Alpitour World

(100% of share capital)

The Alpitour Group was consolidated on the basis of the first half 2011 data, pursuant to IFRS 5, as described in the “Review of the consolidated results of the EXOR Group – Shortened” in this report.

The consolidated results of the Alpitour Group reported for the first half of the financial year 2010/2011 (November 1, 2010 – April 30, 2011) can be summarized as follows:

  Half I
€ million 2011 2010 Restated (a) Change
Net revenues 368.5 362.4 6.1
EBITDA (10.8) (15.5) 4.7
Loss from ordinary operations (21.7) (25.5) 3.8
Loss attributable to owners of the parent (11.8) (25.7) 13.9
€ million  4/30/2011 31/10/2010Restated Change
Equity attributable to owners of the parent 60.9 83.8 (22.9)
Net financial position 9.4(b) 87.0 (77.6)
(b) Before payment of reserves to EXOR for €10 million.

Below is a summary of the operating performance of the Alpitour Group to October 31, 2011.

The sole company in Italy covering the entire tourism chain, Alpitour World is the market leader for organized travel, with a strong position also in the independent traveler segment through the Alpitourworld.com platform. The Alpitour World business unit comprises Tour Operating, Hotel, Incoming and Aviation.

The Alpitour Group’s offering spans five continents, with more than 200 destinations, operating directly with its own offices in numerous countries besides Italy: Cape Verde, Egypt, France, Ireland, Maldives, Morocco, Mexico, Portugal, Dominican Republic, Spain, Tanzania and Tunisia.

Corporate offices are in Turin but more than 3,000 employees work in the offices in Cuneo (registered office), Milan, Malpensa, Verona, Padua, Bologna, Genoa, Rome, Naples, Palma de Maiorca and in the branches and assistance centers found the world over.

With over 3.1 million clients in 2011 and its carefully chosen international partnerships, Alpitour World has for years consistently held the post of the 1° tourist group in Italy and is among the top ten European tourist operators.

The financial highlights for the fiscal years 2010/2011 and 2009/2010 are as follows (note that the fiscal year closes on October 31 of each year):

   
Change
€ million 2010/2011 2009/2010 Restated (a) Amount %
Net revenues 1,142.3 1,183.2 (40.9) -3.5
Contribution margin 183.2 190.0 (6.8) -3.6
EBITDA 47.3 46.5 0.8 1.7
Profit from ordinary operations 19.7 25.8 (6.1) -23.7
Profit attributable to owners of the parent 17.3 10.9 6.3 57.9
Equity attributable to owners of the parent 92.8 83.8 9.0  
Consolidated net financial position 111.7 86.8 24.9  
(a) The Distribution and M.I.C.E. divisions have been reclassified as set out in IFRS 5.

Compared to past years, the consolidated accounting data at October 31, 2011 reflects the effects of the following extraordinary transactions:

  • the company Welcome Travel Group S.p.A. and its subsidiaries (theDistribution business unit) have been accounted for using the equity method instead of being consolidated line-by-line following the sale of a 50% stake to Costa Crociere S.p.A.;
  • the company AW Events (M.I.C.E. business unit) was deconsolidated after the sale of the entire investment during the year.

The data relating to the financial year 2009/2010 have been restated for a better comparison with the financial year 2010/2011.

The economic crisis which marked both 2009 and 2010 has continued to distress the major western economies in 2011 so that, starting in summer, future growth prospects waned even further. As a consequence, in this scenario, the tourism market has continued to display a very weak demand, a particular sensitivity by clients to prices, a sign of reduced spending capacity and a strong propensity of the final client to book at the last minute.

Net revenues of Alpitour World, compared to the prior year, recorded a reduction of 3.5% to €1,142.3 million. This result should nevertheless be considered positive when taken from the standpoint of the difficult general economic panorama and the crisis in demand which can be found in all the countries of Mediterranean Africa, first among them Egypt and Tunisia. In such scenario, sales recorded a decline compared to the prior year in the tour operating division and the hotel division, compensated in part by the gains made in the aviation and incoming divisions.

Consolidated EBITDA in 2011/2012 remained in line at €47.3 million (€46.5 million in 2009/2010); the EBITDA margin for the period thus recorded an improvement to 4.1% from 3.9%. This performance principally reflects the effects of the sales policies designed to protect margins, as well as the positive outcomes of the actions aimed at reducing and containing variable and structure costs.

