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Letter to the Shareholders

Dear Shareholders

Kuoni aims to achieve profits and positive cash flow from sustainable growth in the global travel market. The services and activities required to do this have been in a state of change for several years. Kuoni is proactively driving this process and in 2012 took some key strategic decisions affecting current and future business activities. 

In 2012, growth was generated in business areas that are focused on the future and that have been expanded significantly in recent years. Change processes were initiated in units that are exposed to structural changes in the market, have been influenced by external events, or are no longer of strategic relevance. In 2012, highest earnings before amortisation (EBITA) for four years have been achieved.

Core growth came from the activities in Global Travel Services (GTS) Division. The acquisition of Gullivers Travel Associates (GTA) in 2011 and its continued successful integration into the Kuoni Group in 2012 helped boost this growth and accelerate the change process at Kuoni. This business’s turnover and profits expansion and its significance to Kuoni are illustrated by the 900 000 destination services sold for group tours in 2012, 57 million search queries on average every day on our databases, and the 45 000 group trips arranged. Following the integration of GTA, our existing activities using the Kuoni Connect hotel database were integrated into GTA’s online database. The business area has operated all over the world under the new GTA brand since autumn 2012. At the same time, GTA’s group travel business was merged with Kuoni activities in this area. The “Kuoni Group Travel Experts” brand was created, emphasising Kuoni’s market leadership in nearly all areas where group travel is important, essentially in major Asian countries.

Visa services provider VFS Global also contributed to growth in 2012. It rapidly extended its global leadership in helping governments and embassies to process visa applications. The figures are impressive: 282 new Visa Application Centres (VAC) were opened in 41 countries in 2012, and 14.6 million visa applications were processed during the year. At the end of 2012, VFS Global was operating 802 Visa Application Centres in 88 countries. In 2013, the company began the phased roll-out of visa processing services for the Kingdom of Saudi Arabia. This service will be fully established within the next twelve months. This contract, won by VFS Global, was its biggest yet in terms of both volume and scope of services.

Despite difficult conditions caused by the economic and political situation in key holiday destinations Greece and Egypt, the Outbound Nordic unit also managed to achieve growth in tour operating activities. While the Swedish market suffered from overcapacities and a fall in demand for holidays to Egypt and Thailand during the first half of 2012, the market environment normalised in the second half. Activities in the Norwegian market were once again our most successful.