialsN/A.Due to the nature of our business, we don´t reclaim products.GRI 302: ENERGY 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 88 – 90. 103-2The management approach and its components Pages 89 – 90. 103-3Evaluation of the management approachPages 89 – 90. 302-1Energy consumption within the organizationN/A. Page 90.Due to the nature of our business, we cannot track energy consumption.GRI 401: EMPLOYMENT 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 92 – 95. 103-2The management approach and its components Pages 92 – 95. 103-3Evaluation of the management approachPages 92 – 95. 401-1New employee hires and employee turnoverSustainability Report Annex, www.dufry.com/en/sustainability-dufry & www,dufry.com/en/careers DISCLOSURE
DESCRIPTION
PAGE NUMBER(S) AND/OR URL(S)
REASONS FOR OMISSION
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GRI CONTENT INDEX 2019DUFRY SUSTAINABILITY REPORT 2019GRI 402: LABOR/MANAGEMENT RELATIONS 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 94 – 97. 103-2The management approach and its components Pages 94 – 97. 103-3Evaluation of the management approachPages 94 – 97. 402-1Minimum notice periods regarding operational changes Sustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 403: OCCUPATIONAL HEALTH & SAFETY 2018* MANAGEMENT APPROACH 403-1Occupational health and safety management systemPages 99 – 100 403-2Hazard identification, risk assessment, and incident investigation Pages 99 – 100.403-3Occupational health servicesPages 99 – 100.403-4Worker participation, consultation, and communication on occupational health and safetyPages 99 – 100.403-5Worker training on occupational health and safetyPages 99 – 100.403-6Promotion of worker healthPages 99 – 100.403-7Prevention and mitigation of occupational health and safety impacts directly linked by business relationshipsPages 99 – 100 403-8Workers covered by an occupational health and safety management systemSustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 404: TRAINING & EDUCATION 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 96 – 97. 103-2The management approach and its components Pages 96 – 97. 103-3Evaluation of the management approachPages 96 – 97. 404-1Average hours of training per year per employeeSustainability Report Annex and www.dufry.com/en/sustainability-dufry404-2Programs for upgrading employee skills and transition assistance programsPages 96 – 97.404-3Percentage of employees receiving regular performance and career development reviewsSustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 405: DIVERSITY AND EQUAL OPPORTUNITY 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPage 97, Dufry Code of Conduct and www.dufry.com/en/careers/working-dufry 103-2The management approach and its components Page 97, Dufry Code of Conduct and www.dufry.com/en/careers/working-dufry 103-3Evaluation of the management approachPage 97, Dufry Code of Conduct and www.dufry.com/en/careers/working-dufry 405-1Diversity of governance bodies and employeesSustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 406: NON-DISCRIMINATION 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPage 97, Dufry Code of Conduct and www.dufry.com/en/careers/working-dufry 103-2The management approach and its components Page 97, Dufry Code of Conduct and www.dufry.com/en/careers/working-dufry 103-3Evaluation of the management approachPage 97, Dufry Code of Conduct and www.dufry.com/en/careers/working-dufry 406-1Incidents of discrimination and corrective actions takenSustainability Report Annex and www.dufry.com/en/sustainability-dufry DISCLOSURE
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GRI CONTENT INDEX 2019DUFRY SUSTAINABILITY REPORT 2019GRI 407: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 97 – 98 and www.dufry.com/en/sustainability-dufry103-2The management approach and its components Pages 97 – 98 and www.dufry.com/en/sustainability-dufry103-3Evaluation of the management approachPages 97 – 98 and www.dufry.com/en/sustainability-dufry407-1Operations and suppliers in which the right to freedom of association and collective bargaining may be at riskWe don´t report any operation where freedom of association and collective bargaining is at risk. As per suppliers, see page 91 of Dufry Annual Report.GRI 410: SECURITY PRACTICES 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundarywww.dufry.com/en/sustainability-dufry 103-2The management approach and its components www.dufry.com/en/sustainability-dufry 103-3Evaluation of the management approachwww.dufry.com/en/sustainability-dufry 410-1Security personnel trained in human rights policies or proceduresSustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 414: SUPPLIER SOCIAL ASSESSMENT 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPage 91.103-2The management approach and its components Page 91.103-3Evaluation of the management approachPage 91.414-1New suppliers that were screened using social criteria.N/A Dufry does not report specific numbers or percentages related to screening or impact assessments, as this information is subject to confidentiality constraints.GRI 416: CUSTOMER HEALTH AND SAFETY 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 67. 103-2The management approach and its components Pages 67. 103-3Evaluation of the management approachPages 67. 416-1Assessment of the health and safety impacts of product and service categoriesSustainability Report Annex and www.dufry.com/en/sustainability-dufryGRI 417: MARKETING AND LABELING 2016* GRI 103: MANAGEMENT APPROACH 103-1Explanation of the material topic and its boundaryPages 67 – 68. 103-2The management approach and its components Pages 67 – 68. 103-3Evaluation of the management approachPages 67 – 68. 417-1Requirements for product and service information and labelingPages 67 – 68. 417-2Incidents of non-compliance concerning product and service information and labelingDuring 2019, Dufry has not been notified through the available channels of any significant sanction for non-compliance concerning product and service information and labeling.417-3Incidents of non-compliance concerning marketing communicationsDuring 2019 Dufry has not been notified through the available channels of any significant sanction for non-compliance concerning marketing communications. DISCLOSURE
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GRI 418: CUSTOMER PRIVACY 2016*
GRI 103: MANAGEMENT APPROACH
103-1
Explanation of the material topic and its boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
418-1
Substantiated complaints concerning breaches
of customer privacy and losses of customer data
Pages 68 – 78, 93, 94, Dufry Code of Conduct and
www.dufry.com/en/sustainability-dufry
Pages 68 – 78, 93, 94, Dufry Code of Conduct and
www.dufry.com/en/sustainability-dufry
Pages 68 – 78, 93, 94, Dufry Code of Conduct and
www.dufry.com/en/sustainability-dufry
During 2019, Dufry has not received through the
available set channels any administrative sanction
for the breach of the costumer’s privacy and
personal data protection rules.
GRI 419: SOCIO-ECONOMIC COMPLIANCE 2016*
GRI 103: MANAGEMENT APPROACH
103-1
103-2
103-3
419-1
Explanation of the material topic and its boundary
Page 91.
The management approach and its components
Evaluation of the management approach
Non-compliance with laws and regulations
in the social and economic area
Page 91.
Page 91.
During 2019, Dufry has not been notified through
the available channels of any significant sanction
for non compliance with applicable laws and
regulation.
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GRI CONTENT INDEX 2019DUFRY SUSTAINABILITY REPORT 2019
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, Horgen
Design, Production hilda design matters, Zurich
Print Neidhart + Schön Group AG, Zurich
© Dufry AG 2020
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Dufry – The World’s Leading Travel Retailer.