The profit attributable to owners of the parent was €17.3 million, against a corresponding profit of €10.9 million in 2009/2010; such results were affected by accruals for the year and higher amortization and depreciation charges besides the economic performance described for EBITDA.

The net financial position of the Group also significantly improved during the period from €89.6 million at the end of the previous year to €111.7 million at October 31, 2011. This change came from the combined effect of cash flows during the year, the improvement in net working capital and also the financial effect of the receipt of €12.2 million following the sale of the 50% stake in Welcome Travel Group to Costa Crociere S.p.A., the receipt of €4.6 million on the sale of AW Events to third parties and the partial distribution of €10 million of the share premium reserve to the parent EXOR in July.

Sales of the divisions of the Alpitour Group are analyzed below:

    Restated Change
€ million 2010/2011 2009/2010  Amount %
Tour operating 825.8 917.1 (91.3) -10.0
Hotel 75.9 81.2 (5.3) -6.5
Aviation 222.7 183.0 39.8 21.7
Incoming 251.1 226.2 24.9 11.0
Total 1,375.5 1,407.4 (31.9) -2.3
Elimination of intragroup transactions (233.2) (224.2) (9.0) 4.0
Total 1,142.3 1,183.2 (40.9) -3.5

The Tour Operating division, in 2010/2011, reported a decrease in volumes compared to the prior year: the number of passengers, in fact, arrived at 786 thousand, compared to 908 thousand in 2009/2010 (-13.4%). Sales, which also include the reinsurance sales of Alpitour Reinsurance, consequently followed the same trend and settled at €825.8 million (€917.1 million in 2009/2010), down 10.0%. The lower reduction in sales compared to volumes was due to a different sales mix, which highlighted a decline to destinations in the countries of North Africa to the benefit of destinations exhibiting higher average sales prices.

Specific company policies aimed at cutting back and adding flexibility to direct overheads (particularly empty/full hotel commitments) and structure costs, as well as sales polices geared to maintaining catalog sales prices and protecting margins, made it possible to limit and effectively counter the consequences generated by the continuing market crisis and by the reduction in sales owing to political tensions in Mediterranean Africa. The contribution margin for the year to October 31, 2011 was €54.3 million (vs. €58.6 million in the prior year), or 6.6% of sales (6.4% in 2009/2010). EBITDA stood at €13.9 million with an EBITDA margin of 1.7%, reflecting the margin in the prior year.

In 2010/2011 the Hotel sector posted sales of €75.9 million against €81.2 million in the prior year. Of that amount €31.0 million was generated with the tour operators of the Group (€34.6 million to October 31, 2010).

Sales performance can mainly be ascribed to the closing of some lease contracts due to the early withdrawal from some leisure-type hotels (Villaggio “Floriana”, Villaggio “Nova Siri” and Hotel “Marina Club”) and city hotels (Hotel Ritz & Regent in Rome), decided under the plan for the restructuring of the product portfolio of the hotel division. This reduction was only partly offset by the favorable effects of the opening of the Hotel Oriente in Bari in September 2010.

Despite the combined effect of actions and policies aimed at reducing costs and revisiting the product portfolio in order to limit and compensate both the effects of the difficult market situation and the increase in certain productive factors, the hotel division posted a lower contribution margin compared to the prior year (€41.8 million to October 31, 2011 vs. €45.8 million to October 31, 2010), or 55.0% of sales (56.4% in 2009/2010). Instead EBITDA for the year is basically in line with the prior year in terms of margin (approximately 5.6%), displaying a slight contraction in terms of amount (€4.2 million to October 31, 2011, compared to €4.6 million to October 31, 2010).

The Aviation division headed by the Neos airline company, in 2010/2011, reported sales of €222.7 million (€183.0 million in 2009/2010), of which €115.8 million was with the Group (€103.4 million to October 31, 2010). The sales trend and the number of passengers carried was especially impacted by a different sales mix featuring, in 2010/2011, an expanded charter business with the Group and third-party operators and a reduction in wet lease out business which posted considerably lower revenues than the charter business. In fact, it should be noted that the sales prices of the wet lease business are based on certain limited cost components (lease, crew, maintenance and insurance) while other important costs (first of all fuel) are directly borne by the client airline. With a growth in sales of approximately €40 million, the number of passengers carried in the year 2010/2011 was about 957 thousand as opposed to 958 thousand in the previous year.

