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Letter to the Shareholders

Dear Shareholders

2013 was a successful year for the Kuoni Group, with further positive organic top line growth and a significant increase in operating earnings (EBIT). The Group completed its transformation successfully, and the company achieved a clear positive net result.

Kuoni has developed into a global travel-related service provider with leading positions in its areas of activity and sustainable growth prospects. This business success is based on an outstanding range of services for end consumers, suppliers, online and offline travel agencies, tour operators, aggre­gators and government clients. Kuoni’s three main activities are Destination & Accommodation Services, Tour Operating, and Visa Processing Services.

Global travel activity increased again in 2013. The World Tourism Organisation (UNWTO) announced an increase of 5% of international ar­riv­als in 2013. The main drivers were countries in the Asia/Pacific region and Europe, with growth of 6% each. The great majority of Kuoni’s business is based on these key source markets and desti­nations, so this growth had a direct positive impact on our performance. Meanwhile, however, continued political turmoil in Egypt during the summer and autumn of 2013 led to a freeze on travel to this northern African country that is important for tourism. Social and political unrest in emerging markets Turkey, Brazil and Thailand also had a negative effect on various business activities.

The main earning drivers were Group Travel, FIT, and tour operating activities within Outbound Nordic, as well as the visa services of VFS Global.

The integration of Gullivers Travel Associates (GTA), the company acquired in 2011, was successfully completed in 2013. Operating earnings at both the Group Travel and FIT Business Segments increased. For Group Travel trading was particularly good in the Japanese and Chinese markets during the important summer quarter. The most important source markets were Japan, China and Indonesia, while the most popular destinations were France, Italy, Germany, the UK and Switzerland. Almost 110 000 coaches, and 3.2 million room nights were booked for group travellers.

Source markets in Asia/Pacific, the Middle East, Africa and Northern and Central Europe were the main growth drivers for the FIT Business Segment (online databases with Destination & Accommo­dation Services). The highest figures for booked room nights in 2013 were recorded in the USA, Italy, France and the United Kingdom. The top holi­day destinations in the Asia/Pacific region were Thailand, Singapore, Malaysia, China and Australia.

The "XML" technical standard was extended across all of GTA’s databases. As a result, hotels can now, for example, adjust their room availabilities and prices on the GTA database on an ongoing basis to match supply and demand. 12.7 million room nights were booked on our databases in 2013.