Neos managed to achieve important operating results thanks to its ability to attain the maximum level of aircraft utilization and to vigilant commercial policies and cost containment. The contribution margin during the period reached €66.4 million compared to €66.1 million in 2009/2010. EBITDA for the period, benefiting from the positive effects of cutbacks in operating costs (mainly aircraft lease and employee costs), showed an improvement of €2 million over the prior year (€25.4 million to October 31, 2011 against €23.4 million to October 31, 2010). The EBITDA margin fell to 11.4% from 12.8% in the previous year: 2009/2010 in fact posted a high level of wet lease outs with average sales prices below those of the charter business but with a better margin.

The Incoming sector (Jumbo Tours Group) in 2010/2011 reported sales of €251.1 million (of which €83.2 million came from the Alpitour Group), highlighting an increase (+11.0%) over the prior year (€226.2 million, of which €83.3 million from the Alpitour Group). Even with the impact of outside factors such as the effects of the continuing negative economic environment, the Jumbo Tours Group managed to consolidate its volumes through decisive sales policies and a considerable jump in demand to the Canary Islands, the Balearic Islands and Cape Verde destinations as a result of the unrest in North Africa, recording an increase in the number of passengers managed by about 29.0% compared to October 31, 2010.

The traffic by third-party operators in the period contributed a volume of 1,901 thousand passengers (1,406 thousand to October 31, 2010) and accounted for about 88.7% of the total volumes managed by the incoming division. A decisive contribution came from the 2010/2011 start-up of incoming operations on behalf of the “El Corte Inglés” Spanish operator, as well as the consolidation of the already-operating activities with “Hotel 4 U” (Thomas Cook Group), which gave the Jumbo Tours Group the exclusive for incoming for the management of their client traffic. As for volumes coming from the Alpitour Group’s tour operator, 243 thousand passengers were recorded this year, compared to 256 thousand in 2009/2010: this trend was impacted by the decrease in clients to Tunisia and Morocco destinations compensated in part only by the increases to the Balearic Islands and the Canary Islands.

Incoming’s contribution margin in fact reached €17.5 million, improving over the €16.2 million reported in the prior year. EBITDA in the period displayed a similar improvement reaching €3.7 million (€2.9 million to October 31, 2010), with an EBITDA margin of 1.5% (1.3% in the year 2009/2010).

Significant events

Sale of the 50% stake in Welcome Travel Group:
in February 2011, an agreement was sealed between Alpitour  S.p.A. and the company Costa Crociere S.p.A. directed to the entry of the leading cruise line company in Italy as a shareholder of Welcome Travel Group S.p.A. with a 50% interest. The aim of the partnership is to develop and grow the distribution network with a view towards continually improving services to the final clientele. The operation obtained the approval of the antitrust authority and was concluded in April 2011. The acquisition by Costa Crociere S.p.A. of the investment in Welcome Travel Group S.p.A. came at a total price of €16.3 million and was completed through the purchase of shares (for a price of €14.7 million) and through the subscription of a reserved capital increase (for €1.6 million); a part of the price of the shares (equal to €2.5 million) was in the form of an earn out payable within 24 months of the conclusion of the operation, once pre-fixed targets are reached.

Sale of the investment in AW Events S.r.l.:
in July 2011, Alpitour S.p.A. and the company Alessandro Rosso Incentive S.p.A. signed an agreement for the sale of the entire investment in AW Events S.r.l. (in which Alpitour S.p.A. holds an 83.9% stake). The investment was sold at a total price of €5.5 million (of which €4.6 million is the Alpitour Group’s share) and operation was finalized on September 15, 2011.

New office in Turin:
the project for the new head office of the Alpitour Group was announced in September 2011 and all the employees of the current offices of Turin and Cuneo will be in Turin starting from the second half of 2012. The new office will make it possible to obtain cost savings, a considerable improvement in terms of effectiveness and efficiency and will also ensure stability and business continuity, as well as new opportunities for professional growth and development.

 

 

Commercial Register No.64236277 Legal notes | Credits